Q2 2024 Viasat Inc Earnings Call

[music].

Okay.

Speaker 1: Good day, everyone. Welcome to Vyas's FY24 second quarter earnings conference call. Your host for today is Mark Denkberg, Chairman and CEO . You may proceed, Mr. Denkberg.

Good day, everyone and welcome to Viasat FY 'twenty four second quarter earnings Conference call. Your host for today is Mark <unk> Chairman and CEO. You May proceed Mr. Deng Burke.

Speaker 2: Thanks. Good afternoon, everybody, and thanks for joining us today.

Thanks, Good afternoon, everybody and thanks for joining us today.

Speaker 3: So with me, I've got Guru Gaurabhan, our president, Sean Duffy, our chief financial officer, and Robert Blair, our general counsel. So Robert, could you please start us with our safe harbor disclosure? Sure, Mark. As you know, this discussion will contain forward-looking statements. This is a reminder that factors could cause actual results to differ materially.

So with me I've got Google wrapping our President Shawn Duffy, our Chief Financial Officer, and Robert Blair, Our General Counsel.

Robert Please start with our Safe Harbor disclosure sure Mark as you know this discussion will contain forward looking statements. This is a reminder that factors could cause actual results to differ materially additional information concerning these factors is contained in our SEC filings, including our most recent reports on forms 10-K and 10-Q copies are.

Speaker 3: Additional information concerning these factors is contained in our FCC filings, including our most recent reports on forms 10-K and 10-Q. Copies are available from the FCC or from our website.

Available from the SEC or from our website back to you Mark. So we encourage reading the shareholder letter that we posted to our website earlier this afternoon for more details.

Speaker 2: Okay, thanks. So we encourage reading the shareholder letter that we posted to our website earlier this afternoon for more details.

Speaker 2: I'll start with an overview of the main points and then we'll have time for questions.

I'll start with an overview of the main points and then we'll have time for questions.

Speaker 2: Our main objective today is to bring you up to date, organize it, some information and provide clarity on our plans. So I was caught with a quick update on performance in the quarter, which was really good overall, well into double digits on revenue and adjusted EBITDA, and I can combine operating based.

Our main objective today is to bring you up to date organize some information and provide clarity on our plans.

I'll start with a quick update on performance in the quarter, which was really good overall up well into double digits on revenue and adjusted EBITDA.

Combined operating basis Okay.

Speaker 2: I'll give an update on the status of the two satellite anomalies.

I'll give an update on the status of the two satellite anomaly anomalies.

Speaker 2: lay out the financial implications of putting those behind us and describe the Go Forward plan. And then I'll give a quick reminder of our overall strategy.

The financial implications of putting those behind us and describe the go forward plan.

I'll give a quick reminder of our overall strategy and why we're well positioned for growth primarily in the 108 billion dollar market for commercial and government global mobility.

Speaker 2: and why we're well positioned for growth, primarily in the $108 billion market for commercial and government, global mobility.

Speaker 2: So after that, Guru will go into more depth on the quarter with business highlights and financial results, give a little bit more color on the Inmarsat integration and give an update on our fiscal year 24 and 25 growth outlook.

And after that we will go into more depth on the quarter with business highlights and financial results give a little bit more color on the inmarsat integration and give an update on our fiscal year 'twenty four and 'twenty five growth outlook.

Speaker 2: Just for context at the beginning, we have a good track record of identifying and building profitable and enduring positions in a succession of specific somewhat esoteric markets.

Just for context at the beginning we have a good track record of identifying and building profitable and enduring physicians in a succession of specific somewhat esoteric market segments, including against much larger competitors.

Speaker 4: including against much larger competitors. We think the sale of the tactical data links business earlier this year to a leading aerospace and defense company for about $2 billion, it's indicative of our ability to build long-term value, while also transforming target market segments.

The sale of the tactical data links business earlier, this year to a leading aerospace and defense company.

$2 billion is indicative of our ability to build long term value, while also transforming target market segments.

Speaker 4: We've been targeting global mobile broadband for over a decade.

Been targeting global local broadband for over a decade, and we've had a big impact on the commercial in flight connectivity market in the U S.

Speaker 4: and we've had a big impact on the commercial in-flight connectivity market in the US.

Speaker 4: We aim to leverage our technology and domain knowledge and the extensive operational data that we've accumulated along with Inmarsat's heritage to lead specific segments of this rapidly growing market for commercial and government global mobile. We can do it by focusing on quantitative performance metrics that are critical to our customers and bringing together the assets, skills, and ecosystems needed to win on those metrics.

We aim to leverage our technology and domain knowledge and the extensive operational data that we've accumulated.

Along with Inmarsat is heritage to reach specific segments of this rapidly growing market for commercial and government global mobile.

We can do it by focusing on core.

Quantitative performance metrics that are critical to our customers and bring them together the asset skills and ecosystem needed to win on those metrics.

Speaker 4: Our financial performance in the second quarter demonstrates strength in global mobility. Core operating financial results were good across the business, both at Visehat and Legacy in Marcept. Excluding the one-time benefit of a legal settlement, operating revenue is up 16 percent year over year on a combined basis.

Our financial performance in the second quarter demonstrate the strength and global mobility core operating financial results were good across the business, both advice and legacy Inmarsat.

Excluding the onetime benefit of a legal settlement operating revenue was up 16% year.

Year over year on a combined basis, and then excluding that onetime mitigation benefit and the satellite impairment charges operating adjusted EBITDA was up 20%.

Speaker 2: and then excluding that one-time mitigation benefit. And this had on impairment charges operating adjusted EBITDA was up 20%

Speaker 4: Our aviation business continues steady growth. Our customers fleet of planes is up to 3,350 and still growing. Passing your engagement is growing and we've got a robust pipeline of new orders.

Our aviation business continues steady growth in our customers fleet of planes is up to 3300 50 and still growing passenger engagement is growing and we've got a robust pipeline of new orders.

Speaker 4: Information assurance products for secure government data centers and antenna systems are also growing very well. Maritime is growing modestly and we see opportunities to build momentum there.

Information assurance products for secured government data centers and antenna systems are also growing very well.

Our time is growing modestly and we see opportunities to build momentum there.

Speaker 2: Our outlook is also quite good. We anticipate continued growth in revenue and adjusted EBITDA during fiscal year 24 and fiscal year 25.

Outlook is also quite good we anticipate continued growth in revenue and adjusted EBITDA during fiscal year 2004, and fiscal year 'twenty five.

Speaker 4: and to reach free cash flow positive in the first half of calendar 25.

And to reach free cash flow positive in the first half of calendar 'twenty five.

Speaker 2: So go on to the satellite anomalies. Those on 5-SAT-3, fight one, and in March that 6-S Fight to this summer.

So go out to the satellite anomalies.

<unk>.

On Viasat 351, and Inmarsat six by two this summer.

Speaker 4: two totally different events. They were setbacks, but we have plans to deal with each. The I6F2 will result in a total write-off. A claim for about $349 million will be submitted to insurers for sure.

Two totally different events they were setbacks, but we have plans to deal with each.

Alright.

Two will result in a total write offs a claim for about $349 million will be submitted to insurers shortly.

Speaker 2: I6F2's near-term contribution to revenue was expected to be small. It was part of a longer-term planned evolution of in-marsats redundant global L band coverage to a newer generation of Saddam.

<unk> <unk> near term contribution to revenue was expected to be small.

It was part of a longer term planned evolution of Inmarsat redundant global L band coverage to a new generation of satellites.

Speaker 2: We have a provision in our updated capital budget to replace that mission of I6F2 in a timely manner.

We have a provision in our updated capital budget to replace that mission.

<unk> success to in a timely manner.

Speaker 4: Vice at three, flight one is impaired. And as we disclosed recently, we expect it will have less than 10% of nominal total throughput. We expect to file an insurance claim miscalendar year for about $421 million.

Thanks at 351 is impaired and as we disclosed recently, we expect it will have less than 10% of nominal total throughput.

We expect to file an insurance claim this calendar year for about $421 million.

Speaker 4: The anomaly affected what's called a feteroing antenna. The rest of the satellite has operated nominally or better today.

The anomaly affected what's called a feeder link antenna the rest of the satellite is operated nominally or better to date.

Speaker 4: Our focus has been on characterizing the affected antenna so we can compensate for the anomaly optimally. We've made a lot of progress there. The satellite system is software-defined on the ground, which gives us a lot more tools that we can use.

Focus has been on characterizing the effected antenna. So we can compensate for the anomaly optimally.

We've made a lot of progress there the satellite system.

Software defined on the ground, which gives us a lot more tools that we can use we can use them to optimize available throughput for global mobility, especially by dynamically staring coverage beams on moving airplanes and ships and to the busiest airports seaports or wherever there is instantaneous demand is greatest.

Speaker 4: We can use them to optimize available throughput for global mobility, especially by dynamically steering coverage beams on moving airplanes and ships, and to the busiest airports, seaports, or wherever there's instantaneous demand is greater.

Speaker 4: We also can effectively increase the capacity of our other satellites in our fleet for global mobility by the way we use each of the ViASPAT-3s, including ViASP-1. Our fixed U.S. business, though, depends more on the volume of bandwidth than on dynamic beam steering, so we expect it will decline until we launch and position the next ViASP-3. We expect to grow in fiscal 24 and fiscal 25 nonetheless.

We also can effectively increase the capacity of our other satellites in our fleet for global mobility, either way, we use each of the Viasat three's, including Taiwan.

Our fixed U S business.

It's more on the volume of bandwidth and on.

Dynamic beams, Gary So we expect it will decline until we launch and position the next Viasat three.

We expect to grow in fiscal 'twenty four in fiscal 'twenty, five nonetheless, driven by the backlog and outlook and global mobility and government.

Speaker 4: given by the backlog and outlook in global mobility and government.

Speaker 4: By that three, fight three has a lunch contract now for the fourth quarter of calendar 24 about a year from now.

Pass at 353, Hasnt launch contract now for the fourth quarter of calendar 'twenty for about a year from now.

Speaker 4: Either 5-Sat 3-Pi 2 or 5-3 would replace 5-1 over the Americas. And then 5-1 would be...

Neither viasat three by two or three would replace alright, one over to the Americans and then five one.

David.

Speaker 4: Report on the fight one antenna root cause and then the corrective actions for fight two from the antenna manufacturer is...

On the five one antenna root cause and then the corrective actions for <unk> two from the antenna manufacturer is.

Speaker 4: planned for next week. The Fight 2 satellite is awaiting corrective actions to the effective antenna and then integration with the completed spacecraft. So we'll give an update on that schedule next quarter.

Land for next week.

Slide two satellite is awaiting corrective actions to be effective the antenna and the integration with the completed spacecraft. So we will give an update on that schedule next quarter.

Speaker 2: The other satellite update is that we don't anticipate additional material investment in VICE-4. And we've written down that asset.

The other satellite update is that we don't anticipate additional material investment in Viasat, four and we've written down that asset.

Speaker 2: It was designed prior to the AdVarsat acquisition when fixed services were a higher priority.

It was designed prior to the Inmarsat acquisition, when fixed services, where a higher priority.

Speaker 2: Given the timing on the FIOSAT-3s and our focus on mobility, its need date is farther out than originally planned, so deferring capital investment now saves several hundreds of millions of dollars in the near term, it accelerates our free cash flow generation, and it improves profitability.

Given the timing on the Viasat Three's and our focus on mobility. It's need date is farther out than originally planned so deferring capital investment now save several hundred.

Millions of dollars in the near term and accelerates our free cash flow generation and it improves profitability.

Speaker 2: We expect the key technology work that was performed on Bioset 4 will apply to a future broadband satellite that will deliver better returns in mobility applications.

We expect that key technology work that was performed on Viasat four will apply to a future broadband satellite that will deliver better returns in mobility applications.

Speaker 2: The end result is a write-off of the three satellite assets of about $900 million net of insurance. The schedule for Flight 1, remember, the build schedule for Flight 1 was much longer than for Flight 2 or 3 due to both COVID issues and learning curve. So its cost was higher than the others.

The end result is a write off of the three satellite assets of about $900 million net.

Net of insurance.

Schedule for one member.

The build schedule provided one was much longer than fruit by two or three due to COVID-19.

Covid issues and learning curve, so it's cost was higher than the others.

Speaker 4: The bulk of the write-off is due to flight by 3.5.1, high 6.5.2, about $350 million of capitalized interest.

The bulk of the write off is due to fly viasat 3165 to about $350 million of capitalized interest.

Speaker 4: So just briefly cut to our strategy before we cut a guru.

Yes.

I'll just I'll just briefly touch on our strategy before we got a guru.

Speaker 2: And just to make be sure, our strategy is to lead specific government commercial global mobility market segments that are common characteristics that drive value creation for our customers and for us.

And just to make sure our strategy is to lead specific government commercial global mobility market segments <unk> com.

Common characteristics that drive value creation for our customers and for us.

Speaker 2: So looking for broadband customers, this connectivity is directly coupled to operational needs or wants. And what customers are motivated to understand and measure.

So we're looking for broadband customers as connectivity is directly coupled to operational needs or wants.

And where customers are motivated to understand and measure the quality of connectivity that they need for those purposes.

Speaker 2: quality of connectivity that they need for those purposes.

Speaker 4: And we're looking for customers that want contract to assurance and get the connectivity they need for their missions. Over all the times and places their platforms travel. So that means measuring the times and places where connectivity is most stressed. Those congestion hotspots that can undermine achieving their operational purposes.

And we're looking for customers that want contractual assurance they get the connectivity they need for their emissions overall, the times and places their platforms.

So that means measuring the times and places where connectivity is most stressed those congestion hotspot that can undermine achieving their operational says we can attract and serve those customers by meeting specific granular service level commitments, and then giving them the data and insights they need to optimize their own financial performance.

Speaker 4: We can attract and serve those customers by being specific, granular, service level.

Speaker 2: and then giving them the data and insight they need to optimize their own financial performance. We think that describes a large and growing portion of the global mobile market. Our success in infight connectivity is the outcome of applying that strategy over a journey of discovery that we've taken with our airline customers.

We think that described a large and growing portion of the global mobile market.

Our success in in flight connectivity.

Outcome of applying that strategy over a journey of discovery and we've taken with our airline customers.

Speaker 2: First, quantifying the demand elasticity and value creation for different forms of infight Wi-Fi service offerings. And then measuring highly concentrated demand at big times at busy airports that comes with high passenger engagement. And where other services haven't really performed reliably.

Quantifying the demand elasticity and value creation for different forms of in flight Wi Fi service offerings.

And then measuring highly concentrated demand at peak times. It busy airports that comes with high passenger engagement and where other services Havent really performed reliably.

Speaker 2: And then finally, as good connectivity becomes more widely available across airlines and routes, it becomes critical to each airline to both differentiate their brand and their value propositions from other airlines, while also capturing the value that's created by that connectivity.

And then finally as good connectivity becomes more widely available across airlines and routes it becomes critical to each airline to both differentiate their brand and their value proposition from other airlines, while also capturing the value that's created by that connectivity.

Speaker 4: So we can apply these points to multiple market segments. Once a few customers understand the significance of connectivity measurements over entire routes and the hotspot challenges.

So we can apply these points to multiple market segments. Once a few hundred customers understand the significance of connectivity measurements over entire routes and the hotspot challenges.

Speaker 2: And then translate that into competitive advantage. It tends to drive change across entire market segments.

And then translate that into competitive advantage tends to drive change across entire market segments.

Speaker 2: The dynamic global coverage and beam steering of the Viasat-3 constellation, even with an impaired flight one, as well as the capabilities of the upcoming GX789 series support our strategy. So this continues to resonate with customers, and it's resulting in new business globally, including some examples this quarter, such as Korean Air, Malaysian Airlines, Atlantic Offshore, Porter Airlines, and with the U.S. Space Force and more.

Dynamic global coverage and beam steering of the Viasat three constellation, even with an impaired one as well as the capabilities of the upcoming <unk> 789 series support our strategy. So this.

To resonate with customers and it's resulting in new business globally, including some examples this quarter such as Korean Air Malaysian Airlines.

I think offshore airlines and with the U S space Force and more.

Speaker 4: The other important element of our strategy is a better leverage in Marseille's global Elband leadership. Elband is very well suited to low cost, highly reliable.

The other important element of our strategy as a better leverage Inmarsat Global L band leadership Hilton and is very well suited to low cost highly reliable whether resilient coverage for emergency voice and operational data and a growing opportunity to integrate both satellite and terrestrial coverage.

Speaker 4: weather-resilient coverage for emergency voice and operational data, and there's growing opportunity to integrate both satellite and terrestrial coverage.

Speaker 2: for Internet of Things and mainstream mobile devices. There's already substantial overlap in the customer base between our broadband and LBAN markets, and there's good opportunity to further differentiate our integrated service offering.

Sure.

Internet of things and mainstream mobile devices is already substantial overlap in the customer base between our broadband and L band markets and there's good opportunity to further differentiate our integrated service offerings.

Speaker 4: So our near-term growth outlook is good, and longer-term is even more exciting.

So near term our near term growth outlook is good and longer terms, even more exciting as part of our comprehensive review upon closing the Inmarsat acquisition, we're refining our strategy to make sure. We're focused on the right market segments and refining value propositions resonate with customers.

Speaker 4: As part of our comprehensive review upon closing the Inmarsat acquisition, we're refining our strategy to make sure we're focused on the right market segments and refining value propositions that resonate with customers. As we complete and deploy the capital investments to take those value propositions global,

And as we complete and deploy the capital investments to take those value propositions global.

Speaker 2: that we generate the cash flow we're aiming for. We're planning an investor day in March of 2024, where we'll go into more depth on the analytics and the customer journeys that I'm describing that underpin our approach.

We generate the cash flow arrangements, where we're planning an investor day in March of 2024, where we will go into more depth on the analytics and the customer journeys describing that underpin our approach.

Speaker 2: So now, I'll hand it over to Guru who will talk about our second.

So now.

Turn it over to Gary who will talk about our second quarter.

Speaker 5: Great. Thanks, Mark. I will cover three key topics today. Our Q2 financial performance, integration and transformation, and an update on our combined outcome.

Thanks, Mark I will cover three key topics today, our Q2 financial performance integration and transformation.

And an update on our combined outlook.

Speaker 5: We are executing on our strategy and delivered a strong core financial and operational performance during Q2. Core revenue and adjusted EBITDA both grew by double digits year over year driven by our government, aviation and maritime business.

We are executing on our strategy and delivered a strong core financial and operational performance during Q2.

Core revenue and adjusted EBITDA, both grew by double digits year over year, driven by our government aviation and maritime businesses legacy Inmarsat and <unk>, both performed well with strong contributions.

Speaker 5: legacy in Marsat and Viasat both performed well with strong contributions.

Some of the key highlights from the quarter include.

Speaker 5: Government systems had another quarter of strong demand for our information assurance encryption products, which drove product revenue up 50% year-over-year. And during the quarter, we were awarded a proliferated LEO satellite-based services contract by the U.S. Space Force as part of their $900 million IDIQ program.

Government systems had another quarter of strong demand for our information assurance encryption products, which drove product revenue up 50% year over year.

And during the quarter, we were awarded a proliferating Leo satellite based services contract by the U S space Force as part of their 900 million IQ program.

Services will be comprised of our current and future satellite constellation capabilities as well as our partner Leo MEO networks to Delaware integrated multi orbit solutions that may include space related services.

Speaker 5: Services will be comprised of our current and future satellite constellation capabilities as well as a partner Leo Mio Networks to deliver integrated multi-orbit solutions that may include space relay services.

Speaker 5: Next, UK National Cyber Security Center Evaluator, our next generation data test cryptography solid state drive for top secret classification, which was successful and we are only hardware encrypted SSD using the industry standard interface and form factor to attain the status.

<unk> U K National Cyber security centre evaluate or a next generation data types cryptographic solid state drive for top secret classification, which was successful and we are only hardware encrypted.

SSD using the industry standard interface and form factor to attain this status.

Speaker 5: Recent trends in satellite services continued with strong growth in commercial IFC, which ended the quarter with 3,350 aircraft in service, up 19% year-over-year on a combined basis, and 1,600 aircraft in backloads.

Recent trends in satellite services continued with strong growth in commercial IFC, which ended the quarter with 3350 aircraft in service up 19% year over year on a combined basis.

<unk> <unk> hundred aircraft in backlog.

U S fixed broadband fixed broadband revenue declined as fewer residential subscribers were partially offset by higher ARPA.

Speaker 5: US 6 broad fixed broadband revenue declined as fewer residential subscribers. They're partially offset by higher output.

Speaker 5: We continue to reallocate bandwidth to support our rapid IFC growth.

We continue to reallocate bandwidth to support our rapid IFC growth.

Speaker 5: In addition, we announced several commercial air customer updates, as Mark mentioned earlier, Malaysia Airlines selection of our IFE solution for its new Boeing 737-8 aircraft, Korean Air selection of our IFC solution for its upcoming Airbus A321neo aircraft, and additional orders for both IFE and IFC solutions on Porter Airlines new Embraer E195-E2 aircraft.

In addition, we announced several commercial air customer updates as Mark mentioned earlier, Malaysia Airlines selection of our <unk> solution for its new Boeing 737, eight aircraft Korean Air selection of our IFC solution for its upcoming Airbus <unk> hundred 21, Neo aircraft and <unk>.

<unk> orders for both <unk> and IFC solutions on quarter Airlines, New Embraer E 195 Dash E. Two aircrafts.

Speaker 5: Maritime revenue continued modest growth. The total K-A band mobility platforms, which includes vessels and aircraft, grew to over 19,000, up about 2 percent sequentially.

Maritime revenue continued modest growth in total K band mobility platforms, which includes vessels and aircrafts grew to over 19000 up about 2% sequentially.

Speaker 5: Finally, awards for the quarter were up 15% year-over-year to $1 billion. Backlog was $3.6 billion at quarter end.

Finally awards for the quarter were up 15% year over year to $1 billion backlog was $3 6 billion at quarter end.

We have a couple of one off items in future.

Speaker 5: In the commercial network segment, we recognized a non-recurring benefit to product revenue of $95 million and adjusted EBITDA benefit of $86 million as a result of litigation settlement.

And the commercial network segment, we recognized a nonrecurring benefit to product revenue of $95 million and adjusted EBITDA benefit of $86 million as a result of litigation settlement.

Speaker 5: In the prior year period, we recorded revenue of $56 million and adjusted EBITDA of $51 million related to the same litigation.

In the prior year period, we recorded revenue of $56 million and adjusted EBITDA of $51 million related to the same litigation.

Speaker 5: We also announced 900 million of net asset impairment charges, primarily related to the previously announced satellite anomalies, which includes approximately 350 million of capitalized interest.

We also announced $900 million of net asset impairment charges, primarily related to the previously announced satellite anomalies, which includes approximately $350 million of capitalized interest.

Now some color on the financials.

Speaker 5: Q2 FY 2024 revenue was $1.2 billion. This was up 85% compared to revenue from continuing operations of $664 million in Q2 FY 2023.

Q2, FY 2024 revenue was $1 2 billion. This was up 85% compared to revenue from continuing operations of $664 million in Q2 FY 2023.

Speaker 5: Including the non-recurring litigation benefit from both years, and including Inmarsat in both years, Q2 2024 revenue was up 16% year-over-year.

Excluding the nonrecurring litigation benefit from both years and including Inmarsat in both years Q2, 2024 revenue was up 16% year over year.

Speaker 5: Net loss totaled $767 million for fiscal Q2, which increased from $48 million net loss in the year ago period, primarily due to net asset impairment charges related to satellite anomalies.

Net loss totaled 767 million for fiscal Q2, which increased from $48 million net loss in the year ago period, primarily due to net asset impairment charges related to satellite anomalies.

Speaker 5: Our just a bit down for the quarter was 486 million and increase of 210% year over year from continuing operations, excluding the non-recurring litigation benefit from both years, asset impairment charges, and including in Mar-Sat in both years, Q2 FY 2024, our just a bit down was up, 20% year over year.

Our adjusted EBITDA for the quarter was $486 million, an increase of 210% year over year from continuing operations, excluding the nonrecurring litigation benefit from both years asset impairment charges and including Inmarsat in both years Q2 FY 2012.

For adjusted EBITDA was up 20% year over year.

Speaker 5: Sequentially, net leverage decreased to approximately 3.7 times estimated combined last 12 months adjusted EBITDA as of Q2 FY 2024, which is a 0.2 times sequential improvement and substantially favorable to the plan of the time the Marsette acquisition was announced.

Sequentially net leverage decreased to approximately three seven times estimated combined last 12 months adjusted EBITDA as of Q2 FY 2024.

Which is a 0.2 times sequential improvement and substantially favorable to the plan at the time, the Inmarsat acquisition was announced.

Speaker 5: We have significant financial flexibility with more than 3 billion of liquidity, including approximately 2 billion of cash and cash equivalents on our balance sheet at quarter-end and no near-term maturity.

We have significant financial flexibility with more than $3 billion of liquidity, including approximately $2 billion of cash and cash equivalents on our balance sheet at quarter end and no near term maturities and.

Speaker 5: and we have a fully funded path to positive free cash flow.

And we have a fully funded path to positive free cash flow.

In addition to our solid results.

Speaker 5: We were also proud to be recognized by the U.S. government at this year's G20 Summit for our work to help close the gender digital divide and bring Internet access to women in remote areas of the world.

We were also proud to be recognized by the U S government at this year's G 20 summit for our work to help close the agenda digital divide and bring internet access to women in remote areas of the world.

Speaker 5: You can find a more complete review of our results in the Shareholder letter that we posted today.

You can find a more complete review of our results in the shareholder letter that we posted today.

Speaker 5: Overall, as you heard from Mark as well, this was an excellent quarter for YSA.

Overall as you heard from Marc as well, which this was an excellent quarter for <unk>.

Speaker 5: Now moving to the next topic, which is integration and transformation.

Now moving to the next topic, which is integration and transformation.

Speaker 5: Our integration of Inmarsat and the transformation of our combined organization is going well and is ahead of the plan, bringing greater certainty that we will deliver and exceed our synergy goals for the Inmarsat acquisition.

Our integration of Inmarsat and the transformation of our combined organization is going well and is ahead of the plan, bringing greater certainty that we will deliver and exceed our synergy goals for the Inmarsat acquisition.

Speaker 5: Last week, we took the required labor actions to achieve annual operating expense savings of approximately 100 million beginning fiscal year 2025, which positions the company for improved profitability going forward. This timeline represents a multi-year acceleration relative to our target.

Last week, we took the required labor actions to achieve annual operating expense savings of approximately 100 million beginning fiscal year 2025, which positions the company for improved profitability going forward. This timeline represents a multiyear acceleration relative to our targa.

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Speaker 5: Separately, the benefit to capital expenditures was included in our FY25 guidance of $1.4 billion to $1.5 billion announced last month.

Separately the benefit to capital expenditures was included in our FY 'twenty five guidance of $1 4 billion to $1 5 billion announced last month.

Speaker 5: We expect to incur 45 million of one time costs related to these actions.

We expect to incur $45 million of one time costs related to these actions.

Speaker 5: As financial discipline remains at our priority, we are working every opportunity to improve our cost structure and operational efficiency, including taking a closer look at our third-party procurement spend, more disciplined capital expenditure, and benchmarking to accelerate the timing and magnitude of free cash flow.

Financial discipline remains a top priority we are working every opportunity to improve our cost structure and operational efficiency, including taking a closer look at our third party procurement spend more disciplined capital expenditure and benchmarking to accelerate the timing and.

Magnus <unk> of free cash flow.

Now transitioning to outlook.

Speaker 5: I'll wrap up with the high-level summary of our financial outlook. We are excluding satellite impairment charges and the non-recurring benefit from the litigation settlement announced today from our guidance.

I'll wrap up with a high level summary of our financial outlook, we are excluding satellite impairment charges and the nonrecurring benefit from the litigation settlement announced today from our guidance.

Speaker 5: For FY 2024, we expect revenue growth in the high single digit percentage is over FY 2023 for the combined company. With revenue growing to a range of 4.1 billion, to 4.25 billion.

For FY 2024, we expect revenue growth in the high single digit percentages over FY 2023 for the combined company with revenue growing to a range of $4 1 billion to $4 two 5 billion.

Speaker 5: For FY 2024, we expect adjusted EBITDA growth in the mid single digit percentages over FY 2023 for the combined company.

For FY 2024, we expect adjusted EBITDA growth in the mid single digit percentages over FY 2023 for the combined company.

Speaker 5: We expect FY2024 adjusted EBITDA to grow to a range of 1.25 billion to 1.3 billion.

We expect FY 'twenty to 'twenty four adjusted EBITDA to grow to a range of 125 billion to $1 3 billion.

Speaker 5: In FY 2025, we continue to expect both revenue and our just-it-a-bit-da to grow.

In FY 2025, we continue to expect both revenue and adjusted EBITDA to grow.

Speaker 5: FY 2024 capital expenditures are expected to be approximately $1.7 billion, then decline in FY 2025 to a range of $1.4 billion to $1.5 billion, inclusive of a placeholder for the potential funding of an I-6 F2 replacement.

FY 2024 capital expenditures are expected to be approximately $1 7 billion than decline in FY 2025 to a range of $1 4 billion to $1 5 billion inclusive of a placeholder for the potential funding of a nice except to replacements.

Speaker 5: Capital expenditure guidance does not include the expected 770 million benefit from insurance recovery.

Capital expenditure guidance does not include the expected $770 million benefit from insurance recoveries.

Speaker 5: Note that we include capitalized interest in our Capix Kite.

Note that we include capitalized interest in our Capex guidance.

Yes.

Speaker 5: Our path to positive free cash flow in the first half of calendar year 2025 is driven by sourcing growth from our large and growing markets, which includes government, aviation, and maritime.

Our path to positive free cash flow in the first half of calendar year 2025 is driven by sourcing growth from our large and growing markets, which include government aviation and maritime.

Speaker 5: Realizing realization of our sizable backlog, meaningful cost rationalization and a disciplined capics spending, which benefits from the natural decline as we launch or settle.

Realizing realization of our sizable backlog meaningful cost rationalization, and a disciplined capex capex spending which benefits from the natural decline as we launch our satellites, we are driving cost structure improvements with synergies scale and benchmarking.

Speaker 5: We are driving cost structure improvements with synergies, scale, and benchmarking.

Speaker 5: And the magnitude of free cash flow is expected to increase meaningfully as we place wires at 3F2 and F3 satellites into service.

And the magnitude of free cash flow is expected to increase meaningfully as we place viasat three up two and half three satellites into service.

Speaker 5: So there you have it. You know, while we've had unfortunate satellites at Bax, we have a very good hand. And we are optimizing and growing the strong assets we have. Our operational performance in Q2 was excellent. And we are on track to achieve very material synergy value than expect the combined company to grow revenue and our just a bit dyne FY24 and FY25, while creating a powerful global mobility and government that period potatoes.

So there you have it while we've had unfortunate satellite setbacks, we have a very good hat and we are optimizing and growing the strong assets. We have our operational performance in Q2 was excellent and we are on track to achieve very material synergy value then expect the combined company to grow revenue and adjusted EBITDA.

Why 24, and FY 'twenty, five while creating a powerful global mobility and government business and to be clear our FY 'twenty five growth is based on a full 12 months of Inmarsat in FY 'twenty four but.

Speaker 5: And to be clear, our FY25 growth is based on a full 12 months of in-marsat in FY24. But that I'll pass it back tomorrow.

That I will pass it back to Mark.

Speaker 4: Okay, thanks, Drew. And with that, I think we'll open it up for class.

Okay. Thanks Curt.

With that I think will.

Open it up for questions.

Speaker 1: Thank you and ladies and gentlemen, if you have a question, please press star once on your telephone keypad. We'll take the first question from Phil Cusic, JP Morgan.

Thank you ladies and gentlemen, if you have a question. Please press star one on your telephone keypad will take the first question from Phil Cusick Jpmorgan.

Hi, Thank you.

Speaker 6: I guess a couple of things I can first, was the decision to move away from the VICEF4 and focus on mobility, the statement on the viability of home broadband from satellite or is it more of a timing and capital needs?

I guess a couple if I can first was the decision to move away from the $5 four and focus on mobility statement on the viability of home broadband from satellite or is that more of a timing and capital needs.

Speaker 6: And then second, can you talk about the plans for the cash on the balance sheet and the insured proceeds coming in? Listen, get at a discount, does it make sense to pick off that or do you wanna have this cash on the balance sheet

And then second can you talk about the plans for the cash on the balance sheet and the insurance proceeds coming in.

Get the discount does it makes sense to take off of that or do you want to have this cash on the balance sheet for a long time.

Speaker 7: Okay, yeah, first on the, on the I said four, the, you know, we, we, we,

Okay, Yeah first time.

Viasat four.

B.

We have been.

Speaker 7: targeting the mobility broadband market for, you know, probably for about as long as we've been in, you know, since we launched BISAT-1, and, you know, it's because...

Targeting.

Mobility broadband market.

For about as long as we've been since we launched Viasat one.

And because.

Speaker 7: The customers value the services better. We're not dealing with, we're competing with government subsidies. And the other thing now that's really come to light, especially in our experience and in flight, and in the data that we have from InMarsat in the maritime business, is that that, you know, dealing with that mobility factor and the concentration of demand is a really hard and tricky...

The customers value the services better, we're not dealing with or competing with government subsidies and the other thing now that that has really come to light, especially in our experience and insight and the data that we have from inmarsat in the maritime business is that that drilling.

With that mobility factor.

And the concentration of demand.

Really hard and tricky.

Speaker 4: a problem we think we're really well suited to do that. And whereas, you know, the original design applies that for that we started really.

We think we're really well suited to do that and whereas the original design if I set forth when we started.

Really was about.

Speaker 2: large bulk amounts of bandwidth at low cost. What we're really going to be leveraging is global coverage and the ability to put that demand in the same patterns as the customer's usage requires. So we feel like we can do better in that we've got seven other KA band satellites that will be launched over about the next three years.

Large bulk amounts of bandwidth at low cost.

We're really going to be leveraging is as global coverage and the ability to put that demand.

In the same patterns as the customer's usage requires.

So we feel like we can do better.

We've got seven other ku band satellites.

That will be launched over about the next three years so.

Speaker 7: So we, you know, so we felt it made complete economic sense to, uh, to, you know, to.

So we felt it made complete economic sense too.

Yes.

Speaker 2: focus on those, the vulnerability markets, and then bring a new broadband mobility satellite to market following those later on. You know, they're at the end of the decade.

Focus on those of mobility market, and then bring a new broadband mobility satellite to market. Following those later on.

At the end of the decade.

Speaker 8: So I can hit your question on the cash on the balance sheet. So I think I'll couple things. One, just want to give them the credit markets, want to stay in a very good liquid position and keep that liquidity and agility on the balance sheet. I think if you think about the net carry given the.

And so I can.

Your question on the cash on the balance sheet. So I think a couple of Teng.

And one just one given the credit markets want to stay in a very good liquid position.

That liquidity and agility.

On the balance sheet and I think if you think about the net carry given.

Speaker 8: The investments we've been able to make and note of the tax and impacts of the interest funds, and the benefits we get there.

The investments, we've been able to make and net of the tax impact.

Impact of the interest expense and the benefits we get there is it is.

Speaker 8: it's not as painful to carry that flexibility. And so that's kind of a guidepost for us right now.

Not as.

Painful to carry that flexibility and so that's kind of a.

Guidepost for us right now.

Thank you.

Speaker 1: Next up, we'll hear from Mike Crossberg, B. Riley Security.

Next up we'll have some Mike Crawford B Riley security.

Speaker 9: Thank you. In commercial networks, you have this Cisco settlement off of the soil.

Thank you.

In commercial networks do you have this snow settlement.

<unk>.

Speaker 9: jury award that you won against Acacia when its co-founder stole some

Jerry Award that you won against Acacia when its telephone or stalled.

Speaker 9: code coding structure and email that is there employees but so now you've got two elements in them but also there's this ongoing licensing and royalty requirement that I guess is going to improve ongoing commercial network EBITDAZ or any way you can quantify what that might be or how long that might last.

So tolling structure, an email that their employees, but so now you've got to sell most of them, but also there is this ongoing.

Licensing and royalty.

Requirement that I guess is going to improve ongoing commercial network EBITDA is there any way you can quantify what that might be or how long that might last.

Speaker 8: Hey Mike, yeah, we do have some ongoing benefits from the agreement that the terms of the agreement are confidential. So we can't really give you the details there. We have included the benefits we expect in the outlook.

Hey, Mike and yes, we do have some ongoing benefits from the agreement that the terms of the agreement are confidential. So we can't really give you. The details there. We have included the benefit we expect in the outlet.

Yes.

Speaker 9: Okay, thank you, Sean. And then regarding the status of, I guess, the VySAT 3 F2 and F3 satellite, so is there...

Okay. Thank you and then.

Regarding.

The status.

Uh huh.

I guess the Viasat three <unk> III satellite so is there.

Speaker 9: You're waiting to attach the final refactor component. Like how is there a way you can quantify the timing of some of these steps so we know when potentially that could be at launch, let's say if you got it all cleared to move ahead, say next week.

Youre waiting too.

That's the final reflector component.

Uh huh.

Is there a way.

Hey, you can quantify that.

I mean, some of these steps so we know when potentially that could be a launch let's say if you got it.

Clear to move ahead say next week.

Speaker 7: Okay, yeah, the schedule for integration of the reflector once it's delivered to Boeing is pretty clear. That's the thing that we're gonna get more information on next week is what that lead time will be for the reflector delivery. So we have a-

Okay.

Schedule for integration of the refractor once it's delivered to Boeing is pretty clear that the thing that we're going to get more information on next week is what that lead time will be for the reflected delivery.

Speaker 7: but I think we have a very good understanding of what step in the deployment process failed.

Yes.

We have a very good understanding of what step in the.

And the deployment process.

Failed.

Speaker 4: how to avoid that on the next deployment. And then there's potentially even additional measures that we could use to back those up. That's what we'll find out. And we'll have that discussion. We'll think it'd be better to get the data before we speculate. For fight three, the fight three's been on the same schedule for quite a long time.

And how to avoid that.

Next appointment and then.

There is potentially even additional measures that we could use tobaccos.

We'll find out.

We will have that discussion will.

It would be better to get the data before we speculate for five three to 503 has been on.

Same schedule for quite a long time we.

Speaker 2: I think since the last time we reported, we executed a launch contract for, and that's for the Q4, which was really driven by launch vehicle availability, launch window availability. So that one, I think is that, that one was pretty confident in. You know, then the issue will just be, if it turns out that the two satellites end up being very close together, we'll figure out how to prioritize.

I think since the last time, we reported we executed a launch contract for and that was that's for the Q4, which was really driven by launch vehicle availability window availability.

So that one I think that one.

Pretty confident in.

Then the issue will just be if it turns out that the two satellites ended up being very close together.

About how to prioritize.

Speaker 2: how to prioritize them or the extent to which we could do them both at the same time if that was a case.

How to prioritize them or the extent to which we can do them. Both at the same time if that was the case.

Speaker 9: Okay, thank you, Mark. And then just maybe two really quick ones. You mentioned space force mobility services. Is that something that's new? And is that something that would be show up in government systems or satellite services?

Okay. Thank you Mark and then just maybe two really quick ones.

You mentioned space Force mobility services is that something thats, new and is that something that would be show up in government systems, our satellite services.

Speaker 7: that would show up in government systems and it's, yeah, it is new. It's new for us and it's a little bit unique to our networking services, our K-POP, more of networking technology and our services.

That would show up in government systems and it's.

Yes, it is new it's new for us and it's.

<unk> Nikko.

Our networking services.

More of a networking technology and our services folks.

Speaker 9: Okay, thank you. And then the last one is just, did I hear correctly that the IP from Bioset 4, even though it was close to give you some kind of sevenfold increase in capacity versus say a Bioset 3, that there's no way to put any of those innovations in any of these next seven K band satellites that are launching, but it would, first we would see what would be in the, in a mobility satellite after that, is that what I heard?

Okay. Thank you and then the last one just did I hear correctly that the IP from Viasat or even though it was supposed to give you some kind of a seven fold increase in capacity versus say a viasat three.

There is no way to put any of those innovations in any of these next seven K band satellites that are launching but but but first we would say it would be in the in the.

Mobility satellite after that is that what I heard.

Speaker 2: Yeah. So the, I mean, the seven satellites that are under construction are, you know, all in very, well, at least the Viasat-3s and the GX-10s are pretty close to completion. The GX-7, 8, and 9 are also already, they're well underway. The, so they don't go, those techniques will go into the next.

Yes, so I mean, the the seven satellites that are under construction are all in very well leased.

The viasat threes, and the gx tens or <unk>.

Pretty close to completion.

<unk> 789 are also already they are well underway.

So those.

Those techniques will go into the next.

Speaker 4: The next generation broadband one. In the main thing that we're really focused on.

The next generation broadband in the main the main thing that we're really focused on is getting very large field of view and this dynamic beam hopping and improving.

Speaker 7: getting very large field of view in this dynamic beam hopping and improving, you know, improving not just...

We're proving that Jeff.

Speaker 4: The raw capacity, but the capacity that we deliver.

The raw capacity, but the capacity that we deliver overlaid on top of a demand distributions that were seeing in these mobility markets, which are.

Speaker 7: Overlaid on top of the demand distributions that we're seeing in these mobility markets, which are we we we spent some time discussing on our shareholder presentation in September , but those Being able to match those patterns is really really valuable and so that we think that's a better metric for value creation

We spent some time discussing other shareholder presentation in September.

Yes.

Being able to match those patterns has really really valuable and so we think that's a better metric for value creation.

Okay. Thank you very much.

Hi.

Speaker 1: Next up, you have a question from Rick Prentice, Raymond James.

Next at the other question from Ric Prentiss with Raymond James.

Good afternoon everybody.

Hi, Rick.

Speaker 10: This is the afternoon, but first, I appreciate the guidance kind of clarity, helping us understand growth rates, but also dollars that really helped us. There's a lot of moving pieces here obviously. One question, and two, I think I heard you say that the fiscal 24 revenue guidance would

Yeah.

It will be absolute, but depreciation guidance credit clarity, helping us understand growth rates, but also that will help them. So theres a lot of moving pieces here obviously.

One question on <unk>.

I heard you say.

24, our revenue guidance.

Speaker 10: exclude, well let me just ask the question this way, does the revenue guidance include or exclude the the litigation and the

Exclude.

Now let me just ask the question. This way does the revenue guidance include or exclude the <unk>.

The litigation and the revenue.

Speaker 8: That excludes the non-recurring part of that, Rick. The growth percentage, the growth percentage does, but the range and the growth percentage. Yes. Both. Both. That excludes the effect of the non-recurring for Acacia.

That's correct that.

That excludes the nonrecurring part of that.

Nick.

The growth the growth percentages.

And the range and the range ambiguous.

Yes.

But it excludes the effects of the nonrecurring for Acacia.

Okay. Thank you.

Got it.

Speaker 8: Yeah, I was gonna say, Rick, and just wanting to clarify in the dollars, only include 10 months of immerse out.

Yes, I was going to say.

And just one thing to clarify in the dollars and only include 10 months.

Yeah.

Speaker 10: We're going to have to present our apples to apples 12 months, 12 months.

Yes.

Percents are apples to apples 12 months 12 months.

Speaker 10: or a trend? Yes. Right. Exactly. Okay. Good. Good. Yeah. Because in the Cheryl or letter, I picked up that the eBUT was excluding the litigation. And so the revenue is excluded as well. Okay. Cool.

Alright trend yes.

Okay. Good.

The shareholder letter I picked up that the EBITDA was excluding litigation and so the revenues are excluded.

Yeah.

Speaker 10: on growth in fiscal 25, is there any way that tees out kind of a zip code? Are we talking low single digit mid single digit high single digit teams? Now what should we think about? What does grow revenue in EBITDA and fiscal 25 mean? And that would be I think a 12-month-over-12-month comparison also.

Growth in 'twenty fiscal 'twenty five.

Any way to tease out kind of the ZIP code, we're talking low single digit mid single digit high single digit.

What should we think about what does grow revenue and EBITDA in fiscal 'twenty five need and that would be I think a 12 month over 12 month comparison also.

Speaker 4: Yeah, Rick, we are not commenting on that at this point. I think we are. We'll get next quarter. I think the quarter will give you more cloud of death. It'll be closer. We'll be closer to it. We'll be on a given. Uh, there are rain.

Yeah, Rick we're not commenting on that at this point I think.

Okay got next quarter next quarter next quarter, we'll give you more clarity, yes, there'll be closer will be closer to it and we'll be able to give it.

Right.

Speaker 10: Okay, okay, that helps a lot. And then piggybacking on Phil's question a little bit there, I mean for a long time, heck even when I was in the industry I used to think of satellite, the best use of bandwidth, the best bang for your buck was to go after these better margin areas, we call it the game, government, aviation, maritime, and enterprise. As you think about how you're running the business.

Okay. Okay that helps a lot and then piggybacking on <unk> question, a little bit there for a long time.

History I used to think of satellite that's use of bandwidth the best Bang for your Buck was to go after these better margin areas, we call. It the game government aviation Maritime and enterprise.

As you think about how we're running the business.

Speaker 10: And there are different ways in just lumping a lot of stuff into satellite services that might be more informed to help us understand the businesses or how you manage the business, both in financials and on metrics. Because it does feel to me like the government aviation maritime enterprise will probably the better segments to go after, but it's hard from the outside, really modeling it and understanding.

Is there a different way than just lumping a lot of stuff into satellite services.

Might be more informed to help us understand the businesses or how you manage the business both in financials and metrics.

It does feel to me like the government aviation Maritime and enterprise are probably the better segments to go after but it's hard from the outside really modeling it and understanding it.

Speaker 8: Yeah, so I think Rick, I'm interested in questions. It's just how are we thinking about things looking forward with this segment? And, you know, I think one thing you can see the service growth in our government business. So, you know, I do think you get some insight there, but, you know, I think the way that we look out the business going forward, I think that's something we're gonna continue to think about as the business evolves. So, I think we're gonna continue to think about things looking forward with this segment.

Yeah, So I think and Mike if I understand your question is just how are we thinking about things looking forward.

I think one thing you can see the service growth in our government business.

Thank you.

But I think the way that we.

Look at the business going forward I think that some time, we're again continuing to think about.

Wow.

Yes.

Speaker 10: And the last thing for me is, as we think about, again, zip code thought, fiscal 26 seems a long way away and appreciate the thought of what happens from fiscal 24 to 25 on CapEx.

Last one for me is as we think about.

ZIP code, but fiscal 'twenty six seems a long way away and I appreciate the thought of what happens from fiscal 'twenty four 'twenty five on Capex.

Speaker 10: We get the question a lot about what is maintenance catbacks versus kind of the growth catbacks as you put satellites up there. So anyway, you can kind of help us start thinking about what an ongoing maintenance level is for the business and then also what 26th direction might be in total catbacks.

We get the question a lot about what is maintenance capex versus kind of the growth Capex as you put satellites up there. So any way you can kind of help us start thinking about what our ongoing maintenance level is for the business and then also what 'twenty six.

We might be in total capex.

Speaker 8: I think the best way to think about that is just what we've talked about.

And Eric I think the best way to think about that.

What we've talked about is as we get the satellites into service, we're going to continue to see the capex ticked downward and so that's what we would expect from 25% 26 as well.

Speaker 8: As we get the satellites into service, we're going to continue to see the catbacks take downward. And so that's what we would expect from 25 to 26 as well. You know, our maintenance catbacks is maybe a better way to say it's our satellite catbacks is the dominant part of our capital spend.

And our maintenance Capex is maybe a better way to say is our satellite capex as the dominant iron.

Our capital spend.

Speaker 8: And so, you know, as we finish off on those fleets.

So as we finish off on those fleets.

Speaker 8: That's how you're driving that efficiency downward going forward.

And that's how you youre driving that efficiency downward.

Going forward.

Speaker 7: But I can add a little bit of the maintenance cap X.

Okay, I can add a little I can add a little bit up.

Maintenance Capex.

Speaker 7: Think about that. The dominant factor is the per capita subscriber bandwidth consumption, net of ARPU gain.

Think about that the dominant factor is the per capita.

Scriber bandwidth consumption right net of RP gains so that that is most evident in the consumer markets in these mobility markets.

Speaker 7: So that is most evident in the consumer markets. In these mobility markets, it's, you know, it's a, it's still present in things like, when you think of in-flight connectivity and passenger video consumption, you'll see some of those same effects, but not to the same extent that you'll see them in residential. So those are, and if you look at kind of our history, you'll see some of those same effects, but not to the same extent that you'll see them in residential.

It's fair.

It's still present in things like when you think of <unk>.

<unk> connectivity and passenger video consumption Youll see some of those same effects, but not to the same extent that youll see them in residential so that those are.

And if you look at kind of our history.

Speaker 7: Having been, you know, in the satellite services business for like for over 10 years, you know, one of the things we've been able to do is still get greater productivity out of our satellites, largely from migrating a lot of the bandwidth from mobility, from residential to mobility. And then the other thing that we've done in general really well

Having been in the satellite services business for over 10 years, one of the things we've been able to do still get greater productivity out of our satellite largely from migrating a lot of the bandwidth.

Mobility from.

Residential to mobility.

And then the other thing that we've done in general really well.

Speaker 7: improve the yield of the satellite. That is the pick of bits per megabyte investment in the satellite or the satellite utility by better matching supply and demand. So you have to kind of look at all those factors to end up peeting out maintenance cap-X from growth cap-X. But we've been able to...

Improved yields.

The gigabits per megabyte investment in the satellite or the satellite utility better matching supply and demand.

So you have to kind of look at all of those factors to end up teasing out.

Maintenance capex from growth Capex.

We've been able to.

Speaker 5: to drive growth from our CAPEX. I think to a pretty high degree, and I think we'll do even better on a go-forward basis with the emphasis on mobility. The one of the point I would add, Rick, is, if you look at what I mentioned on CAPEX.

Drive growth from our Capex I think to a pretty high degree and I think we'll do even better.

On a go forward basis with the emphasis on mobility.

One other point I would add.

Because if you look at what I mentioned on Capex.

Speaker 5: FI 24, 1.7 billion and the range for 25, 1.4 to 1.5. And then as you know, big set number of satellites are getting done in next few years, as you heard from Mark. So we do expect FI 26 to come down as we launch these satellites.

<unk> hundred 20, 417 billion and the range for 20 514 to one five and then as you know fixed set number of satellites are getting done in next few years as you heard from Marc So we do expect FY 'twenty six.

To come down as we launch the satellites so from a broader guidance project on an absolute dollar basis.

Speaker 11: So from a broader guidance, I'm an absolute dollar.

Speaker 10: Okay, then you forward to the investor they coming up and watch as well.

Okay.

Investor day coming up in March as well.

Yes, yes.

Speaker 12: Yeah, yes, we will. Thanks everybody.

Thanks, Greg Thanks, everybody.

Yes.

Speaker 13: The next question comes from Chris Quilty, Quilty Space. Investor Day in Carlsbad.

The next question comes from Chris Quilty Quilty Paul.

Investor Day incomes that are in New York.

New York.

Speaker 10: Okay. Carlsbad's nicer, but New York's easier to get.

Okay.

Does that nature, but new York team here to get to.

Speaker 10: Question for you, the number of aircraft net ads looked a little light in the quarter. Is that primarily just seasonal or timing? And can you give us a thought of what to expect on a go forward net ad raid, either in the back half of the year or going in the next year? And then a broader question on the IFC, just what's the general pipeline looking like now?

Question for you the number of aircraft net adds looked a little light in the quarter or is that primarily just seasonal or timing and can you give us a thought of kind of what to expect on a go forward net add rate either in the back half of the year or going into next year.

Then.

Broader question on the IFC.

The general pipeline looking like now.

Speaker 10: in terms of aircraft or airlines that are, you know, new to IFC, still coming on board? Is it a strong pipeline? Has there been weakness because of interest rates or fuel prices or just general temperament of the market?

In terms of aircraft.

Airlines that are.

New to IFC still coming on board or is it a strong pipeline has there been weakness because of interest rates or fuel prices or just general temperament of the market.

Speaker 7: Okay. On the first part, I'd say there are two pretty, I mean, if you just look for a macro perspective, there have been two kind of drags on installs from the airline's perspective. One is the delivery rates of new aircraft, which have been kind of behind schedule from both of the major OEMs. So when, and...

Okay on the first part.

Say to predict I mean.

You just look from a macro perspective, there have been two kind of drags on installs from the airlines perspective, one is the delivery rates of new aircraft.

Finn kind of behind schedule from both of the major Oems so.

We've done we've done well.

Speaker 7: done well on new line fit contracts. And so the line fit, which is driven by aircraft deliveries, that's lower than.

New line too.

Contracts and so on.

The mindset, which is driven.

Aircraft deliveries.

Lower than lower.

Speaker 7: Because you just look at the OEM's delivery issues and that you can kind of...

Could you just look at the look.

We look at the Oems delivery issues and that you can kind of gauge how.

Speaker 7: gauge how, you know, how that would be allocated among the different airlines, some of whom are big customers of ours. And the other one has been, you know, just the fill factor on existing flights, which has

How that would be allocated among the different airlines.

Our big customers of ours and the other one has been.

Just.

He'll factor on existing clients, which has.

Hi.

Speaker 7: I feel sort of discouraged the airlines from or slow down some of the retrofits on the existing fleet. And I think there's...

So sort of discourage the airlines from or slow down some of the retrofits on the existing fleet and I think there is.

Speaker 7: So some of that is seasonal. So on the one hand, and Sean.

Some of that is seasonal.

No.

On the one hand when Sean.

Speaker 7: mention seasonality before for the invite space. You know, that part's good for us because more passengers and it's driven more to me and it's been been good for revenue, but it has slowed down installs a little bit. Backlogs are still really strong. And I would say that the pipeline of new airlines is good. i think that

You mentioned seasonality before for the <unk> space.

That part is good for us because more passengers and its driven more demand than it's been.

Good for revenue, but it has slowed down installs a little bit backlog still backlogs, Joe really strong and.

We'd say that the.

Okay.

The pipeline of new Airlines as good I think that.

Speaker 7: You know, the kind of way to put it is that, you know, the U.S. market has been.

Sure.

So kind.

Kind of alternatives.

The U S.

It has been.

Speaker 7: probably the most forward leaning on infight connectivity. I think that it's also becoming clear that there's monetization strategies, right? That it's not just, it doesn't have to be just an expense for the airlines. And so that is really drawing in a lot of interest from airlines that maybe were on the sidelines.

Probably the most forward leaning on in flight connectivity I think that it's also becoming clear that the.

Monetization strategies.

Not just.

And it doesn't have to be just makes sense for the airlines and so that is really drawing in a lot of interest primarily lines that maybe we're on the sidelines before and are taking both GAAP humanity and figure out how to better monetize it such a good combination I think that.

Speaker 7: and if they can both get the humanity and figure out how to better monetize it, that's a good combination. I think that that is spreading more global.

That is spreading more globally.

Speaker 10: Understand. Clarification of CapEx guidance for next year, did you say the 1.4 to 1.5 includes a possible provision for a I-6 replacement?

Understand.

Clarification, the Capex guidance for next year did you say that one four to $1 five includes a possible provision for a <unk> replacement.

Yes, that's correct.

Speaker 10: Okay. And you know, timing wise, I guess you've got, you know, two modern L band satellites, the I6F1 and the Alpha bus, the I4s are 17 years old. If you get an order in, you know, next year on that satellite, we're looking at three years. Does that leave, you know, enough.

Okay.

Timing wise I guess, you've got two modern L band satellite.

Except one in the Alpha bus.

The high fours or 17 years old if you get an order in next year on that satellite we're looking at three years does that leave.

Yes.

Speaker 14: Time-wise, you know, coverage on the L-band capacity given the age of the legacy satellites? Yes.

Time wise coverage on the L band capacity, given the age of the legacy satellites.

Yes.

Brendan good until.

Yes.

Speaker 4: Yes. Yeah, you know, we also have, besides the existing fleet, we also, or in Mars, I think right around the time of the acquisition, announced a fleet of three I-8 satellites that'll be arriving kind of in that same timeframe. Maybe a little bit earlier. And how much?

Yes.

Besides I mean, besides the existing fleet, we have some remarks I think right around the time of the acquisition.

Announced fleet three eight satellites that will be arriving kind of in that same timeframe, maybe a little bit earlier.

And then how much capacity with those because those are small geos.

Speaker 7: We haven't been reporting the capacity on the LBAN satellites, but the thing that we are focused on is, when we talk about next generation LBAN, the big thing is increasing the capacity of those satellites dramatically. The I8s were really aimed at extending the existing space.

We.

Have a good reporting the capacity on the <unk> satellites, but the thing the thing that we are.

While we are focused on as is.

When we talk about next generation L band the Big thing is increasing those capacity those satellites dramatically.

We are really aimed at.

No.

Extending the existing safety.

Speaker 7: basically the safety and emergency services. And so that's good. I think in terms of showing up the existing fleet, that part of our CAPEX budget on the Go Forward base.

Basically the safety and emergency services.

So thats good.

I think in terms of shoring up the existing fleet.

Part of our Capex budget on a go forward basis and part of what we're talking about an ecosystem building is too.

Speaker 11: And part of what we're talking about in ecosystem-building is to really modernize that whole fleet. And we'll talk about that separately when we're ready.

Is to really modernize the fleet and we will talk about that separately when we're ready.

Speaker 10: Gotcha. And final question, I mean, as you're moving away from the I4 and, or sorry, the Viassat 4 and the, you know, sort of massive capacity towards satellites that are more, you know, agile mobility, capable.

Got you and final question.

As you're moving away from the I four in or sorry, the viasat four and the sort of massive capacity towards satellites that are more agile mobility.

Capable does.

Speaker 10: Does that mean it's more likely that you'll buy something off the shelf from, you know, a talist, a one talist on any space or airbus that have, you know, software defined satellites that they've already fielded, or is it something that you're likely to do internally because of some, you know, design capability that you have internally.

Does that mean, it's more likely that you'll buy something off the shelf from <unk>.

So linear space or Airbus that have.

Software defined satellites.

They have already fielded or is it something that you are likely to do internally because it's.

Design capability that you have internally.

Speaker 7: At the time that we do it, we will definitely look at what's available off the shelf, for sure. But we haven't seen, so far, we haven't seen things off the shelf that have the capability of the technology that we're doing on BioSat-3 or we're doing on 4. So we're going to, you know, we're going to do a comparison. One of the things we also will be able to do by holding up a few years is we do, we will.

At the time that we've that we do it we will definitely look at what's available off the shelf for sure.

Yeah.

We haven't seen so far we haven't seen things off the shelf that have the capability of the technology that we're doing on viasat three or we're doing on for so so we're going to.

No we're going to do a comparison one of the things we also will be able to do.

Bye bye holding off a few years.

We will be able to do some.

Speaker 7: risk reduction, but when I say risk reduction, schedule risk as well as budget risk.

Risk reduction.

Risk reduction schedule risk as well as budget risk.

Speaker 7: So, we, you know, we intend to do a lot better in terms of scheduling budget on the following ones. And then also, there's some really interesting technologies that we can test that can also reduce costs and improve productivity. But those are the things that we're looking at. But there are some... So...

A reduction so.

Yes.

We intend to devote a lot better in terms of sketch.

Schedule and budget.

And then also there is some really interesting technologies that we can test that.

Can also reduce reduce costs and improve productivity.

Those are the things that were.

Looking at but there are some.

Speaker 7: You know, so, so far, you know, I'm biased at three absent that anomaly. Everything's worked.

Yes.

On Viasat three absent that anomaly.

Anomaly everything worked well.

Speaker 2: Well, and four was just an enhancement of that. So that technology, that's something that we can draw on. If things play out the way we expect.

And pour it was just an enhancement of that so that technology.

And then we can draw on.

Kind of think if things play out the way we expect.

Speaker 10: Gotcha. And apparently did you say whether the Emea satellite was going to America's and the Pacific bird to Emea or happy beside of that yet?

Got you.

Did you say, whether the EMEA satellite was going to America, and the Pacific <unk> to EMEA or have you decided that yet.

Speaker 10: We have our we have options on both and we're really focused on meeting the needs of our mobility customers and that's that's how we're going to prioritize them. Okay, great. Thank you very much.

So we have options on both.

We're really focused on meeting the needs of our mobility customers and that's that's how we're going to prioritize.

Okay, great. Thank you very much.

Okay.

Thank you from Deutsche Bank has the next question.

Speaker 15: Hey, thank you very much for taking our questions. First, as you kind of peel away at MRSAT, do you have any updated thoughts maybe on the various pieces that may not be strategically important, especially on the LBAN side? Just curious, any thoughts there?

Hey, Thank you very much for taking our questions.

First as you kind of Peel away at Inmarsat.

Do you have any updated thoughts maybe on the various pieces that may not be strategically important, especially on the <unk> side just curious.

Any thoughts there.

Speaker 7: No, I mean, we are really, we are very interested in LBAN. I think that, you know, NMARCSAT has applied LBAN in some, you know, a variety of very different ways.

No I mean, we are really we are very interested in the L band I think that.

<unk> had has applied L band into some.

A variety of very different market sectors.

Speaker 7: markets that there's U.S. defense, there's international government applications, there's really interesting voice and data applications, and there are these safety ones. What we see is...

U S defense as international government applications, there's really interesting voice and data applications.

And then the safety warnings.

What we see is.

Speaker 7: Our long-term objective, really, is to grow with the direct-to-device market and the IoT market. And with IoT, it's really going to be the shared terrestrial and mobile, these devices that can operate off both.

If.

Our long term objective really is to grow with the.

Direct device market in the Iot market in Iot, it's really going to be this shared terrestrial in mobile devices that can operate off both terrestrial and mobile we're aiming to be able to bring some of those to market soon.

Speaker 7: terrestrial and mobile. We're aiming to, you know, to be able to bring some of those to market soon.

Speaker 7: And then we do think that the things that we do to the satellites to enable that.

And then we do think that things that we did to the satellites to enable that can really.

Got it.

Speaker 7: could boost the existing mobile satellite services market substantially.

The existing mobile satellite services margin substantially so.

Speaker 7: So we're really interested in the whole range of services that in March had performs now. We think that the good foundation for somebody wants to go in for anybody wants to go into these kind of direct device market.

We're really interested in the service a whole range of services that Inmarsat performs now we think Thats a good foundation for somebody who wants.

Once you go into these kind.

Kind of directed device markets.

Speaker 15: And you mentioned D to D, and I think you've kind of alluded to some potential paths into, you know, getting in there. Do we have any kind of updated thoughts about about D to D going forward? Maybe on the, you know, using that extra L band.

Understood and you mentioned <unk> and I think you've kind of alluded to some potential pads into.

Getting in there do we have any kind of.

Thoughts about about <unk> going forward maybe on the.

Using that extra L band.

Speaker 7: Not yet. We are working on some and I expect that we'll have more to talk about next quarter, but we're not going to say we're about it today.

Not yet.

We are working on some and I expect that we'll have more to talk about next quarter, but we're not going to say more about it today.

Speaker 15: Got it. And then there's one last one on, on IFC. So, you know, I think there was some announcements from one of Inmarsat's customers, Qatar and Starlink. And there was a little bit of confusion, I think, at least from, from the, from our end or on the public end. Can you maybe just go over exactly what is, what kind of happened there with Starlink? Is it, did they like shift that over or what exactly is going on?

Got it and then just one last one on on IFC. So I think there were some announcements from inmarsat customers, Qatar Airways and Starlink.

And there was a little bit of confusion I think at least.

Alright.

Can you maybe just go over exactly what is what kind of happened there.

Charlie.

Good day like shift that over or what exactly is going on.

But I think probably best to ask.

Speaker 11: But I think, probably best to ask them. I don't think we want to speak. We don't want to speak for them on this. Okay.

I don't think we want to stick.

We don't want to speak for them.

Sure.

Okay. Thank you.

Thanks Edison.

Next question comes from Louie Dipalma of William Blair.

Speaker 1: Next question comes from Louis DiPomma, William Blair.

Speaker 16: Mark, Rick, Sean, Robert, and Peter, good afternoon. Good afternoon.

Mark.

Rick Sean Robert and Peter Good afternoon.

Good afternoon.

Hi.

Speaker 16: Um, what percentage of revenue will the residential fixed broadband be by the end of?

What percentage of revenue.

The residential fixed broadband the by the end of <unk>.

Speaker 16: fiscal 2024 as it seems that you're de-emphasizing it.

Fiscal 2024, as it seems that Youre deemphasizing it.

Speaker 17: Yeah, Louie, I can jump in here. So I think what we've talked about in the past, right, is that part of our business with, you know, the combined with Emerson and so forth is less than 15%. And, you know, as we continue to prioritize our bandwidth and, you know, work with our supporting the growth in our IFC business, you'd expect that to, you know, continue to scale downward. Okay, thanks.

Yes, I can jump in here. So I think what we've talked about in the past <unk> is that part of our business with the combined with Inmarsat and so far thats less than 15%.

And as we continue to prioritize our bandwidth.

Work with our is supporting the growth in our IFC business, we would expect that to continue to just build downward.

Okay.

Okay.

Sean.

For.

Speaker 16: Have you disclosed who the third Viasat-3 launch contract is with? And also for that launch, I think you said in the fourth calendar quarter of 2024, have you been able to procure insurance for that launch?

Have you disclosed who the.

Third Viasat three launch contract is with and also for that long.

I think you said them.

Calendar quarter of 2024 have you been able to procure insurance for that launch.

Speaker 7: On the launch provider, we will put out a press release. I mean, generally, we want to cooperate with the launch providers just to make sure that they approve the release for it. So we'll do that.

On the launch provider, we will put out a press release I mean generally we want to.

Cooperating with the launch providers just to make sure that they're that they approve the release for it we'll do that.

Speaker 8: in the near future on the insurance. Yeah, I can jump in there. So, you know, on the second satellite, you know, that insurance is already done, just as a reminder, really. And we're starting to work on the next one. And...

In the near future on the insurance, yes, I can jump in there.

And on the second satellite.

Sure.

It is already done.

$900 million annually are starting to work on the next line one.

Speaker 8: You know, I think that that's kind of in process, but, you know, we're good to have the second one all wrapped up.

That's kind of in process, but we're going to have the second one all wrapped up.

Speaker 7: But and then just to be just to add on to that, I mean, the the insurance.

And then just to be.

Just to add onto that.

The.

Insurance.

Speaker 7: The insurers tend to be very detail-oriented, so the review that we're going to have next week with the antenna manufacturer, even though it's a different satellite, it's a different antenna manufacturer for Flight 3 than Flight 2, insurers tend to be, you know, they're really interested in the details, and so I think that having those details available will help them understand what happened and will help us with placing the insurance.

Insurers tend to be very detail oriented so.

The review that we're going to have next week with the impediments factor, even though it's a different it's a different.

Saturday.

Antenna manufacturer for <unk>, three then flight to insurers tend to view.

They are really interested in the details and so I think that having those details available we'll help them understand what happened and will help us with that place from the insurance.

Speaker 16: Great. And as it relates to the fiscal 25 CapEx guidance, is it a good estimate to assume that the I-6 replacement satellite would cost around $400 million? So...

And as it relates to the.

Fiscal 'twenty five capex guidance is that a good estimate to assume that.

The I six replacement satellite would cost around.

$400 million. So if you don't.

I'd like to go ahead with that.

Speaker 7: I'd like to go ahead with that, but you could just subtract it from the 1.4 to 1.5 billion number as, you know, what could be your CapEx for Fiscal 25. Yeah, now for Fiscal 25, what was in the budget would be the portion of replacing that mission that would have been spent in that fiscal year.

Subtract it from the one four to $1 5 billion number is and what could be your capex for fiscal 'twenty.

For fiscal 'twenty five what was in the budget would be the portion of replacing that mission that would have been spent in that fiscal year.

Okay.

Do you have an estimate on what that would be.

Speaker 4: No, we're not going to do that yet. We are evaluating multiple options and we're aiming to simplify it. So again, we're not...

No, we're not going to do that yet we.

We are evaluating multiple options.

And we're aiming we're aiming to simplify.

Again, we're not.

We.

Speaker 4: We are going to make sure that we make the right decision. We're not ready yet. And so it just would be premature to give us to give a dollar value for that.

We are going to make sure that we make the right decision, we're not ready yet.

<unk>.

And so it just would be premature to give us to give a dollar value for that.

Speaker 16: Okay. And one final one, as it relates to.

Okay, and one final one and as it relates to.

Direct to device.

Speaker 16: direct to device, it seems that.

It seems that.

Speaker 16: that Inmarsat was previously partnering with Skylo and they've established chip partnerships with Samsung's chip arm and MediaTek. Have you continued those partnerships such that you would in effect be the direct-to-device partner for Skylo's future initiatives?

The Inmarsat was previously partnering with Stylo and David established.

Chip partnerships with Samsung's chip arm and and media Tech have.

Have you continued those.

Partnerships, such that you wouldn't affect the the direct to device partner for <unk> and our future initiatives.

Speaker 2: Yeah, I mean, I think you're going to see kind of ecosystems evolve around the direct device, and they're going to include device makers and chip makers, spectrum holders, shadow light operators, and others.

Yes, I mean, I think youre going to see kind of ecosystem evolves around the direct to device and theyre going to include.

Device makers and chipmakers spectrum holders satellite operators.

And others.

<unk>.

Speaker 7: You know, the ones that you described are all attractive, you know, members of those ecosystems. And I think, you know, as we've mentioned before, we think Inmarsat's got a really interesting role to play, especially in

They are the ones that you've described raw <unk>.

<unk>.

Members of those ecosystems.

I think as we've mentioned before we think Inmarsat, it's got a really interesting role to play, especially in <unk>.

Speaker 7: You know, there will be different generations of standards, the current one, which is the narrowband IoT, you know, non-terrestrial network. I think you'll see those come to market soon, like within, you know, within quarters. And yes, there's definitely a role for us to play there. Excellent. Thank you.

There will be different generations of standards. The current one which is the narrow band Iot.

Next non terrestrial network I think you'll see those come to market soon.

My question.

Within quarters.

And yes, there's definitely a role for us to play there.

Excellent Thanks, Mike and thanks, everyone.

Okay.

Speaker 1: And just a reminder, it is star one if you have a question, we'll pause for just a moment.

Yeah.

And just a reminder, it is star one if you have a question we'll pause for just a moment.

Speaker 1: And I'll hand the conference back to our speakers for any additional or closing remarks.

I'll now hand, the conference that's our speakers for any additional or closing remarks.

Speaker 4: Okay. So, thanks everybody for joining us this afternoon. Just want to remind you of a few important takeaways from the quarter.

Okay.

Thanks, everybody for joining us.

Just wanted to remind you of a few important takeaways from from the quarter.

Speaker 2: We felt the results were really good, generated, you know, 16% year-over-year revenue growth and 20% year-over-year just-in-event-of growth on like-for-like basis. We are we're doing well on the Inmarsat integration program. We're kind of ahead of schedule and ahead of budget so far.

We thought the results were really good generated 16% year over year revenue growth and 20% year over year adjusted EBITA growth on like for like basis.

We are doing well in the unit.

And most of that integration program were kind of ahead of schedule and ahead of budget so far.

Speaker 4: We think we have a clear and good value proposition on global mobility that's built on meaningful and granular service-level commitments, even in the most challenging places and times. That's resonated with customers, especially in the very competitive U.S. in-flight market. And we think the same kinds of analytics, insights, and bringing confidence to global markets in aviation, maritime, and government. So we think that's going to work for us.

We've got we think we have a clear and and good value proposition on global mobility, that's built on meaningful and granular service level commitments, even in the most challenging places and times.

Resonated with customers, especially in the very competitive U S and pipe market and we think the same kinds of <unk>.

Analytics insights and bringing competence to global markets in aviation Maritime and government.

That's going to work for us.

Speaker 4: We're confident our business will continue to grow revenue in adjusted EBITDA in fiscal year 2024-2025. We'll give more additional guidance on that.

We're confident our business will continue to grow revenue and adjusted EBITDA in fiscal year 'twenty four 'twenty five give more.

Additional guidance on that.

Speaker 4: next quarter for FY25, and we're aiming to become free cash flow positive in the first half of calendar year 25, have taken a lot of the steps that we think we're going to need to get there, and we think we'll get meaningful and sustainable free cash flow during fiscal 26. So with that, I look forward to updating you all on our continued progress next quarter, and I'll hand it back to the operator now.

Next quarter for FY 'twenty five.

And we're aiming to become free cash flow positive in the first half.

Calendar year 'twenty five I've taken.

Out of the steps that we think we're going to need to get there and we think we will get meaningful and sustainable free cash flow during fiscal 'twenty six.

With that I look forward to updating you all on.

On our continued progress next quarter and I'll hand, it back to the operator now.

Speaker 1: Thank you. And once again, everyone, that does conclude today's conference. Thank you all for your participation. You may now disconnect.

Thank you once again, everyone that does conclude today's conference. Thank you all for your participation you may now disconnect.

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Yes.

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Yes.

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