Q4 2024 Viasat Inc Earnings Call
Operator: At this time, I would like to welcome everyone to ViaSat's 4th Quarter Fiscal Year 2024 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise.
At this time I would like to welcome everyone to Viasat sports quarter fiscal year 'twenty 'twenty four earnings results Conference call.
All lines have been placed on mute to prevent any background noise. After.
After the Speakers' remarks, there will be a question and answer session.
Operator: After the speaker's remarks, there will be a question and answer session. I would now like to turn the call over to Ms. Lisa Coran, Vice President of Investor Relations. Ms. Coran, you may begin your conference.
Speaker Change: I'd now like to turn the call over to MS. Lisa Curran, Vice President of Investor Relations Ms. Grande you May begin your conference.
Lisa Coran: Thanks, Sarah. We will present certain non-GAAP financial measures on today's call. Information required by the SEC relating to these non-GAAP financial measures is available in our fourth quarter fiscal year 24 shareholder letter in the relations section of our website. Please note that to provide a more meaningful comparison of our results of operations year over year, results for the fourth quarter and fiscal year 2024 are compared against supplemental combined results for the prior year period.
Lisa Curran: Thanks, Tara we will present certain non-GAAP financial measures on today's call information required by the SEC relating to these non-GAAP financial measures is available in our fourth quarter fiscal year 'twenty four shareholder letter Investor Relations section of our website. Please.
Speaker Change: Note that should provide a more meaningful comparison of our results of operations year over year results for the fourth quarter and fiscal year 2024 are compared against supplemental combined results for prior year period.
Lisa Coran: These supplemental combined results are based on the combination of ViaSat's historical reported results from continuing operations with Inmarsat's historical reported results for periods prior to the acquisition with adjustments to reflect purchase price accounting, the conversion of Inmarsat's results from IFRS to GAF, and conforming changes to reflect ViaSat's presentation of its results. The supplemental combined financial information was prepared to better illustrate for investors the performance of our business following our acquisition of Inmersat.
Speaker Change: These supplemental combined results are based on the combination of Viasat two historical reported results from continuing operations with Inmarsat historical reported results for periods prior to the acquisition with adjustments to reflect purchase price accounting the conversion of English test results from Ifr S T.
Yeah, and conforming changes reflect iff's presentation of its results. This supplemental combined financial information was prepared to better illustrate for investors the performance of our business following our acquisition of Inmarsat.
Lisa Coran: Unless otherwise noted, the presented financial measures reflect year-over-year increases or decreases relative to the supplemental combined financial data in our fourth quarter fiscal year 2024 shareholder letter on the investor relations section of our website. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance.
Speaker Change: Unless otherwise noted the presented financial measures reflect year over year increases or decreases relative to the supplemental combined financial data and our fourth quarter fiscal year 2024 shareholder letter on the Investor Relations section of our website.
Speaker Change: During the presentation, we will describe certain of the more significant factors that impacted year over year. A format. We will also make forward looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we expect or anticipate will or may occur in the future.
Lisa Coran: We will also make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we expect or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, and actual results might differ materially from any forward-looking statements that we make today. Information regarding these factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings and subsequent report on Form 10-K. These forward-looking statements speak only of the date they are made, and we do not assume any obligation to update any forward-looking statements. With that, I'll turn it over to Mark Dankberg, Chairman and CEO. Good afternoon.
Speaker Change: These forward looking statements are subject to a number of risks and uncertainties and actual results might differ materially from any forward looking statements that we make today.
Speaker Change: Information regarding these factors that may cause actual results to differ materially from these forward looking statements is available in our SEC filings and subsequent reports on Form 10-K. These forward looking statements speak only as of the date. They are made and we do not assume any obligation to update any forward looking statements with that I'll turn.
Speaker Change: It over to Mark Baker, Chairman and CEO.
Mark D. Dankberg: Good afternoon, and thanks for joining us today. With me I have Guru Gowrappan, our president, and Shawn Duffy, our CFO. We encourage you to read the shareholder letter that we posted on our website earlier this afternoon for more details. I'll give an overview of the main points, and then Guru will cover operational results and highlights and our growth outlook, and then we'll take questions. Fiscal year 2024 revenue and adjusted EBITDA growth was above the high end of our guidance, driven by mobility and government. Fiscal year 2024 was a big year for us. Because the Enmarsat acquisition dealt with satellite anomalies, it immediately undertook integrating the companies to eliminate redundancies, capture synergies, and drive productivity.
Mark D. Dankberg: Good afternoon, and thanks for joining us today with me I have good rhythm.
Speaker Change: <unk>, our president and Shawn Duffy our CFO.
Courage reading the shareholder letter that we posted on our website early this afternoon for details.
Mark D. Dankberg: I'll give an overview of the main points and then Guru cover our operational results and highlights.
Mark D. Dankberg: Both outlook and then we'll take questions.
Speaker Change: We achieved fiscal.
Speaker Change: Fiscal year 2020 for revenue and adjusted EBITDA growth above the high end of our guidance.
Speaker Change: Driven by mobility.
Speaker Change: Fiscal year 2024 was the peak year for us.
Speaker Change: We closed the Inmarsat acquisition dealt with satellite anomalies.
Speaker Change: Immediately undertook integrating the companies to eliminate redundancies capture synergies and drive productivity.
Mark D. Dankberg: Our objective is to integrate Inmarsat's global customer base, distribution partners, global satellite coverage, and leading global L-band spectrum rights in aeronautical and maritime safety services with ViaSat's technology, domain expertise in aeronautics and government, and systematic methodology to achieve high utilization and productivity to cost-efficiently deliver reliable services to mobility customers, including in the highest-demand places at time. Within about six months of closing, we made difficult but necessary reductions and achieved operational and recurring capital synergies of approximately $200 million, ahead of the planned schedules as we aligned our organization and optimized our satellite network.
Speaker Change: As Dana Great and Morris has a global customer base distribution partners global satellite coverage.
Speaker Change: Leading global L band spectrum right.
Speaker Change: Aeronautical and maritime safety services with Biosense technology domain expertise in aeronautical and government and systematically technology to achieve high utilization and productivity to cost efficiently deliver reliable services to mobility customers, including in the highest demand places.
Speaker Change: Yes.
Speaker Change: Within about six months to close with a difficult, but necessary reductions and achieved operational recurring capital synergies of approximately $200 million.
Speaker Change: Ahead of the planned schedule as we aligned our organization and optimized our satellite networks.
Speaker Change: We reorganized the company to help drive efficiency and productivity by integrating engineering operational distribution and support functions.
Mark D. Dankberg: We reorganized the company to help drive efficiency and productivity by integrating engineering, operational, distribution, and support functions. We've also added a number of key people to our leadership team. In fiscal year 24, we achieved another approximately $175 million reduction in CapEx, largely through investment prioritizations and synergies along with some savings due to satellite sustainability. We strengthened our capital structure and extended about $2 billion in debt maturity.
Speaker Change: Also added a number of key people to our leadership team.
Speaker Change: In fiscal year 'twenty, four we achieved another approximately $175 million reduction in Capex.
Speaker Change: Through investment prioritization and synergies along with some savings due to satellite system delays.
Speaker Change: We strengthened our capital structure and extended about $2 billion of debt maturities.
Mark D. Dankberg: This case focused on achieving our main operating financial goals for Fiscal 24, and as previously mentioned, we achieved above the high end. All that, while continuing investments to support mobility and government growth, including new implied entertainment and connectivity functionality, and additional monetization options for our airlines, and next-gen encryption and advanced technology programs for government customers. Now, our highest priority for Fiscal 25 is establishing a foundation for accelerated multi-year revenue and adjusted EBITDA growth in Fiscal Year 2026 and beyond as we substantially multiply our total global bandwidth resources with new satellites entering service.
Speaker Change: <unk> focused on achieving our main operating and financial goals for fiscal 'twenty four and as previously mentioned achieved above the high end of guidance.
Speaker Change: All of that while continuing investments to support mobility, and government growth, including new and part of entertainment and connectivity functionality and additional monetization.
Speaker Change: Options for airlines, and Nextgen encryption and advanced technology programs for government customers.
Speaker Change: Our highest priority for fiscal 'twenty five is establishing the foundation for accelerated multiyear revenue adjusted EBITDA growth in fiscal year 2026 and beyond.
Speaker Change: As we multiply our total global bandwidth resources substantially with new satellites entering service.
Mark D. Dankberg: Getting those satellites launched and their network infrastructure into service will enable us to continue to normalize CapEx with additional savings in Fiscal 26, providing a clear line of sight to an inflection to positive free cash flow by the end of the first half of Calendar 25, which is also the end of the first quarter of Fiscal 26. Guru will update our capital budget outlook in a few minutes.
Speaker Change: Getting those timelines.
Speaker Change: And there are network infrastructure into service will enable us to continue to normalize capex with additional savings in fiscal 'twenty six providing a clear line of sight to an inflection to positive free cash flow by the end of the first half of calendar 2005, which is also the end of first quarter of fiscal 2006.
Speaker Change: <unk> will update on our capital budget outlook in a few minutes.
Speaker Change: During fiscal 'twenty five we'll also continue to improve operational efficiencies and drive steadily increasing utilization and productivity from our satellite fleet and partner satellite networks.
Mark D. Dankberg: During Fiscal 25, we'll also continue to improve operational efficiencies that drive steadily increasing utilization and productivity from our satellite fleet and partner satellite networks. Starting in the first quarter of 2025, we'll also be re-segmenting our financial reporting to give investors more transparency into our business. We'll also be extending our hybrid multi-orbit, multi-band network services, adding broadband lead. We've already executed agreements for real components for Maritime and Enterprise and anticipate providing hybrid multi-orbit to all our mobility services. Our shareholder letter provides a satellite roadmap and schedule, and it includes satellite in-service dates consistent with our financial outlooks. The in-service dates are the same as we assumed last quarter.
Speaker Change: Starting in the first quarter of 'twenty five we'll also be re segmenting, our financial reporting to give investors more transparency into our business areas.
Speaker Change: Well also be extending our hybrid multi orbit multi band network services, adding broadband leader.
Speaker Change: We have already executed premiums per REO components for maritime and enterprise and anticipate providing hybrid multi orbit to all of our mobility services.
Speaker Change: Our shareholder letter provides satellite roadmap and reschedule. It includes satellite in service states consistent with our financial outlooks in service dates are the same as we've assumed last quarter.
Mark D. Dankberg: The next ones entering service are GX10A and GX10B that are planned for early to mid 2025, calendar year 2025. They will support government and enterprise mobility in the polar region. The Flight 1, ViaSat 3 Intended Deployment Anomaly is motivating us to reduce the capital cost and schedule for individual future satellites through design approaches that will benefit return on invested capital and further drive down fleet-wide bandwidth fulfillment costs while also improving service. Also, in fiscal 25, we anticipate introducing the first scalable commercial 3GPP cellular standards based on direct-to-device service for consumers of consumer mobile devices on five continents, on our existing LBAN network and by partnering with like-minded mobile satellite services operators.
Speaker Change: The next one is entering service.
Speaker Change: Gx 10 10 be planned for early to mid 2025 calendar 2025.
Speaker Change: They will support government and enterprise mobility and the polar region.
Speaker Change: The.
Speaker Change: One three.
III and tenant deployment anomaly is motivating us to reduce the capital cost and schedule for individual future satellites through design approaches that will benefit return on invested capital and further drive down fleet wide bandwidth fulfillment costs, while also improving service quality.
Speaker Change: Also in fiscal 'twenty five we anticipate introducing the first scalable commercial three GPP cellular standards based on direct to device service for customers, our consumer mobile devices on five continents on our existing L band network and partnering with like minded.
Speaker Change: <unk> satellite services operators.
Mark D. Dankberg: We're working with the Mobile Satellite Services Association to promote a mobile satellite services ecosystem offering the greatest amount of licensed satellite spectrometry. We have unique advantages and a technical approach to preserve and evolve our large base of safety service, aeronautical, and maritime customers to next-generation capabilities, building on the D2D infrastructure. We understand the competitive landscape in satellite communications is evolving. ViaSat entered the satellite services sector by focusing on driving down bandwidth costs to deliver greater value to our customers in terms of speed and consumption volume, and do that via cost-effective user terminals.
Speaker Change: We're working with the mobile satellite services Association to promote.
Speaker Change: Mobile satellite services ecosystem offering the greatest amount of pipes and satellite spectrum.
Speaker Change: We have unique advantages and a technical approach to preserve and evolve our large base of safety service aeronautical and maritime customers to next generation capability building <unk> infrastructure.
Speaker Change: We understand the satellite communications competitive landscape is evolving.
Speaker Change: Entered the satellite services sector by focusing on driving down bandwidth costs to deliver greater value to our customers in terms of speed and consumption volume.
Speaker Change: And do that via cost effective user terminals.
Mark D. Dankberg: We offer leading service-level agreements, giving customers confidence their service will meet expectations even in the highest-demand places and times, and innovations that help our customers leverage conductivity to achieve their operational needs and increase passenger and crew satisfaction. We're adding low latency services from Leo Broadband. We've always expected increasing speed and volume value, along with innovative new business models, would drive industry growth through steadily increasing total addressable markets with pronounced price elasticity. And that's clearly happening.
Speaker Change: We offer leading service level agreements, giving customers confidence their service will meet expectations, even in the highest demand places and times.
Speaker Change: And innovations that help our customers leverage connectivity to achieve their operational needs and increased passenger and crew satisfaction.
Speaker Change: We're adding low latency services for Leo broadband partners, we've always expected increasing speed and volume value along with innovative new business models would drive industry growth through steadily increasing total addressable markets with pronounced price elasticity.
Clearly happening.
Mark D. Dankberg: ViaSat has evolved very successfully through several transformational stages in its history. Its next phase is very competitive, but with commensurate growth opportunities. Inmarsat has a heritage of cooperative engagement with all nations to create timely new services, a unique international ecosystem. We see opportunities to synthesize complementary investments from satellite companies and regional space champions into cohesive multi-band, multi-orbit solutions for enterprising governments, emphasizing global mobility, for helping foster interoperable network architectures that will enable us and others to preserve and responsibly extend our services properly to Mokhi Orbit, Mokhi Van Nielsen
Speaker Change: Bypass evolve very successfully through several transformational stages in our history. This next phase is very competitive.
Speaker Change: Westwood commensurate growth opportunities in <unk>.
Speaker Change: That has a heritage cooperative engagement with autonation to create timely new services.
Speaker Change: <unk> International ecosystem.
We see opportunities to Sim to size complementary investments from satellite companies and regional space champions integral pieces multibank multi orbit solutions for enterprise and governments emphasizing global mobility.
Speaker Change: We're helping foster interoperable net architectures that will enable us and others to preserve and responsibly extend our services preferably to multi orbit multi band networks.
Mark D. Dankberg: This past year, we faced challenges and embraced a major acquisition. We've taken difficult measures, maintained our focus, and achieved results above prior guidance for the year. As we meet rising customer expectations for quality and certainty, we're capturing more and more real-world data on how, when, and where our customers and their customers use connectivity. We leverage that knowledge to help our customers compete and win, dynamically managing our own network ecosystem and shaping future space systems, architectures, and services.
Speaker Change: This past year, we faced challenges and embraced the major acquisition, we've taken difficult measures maintained our focus smit, our business objectives, achieving results above prior guidance for the year.
Speaker Change: As we meet rising customer expectations for quality uncertainty or capturing more and more real world data on how when and where our customers and their customers use connectivity.
Speaker Change: We leverage that knowledge to help our customers compete and win dynamically managing our own network ecosystem in shaping future space systems architectures and services.
Mark D. Dankberg: We're focused on serving our customers, our employees, our partners, and our shareholders. We continually evaluate our portfolio for opportunities to bring even more value. We're energized by the pace of change, we know we have work to do, and we're up for the challenge. With that, I'll hand it to Guru to discuss operational results.
Speaker Change: Focused on serving our customers our employees our partners and our shareholders.
Speaker Change: We continually evaluate our portfolio for opportunities to bring even more value.
Speaker Change: We're energized by the pace of change we know we have work to do.
Speaker Change: We're up to the challenge.
Speaker Change: With that I'll hand, it to cover operational results.
Kumara Guru Gowrappan: Great. Thanks, Mark.
Speaker Change: Great. Thanks, Mark.
Speaker Change: Color three topics.
Speaker Change: Performance near term priorities and update on our outlook.
Kumara Guru Gowrappan: I will cover three topics, financial performance, near-term priorities, and an update on our outcome. ViaSat generated good financial performance during FY24. We earned combined revenue growth of 9% year-over-year and combined adjusted EBITDA growth of 6% year-over-year driven by mobility and government, excluding the one-time catch-up benefits of the litigation settlement in Q2 FY24. The pressure on operating leverage reflects incremental R&D investments to deliver mobility growth, including new in-flight entertainment and connectivity functionality, next-generation encryption offerings, and ramp-up for the ViaSat-3 satellites entering service in FY25.
Speaker Change: <unk> generated good financial performance during FY 'twenty four.
Speaker Change: Earned combined revenue growth of 9% year over year, and combined adjusted EBITDA growth of 6% year over year, driven by mobility and government <unk>.
Speaker Change: Excluding the one time catch up benefits of the litigation settlement in Q2, FY 'twenty four.
Speaker Change: The pressure on operating leverage reflects incremental R&D investments to deliver mobility growth, including new in flight Entertainment and connectivity functionality next generation encryption offerings and ramp up for Cys had three satellites entering service in FY 'twenty five.
Speaker Change: For Q4, FY 'twenty four we grew combined revenue by 5%, while combined adjusted EBITDA declined 3% year over year.
Kumara Guru Gowrappan: For Q4 FY24, we grew combined revenue by 5% while combined adjusted EBITDA declined 3% year-over-year. With just a little bit of time, Q4 was favorable to guidance last quarter due to accelerated cost savings from Synergies alongside slightly improved top-line performance in government and commercial sectors. The Q4 cost savings were previously slated to begin in Q1 FY25.
Speaker Change: Our adjusted EBITDA in Q4 was favorable to guidance last quarter due to accelerated cost savings from synergies alongside slightly improved top line performance in government and commercial segments.
Speaker Change: The Q4 cost savings were previously slated to begin Q1, FY 'twenty Fox.
Kumara Guru Gowrappan: Some of the key highlights from the quarter include that we completed the ViaSat-3F1 handover from Boeing; our satellite control center is now operating the spacecraft. In March, we demonstrated speeds over 200 Mbps to an aircraft, and we continue to expect to place ViaSat-3F1 into commercial service later this Q1 FY25. Government systems had another quarter of strong demand for information assurance, high-speed network, and encryption products, increasing just over 40% year-over-year. We also had a strong quarter in tactical FATCOM networks driven by growth in Blue Force Tracking and LBAN services revenue.
Speaker Change: Some of the key highlights from the quarter include we completed the Viasat three F. One handover from Boeing.
Speaker Change: Control Center is now operating this spacecraft in March with demonstrated speeds over 200 mbps to an aircraft and we continue to expect to place.
<unk> into commercial service later this Q1 FY 'twenty.
Robert: Government systems had another quarter of strong demand for information assurance high speed networks, and friction products, increasing just over 40% year over year. We also had a strong quarter and tactical Satcom networks driven by growth in Blue Force tracking <unk>. So this is Robert.
Kumara Guru Gowrappan: We were awarded a contract from Northrop Grumman to support the U.S. Air Force Research Laboratory initiative called the Defense Experimentation Using Commercial Space Internet Program, and our ViaSat-3 satellite network will enable users to access high-bandwidth satellite internet connectivity from existing aircraft or ground vehicles. Our satellite services segment benefits from strong growth in aviation. Commercial IFC ended the year with 3,650 aircraft in service, up about 17% year-over-year on a combined basis, with over 1,350 aircraft in backlog. U.S. fixed broadband revenue declined as expected. Fewer residential subscribers were partially offset by higher RPUs.
Speaker Change: We were awarded a contract from Northrop Grumman to support the U S. Air Force Research Laboratory initiative called the defense experimentation using commercial space Internet program and our Viasat three satellite network will enable users to access high bandwidth satellite internet connectivity from existing aircraft.
Speaker Change: Our ground vehicles.
Speaker Change: Our satellite services segment benefited from strong growth in aviation commercial IFC ended the year with 3650 aircraft in service up about 17% year over year on a combined basis with over 1350 aircraft in backlog.
Speaker Change: U S fixed broadband revenue declined as expected fewer residential subscribers were partially offset by higher <unk> with <unk>.
Kumara Guru Gowrappan: We continue to deprioritize U.S. fixed broadband to support our rapid and higher margin IFC growth. We have developed a hybrid multi-orbit managed service for maritime called Nexus Wave. It's expected to launch this Q1 FY 2025 and is a scalable solution with global coverage, speed, capacity, security, and resilience to meet enterprise-class operational needs and crew welfare. NexusWave will seamlessly integrate ViaSat3 capacity as it enters service.
Speaker Change: We need to de prioritize U S fixed broadband to support our rapid and higher margin IFC growth.
Speaker Change: With that we look to hybrid multi orbit managed service for maritime called excess weight.
Speaker Change: It is expected to launch this Q1, FY 2025, and it is a scalable solution with global coverage speed capacity and security and resilience to meet enterprise plus operational leaves and crew welfare.
Speaker Change: Next this way will seamlessly integrate wired factory capacity at <unk>.
Kumara Guru Gowrappan: And finally, Mark described the full-year impact, but in Q4, we extended the maturity of $1.3 billion out of $1.68 billion of term loan B debt and paid down $84 million with cash. We also extended the Inmarsat revolver for three years in an amount of 550 million. We continue to optimize our balance sheet while retaining ample liquidity to act opportunistically. Now, some color on the financial results. Q4 FY 2024 revenue was $1.2 billion, up 73% compared to $666 million in Q3 FY 2023.
Speaker Change: And finally, mark describe the full year impact, but in Q4, we extended the maturity of $1 $3 billion part of $1 $68 billion of term loan b debt and paid down $84 million with cash.
Speaker Change: We also extended the inmarsat revolver for three years, and an amount of $550 million.
Speaker Change: Continue to optimize our balance sheet, while retaining ample liquidity to act opportunistically.
Speaker Change: Now some color on the financial results Q4, FY 2024 revenue was $1 2 billion up 73% compared to $666 million in Q3 FY 2023.
Kumara Guru Gowrappan: Combined revenue was up 5% year-over-year, driven by growth in government systems, products, and aviation services and products. In the maritime, RKA, and LBAN hybrid offering, Fleet Express continued to grow with some ARPU pressures slowing the overall trend, and while expected declines in LBAN-only fleet broadband continued.
Speaker Change: Combined revenue was up 5% year over year, driven by growth in government systems products and aviation services and products and.
Speaker Change: In maritime RK and haven't been hybrid offerings. Please express continued to grow with some <unk> pressure slowing the overall trend and while expected decline in L band only fleet broadband continues.
Kumara Guru Gowrappan: Given the recurring nature of the business, shifts up or down in revenue trajectory tend to be gradual. That said, we expect improvement later in the year with new multi-orbit Nexus Wave installations, which also lay a foundation for maritime customers onto ViaSat 3. Net loss from continuing operations was $85 million for Q4, up from $23 million net loss in the year-ago period, primarily due to increased interest expense associated with the Inmarsat acquisition
Speaker Change: Given the recurring nature of the business shifts up or down in revenue trajectory tend to be gradual.
Speaker Change: Third we expect improvement later in the year with new multi orbit Nexus wave installation, which also lay a foundation for maritime customers onto quite tricky.
Speaker Change: Net loss from continuing operations was 85 million for Q4.
Speaker Change: 22 million net loss in the year ago period, primarily due to increased interest expense associated with the Inmarsat acquisition.
Kumara Guru Gowrappan: Our just-to-debut top 40 quarter was $358 million, an increase of 188% year-over-year. Combiner adjusted EBITDA decreased 3% year-over-year, reflecting an expected decline in fixed broadband service revenue, lower product revenue, which tends to be lumpy, and higher R&D expenditures in the quarter, largely offset by approximately 30% growth in aviation. sequentially, net leverage declined 0.2 times to approximately 3.6 times estimated combined LTM at Jyotiripita as of Q4 FY 2024, which is substantially favorable to plan at the time the Inmarsat acquisition was announced.
Speaker Change: Our adjusted EBITDA for the quarter was $358 million, an increase of 188% year over year.
Speaker Change: Combined adjusted EBITDA decreased 3% year over year, reflecting an expected decline in fixed broadband service revenue lower product revenue, which tends to be lumpy and higher R&D expenditures in the quarter, largely offset by approximately 30% growth in aviation.
Speaker Change: Sequentially net leverage declined <unk> two times to approximately $3 six times estimated combined LTM adjusted EBITDA as of Q4, FY 2024, which is substantially favorable to plan at the time when that acquisition was announced.
Kumara Guru Gowrappan: We ended the quarter and year with $3 billion of liquidity, including $1.9 billion cash, cash equivalents, and short-term investments at quarter end, no near-term maturities, and a fully funded path to positive free cash flow by the end of Q1 FY22. Finally, insurance recovery claims are proceeding well. The first claim submitted was for the I6F2 satellite, and we have received 100% of the insurance receipts, or $348 million.
Speaker Change: We ended the quarter and year with $3 billion of liquidity, including $1 9 billion cash cash equivalents and short term investments at quarter end and no near term maturities and a fully funded path to positive free cash flow by end of Q1 FY 'twenty.
Thanks.
Speaker Change: Finally insurance recovery claims are proceeding well. The first claims submitted was for the I think the two satellite and we received 100% of the insurance proceeds or $348 million.
Kumara Guru Gowrappan: We are in the process of collecting ViaSat-3F1 insurance proceeds, and to date, we have collected about 55% of the $421 million expected. Overall, it was a good quarter for ViaSat, and we delivered about the high end of previous adjusted EBITDA guidance. Now, I'll touch on the three priorities we discussed in our letter.
Speaker Change: We are in the process of collecting Wi Fi <unk> insurance proceeds and to date, we have collected about 55% of 421 million expected.
Speaker Change: Overall, it was a good quarter for <unk> and we delivered above the high end of previous adjusted EBITDA guidance.
Speaker Change: Now I will touch on the three priorities we discussed in our letter.
Kumara Guru Gowrappan: First, build operational momentum and financial performance in our core business. FY24 was a good year achieved through focused execution, continued strength in awards, and we extended a meaningful portion of our debt maturity. Our second priority was executing the Inmarsat integration to achieve operating capital and revenue synergies to reduce costs and expand the scale and scope of our products and services.
Speaker Change: First build operational momentum and financial performance of our core businesses.
Speaker Change: FY 'twenty four was a good year achieved through focused execution continued strengthen awards and we extended a meaningful portion of our debt maturities.
Speaker Change: Our second priority was executing the inmarsat integration to achieve operating capital and revenue synergies to reduce cost and expand the scale and scope of our products and services, we accelerated delivery of the $100 million in annualized cash operating savings, bringing forward about 25 million.
Kumara Guru Gowrappan: We accelerated delivery of the $100 million in annualized cash operating savings, bringing forward about $25 million of the savings into Q4 FY 2024. Capital Synergies and Discipline Allocation reduced FY 2024 CapEx to $1.5 billion, or about $175 million below our previous $1.7 billion outlook as we drive towards positive pre-capex. In Q3 of FY24, we announced operating expense synergies, as I just mentioned, alongside the rationalization of our satellite roadmaps, which is yielding 100 million in CAPEX synergies for a total of 200 million, as Mark said earlier.
Speaker Change: And of the savings into Q4 FY 2024.
Speaker Change: Capital synergies and disciplined allocation reduced FY 2020 for Capex to $1 5 billion or about $175 million below our previous one 7 billion outlook as we drive towards positive free cash flow.
Speaker Change: In Q3 of FY 'twenty, four we announced operating expense synergies as I just mentioned alongside.
Speaker Change: The rationalization of our satellite Roadmaps, which are yielding $100 million of Capex synergies for a total of $200 million as Mark said earlier too.
Kumara Guru Gowrappan: Today we are announcing an additional 100 million in CapEx synergies related to network and platform integration. You'll also notice 75 million of capex shifting from FY24 into FY25 due to the ebbs and flows of satellite milestone payments. Third, sustain and improve mobility business growth while advancing the inflection point to positive free capital. We are proud of the businesses and trusted customer reputation we've built.
Speaker Change: Today, we're announcing an additional $100 million of Capex synergies related to network and platform integration.
Speaker Change: You'll also notice $75 million of Capex shifting from FY 'twenty four into FY 'twenty five due to the ebbs and flows of satellite milestone payments.
Speaker Change: Third sustain and improve mobility business growth, while advancing the inflection point to positive free cash.
Speaker Change: We are proud of the businesses and trusted customer reputation. We've built our portfolio enjoys a strong right to win good margin profile and long term attractive growth in mobility focused markets. We are progressing on putting three $3 billion of satellite under construction into.
Kumara Guru Gowrappan: Our portfolio enjoys a strong right to win, a good margin profile, and long-term attractive growth in mobility-focused markets. We are progressing on putting $3.3 billion of satellites under construction in DeSoto, that positions us for profitable growth through higher performing satellites and partnerships with other operators. We are making steady progress and have a line-of-sight to positive free cash flow by end of Q1 FY 2020. Now to Outlook.
Speaker Change: That positions us for profitable growth through higher performing satellites and partnerships with other operators.
Speaker Change: We're making steady progress and have line of sight to positive free cash flow by end of Q1 FY 2026.
Kumara Guru Gowrappan: We are initiating our FY 2025 Outlook and a preliminary review of FY 2026. We exclude satellite impairment charges and the catch-up benefit from the litigation settlement announced in Q2 FY 2024 from our guidance. As Mark said, FY 2025 is about setting a foundation. For FY 2025, we expect roughly flat year-over-year revenue with low to mid-single-digit year-over-year adjusted EBITDA growth. We've also provided additional segment-level detail in the Outlook section of our shareholder letter.
Speaker Change: Now to outlets, we are initiating our FY 2025 outlook and the preliminary view of FY 2026.
Speaker Change: We exclude satellite impairment charges and the catch up benefit from the litigation settlement announced in Q2, FY 2024 from our guidance.
Speaker Change: As Mark said FY 2025 is about setting a foundation.
Speaker Change: For FY 2025, we expect roughly flat year over year revenue with low to mid single digit year over year adjusted EBITDA growth.
Speaker Change: We will also provide additional segment level detail in the outlook section of our shareholder letter.
Speaker Change: While we are getting positive operating leverage we are remaining prudent with our top line guide given uncertainties with delayed OEM commercial aircraft deliveries given these pressure points, we've taken targeted measures to resume top line growth in FY 'twenty six building on our strong.
Kumara Guru Gowrappan: While we are getting positive operating leverage, we are remaining prudent with our top-line guide given uncertainties with delayed OEM commercial aircraft delivery. Given these pressure points, we've taken targeted measures to resume top-line growth in FY26, building on our strong backlog and anticipated award growth. We may have opportunities to resume growth earlier and will provide additional updates as warranted. For FY 2025, we expect capital expenditures to decline to a range of $1.4 billion to $1.5 billion. The FY 2025 range excludes the benefit from insurance recoveries as capitalized software and network synergies offset a portion of the FY 2024 expenditures that moved into FY 2025.
Speaker Change: Backlog and anticipated awards.
Speaker Change: We may have opportunities to resume growth earlier, and we'll provide additional updates as warranted.
Speaker Change: In FY 2025, we expect capital expenditures to decline to a range of $1 4 billion to $1 5 billion the.
Speaker Change: The FY 2025 range excludes the benefit from insurance recoveries as capitalized software and network synergies offset a portion of the FY 2024, <unk> that moved into FY 2020.
Kumara Guru Gowrappan: We include capitalized interest in our CapEx guidance, which is approximately $200 million per year, but it will decline in future years as we place satellites into service. In FY 2024, our investments in our satellite network projects and success-based CapEx were over two-thirds of our total capital spent; that's less than one-third associated with other maintenance and general CapEx activities. A preliminary view of FY 2026 indicates we expect to grow revenue and adjusted EBITDA gain in FY 2026 relative to FY 2025 as a majority of our $3.3 billion assets under construction go into commercial services. Capital expenditures for FY 2026 are expected to continue to decline to a range of $1.1 billion to $1.2 billion.
Speaker Change: We include capitalized interest in our Capex guidance, which is approximately $200 million per year, but it will decline in future years as replace satellites into service.
Speaker Change: In FY 2020 for our investments in our satellite network projects and success based Capex, where over two third of our total capital spend with less than one third associated with other maintenance and general Capex activities.
Speaker Change: Our preliminary view of FY 2026 indicates we expect to grow revenue and adjusted EBITDA gain in FY 'twenty to 'twenty six relative to FY 2025 has a majority of our $3 $3 billion assets.
Speaker Change: Under construction go into commercial service.
Speaker Change: Capital expenditures for FY 'twenty to 'twenty six are expected to continue to decline to a range of $1 1 billion Q1 2 billion.
Kumara Guru Gowrappan: Again, FY25 is foundational to multi-year accelerated sales growth, adjusted EBITDA growth, and continued step-down in CapEx in FY2026. In an effort to communicate our outlook more consistently, we will be providing all Outlook comments based on fiscal years rather than a mix with calendar years. So, let me just be clear; our target has not changed.
Speaker Change: Again, FY 'twenty five is foundational to multiyear accelerated sales growth adjusted EBITDA growth and continued step down in Capex in FY 2026.
Speaker Change: In an effort to communicate our outlook more consistently we won't be providing all outlook comments based on fiscal year, rather than a mix with calendar years. So let me just be clear our target has not changed.
Kumara Guru Gowrappan: We continue to expect an inflection point to positive free cash flow by the end of Q1 FY2026. Our path to positive free cash flow is expected to be driven by double-digit operating cash flow growth and continued declines in capital expenditures as we normalize capital expenditures in line with satellites going into commercial service. Before wrapping up, I have two important updates to share. As Mark referenced, in May, we initiated a new segment reporting structure to give additional insight into our portfolio and drivers of value. Going forward, we will have two supportable sectors: Communication Services and Defense and Advanced Technology.
Speaker Change: We continue to expect an inflection point to positive free cash flow by end of Q1, FY 2020, our path to positive free cash flow is expected to be driven by double digit operating cash flow growth and continued declines in capital expenditures as we normalized capital expenditure in line with satellites.
Going into commercial service.
Speaker Change: Before wrapping up I have two important updates to share as mark referenced in May we initiated a new segment reporting structure to give additional insights into our portfolio and drivers of value.
Speaker Change: Going forward, we will have two reportable segments.
Speaker Change: Communication services and defense and advanced technologies.
Kumara Guru Gowrappan: We listened to our investor feedback, and we will include revenue data for each major business unit within seconds. We plan to provide recast historical financials ahead of our first quarter call so that you have time to update your model. Secondly, we are continuing to gather feedback, both from our direct outreach and the perception study that is wrapping up, as we enhance communications and planning for Investor Day and other opportunities to highlight market potential, competitive strategy, growth runway, and our playbook for improved returns and sustainable cash generation.
Speaker Change: We listened to our investor feedback and we will include revenue data for each major business unit within the segment.
Speaker Change: We plan to provide recast historical financials ironed up our first quarter call. So that you have time to update your models.
Speaker Change: Secondly, we are continuing to gather feedback both from our direct outreach and the perception study that is wrapping up as we enhance communications and planning for an investor day, and or other opportunities to highlight market potential competitive strategy growth runway and our <unk>.
Speaker Change: For improved returns and sustainable cash generation.
Kumara Guru Gowrappan: We will come back with future updates. Despite some challenges, our operational performance in FY24 and Q4 was good, and we are capturing substantial operational and capital synergies. In FY25, we expect to make significant progress on our satellite roadmap and towards positive free cash flow with good increases in operating cash flow and moderated capital. With that, I'll pass it back to Mark.
Speaker Change: We will come back with future updates.
Speaker Change: Despite some challenges our operational performance in FY 'twenty four in Q4 was good and we are capturing substantial operational and capital synergies.
Speaker Change: In FY 'twenty five we expect to make significant progress on our satellite roadmap and towards positive free cash flow with good increases in operating cash flow and moderate capex with that I will pass it back to Mark.
Mark D. Dankberg: Okay, thanks Guru. Before we take additional questions, I just wanted to clarify one point. We have received some questions, which is what is the exact adjusted EBITDA base for FY24 that we're using as a reference for our growth into FY2025? So that number is $1.489 billion for Justitia Vidaan FY24; that's the base that we're using. And that's shown on page 3, the FY2024 year in review of the letter, where if you look at the middle right chart, what we described as the combined base for FY2024 was $1.575 billion.
Mark: Okay. Thanks.
Mark: Before we take additional questions I just wanted to clarify.
Mark: One point.
Mark: We have gotten some questions, which is what what is the exact adjusted EBITDA base for FY 'twenty for that we're using as a reference for our growth into FY 2025.
Mark: So that number is.
Mark: 148 9 billion.
Mark: Adjusted EBITDA in FY 'twenty four that's the base that we're using in that.
Mark: Shown on page three of the FY 2024 year in review of the ladder, where if you look at the Middle Right chart, what we described as the combined.
Mark: Base for FY 2024.
Mark: 15, one $5 75 billion and then we had referenced that there was $86 million of.
Mark D. Dankberg: And then we referenced that there was $86 million of one catch-up gain associated with the litigation settlement. So subtracting $86 from $1,575 is what gives that $1,489. And then the growth outlook of low to mid-digit, mid-single digit. Perhaps my 25 would be off that page. I just wanted to clarify that at the beginning, and then we can, I know we can open it up to additions.
Mark: One perch.
Speaker Change: Catch up game.
Speaker Change: <unk> with the litigation settlement, so subtracting 86 from.
Speaker Change: $15 75 is what gives that $14 89 and then.
Speaker Change: The.
Speaker Change: Growth outlook of low to mid single digit.
Speaker Change: For FY 'twenty five would be off that base.
Speaker Change: Just wanted to clarify that at the beginning and then.
Speaker Change: We can open it up to additional questions.
Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Please ensure your line is unmuted if called upon. Your first question comes from the line of Simon Flannery with Morgan Stanley. Your line is open.
Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad. If you would like to withdraw your question simply press Star. One again. Please ensure your line is muted if called upon.
Speaker Change: Your first question comes from the line of Simon Flannery with Morgan Stanley. Your line is open.
Simon William Flannery: Thank you very much. Good evening.
Simon William Flannery: Thank you very much good evening, thanks for all the color on for the new disclosures on things like the satellite set chosen appreciate that if I can dig into that a little bit perhaps.
Mark D. Dankberg: Thanks for all the color and for the new disclosures on things like the satellite schedules. We appreciate that. If I can sort of dig into that a little bit, perhaps you could just give us a little bit more on the current status of the F2 and F3 satellites, the kind of preparation, and where you are in the kind of cycles for getting them on the schedule for launch and for commercial deployment, any updates on what's happened in the last 90 days there.
Speaker Change: Just give us a little bit more on the current status of the <unk>, two and three satellites to kind of preparation.
Simon William Flannery: And.
Simon William Flannery: Where you are in the kind of the cycles for getting them on the schedule for launch and for commercial deployment any any updates on what's happened in the last 90 days there.
Mark D. Dankberg: And perhaps you could just update us on your thoughts on how you're going to distribute the capacity once they're launched. You've talked in the past about maybe moving some of them from EMEA or AsiaPAC to the Americas.
Speaker Change: And perhaps you could just update us on your thoughts on how you are going to distribute the capacity.
Simon William Flannery: Any updated thoughts on that as well? And also, just interesting to see the Nexus Wave product coming out. I think you said in your comments that you might extend that to IFC. Is that something that we'll see this year, a similar product set, or any more thoughts on when we'll see that integrated product?
Speaker Change: Once they're launched you've talked in the past about maybe moving some from EMEA or Asia Pac over the Americas any updated thoughts on that as well and also just interesting to see the next wave product coming out I think you said in your comments you might extend that too.
Speaker Change: IFC.
Speaker Change: Is that something that we will see this year a similar product set are.
Speaker Change: Any anymore thoughts on when we will see that integrated product. Thank you.
Drew: Simon. Thank you for the question. This is drew I'll start it off and then I think.
Drew: Mark will chime in on couple of the points on the <unk>.
Kumara Guru Gowrappan: On ViaSat-3, F3 and F2, just to point to the document or the letter as well, page 10, actually includes the overall roadmap now. That's a new thing that we've added for everybody's reference.
Speaker Change: Why has had three three and half to attempt to point to the document RDR letter as well page 10 actually includes overall roadmap now that's a new thing that were added for everybody's reference so on F. Three in terms of schedule and where we are we continue to expect to bring up 3%.
Kumara Guru Gowrappan: So on F3, in terms of schedule and where we are, we continue to expect to bring F3 into service in mid to late calendar year 2025, which is a little more than a year from now. And a key milestone, which is thermal vacuum testing, is expected to begin this quarter on the F3 spacecraft. And then, in terms of ViaSat-3 F2, we continue to anticipate bringing F2 into service in late calendar year 2025.
Speaker Change: Service in mid to late calendar year, 2025, which is a little more than a year from now and a key milestone which is thermal vacuum testing is expected to begin this quarter on <unk> III spacecraft and then in terms of <unk>, we continue to anticipate bringing up.
Two into service in late calendar year 2025.
Kumara Guru Gowrappan: And we expect the improved reflectors, which include the corrective actions, to be delivered to Boeing in late calendar 2024. And you will notice, just to clarify, we are only giving in-service dates as these are the most critical milestone for our customers and also the most relevant for you. They best inform our growth outlook as well.
Speaker Change: We expect the improved reflectors, which include the corrective actions to be delivered to Boeing in late calendar 2024.
Speaker Change: And you will notice just to clarify we are only giving in service dates as these are the most critical milestone for our customers and also most relevant for you as the best in firm our growth outlook as well.
Kumara Guru Gowrappan: I'll pass it to Mark in terms of overall coverage. And I think you had a question about NexusWave. Let me ask you to repeat that.
Speaker Change: Pass it to Mark in terms of overall coverage and I think I had a question on Mexico sway the amount could you repeat that bookmark.
Mark D. Dankberg: Regarding the locations of the satellites, remember, one of the things we did originally is that each satellite can be used in any region, so we have flexibility there. I think one of the things that we're looking at, and I think we've talked about, is maybe relocating them so that we would probably ultimately have Flight 2 over the U.S., and Flight 3 would go into Asia Pacific directly from launch, and then Flight 1 would be moved to the EMEA area. That's what we think is going to optimize the use of the satellite.
Speaker Change: Yes.
Speaker Change: On the locations of the satellite so remember one of the things. We did originally with each satellite can be used in any in any region. So we have flexibility there.
Speaker Change: Yes.
Speaker Change: One of the things that we're looking at and I think you've talked about is.
Speaker Change: Maybe.
Speaker Change: Re locating them so that we would probably.
Speaker Change: Ultimate ultimately halves.
Speaker Change: Alright, two over the U S and slide three we'll go into Asia Pacific.
Speaker Change: Directly from launch and then pipeline would be moved to two.
Speaker Change: EMEA area.
Speaker Change: That's.
Speaker Change: What we think is going to optimize.
Speaker Change: All lines.
Mark D. Dankberg: Your question about the Nexus Wave, that agreement is specifically for maritime. We expect to have additional agreements that will go into service for in-flight connectivity. The agreements are kind of optimized for each of the markets in which we'll be. And this is with OneWeb, is that right? [inaudible] Yes, for the next... But we're working. We actually are working with almost all of the NGSOs. And so, you know, we'll be mixing and matching as appropriate.
Speaker Change: Andrea Your question Nick.
Speaker Change: Nexus wave.
Speaker Change: That agreement is specifically for maritime.
Speaker Change: To have additional agreements that will go into service for in flight connectivity.
Speaker Change: The agreements are kind of optimized for each of the markets in which we will be in there.
Speaker Change: This was one way or is that right.
Speaker Change: Yes.
Speaker Change: Yes for the next waves.
Speaker Change: We're working we actually are working with almost all of the GSO.
Speaker Change: And so that will be mixing and matching as appropriate based on the deals.
Simon William Flannery: Great. And just maybe one last follow-up.
Speaker Change: Great and just maybe one last follow up just this point on substantially lower OEM deliveries is that something thats changed dramatically in the last few days I don't remember Youre really last.
Mark D. Dankberg: Just this point on substantially lower OEM deliveries, is that something that's changed dramatically in the last few days? I don't remember you really talking about that before. Perhaps you could just flesh that out a little bit, because it does seem like you've got a pretty good backlog still. Yeah, so we do have a good backlog.
Speaker Change: Last few months weeks I don't remember you talking about that perhaps you could just flesh that out a little bit because it does seem like you've got a pretty good backlog still yes.
Mark D. Dankberg: Yeah, so we do have a good backlog. The main issue is, following the Alaska Airlines event, Boeing has reduced, it's pretty much cut its delivery of 787s. 737s in half. And so that affects a fair number of our customers, and so that is a change to what they're receiving relative to what we believed last quarter until we're flowing those through into our outlook for FY25. That is one of the factors for our FY25 outlook.
Speaker Change: Yes. So we do have we do have a good backlog be.
Speaker Change: Main issue is following the Alaska Airlines.
Speaker Change: Event Boeing.
Speaker Change: Boeing has reduced its pretty much cut its delivery of 787.
Speaker Change: 737.
Speaker Change: 730 sevens in the past and so that affects a fair number of our customers and so that is a change.
Speaker Change: To what Theyre, receiving relative to what we believe glass quarter until they are flowing those through into our outlook for FY 'twenty five.
Speaker Change: This is one of the factors for our FY 'twenty five outlook.
Speaker Change: Okay. Thank you.
Tommy: Thanks Tommy.
Richard Hamilton Prentiss: Your next question comes from the line of Rick Prentiss with Raymond James. Your line is open.
Speaker Change: Your next question comes from the line of Ric Prentiss with Raymond James Your line is open.
Speaker Change: Thanks, Good afternoon everybody.
Richard Hamilton Prentiss: [inaudible] A couple of questions. I appreciate that with the current quarter results, we'll get the new reporting segment. Can you maybe give us a sneak peak into what you think we're going to see as far as those major business units under those two comm services and defense advanced technologies?
Speaker Change: Couple of.
Richard Hamilton Prentiss: Couple of questions I appreciate that.
Speaker Change: Yes.
Speaker Change: Third quarter results, we'll we'll get the new reporting segment can you maybe.
Speaker Change: Give us a sneak peek into what you think.
Speaker Change: We're going to see as far as those major business units under those two Tom services in defense.
Speaker Change: Technologies.
Shawn Lynn Duffy: Hey Rick, yeah, this is Shawn.
Speaker Change: Yes.
Speaker Change: John I can help you out.
Shawn Lynn Duffy: I can help you out. You know, I think what we talked about is, we're going to have two segments underneath the new reporting. And, you know, the goal there is really to better reflect our strategies and mobility and, you know, our overall portfolio drivers. There's more data that's going to come, but I think some high-level thoughts are that the communications services segment is going to be all of our businesses that utilize the satellites. And so that means that it's going to include governments.com as a service, which is in our government segment today.
Speaker Change: And I think what we talked about is we're going to have two segments underneath in your reporting.
Speaker Change: And the goal there is related to better reflect our strategies and mobility.
Speaker Change: Overall portfolio drivers.
Speaker Change: And there's more data is going to come but I think some high level thoughts.
Doug: Is that Doug Communications services segment, that's going to be all of our businesses that utilize the satellite and so that means that that's going to include the government Satcom as a service which is in our government segment today.
Shawn Lynn Duffy: Whereas in defense and advanced technologies, that's going to consist of all of our other businesses. You can think of that as, for example, our encryption business. So within that, we're also going to give additional top-line revenue data for most of the, you know, the major revenue drivers in those segments. You can think of that as like aviation or maritime or network. And we'll give you more color, you know, relative to the contributions as well. So a couple other highlights, I think, just to kind of give you that as well.
Doug: And whereas any defense advanced technologies that connect consists of all of our other businesses. When you think about <unk> for example, our encryption business.
Doug: So within that.
Doug: Also going to give additional top line revenue data for most of the major revenue drivers.
Doug: The other segment you can think of that is like aviation and.
Doug: Maritime or network.
And we will give more color relative to the contributions as well. So a couple of other highlights I think just to kind of give you that as well.
Shawn Lynn Duffy: An example would be our IFC equipment revenues. Those are going to now flow into the commercial services segment alongside the recurring aviation revenue streams. And then another would be like our antenna systems product, which is now going to be reported in the defense and advanced technology segment. So those are probably some key takeaways. You know, you'll see R&D move along these as well. For example, our R&D in commercial networks and related to our bringing our networks into service, that's going to blow over, for example, in communication services.
Doug: As an example would be our IFC equipment revenues those are going to now flow into the commercial services segment and alongside the recurring aviation revenue streams.
Doug: Then another would be like our internal systems products.
Doug: That's now going to be reporting in defense.
Doug: Technology segment.
Doug: That's probably some key takeaways youll see R&D move along as well for example, our R&D and commercial networks and related to our <unk> are bringing our networks into service Duskin inflow for example in the communication services.
Doug: Hopefully that's helpful.
Richard Hamilton Prentiss: Yep, yep, it is, and I appreciate the color that you'll provide it to us before we go into the next earnings season to help us kind of use the quiet time to update models. So appreciate that. When you think competitively about these segments, then, so communication services and defense advanced technologies, who do you see as the top competitors that you're competing against in communication services versus defense and advanced technologies?
Speaker Change: Yes, yes, it is and I appreciate the color that youll provided to US before we go into the next earnings season to help us kind of used to.
Speaker Change: Quiet time to update models, so I appreciate that.
Speaker Change: When you think competitively about these segments then so.
Speaker Change: Tom Services and defense advanced technology.
Speaker Change: You see as the top competitors that you are competing against and Tom services versus defense and advanced technologies.
Mark D. Dankberg: Well, you know, I think everybody's pretty focused on Starlink in these satellite services markets, so so are we. And so we're positioning ourselves to compete with them.
Speaker Change: Well I.
Speaker Change: I think everybody everybody's pretty focused on starlink in these in these satellite services market. So so so all right. So.
Speaker Change: We're seeing ourselves to compete with them.
Richard Hamilton Prentiss: And from the launch schedule, as far as in-service goes, keeping kind of where we were, making up some of the delays in launch, we can get the in-service a little quicker. What is the flight one capacity you're expecting that you'll be able to bring into service versus what we originally thought? I think that's just a couple months away then for F-1 to come in service.
Speaker Change: And from.
Speaker Change: The launch schedule.
Speaker Change: As far as in service.
Keith: Keith and kind of where we were makeup so made delays awards, we've got the service a little quicker.
Speaker Change: What is the slight one capacity and you're expecting that you'll be able to bring into service versus what we originally thought hey, guys. Just a couple of months away then for platform to come in service.
Mark D. Dankberg: Yeah, our view of that hasn't changed from what we've said in the past, which is that we think we would get up to 10%, you know, roughly up to about 10% of the originally anticipated capacity on the satellite. So that's from a total bandwidth perspective. The big thing is that we still have really good flexibility in how we apply it, and so it'll punch above its weight relative to older satellites in those markets.
Keith: Yes.
Speaker Change: Our view of that hasn't changed from what we've said in the past, which is that we think we will get up to 10% roughly up to about 10% of the originally anticipated capacity on the satellite.
Speaker Change: So thats from a total bandwidth perspective.
Speaker Change: The Big thing is that we still have.
Speaker Change: Really good flexibility in how we apply that bandwidth and so.
Punch above its weight relative to older satellites in those markets.
Richard Hamilton Prentiss: Okay, last one for me, the directed device, 3GPP. You touched on that a little bit, but there could be something this fiscal year. Can you help us understand how we size that opportunity? It's complicated as heck, I think, because the ecosystem involves so many people, chips, handsets, carriers, and satellite companies. Help us understand kind of what the go-to-market strategy is there and what the opportunity is, particularly since we've got this, you know, the next fiscal year. We don't really have capacity to come online from Flight 2 or Flight 3, though.
Speaker Change: Okay last one for me.
Speaker Change: The address it device.
Speaker Change: <unk> you touched on that a little bit, but there could be something this fiscal year.
Speaker Change: Help us understand how can we size that opportunity. It's complicated attack I think as the ecosystem evolves. So many people chips handset carriers satellite companies help us understand kind of what the go to market strategy is there and what the opportunity is particularly since we've got this next.
Speaker Change: Our next fiscal year, we don't want to have capacity come online from complied to replace radar.
Mark D. Dankberg: Yeah, so for the D-to-D market, I think there are at least a couple of different..., different target markets for that. One is literally the direct-to-device market, which is getting a lot of attention. And what that refers to is pretty much any smartphone being able to communicate directly to a satellite. I think there's clearly something that's never been done before, and so there's just unknowns or unknowns about how big that market will be. One of the things that we're aiming to do is
Speaker Change: Yes.
Speaker Change: For the DVD market I think there is.
Speaker Change: Just a couple of different.
Speaker Change: Different target markets for that one is literally the directed device market, which is getting a lot of attention and what that refers to as is.
Speaker Change: It is pretty much any smartphone being able to communicate directly to a satellite.
Speaker Change: There is.
Speaker Change: Clearly that's never been done before and so there's just unknowable.
Speaker Change: Homes about how big that market will be.
Speaker Change: One of the things that we're aiming to do.
Mark D. Dankberg: And this is what we've talked about with the, uh, the Release 17 3TPP standard, which is also known as the Narrowband Internet of Things non-terrestrial network standard, that that does enable messaging or emergency communications to smartphones. And so, you know, one example, the emergency communications example, is what.
Speaker Change: And this is what we've talked about with the.
Speaker Change: The what's called the release 17, <unk> standard, which is also known as <unk>.
Speaker Change: Narrow band Internet of things non terrestrial network standard that that does enable messaging or emergency communications to smartphones.
Speaker Change: One example of emergency communications examples.
Speaker Change: But.
Mark D. Dankberg: You know, Apple kind of kicked this thing off with their iPhones over GlobalStar. So, we are working on being able to deliver those capabilities through our satellites and partner satellites during fiscal year 2025 in five different continents. So, that uses the Inmarsat fleet and partner fleets. And one of the things that we aim to measure with that is, you know, how many of the phones that are capable of implementing that service are signed up in some way or another for service, and what types of use do they get.
Speaker Change: Apple kind of kick this thing last week.
Speaker Change: Their iphones.
Speaker Change: Star So.
Speaker Change: We are working on being able to deliver those capabilities through our satellites and partner satellites during fiscal year 2005.
Speaker Change: And five different kind of.
Speaker Change: Uses the Inmarsat fleet and partner fleets and one of the things that we.
Mark D. Dankberg: That's one of the ways that we'll be able to get a better handle on how that market might grow, and that's one of the things we're looking forward to reporting on. There are a number of really interesting and popular phones that will be equipped with chipsets that are capable of performing to that standard.
Speaker Change: Aimed to measure with that is how many of the phones that are capable of implementing that service.
Speaker Change: Our signed up in some way or another for service and what type of what types of abuse do they get that's one of the ways that we'll be able to get a better handle on how that market might grow.
Speaker Change: And that's one of the things we're looking forward to reporting on.
Speaker Change: There are a number of really interesting and popular phones that would will be equipped with chipsets that are capable of performing to that standard.
Mark D. Dankberg: So we're working with the ecosystem of chip makers, device makers, and mobile networks to create service plans that, you know, that should be interesting to those customers. And then we'll report on that as that comes into service. The other market that's also really, really interesting is to upgrade the existing mobile satellite services market. So Inmarsat has a pretty interesting base of customers in aeronautical services, maritime services, and land mobility, which are pretty basic services performed by their fleet. Don't have the existing fleet, which doesn't have a lot of throughput.
Speaker Change: So we are working with the.
Speaker Change: The ecosystem of chipmakers device makers in mobile now.
Speaker Change: To create service plan.
Speaker Change: That should be interesting to those customers.
Speaker Change: We will report on that.
Speaker Change: That comes into that comes into service. The other market. That's also really really interesting.
Speaker Change: As to upgrade the existing mobile satellite services market. So inmarsat.
Speaker Change: Pretty interesting base of customers in aeronautical services Maritime services, and mobility, which are pretty basic services performed by their fleet, which.
Mark D. Dankberg: That just reflects kind of what the state of the art has been in LBAN. What we believe is there are real opportunities to improve that, and so those will be reflected in new satellites that evolved from the narrow band version of the directed device to what's called the new radio 5G. And I think that's where most people think the big potential prize is getting that new radio version, which can do voice and higher-speed media services to those same cell phones, in addition to just texting and emergency service.
Speaker Change: Don't have the existing fleet, which don't have a lot of throughput.
Speaker Change: <unk> throughput.
Speaker Change: Just reflects kind of what the state of the art has been an L. Band is what we believe is there is.
Speaker Change: Real opportunities to improve that and so those will be reflected in new satellites that Steve.
Speaker Change: From the narrow band version of direct to device to what's called the new radio.
Speaker Change: G version.
Speaker Change: That's where most.
Speaker Change: Most people think is really the big potential prize is getting that new radio version, which can to voice.
Speaker Change: Higher speed media services to those same cell phones. In addition to just texting and emergency service. So.
Mark D. Dankberg: So the satellite can do that, and it will also be capable of greatly enhanced mobile satellite, and those we think fit really well with our large base of customers and prospective customers, and Aaron Arbuthort. Aviation and land mobile.
Satellite set to do that will also be capable of greatly enhanced both satellite services and those we think fit really well with our large base of customers and prospective customers and aeronautics.
Mark D. Dankberg: So those are the markets that we're going after. It'd be kind of premature for us to put any numbers around them, but we think we'll get data on those in as we start rolling out these. And the one thing I also do want to re-emphasize is that this is all consistent with our forward-looking plan. So anything that we do here will be consistent with the capital budget guidance that we've
Speaker Change: Aviation and land mobile so those are those are the markets that we're going after it would be premature for us to put any numbers around them, but we think we'll get data on those.
Speaker Change: <unk>.
Speaker Change: As we start rolling out these services and the one thing I also do want to reemphasize is that.
Speaker Change: This is consistent with ours.
Speaker Change: Forward looking plan for capital investments, so anything that we do here will be consistent with the capital budget guidance that we've been getting.
Richard Hamilton Prentiss: All right, that helps a lot. Thanks, everybody.
Speaker Change: Alright that helps a lot thanks, everybody. Thanks.
Ed: Thanks, Ed.
Edison Yu: Your next question comes from the line of Edison Yu with Deutsche Bank. Your line is open.
Speaker Change: Your next question comes from the line of Edison you with Deutsche Bank. Your line is open.
Edison Yu: Hey, thank you. Thank you for taking our questions. First one on the maritime partnership. I'm wondering if you can give us a sense of the economics that go into the market for this type of arrangement.
Edison: Hey, Thank you. Thank you for taking our questions first one on the Maritime partnership I'm wondering if you could give us a sense on.
Speaker Change: The economics that go to market.
Speaker Change: This type of arrangements.
Mark D. Dankberg: Well, the, you know, what we're aiming to do with this is to provide services that are both, that include There are enhancements of things that we do, but these would be crew services and operational services to maritime users integrated through a single provider. And then also, as we add the low Earth orbit component to it, we can also provide low latency services, which are interesting for both of those applications for some portions of the crew use and some portions of the operational use.
Speaker Change: Well.
Speaker Change: So what we're aiming to do with this is to provide services that are both that include.
Speaker Change: I think things that.
Speaker Change: Enhancements and things that we do but these would be crew services and operational services to maritime users.
Speaker Change: Integrated through a single provider and then also as we add to it.
Hello lowered its orbit component to it. We also can provide low latency services, which are interesting both for for both of those applications for some portions of the crew use in some portions of the operational use so we will be integrating that into both.
Speaker Change: Our <unk>.
Mark D. Dankberg: So we'll be integrating that into both our direct and indirect service plans. We haven't announced all the details of those, but there are a few really important concepts that are described in the press release, and one of those is untapped services, which is one of the things that people are really looking for. So, uh, the, uh, I think those are the main points, high speed, uncapped, including low latency. And the idea is that all those services will be delivered through our management of them. It's not just two side-by-side things, right? We're not just going to present two services next to each other. They'll be integrated in a way that actually allows us to fulfill our commitments on speed, volume, and latency more effectively than either one could.
Speaker Change: Direct and indirect service plans, we haven't announced the details of those but there are a few really important concepts that are described in the press release in one of those is untapped services, which is one of the things that people are really looking for.
So.
Speaker Change: D.
Speaker Change: Sure.
Speaker Change: I think those are the main points is highest.
Speaker Change: High speed uncapped.
Speaker Change: Including low latency.
Speaker Change: The idea is that those will be all those services will be delivered through our management of services. It's not just two side by side. So we're not just going to present to services next to each other that there'll be integrated.
Speaker Change: In a way that actually allows us to fill.
Speaker Change: Fill our commitments on speed volume and rates, even more effectively in either one could on its own.
Edison Yu: Understandable. And just a follow-up, more generally on the maritime VSAT side, have we been seeing any sort of incremental pressure from Starlink? And I said in the context of I think some competitors out there are seeing a lot of pressure, but the MR-SAT, V-SAT growth is actually pretty, pretty solid. So are we more resilient? And is this partnership going to kind of reinforce that?
Speaker Change: Understood.
Speaker Change: And just a follow up more generally on maritime on the VSAT side have you been seeing any sort of incremental pressure.
Speaker Change: From from Starlink and.
And that's in the context of I think some competitors out there are seeing a lot of pressure but.
Speaker Change: <unk> growth has actually been pretty pretty solid so are we more resilient and is this partnership.
Speaker Change: To kind of reinforce that.
Mark D. Dankberg: So first of all, yeah, we believe that our broadband maritime service is pretty resilient. It's continued to grow. I think that's not maybe the case for all other competitors, but our K-band service has continued to grow. In maritime, we offer a land We offer both K-A-Band services, branded generally as Fleet Express, and the older L-Band services, which are branded Fleet Broad. We've got, uh, three priorities, which is, you know, kind of the L-band version of broadband.
Speaker Change: So first of all yes, so we believe that our our broadband Maritime service is pretty resilient, it's continued to grow.
Speaker Change: It's not.
Speaker Change: Maybe the case for other.
Speaker Change: Competitors, but our Ku band service has continued to grow in.
Speaker Change: Maritime we offer a blend.
Speaker Change: We offer both Ku band services branded generally as fleet expressed an NDA.
Speaker Change: And the older L band services, which are branded branded fleet prob.
Speaker Change: We've.
Speaker Change: There are three broad base.
Speaker Change: Which is kind of a yellow band version of broadband that's been declining for a number of years.
Mark D. Dankberg: That's been declining for a number of years, but Fleet Express is still growing, and we have opportunities to refresh fleet broadband as well. But, yes, it's a competitive environment. We see the competition just as others do. I think that it's a combination of our services and our market segments that have helped us to, you know, be resilient. And, you know, there's... It's a big market, and we believe it is segmented, and certainly certain segments have been seeing more, I'd say more competition from Starlink than others. The enterprise segments, which do depend on operational and sometimes safety at sea certifications, those are the most...
Speaker Change: Sweet Express is still growing.
Speaker Change: We have opportunities to refresh the fleet broadband as well.
Speaker Change: Yes, it's a competitive environment, we see the competition.
Speaker Change: And as others do I think that it's a combination of our services and our market segments, but it helped us too.
Speaker Change: Yes.
Speaker Change: To be resilient.
And.
Speaker Change: It's.
Speaker Change: The big market believe it is.
Speaker Change: Certainly certain segments have been seeing more.
Speaker Change: I'd say more competition from sterling than others.
Speaker Change: Enterprise segments, which.
Speaker Change: To depend operational and sometimes safety at sea.
Speaker Change: Certification, but those are the most resilient months.
Edison Yu: Thanks. If I could just sneak in one clarification, I think you made a comment that was about the growth capex over two thirds. Did I hear that right? And is that for the
Speaker Change: Thanks, if I could just sneak in one clarification I think you made a comment there was about the gross capex over two thirds.
Speaker Change: Did I hear that right and is that for the full year or for the quarter.
Unknown Executive: I think that the two-thirds was around maintenance CapEx versus... No, no, no. Satellite. Oh, good. Yeah, yeah. I can help you with that.
Speaker Change: I think.
Speaker Change: Two thirds was around maintenance capex versus.
Speaker Change: Okay, Yes, yes, I can help you with that thought that two thirds is just to give you what the percent percentage of ourselves of our capex spend that is related to essentially satellite ground network and our success based capex.
Unknown Executive: So the two-thirds is just to give you the percentage of our CapEx spend that's related to essentially satellite, ground networks, and our success-based CapEx for a year, given a year. For the full year. Yeah, fiscal 20.
Speaker Change: For year, given a year for full year.
Unknown Executive: Fiscal 2024 is the full year.
Speaker Change: Fiscal 2020 for full year.
Alright, okay.
Speaker Change: Thank you okay.
Unknown Executive: Thank you.
Speaker Change: Thank you.
Caleb Henry: Your next question comes from the line of Caleb Henry with Quilty Space. Your line is open.
Speaker Change: Your next question comes from the line of Caleb Henry with Quilty. Your line is open.
Caleb Henry: Hi, thanks. Broad question just for Mark. I was curious, with the Nexus program, has your philosophy around low-Earth orbit changed at all? I know you've talked a lot in past calls and in years past about LEO, but this seems like a little bit of a shift from ViaSat's logic from years past.
Speaker Change: Alright. Thanks broad question just for Mark I was curious with the <unk> program has your philosophy around low Earth orbit changed at all I know you've talked in past calls in years past a lot about but this seems like a little bit of a shift from <unk> <unk> from years past.
Speaker Change: Okay.
Mark D. Dankberg: Well, first of all, I think my philosophy matters a lot less than what customers really want. And so the first thing we're going to do is make sure we're responding to what customers want. There is a desire for low latency. We have talked about that.
Mark: First of all I think my philosophy philosophy matters, a lot less than what customers really want and so first thing we're going to do.
Mark: Responding to our customers. There is there is a desire for low agency, we have talked about that and so what.
Mark D. Dankberg: And so what we do see is an opportunity to combine low latency and geolocation to deliver a complete suite of services. The other thing that we have focused on a lot is being able to deliver service level agreements wherever customers are. And so the combination of Geo can be helpful in doing that. It can lower our overall fulfillment costs if we can manage that as a single service. And so we get that in addition to the low latency.
What we do see is an opportunity to combine low latency.
Mark: Joe to to deliver a complete suite of services. The other thing that we have focused on what is.
Mark: Being able to deliver service level agreements wherever customers are and so the combination of.
Mark: Okay.
Mark: Can be helpful doing that.
Mark: Our overall fulfillment costs. If we can manage that has a single service until we get that in addition to the low latency, but we recognize that low latency is something that customers want. So we are integrating that I've mentioned.
Mark D. Dankberg: But we recognize that low latency is something that customers want, so we're integrating that, as mentioned certainly main in a big way this year with maritime, but we expect to do the same in all of our global mobile services.
Mark: Certainly.
Mark: In a big way this year with maritime, but would you expect to do the same in all of our global mobile services as well.
Caleb Henry: Okay. And then on the integration there, assuming it's starting with OneWeb, they're a KU band system, whereas the current satellites in the ViaSat fleet are KA and L band. Does that present any sort of integration challenges? And if so, how do you work through those?
Mark: Okay.
Speaker Change #100: And on the integration there and assuming it's starting with one word there a.
Speaker Change #100: Ku band system, whereas the current satellites and that Viasat.
Speaker Change #101: A L band.
Speaker Change #102: Does that present any sort of integration challenges and if so how do you work through this.
Mark D. Dankberg: Well, that's one of the reasons we're starting with Maritime, where, you know, shipboard operators seem to be completely fine with the notion of having separate LEO and GEO antenna components. So this goes along with what a number of shipowners and operators have been open to doing. It's a little bit more complicated on other platforms where we may end up with, you know, for instance, working with our KA band antennas and working with KA band LEO.
So thats one of the reasons, we're starting with maritime.
Speaker Change #102: Shipboard operators seem to be completely fine with the notion of having separate Leo and Geo antenna components. So this is this goes along with what a number of.
Speaker Change #102: A number of ship owners and operators have been open to doing it as a little bit more complicated on other platforms.
Speaker Change #102: We may end up with for instance.
Speaker Change #102: Working with our Ku band antenna working with Bam Leos.
Speaker Change #102: Okay.
Caleb Henry: Okay, next question. I know ViaSat hasn't given the number for a little bit, but can you share how many consumer subscribers the company has today and kind of the plan to continue with that business, or do you see that eventually kind of closing as you focus purely on mobility and other high ARPU sectors?
Speaker Change #102: Okay.
Speaker Change #103: Next question.
Speaker Change #104: Given the number in a little bit, but can you share how many consumer subs. The company has today and kind of is the plan to continue with that business or do you see that eventually kind of closing as you focus purely on mobility and other <unk> sectors.
Mark D. Dankberg: So we haven't disclosed exact subscriber numbers for a while. It's been, it's one of the things that we would point out is that, especially as we shift bandwidth from that market to the mobile markets, there's been a relatively steady rate of decline in that business. That's one of the areas that is affecting our FY25 revenue outlook, so even though our revenue outlook is relatively flat, we will be overcoming all of that in FY25, you know, with essentially no major new saddles in that year.
Speaker Change #105: So we have we haven't disclosed exact subscriber numbers for a while it's been.
Speaker Change #105: One of the things that.
Speaker Change #105: We would point out is that as we especially as we ship bandwidth from that market to the.
Speaker Change #105: To the mobile markets Theres been a relatively steady rate of decline in that in that business. That's one of the areas that.
Speaker Change #105: That is affecting our FY 'twenty revenue outlook.
Speaker Change #105: Even though our revenue outlook is relatively flat, we will be overcoming all of that.
Speaker Change #105: 25.
Speaker Change #105: With essentially no major new satellite editions.
Mark D. Dankberg: I'd say going beyond FY25, one of the things that we do see is opportunistic uses in residential. And we think that based on the initial feedback that we've gotten from some of our newer residential service plans, we do believe that we may be able to flatten that out or improve it depending on the amount of bandwidth that we allocate to that.
Speaker Change #105: In that year.
Speaker Change #105: I'd say going beyond FY 'twenty five one of the things that we do see as opportunistic uses in residential and we think we think.
Speaker Change #105: Based on the feedback that we've initial feedback that we've gotten from some of our newer residential service plans. We do believe that we can we may be able to flatten that out.
Speaker Change #105: Prove it depending on the amount of bandwidth that we allocate to that market.
Speaker Change #105: Yes.
Speaker Change #105: Okay.
Caleb Henry: A couple more questions. On the schedule for satellites, it looks like the Swiss Hummingsats have incurred a two-year delay. I think last year they were supposed to launch in 2026. Now it says 2028. Can you kind of shed any light on the reason for that, and does that have any impact on the plans for shoring up L-band capacity?
Speaker Change #106: A couple of more questions on the schedule for satellite it looks like the Swift 12, humming set to have carried a two year delay I think last year. They were supposed to launch in 2026. Now says 2028 can you kind of give any shed any light on the reason for that and does that have any impact on.
Speaker Change #106: The plans for shoring up L band capacity.
Mark D. Dankberg: No, I think there's a misunderstanding there. I think that those satellites are pretty much on the schedule on which they were originally procured. InMarsat had procured them prior to the close of the merger. We were aware of them, and the purpose that you mentioned is one of the main purposes, which is to provide additional coverage and resiliency for the safety services, and that schedule is consistent with that.
Speaker Change #107: No I think there is a misunderstanding there I think that.
Speaker Change #107: Those satellites are pretty much on schedule.
Speaker Change #107: In which they were on which they were originally procured inmarsat had procured them prior to the close of the merger we were aware of them.
Speaker Change #107: That is one of them.
Speaker Change #107: The purpose that you mentioned is one of the base purposes is to provide additional coverage and resiliency for the safety services and that schedule is consistent with that.
Speaker Change #107: Yes.
Caleb Henry: Okay. And then just the last question, I was curious if ViaSat sees any opportunities with the Space Development Agency, with the PWSA. I know a lot of that seems to be focused on providers of the satellites, maybe some of the ground network infrastructure, but is there any way for ViaSat to contribute to that program?
Okay and then just the last question I was curious if <unk> seen any opportunities with <unk>.
Speaker Change #108: Case development agency with the Gws, a I know a lot of that seems to be focused on providers of the satellites, maybe some of the ground.
Speaker Change #109: Work infrastructure, but is there any way for viasat to contribute to that program.
Speaker Change #108: Yes.
Mark D. Dankberg: I don't know if you want to go after me, but the answer to that is definitely yes. You know, we've been involved in some programs in the past. But we do see a number of opportunities to participate in that program on a go-forward basis through some of, you know, a lot of it. A lot of what they're doing is satellite technology, and that's really what the opportunity is for us, is satellite technology.
Speaker Change #108: Scott.
Scott: The answer to that is definitely yes.
Scott: Been involved in some of the programs in the past.
Scott: We do see.
Scott: We see a number of opportunities to participate in the program on a go forward basis through some of them.
Scott: A lot of it.
Scott: What theyre doing a satellite technology.
Scott: And that's really what the opportunity is for US is in satellite technology.
Caleb Henry: So could that look like supplying payloads or space hardware, or is it something else?
Speaker Change #111: So could that look like supplying payloads.
Speaker Change #111: Space hardware or is it something else.
Mark D. Dankberg: No, it's really around payloads, specific subsystem hardware, or specific missions of those satellites. All those are the kinds of ways in which we could be involved, and we have been in the past.
Speaker Change #111: No.
Speaker Change #111: It's really around.
Speaker Change #111: Payloads.
Speaker Change #111: Specific sub system hardware or specific missions.
Speaker Change #111: Satellites.
Speaker Change #111: Tons of the kinds of ways in which we could be involved and have in the past.
Caleb Henry: Okay, great. Thanks, guys.
Speaker Change #112: Okay, great. Thanks, guys.
Speaker Change #112: Okay.
Ryan Boyer Koontz: We have time for one more question. It will come from the line of Ryan Koontz with Needham. Your line is open.
Speaker Change #113: We have time for one more question it will come from the line of Ryan Koontz with Needham Your line is open.
Ryan Boyer Koontz: Great, thanks for squeezing me in. On the IFC side, kind of your puts and takes there relative to slow shipments from Boeing to Alaska and, maybe you know, some push out and available capacity. If you exclude the Alaskan impacts, would you say how you would characterize the growth in IFC from 24 to 25? Is it a demand issue? Is it a capacity issue? What kind of growth are we talking about here at a high level? You don't have to quantify it, but is it in line with your goals? I guess that's my question.
Ryan Boyer Koontz: Great. Thanks for squeezing me in on the IFC side.
Ryan Boyer Koontz: Okay. Your puts and takes there relative to slow shipments.
From Boeing to Alaska and maybe.
Ryan Boyer Koontz: Some push out available capacity, if you exclude the Alaska.
Speaker Change #115: Impacts would you how would you characterize.
Speaker Change #116: The growth in IFC from 'twenty four 'twenty five as it is it a demand issue is it a capacity issue what kind of growth are we talking about here at a high level you have to quantify it but as it is in line with your goals I guess my question.
Shawn Lynn Duffy: Yeah, so I think Ryan and I can take this and you know we've had some good momentum this year with respect to new installations. And, you know, even though we're seeing some of that shifting into next year, we're going to continue to have good installation activity throughout the year as a whole. So I would say that, as we look outward, aviation is a big part of our growth, both from services and from tourism.
Speaker Change #115: Yes.
Speaker Change #118: Brian I can take that.
Speaker Change #117: We've had.
Speaker Change #119: Some good momentum next year with respect to new installs.
Speaker Change #119: And.
Speaker Change #119: Even though we're seeing some of that shifting into next year, we're going to continue to have a good install and activity into the year as a whole so I would say that.
Speaker Change #119: As we look outward aviation here.
Speaker Change #119: A big part of our growth bolt on services and products.
Ryan Boyer Koontz: Ryan, just to clarify there, just one thing, because just to bring it back, I still think that we're expecting around 4200 aircraft in service by the end of fiscal year 25. With regard to the quarter that's in the books here, Q4, we saw a step down in gross margins. Is that primarily driven by, you know, pricing in these maritime and fixed markets or something else going on there with gross margins?
Got it helpful. Thanks.
Brian: Hey, Brian just to clarify there just one thing because it just to bring it back in I still think that we're expecting around 4200 aircraft in service by the end of fiscal year 'twenty.
Speaker Change #121: Great. Thank you for that.
Speaker Change #122: With regards to the quarter Thats in the books here Q4, we saw a step down in gross margins is that primarily driven by pricing and these maritime and fixed markets or something else going on there on the gross margin side.
Shawn Lynn Duffy: Overall, in gross margin, I think there are multiple components. We saw some cost growth, for example, in our government business and the programs. We also saw a bit of, if I go below the lines, we saw some R&D adventures. But I think if you're looking at the gross margin line, it's predominantly a little bit of cost growth that we had on the program side.
Speaker Change #123: Yes, so overall in gross margins.
Speaker Change #124: There is multiple companion and hospital for example in our <unk>.
Speaker Change #124: Our government business and the programs. We also saw that is.
Speaker Change #124: If I go below the lines with household R&D center, but I think if youre looking at the gross margin line is predominantly a little bit of cost growth that we had on the program side.
Ryan Boyer Koontz: Got it. All right. Thanks. It's all I had. I appreciate it.
Speaker Change #125: Got it alright, thanks, Tal I had I appreciate it.
Mark D. Dankberg: This concludes the question and answer session. I will turn the call over to Mark Dankberg for closing remarks.
Speaker Change #126: This concludes the question and answer session I will turn the call to Mark Dunkerley for closing remarks.
Mark D. Dankberg: Okay, thank you. So we tried to give you a good discussion about our initiatives and our approach to competing in this evolving and, what we feel is, a rapidly growing global mobility market. We've got work to do. We know we have a lot of work to do. We know we also have a lot of opportunity to grow with those markets in a rewarding manner. So thanks, everyone, for participating in this call, and we'll look forward to updating you on our next call.
Okay. Thank you.
Speaker Change #126: <unk>.
Mark D. Dankberg: Try to give you the discussion about our initiatives and our approach to competing.
Mark D. Dankberg: In this evolving and what we feel is perhaps.
Mark D. Dankberg: Rapidly growing global mobility market.
Speaker Change #127: Got work to do.
Speaker Change #127: We have a lot of work to do we know.
Speaker Change #127: So have a lot of opportunity to grow with those markets.
Speaker Change #127: In a rewarding them.
Speaker Change #127: So thanks, everyone for participating in this call and look forward to updating on our next call.
Operator: This concludes today's call. We thank you for joining us. You may now disconnect your lines.
Speaker Change #128: This concludes today's call. We thank you for joining you may now disconnect your lines.
Speaker Change #128: [music].
Speaker Change #128: Okay.
Speaker Change #128: Yes.
Speaker Change #128: [music].
Speaker Change #128: Yes.
Speaker Change #128: Yeah.
Speaker Change #128: Okay.
Speaker Change #128: [music].
Speaker Change #128: Yes.