Q2 2024 Iridium Communications Inc Earnings Call

Good morning and welcome to the Iridium second quarter 2024 earnings call.

Unknown Executive: Recorder, 2024 earnings call. Participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad.

Operator: Welcome to the 2024 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Kenneth B. Levy, Vice President of Investor Relations. Please go ahead.

Speaker Change: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad.

Unknown Executive: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two.

Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded.

Unknown Executive: Please note this event is being recorded.

Kenneth Levy: I would now like to turn the conference over to Kenneth B. Levy, Vice President of Investor Relations. Please go ahead.

Speaker Change: I would now like to turn the conference over to Kenneth B. Levy, Vice President of Investor Relations. Please go ahead.

Kenneth B. Levy: Thanks, Drew. Good morning, and welcome to Iridium's second quarter 2024 earnings call. Joining me on the call this morning are our CEO, Matt Desch, and our CFO, Tom Fitzpatrick. Today's call will begin with a discussion of our second quarter results, followed by Q&A. I trust you've had the opportunity to review this morning's earnings release, which is available in the Investor Relations section of Iridium

Unknown Executive: Thanks, Drew.

Kenneth Levy: Good morning and welcome to Iridium's second quarter, 2024 earnings call. Joining me on the call is, this morning, our CEO, Matt Desch, and our CFO, Tom Fitzpatrick. Today's call will begin with the discussion of our second quarter results, followed by Q&A. I trust you have the opportunity to review this morning's earnings release, which is available on the Investor Relations section of Iridium's website.

Speaker Change: Thanks, Drew. Good morning and welcome to Iridium's second quarter 2024 earnings call. Joining me on the call this morning are our CEO , Matt Desch, and our CFO , Tom Fitzpatrick.

Speaker Change: Today's call will begin with the discussion of our second quarter results followed by Q&A. I trust you've had the opportunity to review this morning's earnings release, which is available on the Investor Relations section of Iridium's website.

Kenneth Levy: Before I turn things over to Matt, I'd like to caution all participants that our call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical fact and include statements about our future expectations, plans, and prospects. Such forward-looking statements are based upon our current police and expectations, and our substantial risks, which could cause actual results to differ for forward-looking statements. Such risks are more fully discussed in our findings with the Securities and Exchange Commission. Our remarks today should be considered in light of such risks.

Kenneth B. Levy: Before I turn things over to Matt, I'd like to caution all participants that our call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical fact and include statements about our future expectations, plans, and prospects. Such forward-looking statements are based upon our current beliefs and expectations and are subject to risks which could cause actual results to differ from those projected.

Speaker Change: Before I turn things over to Matt, I'd like to caution all participants that our call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Speaker Change: Board-looking statements are statements that are not historical fact and include statements about our future expectations, plans, and prospects.

Speaker Change: Such forward-looking statements are based upon our current beliefs and expectations, and are subject to risks which could cause actual results to differ from forward-looking statements.

Kenneth B. Levy: Such risks were more fully discussed in our filings with the Securities and Exchange Commission. Our remarks today should be considered in light of such risks. Any forward-looking statements represent our views only as of today, and while we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views or expectations change. During the call, we'll also be referring to certain non-GAAP financial measures, including operational EBITDA, pro forma free cash flow, free cash flow yield, and free cash flow conversion.

Speaker Change: Such risks are more fully discussed in our findings with the Securities and Exchange Commission. Our remarks today should be considered in light of such risks.

Kenneth Levy: Any forward-looking statements represent our views only as of today, and while we may elect to update forward-looking statements at some point in the future, we specifically disclaim the obligation to do so even if our views or expectations change.

Speaker Change: Any forward-looking statements represent our views only as of today, and while we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views or expectations change.

Kenneth Levy: During the call, we'll also be referring to certain non-GAAP financial measures, including operational EBITDA, pro-forma free cash flow, free cash flow yield, and free cash flow conversion. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. Please refer to today's earnings release and the Investor Relations section website for a further explanation of our non-GAAP financial measures in a reconciliation to the most directly comparable GAAP measures.

Speaker Change: During the call, we'll also be referring to certain non-GAAP financial measures, including operational EBITDA, pro forma free cash flow, free cash flow yield, and free cash flow conversion.

Kenneth B. Levy: These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. Please refer to today's earnings release and the Investor Relations Techsite website for a further explanation of our non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measures. With that, I will turn things over to Matt.

Speaker Change: These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles.

Speaker Change: Please refer to today's earnings release and the Investor Relations Techsite website for a further explanation of our non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measures. With that, let me turn things over to Matt.

Matthew Desch: With that, let me turn things over to Matt. Thanks, Ken. Good morning, everyone. As you saw in our earnings release this morning, we delivered another good quarter of revenue and subscriber growth and remain on track for our full-year guidance. Our unique network and service continue to attract new customers and drive service revenue, allowing us to keep returning capital to shareholders. We're also investing in our future with R&D and new partnerships to broaden our device and service lines and remain very confident in our competitive position and market offerings going forward. We continue to believe that Aridium's growth and free cash flow generation validate our strategy and make our shares an attractive investment opportunity, especially at current market valuations.

Matthew J. Desch: Thanks, Ken. Good morning, everyone.

Matthew J. Desch: As you saw in our earnings release this morning, we delivered another good quarter of revenue and subscriber growth and remain on track for our full year guidance. Our unique network and service continue to attract new customers and drive service revenue, allowing us to keep returning capital to shareholders. We're also investing in our future with R&D and new partnerships to broaden our device and service lines and remain very confident in our competitive position and market offerings going forward.

Matt: Thanks Ken. Good morning everyone. As you saw in our earnings release this morning, we delivered another good quarter of revenue and subscriber growth and remain on track for our full year guidance.

Matt: Our unique network and service continue to attract new customers and drive service revenue, allowing us to keep returning capital to shareholders.

Matt: We're also investing in our future with R&D and new partnerships to broaden our device and service lines, and remain very confident in our competitive position and market offerings going forward.

Matthew J. Desch: We continue to believe that Iridium's growth and free cash flow generation validate our strategy and make our shares an attractive investment opportunity, especially at current market valuations. The passage of time will demonstrate the durability and strength of our business and provide investors with more appreciation of Iridium's unique position in the satellite industry, particularly as service revenue growth accelerates and our progress in the emerging D2D and standard-based IoT arena gets more attention. Our global reach and specialized safety services will continue to be differentiators and allow us to achieve our long-term guidance through 2030 and beyond.

Matt: We continue to believe that Iridium's growth and free cash flow generation validate our strategy and make our shares an attractive investment opportunity, especially at current market valuations.

Matthew Desch: The passage of time will demonstrate that the durability and strength of our business and provide investors more appreciation of Aridium's unique position in the satellite industry, particularly as service revenue growth accelerates and our progress in the emerging D2D and standard-based IoT arena gets more attention. Our global reach and specialized safety services will continue to be differentiators and allow us to achieve our long-term guidance through 2030 and beyond. Iridium's unique service offering is not a commodity, and our performance in the coming years will demonstrate to investors that we are very different from the KBN companies that they continue to compare us to.

Matt: The passage of time will demonstrate the durability and strength of our business and provide investors more appreciation of Iridium's unique position in the satellite industry.

Matt: Particularly as service revenue growth accelerates and our progress in the emerging D2D and standard-based IoT arena gets more attention.

Matt: Our global reach and specialized safety services will continue to be differentiators and allow us to achieve our long-term guidance through 2030 and beyond.

Matthew J. Desch: Iridium's unique service offering is not a commodity, and our performance in the coming years will demonstrate to investors that we are very different from the KBAN companies that they continue to compare us to. As I noted during our April call, we completed our first company acquisition with Satellis in the second quarter, and the integration with other parts of our business is going very well. This acquisition now makes Iridium the market leader in alternative PNT, and we're excited about the business opportunities this new offering provides, especially given the growing threats to GPS signals around the world that support critical data and infrastructure.

Matt: Iridium's unique service offering is not a commodity and our performance in the coming years will demonstrate to investors that we are very different from the K-band companies that they continue to compare us to.

Matthew Desch: As I noted during our April call, we completed our first company acquisition with Satellis in the second quarter, and the integration with other parts of our business is going very well. This acquisition now makes Iridium the market leader and alternative PNT, and we are excited about the business opportunities this new offering provides, especially given the growing threats to GPS signals around the world that support critical data and infrastructure. Since our entry into PNT with the Satellis deal, we've already expanded the footprint of the service to Europe and Asia to allow our partners to more easily address opportunities with their customers for secure PNT and data centers, maritime, in-building wireless, and other market areas.

Matt: As I noted during our April call, we completed our first company acquisition with Satellis in the second quarter, and the integration with other parts of our business is going very well.

Matt: This acquisition now makes Iridium the market leader in alternative PNT, and we're excited about the business opportunities this new offering provides, especially given the growing threats to GPS signals around the world that support critical data and infrastructure.

Matthew J. Desch: Since our entry into P&T with the Satellis deal, we've already expanded the footprint of the service to Europe and Asia to allow our partners to more easily address opportunities with their customers for secure P&T in data centers, maritime, in-building wireless, and other market areas. I don't think investors completely understand the potential of our satellite-based time and location service yet, as there aren't many real competitors for us in this space, and coverage of the growing threats to GPS is more frequent in conflict areas, which may seem quite distant at this time to consumers.

Matt: Since our entry into PNT with the Satellis deal, we've already expanded the footprint of the service to Europe and Asia to allow our partners to more easily address opportunities with their customers for secure PNT in data centers, maritime, in-building wireless, and other market areas.

Matthew Desch: I don't think investors completely understand the potential of our satellite-based time and location service yet, as there aren't many real competitors to us in this space and coverage of the growing threats to GPS or more frequent and conflict areas, which may seem quite distant at this time to consumers. Our STL service solves a lot of important use cases as it uses our powerful paging channel to offer a secure position navigation and timing signal that is a thousand times stronger than GPS. This service has growing relevance beyond conflict areas as jamming and location spoofing become more prevalent.

Speaker Change: I don't think investors completely understand the potential of our satellite-based time and location service yet, as there aren't many real competitors to us in this space, and coverage of the growing threats to GPS are more frequent in conflict areas, which may seem quite distant at this time to consumers.

Matthew J. Desch: Our SDL service solves a lot of important use cases as it uses our powerful paging channel to offer a secure position navigation and timing signal that is a thousand times stronger than GPS. This service has growing relevance beyond conflict areas as jamming and location spoofing become more prevalent. Our STL offering adds redundancy and protection to critical infrastructure and even in-building networks. We especially like the fact that Iridium's STL is a wide-area broadcast service that supports an unlimited number of users while using minimal network resources.

Speaker Change: Our SDL service solves a lot of important use cases as it uses our powerful paging channel to offer a secure position, navigation, and timing signal that is a thousand times stronger than GPS.

Speaker Change: This service has growing relevance beyond conflict areas as jamming and location spoofing become more prevalent.

Matthew Desch: Our STL offering adds redundancy and protection to critical infrastructure and even in building networks. We especially like the fact that Iridium's STL is a wide-area broadcast service that supports an unlimited number of users while using minimal network resources. On the engineering that support front, we continue to see our work and revenues expand with the US Space Development Agency as our team along with General Dynamics Mission System builds the ground infrastructure to support the FDA's new LEO network. That consolation should start launching in earnest later this year and into 2025. Our scope of work on this multi-year project has expanded over the past year, and we expect it to drive record engineering support revenue in 2024, all while continuing to expand the capability of our satellite operations team and give us great insight into cutting edge Leo technologies to help inform our future plans.

Speaker Change: Our STL offering adds redundancy and protection to critical infrastructure and even in-building networks. We especially like the fact that Iridium's STL is a wide-area broadcast service that supports an unlimited number of users while using minimal network resources.

Matthew J. Desch: On the engineering and support front, we continue to see our work and revenues expand with the U.S. Space Development Agency as our team, along with General Dynamics Mission Systems, builds the ground infrastructure to support the SDA's new LEO network, which should start launching in earnest later this year and into 2025.

Speaker Change: On the engineering and support front, we continue to see our work and revenues expand with the U.S. Space Development Agency as our team, along with General Dynamics Mission Systems, builds the ground infrastructure to support the SDA's new LEO network.

Speaker Change: That constellation should start launching in earnest later this year and into 2025.

Matthew J. Desch: Our scope of work on this multi-year project has expanded over the past year, and we expect it to drive record engineering support revenue in 2024, all while continuing to expand the capability of our satellite operations team and giving us great insight into cutting-edge LEO technologies to help inform our future plans. In the second quarter, we also announced a new contract with the U.S. government to continue to secure and support the longstanding private network that we maintain in partnership with them, which many of you know as the EMSS program.

Speaker Change: Our scope of work on this multi-year project has expanded over the past year.

Speaker Change: and we expect it to drive record engineering support revenue in 2024, all while continuing to expand the capability of our satellite operations team and give us great insight into cutting-edge LEO technologies to help inform our future plans.

Matthew Desch: In the second quarter, we also announced a new contract with the US government to continue to secure and support the longstanding private network that we maintain in partnership with them, which many of you know is the EMSS program. This new five-year contract expands our relationship with the Space Force and will produce greater than 50% more revenue than the previous support contract. That's more than 90 million in revenue to already him over five years. This contract's term also straddles the current EMSS contract and a successor contract we expect with the U.S. government. On that front, we are starting to plan for those initial conversations and what we expect to be a favorable renewal at the end of the current contract term.

Speaker Change: In the second quarter, we also announced a new contract with the U.S. government to continue to secure and support the longstanding private network that we maintain in partnership with them, which many of you know as the EMSS program.

Matthew J. Desch: This new five-year contract expands our relationship with the Space Force and will produce greater than 50% more revenue than the previous support contract. That's more than $90 million in revenue to Iridium over five years. This contract's term also straddles the current EMSS contract and a successor contract we expect with the U.S. government.

Speaker Change: This new five-year contract expands our relationship with the Space Force and will produce greater than 50% more revenue than the previous support contract. That's more than $90 million in revenue to Iridium over five years.

Speaker Change: This contract's term also straddles the current EMSS contract and a successor contract we expect with the U.S. government.

Matthew J. Desch: On that front, we are starting to plan for those initial conversations and what we expect to be a favorable renewal at the end of the current contract term. Moving to our capital market activities, many of you saw that we completed the repricing of our term loan last month, which will save Iridium about $4 million in annual interest expense on a go-forward basis. The transaction underscores the support we have from credit investors and the durability with which they view our business and cash flows into the future.

Speaker Change: On that front, we are starting to plan for those initial conversations and what we expect to be a favorable renewal at the end of the current contract term.

Matthew Desch: Moving to our capital market activities, many of you saw that we completed the repricing of our term loan last month, which will save a redeem about 4 million in annual interest expense on a go-forward basis. The transaction underscores the support we have from credit investors and the durability with which they view our business and cash flows into the future. Let me be clear; we share their optimism. We think our equity is undervalued in light of how we believe our business and our cash flow will continue to grow. As a result, we've been more aggressive with our share buy-back activities.

Speaker Change: Moving to our capital market activities, many of you saw that we completed the repricing of our term loan last month, which will save Iridium about $4 million in annual interest expense on a go-forward basis.

Speaker Change: The transaction underscores the support we have from credit investors and the durability with which they view our business and cash flows into the future.

Matthew J. Desch: We share their optimism. We think our equity is undervalued in light of how we believe our business and our cash flow will continue to grow. As a result, we've been more aggressive with our share buyback activity. You'll see we drew on our revolver in the second quarter to help repurchase 3% more of our outstanding shares during the quarter, and we expect this activity to continue.

Speaker Change: Let me be clear. We share their optimism. We think our equity is undervalued in light of how we believe our business and our cash flow will continue to grow.

Matthew Desch: You'll see we drew on our revolver in the second quarter to help repurchase 3% more of our outstanding shares during the quarter, and we expect this activity to continue. Tom will share more details on this activity shortly. I want to also highlight that we increased our quarterly dividend with our June payment to 14 cents per share. This increase reflects our confidence and Iridium's ability to grow free cash flow well into the next decade, and will result in a 6% increase to our dividend for the full year. Overall, our business is performing well, and we remain on track for our full year forecast.

Speaker Change: As a result, we've been more aggressive with our share buyback activities. You'll see we drew on our revolver in the second quarter to help repurchase 3% more of our outstanding shares during the quarter, and we expect this activity to continue. Tom will share more details on this activity shortly.

Matthew J. Desch: Tom will share more details on this activity shortly. I want to also highlight that we increased our quarterly dividend with our June payment to $0.14 per share. This increase reflects our confidence in Iridium's ability to grow free cash flow well into the next decade and will result in a 6% increase in our dividend for the full year. Overall, our business is performing well, and we remain on track for our full-year forecast.

Tom: I want to also highlight that we increased our quarterly dividend with our June payment to $0.14 per share. This increase reflects our confidence in Iridium's ability to grow free cash flow well into the next decade and will result in a 6% increase to our dividend for the full year.

Tom: Overall, our business is performing well and we remain on track for our full year forecast.

Matthew Desch: The quality, resilience, and reach of Iridium's network remain strong selling points to partners and their customers. We continue to add new commercial and government partners and deliver more services to our global network of resellers. We've already certified a record 39 new partner devices just in the first half of this year, which matches 2023's full year total. I think this shows the pace of investment that's taking place around our network by Iridium's partners, which will only add to our growth. Our business partners understand Iridium's differentiated service and reliability, as well as the performance of our network services.

Matthew J. Desch: The quality, resilience, and reach of Iridium's network remain strong selling points for partners and their customers. We continue to add new commercial and government partners and deliver more services through our global network of resellers. We've already certified a record 39 new partner devices just in the first half of this year, which matches 2023's full year total. I think this shows the pace of investment that's taking place around our network by Iridium's partners, which will only add to our growth.

Tom: The quality, resilience, and reach of Iridium's network remain strong selling points to partners and their customers. We continue to add new commercial and government partners and deliver more services through our global network of resellers.

Tom: We've already certified a record 39 new partner devices just in the first half of this year, which matches 2023's full year total.

Tom: I think this shows the pace of investment that's taking place around our network by Iridium's partners, which will only add to our growth.

Matthew J. Desch: Our business partners understand Iridium's differentiated service and reliability, as well as the performance of our network services. They're excited about our new IoT technology coming to market and how it will expand their applications. They are particularly looking forward to the prospects for even lower-cost end user devices based on 3GPP standard narrowband IoT services which we are developing through our project Stardust program. While 2024 is a bit of a transition year for Iridium, I feel very good about our strong market position and growing opportunities, as well as the investments we're now making.

Tom: Our business partners understand Iridium's differentiated service and reliability, as well as the performance of our network services.

Matthew Desch: They are excited about our new IoT technology coming to market and how it will expand their applications. They are particularly looking forward to the prospects for even lower cost and user devices based on 3GPP standard Narrow Band IoT services, which we are developing through our Project Star Desk program.

Tom: They are excited about our new IoT technology coming to market and how it will expand their applications.

Tom: They are particularly looking forward to the prospects for even lower-cost end-user devices based on 3GPP standard narrowband IoT services, which we are developing through our Project Stardust program.

Matthew Desch: While 2024 is a bit of a transition year for Iridium, I feel very good about our strong market position and growing opportunities, as well as the investments we are now making. They align well with our unique brand position and extend the utility of our differentiated services to a broader set of industries and users.

Tom: While 2024 is a bit of a transition year for Iridium, I feel very good about our strong market position and growing opportunities, as well as the investments we are now making.

Matthew J. Desch: They align well with our unique brand position and extend the utility of our differentiated services to a broader set of industries and users. With that, I'll turn the call over to Tom for a review of our financials.

Tom: They align well with our unique brand position and extend the utility of our differentiated services to a broader set of industries and users.

Thomas Fitzpatrick: With that, I'll turn the call over to Tom for a review of our financial stump. Thanks, Van. Good morning, everyone. I'd like to start my remarks by summarizing our key financial metrics for the second quarter and providing some color in the trends we're seeing across the business. Then I'll recap the 2024 guidance, which we affirm this morning and close with the review of our liquidity position and capital structure. Iridium continued to execute on its annual plan, delivering 5% service revenue growth in the second quarter and generating strong subscriber growth with net additions of 80,000. Operational EBITDA was 114 million in the second quarter, with growth from commercial service revenue and engineering and support, largely compensating for equipment sales returning to more normalized levels.

Thomas J. Fitzpatrick: Thanks, Matt. Good morning, everyone.

Tom: With that, I'll turn the call over to Tom for a review of our financials. Tom? Thanks, Matt. Good morning, everyone.

Thomas J. Fitzpatrick: I'd like to start my remarks by summarizing our key financial metrics for the second quarter and providing some color on the trends we're seeing across the business. Then I'll recap the 2024 guidance, which we affirmed this morning, and close with a review of our liquidity position capital structure. Iridium continued to execute on its annual plan, delivering 5% service revenue growth in the second quarter and generating strong subscriber growth with net additions of $80,000.

Tom: I'd like to start my remarks by summarizing our key financial metrics for the second quarter and providing some color on the trends we're seeing across the business. Then I'll recap the 2024 guidance which we affirmed this morning and close with the review of our liquidity position capital structure.

Tom: Iridium continued to execute on its annual plan, delivering 5% service revenue growth in the second quarter and generating strong subscriber growth with net additions of 80,000.

Thomas J. Fitzpatrick: Operational EBITDA was $114 million in the second quarter, with growth from commercial service revenue and engineering and support, largely compensating for equipment sales returning to more normalized levels. In our commercial business, service revenue is up 6% this quarter to $126 million, with the increase reflecting continued strength in IoT. Voice and data revenue rose 3% from last year's comparable quarter to $56.5 million. The increase was driven by subscriber growth as demand for Iridium's push-to-talk services remained strong. Commercial IoT continued to benefit from demand for personal satellite communications, as well as traditional industrial services.

Tom: Operational EBITDA was 114 million in the second quarter with growth from commercial service revenue and engineering and support largely compensating for equipment sales returning to more normalized levels.

Thomas Fitzpatrick: In our commercial business, service revenue was up 6% this quarter to 126 million, with the increase reflecting continued strength in IoT. Boys and data revenue rose 3% from last year's comparable quarter to 56.5 million. The increase was driven by subscriber growth as demand for Iridium's push-to-talk services remained healthy. Commercial IoT continued to benefit from demand for personal satellite communications as well as traditional industrial services. Revenue rose 20% from the prior year quarter to 41.6 million, in part reflecting the new two year contract we signed earlier this year with a large fast growing partner. As I discussed during our April call, this new contract has the effect of materially increasing revenue from this customer in 2024 compared to 2023, which serves as a tailwind to IOT for the quarter and the first half of the year.

Tom: In our commercial business, service revenue is up 6% this quarter to $126 million, with the increase reflecting continued strength in IoT.

Tom: Voice and data revenue rose 3% from last year's comparable quarter to $56.5 million. The increase was driven by subscriber growth, as demand for Iridium's push-to-talk services remained healthy.

Tom: Commercial IOT continued to benefit from demand for personal satellite communications as well as traditional industrial services.

Thomas J. Fitzpatrick: Revenue rose 20% from the prior year quarter to $41.6 million, in part reflecting the new two-year contract we signed earlier this year with a large, fast-growing partner. As I discussed during our April call, this new contract has the effect of materially increasing revenue from this customer in 2024 compared to 2023, which serves as a tailwind to IO2 ARPU for the quarter and the first half of the year. Revenue and commercial broadband fell 4% from the year-ago period to $13.5 million, even as we grew subs by 4% from the year-ago period.

Tom: Revenue rose 20% from the prior year quarter to $41.6 million, in part reflecting the new two-year contract we signed earlier this year with a large, fast-growing partner.

Speaker Change: As I discussed during our April call, this new contract has the effect of materially increasing revenue from this customer in 2024 compared to 2023, which serves as a tailwind to IO2 ARPA for the quarter and the first half of the year.

Thomas Fitzpatrick: Revenue and commercial broadband fell 4% from the year-ago period to 13.5 million, even as we grew subs by 4% from the year-ago period. As we previously noted, we're forecasting a reduction in broadband output this year related to vessels where Iridium was being used as the primary communications device. During the quarter, we added 83,000 net new commercial subscribers. Commercial IoT data subscribers now represent 81% of available commercial subscribers, up from 79% in the year-ago period. Hosting and other data service revenue was 14.4 million this quarter, down 4% from last year's comparable quarter. As we've discussed previously, the decline from the year-ago quarter reflects lower revenue recognition from extending the useful life of our satellites.

Tom: Revenue and commercial broadband fell 4% from the year-ago period to $13.5 million, even as we grew subs by 4% from the year-ago period. As we have previously noted, we are forecasting a reduction in broadband ARPU this year related to vessels where Iridium was being used as the primary communications device.

Thomas J. Fitzpatrick: As we have previously noted, we are forecasting a reduction in broadband ARPU this year related to vessels where Iridium is being used as the primary communications device. During the quarter, we added 83,000 net new commercial subscribers. Commercial IoT data subscribers now represent 81% of billable commercial subscribers, up from 79% in the year-ago period.

Tom: During the quarter, we added 83,000 net new commercial subscribers.

Tom: 81% of billable commercial subscribers, up from 79% in the year-ago period.

Thomas J. Fitzpatrick: Hosting and other data service revenue was $14.4 million this quarter, down 4% from last year's comparable quarter. As we've discussed previously, the decline from the year-ago quarter reflects lower revenue recognition from extending the useful life of our satellites. The extension of the useful life has no bearing on cash flow and only impacts the time over which we recognize revenues from the associated fixed-price hosting contracts.

Tom: Hosting and other data service revenue was $14.4 million this quarter, down 4% from last year's comparable quarter.

Tom: As we've discussed previously, the decline from the year-ago quarter reflects lower revenue recognition from extending the useful life of our satellites.

Thomas Fitzpatrick: The extension of the useful life has no bearing on cash flow and only impacts the time over which we recognize revenues from the associated fixed price hosting contracts.

Tom: The extension of the useful life has no bearing on cash flow and only impacts the time over which we recognize revenues from the associated fixed price.

Thomas Fitzpatrick: As Matt noted in the second quarter, we also started to recognize retail revenue from Iridium FTL, the time and location business we acquired in the Satellis transaction that closed on April 1st. We see a tremendous revenue opportunity in broadening the availability of Iridium's alternative position, navigation, and timing service, and believe it will generate over 100 million in annual service revenue by 2030. Government service revenue was stable during the quarter at 26.5 million, reflecting the terms of our EMSS contract with the US government. Subscriber equipment was 22.8 million in the second quarter and continues to return to more normalized levels following two years of heightened demand owed to supply chain constraints and customer inventory buildup.

Thomas J. Fitzpatrick: As Matt noted, in the second quarter, we also started to recognize retail revenue from Iridium STL, the time and location business we acquired in the Satellis transaction that closed on April 1st. We see a tremendous revenue opportunity in broadening the availability of Iridium's alternative position, navigation, and timing service and believe it will generate over $100 million in annual service revenue by 2030. Government service revenue was stable during the quarter at $26.5 million, reflecting the terms of our EMSS contract with the U.S. government.

Tom: As Matt noted, in the second quarter, we also started to recognize retail revenue from Iridium STL, the time and location business we acquired in the Satelis transaction that closed on April 1st.

Speaker Change: We see a tremendous revenue opportunity in broadening the availability of Iridium's alternative position, navigation, and timing service, and believe it will generate over $100 million in annual service revenue by 2030.

Speaker Change: Government service revenue was stable during the quarter at $26.5 million, reflecting the terms of our EMSS contract with the U.S. government.

Thomas J. Fitzpatrick: Subscription equipment revenue was $22.8 million in the second quarter and continues to return to more normalized levels following two years of heightened demand owed to supply chain constraints and customer inventory buildup. Engineering and support revenue was $25.8 million in the second quarter as compared to $20.6 million in the prior year period. The rise reflects growing activity with the U.S. government and the increasing scope of work with the Space Development Agency.

Speaker Change: Subscriber equipment was $22.8 million in the second quarter and continues to return to more normalized levels following two years of heightened demand owed to supply chain constraints and customer inventory buildup.

Thomas Fitzpatrick: Engineering and support revenue was 25.8 million in the second quarter, as compared to 20.6 million in the prior year period. The rise reflects growing activity with the US government and the increasing scope of work with a space development agency. As Matt noted, Iridium was also awarded an upsized contract with the government earlier this year to support maintenance and engineering work when our EMSS contract through 2029. In light of our second quarter results, we are affirming our full year guidance on service revenue and EBITDA. To aid with your financial models as we look to the second half of 2024, I would like to highlight some trends that provide context and support our outlook.

Speaker Change: Engineering and support revenue was $25.8 million in the second quarter as compared to $20.6 million in the prior year period. The rise reflects growing activity with the U.S. government and the increasing scope of work with the Space Development Agency.

Thomas J. Fitzpatrick: As Matt noted, Iridium was also awarded an upsized contract with the government earlier this year to support maintenance and engineering work on our EMSS contract through 2029. In light of our second quarter results, we are affirming our full year guidance on service revenue and EBITDA. To aid with your financial models, as we look to the second half of 2024, I would like to highlight some trends that provide context and support our outlook.

Speaker Change: As Matt noted, Iridium was also awarded an upsized contract with the government earlier this year to support maintenance and engineering work on our EMSS contract through 2029.

Speaker Change: In light of our second quarter results, we are affirming our full year guidance on service revenue and EBITDA.

Thomas J. Fitzpatrick: We continue to expect service revenue growth of between four and 6%, primarily driven by momentum in commercial IOT. 2024 IOT revenue growth in the mid-teens represents an increase in the growth rate compared to both 2022 and 2023. The Citelis acquisition, which we completed in April, will be additive to service revenue growth, but the impact is expected to be limited this year at less than 100 basis points to our full-year forecast.

Speaker Change: To aid with your financial models as we look to the second half of 2024, I would like to highlight some trends that provide context and support our outlook. We continue to expect service revenue growth of between 4 and 6 percent, primarily driven by momentum in commercial IoT.

Thomas Fitzpatrick: We continue to expect service revenue growth between 4 and 6%, primarily driven by momentum in commercial IoT. 2020 for IoT revenue growth in the mid teens represents an increase in the growth rate compared to both 2022 and 2023. The Satellis acquisition, which we completed in April, will be additive to the service revenue growth, but the impact is expected to be limited this year at less than 100 basis points to our full year forecast. Revenue from our EMSS contract with the US government will rise in the second half of the year with a contractual step up in mid-September.

Speaker Change: 2024 IoT revenue growth in the mid-teens represents an increase in the growth rate compared to both 2022 and 2023.

Speaker Change: The Satellis acquisition, which we completed in April , will be additive to the service revenue growth, but the impact is expected to be limited this year at less than 100 basis points to our full year forecast.

Thomas J. Fitzpatrick: Revenue from our EMSS contract with the U.S. government will rise in the second half of the year, with the contractual step-up in mid-September. Full-year revenue in our government business will be $106.3 million in 2024. As we previously discussed, equipment sales will moderate this year. We saw this moderation begin in the second half of 2023, which will make year-over-year comparisons easier as we move to the second half of 2024.

Speaker Change: Revenue from our EMSS contract with the U.S. government will rise in the second half of the year, with the contractual step-up in mid-September. Full-year revenue in our government business will be $106.3 million in 2024.

Thomas Fitzpatrick: Full year revenue in our government business will be 106.3 million in 2024. As we previously discussed, equipment sales will moderate this year. We saw this moderation begin in the second half of 2023, which will make year-over-year comparisons easier as we move to the second half of 2024. When the expense out of the ledger, our R&D will remain higher this year, up about 5 million, as we make the progress on our standard space initiatives to support Narrowband IoT and directed device. We had initially expected that S-GNA would be in line with 2023 for the full year 2024.

Speaker Change: As we previously discussed, equipment sales will moderate this year. We saw this moderation begin in the second half of 2023, which will make year-over-year comparisons easier as we move to the second half of 2024.

Thomas J. Fitzpatrick: On the expense side of the ledger, our R&D will remain higher this year, up about $5 million, as we make progress on our standards-based initiatives to support narrowband IoT and directed devices. We had initially expected that SG&A would be in line with 2023 for the full year 2024. We now expect SG&A to be up about 15% in 2024 over last year. This change gives effect to the TELUS acquisition, which was not contemplated in our original guide, and to a reclassification of certain expenses from cost of service as originally modeled to SG&A.

Speaker Change: On the expense side of the ledger, our R&D will remain higher this year, up about $5 million, as we make progress on our standards-based initiatives to support narrowband IoT and directed device.

Speaker Change: We had initially expected that SG&A would be in line with 2023 for the full year 2024.

Thomas Fitzpatrick: We now expect S-GNA will be up about 15% in 2024 over last year. This change gives effect to this telephs acquisition, which was not contemplated in our original guide, and to a reclassification of certain expenses from cost of service as originally modeled to S-GNA. This reclassification does not change our EBITDA outlook, as the increased S-GNA is offset by lower cost of services than was originally modeled. Depreciation and amortization will be significantly lower than a year ago as a result of the change in our satellite useful life. We would advise modeling 2024 DNA close to 200 million.

Speaker Change: We now expect SG&A will be up about 15% in 2024 over last year.

Speaker Change: This change gives effect to the TELUS acquisition, which was not contemplated in our original guide.

Speaker Change: and to a reclassification of certain expenses from cost of service as originally modeled to SG&A. This reclassification does not change our EBITDA outlook as the increased SG&A is offset by lower cost of services than was originally modeled.

Thomas J. Fitzpatrick: This reclassification does not change our EBITDA outlook, as the increased SG&A is offset by a lower cost of services than was originally modeled. Appreciation and amortization will be significantly lower than a year ago as a result of the change in our satellite useful life. We would advise modeling 2024 DNA close to 200 million.

Speaker Change: Depreciation and amortization will be significantly lower than a year ago as a result of the change in our satellite useful life. We would advise modeling 2024 DNA close to 200 million.

Thomas Fitzpatrick: We already am still expect cash taxes of less than 10 million through 2026. Lastly, on interest expense, I would highlight that we increase outstanding debt under the term loan, which we used for this telephs acquisition, and drew on our revolving facility in the second quarter. For RIDIUM, also repriced its term loan in the second quarter, which reduced the spread paid on the credit facility by 25 basis points to SOFR plus 225. The repricing transaction will save 4 million in annual interest expense. However, for 2024, the additional interest on the new borrowings will outpace the lower facility rate based upon the current outstanding term loan and prevailing interest rate.

Thomas J. Fitzpatrick: Iridium still expects cash taxes of less than $10 million through 2026. Lastly, on interest expense, I would highlight that we increased outstanding debt under the term loan, which we used for the Sotelis acquisition, and drew on our revolving facility in the second quarter. Iridium also repriced its term loan in the second quarter, which reduced the spread paid on the credit facility by 25 basis points to SOFR plus 225. The repricing transaction will save $4 million in annual interest expense. However, for 2024, the additional interest on the new borrowings will outpace the lower facility rate.

Speaker Change: Iridium still expects cash taxes of less than $10 million through 2026. Lastly, on interest expense, I would highlight that we increase outstanding debt under the term loans.

Speaker Change: which we used for the Sotelis acquisition.

Speaker Change: and Drew in our revolving facility in the second quarter. Iridium also repriced its term loan in the second quarter which reduced the spread paid on the credit facility by 25 basis points to SOFR plus 225. The repricing transaction will save four million in annual interest expense.

Speaker Change: However, for 2024, the additional interest on the new borrowings will outpace the lower facility rate. Based upon the current outstanding term loan and prevailing interest rate, we expect interest expense to total about $86 million in 2024. Taken together, this outlook...

Thomas J. Fitzpatrick: Based upon the current outstanding term loan and prevailing interest rate, we expect interest expense to total about $86 million in 2024. Taken together, this outlook allows us to reiterate our forecast for service revenue growth between 4 and 6 percent and operational EBITDA between $460 and $470 million this year. Moving to our capital position, as of June 30th, Iridium had a cash and cash equivalents balance of $63.5 million. During the second quarter, we utilized cash from an upsized term loan to complete the acquisition of Sotelis, which closed on April 1st.

Thomas Fitzpatrick: We expect interest expense to total about 86 million in 2024. Taken together, this outlook allows us to reiterate our forecast for service revenue growth between 4 and 6 percent and operational EBITDA between 460 and 470 million this year. Moving to our capital position, as of June 30th, RIDIUM had a cash and cash equivalence balance of 63.5 million. During the second quarter, we utilized cash from an upsized term loan to complete the acquisition of Satellis, which closed on April 1st. As of June 30th, RIDIUM's term loan balance was $1.62 billion. We ended the quarter with net leverage of approximately 3.5 times of EBITDA.

Speaker Change: Allows us to reiterate our forecast for service revenue growth between 4 and 6 percent and operational EBITDA between $460 and $470 million this year.

Speaker Change: Moving to our capital position, as of June 30th, Iridium had a cash and cash equivalents balance of $63.5 million. During the second quarter, we utilized cash from an upsized term loan to complete the acquisition of Satellis, which closed on April 1st.

Thomas J. Fitzpatrick: As of June 30th, Iridium's term loan balance was $1.62 billion. We ended the quarter with net leverage of approximately 3.5 times our EBITDA. With our earnings update today, I would note that we have updated our interim guidance for net leverage to provide additional capacity for share repurchases in light of recent trading levels. We believe that Iridium stock is undervalued today and represents compelling value at current levels. In fact, during the second quarter, we drew $50 million on our revolver to facilitate additional open market purchases.

Speaker Change: As of June 30th, Iridium's turn loan balance was $1.62 billion. We ended the quarter with net leverage of approximately 3.5 times what EBITDA.

Thomas Fitzpatrick: With our earnings update today, I would note that we have updated our interim guidance for net leverage to provide additional capacity for share repurchases in light of recent trading levels. We believe that a RIDIUM stock is undervalued today and represents a compelling value at current levels. In fact, during the second quarter, we drew 50 million on our revolver to facilitate additional open market purchase. As a 2026 exit rate, we are increasing net leverage guidance to below four times of EBITDAW through 2026. This update reflects our plans to raise additional debt to facilitate increased share purchases in the near term.

Speaker Change: With our earnings update today, I would note that we have updated our interim guidance for net leverage to provide additional capacity for share repurchases in light of recent trading levels.

Speaker Change: We believe that Iridium stock is undervalued today and represents a compelling value at current levels. In fact, during the second quarter, we drew $50 million on our revolver to facilitate additional open market purchases.

Thomas J. Fitzpatrick: While we got it to net leverage of below two and a half times, so EBITDA. As a 2026 exit rate, we are increasing net leverage guidance to below four times what you've adopted through 2026. This update reflects our plans to raise additional debt to facilitate increased share repurchases in the near term.

Speaker Change: While we had guided to net leverage of below 2.5 times OEBDOT as a 2026 exit rate, we are increasing net leverage guidance to below 4 times OEBDOT through 2026.

Speaker Change: This update reflects our plans to raise additional debt to facilitate increased share repurchases in the near term.

Thomas J. Fitzpatrick: We continue to forecast Iridium's net leverage will fall below 2x OEBDOT by the end of 2030. The rate at which we expect Iridium to naturally deliver makes us very comfortable with this long-term guide, notwithstanding the projected uptake and leverage in the near term. In the second quarter of 2024, Iridium retired approximately 3.3 million shares of common stock at an average price of $29.25. This activity leaves Iridium with an outstanding balance of $180.8 million under our board-approved authorization through December 31, 2025.

Thomas Fitzpatrick: We continue to forecast Iridium's net leverage will fall below two times of EBITDAW by the end of 2030. The rate at which we expect Iridium to naturally deliver makes us very comfortable with this long-term guide, notwithstanding the projected uptake in leverage in the near term. In the second quarter of 2024, Iridium retired approximately 3.3 million shares of common stock at an average price of $29.25. This activity leaves Iridium with an outstanding balance of 180.8 million under our Board-approved authorization through December 31st, 2025. As I've noted, we will look at probably that Iridium's equity offers a compelling investment opportunity at current levels.

Speaker Change: We continue to forecast Iridium's net leverage will fall below 2 times OEBDOT by the end of 2030. The rate at which we expect Iridium to naturally deliver makes us very comfortable with this long-term guide, notwithstanding the projected uptake in leverage in the near term.

Speaker Change: In the second quarter of 2024, Iridium retired approximately 3.3 million shares of common stock at an average price of $29.25.

Speaker Change: This activity leaves Iridium with an outstanding balance of $180.8 million under our board-approved authorization through December 31, 2025.

Thomas J. Fitzpatrick: As I've noted, we believe that Iridium's equity offers a compelling investment opportunity at current levels. We will continue to execute on our buyback program, balancing the desire to maximize return on investment with our long-term objective for delivery. During the second quarter, we made a quarterly dividend payment of $0.14 per share, paid on June 28th. This was up from $0.13 in the first quarter and will result in a full-year increase of approximately 6% to Iridium's annual dividend from 2023.

Speaker Change: As I've noted, we believe that Iridium's equity offers a compelling investment opportunity at current levels. We will continue to execute in our buyback program, balancing the desire to maximize return on investment with our long-term objective for deleveraging.

Thomas Fitzpatrick: We will continue to execute in our buyback program, balancing the desire to maximize return on investment with our long-term objective for deleveraging. During the second quarter, we made a quarterly dividend payment of $0.14 per share paid on June 28th. This was up from $0.13 in the first quarter, and will result in a full year increase of approximately 6% to Iridium's annual dividend from 2023. Between our dividend program, which started in 2023, and the commencement of our share repurchases, Iridium has already returned more than 900 million to shareholders. Capital expenditures in the second quarter were $12.4 million.

Speaker Change: During the second quarter, we made a quarterly dividend payment of $0.14 per share paid on June 28th. This was up from $0.13 in the first quarter and will result in a full year increase of approximately 6% to Iridium's annual dividend from 2023.

Thomas J. Fitzpatrick: Between our dividend program, which started in 2023, and the commencement of our share repurchases, Iridium has already returned more than $900 million to shareholders. Capital expenditures in the second quarter were $12.4 million. We expect capital expenditures to reach close to $70 million in 2024 as we invest in new product development initiatives like Project Startup. Thereafter, it will trend below 60 million in the latter part of the decade to average 60 million annually during the period from 2023 through 2030.

Speaker Change: Between our dividend program, which started in 2023, and the commencement of our share repurchases, Iridium has already returned more than $900 million to shareholders.

Thomas Fitzpatrick: We expect capital expenditures to reach close to $70 million in 2024, as we invest in new product development initiatives, like Project Startup. Thereafter, it will trend below $60 million in the latter part of the decade to average $60 million annually during the period from 2023 through 2030. Turning to our pro-former free cash flow, if we use the midpoint of our 2024 EBITDA guidance, and back up $86 million in net interest pro-former for our current debt structure, approximately $69 million in catbecks for this year, $5 million in cash taxes, and $6 million in working capital, inclusive of the appropriate hosted payload adjustment, we're projecting pro-former free cash flow of approximately $209 million for 2024.

Speaker Change: Capital expenditures in the second quarter were $12.4 million. We expect capital expenditures to reach close to $70 million in 2024 as we invest in new product development initiatives like Project Startup.

Speaker Change: Thereafter, it will trend below $60 million in the latter part of the decade, to average $60 million annually during the period from 2023 through 2030.

Thomas J. Fitzpatrick: Turning to our pro forma free cash flow, if we use the midpoint of our 2024 EBITDA guidance and back up 86 million in net interest pro forma for our current debt structure, approximately 69 million in capex for this year, 5 million in cash taxes, and 6 million in working capital, inclusive of the appropriate hosted payload adjustment, we're projecting a pro forma free cash flow of approximately $299 million for 2024. These metrics would represent a conversion rate of EBITDA to free cash flow of 64% in 2024 and a yield of close to 10%.

Speaker Change: Turning to our pro-forma free cash flow, if we use the midpoint of our 2024 EBITDA guidance and back off 86 million in net interest pro-forma for our current debt structure,

Speaker Change: Approximately $69 million in CapEx for this year, $5 million in cash taxes, and $6 million in working capital, inclusive of the appropriate hosted payload adjustment, we're projecting pro forma free cash flow of approximately $299 million for 2024.

Thomas Fitzpatrick: These metrics would represent a conversion rate of EBITDA to free cash flow of 64% in 2024, and a yield of close to 10%. A more detailed description of these cash flow metrics, along with the reconciliation to GAT measures, is available in a supplemental presentation under events on our investor relations website. Our rating continues to execute well on this year's plan, and we see meaningful growth ahead to support free cash flow generation in service revenue expansion. We remain comfortable with our long-term guidance for $1 billion in service revenue by 2030, and our capacity to return $3 billion to shareholders from 2023 through the end of the decade.

Speaker Change: These metrics would represent a conversion rate of EBITDA to free cash flow of 64% in 2024 and a yield of close to 10%. A more detailed description of these cash flow metrics along with the reconciliation to GAAP measures is available in a supplemental presentation under events on our investor relations website.

Thomas J. Fitzpatrick: A more detailed description of these cash flow metrics, along with the reconciliation to gap measures, is available in a supplemental presentation under events on our investor relations website. Iridium continues to execute well on this year's plan, and we see meaningful growth ahead to support free cash flow generation and service revenue expansion. We remain comfortable with our long-term guidance for $1 billion in service revenue by 2030 and our capacity to return $3 billion to shareholders from 2023 through the end of the decade. With that, I'll turn things back to the operator and look forward to your questions.

Speaker Change: Iridium continues to execute well on this year's plan, and we see meaningful growth ahead to support free cash flow generation and service revenue expansion.

Speaker Change: We remain comfortable with our long-term guidance for $1 billion in service revenue by 2030 and our capacity to return $3 billion to shareholders from 2023 through the end of the decade.

Unknown Executive: With that, I'll turn things back to the operator and look forward to your questions.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Ric Prentiss with Raymond James. Please go

Unknown Executive: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. If you would like to withdraw your question, please press star, then two.

Speaker Change: With that, I'll turn things back to the operator and look forward to your questions. We will now begin the question and answer session.

Speaker Change: To ask a question, you may press star, then 1, on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If you would like to withdraw your question, please press star, then 2.

Unknown Executive: At this time, we will pause momentarily to assemble our roster.

Ric Prentiss: The first question comes from Ric Prentiss with Raymond James. Please go ahead.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: The first question comes from Ric Prentiss with Raymond James. Please go ahead.

Ric Prentiss: Thanks, good morning everybody. Hey, a couple questions. First, on the service revenue guidance, maintaining it at four to six percent year-over-year increase. I think last quarter you thought you might be heading to the higher end of the service revenue guidance. Any update from what you were thinking last quarter to what you're thinking this quarter as far as that range is concerned?

Ric Prentiss: Thanks, morning, everybody. Hey, Rick. Hey, a couple questions. First, on the service revenue guidance, maintaining it 4% to 6% your rear increased. I think last quarter, though, you thought you might be heading to the higher end of the service revenue guidance. Any update from what you were thinking last quarter to what you're thinking this quarter as far as in that range?

Speaker Change: Thanks. Morning, everybody.

Ric Prentiss: A couple of questions. First.

Ric Prentiss: On the service revenue guidance, maintaining at four to six percent year-over-year increase, I think last quarter, though, you thought you might be heading to the higher end of the service revenue guidance. Any update from what you were thinking last quarter to what you're thinking this quarter as far as in that range? No, not really, Rick. What I'd say is.

Thomas Fitzpatrick: No, not really.

Thomas J. Fitzpatrick: No, not really, Ric. What I'd say is... The Telus acquisition was not contemplated in our original guide, so as much as we did the acquisition, it represented kind of goodness to that original guide, but we sized it at less than 100 basis points. So, you know, we're in a similar circumstance as to where we were last quarter. What I would say is we're very comfortable reiterating the original guide of 4 to 6, and, more importantly, reiterating the billion-dollar service revenue guide for 2030.

Thomas Fitzpatrick: What I'd say is the tell us was not contemplated in our original guide. So, as much as we did the acquisition, it represented kind of goodness to that original guide. But we sized it at less than 100 basis points. So, you know, we're in a similar circumstance as to where we were last quarter.

Speaker Change: Satellis was not contemplated in our original guide, so as much as we did the acquisition, it represented kind of goodness to that original guide, but we sized it at less than 100 basis points.

Speaker Change: So, you know, kind of, we're in a similar circumstance as to where we were last quarter. What I would say is we're very comfortable reiterating the original guide of 4 to 6, and more importantly, in reiterating the billion-dollar service revenue guide for 2030.

Thomas Fitzpatrick: What I would say is we're very comfortable reiterating the original guide of 46 and, more importantly, in reiterating the billion dollar service revenue guide for 2030. And obviously taking the leverage up to see opportunity in your stock price. Is there something that goes on when leverage is above three and a half, but less than 4% kind of on what happens with the data or prepayments or cash weeks like was written through the 10 queue a little bit there. Not between three and a half and four. When you get over four, there are certain certain things happen there.

Ric Prentiss: Okay, and obviously, taking the leverage up to see opportunity in your stock price. Is there something that goes on when leverage is above three and a half but less than four percent, kind of like what happens with the debt or prepayments or cash sweeps? I was reading through the 10-Q a little bit there.

Speaker Change: Okay, and obviously taking the leverage up to see opportunity in your stock price, is there something that goes on when leverage is above three and a half but less than four percent kind of on what happens with the debt or prepayments or cash sweeps, I was reading through the...

Thomas J. Fitzpatrick: Not between three and a half and four. When you get over four, there are certain things that happen there, and when you get over four, they're manageable, but we just like keeping it inside of four times. And that provides a lot of capacity for additional share repurchases.

Matthew Desch: And when you get over four, they're manageable. But we just let, we just like keeping it inside of four times. And that provides a lot of capacity for additional sharey purchases.

Speaker Change: and that provides a lot of capacity for additional share repurchases.

Ric Prentiss: Okay, and the last one for me is on the IOT. You did have that ARPU increase; you called it out a little bit in your prepared remarks. Talk to us a little bit about the competitive positioning of those IOT devices versus what's going on with direct-to-device of other operators out there, and should that ARPU trend upward and net-as, just trying to think about the competitive dynamics on that particular line.

Ric Prentiss: Okay.

Matthew Desch: And the last one for me is on the IoT; you did have that RPU increase. You call it out a little bit in your prepared remarks. Talk to us a little bit about that competitive positioning of those IoT devices versus what's going on with directed device of other operators out there. Should that RPU trend upward and net ads just trying to think the competitive dynamics on that particular line. Well, in terms of competitive aspects, I mean, one of the reasons is trending upwards is that we're introducing new devices into the market that offer higher speeds, you know, more capabilities, the ability to send, you know, consumer devices, pictures and voice snippets, and things like that.

Speaker Change: Okay, and the last one for me is on the IOT, you did have that ARPU increase, you called it out a little bit in your prepared remarks.

Speaker Change: Talk to us a little bit about that competitive positioning.

Speaker Change: of those IoT devices versus what's going on with direct-to-device of other operators out there. And should that ARPU trend upward and net-as, just trying to think the competitive dynamics on that particular line item.

Matthew J. Desch: Well, in terms of competitive aspects, I mean, one of the reasons that the market is trending upwards is that we're introducing new devices into the market that offer Unknown Speaker, Unknown Attendee, Unknown Speaker, Unknown Speaker, Unknown Speaker, [inaudible] you

Speaker Change: Well, in terms of competitive aspects, I mean, one of the reasons it's trending upwards is that we're introducing new devices into the market that offer

Speaker Change: higher speeds, more capabilities, the ability to send consumer devices, pictures, voice snippets and things like that. And we think that that will.

Matthew Desch: And we think that that will help in terms of driving some RPU in those kind of products. But you know, in addition, I mean, we really have a strong competitive advantage over everyone in IoT because we're a global service day one. I mean, the other activities people have are either typically non-real-time or they are regional. You know, we're expecting, for example, we don't really compete with cellular IoT. We supplement it; we support it. But it only covers the low teams part of the world, and even with supplemental coverage from space, you know, you know, coming that only adds a couple points to sort of the IOT footprint.

Speaker Change: That will help in terms of driving some ARPU in those kind of products.

Speaker Change: You know, in addition, I mean, we really have a strong competitive advantage over everyone in IoT because we're a global service, day one. I mean, the other activities people have are either

Speaker Change: Typically non-real-time or they are regional. We're expecting, for example,

Speaker Change: We don't really compete with cellular IOT. We supplement it. We support it, but it only covers the low teens part of the world and even with supplemental coverage from space, you know, you know coming that only adds a couple points to sort of the IOT footprint. So

Matthew Desch: So we're expecting still to have an important kind of global role for that. And then, yeah, on top of that, that we've been in service for many, many years in IoT and have hundreds of partners and potentially thousands of solutions out there today that are deeply embedded in all kinds of industries and expanding into more industries. So, you know, we're real comfortable with our position in IoT. In fact, it's even a particular strength right now in our results and what we're looking at going forward.

Speaker Change: We're expecting still to have an important kind of global role for that. And then yet on top of that, that we've been in service for many, many years in IOT and have...

Speaker Change: Hundreds of partners and potentially thousands of solutions out there today that are

Speaker Change: Deeply embedded in all kinds of industries and expanding into more industries. So, you know, we're real comfortable with our position in IoT. In fact, it's even a particular strength right now in our results and what we're looking at going forward.

Matthew Desch: And Khors getting into the D2D yourself, still a couple years to get kind of designed through the standards by the 3GPP. How should we think about kind of the cost and then the revenue curve of that effort? Well, you know, again, I think it will continue to add and support the growth that we're continuing to have as we're able to, as we're able to add more use cases and lower the cost of our product. I mean, we have plans to lower the cost for our products dramatically, even before standards, and then kind of seamlessly go into standards environments which would allow, you know, consumer, well, it would allow threshold devices that have already been sold in places to roam on to our network, which would then add kind of new revenue streams to us. You know, the development of Stardust is going very well.

Matthew J. Desch: As far as getting into D2D yourself, still a couple of years to get kind of designed through the standards body 3GPP, how should we think about kind of the cost and then the revenue curve of that effort? Well, you know, again.

Speaker Change: As far as getting into the D2D yourself, still a couple years to get kind of designed through the standards body 3GPP. How should we think about kind of the cost and then the revenue curve of that effort?

Matthew J. Desch: Well, you know, again, I think it will continue to add to and support the growth that we're continuing to have as we're able to add more use cases and lower the cost of our products. I mean, we have plans to lower the cost of our products dramatically, even before standards. And then kind of seamlessly go into standards environments, which would allow, you know, consumers. It would allow terrestrial devices that have already been sold in places to roam onto our network, which would then add kind of new revenue streams to us.

Speaker Change: Well, you know, again, I think it will, um...

Speaker Change: continue to add and support the growth that we're continuing to have as we're able to as we're able to add more use cases and lower the

Speaker Change: I mean, we have plans to lower the cost of our products dramatically, even before standards.

Speaker Change: and then kind of seamlessly go into standards environments which would allow

Speaker Change: Well, it would allow terrestrial devices that have already been sold in places to roam onto our network, which would then add.

Matthew J. Desch: You know, the development of Stardust is going very well. We've selected a lot of our partners. Development is... Unknown Speaker We've already seen some sort of demonstrations of Narrowband IoT across our unique waveform. Well embedded into standards processes and discussions with chip vendors and all that sort of thing. So we've gotten off to a great start on Stardust. It will be a couple years before I think it adds considerably, but nothing's going to decline in the meantime, and I think it's just added juice to our growth.

Speaker Change: You know, development of Stardust is going very well. We've selected a lot of our partners. Development is, occur, we've already seen some sort of demonstrations of

Matthew Desch: We've selected a lot of our partners; development has occurred. We've already seen some sort of demonstrations of of narrow ban IOT across our across our way, our unique waveform. We've well embedded into standards processes and discussions with chip vendors and all that sort of thing. So we've gotten off to a great start on Stardust. It will be, it will be a couple of years before I think it adds considerably, but, you know, nothing's going to decline in the meantime, and I think it's just added juice to our growth.

Speaker Change: of Narrowband IoT across our unique waveform.

Speaker Change: Well embedded into standards processes and discussions with chip vendors and all that sort of thing. So we've gotten off to a great start on Stardust. It will be a couple of years before I think it adds considerably, but nothing's going to decline in the meantime, and I think it's just added juice to our growth.

Ric Prentiss: Great. Thanks, guys.

Simon Flannery: Thank you. The next question comes from Simon Flannery with Morgan Stanley.

Simon William Flannery: The next question comes from Simon. Flannery with Morgan Stanley. Please go ahead.

Speaker Change: Great, thanks guys. Thank you.

Speaker Change: The next question comes from Simon Flannery with Morgan Stanley . Please go ahead.

Simon Flannery: Please go ahead. Great. Thank you very much.

Simon William Flannery: It's a pretty significant increase from the 2.5 to the 4. And I understand that your stock is attractive. One, is there anything else going into this? I think you confirmed the CAPEX guidance, but any other changes? Or is this all essentially keeping leverage higher to return more capital to shareholders? And just, you know, what was the decision to go up by one and a half turns rather than say, keep it in that three, three, five or whatever? How did you balance that and, you know, come up with this?

Simon Flannery: Good morning. If I could just come back to the leverage point, it's a pretty significant increase from the two five to the four. And I understand that the stock is attractive. One, is there anything else going into this? I think you confirmed the catback's guidance, but any other changes or is this all essentially keeping leverage higher to return more capital to shareholders and just, you know, what was the decision to, you know, go to up one and a half turns rather than say, keep it in that three, three, five or whatever. How did you balance that and, you know, come up with this ratio?

Simon William Flannery: Great, thank you very much. Good morning. If I could just come back to the leverage point, it's a pretty significant increase from the 2.5 to the 4.

Simon William Flannery: And I understand that your stock is attractive. One, is there anything else going into this? I think you confirmed the CAPEX guidance, but any other changes or is this all?

Speaker Change: financially keeping leverage higher to return more capital to shareholders. And just you know what was the decision to you know go to up one and a half turns rather than say keep it in that three three five or whatever. How did you balance that and you know come up with this ratio?

Thomas Fitzpatrick: Morning, Simon.

Thomas J. Fitzpatrick: Morning, Simon. So, yeah, the additional leverage is exclusively to repurchase more shares. I would say the thinking is an evaluation of our competitive circumstances and the commitment to the billion in service revenue. We think that we've done a thorough review and think that the stock is undervalued.

Thomas Fitzpatrick: So yet, the additional leverage is exclusively to repurchase more shares.

Speaker Change: Morning Simon, so yet the the additional leverage is exclusively to repurchase more shares. I would say the thinking is an evaluation of our circumstance competitively and

Thomas Fitzpatrick: I would say the thinking is an evaluation of our circumstance competitively and the commitment to the billion in service revenue. We think that we've done a thorough review and think that the stock is undervalued. And taking it up to just inside of four times can be done. There's, as I said, there's no implications on the credit facilities. Just a little bit of additional interest. And we can. And you won't go over four times. I think you told Rick. We're going to, we're going to stay inside four times.

Speaker Change: The Commitment to the Billion in Service Revenue, we think that's, we've done a thorough review and think that...

Thomas J. Fitzpatrick: And taking it up to just inside of four times can be done. As I said, there are no implications on the credit facilities, just a little bit of additional interest. And you won't go over four times, I think you told Greg, right? We're going to stay inside of four times.

Speaker Change: The stock is undervalued, and taking it up to just inside of four times can be done. As I said, there's no implications on the credit facilities, just a little bit of additional interest.

Thomas J. Fitzpatrick: But think about the amount of capacity that frees up for share repurchases. It's hard to imagine that we'd be less than $500 million in EBITDA in 2026. So at a turn and a half, you're talking about three quarters of a billion in capacity for share repurchases on a company with a $3 billion market cap. So it's significant, and we think it's appropriate at these trading levels

Speaker Change: And you won't go over it four times, I think you told Rick, right? We're going to stay inside it four times.

Thomas Fitzpatrick: But that think about the amount of capacity that frees up for sharey purchases. You know, it's hard to imagine that we'd be less than 500 million EBITDA in 2026. So, at a turn and a half, you're talking about three quarters of a billion in capacity for sharey purchases.

Speaker Change: But that, think about the amount of capacity that frees up for share repurchases, you know. It's hard to imagine that we'd be less than 500 million in EBITDA in 2026, so at a turn and a half you're talking about three-quarters of a billion in capacity for share repurchases on a company with a three billion dollar market cap. So it's significant and we think it's appropriate at these trading levels.

Thomas Fitzpatrick: We want a company with the three billion dollar market caps that's significant. And we think it's appropriate at these trading levels. Great.

Simon William Flannery: Great. And then on commercial broadband, I think you sort of talked about this going as expected, given some of the primary to complementary.

Simon Flannery: And then on commercial broadband, I think you'd sort of talked about this is going as expected given some of the primary to complimentary. Can you just help us? What ending are we in on this? Are we near the bottom of this sort of rate of percentage decline? Or is there a couple more quarters before we can sort of say, you know, we're seeing some sort of easing of that pressure.

Speaker Change: Great. And then on commercial broadband, I think you'd sort of talked about this as going as expected.

Simon William Flannery: Can you just help us figure out what inning we are in on this? You know, ARPU's down to 269; are we near the bottom of this sort of rate of percentage decline, or is there a couple more quarters before we can sort of say, you know, we're seeing some sort of easing of that pressure?

Speaker Change: given some of the primary to complementary. Can you just help us, what inning are we in on this? You know, ARPU's down to 269. Are we near the bottom of this sort of?

Speaker Change: rate of percentage decline or is there a couple more quarters before we can sort of say you know we're seeing some sort of easing of that pressure

Matthew Desch: What sport do you want to use? Baseball or, you know, I guess it was baseball. I think we're in the latter part of the game here, you know, maybe third or fourth quarter. I don't know what sport you like, but it definitely feels like we're mostly, we're mostly through a lot of that. We're kind of getting to the environment where I think the predominant use of these days is us as companion service, and the development is going very well and is on track for adding GMDSS to our broadband service so that, you know, one terminal can really do all the safety as well as companion aspects, which we think is a real dynamite product.

Thomas J. Fitzpatrick: Which sport do you want to use baseball or, you know, I guess it was baseball. I think we're in the latter part of the game here. You know, maybe, maybe third or fourth quarter.

Speaker Change: Which sport do you want to use? Baseball or, you know, I guess it was baseball. I think we're in the latter part of the game here, you know, maybe.

Speaker Change: Good evening, and welcome to the first and maybe third or fourth quarter, I don't know what sport you like but it definitely feels like we're mostly, we're mostly through a lot of that. We're kind of getting to the environment where

Simon William Flannery: I don't know what sport you like, but it definitely feels like we're mostly through a lot of that. We're kind of getting to the environment we were. I think the predominant use these days is us as a companion service, and the development is going very well and is on track for adding GMDSS to our broadband service so that, you know, one terminal can really do all the safety as well as companion aspects, which we think is a real dynamite product. So I think we're really very well positioned to sort of continue our Broadband Business.

Speaker Change: I think the predominant use these days is us as a companion service and the development is going very well and is on track for

Speaker Change: Adding GMDSS to our broadband service so that, you know, one terminal can really do all the safety as well as companion aspects, which we think is a real dynamite product. So I think we're really very well positioned to sort of continue our

Matthew Desch: So, I think we're really very well positioned to sort of continue our broadband business there.

Simon William Flannery: And where should that ARPU settle out in the kind of mid-200s, sir? I think that's fair. Yeah, I think that's about right. And then just one last one, you talked about the 90 million in incremental revenue over the next five years from the US government. How does that flow through the next several

Matthew Desch: And where should that arpus settle, as in the kind of mid 200s, sir? I think that's fair. Yeah, I think that's about right now.

Speaker Change: Our broadband business there. And where should that ARPU settle out in the kind of mid 200s?

Simon Flannery: And then just one last one, you talked about the 90 million incremental revenue over the next five years from the US government.

Speaker Change: I think that's fair. Yeah, I think that's about right.

Speaker Change: And then just one last one, you talked about the 90 million in incremental revenue over the next five years from the U.S. government. How does that flow through the next several years?

Simon Flannery: How does that flow through the next several years? It's pretty...

Thomas J. Fitzpatrick: It's pretty... It's in engineering and support, Simon.

Simon Flannery: It's an engineering and support, Simon. Yeah, it's pretty flat. The previous contract, as we said, was lower than that. And it was pretty flat each year. This one obviously steps it up roughly 50% or so. So that will just be an increase over the next five years to that.

Speaker Change: It's pretty flat. The previous contract, as we said, was lower than that and it was pretty flat each year. This one obviously steps it up roughly.

Speaker Change: 50% or so. So that will just be an increase over the next five years to that. And when does the when's the first quarter you get to step up?

Simon Flannery: And when's the first quarter you get the step up? I think a little bit comes in this year, and then next year is sort of a full year effect. Right. Not huge effect, but it's positive and one of the many positive things. Yeah, appreciate it.

Thomas J. Fitzpatrick: Yeah, it's pretty flat. The previous contract, as we said, was lower than that, and it was pretty flat, you know, each year. This one obviously steps it up roughly 50% or so, so that will just be an increase over the next five years on that. And when's the first quarter you get to step up? I think a little bit comes in this year and then the next, and then next year is sort of a full year effect. It's not a huge effect, but it's positive and one of the many positive things.

Speaker Change: I think a little bit comes in this year and then next year is sort of a full year effect.

Speaker Change: It's not a huge effect, but it's positive and one of the many positive things.

Simon William Flannery: Yeah, I appreciate it. All right. Thanks a lot.

Simon Flannery: All right. Thanks a lot.

Walter Piecyk: Thank you, Simon. The next question comes from Walter Pysic with Lightshed.

Speaker Change: Appreciate it. All right. Thanks a lot.

Walter Paul Piecyk: The next question comes from Walter Piecyk with LightShed. Please go ahead.

Walter Piecyk: Please go ahead. Yeah, hi guys. This is Joe on for Walt. You've cited maritime in terms of the area that's being impacted by... Or it's impacting broadband. Is there anything... Are there any other verticals that are at risk?

Speaker Change: The next question comes from Walter Piecyk with LightShed. Please go ahead.

Walter Paul Piecyk: Yeah, guys, this is Joe on for Walt. You've cited maritime in terms of the area that's being impacted by or that's impacting broadband. Is there anything, are there any other verticals that are at risk? So maybe you can describe a little bit what's going on in those other verticals in the broadband market.

Speaker Change: Hi guys, this is Joe on for Walt. You've cited Maritime in terms of the area that's being impacted.

Speaker Change: [inaudible]

Matthew Desch: So maybe you can describe what's going on in those other verticals in the broadband market? Well, I mean, the two other main ones that we... Well, three, I guess you could say would be land mobile, aviation, and government. Governments still in the early days, and we're in the emergency or contingency. Anyway, there in their pace model of primary alternative contingency emergency. And you know, we're still well positioned there. Land mobile, you know, has been a small business for us as sort of an alternative for things like trains or, you know, remote assets. And we think that's kind of...

Matthew J. Desch: Well, I mean, the two other main ones that we, well, three, I guess you could say, would be land, mobile, aviation, and government. Government is still in the early days, and we're a We're in the emergency or contingency mode anyway, they're in their pace model of primary alternate contingency emergency, and you know, we're still well positioned there. LandMobile, you know, has been a small business for us as sort of an alternative for things like trains or, you know, remote assets.

Speaker Change: Well, I mean, the two other main ones that we, well, three, I guess you could say, would be land, mobile, aviation and government, government still in the early days, and we're a

Speaker Change: We're in the emergency or contingency anyway, they're in their PACE model of Primary Alternate Contingency Emergency, and you know, we're still well positioned there.

Speaker Change: LandMobile, you know, has been a small business for us as sort of an alternative for things like trains or, you know, remote assets. And we think that's

Matthew J. Desch: And, and we think that's, Matthew DiPalma, Kenneth Levy, Michael DiPalma, Kenneth Levy, Unknown Attendee, Matthew DiPalma, completing right now. And, and We're seeing the first sort of broadband terminals go out on helicopters and corporate jets and into commercial airliners. We'll see that accelerate into the coming years as final safety sort of certifications come later this year and then next year for that, and so that's an area where we have a unique position.

Matthew Desch: It's been a niche. It hasn't really been impacted, per se. But it's a small business overall for us that we think will... Again, we're always a bit more in the alternative category. And then aviation, that's a safety business for us. That's where we're in the cockpit of airplanes. That work is completing right now. And we're seeing the first sort of broadband terminals go out on helicopters and... Corporate jets and into commercial airliners will see that accelerate into the coming years as the final safety sort of certifications come later this year and in next year for that.

Speaker Change: It's been a niche. It hasn't really been impacted per se, but it's a small business overall for us that we think will

Speaker Change: Page Number Verizon Scripture News again sit in we're always a bit more in the alternative category and then aviation that the safety business for us that's where we're in the cockpit of airplanes that worker

Speaker Change: completing right now and and we're seeing the first sort of broadband terminals go out on helicopters and

Speaker Change: Corporate jets and into commercial airliners. We'll see that accelerate into the coming years as

Speaker Change: Final safety sort of certifications come later this year and next year for that. And so that's an area where

Matthew Desch: And so that's an area where we have a unique position. There's really few that can do that. And that isn't sort of a service that a lower cost KU band service can do.

Matthew J. Desch: There are really few that can do that, and that isn't sort of a service that a lower-cost KU band service can do. It's really pretty much just been maritime has been the only impact that we have.

Speaker Change: We have a unique position. There's really few that can do that, and that isn't sort of a service that a lower-cost KU band service can do. So, it's really pretty much just been maritime has been the only impact that we really kind of seen.

Walter Piecyk: So it's really pretty much it's been maritime has been the only impact that we that we really kind of seen. Okay.

Walter Piecyk: And then on SGNA, I know there was some reclass and there's some step up for Satellis and then Tom mentioned that the guide year year should be plus 15%. So that implies I guess that SGNA will be a little lower in Q3 than it was in Q2 and Q4. So is there is there some one timer that's in that 47 million that was in Q2. So, in the second quarter, there was the reclass that made the second quarter number higher. So a lot of the year-to-date reclass occurred in the second quarter. And you're right to observe that SGNA will move down sequentially in the third and the fourth from where you see it in a second.

Walter Paul Piecyk: And then on SG&A, I know there was some reclassification and, you know, there's some step-up for Satellis, and then Tom mentioned that the guide year-over-year should be plus 15%. That implies, I guess, that SG&A will be a little lower in Q3 than it was in Q2 and Q4. So is there some one-timer that's in that?

Speaker Change: Okay.

Speaker Change: and then on SG&A I know there was some reclass and you know there's some step up for us to tell us and then and then Tom mentioned that the guide year-over-year should be plus 15% so

Speaker Change: That implies, I guess, that SG&A will be a little lower in Q3 than it was in Q2 and in Q4. So, is there some one timer that's in that?

Thomas J. Fitzpatrick: 47 million that was in Q2. So in the second quarter, in the second quarter, there was the reclass that made the second quarter number higher, so a lot of the year-to-date reclass occurred in the second quarter. And you're right to observe that SG&A will move down sequentially in the third and the fourth from where you see it in the second. And you know, you modeled it, 165 to 170. That ought to be good. Okay, and then what specifically was reclassed out of SG&A? Certain, fixed costs.

Speaker Change: 47 million that was in Q2. So in the second quarter, in the second quarter there was the reclass that

Speaker Change: made the second quarter number higher. So a lot of the year-to-date requests occurred in the second quarter. And you're right to observe that SG&A will move down sequentially in the third and the fourth from where you see it in the second. And you know, he modeled it, you know, 165 to 170, that ought to be good.

Thomas Fitzpatrick: And you know, you modeled it, you know, 165 to 170. That ought to be good. Okay. And what specifically was reclass out of SGNA? Certain costs in support of our FDA contract, where we, on reflection, it was more appropriate for them to be shown as SGNA than cost of service. So we just made that reclassification. And, as I said, no impact on EBITDA; it's just bucketing, if you will. Okay.

Thomas J. Fitzpatrick: Certain costs in support of our SGA contract were, on reflection, it was more appropriate for them to be shown as SG&A than cost of service. So we just made that reclassification. As I said, it had no impact on EBITDA.

Speaker Change: Okay, and what specifically was reclassed out of SG&A?

Speaker Change: Certain costs in support of our SDA contract, on reflection, it was more appropriate for them to be shown as SG&A than cost of service, so we just made that reclassification. As I said, no impact on EBITDA, it's just bucketing, if you will.

Walter Paul Piecyk: And then last one, on CapEx, it's been kind of, I guess, light in the first half. Is that expected to ramp up each quarter into the end of the year to get to like this 70 million ish guidance? Yes, that's our expectation.

Thomas Fitzpatrick: And then last one on CAPEX: it's been kind of light in the first half. Is that expected to ramp each quarter into the end of the year to get to like this 70 million-ish guidance? Yes, that's our expectation. Okay.

Speaker Change: And then last one, on CapEx, it's been kind of, I guess, light in the first half. Is that expected to ramp each quarter into the end of the year to get to like this 70 million-ish guidance? Yes, that's our expectation.

Thomas J. Fitzpatrick: Yes, that's what our expectation is.

Walter Piecyk: Thanks.

Hamed Khorsand: The next question comes from Hammond Corsand with BWS.

Hamed Khorsand: The next question comes from Hamed Khorsand with BWS. Please go ahead.

Speaker Change: Okay, thanks.

Hamed Khorsand: Please go ahead. Okay.

Speaker Change: The next question comes from Hamed Khorsand with BWS. Please go ahead.

Hamed Khorsand: Good morning. So, first off, on the IOT front, what drove ARPU and IOT going up on that side? Was it consumer? Was it industrial?

Hamed Khorsand: Good morning. So first off on the IoT front, excuse me if you're answering this, but what drove the RPU and IoT going up on the, on that side was a consumer, was industrial? Consumer and it's on the back of the new contract that we referred to with a large fast growing customer. And then, is that just going to be a one-time benefit, though? The contract is two years, so it's a two-year bond load increase in like a one-time benefit and then just tapers off.

Hamed Khorsand: Hey, good morning. So first off on the IoT front, excuse me if you already answered this, but what drove ARPU and IoT going up on that side? Was it consumer? Was it industrial?

Thomas J. Fitzpatrick: Consumer, and it's on the back of the new contract that we refer to with the large, fast-growing customer.

Hamed Khorsand: Consumer, and it's on the back of the new contract that we referred to with the large, fast-growing customer.

Hamed Khorsand: And then, is that just going to be a one-time benefit, though? Or is it going to be consistent pricing? The contract is two years, so... Unknown Speaker So there was no like front load increase in like a one-time benefit that just taper off? Unknown Speaker Right.

Speaker Change: And then, is that just going to be a one-time benefit, though?

Speaker Change: The contract is two years, so

Speaker Change: So there was no like front load increase in like a one-time benefit and then just tapers off.

Hamed Khorsand: All right. So the fundamental trend in IoT, if you look at it over a multi-year basis, is personal communications is growing faster than industrial in terms of subs. So there will be a natural... There'll be a natural move towards the ARPU of personal communications, which is in the $4 range, which is lower than the overall ARPU in the $7 range. So that's the fundamental; that's what you've been seeing for years, and that will continue to be the case as personal comms continues to grow really fast.

Thomas J. Fitzpatrick: Right, so the fundamental trend in IoT, if you look at it over a multi-year basis, is personal communications is growing faster than industrial in terms of subs, so there'll be a natural There'll be a natural move towards the ARPU of personal communications, which is, you know, in the $4 range, which is lower than the overall ARPU in the $7 range. So that's the fundamental. That's what you've been seeing for years, and that will continue to be the case as personal communication continues to grow really fast.

Speaker Change: All right, so the fundamental trend in IoT, if you look at it over a multi-year basis, is personal communications is growing faster than industrial in terms of subs, so there'll be a natural

Speaker Change: There will be a natural move towards the ARPU of personal communications, which is...

Speaker Change: In the $4.00 range, which is lower than the overall ARPU in the $7.00 range. So that's the fundamental, that's what you've been seeing for years, and that will continue to be the case as personal comms.

Hamed Khorsand: Okay, and then my last question is, is your partner the same partner that we're talking about? Are they promoting their product more than include you? Are they doing anything to increase the units sold? Yeah, I mean, they're heavily promoting their products; obviously, that's the whole point to this and why the revenue has gone up. Is that they've been very successful and are introducing new products to the market with new capabilities, et cetera, and we're working together to make that a success for them and for ourselves.

Hamed Khorsand: Okay, and then my last question is, is your partner, the same partner that we're talking about, promoting their product more than including you? Or are they doing anything to increase the units sold?

Speaker Change: continues to grow really fast.

Speaker Change: Okay and then my last question is, is your partner, the same partner that we're talking about, are they promoting their product more than include you or are they doing anything to increase the units sold?

Thomas J. Fitzpatrick: I mean, they're heavily promoting their products. Obviously, that's the whole point of this and why the revenue has gone up is that they've been very successful and are introducing new products to the market with new capabilities, etc. And we're working together to make that a success for them and for ourselves.

Speaker Change: I mean, they're heavily promoting their products. Obviously, that's the whole point of this and why the revenue has gone up is that they've been very successful and are introducing new products to the market with new capabilities, etc. And we're working together to make that a success for them and for ourselves.

Hamed Khorsand: Okay, thank you.

Hamed Khorsand: Okay, thank you.

Christopher Quilty: The next question comes from Chris Quilty from Quilty Space. Please go ahead. Thanks, Tom. Just quickly, are we saved modeling sort of high 30s margins for equipment, and what sort of the range there for full year? I think that's about right yet.

Christopher David Quilty: The next question comes from Chris Quilty from Quilty Space. Please go ahead.

Speaker Change: Okay, thank you

Speaker Change: The next question comes from Chris Quilty from Quilty Space. Please go ahead.

Christopher David Quilty: Thanks, Tom. Just quickly, are we safe modeling sort of high-30s margins for equipment? And what sort of range is there?

Christopher David Quilty: Thanks, Tom. Just quickly, are we safe modeling sort of high 30s margins for equipment?

Speaker Change: And what's sort of the range there?

Thomas J. Fitzpatrick: I think that's about right. Yeah

Speaker Change: for full year.

Christopher David Quilty: Okay, second question. Todd, did I hear you mention you have partners on the Stardust program? I hadn't heard you specifically mention that before.

Christopher Quilty: Okay, second question.

Speaker Change: I think that's about right, yeah.

Christopher Quilty: Did I hear you mention you have partners on the Start Us program that hadn't heard you specifically mentioned that previously? Well I, you know, supply, you know, when you build into new equipment to support the standard new equipment in a gateway, that sort of thing. I don't know that I refer to them as partners as opposed to, well, maybe I did. We view them that way; I guess in some ways, but, you know, as we work together to implement the capability into our network, we aren't doing it all ourselves. So there is some new hardware on the ground infrastructure that's required, and I was seeing software programming in the satellites and that sort of thing.

Todd: Okay, second question. Todd, did I hear you mention you have partners on the Stardust program? I hadn't heard you specifically mention that previously.

Thomas J. Fitzpatrick: Well, I equip, you know, supply, you know, when you build new equipment to support the standard, new equipment in the gateway, that sort of thing. I don't know that I refer to them as partners as opposed to... Well, maybe I did. We view them that way, I guess, in some ways, but, you know, as we work together to implement the capability into our network, we aren't doing it all ourselves, so there is some new hardware on the ground infrastructure that's required, and obviously, you know, software reprogramming in the satellites and that sort of thing. So that's really what I was referring to.

Speaker Change: Well, I equip, you know, supply, you know, when you build into new equipment to support the standard, new equipment in the gateway, that sort of thing. I don't know that I refer to them as partners as opposed to, well, maybe I did.

Speaker Change: We view them that way, I guess, in some ways. But, you know, as we work together to implement the capability into our network, we aren't doing it all ourselves. So...

Speaker Change: There is some new hardware on the ground infrastructure that's required, and I've seen, you know, software reprogramming in the satellites and that sort of thing. So that's really what I was referring to. We haven't announced...

Matthew Desch: So that's really what I was referring to.

Matthew Desch: We haven't announced the kind of partnerships I expect you're really talking about yet, though we're talking to many companies about it and are getting a lot of encouragement support. And as we get closer to things, I think we're going to obviously be able to talk about some of those sort of things.

Thomas J. Fitzpatrick: We haven't announced the kind of partnerships I expect you're really talking about yet, though we're talking to many companies about them and are getting a lot of encouragement and support. And as we get closer to things, I think we're going to obviously be able to talk about some of those sorts of things.

Speaker Change: The kind of partnerships I expect you're really talking about yet, though. We're talking to many companies about it and are getting a lot of Encouragement and support and as we get closer to things, I think we're going to obviously be able to talk about some of those sort of things

Christopher David Quilty: Okay, just checking. Yep.

Christopher Quilty: Okay, just checking.

Christopher Quilty: So I was looking at the your DOD sub, and they're, you know, still kind of fluctuating around. And you kind of look at what's going on in the world is sort of what they call in the 90s revolution and military affairs that tap me with drone warfare and, and currently there's sensor networks all around Ukraine that pick up the drone signals. It would seem to be the sort of market activity for you with, you know, secure communication devices that you would be seeing large activities or programs within the government. And you know, I haven't seen anything; the P Leo contract doesn't seem to be the vehicle for that.

Speaker Change: Okay, just checking. Yep. So I was looking at the your DoD subs, and they're, you know, still kind of fluctuating around. And you kind of look at the what's going on in the world is sort of

Christopher David Quilty: So I was looking at your DoD subs, and they're, you know, still kind of fluctuating around, and you kind of look at what's going on in the world. What would they call in the 90s, a revolution in military affairs that's happening with drone warfare and... Apparently, there are sensor networks all around Ukraine that pick up drone signals. It would seem to be the sort of market activity for you with, you know, secure communication devices that you would see large activities or programs within the government. And I haven't seen anything; the PLEO contract doesn't seem to be the vehicle for that. And so could you give us an update on, you know, both the PLEO and what you're seeing?

Speaker Change: What would they call in the 90s a revolution in military affairs that's happening with drone warfare and

Speaker Change: Apparently there are sensor networks all around Ukraine

Speaker Change: It would seem to be the sort of market activity for you with, you know, secure communication devices that you would be seeing large activities or programs

Speaker Change: I haven't seen anything, the PLEO contract doesn't seem to be the vehicle for that, and so could you give us an update on both the PLEO and what you're seeing out there?

Matthew Desch: And so could you give us an update on, you know, both the P Leo and what you're seeing. Well, yeah, our sub count is very, you know, it moves around a lot. I think we're in kind of a transition period right now with the government on sort of subscribers. There's both clean ups and additions, and all kinds of stuff, but the trends going forward we believe is going to be very positive. There's a number of new contracts and areas that we're working with the government that would drive a lot of subscribers in the coming years.

Matthew J. Desch: Well, yeah, our subscriber count is very, um, it moves around a lot. I think we're in kind of a transition period right now with the government on sort of subscribers. There are both cleanups and additions and all kinds of stuff. But the trend going forward, we believe is going to be very positive. There's a number of new contracts and areas that we're working with the government on that would drive a lot of subscribers in the coming years. And so, you know, given it's a fixed price contract, we're not exactly worried about the day to day subscriber counts but more focused on making sure that we are For more information, visit www.fema.gov

Speaker Change: Well, yeah, our sub count is very...

Speaker Change: You know, it moves around a lot. I think we're in kind of a transition period. Right now with with the government on sort of subscribers, there's both cleanups and additions and all kinds of stuff. But the trend going forward, we believe is going to be

Speaker Change: Very positive. There's a number of new contracts and...

Speaker Change: areas that we're working with the government that would drive a lot of subscribers in the coming years. And so, you know, given it's a fixed price contract, we're not exactly worried about the day to day.

Matthew Desch: And so, you know, given us a fixed price contract, we're not exactly worried about the day-to-day subscriber counts, but more focused on making sure that we are embedded in all the right, you know, activities that we're an important technology in services and that we see kind of long-term growth. In that area, that's the most important thing for, you know, continued good relationship with the government. So, you're right; you don't see it quite in the sub; you're not going to be able to see it right in the sub count in the short term, but I think that will turn positive, I think in the coming years.

Speaker Change: Subscriber Counts, but more focused on making sure that we are

Speaker Change: embedded in all the right, you know, activities that they have that that were an important technology in

Speaker Change: In services and that we see kind of long-term growth in that area. That's the most important thing for

Speaker Change: You're right, you're not going to be able to see it right in the sub count in the short term, but I think that will turn positive in the coming years.

Christopher David Quilty: And do you still feel that the strategy of selling Sirtis as, you know, separate, you know, from the EMSS contract, does that, you know, still look like a solid plan? Yeah.

Matthew Desch: And do you still feel that the strategy of selling service as, you know, separate from the EMSS contract is that, you know, still look like a solid plan? Yeah, I think so. I mean, I think we're continuing to see niches of things that we can do well that, you know, others can't, and it's a bit of a need service. I think we're going to see it finally been installed at the government gateway soon, which will help continue to see sort of us as an all as a contingency backup sort of service for other technologies there too.

Speaker Change: Do you still feel that the strategy of selling SIRTIS as separate from the EMSS contract, does that still look like a solid plan?

Matthew J. Desch: Yeah, I think so. I think we're continuing to see niches of things that we can do well that, you know, others can't. And it's a bit of a niche service. I think we're going to see it finally installed at the government gateway soon, which will help continue to see us as a contingency backup sort of service for other technologies there too. So I think we're still well-positioned with that technology on the broadband side and then really well-positioned in sort of the mid-band and what I'd call narrow-band side of the SIRTIS technology as well in application.

Speaker Change: Yeah, I think so. I mean, I think we're continuing to see niches of things that we can do well that, you know, others can't, and it's a bit of a niche service. I think we're going to see it finally.

Speaker Change: [inaudible]

Matthew Desch: So I think we're still well positioned with that technology on the broadband side and then really well positioned sort of the midband and what I call narrow band side of the service technology as well in applications.

Speaker Change: Well positioned with that technology on the broadband side and then really well positioned in sort of the mid band and what I call narrow band side of the SIRTIS technology as well in applications.

Matthew Desch: Final question, don't ask why I was looking at a pre pandemic in Mars at annual report and they were sizing the, I think the aviation safety market, you know, that you, you and a share that I think like 250 million and growing to a billion whenever, right. You know, I think your business there is still probably around 30 million. I think Tom and, you know, what do you think is the outlook for that market? Obviously, you need to get, you know, your certification in place, but is it really about getting equipment deliveries? Is it aircraft deliveries?

Christopher David Quilty: Final question, don't ask why, I was looking at a pre-pandemic Inmarsat annual report, and they were sizing the, I think, the aviation safety market, you know, that you and they share, and I think it's like 250 million and growing to a billion every year, right? You know, I think your business there is still probably around 30 million, I think, Tom, and what do you think is the outlook for that market?

Speaker Change: Final question, don't ask why, I was looking at a pre-pandemic Inmarsat annual report and they were sizing the, I think, the aviation safety market, you know, that you and they share.

Speaker Change: And I think like 250 million and growing to a billion whenever, right? You know, I think your business there is still probably around 30 million, I think, Tom.

Christopher David Quilty: Obviously, you need to get, you know, your certification in place, but... Is it really about getting equipment deliveries? Is it aircraft deliveries? Is it the OEM activity of getting, you know, all the SDCs for aircraft? And how is that activity being done?

Speaker Change: What do you think is the outlook for that market? Obviously, you need to get your certification in place, but...

Matthew Desch: Is it the OEM activity of getting, you know, all the SDCs for aircraft, and how is that activity being managed? Yeah, I can't speak to the top of my head on, you know, the market forecast that you saw from them. I mean, I don't see it that way. We believe aviation is a growth vector for us, you know, particularly given how well we're positioned and the new products and our partners. Having their products certified with us and getting them approved by the FAA and going through the safety certification stuff that is going off. We also know that we can address certain parts of that market that others can't address from Geo because things like, for example, we've always had an advantage: our antennas are smaller than others, so they really fit on different kind of aircraft.

Speaker Change: Is it really about getting equipment deliveries? Is it aircraft deliveries? Is it the OEM activity of getting, you know, all the SDCs for aircraft? And how is that activity being managed?

Christopher David Quilty: I can't speak to the top of my head on, you know, the market forecast that you saw from them. I mean, I don't see it that way.

Speaker Change: I can't speak to the top of my head on the market forecast that you saw from them. I mean, I don't see it that way. We believe aviation is a growth vector for us, particularly given how well we're positioned and the new products and our partners.

Matthew J. Desch: We believe aviation is a growth factor for us, you know, particularly given how well we're positioned and the new products and our partners, having their products certified with us and getting them approved by the FAA and going through the safety certification stuff that is going on. We also know that we, Transcripts provided by Transcription Outsourcing, LLC. Unknown Speaker, Unknown Interpreter, Unknown Transcriber, Unknown Interpreter, Unknown Transcriber, And a few technologists do that, and we're kind of at the heart of this Beyond Visual Line of Sight stuff and think that in the coming years it will be a big growth driver as well. So I can't put numbers on it other than it's bigger, you know, nicely bigger than where we are today, and I think it's one of the contributors, you know, as we go out to 2030.

Speaker Change: Thank you for having their product certified with us and getting them approved by the FAA and going through the safety certification stuff that is going off. We also know that we...

Speaker Change: can address certain parts of that market that others can't address you know from Geo because you know things like for example Rotorcraft which we've always

Speaker Change: We've had an advantage to our antennas are smaller than others, so they really fit on different kind of aircraft. We're really excited about the drone market.

Matthew Desch: We're really excited about the drone market, which still hasn't developed, you know, that's significantly yet, but there's an awful lot of activity to fit drones into the national airspace system, and we think we're one of the few technologies to do that, and we're kind of at the heart of this beyond visual line of sight stuff. And think that in the coming years will be a big, big growth driver as well, so I can't put numbers on it other than it's bigger, you know, nicely bigger than where we are today and think it's one of the contributors, you know, as we go out to 2030.

Speaker Change: which still hasn't developed, you know, that significantly yet, but there's an awful lot of activity to fit drones into the national airspace system. And we think we're one of the

Speaker Change: I'm a few technologists that do that and we're kind of at the heart of this beyond visual line of sight stuff. And I think that in the coming years will be a big growth driver as well. So I can't put numbers on it other than it's bigger.

Speaker Change: You know, nicely bigger than where we are today and think it's one of the contributors, you know, as we go out to 2030.

Christopher David Quilty: to the incremental contributor next year. Yeah, I think so. Yeah, absolutely.

Matthew Robilliard: Did the incremental contributor next year? Yeah, I think so. Yeah, absolutely. All right, thank you.

Speaker Change: to the incremental contributor next year.

Speaker Change: Yeah, I think so. Yeah, absolutely.

Matthew Robilliard: Yeah, thank you.

Matthew Robilliard: The next question comes from Matthew Robillard with Barclays. Please go ahead.

Mathieu Robilliard: The next question comes from Mathieu Robilliard with Barclays. Please go ahead.

Speaker Change: All right, thank you.

Speaker Change: The next question comes from Mathieu Robilliard with Barclays. Please go ahead.

Mathieu Robilliard: Good morning. Thank you for the presentation.

Matthew Robilliard: Good morning. Thank you for the presentation. My first question was about the trajectory of the growth margin on service revenues. Over the past years and quarters, we've seen the margin go down a bit and understand that part of that is explained by the fact that some of the government services come with lower margin. But I was wondering if there was anything else impacting the trajectory of the growth margin on the service revenues beyond the mixing revenues.

Mathieu Robilliard: Good morning, thank you for the presentation. My first question was about the trajectory of the gross margin on service revenues.

Mathieu Robilliard: My first question was about the trajectory of the gross margin on service revenues. Over the past years and quarters, we've seen the margin go down a bit. I understand that part of that is explained by the fact that some of the government services come with lower margins. But I was wondering if there was anything else impacting the trajectory of the gross margin on service revenues beyond the mixing revenues.

Mathieu Robilliard: Over the past years and quarters, we've seen the margin go down a bit. I understand that part of that is explained by the fact that some of the government services come with lower margin. But I was wondering if there was anything else impacting the trajectory of the gross margin on the service revenues beyond the mix in revenues.

Thomas Fitzpatrick: Good morning, Matthew. No, the overall growth margin or EBITDA margin is any reduction in that or decrease in that is exclusively related to engineering and support. So the SDA contract is large and is lower margin business. And so that's what's causing the decrease in EBITDA margin. The service revenue margin, if you will, is alive and well and will continue to demonstrate operating leverage year in and year out. So that's clear. That's very clear.

Thomas J. Fitzpatrick: Good morning, Matthew. No, the overall gross margin, or EBITDA margin, is any... Reduction in that or decrease in that is exclusively related to engineering and support. So the SDA contract is, you know, large and is a lower-margin business. And so that's what's causing the decrease in EBITDA margin. The service revenue margin, if you will, is alive and well and will continue to demonstrate operating leverage year on, year in, and year out.

Speaker Change: Morning, Matthew. No, the the overall gross margin or EBITDA margin is any any

Speaker Change: Reduction in that or decrease in that is exclusively related to engineering and support. So the SDA contract is

Speaker Change: you know, large and it's lower margin business. And so that's what's causing the decrease in EBITDA margin. The service revenue margin, if you will, is alive and well and will continue to demonstrate operating leverage year in and year out.

Mathieu Robilliard: That's very clear. A second question was about your satellite phone business, the legacy part. I guess I was hoping to get a little bit more granular about the kind of customer and usage you have there because obviously the underlying question is, could it be impacted by all the initiatives on D2D? I understand that for some of your customers, I mean, going through a commercial network, given if it's enabled by satellite on their iPhone, it doesn't work or it's not what they want.

Speaker Change: So there is...

Matthew Desch: The second question was on your satellite from business, the legacy part. I guess I was hoping to get a little bit more granularity about the kind of customer and users you have there because obviously the underlying question is, could it be impacted by all the initiatives on D to D and understand that for some of your customers, I mean going through a commercial network, even if it's enabled. By satellite on their iPhone, it doesn't work or it's not what they want. But if we could maybe get a sense of what kind of clusters of customers and where you think is maybe a little bit of risk from G2D and where there isn't, that would be super helpful.

Mathieu Robilliard: But if I could, if we could maybe get a sense of what kind of clusters of customers and where you think there's maybe a little bit of risk from D2D and where there isn't, that would be super helpful.

Speaker Change: If that's clear.

Speaker Change: That's very clear. A second question was on your satellite phone business, the legacy part. I guess I was hoping to get a little bit more granularity about the kind of customer and usages.

Speaker Change: because obviously the underlying question is, could it be impacted by all the initiatives on D2D? I understand that for some of your customers, I mean, going through a commercial network, even if it's enabled by satellite on their iPhone, it doesn't work or it's not what they want. But if I could...

Speaker Change: If we could maybe get a sense of what kind of clusters of customers and where you think there's maybe a little bit of risk from D2D and where there isn't, that would be super helpful.

Matthew Desch: Well, you know, D to D right now, as it's been proposed, and I think most people are, they think Starlink and perhaps some others down the road, you know, is only right now anyway. being proposed using threshold spectrum, and threshold spectrum, or what the FCC calls supplemental communication from space, that's sort of how I've been describing it, is really a coverage enhancer within specific markets, where there is spectrum that can be used sort of bordered a border, and that's only a couple of countries right now, I mean it's a really handful of countries where it's likely to happen, assuming the regulatory issues and technical issues and all that kind of get resolved, and I expect that they ultimately will over time.

Matthew J. Desch: Well, you know, D2D, right now, as it's been proposed, and I think most people are, they think Starlink, and perhaps some others down the road, are only right now, anyway, being proposed using the terrestrial spectrum. And terrestrial spectrum, or what the FCC calls supplemental communication from space, that's sort of how I've been describing it, is really a coverage enhancer within specific markets where there is spectrum that can be used.

Speaker Change: Well you know D2D right now as it's been proposed and I think most people are they think Starlink and perhaps some others down the road you know is only right now anyway

Speaker Change: being proposed using terrestrial spectrum. And terrestrial spectrum, or what the FCC calls supplemental communication from space, that's sort of how I've been describing it, is

Speaker Change: It's really a coverage enhancer within specific markets where there is spectrum that can be used sort of border-to-border. And that's only a couple countries right now. I mean, it's a really handful of countries where...

Matthew J. Desch: I mean, it's a really handful of countries where it's likely to happen, assuming the regulatory issues and technical issues and all that kind of get resolved. And I expect that they ultimately will, over time.

Speaker Change: It's likely to happen, assuming...

Speaker Change: Assuming the regulatory issues and technical issues and all that kind of get resolved and I expect that they ultimately will over time so, you know, to the extent that

Matthew J. Desch: So, you know, to the extent that it makes your cell phone work a little bit better within a few markets, but it really doesn't make it into a global service, which has been our brand. It's been the primary capability, especially when you talk about IoT. People use us for IoT because we, their assets, no matter where they are in the world, will work very well, and people have embedded us into. I've been a part of many, many industries and applications and services because of our reliability anywhere in the world. But that's really not what D2D is offering today.

Matthew Desch: So, to the extent that that makes your cell phone work a little bit better within a few markets, it really doesn't make it into a global service, which has been our brand; it's been the primary capability, especially, you know, you talk about IoT. People use us for IoT because we, their assets, no matter where they are in the world, will work very well, and people have embedded us into many, many industries and applications and services because of, you know, our reliability anywhere in the world, and that's really not what D to D is offering today.

Speaker Change: That makes your cell phone work a little bit better within a few markets. It really doesn't make it into a global service, which has been our brand.

Speaker Change: The primary capability, especially you know, you talk about IoT, people use us for IoT because we their assets no matter where they are in the world will work very well and people have embedded us into

Speaker Change: many, many industries and applications and services because of, you know, our reliability anywhere in the world. And that's really not what

Matthew Desch: It is true that there will be some services and stuff on your uncertain phones, or you know that work better in certain markets, but that really wasn't why people were buying our satellite phones; that wasn't why they were buying or using our devices. I've often said you know someone doesn't buy our satellite phone in Wyoming to use in Wyoming; they buy it because they're a first responder who might be dispatched to Haiti, or some place where there's a hurricane, or we'll use it when they travel into South America and beyond where you know D to D isn't going to be offered anytime soon, nor will it be offered anytime soon in Africa or Europe or a number of other places, and our services work there perfectly well.

Speaker Change: D2D is offering today. It is true that there will be some services and stuff on your on certain phones or you know that work better in certain markets but that really wasn't why people were buying our

Matthew J. Desch: It is true that there will be some services and stuff on certain phones that work better in certain markets, but that really wasn't why people were buying our satellite phones. That wasn't why they were buying or using our devices, which are a satellite phone in Wyoming to use in Wyoming. They buy it because they're a first responder who might be dispatched to Haiti or someplace where there's a hurricane or will use it when they travel into South America and beyond, where D to D isn't going to be offered anytime soon. Nor will it be offered anytime soon in Africa or Europe or a number of other places, and our services work there perfectly well.

Speaker Change: satellite phones, that wasn't why they were buying or using our devices. I've often said, you know, someone doesn't buy our

Speaker Change: are a satellite phone in Wyoming to use in Wyoming. They buy it because they're a first responder who might be dispatched to Haiti or someplace where there's a hurricane or

Speaker Change: or we'll use it when they travel.

Speaker Change: into South America and beyond... ...where you know, D to D isn't going to be offered anytime soon... ...nor will it be offered anytime in Africa or Europe ... ...or a number of other places. And our services work there perfectly well so...

Matthew Desch: So you know it would be, we believe it's really at the margins, we believe, we understand what's happening and coming in D to D, we think we've included that in our forecast and our expectations between now in 2030, and I've said I will still deal with people who don't appreciate that and will be reading press releases and stuff, but you know it'll take some time when people realize that we, we're very, we can coexist and our growth is compatible really with that, and that we'll be able to participate in that market as well, as a global kind of, I think glue, you know that we'll be able to put in products that will provide a certain level of services that can be dependent on globally because of our global L band allocations.

Speaker Change: We believe it's really at the margins. We believe we understand what's happening and coming in D to D.

Speaker Change: Included that in our forecast and our expectations between now and 2030 and like I said, I will still deal with people

Matthew J. Desch: [inaudible] who don't appreciate that and will be reading press releases and stuff. But it'll take some time when people realize that we can coexist and our growth is really compatible with that. And that we'll be able to participate in that market as well as a global kind of, I think, glue that we'll be able to put in products that will provide a certain level of services that can be dependent on globally because of our global L-band allocations.

Speaker Change: who don't appreciate that and will be reading press releases and stuff. But you know, it'll take it'll take some time when people realize that it's that we were very we can coexist and our growth is compatible really with that.

Speaker Change: And that we'll be able to participate in that market as well as a global kind of, I think, glue, you know, that we'll be able to put in products that will provide a certain level of services that can be dependent on globally because of our global L-band allocations.

Matthew Desch: So I hope that helps. Got it.

Mathieu Robilliard: Got it. It does. And then I'll try a last one. With regard to your new leverage target for the year end 2026, which has already been discussed in previous questions, I was wondering if the decision to move from two and a half to four was maybe also linked to the fact that you had been looking at some deals potentially, and in the end, you decided not to go for these, and that's why you have this new flexibility. No, that's not it at all. We were

Thomas Fitzpatrick: It does, and then I'll try last one, with regards to your new leverage target for a year and 2026 that was discussed already in previous questions. I was wondering if the decision to move from 20.5 to 4 was maybe also linked to the fact that you had been looking at some deals potentially, and in the end you decided not to go for these, and that's why you have this new flexibility. No, that's not it at all. We were taking a leverage guide up exclusively to repurchase shares given their current trading levels. Okay, so it's not like you were looking at stuff, and it's not happening.

Speaker Change: Cool.

Speaker Change: Hope that helps. Got it.

Speaker Change #100: It does, and then I'll try a last one. With regards to your new leverage target for year-end 2026 that was discussed already in previous questions, I was wondering if the decision to move from 2.5 to 4 was maybe also linked to the fact that you had been looking at some

Speaker Change #100: [inaudible]

Thomas J. Fitzpatrick: No, that's not it at all. We were taking the leverage guide up exclusively to repurchase shares given their current trading levels.

Thomas J. Fitzpatrick: No, no, we're always looking at things, and that's a separate aspect, and if something can pay for itself, we'll be interested in looking at that independently. And there may be opportunities for that sort of thing in the future, but the focus on this was strictly, you know, shareholder-friendly activities.

Matthew Desch: No, no. I mean, I'm always looking at things, and that's a separate aspect. If something can pay for itself, I will be interested in looking at that independently. And there may be opportunities for that sort of thing in the future, but the focus on this was strictly, you know, shareholder-friendly activities. Right, and the only interplay between doing deals and the leverage was, you know, when we acquired to Tellus there was, we had gotten questions, would we back off of the share repurchases given the funding of Tellus and we said, absolutely not, we'll take leverage up because of where the stock is trading.

Speaker Change #105: Okay, so it's not like you were looking at stuff and it's not happening.

Speaker Change #104: No, no, I mean, always looking at things and that's a separate aspect and if something can pay for itself, we'll be interested in looking at that independently. And there may be opportunities for that sort of thing in the future, but the focus on this was so...

Speaker Change #104: Strictly, you know, shareholder friendly activities.

Thomas J. Fitzpatrick: Right, and the only interplay between doing deals and the leverage was, you know, when we acquired Satellis, we had gotten questions about whether we would back off of the share repurchases given the funding of Satellis, and we said absolutely not, we'll take leverage up because of where the stock is trading. So I think this move is consistent with what we said there. We just think that because the shares are at this level, we need to take the leverage up a bit.

Speaker Change #107: Right. And the only interplay between doing deals and the leverage was, you know, when we acquired Satellis, we had gotten questions, would we back off of the share repurchases, given the funding of Satellis? And we said, absolutely not. We'll take leverage up.

Matthew Robilliard: So I think this move is consistent with what we said there. We just think that the shares are at this level. We need to take the leverage up a bit. Okay, thank you very much.

Speaker Change #100: I think this move is consistent with what we said there. We just think that the shares are at this level. We need to take the leverage up a bit.

Mathieu Robilliard: Okay, thank you very much.

Matthew Robilliard: The next question comes from Bryce Sandberg with William Blair. Please go ahead. Matt, Tom, and Ken, good morning. Morning. I just want to ask about the Soraya outage this quarter. If you saw any positive impact from that outage, and it's able to quantify that impact at all. There has been a positive impact in the sense that Asia Pacific customers are looking for alternate solutions. You know, Soraya is really not going to be assuming that they have a successful launch, and all that sort of thing are going to be kind of out of the market for, you know, two years here.

Bryce Sandberg: The next question comes from Bryce Sandberg with William Blair.

Speaker Change #100: The next question comes from Bryce Sandberg with William Blair. Please go ahead.

Bryce Sandberg: Matt, Tom, and Ken, good morning. Good morning. I just wanted to ask about the Sariah outage this quarter and if you saw any positive impact from that outage.

Matthew J. Desch: [inaudible]

Bryce Sandberg: Matt, Tom, and Ken, good morning.

Speaker Change #101: Morning.

Bryce Sandberg: I just wanted to ask about the Soraya outage this quarter, if you saw any positive impact from that outage and if you're able to quantify that impact at all?

Matthew J. Desch: There has been a positive impact on the census, that Asia Pacific customers are looking for alternate solutions, you know, Thri is really not going to be Assuming that they have a successful launch and all that sort of thing are going to be kind of out of the market for, you know, two years here, and I think the reliability of GeoSolutions is... is being put to the test here between itself and Inmarsat's outages in So, you know, we are getting a lot of positive reception. It takes time for that to kind of develop or see, certainly particularly around the handset, but in some cases IOT, you know. Customers in that region are looking for different solutions, so it's certainly been supportive.

Speaker Change #109: There has been positive impact in the sense that

Speaker Change #103: that Asia Pacific customers are looking for alternate solutions. You know, Thri is really not going to be assuming that they have a successful launch and all that sort of thing are going to be kind of out of the market for, you know, two years here and

Matthew Desch: And I think the reliability of geo solutions has been put to test here between themselves and in our sets outages in Asia as well. So, you know, we are getting a lot of positive reception. It takes time for that to kind of develop. We're seeing certainly particularly around the handset. But in some cases, IoT, you know, customers in that region are looking for different solutions. And so it's certainly been supportive; you know, will it move the needle substantially?

Speaker Change #105: I think the reliability of geo solutions is...

Speaker Change #103: has been put to test here between themselves and in Mansett outages, um, in Asia as well. So, you know, we are getting a lot of positive reception. It takes time for that to kind of develop.

Speaker Change #103: Certainly particularly around the handset, but in some cases IoT.

Speaker Change #103: You know

Speaker Change #103: customers in that region are looking for different solutions. So it's certainly been supportive, you know. Will it move the needle substantially? We'll see. You know, we certainly hope so, but it's a little too early to call that yet.

Matthew J. Desch: Will it move the needle substantially? We'll see. We certainly hope so, but it's a little too early to call that yet.

Matthew Robilliard: We'll see; you know, we're certainly hopeful, but it's a little too early to call that right yet. Great. Thanks, Matt. It's all for me. Thanks.

Bryce Sandberg: Great. Thanks, Matt. That's all for me.

Christopher Quilty: And our final question is a follow-up from Chris Quilty from Quilty Space.

Speaker Change #103: Great. Thanks, Matt. That's all for me.

Christopher David Quilty: And our final question is a follow-up from Chris Quilty from Quilty Space. Please go ahead. Unknown Speaker

Speaker Change #108: Okay, thanks.

Matthew Desch: Please go ahead. Anything to update on area, and if not, okay? There are, you know, board meeting a couple of months ago, as I remember hearing Don talk about it. There was a lot of bullishness in terms of the computer. I mean, the CDF business, the data services business. They have a number of new products they're developing. They're expanding their team because of the opportunities. You know, continued sort of expansion of their footprint around their customers are renewing.

Speaker Change #110: And our final question is a follow-up from Chris Quilty from Quilty Space. Please go ahead.

Christopher David Quilty: Anything to update you on, Arion, and if not, okay.

Christopher David Quilty: Anything to update on, Arion? And if not, okay.

Matthew J. Desch: There, you know, at the board meeting a couple of months ago, as I remember, and hearing Don talk about it, there was a lot of bullishness in terms of the computer business, the CDS business, the data services business. They have a number of new products they're developing. They're expanding their team because of the opportunities. You know, continued sort of expansion of their footprint around their customers or renewal. We've been working with them on this.

Speaker Change #111: there, you know.

Speaker Change #111: Board meeting a couple a month ago as I remember and hearing Don talk about it there was a lot of bullishness in terms of the

Speaker Change #112: Computer, I mean the CDS business, the data services business, they have a number of new products they're developing. They're expanding their team because of the opportunities, you know.

Speaker Change #113: continued sort of expansion of their footprint around their customers or renewing. We've been working with them on this.

Matthew Desch: We've been working with them on this sort of system engineering work around a possible global VHF service to add to ADS-B. I mean, that's something that they're kind of...

Speaker Change #114: I'm going to be talking about a system engineering work around a possible global VHF service to add to ADS-B.

Matthew J. Desch: Looking to the long term, haven't made any decisions about it, it'll take a long time to develop a service like that successfully, but we would want to be part of that, you know, maybe with our next constellation.

Matthew Desch: and looking at long-term have made any decisions about it will take a long time to develop a service like that successfully, but we would want to be part of that, you know, maybe with our next consolation. So I'd say, you know, only positivity right now. I think it was good that they got their financing sort of refinance in a way that kind of took their puffs off a little bit. And so they're, say their things are quite positive. That's positive over there right now.

Speaker Change #114: Looking at long-term, haven't made any decisions about, it'll take a long time to develop a service like that successfully, but we would want to be part of that, you know, maybe with our next constellation.

Matthew J. Desch: So I'd say, you know, only positivity right now. I think it was good that they got their financing sort of refinanced in a way that kind of took their cuffs off a little bit. And so they're, things are quite positive over there right now.

Speaker Change #115: I'd say, you know, only positivity right now. I think it was good that they got their financing sort of refinanced in a way that kind of took their cuffs off a little bit. And so I'd say things are quite positive over there right now.

Matthew Desch: Very good. Good to hear. Thanks, guys.

Christopher David Quilty: Very good. Good to hear it. Thanks, guys. Yep. Thanks, Chris.

Unknown Executive: Thank you.

Speaker Change #115: Very good. Good to hear it. Thanks, guys. Yep. Thanks, Chris.

Matthew J. Desch: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Unknown Executive: This concludes our question and answer session.

Unknown Executive: I would like to turn the conference back over to management for any closing remarks. No, thanks for joining us. We'll see you again in August and talk to you onshore individually. Thanks for your time.

Speaker Change #116: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Matthew J. Desch: Thanks for joining us. We'll see you again in August, and I'll talk to you, I'm sure, individually. Thanks for your time.

Speaker Change #117: Thanks for joining us. We'll see you again in August .

Unknown Executive: The conference has now concluded. Thank you for attending today's presentation.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change #118: And talk to you, I'm sure, individually. Thanks for your time.

Unknown Executive: You may now disconnect. Thank you.

Speaker Change #119: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.