Q4 2024 KVH Industries Inc Earnings Call

March 6, 2025

Speaker Change: Good day, thank you for standing by. Welcome to KVH Industries Sport Quarter 2024 earning

Speaker Change: At this time, all participants are no less than only mode. After this biggest presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message

Speaker Change: Please note that today's conference may be recorded. I would now like to send a conference of a two-meter Anthony Pike's chief financial officer. Please go ahead, sir.

Anthony Pike: Thank you, Olivia. Good morning, everyone, and thank you for joining us today for KVH Industries full-quart results, which are included in the earnings release we published earlier this morning.

Speaker Change: Joining me on the call is the company's Chief Executive Officer, Brent Bruun.

Before I get into the numbers, a few standard statements.

Speaker Change: Further, this conference call will contain certain foldable statements that are subjected to numerous assumptions and uncertainties that may cause our actual results to differ materially from those expressed in these statements.

Speaker Change: We undertake an obligation to update or revise any of these statements.

Speaker Change: We will also discuss adjusted EBITDA, which is a non-GAAP financial measure. You will find a definition of this measure in our press release, as well as a reconciliation to comparable

Speaker Change: We encourage you to review the cautioned statements made in our SEC filings, specifically those under the heading risk factors in our 2020 form 10K, which we plan to file later today.

Speaker Change: The company's other SEC filings are available directly from our Invested Information section of our website.

Brent Bruun: Now to walk you through the highlights of our fourth quarter, I'll turn the call over to Brent.

Thank you, Anthony. Good morning, everyone.

Brent Bruun: Before discussing our high-level results, I want to address the overall shift in our business.

Brent Bruun: During 2024, we continued our transition from focusing slowly on V-SET services to offering multi-orbit, multi-channel solutions.

Brent Bruun: What does this mean? In addition to V-SAT services, we now offer Leo Solutions, the most significant of which is Starlink.

Brent Bruun: We've also expanded our portfolio to include a high-speed cellular solution.

Brent Bruun: Additionally, we added a cutting-edge appliance, the con box edge, to deliver advanced and easy-to-use onboard remote bandwidth management for multiple wide and local area networks.

Brent Bruun: Over the course of 2024, we integrated each of these elements into our go-to-market strategy which is steadily building positive momentum.

Brent Bruun: and the fourth quarter was shipped to more than 1,000 star-linked units and roughly 200 VCAT terminals. Our fourth consecutive quarterly record for terminal shipments.

Brent Bruun: With more than 2,300 active maritime starling terminals at the end of 2024, Starlink is our fastest growing product line in our history, and currently there are roughly 1,000 starling terminals in the field that are awaiting activation.

Thank you. Bye-bye.

Brent Bruun: Our customers find our custom-starling data plans along with our live 24-7 technical and airtime support compelling differentiators.

Brent Bruun: Additionally, our KVH manager platform offers a robust and secure set of tools to track and control onboard data usage.

Brent Bruun: These factors are driving our unit growth in both leisure and commercial markets.

Brent Bruun: We recently completed the installation and activation of starling terminals and cross the entire

Brent Bruun: The addition of Starlink to their existing KVHV set service illustrates a strong demand for hybrid connectivity. In fact, roughly 50% of our Starlink terminals have been activated in tandem with a new or existing V set terminal.

Brent Bruun: Our Combox Edge Communication Gateway, introduced early in 24, is the heart of our Integrated Connectivity approach. Demand for Combox Edge remains strong.

Brent Bruun: Few four activations were double the number of activations in Q3. We are now preparing to roll out a range of new convocs edge capabilities, including a suite of security features that deliver integrated cybersecurity, intrusion protection, and risk mitigation tools.

Brent Bruun: In December , we launch our new Tracknet Coast to sell their Wi-Fi system.

Brent Bruun: with cellular and Wi-Fi system, excuse me, which offers data speeds as fast as 300 megabits per second and data cost as well as $1 per gigabyte.

Speaker Change: Trackneck E-Costle uses our unique Fusion E-Cent technology to create a high-performance McGreen, Marine, Grade, Cellar solution, offer connectivity in 135 countries.

Speaker Change: As a result, we can deliver a maintenance-free and seamless global service that the Technic Coastal and Attractive Enhancement produce that in Leo's services as well as a standalone communication system.

Speaker Change: I'm also pleased to inform you that we've added one web to our satellite communications service portfolio. C-SPAN, a leading owner and operator of container ships, recently signed an agreement with us to equip its fleet with the one web service.

Speaker Change: They will be among the first commercial fleets to install one web and use it in an expanded hybrid configuration alongside KVHV-SAT and Starlink services.

Speaker Change: These strategic initiatives are beginning to take hold and will position us well in 2025.

Total revenue for the fourth quarter was $26.9 million. Roughly $4.5 million.

Fourth quarter of 2023.

Speaker Change: But a more relevant comparison is our third quarter revenue of $29 million. Excluding the US Coast Guard revenue reduction of $1.7 million, revenue was effectively flat sequentially.

Speaker Change: Non-US Coast Guard, geo-air time revenue in the fourth quarter, contracted by around $1 million, which was offset by increased Starlink revenues in the same period.

Speaker Change: Going forward, we anticipate Starlink, as well as other new revenue sources, to outpace the decrease in geo-era time revenue.

Speaker Change: Additionally, we anticipated a contraction in revenue in 2024 and worked diligently to implement cost reduction initiatives. As a result, we brought recurring off-ex down by almost 10% for the full year.

Speaker Change: So to wrap things up, mobile connectivity remains a market in transition. As a geo-market place continues to adjust to the new disruption caused by LEAL services such as Starlink and OneWeb.

Speaker Change: While our results reflect the impact of the dynamic, dynamic nature of the geomarket.

Speaker Change: The decisive steps we've taken to embrace Starlink while adding supplemental offerings such as one web, Convox Edge and a Global 5G Cellar Service are creating a foundation for future growth.

Speaker Change: We have made the hard decisions necessary to reconfigure our business operations, streamline costs, and focus on our core strengths. We are in a stronger position now than a year ago, and I believe we are on a path towards renewed growth and profitability.

Anthony Pike: I will now turn the call back to Anthony to discuss the numbers.

Anthony Pike: Thank you, Brent. As a reminder, I would like to know that similar to our call for Q3, I will not restate data that is in the earnings release or clearly described in our 10K. I will focus my comments on information that either elaborates on or clarifies the public

Anthony Pike: We respect to our fourth quarter financial results, Add Time Gross Margin, which is not reported in our earnings release, was 28.2%, which is down compared to the prior quarter gross margin of 36.5%.

Anthony Pike: This drop can be mostly attributed to the nature of our broadly fixed cost V-SAT services as we continue to see churn from our geo-based V-SAT network, including the US Coast Guard. However, our Leo margins remain strong.

Anthony Pike: RGL Bandwidth Commitment will reduce by $5 million in 2025 and then a further $5 million in 2026.

Anthony Pike: Total subscribing vessels at the end of Q4 would just be low 7100 which is approximate with 4% up from the prior quarter.

Anthony Pike: reported Q4 product growth profit with positive 0.3 million as compared to a negative 0.6 million excluding non-retiring charges in Q4 of last year.

Anthony Pike: The Q4 operating expenses of £9.3 million were £1 million or £10% down compared to the prior quarter and £1.6 million or £15% down from the fourth quarter of 2023 on a light for light basis, excluding non-occurring charges.

Anthony Pike: I registered EBITDAF the quarter was 0.5 million and our earnings release has a usual reconciliation of that.

Anthony Pike: Couple of expenditures for the quarter was 0.8 million and so it just did a bit dar less capex which we believe is a good proxy for free cash flow generated from our ongoing business was negative 0.3 million.

Anthony Pike: This compares to an adjusted EBITDA less capex of 1.4 million positive in the third quarter, with a adjusted EBITDA of 2.9 million less capital expenditures of 1.5 million.

Anthony Pike: So, for the full year, adjusted E-bita was £8.1 million, and Capex was £7.4 million. So, adjusted E-bita, less Capex was £0.7 million.

Anthony Pike: Rending cash balance of $50.6 million was up approximately $0.8 million from the beginning of Quarta.

Anthony Pike: and finally, our earnings release provides our guidance for 2025, which is revenue of $115 to $125 million and adjusted EBITDA of 9 to $15 million.

Anthony Pike: This concludes our prepared remarks and I will now turn the call over to the operator to open the line to the Q&A portion of this morning's call. Operator?

Speaker Change: Thank you. Ladies and gentlemen, to ask a question at this time, you will need to press star 1-1 on your telephone and wait for your name to be announced.

Speaker Change: To enjoy your questions, simply press star 1-1 again, please stand by while we compile the in our roster.

Speaker Change: And we have a question from Call of Henry, with Quilty Space Hill on his now open.

Caleb Henry: Hey guys, a couple of questions mostly related to Leo services. You mentioned having a thousand new ads from Starlink this quarter. I'm wondering if that's sort of your expectation.

Speaker Change: Going forward on a quarterly basis, or if you have any expectation of roughly how many

Speaker Change: Let's be clear. We shipped 1000 terminals. Anthony can see with the actual activations where we had 2300.

Speaker Change: Active throwing terminals at the end of the quarter and we shipped 1,000 and we also discussed her number of thousands, there's about 1,000.

Speaker Change: There's approximately 1,000 Starling terminals in the field awaiting activation, not all those were actually shipped to you.

Brent Kuebel, Roger Kuebel, Brent Bruun

Speaker Change: A key thing here is any terminal we ship. It's locked to our service, so we know we can't be used without our permission to on another service. As far as activations for the quarter, we activated just under 700 Starlink maritime terminals.

Speaker Change: Okay, thanks for the clarification. What is it that leads companies to delay their activation?

Thank you. Bye bye.

Speaker Change: Well, there's a couple of things to play here, right? You have commercial, leisure, and boatbuilders. So OEMs will buy the Starling Terminal and installing on a boat which yet hasn't been taken over by the owner.

Speaker Change: I'm going to have them on the shelf. What we're finding is because of the cost of the equipment, you know, in comparison to what Bset used to cost.

Speaker Change: People are willing to, whether it's a dealer, distributor, boat builder, are willing to take units to have on hand at higher quantities than they did with a V-SAT. And one startling terminal from our quad or cell price comparison to a V-SAT, to about an 8-1 ratio.

Okay.

Speaker Change: And then another question is about the customer set that's procuring the Starlink dishes. Is this mainly like existing customers that you see transitioning to Starlink or is it more so new customers that never had?

B-Sat before, I'd like to take the B-Ace that are coming on board.

Well.

Speaker Change: As far as our accusations are both new and existing customers.

Speaker Change: As far as the new ones, they may not have had V-Sat, they could have had Fleet Broadband or other lower bit rate type of communication systems and it has taken advantage of the cost structure surrounding the startling terminals and the airtime.

Speaker Change: Okay, and then thanks. My last question is just around some emerging constellations. Yeah, I think...

Speaker Change: Kuiper may have some of their first satellites up later this year and seeing some headlines around Chinese constellations that are also starting to launch, wondering if you have seen any kind of market response to those things or anticipate that during the year.

Speaker Change: I anticipate a market response. I think it's still too early. You know, Kuiper is testing, but, you know, by time they have a commercial service, it's going to be willing to 26 or early 27. So it's just still a bit, a bit out until they're actually up and going. But we're keeping a close eye on it, and we talked everyone in the industry.

Okay, got it. Thank you.

Thanks, Greg.

Speaker Change: Thank you. And our next question, coming from the line-up Chris Quilty with Quilty Space

Chris Quilty: Thanks, guys. I guess congrats on getting that OneWeb service launched. Just a general question. How much of a challenge is the terminal pricing relative to SpaceX for customers or are the customers choosing OneWeb for reasons other than cost?

Chris Quilty: I think it's a bit of both, you know, I just talked about it across the V-SAT terminals, Chris, so...

Chris Quilty: You know, although one web is more terminals are more expensive than a Starling terminal, they have two plexes raised to the roughly two extra price.

Chris Quilty: But we see users and we talked about C-SPAN that want diversity in network. We have hybrid users using both our B-Sat and our Starlink, but in regard to C-SPAN, they're using Starlink One Web as well as B-Sat. And we anticipate, you know,

Chris Quilty: You're going to have a requirement to have diversity of networks and it could very well be a Leo Leo solution.

Chris Quilty: as far as stand alone. One web services, they do offer CIR and other compelling features that may make it more attractive for the end user.

Chris Quilty: But, you know, as far as the cost, as I said, for the half-do price, it's about 2x to that of the high performance flat panel starlink. So, it's not a huge difference as like the H1 ratio I talked about a few minutes ago.

Speaker Change: and what seems to be an increasingly competitive marketplace of, let's call them, you know, Comebox Equivalents, do you still feel like the feature set that you guys are offering stands out?

Speaker Change: We think the future set stands out, and as I discussed, the future set is being expanded in particular for intrusion protection and cybersecurity. So we feel that we're adding those elements will make it even more attractive, and it's more than competitive to anything else on the market.

Speaker Change: I understand. Does Combox have applicability in any of the new markets where you've started to see some interest. You've mentioned land and things in South America that were off normal from your traditional business?

Speaker Change: The short answer is yes, absolutely. We didn't really talk about our land initiatives. It's still a bit premature, but we're getting some good traction in land as well, and Combox is being sold in Canada with some of the land opportunities that we're pursuing.

Speaker Change: Overly impacted on a go for basis. And I guess more generally, have you seen the rate of the BSAT loss? You know, let's stay the same, accelerate, decelerate.

It's actually...

Speaker Change: It's even doubt, you know, so it's almost as decelerated to a degree, but we're seeing a pretty consistent term number.

Configuration.

Speaker Change: and another nice element about the V-SETS for shipping. For the most part, they're agile units that we've gotten back and refurbished, so we don't have any significant amount of cap-backs to go along with those terminals that were shipping.

Speaker Change: So as we go forward, we're carefully managing the Vset Network.

Speaker Change: It's, um, and we're concentrating every day. It is a shrinking piece of our business, but Anthony alluded to, we're trying to match. Revenue with expense, we have our commitment that must be decreased.

Speaker Change: as far as the Geo bandwidth. We're taking good advantage of our installed base of set terminals.

Speaker Change: We have special pricing for hybrid configuration to keep terminals active as well as taking advantage of our pool of agile units that we've had over the years so as we go forward the amount of cat backs it will be for him.

Speaker Change: for the V-Sex service is going to be decreasing. I think you have to have something watching. Well, I just give a day to point on that, just to evidence that in the fourth quarter our CAPEX, which was related to our Agile program, was a quarter of what it was in the second quarter.

Speaker Change: So, you know, we've reduced it significantly just in six months and we expect that trend to continue.

Speaker Change: Anthony, what is, I mean, if you put aside our agile plan, what is the base run rate

Christopher Quilty, Brent Bruun, Roger Kuebel

Well, so I had yours. Yeah.

you have a great day everybody.

Great.

Speaker Change: So it's a place that the safe free cash flow positive in 25th.

Absolutely. That's where we're striving for, yes.

Great. Thanks, gentlemen.

All right. Thanks, Chris.

Speaker Change: Thank you, and there are no further questions at this time. Please enjoy my Disconcudio's conference. Thank you all for your participation, and you may now disconnect.

Christopher Quilty, Brent Bruun, Roger Kuebel

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Christopher Quilty, Brent Bruun, Roger Kuebel

[inaudible]

Speaker Change: recognise John Parker, Roger Kuebel, Brent Brun, John Pike, and Brent Bruun.

Speaker Change: Good day. Thank you for standing by. Welcome to KVH Industries Fort Quarter 2024 Earning Scraping Scraping Scraping.

Speaker Change: At this time, all participants are now listening only mode. After this biggest presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message that fights in your hand is raised.

Speaker Change: Please note that today's conference may be recorded. I would now like to send a conference over to Mr. Anthony Pike, Chief Financial Officer. Please go ahead, sir.

Anthony Pike: Thank you, Olivia. Good morning, everyone, and thank you for joining us today for KVH Industries Fourth Quart Results, which are included in the earnings release we published earlier this morning.

Anthony Pike: Joining me on the call is the company's Chief Executive Officer, Brent Bruun.

Before I get into the numbers, a few standard statements.

Anthony Pike: Firstly, if you would like a copy of the earnings release or if you would like to listen to a recording of today's call, both will be available on our website and if you are listening via the web, please feel free to submit questions to iradkvh.com

Anthony Pike: Further, this conference call will contain certain fold looking statements that are subjected to numerous assumptions and uncertainties that may cause our actual results to differ materially from those expressed in these statements.

Anthony Pike: We undertake an obligation to update or revise any of these statements.

Anthony Pike: We encourage you to review the cautioned statements made in our SEC filings, specifically those under the heading risk factors in our 2024 form 10K, which we plan to file later today.

Anthony Pike: The company's other SEC filings are available directly from our Invested Information section of our website.

Brent Bruun: Now to walk you through the highlights of our fourth quarter, I'll turn the call over to Brent.

Thank you, Anthony. Good morning, everyone.

Brent Bruun: Before discussing our high level results, I want to address the overall shift in our business.

Brent Bruun: During 2024, we continued our transition from focusing solely on V-SET services to offering multi-orbit, multi-channel solutions.

Brent Bruun: What does this mean? In addition to V-SAT services, we now offer Leo Solutions, the most significant of which is Starlink.

Brent Bruun: We've also expanded our portfolio to include a high-speed cellular solution.

Brent Bruun: Additionally, we added a cutting edge appliance, the con box edge, to deliver advanced and easy to use onboard remote bandwidth management for multiple wide and local area networks.

Brent Bruun: Over the course of 2024, we integrated each of these elements into our go-to-market strategy, which is steadily building positive momentum.

Brent Bruun: In the fourth quarter, we shipped more than 1,000 Starlink units and roughly 200 VISA terminals. Our fourth consecutive quarterly record for terminal shipments.

Brent Bruun: With more than 2,300 active maritime starling terminals at the end of 2024, Starlink is our fastest growing product line in our history. And currently, there are roughly 1,000 Starlink terminals in the field that are awaiting

[inaudible]

Brent Bruun: Our customers find our custom-starling data plans along with our live 24-7 technical and airtime support compelling differentiators.

Brent Bruun: Additionally, our KVH Manager platform offers a robust and secure set of tools to track and control onboard data usage.

Speaker Change: We recently completed the installation and activation of starling terminals and cross the entire

Speaker Change: The addition of Starlink to their existing KVHVSET service illustrates a strong demand for hybrid connectivity. In fact, roughly 50% of our Starlink terminals have been activated in tandem with a new or existing VSET terminal.

Speaker Change: Our Combox Edge communication gateway introduced early in 24 is the heart of our Integrated Connectivity approach. Demand for Combox Edge remains strong.

Speaker Change: Q4 activations were double the number of activations Q3. We are now preparing to roll out a range of new convocs edge capabilities including a suite of security features that deliver integrated cybersecurity, intrusion protection, and risk mitigation tools.

Speaker Change: In December , we launch our new Tracknet Coast to sell their Wi-Fi system.

Speaker Change: with cellular and Wi-Fi system, excuse me, which offers data speeds as fast as 300 megabits per second, and data costs as low as $1 per gigabyte.

Speaker Change: Tracknet E-Costle uses our unique Fusion E-Cent technology to create a high-performance McGreen, Marine, Grade, Cellar solution, offer connectivity in 135 countries.

Speaker Change: As a result, we can deliver a maintenance-free and seamless global service that means the technical soul and attractive enhancement for V-Set and Leo services as well as a standalone communication system.

Speaker Change: I'm also pleased to inform you that we've added one web to our satellite communications service portfolio. C-SPAN, a leading owner and operator of container ships, recently filed an agreement with us to equip its fleet with the one web service.

Speaker Change: They will be among the first commercial fleets to install one web and use it in an expanded hybrid configuration alongside KVHV-SAT and Starlink services.

Speaker Change: These strategic initiatives are beginning to take hold and will position us well in 2025.

Total revenue for the fourth quarter was $26.9 million. Roughly $4.5 million.

Fourth quarter of 2023.

Speaker Change: Non-US Coast Guard Geo Airtime Revenue in the fourth quarter, contracted by around $1 million, which was offset by increased Starlink revenues in the same period.

Speaker Change: Going forward, we anticipate Starlink, as well as other new revenue sources, to outpace the decrease in geo-era time revenue.

Speaker Change: Additionally, we anticipated contraction in revenue in 2024 and worked diligently to implement cost reduction initiatives. As a result, we brought recurring op-backs down by almost 10% for the full year.

Speaker Change: So to wrap things up, mobile connectivity remains a market and transition. As the geo-market place continues to adjust to the new disruption caused by LEAL services such as Starlink

Speaker Change: The decisive steps we've taken to embrace Starlink while adding supplemental offerings, such as OneWeb, Convox Edge, and a Global 5G Cellar Service are creating a foundation for future growth.

Anthony Pike: I will now turn the call back to Anthony to discuss the numbers.

Anthony Pike: With respect to our fourth quarter financial results, airtime gross margin, which is not reported in our earnings release, was 28.2%, which is down compared to the prior quarter gross margin of 36.5%.

Anthony Pike: Excluding depreciation, our airtime gross margin for the fourth quarter was 41.4% compared to 48.6% in the prior quarter.

Anthony Pike: Our GL Bandwidth commitment will reduce by $5 million in 2025 and then a further $5 million in 2026.

Anthony Pike: Total subscribing vessels at the end of Q4 would just be low 7100 which is approximate with 4% up from the prior quarter.

Anthony Pike: reported Q4 product growth profit with positive 0.3 million as compared to a negative 0.6 million, excluding non-recurring charges in Q4 of last year.

Anthony Pike: The Q4 operating expenses of £9.3 million were £1 million or £10% down compared to the prior quarter, and £1.6 million or £15% down from the fourth quarter of 2023 on a light-for-light basis, excluding non-recurring charges.

Anthony Pike: I would just be a bit duff the quarter was 0.5 million and our earnings release has a usual reconciliation of that.

Anthony Pike: couple of expenditures for the quarter was 0.8 million and so just a little bit less capex which we believe is a good proxy for free cash flow generated from our ongoing business was negative 0.3 million

Anthony Pike: This compares to an adjusted EBITDA less capex of 1.4 million, positive in the third quarter, with a adjusted EBITDA of 2.9 million less capital expenditures of 1.5 million.

Anthony Pike: So, for the full year, adjusted EBITDA was 8.1 million, and CAPEX was 7.4 million, so adjusted EBITDA, less CAPEX was 0.7 million.

Anthony Pike: Rending cash balance of $50.6 million was up approximately 0.8 million from the beginning of quarter.

Anthony Pike: and finally, our earnings release provides our guidance for 2025, which is a revenue of $115 to $125 million and adjusted EBITDA of $9 to $15 million.

Anthony Pike: This concludes our prepared remarks, and I will now turn the call over to the operator to open the line to the Q&A portion of this morning's call.

Speaker Change: Thank you. Ladies and gentlemen, to ask a question at this time, you will need to press star 11 on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your questions, simply press star 1-1 again, please stand by while we compile the can air roster.

Speaker Change: and we have a question from Caleb Henry with Quilty Space Hill on his now open.

Speaker Change: Hey guys, a couple of questions mostly related to Leo Services. You mentioned having a thousand new ads from Starlink this quarter. I'm wondering if that's sort of your expectation going forward on a quarterly basis or if you have any expectation of roughly how many Starlink ads you'll anticipate seeing.

So let's be clear, we shipped 1000 terminals.

Speaker Change: Anthony Concy with the actual activations where we had 2300.

Speaker Change: There's approximately 1,000 Starling terminals in the field awaiting activation, not all those were actually shifted.

Speaker Change: and Ford, some of them are shipped in the third quarter and ironically some are shipped in the second quarter. So we're staying on top of what's in the field, awaiting activation.

Speaker Change: A key thing here is any terminal we ship. It's locked to our service, so we know we can't be used without our permission on another service. But as far as activations for the quarter, we activated just under 700 star-link maritime terminals.

Speaker Change: Okay, thanks for the clarification. What is it that leads companies to delay their activation?

Thank you.

Speaker Change: Well, there's a couple of things to play here, right? You have commercial, leisure.

Speaker Change: and they may have them on the shelf. What we're finding is because of the cost of the equipment, you know, in comparison to what Vset used to cost.

People are willing to...

Speaker Change: whether it's a dealer, distributor, boat builder, are willing to take units to have on hand and hire quantities in data with a V-Sat. Now, one startling terminal from our quad, our cell price, comparison to a V-Sat, to about an 8-1 ratio.

Well.

Speaker Change: as far as our accusations are both new and existing customers.

Speaker Change: As far as the new ones, they may not have had V-Sat, they could have had Fleet Broadband or other lower-bit rate type of communication systems, and it has taken advantage of the cost structure surrounding the Starlink terminals and the airtime.

Speaker Change: Okay, and then thanks. My last question is just around some emerging constellations. I think

Speaker Change: Kuiper may have some of their first satellites up later this year and seeing some headlines around Chinese constellations that are also starting to launch, one of you have seen any kind of market response to those things or anticipate that during the year.

Speaker Change: I anticipate a market response. I think it's still too early. You know, Criper is testing, but by the time they have a commercial service, it's going to be willing to 26 or early 27, so it's just still a bit out until they're actually up and going. But we're keeping a close eye on it and we talked everyone in the industry.

Okay, got it. Thank you.

Thanks for your time.

Speaker Change: Thank you. In our next question, coming from the line-up Chris Quilty with Quilty Space

Chris Quilty: Thanks, guys. I guess congrats on getting that OneWeb service launched. Just a general question. How much of a challenge is the terminal pricing relative to SpaceX for customers, or are the customers choosing OneWeb for reasons other than cost?

Chris Quilty: I think it's a bit of both, you know, I just talked about it across the Vset Terminals

Chris Quilty: But, you know, we see users and we talked about CSPAN that want diversity and network, right? We have hybrid users using both our B-Sat and our Starlink, but like in regards to CSPAN, they're using Starlink One Web as well as V-Sat and we anticipate, you know, you're going to have...

Chris Quilty: a requirement to have diversity of networks and it could very well be a Leo Leo solution.

Chris Quilty: as far as stand alone, one web services, they do offer CIR and other compelling features that may make it more attractive for the end user. But as far as the cost, they set for the half-do price, about 2x to that of the high performance.

Chris Quilty: Flat Panel Starlink. So it's not a huge difference as like the 8-1 ratio I talked about to be seen as you know.

Speaker Change: Right. Switching gears, it sounds like you're getting good traction with the Combox. Any lessons learned there?

Speaker Change: and what seems to be an increasingly competitive marketplace of, let's call them, you know, [inaudible]

Speaker Change: We think the feature set stands out, and as I discussed, the feature set is being expanded in particular for intrusion protection and cyber security, so we feel that we're adding those elements to make it even more attractive, and it's more than competitive to anything else on the market.

Speaker Change: I understand. Does complex have applicability in any of the new markets where you've started to see some interest, you've mentioned land and some things in South America that were, you know, off nominal from your traditional business.

Speaker Change: The short answer is yes, absolutely. We didn't really talk about our land initiatives, it's still pretty mature, but we're getting some good traction in land as well in Convox is being sold in Canada with some of the land opportunities that we're pursuing.

Great, and I guess final question.

Speaker Change: You know, as you look at the decent terminals coming off the network,

Speaker Change: over the impact that I'm going to go for a basis and I guess more generally have you seen the rate of B-Sat loss, you know, stay the same, accelerate, decelerate.

It's actually...

Speaker Change: It's even doubt, you know, so it's almost as decelerated to a degree, but we're seeing a pretty consistent term number.

Configuration

Speaker Change: and another nice element about the V-SETs for shipping. For the most part, they're agile units that we've gotten back and refurbished, so we don't have any significant amount of cap-backs to go along with those terminals that were shipping.

Speaker Change: So, as we go forward, we're carefully managing the Vset Network.

Speaker Change: We're concentrating every day. It is a shrinking piece of our business, but as Anthony alluded to, we're trying to match revenue with expense. We have our commitments being decreased.

Speaker Change: as far as the Geo bandwidth. We're taking good advantage of our installed base of

Speaker Change: We have special pricing for hybrid configuration to keep terminals active, as well as taking advantage of our pool of Agile units that we've had over the years, so as we go forward the amount of Capbex that we'll be firing.

Speaker Change: for the V-SAT service is going to be decreasing. I think Anthony has something more to say. Well, I just give a day to point on that, just to evidence that in the fourth quarter, our CAPEX, which was related to our Agile program, was a quarter of what it was in the second quarter.

Speaker Change: So, you know, we've reduced it significantly just in six months and we expect that trend to continue.

Speaker Change: Anthony, what is, I mean, if you put aside our agile plan, what is the base run rate

Well, so, hedges? Yeah.

and Mark Miller.

Right.

Speaker Change: So it's a place that the safe free cash flow positive in 25th.

Absolutely. That's horse driving for, yes.

Great. Thanks, gentlemen.

All right. Thanks, Chris.

Speaker Change: Thank you, and there are no further questions at this time, ladies and gentlemen, this concludes the conference. Thank you all for your participation, and you may now disconnect.

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