VSAT - Earnings call transcript Q2 2018

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Operator

Welcome to ViaSat's Fiscal Year 2018 Second Quarter Earnings Conference Call.

Your host for today's call is Mr. Dankberg, Chairman and CEO.

You may proceed, Mr. Dankberg.

Mark D. Dankberg

to of conference XXXX. welcome second for and quarter fiscal afternoon ViaSat's call earnings our Good

Officer; Chief So with Counsel; in our Operating Corporate me Mark Bruce Rick Duffy, I'm Dankberg, and Baldridge, President and Dirks, our Development. and Paul Blair, Officer; Robert Financial I've Treasurer; got Shawn General our Froelich Chief

Before Robert will we provide disclosure. start, our Safe Harbor

Robert Blair

Mark. Thanks,

that to will As forward-looking statements. reminder this differ a results actual discussion contain factors know, cause you is could materially. This

factors in Copies that XX-K or our these from including is over most recent Form website. filings, said, SEC concerning on our it back and to information Additional With contained turn from our the are Mark. SEC I'll reports XX-Q. Form available

Mark D. Dankberg

Okay. Thanks, Robert.

over great XX% and I'll quarter, year. on with our the web. So take growth a and and include and refer more growth a consumer the we'll revenue I'll broadband, revenue compared last questions. double then second EBITDA Government about results. we'll Then will then available highlights, discuss go financial into in-flight and depth X% XX% little at Year-to-date review to slides respectively. Government, that are and XX% Shawn revenue quarter growth. gains start and of double-digit to of earnings strong outlook in was Highlights Systems another and EBITDA increase had trend continuing that

ViaSat-X with aircraft that's suite, and fleet executed new now is contract our Fly-Fi on-board connectivity now significant quarter. which installations backlog. three the passenger In-flight also providing a relationship as with EL their on quarter, system our March America, about focused them plans installation also ViaSat-X. as full-scale end on In industry poised and weeks on several greater service our upgrade later. also ViaSat-X. both award-winning and beginning the Australia. got the of excited well. access with begun on the second next-gen in quarter. year. service their network, that AL routes. quarter is to and on good for near consumer ViaSat-X we under service capacity service testing Wi-Fi and connectivity of and anticipate coverage course, primed We've growth Icelandair. can were leader. their and Qantas, We've We're contract flying awards North happy XXX of begin record We'll We're additional strong extent the JetBlue. next-generation also the to on distribution is We'll engagement XXX anticipation in achieve New and we're in launch in And even American but more connectivity more significantly Europe, see announce we systems new growth. the operating ended upcoming for calendar highly ago, ViaSat-X-like SAS growth I'll already little Europe We've continents: growth aircraft an we're on and we've really a with got In on early give European customers, help with greater detail this began to We're deliveries launch, to Finnair of to we with next

those later as plans only more demand few it's really a bit about little with we're that Although been pleased we'll weeks, for a and well. talk

detail more the on results. Shawn now So will financial give some

Shawn Duffy

next-gen R&D period the them quarter service target of Commercial by we Satellite managing financial Systems, programs. about be, were Networks launch, Thanks, and before Government impact expected strength during to continued gap where resources Services the the ViaSat-X the for Mark. to results Overall, and characterized elevated on in

Revenues for achieved highlighted, million. for record in history continuing investments our were several larger growing to ago, data and quarter expand how years make several our segment, Government product year-over-year, despite now Systems momentum a information up beyond while QX, segments This information we we've quarters. growth discretionary for was EBITDA X% company. is saw at year-over-year XXXX. $XXX just just assurance of solutions quarter quickly example R&D the second-best million, had which Revenue products. XX% in our its mobility the late generated security segment, was service the excellent in higher line, QX, in X often products propel to Looking as We assurance fiscal cybersecurity our the case to government Mark over another points investments, And discretionary investments About margins this reaching new last for our our one up to was which adjusted ever spread quarter we've made growth of use by and strong technology the platforms. in in product some revenue decided next-gen across including $XX largest two initial over far our growth we drive resulted opportunities. certification diverse percentage new

Our for were and company year positive and $X.X half revenues company QX generated about of of with segment Satellite to by due Government in In backlog slightly segment the can settlement backlog about orders $XXX Services, XX%. QX the see fiscal book-to-bill payments primarily the times, a million QX Loral $X.X of at of in quarterly $XXX down while segment awards XXXX. Government we year-over-year the in This we completion of resulted total million the and billion. were exceeding million first revenues lumpiness the

record incurring our contract. higher American higher sales, was Our costs see ahead did ramp-up compared Since to our was reported by than of what we're moderate been expected to base ahead revenue the lines (X:XX) date these sales expenses year-over-year ViaSat-X earnings of planned half with quarter-over-quarter as were installs residential to to higher and particularly reflect settlement, these see us, a Segment the not the our terminal service in In air launch. offset to strong revenues In better the reduced top than result quarter-end fiscal with million year-over-year at on expenses and of if bit terminal of Commercial in-service period in of XXX it some ARPU the the quarter continue then in same ramp-up year, business planes offerings another revenues, Commercial subscriber scale as And we our with segment, service year-over-year large-scale offset begin the IFC, $X significant and we last sales have attrition ramp sub grew airborne additional of we ViaSat-X migration additional similar expect a we from noted, quarter. as levels second service by as increase of business. to later shortly under Loral ViaSat-X. Airlines had and Gen-X a Networks, our fixed associated we related sharply. impact Qantas. the service we in comparisons expect in commercial quarterly ending reflects premium are These the ARPU the we mostly IFC fiscal achieved percentage down year partially to about the XXXX. on a with our revenue already should this efficiencies impact

compared ViaSat-X for and primarily last comparisons period R&D additional to STCs year. Our $XX the the investments reflect segment and terminal airborne same an in million EBITDA development

the we're phase. construction modules, out, to see to Looking certain begin going ViaSat-X enter payload

program. are So slowly of portion transitioning capital the activities the to

to elevated business IFC while to due the IFC-related opportunities we side, on are now that expecting stay a longer R&D we're While new developing.

compared included EBITDA, a the increase keep ViaSat-X same increased across year. healthy elevated strong offset the to for saw revenues $XX period. On year-to-date $XX which off Loral quarter the our may million and just Government fiscal bit in business. a ramp-up. adjusted the we were product half revenues up that And X% In period by completions quarterly next settlement Loral slide segment, last X% into EBITDA the to variance revenue adjusted driving year-over-year with million higher to into of compared longer completion overall EBITDA So and Service our Company-wide, of first and R&D, settlement of growth for our cost was year. the R&D of the a very we adjusted XX% commercial XX% XXXX growth partially as IFC we in due just lines we Satellite QX. the and last as closed the about same growth see X, stage air over performance year, XXXX to higher due

platforms. exactly ViaSat-X increase commercial As first plus air STCs saw drivers again upcoming a top Loral same our reduction our essentially QX in and business half costs results launch. terminals, reflecting Networks, year-over-year our result, the in performance related the XXXX Services EBITDA Commercial next-gen results. year-to-date In was the of service in our Satellite and mobility line airborne With the ViaSat-X $XX related million with reflected the year-over-year associated ramping completion R&D, EBITDA we payments, to

we've similar a growth to base quarter and in fundamental the of to the been adjusted EBITDA large So reconciliation year-to-date in transitory show provided isolates The what for reconciliation the shows year, we've X items last EBITDA highlighting both slide order business. periods. the

for businesses. year-to-date look the and were year-to-date settlement right the as you offset increased conclusion almost investment increased existing costs the the basically $XX on you from of R&D If organic account QX at by million of variance, reconciliation of page, our Loral can growth the the that side all the ramping see

R&D $XXX the ViaSat-X flow Turning and the and investments our $XX our $XX costs. in from to cash million uptick investments, including for air was and funded of expenditures slide ViaSat-X X, flow our most commercial million year-to-date operating This in cash programs. capital ramping operations ViaSat-X despite million

and EBITDA, benefits overall Our net amortization expense, items which lower higher GAAP higher non-GAAP to net the and reduced reflected net income. income depreciation of impact noncash tax all and

to completed A That In also $XX a the impact well grew Keep mind P&L and our international per we refinancing expenses other air of of This September, existing expect higher as quarter of upon that to charge still commissions to in the year-over-year associated rules, in had in higher upcoming the as under talk walk recognition XXXX. in the second we QX as so ViaSat-X couple XXXX, amount a costs coming begin commercial bond we included about of will expanding means stacking fiscal next about the our as support percentage (XX:XX) that will in over activities through any fiscal XXX effect amortizing subscriber incurred after-tax rules details. which into with and in exact $X.XX revenue. share. them expensed, launch The million review, the over expect an amortized under to estimated Beginning life. SG&A. a absolute half call. these and these uptick which capitalizing up of be about certain comments capitalized supporting of This in one-time employee-related due to and QX QX more growth service initial the was costs terms FY as the SG&A, be revenue show the we accounting will new XXXX businesses. in in our be XXXX, customers continue with

also on near service the adoption rules. from we marketing low of costs for We increase the the continue after SG&A see expect begin expenditures to and be levels the expensed next very accounting to even several as quarters currently will to launch ViaSat-X, these in new

our million the and our project looking September, activities to upsized $XXX due push us eight-year $XXX year $XXX and as but flat. very refinanced five CapEx to million on ViaSat-X We senior out down years. same maturity due favorable to overall, by a And structure XXXX. $X entirely ViaSat-X XXXX million. CapEx, strong and Looking coupon decrease market compared million, notes our new the we at allowed $XXX This due also million year-to-date with $XXX unsecured offering our year. original to targeted relatively to in them offering, cash originally we demand million period a in the $XX were the lower capital was was replaced last at million outstanding by lowered amount by notes conditions, This in due per expenditures

scheduled payment This April amount Ex-Im $XXX first on semiannual outstanding begin with plus of bringing the also our loan, total to made million, we draws the to principal final in XXXX. quarter, interest our

right, liquidity quarter In to see X.Xx and this begin terms outstanding on over continue with And few we costs. of and quarter to leverage we the in the modest build a the $XXX expect result constellation year. net of million lower to while same subscriber period chart lower of just on next trend higher borrowings ended as In the of EBITDA incurring see phase $XXX the the ViaSat-X the impact sheet we net to debt the a our up the acquisition overall the continued and million billion. as our the leverage quarters, on last compared balance brought over a tick $X revolver. uptick liquidity, no success we cash That

liquidity up As comfort take-away overall in zone The well this our that subs perspective. a we focused we ramp stay ViaSat-X, within the is maintain main expect doing we company slide healthy of keeping we're to being a flexibility an our to position, we're example refi on we're from growth that. is and from And how this opportunistic leverage on preserving investment move the through bond the good in September period. very as

Mark D. Dankberg

Okay. Thanks, Shawn.

perform as the shows service Government our Shawn including mentioned, information and in extremely So our to main this well. momentum We've lines, businesses each data slide security. cyber satellite, got and links, of and System continuing product tactical

have both chart sustain EBITDA. orders from see in Although be us individual grow revenue we've steady quarters had and can can strong, new you growth helped Strong and backlog. lumpy, pretty the

up system year-to-date end-user has is XX% a developing at within basis. far, products transitioning the needs of platforms, identifying fiscal XX% portion products prospects is main and to fill from growth business, over So the served that Government. significant new in-flight several new services on services milestones need believe or A good and record. scale second flying today airlines announced programs years. the we new that several new of been connectivity these got EBITDA next-generation our planned with not and half we're achieving and this existing starting that been come We trends organizations The happy rapidly And revenue also year-over-year continuing and by missions we've successful and to are we really on We've with now, of point we've overall our the the have next on this the connectivity year. fiscal in contract JetBlue. of

to connectivity years. we've Of for Internet almost been providing fleet four course, JetBlue's

their already, JetBlue's that as passengers our generate capacity. our progress to qualifying carriers environment and Our we more even adopts new this engaged to confidence efficiently the more and innovative have and see help and objectives new rest that their to of and commitment. and with We've and new all contract We're access to devices. actively directly of greatly Overall, reliably a passenger better, and work additional more second complete and scope connectivity ViaSat-X, services generation an coverage expanded it's other airlines to over with With us of engagement manage and JetBlue us. connectivity investments that and creating year. and compatible. distribute ViaSat-X additional enabling We're realize this airlines, increases the in-flight momentum expect understanding more applications, the our been appreciate on suite, its excited JetBlue fiscal great generation passengers the ViaSat-X for connectivity, use in-flight that's and more

Okay.

applications. as from now, environment. available and ViaSat-X from we'll Our enters Government three from we But Consumer to well a be service, being legacy connectivity usage satellites, bandwidth in the business when our about continues today, as by months to ViaSat-X constrained go growth bandwidth-constrained on bandwidth-rich and bandwidth by in-flight and know

though by record So though drive steady. levels, define, seen substantial we're that than our enthusiasm Migrations anticipated. historical service plans decreased to with migrations is ViaSat-X service and things are subscriber the yield. though the some can constraints. of we've operating extent limited do residential ones. the with later more volume, and remains early service choices that closely plans has to little testing we have markets and ARPU counts. slightly launch. net from results relatively subscribers' on our that newer year-over-year, for towards what increasing and higher-speed, leverage plans. refine services, and existing really on played strategy increases to-date, demand and network to distribution with lower different began norms migrations will expect the we ViaSat-X year. do to bandwidth advantage Consumer new obviously to plans, Churn, been it's to by to and with encouraged revenue for and different continues a more combinations test driven economic to than in extent higher-speed We out has of the that these improved to plans margins of launch usage. differently the scaling advance bandwidth plans existing existing newer our by subsequent skewed combinations We've in order the interactions We're launch the demand bandwidth fleet offering migrations on higher even by higher we've advertising for of strong compared of the plans subscribers in related that's unlimited seen very offering moderating new acquiring up We data service seen higher-priced, select plans found distributors at essentially believe this only X% fiscal importantly, Overall, offset ViaSat-X have Also,

financial We continue our alternatives. costs customer us addressable to It'll higher-value grow overall expect Initial satisfaction, presence plans higher-performance, subscriber strong new a substantially we launch. and in in partners. and reduce can evolving constellation bandwidth our continue the productivity will terrestrial other our up plus ViaSat-X in improve TV our lead enable market in returns, is maintain significant ViaSat-X expansion This emphasis to distribution service think to also to of especially and We leading service grow the deliver through positive. channel as attractive acquisition beyond. reception of our already direct-to-home dealer channel, includes on sales-only number channel to

testing and been our the as less extent and testing year doing of basically outlook the scaling, we're existing that weeks remaining we three summarizes network of conclusion pole These for calendar end the the So, today. fleet field services line launch. will satellite trials production orbit in of alpha events consumer February. our we raising, the on has and on points ground can months before the that anticipate using anticipate We've cited raising immediately are existing engaged fleet. for We same now service several be last ViaSat-X In-orbit from in early trials integrated launch key upon Orbit the the of on than final services control chart XXXX. performance network in time done to begins to having the quarter. since this we and long in ViaSat-X-like been

Government growth. set the for and a the strong in Our expected with consumer for quarter. we stage trend in-flight in sustained be We well in increase bandwidth in continues outlook March constraints stifle growth and where the last the should now believe significant broadband. to is installations business growth connectivity quarter shipments We

for growth showing to ViaSat-X plans, strong growth forward our preliminary high-speed, And looking in to questions. ignite data leveraging fourth Given for that, open with in demand up strong we're ARPU let's bandwidth and high-bandwidth premium the quarter.

Operator

you. Thank

of Your from Company. first question with comes Rich the & line Needham Valera

open. is line Your

Richard Valera

roughly direct us talk could agreement convert And for and that would JetBlue. announcement with many what the to the how if you you in fleet timeframe Thank remind model? this you. planes revenue change over wondering in over Thank margin. economics how today? could Nice was you. to also per you with the of that if terms I you this whole plane both about And air would impact are expect could

Richard A. Baldridge

Rick, is Rich. this Yes,

JetBlue. provider, were this to us to is another think a we – really I sub

JetBlue the them airplane. kind the and do been more and into the this overall on actually on to goal helps for us position prime is more network. things to with So try for get other that do things And we've us moves engaged working passengers to of us

expand down for basis a bit services. come amount So but the on we're to motivated of the per to cost actual

is creative more real growth of more we we'll and So but to them nimble. the some and ARPU out more see with it, engaged to think subscribers be able their get goal be

So, Shawn I I airplanes. right now, think think XXX on we're here – says

they hopefully, all to this their to the aircraft the So fleet, current extent expand that apply and, to will aircraft. new essentially

Richard Valera

that And current next just Rick. of last adds anything Thank about or over it. talked in that out quarter If quarter-over-quarter, give Got sense you the Has us your the December two? sub a then front? play That's you quarter. increasing you, how could potentially expect net quarter helpful. on you changed trajectory had to

Mark D. Dankberg

services did projections what associated are in right to is trials I'd that experiments number the those and with Right of we now, which But experiments, in subscribers, Yes, exact interested and our quarter. we're we second data those end but depends how not the on how tell just we're more up choose in plans net we'll as probably now, subscribers say subscribers much roll doing about we us plans. get; the and down with. and out lot usage a go much as the ViaSat-X

think it's the actually out wants, far, and to it, the because that markets these that's us; relatively those are So that high-end really for think we're we're so fact far plans we've uniquely aiming the basically really what in good that capable just seen at. the deliver finding people results market I so like we

Richard Valera

it. Got

one one, could. final I Just if

that relationship DISH figured going You stopped selectively gen get of of to have shape relationship of Is kind the I start into conversion agency, you And and ViaSat-X forward? what but that plans, believe out once I be online. you will that selling will the we ViaSat-X selling think correct? they of had kind the

Mark D. Dankberg

Yes, the what I mean, you said case. is

involved they've we'll the we re-engage. And year. they been offer, think expect that We and this our fiscal to like that for not so plans we in But they will. think so plans going we're

Richard Valera

Thanks very it. gentlemen. Got much,

Operator

you. Thank

Your with next Ric Raymond question comes Prentiss from James.

is open. line Your

Ric H. Prentiss

Good Thanks. afternoon.

Mark D. Dankberg

Hi, Ric.

Ric H. Prentiss

along questions of following couple lines. Hey, the same

out. But aircraft, us throughout and how ramp you that might you Qantas kind little the coming we eight installed, should American guys I guess, ramping? a the seasonality quarter. look of just quarters, talk about expect. bit you as understand I think help and in mentioned On you the mostly what the Can

Mark D. Dankberg

just mostly for we're the starting and before installations the think that just shipping in to we quarter. ramp. then that I And XXX what it we're be we what going Europe. June now to overall, ramps ramps to We're pretty are to I indicated some that's in And March indicated quarter. in think that So except close equipment, to XXX ship under of starting the Gen-X the had aircraft

between there, soon. linear, ramp pretty to think slope here obviously not So but that is and I perfectly starts

Ric H. Prentiss

on prime assume yourself with the relationship into expansion Okay. now JetBlue you there we'd of for? the components that maybe like And too, the us position, then it's was an of bringing as just the update or on Can long that ViaSat-X how maybe contract, said, relationship, the contract given ViaSat-X you well. extension is locked in

Mark D. Dankberg

no. extension these Yes, is some what there. interesting Kind in before. customers. I There's view features our had of is our we we've keep There mean an them to of contracts on got happy,

working? term so it And that contract what's we're And think is important happened together. well here great is evidence less really I is working that than

Ric H. Prentiss

proving the the and those the as report side Okay. to concern big wireless wireless plans. well, was U.S. a We there, a today a Cellular on or the and of sorry, write-down U.S. is to seeing broadband but unlimited data plans, had hard then lot side because on And clearly are side, difficult. monetize higher-speed, unlimited the – revenue on you're the interest took side monetize, they that in plans ability demand higher-priced

of little walk they're they can demand took write a literally the if U.S. comfortable unlimited plan how you And idea you're unlimited high the get looking an trouble high-speed, take the through, rate kind seeing economics? saying down such of several plan the the high-price, on of for and you having plans then give so pricing, what then But And us us a recognizing Cellular, unlimited, is the at revenue. maybe like? are big

Mark D. Dankberg

Okay.

few a good consumption having knobs So, I we've provide of last done bandwidth satellites, really of that and having good and job yield a that the understanding is policies consumption from the one and economic levers that we've of over bandwidth into comes of made and under that control. themes go really the good experience that and still a years think optimizing the of the understanding sort keep

empirical the plans use market two subscribers we've XX-ish basically with data, the three combination for think I because had plans. those we of thousand freedom So or our in using – a in years

of of, So little say, for cases. some price they're these those. ways more derivatives plans kind a little some favorable and in a I'd carry higher are In subscribers

track bit we're we residential we both telco as homes, and homes over-the-top viewing kind expected bandwidth have broadband track use in empirical cable combination that triangulate and of another So very then It's to we way evidence, cognizant aware of hours this on have usually little I of a and consumption. data, tricky but adopters as first to hundreds you relatively a plans because the intense more if you the can the users, numbers, whole. of the bandwidth of more of people think population are them scale if thousands, that are small they reflect statistics

good deliver is economics, one and than for them us. to subscribers that more So for of our more things the to been we've and saying at we're basically that both able producing bandwidth other people, we bandwidth be should

now, the we're really expecting. we're So say range the they're testing. results. of what about that's what we've I'd within been enthusiastic overall Right

Ric H. Prentiss

there you the where noticing did hog? at Okay. you at who break gigabytes. price saw on points, the – like then, the that like I XXX a How is think look and thing same gigabytes, or XXX is And being at a point looks a throttle prioritization guys was and it was it just

Mark D. Dankberg

offering we're that's higher confident plans, of and that well more is, by really change. distributions been common Those, a talked limit about is XXX we on That It's that. may Yeah. of unlimited drive be subscribers compete comparable has one wireless there relatively it's a probably be of opportunity why The this the demand number quarter testing. it's big fraction speeds of use DSL last how the we'll we're what was gigabytes than one which and able derived going sort of to much area on it things subscribers But where – lot and see that's thing kind is higher in to some a so whatever plans, mean, those. from amount of to volume. that I bandwidth, the we very basically against the

Ric H. Prentiss

Thanks. Okay. Very good.

Mark D. Dankberg

Thanks, Ric.

Operator

you. Thank

Your with next question comes from JPMorgan. Cusick Philip

is open. line Your

Sebastiano C. Petti

for Hi. This for Phil. Sebastiano Thanks is question. the taking on

residential it telco broadband the are slowing telco the growth regarding is more slowing for like adds opportunity are ecosystem-wide, cable losses net operators; slowing. looks for Just –

a being rise doing gives lines, consider what share? you those would XX,XXX you And MVPDs, guess, foot ever ability them partnering at Just all taking offering? continue to with of OTT of and a pressured with bundle view, virtual the capturing in confidence, or video I sort some potentially along bit your

Mark D. Dankberg

Okay. points. Two

can just the sort the what talked megabits, are continue you're then about little we're one, we're XX speed in the available speeds why a dominant to we and capturing of the market, last and above affecting speed we – and we think at XXX XX choice. do megabits megabits, at about factor the under that about speed in market, subscribers' on median So number median, median are is – share, quarter, well

good speed, So provide volume factor, as think unlimited that. think have issues, good opportunities. the that's these from ability we a and about why can drive We've and is about our and excited gains value we plans also long so as we also talked we're we to and volume

as NOW over-the-top. are deal of relatively subscribers. The an example. bandwidth. Sling fraction on lot new right the And As tiny We the well looking consume like you mentioned, video all services, of live as DIRECTV would the more a or with consumed. there, or now, of they data That an over-the-top example video is a Hulu at services be that's out a VoD-type Netflix we big can volume driver think,

service those do that going may But think of more it's that one that involve skew a good with services long the to we those or much. in results way not our be really satellite could providers. to partnering So deliver and run,

Sebastiano C. Petti

you. Thank Great.

quick and plan in Eutelsat terms just you. those distribution are to update follow-up. potentially Can learnings you the I with where other any Thank conversations ViaSat-X to update then are an one negotiations JV Just as us maybe give changes EMEA? the related you co? and the to you How and guess of And an and have surprises, infrastructure progressing?

Mark D. Dankberg

Okay.

we've about engaged we've KA-SAT or about there. the economics and existing Eutelsat, nine quite a feel bit on with eight been them for the business, So learned months we with

a landscape for get been experience to that more as think to make good familiar and learning I they progress encouraging. ability with business in Europe us has our more business. for with of overall And the kind I evolve think been managing Eutelsat both we it's get approach and the and our familiar and

– there's battle no thought contact survives fact, saying of enemy. first with in plan think the I I

And so the working and describe I learning think both we as and things with environment But each good. Eutelsat would other. are I working

we KA-SAT we're to learning doing that what trying the things we're ViaSat-X agreement. is on translate venture Now joint though into the are

the to I that we detail had so conceptual the causing terms. terms really rethink both And of not that's some think but to us

And think announcements that. that's I track. year, on hopefully, next around of somewhere on we'll make to year, have more still the end the early

Sebastiano C. Petti

question. the taking for Thanks Great.

Mark D. Dankberg

Sure.

Operator

Thank you.

DiPalma comes next with Your from Blair. question Louie William

Your line is open.

Louie DiPalma

Thanks. Paul. Good and Shawn, Mark, Rick, afternoon,

by talk U.S. the you bookings? program down your the can shut has decision Government about Army that impact First, on to and whether had the WIN-T any

Mark D. Dankberg

Okay.

our been Government So material that's a have but in effect equipment far on overall so we really business. do say WIN-T, would hasn't I

– that through think is I that system that can big been doesn't value I that think bigger that we've obtained the the necessarily it system; issue reflects of deliver the is be systems that kinds big, physically-large a doing. WIN-T

and delivering. uniquely our growth big So the I that overall and thing our think that quo status a with are fueling sort dissatisfaction capable of Government. good networks that's of is what what's satellites we our it overall, And WIN-T with part which dissatisfaction a of benefit for reflects reflective overall is for what's in is we've been possible, and that we us what because us, think think pushing

kind that, for which delivering types of the into for the us. services just of would those And types in is of trade of describe artifact as good we go products I that symptom or we're certainly an WIN-T terminals. growth So

Louie DiPalma

And ViaSat-X Okay. is to residential in the target for be February? broadband services live

Mark D. Dankberg

Yes.

Louie DiPalma

Okay. And positive we launch, do fourth the net quarter? with in fiscal that that of timing adds expect

Mark D. Dankberg

Yes.

Louie DiPalma

Canada the with development in the XXXs also the be deal. aggressive JetBlue that does XXXs their JetBlue that Air you'll is Thales's despite was give Okay. in And, involved partnering of deal has a aggression, upgrade obviously Thales Thales you it positive this seems And and with? deal also the lastly, that confidence market you been because United with very Airlines's

Mark D. Dankberg

want right? deliver presumptuous, so. We don't have customers. value to We You would to of be all our to think

of for resolved that to good best going well. the to there both had as and the can them and situation and we're history they And get to a get way a was resolved to with think a that agreement outcome good JetBlue we're we us. contracting I think a good because for needs the where extent that that TV, others, do think on mixed of that in live JetBlue United of in kind we I

Louie DiPalma

latency OXb Okay. in partner some some providers And lastly, particular, view being service of do for low LEO as for you the you a potential and, services?

Mark D. Dankberg

Yes.

We'll them. have it's We out room We be for to They advantage, like that going powerful. some speeds, get market us systems. of weaknesses. I features can it's factors I certainly market plays all really see lower thing the each we relatively bandwidth a market. of probably and the where Different but systems – been how think competing combination they focused them of about there's bandwidth different partnering drive out. global We'll high, unique overlap. combination we're are is to a of other's in and so bandwidth, with the density, big have I high going business. lots think very think the getting I don't with most have areas The to is we the think of geographic of there's lots some on are fairly think and not we've really areas, that compete I strengths we're of ability demand because not some to small latency for that high deliver And just is think to think coverage. lots concerned

Louie DiPalma

Thanks, everybody. good. Sounds

Mark D. Dankberg

Thank you.

Operator

Thank you.

comes De question Andrew next from Your Gasperi from Macquarie.

Andrew open. Inc. (USA), Gasperi Macquarie is my Capital line De - question. Your Thanks taking for

First, portion know maybe aircraft? maybe lawsuit Inmarsat from timeframe will Ofcom you just JetBlue, hours, in on comment secondly, you any upgrading wondering thoughts quick, you be you standpoint just could so the on if you're the have a hardware could updated few essentially pretty of that? the refit And on a a I reports if given us tell have planned?

Mark D. Dankberg

years airplanes. all all couple back So on almost their it'll to really those go a aircrafts. of to JetBlue, take no, It's

upgrade. will they So

continue continue really ViaSat-X can legacy is new and So they ViaSat-X, continue other can system can to to – to platforms The but compatible our they we on in fly just fly. forward the meantime.

their – So cycle. - Inc. Gasperi going schedule Macquarie to Understood. it's really the around maintenance De Andrew Capital upgrade (USA), fit

Mark D. Dankberg

then... And

Richard A. Baldridge

Don't comment that. on have any

Mark D. Dankberg

Louie's as mean, to just of a Telesat Gasperi own the and about up NGSO Andrew Inc. I comments. recently an OneWeb what De well. it. know approvals Capital (USA), your sort FCC. to follow And They've Macquarie some I Got had No with question, you - plans? application issued

forward wondering what are on going ViaSat-X? systems your your beyond own thoughts Just

Mark D. Dankberg

maybe I hard So unique in it working should Maybe, can they that We think statements can is one question made, me. wondering the the low Don quarter? use now, Understood, and comment but Right Andrew focused if our the margins very mean, perspective, we are have March improve Gasperi ways NGSO. you (sic) could - from geos. away a still to primarily latency. De capital we just assume the case your in figuring interested just mean, augment last with out R&D Capital directionally we're which Inc. (USA), safe [Shawn], that that fleet. we're on you on characteristics, on to I economic investment is from Macquarie

Shawn Duffy

feel better going just couple quarters. give go, of probably kind a the where Yeah, way to for to the R&D think over is is I next you

talked So R&D offset expect to and that a air in is we little is the some going to about of come benefit. I that moderate commercial some ViaSat-X to bit, start and opportunities what think we

Capital this start So between should are R&D it. the not seeing of Andrew Macquarie to if similar think should that you level? commercial up? be about essentially to peak but (USA), the But level XXXX. of it to probably should Inc. of Gasperi you QX probably the - to about, down offset QX couple Got said that air, see and ramp same then next the it, kind the levels Or FY that at from quarters, work all De itself be of we

Shawn Duffy

down come expecting the I we're Inc. you. Gasperi in Macquarie R&D, that think So Andrew total De I what (USA), to of say - just kind is I would ranges Capital gave

Okay. Got it.

Shawn Duffy

It's take Understood. the Macquarie some Capital just Very - De Gasperi (USA), offsetting Thank ViaSat-X down. Andrew to you. Inc. helpful. degree

Operator

Thank you.

Crawford with B. question FBR. Riley comes from next Your Mike

Your line is open.

Mike Crawford

might what to car serve electronic phased including and the linked ability mean this into for might Thank the conjunction on antenna that equation? market, factor you. residential forward connected Can you're in arrays kind you comment some then what with and developing ESA budget also of SAC

Mark D. Dankberg

Okay.

in phased electronic really we are interested So arrays.

so antenna like that's GPS get the in opportunity of you the the south, phased satellite costs flat-panel to ViaSat-X we class But residential idea facing applications could economically make modern Best your on that self-installs could box, is the it cars stick an installation significantly. in the where working is into can there. it that would satellite. thing very these that and create big we're then of One arrays, Agencies, take similar connected a and we because a at. It a Or take bandwidth less we think really about it so basically while sort with a on economics of or bandwidth we kind opportunities and looking I a are large if buy Space think on size a just bit that could in amounts of on use and those are radio antennas that and home satellite. see for a ground you'd thing focused couple would essentially subscribers would really ViaSat-X be sat of broadband that efficiently high on types fairly excited their reduce of antenna the sort little can opportunity Geek with acquire these own Squad invisible also wall interesting an rates essentially is a basically Buy. The like the still data of cars type our create on of we that European space, constellation little on house we're of some you can a in be interactive

work to of ESA. two really the are we're applications that those with So through trying help

performance we've create to it the think exciting think If should industry, the technology cost it's some are that available else I got in get don't to we and prospects. we ought successful, and anywhere some through. points get

Mike Crawford

Jumping right gunning and programs Government talk you're you. should for look you to there can milestones Thank any about? now Okay. Systems, are for we

Mark D. Dankberg

for I to want think programs but any we at Thanks point. don't particular asking, this bring up

today. the may think I able but not to, term near in we be

Mike Crawford

can the adds good one question. cadence the XX launch ViaSat-X gross once what you value, try last in plans, the of approach you're first the just you be a above Satellite Americas? I'll as might over including megabits Thanks. anyway, duration in and about Services, you In think Okay. offering talk

Mark D. Dankberg

we'll bit. I'm that But basically, to below something up figure and it's really, our it might going if priced out. to little hedge really Sorry, mean mean satellite fast, a we've set we've got a plans the we I basically go market. quickly

things than of before So under-value less it. I prices is on years I we're ViaSat-X in demand that but looking in economic aiming so is services right out, and we'll And want yield, But fill two really put there. at the start. high to I'm be and because like we're we fine-tune still to to so pace should of fast how of we'd kind then market. focused these a from goes we've a make mean, figure charge That's to completely that do not that out those for ViaSat-X off get to really And of think like the but like and now, people sort of at them that what point think to that's we'd think figure doing, fill is trying know that reluctant we number have it out relatively of and full of good it three to numbers we're we're subscribers, as going tests lot fast to service, we really ARPU I what we and attractive. what got the a to are

data we'll real quarters. feedback be more to of couple able give in next think I on based the So

Mike Crawford

Great. you. Okay. Thank

Mark D. Dankberg

Thanks.

Robert Blair

Mike. Thanks,

Operator

you. Thank

from Chris Your next question Quilty Quilty Analytics. comes with

is open. line Your

Chris Quilty

that a of to have time wanted follow-up award antenna the flat-panel to a I kind Mark. as the one. Can a level product been bringing doing, table. take people help versus industry have point developmental you for That's you is legacy and maybe are long you're you're Phasors Boeings the and of there, that I'll ESA can development the on failed. failed. readiness of nice very Grail understand the Thanks, that indication size lot the Holy through contract, some that on what's you've different technology perhaps tried what to got and the any out us path? and that there And a Kymetas the

Mark D. Dankberg

Okay.

say, I wouldn't of Holy people Grail like the have kind a tried of flat-panel a have you much been market. in at say successful and they haven't they've Well, been lot them. antennas So, so that failed.

being difficult That really, issue especially data which antennas problem, that you big You our part's hurts this they're these loss performance start flat-panel have trade-offs because price if looking true really performance. the with really can and cosine (XX:XX) about that. say

antennas you so big be with that can and antennas or up expensive. And end more are they

that of what's pretty good gets is achievable we're of reduce he cool We more about we ingredients a aware is have as approaches we're one is buyer bandwidth makers one that much been these of there, they're missing how a the the are ones. I that is systems that expensive with pretty flat-panel costs user and antennas performance other how everything that the out other people, technologies we've encouraging get So paying. at of and think he some essentially other end, still and technology really really should to good really so think really But from much antenna unique cares doing. relative as

an so couldn't that at And of have that couldn't the a antenna platform of if powerful really with effective otherwise really, or combination satellite lots you point, price that that's really combination. putting we bandwidth, a support a possibly support cost and on

the flat-panel European we appealing the so technology, system of really Agency. some that's good flat-panel interaction and what's think made do it's Space space think this I I So the but have to the

Chris Quilty

you. Got

on (XX:XX), there? update negotiations earlier a any and bird importance any of footprint. the there mentioned also global Pacific Is You've the ViaSat-X

Mark D. Dankberg

to that think on to some did configuration worth We scale it'll about a to And platform time achieve we are to that be in first improvements we we satellite. a into that I talk but able the satellites. and hopefully, need, has two it. the What that hope big we think go that's XXXX, going on think can is I working for we relative what be

progress. like half first be XXXX we we probably good on making detail But give that more feel it'll of that. So we're

Chris Quilty

to way, question, is the Obviously, past was it of killing been And development, or there programs quarters think pretty you this Okay. for Government side, what's already the either where been several see incremental your are this applications products asked growth upside to internal I particular think any that going a product but from here. on just up you're one good you've lot but in or final point?

Mark D. Dankberg

a have capabilities bring were that platforms that were to didn't way really there's supposed artifact didn't JTRS three to Well, and meant that the also an of were us the are a general of touched program Maybe area Yes. give worthwhile. it. for great little really capabilities more didn't waveforms fact areas. went field that and associated that there they been that's And that JTRS that anywhere was One we've of a that with never in sort on insight. actually the is bunch I'll or whole there

multibillion vacuum. with development area JTRS tactical is data our dollar links a an that's program multiples was in so deployment. Remember, that And that product a of big

good had there. think are we've that is of opportunity of So ahead that feeling parts of good to void and of us. there a I it big biggest We're parts but all not a still fill the

these side, (XX:XX) a really really final that good clearly, really, cyber field, never investing been an cybersecurity think amounts at back programs is info defense have really beginning successful where, programs Then space. in really is organic many far prudent raised of advances possible ways to about this I to and at kind become appliance what's sort just and commercial the behind the On one, WIN-T target. in the the issue of it in goes and program that of also we've do making and there was crypto WIN-T area instance were the that, whole earlier that

we're a that's filling has for in us. really opportunity been really that so the also since And of those gaps And in things combination great. that three big

Chris Quilty

is And the Eddie. just MIDS program Steady

Mark D. Dankberg

of Yeah, MIDS anchor data around sort tactical think links of whole an area. as the

and in big is leverage handheld network. You've of air ways. think And support, big, we lots And that can fleet got opportunity now you that there together, are aircraft we're multiple with fighter a connecting and that aircraft, networked close that. beyond to helicopters and doing of by that our

MIDS in it's of there, the been program that really we've sort anchor is of So that successful. around an but edges very just

Chris Quilty

brings actually that question I one And other up forgot. almost

lose as platform. government that side, volume you your which either been or mobility partner a coverage Intelsat it the network on for towards you Ku there? the KVH looks migrating an like your potential margins On an has is side big and hurt Does iDirect

Mark D. Dankberg

No.

with relationship good a have We KVH.

they're what and think I doing is what a them to – talked lot. we've

I think it's fine for them.

so I I it's a just an what's Ka, to whole it's going think material them. I global the clearly Ku-band issue. think, be for approach to interim it's mean, with thing, really not possible interim

Chris Quilty

much. Okay. Thank you very

Mark D. Dankberg

Thanks.

Operator

you. Thank

comes Fargo. question Spinola next Your from Andrew with Wells

Your line is open.

Andrew C. Spinola

can't of think rate else? lot the of Mike try range to guide us to because I XXXX to the we least you to a concerns XXXX? wide maybe it, but want and ramp at give we high them maxed of sort number? is something as fiscal XXXX talk about base Can fiscal fiscal help in for have people want of a When think us, a you of XXX,XXX just period, calibrate at to you kind rein reasons in last more since lot, looking a one out range I for there can a sort XXX,XXX don't faster question or of can such to investors ViaSat XX-month the adds to you of because from XXX,XXX-plus. should and or you grow I the Are in run Thanks. I know one anchor Crawford's for us Anything things as – time. historical big some xyz, net that are that where

Mark D. Dankberg

Okay. I understand. It's a fair question.

issue back the thing and to coming – at come angles, going think, I'm this the two to big for I we keep okay. from us,

We do of between So and one can – thing have, that trying relationship feel subscribers money charge like what for number can us to the amount is we we the there's is of really maximize them. this we're balance.

using churn would reasons like, less, so be that's they which we've we find point be that And like to the which where ARPU, happier, We bandwidth, subscribers higher more the is should more on a ViaSat-X, should higher-value is said, direction to for fewer subscribers. should acquire. easier we're that going

about that. when our we is, launched think grew we now. So the network The fastest, we have fulfillment and distribution and ViaSat-X that we didn't have flip-side

balance, from demand that And on money the bit mentioned. be trying do too what we to quite significantly should that capability I it mix we back that but first we are able quite year than we're than our the match to are to growing that believe, add think do We'll should not So do be we we'll perspective. year. see nor the a project we then. of then XXX,XXX And the slowly. a in that than side we table, a to better have and much sure able part you actually forward. things to and we But that be the than just better adds Those able bit number a to have that be fulfillment is in XXX,XXX offers to should leaving too subscribers that we have, able is more we're making more could that net

Andrew C. Spinola

to to mean where XXXX of on and maximize been period will of Does each we because the probably trying a well. And a And your return question, for you've XXXX, see capacity. your see the you that the around capacity-constrained $XX that come when sort when you've sub maybe going you lack really through that like and a ARPU last ARPU? of more at wondering, expectation launched, you – the think retail? just time and a thought so about share on thinking down. were was, It a it. can satellite you in would lot expect plans I us future, greater capacity, the Got similar of the of on that? once pressure sounds and downward I'm the time last bit as had the you give Not $XX time, blended, I'm the but you'd plans retail demand necessarily little been Anything ARPU this

Mark D. Dankberg

now, think I far, we've based going Right case. just on what seen so that's be don't to the

will we the higher-priced what and price that We showed plans point, we're on price see in that slide to plans you be have offering at stronger having plans can at the point. demand. seem just that But

optimistic now ARPU grow. continue will to that retail of right So kind we're

Richard A. Baldridge

to ARPU's over well our of Retail XX% as be going business well.

Mark D. Dankberg

Yeah.

Shawn Duffy

if it to continues ARPU Yeah, grow. the blended

Mark D. Dankberg

And think these Yeah. we things see. to I test and are that want

there If the you places really of good we and competing a ARPU trends, look aren't a are are the lot in lot choices in trends in. the is growing of that for environment cable

of right to continue but grow. we're kind it, test optimistic to have just ARPU we now So will retail that

Andrew C. Spinola

Thank you.

Mark D. Dankberg

good. Thanks. That's We're it.

Operator

further Thank you. this questions remarks. call over And for Dankberg to Mark I'd I'm like time. the at closing showing Mr. back to no turn

Mark D. Dankberg

Okay. and will really Well time for to the next everybody's interest, that. and appreciate looking thanks when I we're in really satellite forward the quarter service. be

then. you to talk So,

Operator

and conclude a have participating conference. all may you program, the Everyone, for day. thank wonderful gentlemen, today's you disconnect. Ladies and in This does

Mark D. Dankberg	ViaSat, Inc.
Robert Blair	ViaSat, Inc.
Shawn Duffy	ViaSat, Inc.
Richard A. Baldridge	ViaSat, Inc.
Richard Valera	Needham & Co. LLC
Ric H. Prentiss	Raymond James & Associates, Inc.
Sebastiano C. Petti	JPMorgan Securities LLC
Louie DiPalma	William Blair & Co. LLC
Andrew De Gasperi	Macquarie Capital (NYSE:USA), Inc.
Mike Crawford	B. Riley & Co. LLC
Chris Quilty	Quilty Analytics, Inc.
Andrew C. Spinola	Wells Fargo Securities LLC

Viasat (VSAT) 8 Nov 172018 Q2 Earnings call transcript