VSAT - Earnings call transcript Q4 2018

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Operator

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

Your host for today’s call is Mark Dankberg, Chairman and CEO.

You may proceed, Mr. Dankberg.

Mark Dankberg

Yes, thanks. welcome XXXX. earnings and year for everybody, fiscal end afternoon to call our our Good Dankberg, and Operating Mark Counsel; from Baldridge, our I’m Corporate Chairman Robert Bruce our me got CFO; and President Rick Dirks, with Development. our and Paul our Chief Blair, Officer; Treasurer; Duffy, CEO, Shawn General and Froelich I’ve And start, Robert disclosure. before will Harbor we provide our Safe

Robert Blair

Thanks Mark.

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

these contained XX-Q. Form SEC is SEC available said, including concerning you, our information on Additional back the reports our factors Mark. That XX-K filings in or our from most Copies website. recent to from Form and are

Mark Dankberg

thanks. Great,

I’ll consolidated then start discuss questions. additional an Shawn be will segment get Then our and and outlook with to and we'll So are we’ll available and referring overview, the our that or review some I’ll take slides financial of color results. over web, the

impacted fiscal can in space so So the well in the we made achieve substantial we main network was ViaSat-X, investments in XXXX antenna we growth as intended, thing delays while milestones beyond. did the as and that is XXXX the issue we enable and in-flight by significant infrastructure, connectivity and that fiscal ground launch and

and our we connectivity rapidly smaller highly and much operational on the coverage in-flight got beyond. a year it’s We it's market for speed, beside ground Services. we top in geographic vertical and state-of-the-art believe fiscal of added service The virtualized. second set that we've year-over-year fiber and markets So services We the kind can with all Systems ViaSat-X the now connectivity after delays, XX% of products in issue, in and completed intend growth broad organizations. consumer to plans broadband applications of airlines level tested this we real the EBITDA, that fabulous on terminals gateways we in orders. hardware stage finally, ViaSat-X, in-flight accomplishments broadband time had hardware it's And combination year successfully even expanded this, enables testing with and existing capable revenues, launch for new that satellite And generation powerful and and scale to XXXX scale flight adjusted in several geographic our by XX% through pre-flight growth. driven customer operating flexibility new bandwidth, antenna services Satellite new that most and XX% and features Government We and with deployed production. ever, network earnings,

for mission side So are on capitalize our and fiscal they're The drivers earnings. already the strong XXXX is in revenue all and underway. growth to with this growth on

rapidly quarter moving to started is it's scale aircraft service. our and the in That in-flight First fourth in connectivity fast.

Government expansion continued are is in that growth organizations Next services user market driven largely Systems. already That's by and product in applications underway.

reimbursement new vertical residential And the of the going loss of our quarter. to to ViaSat-X finally, to Next proof still the obtain And markets. our the and in and satellite have that also issues we're work some subscriber production. ViaSat-X, begin quarter-over-quarter assessment submit current then We best continued and our started grow also situation will antenna ground We geographic in with we adjusted scaling test EBITDA. and confidence grown. revenue has growth also is to this sequential fourth account U.S. and network the in ViaSat-X our with situation make quarter. to can We've more insurance revenue analyze continue of

and for for depth as more the quarter top will the Shawn that’s on fourth a level overview. financials So XXXX into fiscal go the whole.

Shawn Duffy

Mark. Thanks

in businesses growth XXXX ViaSat-X, connected quarter fiscal and strong service with are line milestones ARPU expectation. our subscriber important our commercial American of stable aircraft introduction saw of results across on by are the achievement fourth execution and Services count, Airlines Satellite financial marked was of our Our QX ramping.

tailored Our And in Systems segment R&D achieved decreased our expenses ViaSat-X Commercial EBITDA strong terminal reflected Link adjusted increases. IFC record product Government sequentially margin Network deliveries deliveries once again. and segment strong XX levels uptick of and family

terminals of earlier levels record or brought here, shipped generation handheld at the Therefore, margins development Government These data to link margins to of QX, products a are tactical NDI record drove radio. Looking non-development items customer-funded the this XX% considered record XX higher closer the segment and data solutions. was growth earlier give newest adjusted Systems million. contribution we data we bit and platform had they’re increase. product JTRS million more Small topline products our color I a funded mentioned $XX Much a growth an revenues from last representing company's efforts. improved than units. quarter see which and overall of through meaning $XX this yield tend To they Link link EBITDA lines solution, link two year-over-year

several year-over-year reserve were mobility to basis were XX% So the solutions. EBITDA in overall, of fewer growth ViaSat-X in revenues. $X was commercial increases contributions the if satellite consumer in last air down of from year-over-year ViaSat-X Offsetting and XX% businesses. days revenue of delays. $X 'XX FY a shorter these the QX the impact we continued revenue driven Services, launch a QX, service year. on grow exclude adjusted time saw Plus two for that's revenues subs, impact settlement Also a this booked consumer impacts than fewer corresponding due $X.X Satellite represented segment our the in quarter. payment the On it so you million had service ARPU sequential from completion IFC despite QX the EBITDA QX of to fourth our growth a quarterly basis, and investments raw and year-over-year in R&D our first by XX% increase generation million segment or increased quarters million In associated adjusted approximately Telebras quarter next with we government contingency revenues

we shared the and back As Wi-Fi service new as QX driven expect period service support. subscriber revenue ViaSat-X. our to will as ViaSat-X and the result and additional prior be opened of IFC the also now by accelerate nationwide, segment scale a the investments forward aircraft end primarily compared revenue EBITDA growth following services on look decrease. profit fourth lower operating in installations with we reflected growth, in loaded adjusted was commercial to delay year quarter revenue The

to the ability commercial networks, fiscal of segment. fleet, begin installed highlighting XX% sequentially In base revenues year-over-year several margins of we’ll ever our grew quarters increased revenues operating XX% We leverage growing drive of in elevated contribution the by this expect airport the these costs XXXX subscriber and driven aircraft half more stay for terminals. residential for from sales quarterly second and to

also and We year year-over-year XX% a saw basis. growing contract XX% on new awards up in higher full ramp QX,

and equipment contract IFC next generation for position broadband in demand fiscal resulted Continued XXXX. new for capability also book-to-bill wins for positive

throughout We our sales year, and continue Airlines the to American execute we customers. strengthen expect product as the mobility of other to program airline those

for a also sequential quarters This as and $X decreased another customer those to newest of grow consumer commercial performance operating we the the to see to contributing also our on revenues segment R&D, global This government over The as we increase broadband pilot cyber shift continues losses terminals tactical period the quarter satellite of Systems, and $X.XX the to expanding links, coming tactical was mobile higher increase. next XXXX. data our portion XX% the And well. with adjusted increased to expect of $XX sales Canada, our EBITDA data full from also products portfolio we new quarter reduced capabilities. our program of and XXXX the million adjusted fixed shipments included the profit the million R&D a also compared segment record of saw with mostly to links. fiscal the finally and product operating satcom billion. radio information year incremental global segment and of assurance In mobility and revenue invested project. to focus in increased expenses heavy Achieving these revenues broadband, EBITDA our milestones, compared all X, mobile prior satcom generation capital product ViaSat-X government in across year sequentially. third-party last our see tactical On initial diverse segment of areas to Slide year Government in to and Service reaching platforms we result in fiscal

of up EBITDA earlier, despite the $XXX million, investment, a So this product as non-developmental higher by I mentioned record item new primarily margin portfolio. driven service our as the kicked segment well sales achieved in adjusted

of offset settlement to of year our year. million payments of that ramp, revenues second the Satellite ramp by the consumer our year-over-year to revenues, to Services in the of Looking sales. lower margin which commercial fixed operational terminal to business. network, our revenue air more our slightly overall launch our with increase about attributable Adjusted last ViaSat-X mobile terminals, mobility half the and mix number full the of terminal year sales the year. mostly completion R&D was as second half revenue, new million. in plus full for by marketing and Loral the IFC were the higher due commercial subscribers higher for compared well residential they impacted offset and EBITDA in our In due remaining year was down with up by The million prevalent commercial consumer lower to decrease $XX the IFC bulk were of lower expansion about was X% Adjusted higher compared associated $XX business terminals and to lower $XX were G&A costs between last anticipated year-over-year our and both EBITDA revenue ViaSat’s impacted program ARPU service as by up

earlier, this company’s continues X% a anticipated by which backlog the mentioned year-over-year words the generated under book-to-bill IFC commercial contracts. I exclude and increased As to positive existing ratio, segment networks backlog

to related additional line, depreciation loss. refi. federal year non-GAAP related did current in and On So results over the primarily year-over-year the Also service isolates for the year flow million last for trends QX of year similar income rate we've mobility the year that higher for tax the income a it legislation, a What ramping dominant tax the adjusted see what result XXXX net revaluation that overall the associated commercial $XX provided I two the the we cost cash our transitory and quarter deferred on and by net in with QX discussed we in net X, few last the growth. of In included our tax reduce quarter for launch were of earlier extinguishment X were GAAP EBITDA we for quarters, million. was and offset highlighting. million just can period. was the chart see adjusted non-cash ViaSat-X fiscal shows The expense the R&D associated is costs, last and $XX actually tax adjusted to with $XX.X million EBITDA EBITDA large approximately net charge debt debt been And items to tax impact benefit the and a to And loss the impact left XX%. which to the headwinds you decreased of summarize QX both income $X of fiscal leverage reform the as and years. it was our the higher of asset Slide and Slide

revenue should record also life. to we’ll effect net our change, amortizations broadband which FY our XX% commission And will approximately new of two, So this be recaptured the expect SaaS remind to our the into us amortized see incurred the a QX versus move being business. customers to come assets, With estimated capitalized after two for XX% XX% accepted range over capitalized quarter in historically. you amortized those associated that to lives. will will be April primary future commissions leap with over the of asset existing remaining XX% with I'll before One, new I consumer SaaS impacts standards X on, and for 'XX quickly next everyone

out standard implementation heavily ASC still we As XXXX, our underway. XXX are our activities fiscal close for

provide to expect we on differences identified any quarter’s call. So in further details other next

investment the an year, or Turning cash throughout compared to flow, over our fiscal year. incurred generated million XXXX despite $XXX higher levels down to R&D cash were $XXX million In decrease the CapEx, about of the and from XX% last we operations. flow ramping expenses

down investment were by Looking portfolio, completion moved network across half project a project our ViaSat-X to second expenditures in satellite stretch and weather investment the of as related that higher program. ViaSat-X offset CP

KA-SAT to investments XXXX. see and the alongside ViaSat-X fiscal on as activities satellite in is summary, primarily IFC company due investments ViaSat-X, in our grow continue elevated Arconics. in keep Eutelsat’s fiscal aviation which XXXX, expect to year-over-year Also So to including base the subscriber stay and CP will our our variance we would ramp acquisition mind we of that our throughout software

the Looking our the times last X.X at was at QX year stressing FY been right, by on our This EBITDA the factors chart net increase the the mainly adjusted driven lower in we've by few caused adjusted ended leverage transitory headwinds calls. EBITDA. XXXX

discussed indenture of current that a begins covenant EBITDA. Thus, Also what adjusted our a trajectory deleveraging reported bit ViaSat-X adjusted recently as As we additional ViaSat-X amended we should with maintain leverage able year bank our credit loan upward in net here ratio you two non-cash the ViaSat-X satellite Starting should flexibility is has December backs previously, in and our our our and to growth quarters bond to see covenant another see EBITDA begin next and our we've not to growth we add obtain and are subscribers partner our in to activities. number leverage to purposes throughout stack continue construction for adjusted our which quarter, investments expect as our point with the lower and see our trend plus again satellite. EBITDA for additional new included quite than accelerate. ramp out agreement, I agreement banks we’re

million outstanding million very credit our So strong. $XX nothing QX and finally facility. liquidity cash $XXX our on position remains This of

of two amounts these less continue into million. significant taking our fees, liquidity we to outstanding account $XXX have So

So with over to turn Mark. you that, back I'll it

Mark Dankberg

Okay. Thanks Shawn.

So, three to strong fleets of I'll XXXX little anticipating on quarter into bit equipped combined. made is progress each give placed their in-flight XX that growth on good new in than partners in prior more service, get quarters fourth enabling airline a with with We're color business which we've our done more the service. fiscal our our connectivity by segments. in new planes We the

fourth that over also quarters. delivered the quarter and in number of total a the in coming We XX terminals to grow expect

customers wireless current growth positive airline So connected contractor last we our and very accelerating we've expect entertainment in see of in to service quality customers. week Airlines airline have and had and operating We on and feedback the aircraft quarter beyond. of to continued in-flight the connectivity the have introduce very to two our successful of SAS we service. now a also all with media with flight airlines service prime relationships in-flight established

revenue to year be service in fiscal opportunity to got over the to is mission the aircraft combination So sales our the XXXX anticipated year-over-year scale. The and We've to in-flight XXXX revenues equipment year. by of X,XXX an of new connectivity greatest fiscal service a reach growth. contributor end are

wins confidence Our out. under contract existing to aircraft growth that

set and we a market, which new Of best year-over-year fourth XX% leverage the count quarter, achieve airlines years XX% operating for operating and on our achieved new our year. $XXX year. fourth that course, the Government was compound for the We the has excellent Government also quarter the can Internet, from player years the After and growth increased growth Overall, seamless, in the revenue connectivity advantages as establish we for had mobile remain strong services. EBITDA profit to also cancellations factors the We're airline still appliances with equipment and existing scalable delays for a a media and there’s Systems fourth fueled XX% Slide backlog was value on We've for customers. new year the working past year-over-year track all believe over satellite a year-over-year tail year Year-end profit as have defense present. tactical exciting year. services and record two growth viable to of believe as with airlines the got up partnerships make in the very expansion content we passengers. a up commercial increase for add that passengers. all X% rate reached and XX% and as of very have from opportunities good partners as long-term opportunities in scaled. Internet and EBITDA as like Information can well XX% that and we've adjusted and technology about be success interest Revenue, such communications quarter their offering business the annual delivers to growth programs good we've Wi-Fi we're that shows and pattern there. their help X going whole. well experience main records to segment. the strong in-flight global economically best ground period grew cyber items connectivity the fiscal Assurance in business our our last fiscal record that XX% for where to footholds in Adjusted frictionless, in as that that within the and whole, margins XX% a broadband as the model continued the have non-developmental an market a had four and the Revenue good in quarter million, radios of to grew in we growth

backlog been believe growth opportunities Government we and grow continue fiscal to have in should sustained loaded earnings to had years. as and for revenue our to and lumpy, back and We can anticipate Our in somewhat hopes confidence be we XXXX our that good be prior year pattern win growth outlook.

sample well dish. is ViaSat-X over speed We revenue terminal. also impressive slide and on that a for broadband has per XXX-megabits growing XXXX. fiscal second pretty a small speed in residential such taken U.S. think and a we're business adjusted user focused a EBITDA from our very shows So, This year

discussed confirmed services very into we've an we quarter for due broadband bandwidth sequentially small the coverage refine higher residential as We a subscribers. X% areas complications. plans. support does revenue been understanding antenna our plans Those Growth as grow in year-over-year confirm that long-term competitive satellite a more more satellites the doing some antenna the higher predicts of potential and we're beams analysis streaming root our demand Internet higher previously plans. satellite. subscribers ARPU of on subscribers efficiency. increase distribution, been of geography, will It's did despite U.S. a number driven ARPU issue but fiscal marketing we've rapidly service while challenge, of on more continue thousands We Overall, with for almost growing more and Data the viewing on plans. and We've broadband delivered to traditionally to additional few estimate for ultimate plans subscribers and rate we add the subscriber accelerate as incorporate month to premium completely our with demand helped on substantially to-date the of was tens performance ramp of revenues proportions capital capacity. has have ViaSat-X than and broadband that volume plan bring temporary for for affected We're grow of service been a to in support advantage it accelerating be and is decrease to per each in aiming to delay highest issue leveraging our we combination add quite our largely which some able tap can ongoing XXXX, targeting us quarter-over-quarter So a sets. to cause the has much growth currently with spend. kept our are the the core of ViaSat-X. plans subscriber premium, deals. which and which pretty We're speed, antenna network we're the well. value led fourth that new pattern the in including plan has video to emphasizing of to assessment the video present expand speed plan XXX to maximum helped good. geographic new Things reflects continue X. the growth higher months at by market working depending anticipate sequential model growth the issue, The several revenue affected demand that refine ViaSat-X on sub-counts what

preparing and proof issue. our excuse the data antenna of to Additional measurements due loss were, me, in

power loss compensate the to We're we'll proof quarter. of over the the to issue, technical, expect months. evolve insurance in We continuing by of Those business we're measures few taking measures current the means. to operational next a and will adapt introduced through our number effects antenna

ViaSat-X One of of the advantages is its coverage. big broad very geographic

issue. said unaffected we've and by the fully As antenna operational before, that's

initial large bandwidth of have had full from of the good for broadband ramping scale The with a business creates XXXX northern spacecraft of and tailwind winding on We We've Central the is adjusted expense up and with hardware Atlantic ViaSat-X, Ocean. We're across Wi-Fi Europe, the the in hotspot coverage using Canada little very tip year East, our in series. good also legacy capitalized significantly parts EBITDA of that continuous to the growth. America, and for our more R&D availability R&D ramping expenses flight moderating let the South Preflight through expand Middle space of bit begun fiscal down fleet. America U.S., making Mexico into ViaSat-X production a services. Caribbean, our satellite success ViaSat-X construction We've activities Africa planning us we're the Americas, progress markets. enterprise and up, are and

for Europe, As said, months one. still the six Americas satellite after approximately we're we've Africa the previously East, planning first Middle

budgets impact that's primary starting most is entering European in build since to testing. XXXX retail the calendar a target orbit budget satellite in the aiming the integration, a year choose We're spacecraft is with still region, first second it's markets, but into on-orbit our manageable. to raising with plus Eutelsat to ultimately that launch, steadily ground to tighter, satellite in little half existing capital been in have the place. testing. System able risks readily the is own record KA-SAT burn difficult and Eutelsat taking JV’s service using on available. bandwidth countries remain performance in We're service the that are through account where most Although The and still plan, we've KA-SAT of methodically ViaSat-X down

competitive to Our with ARPU performance. we even the believe plans adjusted of experience the to enable government with in-flight is ViaSat-X and those second a reinforces market, residential achieve planes broadband speed us ViaSat-X this like the other growth can contribute of on the us ViaSat-X two to more that and advantages pricing. then broadband during U.S. should XXX-megabit year's We meaningfully our big connectivity more be able are early XXXX, fiscal order residential with doesn't video to streaming of satellite our We'll to our systems Residential deliver will rest push businesses. ahead view hours today per and several story. market predictable bring service to fold. Europe broadband benefit up enable year have in confident and we're businesses, highest of growth economics attractive speeds the those contribute everywhere along will book in planned the based results U.S. but EBITDA bandwidth our and years and with

Okay.

summarize and terms what fiscal growth excited XXXX but already main the prospects accomplished here. We've beyond. In our our we're EBITDA I'll them we fiscal revenue in outlook this drivers, year of in for very and about and adjusted past covered

an shipments X,XXX We've opportunity got our the their ramping customers all over now. a get We’ve to hardware excellent service. service of end by airline to we're connectivity planes airline in partners to fiscal prime a our contractor in-flight grow in enable with got relationship aircraft XXXX. of First to

over expect track Rev business that services its has role underway to to begun and government as and and larger well. and of mainstream record Tactical functions more scale helped Hardware So and are new aircraft growth. expanding products new crossing Department much And satellite We've market We've with We've organizations already currently assurance information by Defense and aircraft those a to been concepts. operational the also deliveries additional from cyber technologies. will receptive well activated. good grow create user strong Radio commercial added our is taking we adopter early and systems on platforms organizations. opportunity also more The associated effective and item are revenue non-development as services. to more continue

no by significantly our also for products and We’ve residential Our premium be broadband quarterly revenue fiscal government sees subs. for stronger essentially growth business fourth funding our does second effects tends fiscal had services in corner growth, sequential good of to periods quarterly the with XXXX the Individual turned on quarter government XXXX. plans years. can based quarter-over-quarter and half opportunities fiscal exhibit We be lumpy. our in U.S. in more cycles service driven on reporting flat

some with mix ARPU due the growth growth will we EBITDA marketing We is XXXX and anticipated much second promotional pricing expansion. reflect premium broadband emphasize overcome associated of market higher speed, fixed SAC and growth network the initial higher occur expenses the ViaSat-X continue demand. for to plus residential subscriber as reflecting in higher Adjusted volume, to half plans cost on demand. Revenue to in that support more proportions streaming fiscal video

the and tailwind EBITDA growth Adjusted plan in return growth Wi-Fi additional that, also questions. levels X% up also open quarterly anticipate in be with will of that hotspot verticals enterprise past, for in as had let's effect And We expand geographic our R&D we in of range and expenses we've to markets. would it from revenues. the had to in a moderating

Operator

line of Cusick from of first Our Instructions] JPMorgan. comes the question Philip [Operator

question Your please.

Sebastiano Petti

Phil. said you’re there no be on the a also for of appears Sebastiano the footprint? coverage affected in geography just lost you across the capacity is quick the the any about had at effect the to regarding satellite have or coverage, This issue capacity question you geographic we think how particular but should I looking beams. said mean the I anomaly, know I you

Mark Dankberg

So we one we due of very this coverage the having it's and it large design what then set and anticipated we're way to is coverage of particular antenna what is that's antennas issue demand where the and - an second contiguous another one pretty that and unique areas basically augment area And a think set us highest satellite we is there's that and the within design that that's and to for that satellite describing. that's set. be

issues they're help? in coverage we we've and to so before. coverage markets. we of what area the within covered the those when the areas And that the - in larger That's issues so specific antennas, and referred they're Does described some have only that that’s only by

Sebastiano Petti

looking at should that called sense. out. the Is should XXXX? we we for through expect steady R&D fiscal that further state rough level decline How just Now a you And makes think that then Independent we that declines for here? to should, about this see continues obviously

Mark Dankberg

said, had we’ve I And range. the run ramp where associated we to in at revenue that’s on we’re this are for with ViaSat-X, before headed What to look due to of tend that mean kind we historically prefilled the of the expenses good a target you back X%, R&D if X%

Operator

Our next of Ric James. the Raymond of question comes from Prentiss line

line open. Your is

Ric Prentiss

ground make you you you've XXX said questions of max the you've still that following wondering the from down looking found? I of XXX? mentioned just the A to best think the situation? capacity Sebastiano. the Is estimated working couple on on some what station ViaSat-X. work Mark been like Or

Mark Dankberg

Yes.

of estimate we've done and the right weight basically, more for capacity last issue we an given the as we confirmed just as where potential that satellite, gigabits to stand the about has antenna we since that's had understand work just estimate. So it, time XXX still that given maximum the

Ric Prentiss

provided way down win? from XXX theoretical almost And back although that's you

Mark Dankberg

just original So, advantage with ended sort measurements as estimated we up that did and we in XXX a was it we did XXX XXX, initial we the and when gigabits capacity after for the orbit, an reminder our of the the all was satellite, ViaSat-X, of additional spectrum. estimate was a took

XXX of So the was necessarily just preliminary potential wasn't - just a was it of maximum the the the satellite, the satellite. estimate it capacity

Ric Prentiss

Do well? file to get this And you mentioned this within you'll to expect expect claim then stand Do That compensated quarter. in quarter? - that makes current quarter line, a the sense. loss that you as I’ll you prove this

Mark Dankberg

be compensated expect No, quarter. to we don't this

Ric Prentiss

in hand money the get and… to take of kind process that would long How

Mark Dankberg

want argument, claim been I one. really that we've big but the it's have think on very speculate don't before. we and through a clear process a not to We

Ric Prentiss

ASC of capitalizing for an idea And then ASC Can give direction with what on and bit EBITDA the amortizing. and and talking be you magnitude you’ll I to XXX quarter about mentioned we're about little of XXX a since improving, this Shawn, revenues current kind is now. us going assume you

So of think any can if we magnitude of? there rough is kind

Shawn Duffy

we'll early you guys all Yes, guys, We're I you the it's of of process in and little impact. we in the to QX. implement a think bit having still give quantification kind give

we'll you give update guys more then. So

have of things and kind do we I the P&L. fast we've commission the will that new one into most one is think capitalized the that around commissions of that mind debt the I in being change this asset out mentioned to noted is put get but the significant keep amortized day

So capitalization through commission of the the benefit that muted. gets

Ric Prentiss

payment projects, guys just you away, you kind phase either. going trying at me of And doing changes controlling liquidity insurance in Eutelsat the is any to there one doing far think looking internally are the quarter been the won’t as there? what JV, in costs, last come are the item about, What procedures you other since as internally talked the for through

Rick Baldridge

is in streams. cost Rich. We've of only near-term on that delays revenue in near-term got savings impact cost any the can We do program capital focused reduction place. kind This definitely we

term. we the near absorbing we're So do to to trying the it make boundaries have things describe some as that sure in

that two we of deleveraging. we have deal before quarters said, Shawn to As begin about with

the just done we've in So term. near prudent things

Operator

the from comes of Stanley. of question Simon next line Morgan Flannery Our

Your open. is line

Simon Flannery

each are that some X,XXX color and interested clarity that busy sometimes on? or And you partner mentioned Asia-Pac any thought more your …getting slow will that a And a of know process period I the summer is ARPU that think any so it should around in finding the in what modeling around still a to is might about it go Europe, having you that ARPU. how got something back intention is Thanks. have alone is then I ViaSat-X of be that is year-end the quarter. for on steadily installs Europe we think sort for the might ramp airlines, something the Asia coming up, there's kind then summer that. increase and into into so you've color going of

Mark Dankberg

at question rate off, airplanes. are going refurbish I X,XXX. we’re what and And So little you're installs managing the our was part with to basically rate think actually to your the heading cut got they sales the asking at airline, working which a first the aircraft airline of which deploy we're some the the

has of Airlines so purposes a number going for instance for on refurbishments as American And well. other

contributor that's probably rate. to largest on really we're And that the piggybacking so growth. installed And

probably rate next aircraft quarters three at to quarters. which going I to continue think they install over the expand they're the or two

level-off. So it I quarters away. it that's think will several see grow, But you'll

asked You about Europe.

Simon Flannery

ARPU?

Mark Dankberg

ARPU.

then will, because have to which the the on bit - service different up the really the plans. bit different and to at in say depend going a that want do among And we're they them ARPU a airlines rate little going on also depend however to it's support to mix mean that's the the that going is their the airlines on it. evolving. get airlines way bring to the installs market to installing done ARPU I'd that's discretion. So we're and little I

a give a be we’ll able say of think quarters. that I clear view in So to on couple I’d

that's that issues some have say, that are because really and constantly to satellite tell around one looking have I the best us - ways You'll especially seen the over we to you that of with measure offer go things presented need we've and are little take let’s see way chooses each think to think all And connectivity is you've we satellite the airlines other some and think model some a I’d not doing services. of I bit projecting of trying say preserve best as to in past the be for really that's service of more what that really to are evolving. with In Europe, American the see they're the to conflicts we airlines other necessarily business the have distribution partners had the the advantage of control how or of airplanes services it able into more you service.

conflicts get market. what this a the don't have the Europe, towards other starting we're And least very in been So we're markets any we also well, oriented we've as and as We're doing what retail partners now. that's doing services best of point understanding in is at that their so for fixed looking they on variable wired partner low provide they’d providing by is service and cost the service do satellite. of that and facilities wireless with if whether existing with their interest partners that facilities ground on telecom generally for are better we often rather and that have a

it's think with. most the we - And so when concerned go market that's partners. really have scale drive to we the don't resources try closer channels really that's we think we that will be other that ViaSat-X on that. enough to Right announcements we're issue service where have the we about now But to get about We may that. given to bandwidth there as

satellite. have Asia-Pacific the we're still coming the dominant been satellite, that for Asia-Pacific, on starting with For probably market. effects Asia-Pacific for best up the the I on working configuration pacing

and first regulated the kind that to able with to we to some before, capacity Asia-Pacific we're the going bet also may improvements of have dispersed access configuration do ocean, markets satellite. couple what argumenta before a heavily with you've where that two. complicated heavily land are large access pretty market on will are we not able be we meaningfully get from - we’ve first not masses got because But very very where right of or we’ve the this we been do increase said on converging were technical is

place with manufacturers the So get two negotiating that. deal in good and spacecraft getting those on to we're a

announce next quarters good in one. a there of probably is shot something pretty the couple this to think after I we'll be able

Operator

question of Blair. William next Louis from the line comes DePalma of Our

question Your please.

Louis DePalma

Shawn factor IDIQ was for that was highlighted shipments. I small shipments SOCOM million that Link part very $XXX those a customer? of were wondering form strong XX a or different

Mark Dankberg

use they we can but choose. customers is the that other we that purchase to SOCOM - contract, vehicles, only that contract can other use their radios, IDIQ those if radios. say Those deliver have those for that - to aren't use can purchase through SOCOM radios those radios to let’s purchase customers customers those We contract radios

really certain So far towards part platforms they've of that been that directly IDIQ. weren't

Louis DePalma

wondering near was and becoming talking they of prepared alluding program I in programs Rick remarks in to about that were a future? of record sometime the are were you you the record

Rick Baldridge

on investments turned Tactical Joint like Link for Radio just that are and our things basically that Small Those haven't anticipated. of instance the so the Well had way one several investments major out DoD the small has that XX DoD lot that the so and System has Terminals they Tactical been there JTRS radio. going designated as a up successful Tactical it well. platforms we’re ended originally are others record, And that going been have but of a program terminal get has of to

- good it handheld there case getting program satellite there's programs. scaled up no came reception products there a us think really good Link our new applications, with. was So concept totally the We were intended. program for the for XX. there services really a are that not a surprised the was for in we of haven't for and of especially very a that for Wouldn't we're give opportunity that no and lot us. That's or be record of future That they opportunities become record now other that's record really good to a programs - That's way it.

Robert Blair

sometimes of I delivery things something, about that the what by into haven't talking that progression delivered think record. the they the waiting been - haven't and prepared are remarks, Mark so that's been record those programs on for was this they in is programs need

Louis DePalma

of is increased agility not of there program part when So record? the it's

Rick Baldridge

demand delivered. really because demand, there's didn't pent things up get But they is

Louis DePalma

have And and in Argentina. Colombia service to initial those use come the those launch second landing the in to ViaSat set partnership retail rights services ViaSat further the American rights ViaSat-X you American Brazil, have access half or into that XXXX. does is I of satellite in plan And countries. operate in those know to does that but to give Viasat-X the in Brazil, you spectrum Latin countries? now Does Right

Rick Baldridge

rights landing give country us our Telebras by in for that issue does with program Brazil that landing Look, a partnership satellite. based are country on rights

choose create markets that When our landing rights like things we helping to come is we well. know time of prospect to to big been in we're in the we're where places other to know at rights. for do which one there, you that's community we Wi-FI with where an Viasat-X. with that our landing think do through things have hotspot well and our those trying what it going there them specific part include the do is us I A and that environment could relationship want perform we enter a to you only mentioned to Now have countries and to service the Telebras as of mission that expand us satellites good was

well. of I working excited think that's kind one of year the that we that have the Mexico program reasons about us we that - and in announced us Brazil was preliminarily I it's which in just the with very, been next a put weeks there few the a because of think very Mexico bit to both for as reference last for account us successful for

Louis DePalma

going your EMEA And Viasat-X lastly satellite? all fill impact talk And the fund for you satellites? that how at WGS-XX by to can decision about and WGS-XX you're projections does Congress the to

Mark Dankberg

on two I government age WGS satellites know perspective, for okay, said they is additional converge they WGS and And want to able we of argument the hadn't Satellites at you that So to say WGS. the an buy been alternative look a acquired Department from more. it why they really think to stated institutionally existing Defense

look So offering if WGS. of rationale I was. the From our basically there perform services you think most that are we're to services perspective that no was way what using those the at satellites, our through

doesn't really, but things for really things, services WGS growth our other substitute isn't for because a in it’s do. of expectations the on that revenue effect does it sense it’s it. some doesn’t any So our do It have we

Operator

Fargo. the next question Our Andrew of Wells from comes Spinola of line

open. is Your line

Andrew Spinola

that? of wondering to means and the what described quarter if can the good. you understand what fix not you Mark you ViaSat-X. And Couple help it's on help the And performing anything when to I'm customer. during well that of the just as me largely if performance do questions can

Mark Dankberg

question. So that's fair a

we the for based So basically the three incredibly programmable. the about all all and that say found to in reboot And to months a had a about once I'd led accommodate way didn't the here’s Orbit is and basically preparing plans spent years would the way operating we issue a flexible bandwidth those couple to parameters on it that we antennas places and ViaSat-X satellite in on the of - The work. - lease And I’d put, two once we way found configuration plans that. configured some shortages.

issue. had we'd that didn't that in of the so antenna few impacts that we realized operational to satellite a problems, anticipate realized, the just we un-orbit and whenever issue it Once you know problem. largely, fix it because all those when that had us had, was, the beams that's And I the we it’s we've the we basically configured long, that wrong say and reconfigure we of didn't take just very

hasn’t models there's that's it free, not our hasn't emphasize that - I when we've anything explain. say seen but the is thing glitch second So don't been I'd been there been largely, that

make really sense? that it's and out fixing been ironing So, question those a just glitches. Does of

Andrew Spinola

Exactly.

have all been time I but of some late in guess because point sense beams the glitches beams the have so had a rolling maybe are little this and a on fixed at - been I so of out. And in all said rollout, national turned you’ve that that the a

of everything Or has turned on? now? as they turned when So were fully on

Mark Dankberg

on, XX% would of that’s and are that’s. not left, we turn on. X% So the The XX% or say beams might X% I

that So of been but beam on as - it think think the final is the the haven't refining now that we've while having the a We point here's we estimates, these beam coverage in much pretty that contour is, we're of say ground. can where issue a I having service was want because had to do offer without of this edges of understanding we good with beams we to on the performance those areas. don't each we really of ground direct wanted measurements in the satellite those were, to understanding the to people where confirm like and

probably outer outer we've beams of well. for delayed beams But on what to extent believe we in really model those in have be the coverage actual we're expand correct. have on beams have out far, is case edges about end of the so the turned the sneak now on mentioned can the we'd some to think out measure turning all and we tens we ground some so that beams just So their the error all we of in of turn kind state. be the checked margin of I their to but it thousands of the what will all sort of those to terminals basically things so peek didn't with performance

issue, is other service the things that going we antenna like of so a deployed. just and that we area design do the also because I the gateways in still few cover not the of thing a all to have one we them mentioned ground satellite all all lot that. of there need But could The gateways is of more value getting those on

able will all to that done doing think and much manage probably the timeframe we're all have be in need that'll when all pretty we I to ahead and us August that the we that once July, all So of service the anticipated tools be originally in get areas. done we

Rick Baldridge

that we I we were areas the if talked that contours is can these of we the about, net because service in. One effects limited of just Mark that Mark selling

of limiting are things little we’re constrained that the high about geographies demand the think selling in pretty in. That it So going. but way bit you growth can excited rate, as the we're things a areas the and demand

Andrew Spinola

next thought give that first of question about made walking also you more last Since far a sort lot you in ViaSat-X, you that this quarter think XXX,XXX commentary than people XX that with see were and is, That did ViaSat-X. a can we'd months made couple you some has kind adds then of you expectation. which from net seen so back you've asked some us the quarter that this that quarters in we April adds of if of could leads think ago in May to what quarter you've net my on help I and

you a basis. can And what what XX-month us honestly, about so you're us terms tell I'm QX, you can trying on to wondering adds message tell net about what just in of

Mark Dankberg

So to net give guidance. a we're going not ad

that we’re a offering So bandwidth. here's think issue lot the more think plans I is I us use for

going and that's ViaSat-X. right So ViaSat-X want lot really the about because we on to really and is do That's the plans where we're more have, like basically double. would as get to on fewer than adopt so and adopt people matters, we’d ViaSat-X we more those what growth a has want talk faster bandwidth pick what is ViaSat-X we those they subscribers to plans people

it which with at in know what subscriber people, per do kind it rate is is adds to time ViaSat-X can getting now So ramps, down, that the net somewhat happen. the coverage and the issue less we're we're up Right from subscribers, the we is going unit the to to term of revenue it's higher bandwidth the revenue proportional same short but of that. support ramping getting fewer ViaSat-X the that's that predicting At we has. but is and it amount supposed supposed

we're So point we're at full just getting where coverage. to the now

got we're look a okay time when of So compared ViaSat-X rate that is or Are we're XX doing up. to think especially what of our what to we look we we've going at want XX is at rate trying quarters quarters ViaSat-X on how we and we as, to where it not filled as I plans far have do growth early. expand like And But do mean it's declare two really - better. combination I that's factors. so going that looks to that? yes. a net going far coverage is to this go the we're so the But the that to answer I will And we of going it think well. hate victory at

revenue think see per you'll early growth look know before what net probably you'll of it'll like. add take we growth couple you'll ARPU see that will on a but in I So quarter quarters is see and what

Rick Baldridge

talked about to of that that given and where that we go also is areas other these earlier Mark more other are. ViaSat-X enterprise percentage towards going historically applications I higher a IFC think just the

Mark Dankberg

an So each right of that's those. we now for have allocation I mean

a we I because want existing new because bit will we are maneuvering whereas fill residential come ViaSat-X we'll think them the that's would room those to be some have that so well of think ViaSat-X valuable. XX% percentage of over the closer, be enough residential that it but if expect other was quite we than services less with services we way more services

Andrew Spinola

if quite get a it's is that. a bit lower, it you used than so, mean be going lower definitely a you say lot I - aero great Is When it’d are I right talk XX% it to about we XX% said? lot going be lower. to

Mark Dankberg

Yes, That’s that's ballpark. in in the ballpark. the

Andrew Spinola

should anything transitory expect is and if quarter there costs hop the jump used the in of Mark used quarter. in I couple in is more - off one ask times, and can in jump in cost going fixed away to was really a I fourth of huge go word the here in to have huge was anything a forward. because question. Shawn I the word next it you but that what ViaSat-X, a really There transitory service one-time

Shawn Duffy

the know the all forth. software and our going on service need satellite you're in service service if and going of into so cost you of looking line, so ground the you network at Well and factor and into to

sense I you But that component coming is line you’re at transitory. as the say not that in in just know is it alone it's QX. So just that looking would lumpy

Rick Baldridge

on kind the say development area Mark gateways end lit as fiber turn accelerating I some front since front costs up, plan. earlier planned. had the But so launching that as the turned of fixed versus relative shrink some is growth in we revenue all of let’s up, lit connectivity - more end percentage have should gateways original said, little services in new all revenue. the mean on and VisSat-X we’re that we The a a all should only to new in-flight cost transitory the gets the the the gets but fixed the we the we’re on on than terminals versus

Andrew Spinola

helpful. That’s you Thank very much.

Mark Dankberg

a basis, fixed are costs the an of right. lot absolute On

Shawn Duffy

are fixed High costs. percentage

Mark Dankberg

it’s fixed a those increase one-time But costs. in

Operator

of Our of comes from Valera and Rich line Needham next question Company. the

is line open. Your

Rich Valera

was the right With to quite thought JV that the retail clear respect the to working they thought retail they way JV and that Eutelsat was was to not in Europe, saying over not go market. well

not you think guys far? great it gone if do better to So on gone it's in JV And take how you the what do guys on obviously has is what But have a different your can take you so future? that that. make go differently

Mark Dankberg

connectivity the we oriented I’d Historically have and say or each on of more views we other most be residential distribution whatever. what satellite broadband market and bandwidth Eutelsat tend the way on wholesale for FSS as rely very best partners integrated whether have operators vertically to different segments. of been of that’s is to enterprise or or our in-flight

many there. And for for philosophical so a years existing I think operators. there's difference Clearly the approach wholesale worked has

Our really very been different. approach has

beat to ways some the I of our think drummer. own march in we

in we’ve really do the U.S. it. want argument we the still gone Eutelsat liked And it. we But an that I best that get over it don't to way the we're way like with that way think about I the to market. doing into

work it will give I control. for think It will us. us more

I think Eutelsat the I influential broadband, in think French things the was our for of subsidized consumer has about notion decision for wholesale launch of distribution the and by with that government. arrangement and one their talked was

fine. that's So

path of - progress probably we're think think We on them. the that it. long-term is with I’d rate I say the We we're best think to the some happy to that's don't on work that'll that and we’re approach. extent

bandwidth Eutelsat’s the that prepared would is is their in referenced out wholesale say sold approach most I of market. are thing, things other that has the easiest basically remarks what in we The existing

the so objective these to was into go period list time. that hadn't not for of in And retail markets sold some

try So through difficult the open most markets are and to retail. those clearly those up

the two a doing we're of compromise what I the that's wholesale JV was a for because partnerships the mean, - still. kind other that's I a JV So is business. think that

doing. we’re what that's So

difficulty. I the think we're relative to

we're that made, we've progress into and more have I think we and other will with markets translate pretty the that capacity as happy think we more there.

Operator

Our of Quilty Analytics. question line next from the of comes Chris Quilty

is line Your open.

Chris Quilty

follow-up question Mark, just capacity. on a

generating subs the that down with once ViaSat-X the if mean long-term all and in was made of amount selling In is going ViaSat-X, does you or sold transition First have of or less old and that it ARPUs full that going plans? it up. when the more is same revenues as was

Mark Dankberg

bandwidth of wants is. of saying exactly giving a the think that amount we and So been that generate years same that’s couple for that because we're have we will think Right, a and the amount the of for amount market satellite will only go what people future what revenue that's bandwidth is what more we've finite is of down and the money. we

ViaSat-X the So satellites we the as go even plan. deal will satellite that for ViaSat-X. capital that ViaSat-X think the with have on we we that produced we go cost will down, faster. That’s is roughly in same have up more way like way the and bandwidth gain actually

Chris Quilty

the greater of because - on a like so, your And capacity theoretical were are inhibited am I say the degree is out in number ViaSat-X, that issues? the having beam of stranded megabits does and highest correct needed the areas got are to subscribers you where than And broad describe question that the past that general the you the expecting which your in subscribers let's are capacity you've the second impairment sounds way terms beams you areas it in if gigabits per the geographic limit beams actual or but it? to where the now in areas where get of got which run you concentrated those and fine on coverage capacity, overlay you've on

Mark Dankberg

believe we demand. you're that point into question the is satellite, we we the of flexibility where places capacity the yes whole asking So, can why the is put so in there most allocate the the the

that I'd we the did good led capacity that market had - - had we places to good when we the data place chose. say, we in satellite, had we designer So the us

mean the still think recalculate is think it the needed fine. we where is, where of there's we address know are, that demand, to we market the address Now just and we we know market I can what beams plenty was.

so And world and in results far that, that we're now the real getting so rescaling and it's the good. satellites that's theory, service and the geography, from

I go to think things pronounce pretty like a before I should have far that well, will - we're of experience continue so but more that. than few optimistic we're months we to

Chris Quilty

you The a to still for own? is that? path partner on attempting going bring a in Asia-Pacific your satellite, forward are there to try Or of

Mark Dankberg

Yes, our on a forward there’s own. path going

the investment for do partners our decision having us, to a but it, we on talking that overall on makes a but we'll it to think the if plan partner are default make We better is own.

Chris Quilty

of mentioned also that - that customers and of prime both I role of relationship think You which IFC sort terms but American, of that announced on JetBlue there now, assumed them you’ve you took you’re in your for over prime? you were publicly means where that the others all

Mark Dankberg

United, with by also ITV went started Telus. we when acquired so we Yes, was eventually through which

new So the last order all prime contractor. that we with the - got planes the as of us from United as had

Chris Quilty

where year? to for final land for gave that an band million give something question million, down lot coming to maybe $XXX but exact EBITDA, get tailwind you couldn't $XXX $XXX Shawn, might a around all? And and to it million Is were $XXX you help to us I think markets of Could that growing number. you the R&D us and EBITDA million a of like this color

Shawn Duffy

not guess the number. growth I provide exact to to here, strong be we're number. going not going should give an It but a we're

Mark Dankberg

in everybody's I this that to that’s speaking again look all quarter. for. So think and questions we've we participation got forward call quarter's in time next And appreciate the

Operator

and gentlemen, wonderful a Ladies your and you participation conference. day. today's sir. you, for concludes Thank Thank this have

Viasat (VSAT) 25 May 182018 Q4 Earnings call transcript