VSAT - Earnings call transcript Q3 2020

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Operator

Welcome to Viasat's FY 2020 third 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 of earnings XXXX. and third for everybody quarter fiscal afternoon to call Viasat's our Good

Rick and So Development. CEO. our our the are Treasurer And am CFO, also our I Mark Counsel, Froelich on call Dankberg, Robert Blair, and with Bruce Shawn Paul Operating Officer, Chief Chairman General and Baldridge, Duffy, President Dirks, me Corporate in

Robert And our provide start, disclosure. will before we harbor safe

Robert Blair

Mark. Thanks

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

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

turn back let to said, me that With it over Mark.

Mark Dankberg

Robert. Thanks

are start the And I progress we over and available our color So financial segment give slides the our more global with outlook. expansion will the discuss overview on will will and consolidated Shawn and I will results. level business, be referring then that update ViaSat-X, an web. on plans to

one year-over-year The results for year. above fundamentals. $X.X XX% over higher billion book-to-bill financial to last and for $XXX year-over-year last Revenue is strong. is a business QX is continue quarter year-to-date $XXX are be of X% million billion results strong year than of and million times. at Year-to-date XX% is EBITDA $XXX just compared up year. XX% year-to-date of up slightly to million demonstrated last orders of third and reflect up $X.X financial So

scaling and We and execution. refining are improving

growth. gains for to able We deliver future solid investing are while

growth both government potential. aeronautical near the commercial, and broadband, In has mid term great to

nature opportunities a cylinders North connectivity is accomplishments the we across of firing all from share opportunities how gains are are on global the in platforms significant we product expansion have creating Government are on achieved and effects to and American deployed, in motion. several We lines. basis By more making already systems are market government progress. aiming and in-flight network global translate

services portfolio our prepare One of strategic our grow resilience, for themes addressable and increase total to coverage. global our satellite diversifying is market

shown We every quarter. have progress

driving even While fixed other U.S. we our growing faster. markets revenue growth are in are site and earnings efficiently service,

each vertical geographically. are expanding entering and market methodically We

have growth of runway We substantial very a front us. in

Our is being proven. strategy

highly platform-specific with service in Our tailored customers, we data vertical bandwidth underpins leadership unique of learning, integration demand. Through and production applications space regions. terminal technology machine greatest and our form definitely are bandwidth. just user we specific the end in for for global integration, unified to applications work ground analytics integration, geographic maintain in approach playbooks intend our But with and the a impactful places of not cybersecurity, our in outcomes space-based delivering cost-efficient delivery in

growth. so long positioned distinct profiles, broad is The portfolio because We term Mastering the realities service driven exceptionally each for different believe diverse vastly valuable are economic, the ground. regulatory well on political now. political advantages, across has of bandwidth extending time Vertical the synergies our is the geographic far portfolio, economic unique allowing is architecture offers more right experiencing allocations exceptional and and economic integration to world yield given kind region demand geographic, by and dramatically of network the across space. portfolio we a flexible, resilient world disruptions especially

us, industry. entire the being exceeds only brought by represented to to built mid-XXXX processes but first and spacecraft the fully assembled, the achieve our payload service and standard by We on far and launch. From anticipate on, a will constellation integrated XXXX we tested a market, as major portfolio then schedules not ViaSat-X integration module. the the campaign rest ship ViaSat-X demand space-based the target Finally, of of supply milestone aggregate our launch mark existing by for bandwidth

in the propositions that relative in strides important primary bandwidth any reinforces of and our value to the our and we next made MEO satellite preserving leadership GEO, broadband And confidence evolution, in LEO alternatives. speed extending ViaSat-X, have or

So on of have I financials, areas depth into each review will highlighted here. after more the go the we I

financial illustrates the upfront. highlights, summary clearly the slide financials With mentioned this I

to Just up $XXX year-over-year of they book-to-bill is QX year-over-year. of is reflect better year-over-year XX% up $XXX of than at revenue QX EBITDA up adjusted of recap, billion and $X.X up year-to-date $XXX $X.X XX% year-over-year, at X% X.XX. million is year-over-year million and awards QX XX%. a up XX% awards year-to-date $XXX is X% billion up year-to-date million are are year-to-date and million

broadband for space continue the to the we industry. set Overall, pace

with Virtually markets major Our revenue highest the are rates growth rate. our growth markets. are a solid run all of

is end-user We moats. the We skills is to think going the anyone to most space and tricky creates technology The strategy are. and we delivery. but service doing what and we ground fundamental master The vertically are have and at markets to it. are service competitive scale end-to-end simple. difficult, global that execution to customer It's broadband from deliver is integrated aiming

Finally, it last in from quarters the right places cost-effective our availability of geographic the clear fuel bandwidth several should is driving be the that growth.

coming the replenished launches. our We supply. are the the potential economic satellite on, partnerships visualize benefiting approaching of the better bandwidth ViaSat-X bandwidth Later from help investors that international with ViaSat-X we fuel and will

turn I So over with will that to it Shawn. backdrop,

Shawn Duffy

Thanks Mark.

our and earnings. corresponding with of government government very covered on is a This which level $XX our tactical topline historically XX% just million budget QX, with work quarter in across and products. for the Segment right good occurring jump a highlights, grew reflecting our to sales and seasonally diverse September or in The both ship good continues quarter book will portfolio performance data with us fiscal radios, third strong higher into government's year-over-year, business heels broadband, including year-end product performance. comes on the XX. satcom momentum drive tactical top the the revenues segment As I Mark links closeout growth, mobile

that revenue into the easily performance I last billion its to mentioned continue strong quarter. exceeding XXXX expect our QX, $X we So FY for government business threshold

for approximately as on margins a Adjusted period million, a awards a year-over-year, the $XX representing to higher leader The values position. provide mix services global almost up government offset drove QX $XXX U.S. Government SG&A. NDI over uptick was XX% and product remind backlog IDIQ excludes of which, resulting gross year-to-date mentioned prior end government year. in in million, to $XXX EBITDA options the that everyone, the last $XXX Segment senior to we positive the improved elite earlier aircraft. in was at XX% to increase from this million book-to-bill stood of contract quarter is remaining modest the quarter a million QX on AMSS have by the and the higher topline connectivity contract Mark and were systems in in-flight growth new record at

IFC modest commercial product Turning XXX year's in-flight mounting IFC saw terminal impact increases. grounding And interest quarter-over-quarter We the spike drives our comparative commercial picked Internet experience the continued in American for the with sequentially of decline despite up demand as of installations MAX, to Airlines, revenues deliveries by an quarterly $XX globally. networks. to the offset IFC at home other last entirely for or million due terminal XX%,

XX% for networks this with over $XXX systems lower the next-gen And is earnings strong and a larger R&D QX quarter the extent, ended representing satellite were at antenna backlog and and million, terminals with backlog commercial years. to which higher EBITDA the of networks million, of total. as in last we mobile five the highest over have very the segment we air had $XXX on reflected quarter position loss as lesser well But terminal revenues this a Commercial adjusted awards higher SG&A.

Lastly, businesses growth increases, the expand stronger our the ViaSat-X. continue satellite and we inherent services, service see strong leverage as to operating in large-scale and revenue adjusted even EBITDA

continues on marked while quarter revenues of remainder. broadband representing portfolio to overall is increase a and high all-time a QX U.S. business increase record two-thirds with business growth, consumer expand, of and our our year-over-year our this $XXX about also a IFC an QX the growing, quarter the million eighth bulk with quarter-over-quarter contributing This revenue And basis. service revenue of the revenue XX% sequential our a still generating representing hitting QX broadband X%

from year-over-year our from expanding biggest mix, was topline ARPU, year-over-year plan The reflected part increase revenues In and ARPU primarily service premium consumer twofold. higher a in our onboard was XX% expansion by air broadband, services. increased XX% driven commercial a while alongside increase tails capabilities in service, in

end in-service of ending enabled the was tailcount excludes the MAX XX grounded ViaSat have Boeing XXX Our X,XXX about already quarter. aircraft, planes of as but remain which services that

to our EBITDA we year-over-year and our the in from for the satellite The or expansion million to was incremental which scaling adjusted flow-through investments, seen revenue incremental a XX% little contribution to of $XX.X primarily EBITDA lower service $XX the past, XX% related was residential have up what over fixed of QX million. adjusted offset than global businesses. segment mobility margins

abroad, continuing are activities to our promising. to things respect look With

While need it for our But our forming we revenue including relationships distribution and making importantly, in is execution base is growing local the as as building establishing infrastructure small, we in-country gaining the are expertise, progress good more capabilities, operating expected. we ViaSat-X ready conciliation.

continuing time year-end the and of return the quarter, rebated statements, on in based on most we fiscal return frame at let Now range, earnings MAX of $X to public be pressures recent end would reduced revenues grounding. impact I in of don't in end new service the calendar in million number Boeing's before that the that touch flight and anticipate on, XXX higher result a to on to million XXX $XX before year. of could installs move that fiscal I likely Last range. Based a flight the we the said me the delay year MAX the

million. that be earnings impact So full approximately $XX we XXXX now can confirm will fiscal the

into pressures financial These to likely are XXXX. carry fiscal

However, anticipate clarity, to we for services year, into adjusted with expect and these a satellite again function said segment EBITDA revenue revenues see we momentum before, a air have in service. commercial next step planes when as solid continuing year-over-year growth basis. on overall, But to we return

year-over-year last expect and had billion, a segments $X.X we results revenue position into about close recap, our key as X% good the of have of across fiscal of we another XXXX. And to up this we continue our business adjusted backlog the period quarter to we So trend and based EBITDA year year. topline on out solid sight same from and line

and investments. our we XXXX, totaled last months adjusted EBITDA consistent year-to-date highlighted, a slide To momentum $XXX the than previously has higher I next year-to-date expansion year. high. EBITDA with So prior results technology our performance size next we more, over good adjusted as by bit see And million, XX our see which is continuing fiscal of over million historical throughout revenue fueled our and this this portfolio $XXX

of drivers this quarterly revenue government a margins EBITDA growth X.X% the Segment I SG&A the million, saw In under categories growth new $XX we were $XXX year-over-year the up as to basically high improvement topline to product in of with results. adjusted The a segment, as mentioned percentage XX% that for was same year-to-date a revenue. of in a of or lower $XXX million result just XX% segment. million

million EBITDA mobile million on our broadband revenue networks XX% anticipated combination terminal were the revenues partially satellite supporting our growing that decreased products. broadband revenues R&D down shipments lower networks, the to commercial and In Adjusted and in Aero $XXX $XX but SG&A next-gen by higher of year-over-year satellite higher year-over-year, networking, on fixed expenses antenna business. was the offset absolute lower and the systems and

$XX significantly driven were quarterly more same I discussed XX% adjusted satellite Topline up by over was factors in the the margin million up same expansion and results. services, And or were year-to-date, revenues at period. scaling the XX% while growth on EBITDA

we international and EBITDA in with our this segment. vertical in even making our to investment markets, are solid businesses fixed and forward, broadband see absolute adjusted Going continued we mobile still other year-over-year expect growth the

as the improved On income, the driven improvement income income adjusted cash capitalization operating and for as for income constellation and quarter the and a in substantially of such and mostly and higher large for as depreciation EBITDA flows net non-cash leverage well interest seven, the the net interest decrease slide trends expenses in by the by have construction year-to-date and expense net partially incurred continues. lower year-to-date of loss reflects period, amortization. the improvements Positive we the our Operating quarter. the as ViaSat-X offset quarter

to $XX credit reflect the GAAP our R&D income benefits, higher In and and federal tax non-GAAP income our periods $X.X year-to-date offsetting this taxes, brought third Collectively, expense levels. tax our QX on million additional net quarter our net net Year-to-date, and $XX trends million, non-GAAP million GAAP we GAAP saw similar improvement. $XX income again bringing by about breakeven income to our year-over-year with results net to million. $XX improved to a income year-to-date million

being existing business greatly funded year-to-date XX% investments constellation, high-capacity $XX CapEx by working at $XXX the period QX was up generation XX% increased offset EBITDA fueled by almost by This $XXX with ViaSat-X payments. strong million supporting Overall, partially was and ViaSat-X two-thirds flow and CapEx. partially increase generated ViaSat-X adjusted same increase which million expanded to capital which year-to-date primarily driven cash by to by growth. year-over-year of strength, last year's cash our have is additional roughly year-over-year $XXX of portfolio offset The cash our by was increase, the our We Looking or due operations, year. increase the offset of approximately XXX-gigabit about operating of flows. of with remaining million this compared lower our million our about Ka-band from insurance Capital associated expenditures our last ground spend. CPE

leverage chart. So of moving corner right to the lower on the

net it's from slightly last quarter year-over-year. but significantly still expected, leverage QX position down as increased Our

expect prior of or hover outlays. this certain As perhaps capital noted in calls, to leverage in slightly we the on timing quarter, range depending next increase

our and alongside our increase to our construction strong to of modestly hit as expected we to the of continued Looking program milestones backdrop continue we but the XXXX, a our against transition expect of wave in final performance. fiscal activities, critical subcontractors leverage again adjusted EBITDA growth to phase ViaSat-X

to and revolving over which have the under at continued facility. million, $XXX $XXX cash have availability liquidity we Finally, million ample the just balance credit our on sheet the includes

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

Mark Dankberg

Thanks Shawn.

Okay.

will go with systems. into starting depth, I government So more

portfolio total. XX% seasonality. XX% $XX year-to-date. to Just in up million this to growth. to services and and to to reached revenue million million higher in $XXX EBITDA with and also as product quarter Strong Unawarded million, contract growth XX% $XXX our demand Year-to-date, the IDIQ strong is in year-over-year topline recap, the segment. and in Adjusted than year-to-date better $XXX grew year-to-date up has expectations, the and quarter. million and quarter revenue million awards we that's our ended revenues billion by backlog Growth government drove was third about across government the performance added Year-to-date, about boosted $X.X QX value backlog year-to-date contract included third of government been of figure. respectively, and the not third and year-end fiscal $XXX $XXX quarter just the third XX% for half

a government we We They by close encounter defense new and to overcome we that with responders. procurement the an built are regular proven that's and systems, them. to skills services Navy nation's In threat to our system incredibly stressed relationships Air the augment the help to first aiming spectrum Force, broad advances. migrate global rapid with technical Army. environment in products and larger threats And have agility learn and working much

working U.S. also with forces. are with leverage We coalition interoperability who partners

and support with to them end user XX that and operational the productized would organizations meaning items, response on by invented, Link times using processes is that as network. as as be product a creates or more. much operational the has effective decade and network Link all XX platforms find The that interoperate valuable join users effects, standards reduce see are often specific the and ourselves in needs show they lead all their combatant almost powerful users, So products non-developmental this new we more to slide we the connections directly been

to by to enabling of the are grow and of number thousands to magnitude network thousands. from of platforms enabled devices of tens thousands hundreds We orders

defense are by the innings transformations department. in the still needed the early U.S. We of

other Link While in XX, too. have areas, similar on this we slide focuses opportunities

front to the is address well space as a need evolving mandate environment The the for change. of force operational still threat of innovation us. space believe rapidly as indicative growth faster is with We models new in biggest for the

broad We satellites are range secure well platforms customized satellite operational both placements of that DoD ViaSat-X ViaSat a organic can earning on support of as as terminals networks.

leverage of ready bandwidth. ViaSat-X terminals global are building We a population to be on diversified and steadily

business Government comparable our growing fast, also that, wing earning of rotary and services Aero in-flight to revenue. are representing government more business Within to platforms, the our financial segment in fleet the is services basis, positions there's and that in inherently for we fixed is endure thousands are in mobility an system the early last era. lumpy revenue trends but on of over results commercial adopters have business connectivity where results a will years increase XX% that total can Government quarterly believe of growth even vary aircraft. driven the ViaSat-X several an

satellite to Turning services.

XXX of that we XXX QX totals It's An year-over-year aircraft contracts. about million residential reported $XXX expect EBITDA an million more as existing that Airlines, our increase million customers. quarter Adjusted XX% about XX% and third increases existing tails planes that's consecutive flights we quarter increase with XX% XXX million ARPU eighth a the of had our $XXX in-flight And and plans about first as and Azul. Here $XX from XX under third MAX to in we in gains year-to-date and at XX% of planes while drove third from in with South the respectively. and about gain Azul revenue, into we and well in X,XXX and derived includes was year-to-date, total America from growth. XX% to accomplished install $XXX respectively. the QX year-over-year, quarter benefited of as already XX% have expansion of end revenue the of year-over-year, connectivity additional sequential the revenue of And and additional Together, to quarter. revenue,

strongly to continue they grow lower a see more revenue, of business. that diversity, satellite market, growth and by believe basis, have We services XX-month optimal in vertical our has geographic is vertical that last residential our service on rapidly, the business chart the both the And even the XX% global in grown you years the four over while markets So U.S. can double our and key to left geographically reached ago. in resilient newer proportion faster. of

U.S. we this higher in really have hundred million the worked well. emphasized benefit fixed to market, a already That's cash constant to-date The of couple count range count of dollars. the is over ARPU strategy ViaSat-X. subscriber For consistently sub approach a ARPU with growth approximate compared of

We value satisfaction by churn. offering reduced higher have have higher and increased priced, ARPU plans grown that

addressable to think We or Don't market misinterpret those price the and alternatives. terrestrial is as compared offered meaning The addressable performance satellite results depends saturated. opposite. the on small market

a high could low addressing people ViaSat-X, switch are to different better and to of price market preliminary beta appeal video the and addressable pretty broadcast can from the demand of including over-the-top Obviously, a apparently size, triangulating the well our end, which to underserved. latency anyone compete only satellite we our a more as base, million at bandwidth it's We current points, the U.S. hybrid market among be reasonable currently terrestrial that would believe for quality We competition really streaming. is is approach target subscriber video existing the and directions, big. higher consumer with services DSL estimate range. streaming speeds in demand the for $XX-ish We from test for choose multiple video, delivering

the focuses and partnership for service you live video-on-demand and we and would the with Internet can and fuboTV, quantity by TV to sports technical quality leveraging a encourage apply news streaming fixed connectivity that market, We that services announced focused live the Today, same a release. both on the Video developed emphasizes Streaming over Alliance. improving streaming are principles to but specifications services. in-flight It read they

experience and to otherwise hundreds improve protocol for is we and to seeing The streaming to going on video. literally focused providers higher-end places content the We we for satellite The services. developing better get inaccessible Alliance Video are now plans have millions over best contributing technology service help while of substantially, Streaming reaching in of at users is end-user that over-the-top the reason adoption. a process are standards main the been

each right for other the the plenty points. price geographic any and see bandwidth. service. assets diversified of portfolio So and market, But the driven the of though of by vertical geography, for the of constraint still broad bandwidth a most our will optimizing see a or characteristics differentiated value market for strong, other bandwidth us demand a our We part services And markets the across regulatory, demand right having growth globally politics us given in the best the have world. player even bottleneck opportunity we distinctions gives we of is in the is and range in

is more constellation two the simplified shaded way satellites. figure really slide the shows The So satellites a get segments The swing. is this slide are on about schedule. All the are this in to for bandwidth. ViaSat-X first completed full three fully about

intended The payload in main approximately the divided assembly overall brackets The two and fill gradient to under is test. first are where in portions. The into satellite is show schedule process. are we the

pressures first spacecraft. uncertainties. will. ViaSat-X performance the build this assembly subcontractor schedule if unique unknown second schedule and more payload The for payload come and The you the the The portion from known unknowns, portion. XXX in our is with unknowns standard And is production Boeing mostly is test greatest and the

taken have mitigate to those now payload integrating and issues onto module. subassemblies are We steps the

processes of an the Boeing the a module launch calendar launch reducing campaign deliver milestone payload We are test program and mid-XXXX important aiming risk spacecraft ViaSat-X. schedule the is in uses this standard Payload to by and that, and integration delivery similar achieving year. After fall for overall of module to the to first date.

comes on have new ViaSat-X many it progress are technology program and But schedule challenges. performance innovative built The retiring risks. great and systematically with we made and is we

in measured We and to scheduled years. Others programs, quarters towards coverage system or risks not we objectives. weeks narrowing and driving those and always in space with to the risks meet completion expect believe were months, performance its be

ViaSat-X line entered of total that the XX-month gains slide ViaSat-X graph basis showed satellite inflection revenue illustrate the services created growth the business growth even ViaSat-X in hand rate. with we revenue WildBlue up trailing the the and next points shows obvious. a by portion sharper with magnitude are on acquisition. rate left The The this opportunity of since helps So ViaSat-X. quarter-by-quarter

interval where achieving time momentum. We the to now are have ViaSat-X growth the as labeled ViaSat-X we good from runway,

with that bandwidth line turned left measured in right our on the black constellation projected bandwidth and and on of the ViaSat-X up gigabits launch the The starts fleet sharply is with in actual hand lower axis. the capacity

can regional roughly You chart constellation three installments. vividly fuel equal in ViaSat-X is the Xx The reinforces see point with increase growth. an that the bandwidth for anticipated the

been transforming that very creating in executing already biggest at have each or and examples. of models segment the with We successful defining, the connectivity vertical government process and three business Aero are new have fixed being residential, commercial in-flight mobile

global are We the in for now. putting place verticals remaining expansion

We are we bandwidth methodically The productivity opportunities expanding experiences gains create user intensive for geographically. to applications. achieve end can transform

customers pie have there's too a gains is with geographic a aggregate demand enough where Viasat for don't portfolio shareholders. right while good share see The bandwidth bandwidth places. across a We returns earning the We entire productivity to in great that's situation large. the too

bandwidth allocate we ability in the most to in unique time. effective ways the have geography architecture, ViaSat-X a in With

labeled coverage. APAC ViaSat-X Americas, of of Flight coverage Western the Pacific the total the EMEA overlaps Flight So illustrates The Americas around and the APAC. Ocean and wraps point portfolio. this Alaska. the Flight three helps over that slide of illustrate applications satellite edge They approximately give are X coverage regional X our of the X areas value the almost global map satellites world The

we the show beams on so expect applications don't serve different we focus the satellites. the includes beams, we coverage individual air routes. spot many to here, transcontinental thousands Coverage Our on but can of consists of

vertical The we targeted mobile the green. colored that quite markets pyramid, divide successfully. colored We and left on so lower fixed have and far into the part's them shows that blue

regions in shading the the indicating and distinct Canada mobile. of demand a can fixed looking markets like the residential by the pretty interesting with of Brazil America extent, relative at are because are to see So markets profiles the and South amounts and of growing quite and for Mexico. the each three U.S., you map, North

there's Currently, large The residential cellular via military the cellular, similar access emerging cruise America. air these an Caribbean international domestic market largest quite Europe to prepaid as more rest the of our a an WiFi, market attractive in Latin activity. WiFi, But prepaid travel market. is our ship it of community, is EMEA is community region of Western There's like that the important much an not U.S. unit and but destination. different. attractive community market the in There's services. world's much think

still. but There's who pretty the also services number U.S. in for need of coalition different much region global in and carriers interesting the Aero is high coverage. be than Internet The And populated restrictions. due ocean. proportion of of to markets. most Others so regional a poor high course, is are the are thing, striking be Americas. a partner with residential satellite to countries market, to global penetration regulatory densely government demand as unavailable likely APAC in EMEA There's more

as services big in such and mobile services. largely through plans a opportunity our satellite versions of community segment, aero, commercial, accessed maritime is the every government There's prepaid attractive the Internet Asia is those. there Southeast and for

challenging The and market. big Pacific a technically creates Ocean

as of are that than a of places coverage, out well architecture filings better capacity actually demand as and that lets only Our satellite us large advantage most non-geosynchronous is amounts big geographic times is which that its there's in put there. the the

with are like-minded We forming in important we verticals. finding and region valuable partnerships grow our entities each as

We NBN in Satcom, list China Australia. in Telebras Brazil among these and

are of planned. value market platform believe why one service under we in for far are focused or delivery many have projected to for user type or been we building delivering each terminal have And the on verticals the with satellites the process. are tight yet demand of even capacity integration and We in in services our verticals compete our integration. expanding this capacity and not among in all between network or all construction requires each delivery, customization exceeds these Total announced that We best others these management and space That's and portfolio. service positioned environment. so complex

Okay.

EBITDA So over XX-month shows the most our the results. which the Since for to has on let's six last introduced quarter, turn we quarters. updated the outlook trailing adjusted revenue recent been side. It chart and left, we the adjusted on listed and We second EBITDA enabling the revenue in points underlying by remain XX%. this are have of fiscal slide. grown the they XX% Last and quarter market in place believe factors the by XXXX, growth

Government but depending The specific strong this exceptionally it's systems business been we be timing discussed of factors on lumpy, can year. remain in fiscal play. contracts,

benefiting with the results been Satellite process good. and We the services have growth our pleased is improvement. is business IDIQ the Financial from for healthy. very of of market is in and part Aero option segment. has strong government high-end fixed mobile the embedded and been continuous the Backlog services our are scale services portfolio good and

exceptional growth in the we North share of potential market what aim we along In-flight has to America. lines achieved as capture connectivity international have

in We of a process. number have opportunities

We expansive and how are but on community The optimize too. network. portfolio business. logistics to making market good our and a Internet establishing capitalize will global are Overall, we vertical are healthy strong are challenging, demand to gaining partners we learning to geographic take expand the progress in appears be it and

access, for have government continue increase in enterprise the systems, commercial, rapid in EBITDA, services Internet are with to International. been make to growth. These future investments able flight, we community and Even in prudent primarily

mindful on being while of based objectives. We favorable market earnings metering investments are our our feedback,

to be ViaSat-X. Finally, made test test progress enough first on we portion payload the up payload and building the unit have of assembly scaling

major it focused we milestone the will of and spacecraft integration. are phase processes. the toward first delivering a Boeing that to proven the enter first be completing for as a program launch uses module We That ViaSat-X on payload

for Airlines. Dr. serve from Also been to on information She of and Airlines asset helping Theresa for today, Chief she's a Directors. analytics, Officer on we announced Cornell Northwest data then applied holds of Ph.D. math Wise insight airline technology, in Theresa will and our optimizations add Delta and Information partners. our the addition Board best

We are to her have really pleased us. with

that's So prepared our it for remarks.

for really pleased into year see strong business are and We era. our foundation creating overall ViaSat-X the fiscal for underlying the progress with QX, this XXXX and fiscal a factors

questions will we So now. be take to happy

Operator

[Operator Instructions].

comes the JPMorgan. Cusick question first with from of Philip Our line

Philip Cusick

guys. Thanks. Hi

service of and talk product kind government. streams? is can further of that us about IP very one dig revenue as You and stream, And First, stream effects. versus network you businesses the having government about Mark, between relative book-to-bill backlog margins that mentioned into within But What's Thanks. already well? recurring these you product What of revenue product know the you was company? some talked that that and different one how are time much for sort sales? mix inside synergies strong

Mark Dankberg

Boy, okay.

ones So can we the answer. I will answer of we start, will some we think

where We product break component, they are general, we the they an be of are to In goods component building separately. are of margins going that fixed service on are margins not healthier, have, cost less service the asset them. products base asset sold a going more that to and to amortized because out of

look to better. the margins that's So going make

driven side, shipments. are product generally On the the revenues by product

interoperate. products products all If you what portion same that, systems revenue in makes with interoperate are to that of think or same of to of need the each organizations valuable or order the the weapon is recurring the that use operational the going concepts other

are be what one the will they of by the gauge the you or or platforms So the number of recurring of organizations can using of at size ways looking the platforms. revenues the is sort

we evolving platforms. the So on have numbers that other if to and is like sales keep than that's on spares. F-XXs referring type things up can or larger we count the some to are all we thing shipments helped that you helicopters The grow are we addressing those have and anticipate platforms there will well more some that organizations cover of to larger helicopters, that many and as of or market integrated sizes Apache as

So from or MIDS do used since, used what or call that's JTRS'. MIDS-LVTs thing to what to we we we the where go

terminal. a got tactical small small more terminals, tactical We lot have

handhelds, many We handhelds. more have there're got

there's weapons, many for many, weapons. potential more integrate we As

happens about talk becomes can of the And the a here within Or Also to network of information valuable network, information as effects of contribute information can participants network that on these within to the makes more sensor of information the they more the that think when we you that add participants. in definition The refer network the valuable in network the which they valuable. is Link when XX a the network to other each environment. the more a network is that way makes as act they members them all and source way add that that more for I that effects them to participants.

that's expand And can the to we see there. contribute effects So participants them. see it, certainly that act the in when other participants that, the to they in showed as value people increased on we network that, the you way figure, can

in other those areas have We business. the of

I the that the on place too covered of time I much. to think, nor it. most isn't elaborate this

Rick Baldridge

Mark, Rick. more. is one yes. is This There

purchases. licensing kind We non-recurring zero have of IP-type almost or

Philip Cusick

Okay. Thanks.

Operator

Thank you.

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

Rich Valera

you. Thank the on couple government questions business. A more

with field. in So nice, that's had X,XXX units you Force you you into the had that order the shipped that of noted a Air press the release, those and

you if wondering years, over sort or against Just next think that the might potential you what of kind X,XXX? TAM were five penetration that thinking for of rate? the What's potential And of that how product like your XX be of the penetration TAM?

Mark Dankberg

depends trajectory the Okay. growth What was air say, of release who people controllers close are and the let's air are A tactical way, support. adoption about on lot Link joint ground press XX of that was coordinating on this the who the products.

increases So for the airborne Link XX platforms the potential as it. we applications more more on of terminals get ground-based of that

as airborne they it, you so more both of them. And the those of ground-based are use better that supporting get can things, applications platforms

to hundreds that of will does, It's the as into So it thousands. the happen. through occur in of on right that But break would to cause tens of refer that that we we thousands. kind it events if for the now, possible will report the market

Rich Valera

give doing update can LEO that the of sort us Link status guess, been work on the you And constellation early I relatedly, a have on? you XX

Mark Dankberg

Yes.

on concepts main So that satellite that right coming constellation. first and now, up prototype work operational operational the prototype with the the is an into of capabilities building translate would

update yet will on an early in satellite right middle comment would closer date. next I it the in we not stages. on shorter small or to still say, will next kind I give these be quarter of focused now, launch the satellites, But two. on years. really than an it's to It than, to be we are that program's prototype expected for itself be mean, which, the can going more year-ish, So And want with I years. don't

Rich Valera

side And just Brazil, if get you just. wanted more your and maybe Mexico Okay. update commercial to the to rural on I in-depth a pivot WiFi in and can activities

kind well. sure logistical You as some successes it's challenges, but I some there's mentioned of been am

And would sort the how is give So color be of a just us appreciated. of there? progress could if you any sense

Mark Dankberg

use these they Okay. the important is the drop Do kind what if is are matter? coverage, people between per to And Yes, towns use it? rural to thing do and villages, find the people very of this wanted say, performance? that, it care? you we and first pay most see WiFi into that price out let's trade-offs Does WiFi, want that

would into that you terminals putting And say, care. remember, so there is, I that call learned would make challenges. a is town, challenges, say the to a that we around can the the challenge I to collection, they they I logistical these refer when it. can understand Those really that are lot. we they support The are we logistical we small Cash sure would have all it. are yes, what like, care is things terminal how sure that use on time do what residents make the we air

that of then more, the exact okay, expect the see really you to tailored buy what the we now, they but going Internet that prepaid by hour, plans more you of the there that around The offer. kind sophisticated other are are things plans cellular we like offer And forms in right other environment. could are are we and service

and That's would not time most how evolve around that's people care? to and the on more would have connected, we adoption focused say, of and it, things And use, on then we less. say, Will mentioned, general, let's or overall, there. I it? to those. the as trading lot are And in the coverage towns what we use you the they it's are off see The are you right do way to say. in now. There's encouraged, use the things the usage. the friction John the other with and demand. And Measuring capital the most investments because thing that over look work are limits a more important at I probably But they

Rich Valera

Got it.

the floor. Mark. I will Thanks Okay. yield

Mark Dankberg

Rich. Thanks

Operator

you. Thank

Blair. with Our Dipalma next comes line from question the William of Louie

Louie Dipalma

afternoon, and team. Good Mark

Mark Dankberg

Louie. are you? Hi How

Louie Dipalma

your on you Not flow you positive? will where cash free debt elevated bad. Shawn, peak ballpark the sense net with do CapEx, have a before turn

Shawn Duffy

Yes.

at our positive way kind the think turn. flow be. And to is of think where I it cash leverage kind for would probably the will you levels guys looking is of think characterize we we going I just what free

or year bit would in satellite. I And to expect ViaSat-X said, we think it we be because have throughout the to year, X.X% the completion, we little be to starting expect third the this next on increase give range scaling up going over take. to a are

to little throughout comfortable will build. stay a in We but scale bit, start ranges the

And positive, flow cash backdrop. satellite. that's would I think are And two it. first years as of overall, about put then where that the we seeing we kind a So free the said I still after have think we

Mark Dankberg

to we levers All because reason are characterize and Shawn is it described, right. manage And the we the way. that's the just going to Right, have that we way add way knobs manage it. to that, to it

Louie Dipalma

to on Okay. CapEx post And ViaSat-X? do going you sense be normalized level the have what's a

Shawn Duffy

Well, to are are I at next-generation on in think we dependent more satellite building right three satellites one elevated and bit that's a little state are an time. the where Obviously now, because we next. going we

up. that going of normalized this what the these little that bit down pace again, of But tick expect more is. future that's we and going a it at levels on and to before don't to the I see opportunities you pace next-gen are little the run to a stay some So in bit the we

Mark Dankberg

that's, And satellite. yes. the on rates uptake the And

Louie Dipalma

some that the like Okay. do is the ViaSat-X OneWeb And had SES, estimate after and Starlink how large will you players And International pie guys revenue then you, be traditional news I today. Starlink, Mark, theoretically Intelsat Inmarsat, Eutelsat and sharing was is wondering, completed.

Mark Dankberg

this. I of be different at don't divided of that's billions it's especially But of go least have am some out enterprise, number going have among market, markets WiFi are to a it's you right. market. I I to government there. I all it's given have to put insight. range, And would going the are going than mean, call, that this depth market community that big. on we dollars. What Aero up That's this to these fixed that got and add up you But we addressing. to but residential, do say, we so commercial not is think got the tens more into in Well,

we into look at given have insight to parametric think ways I it. And

$X, revenue four in-flight how that annual growing can to instance, of billion and the on from market. For at passengers seven-ish $X think in $X, look connectivity can depending opportunities see a billion and you attack the you passenger

estimate of of businesses., mobile at address WiFi millions in the and we hundreds look in community people you that prepaid dollars look these You at market. can

You benchmarks. look at dollars per month of as revenue per user

dollars we usually back we are to to get these those the So not not the among in it, near end, numbers. dividing near the that line. of billions are expect of that construct leaders you the going tens but pie, you up And the of way be

Louie Dipalma

And last one. one Sounds good.

in contract a generally JTRS soon large for been and ends every it's you very has months. MIDS upsized Your expect a May Do of the you one after new contributor six vehicle XXXX? been IDIQ existing

Mark Dankberg

plenty Yes. do. are of, Yes. yes, we There

Louie Dipalma

Sounds Shawn. good. Mark Thanks, and

Operator

you. Thank

Crawford the from comes of B. question Riley. next line with Our Mike

Mike Crawford

TrellisWare affiliates rising with you Thanks. possibilities the well. your TrellisWare? just on potential it quite looks doing network talk is income and and maybe waveform equity like what's with line, net subsidiary From about probably going that effect Can

Mark Dankberg

Yes.

up handheld scaling for Manpack and talk several where Forces for Army and contractors waveform of business a TrellisWare model radio we the licensed common into developed by both the a for are programs. Special that and has waveforms are production. good adopted the of Army effects, really has their, TrellisWare several radios that's when So their example. being network a that's those about other

is happening is growing revenue what's So rapidly there. licensing pretty

We that. pretty about excited are

then as XX% portion a There's from there we reflected a radios a in that little part big on some network makes there that consolidate of see of interoperability. based you TrellisWare. in And again, over what a runway our ownership good of and valuable perspective, those growth effect

fact adopting of numbers large waveforms, is Forces, to and Army as broadly basically, the are across drive Special So very helping adoption of those users well. that Marines

Mike Crawford

I services just going are And if Okay. to turn along could someone if both play fixed latency ViaSat-X is guess, that weigh to then and satellite LEO these mobile we some and with back you Obviously, like to maybe of Fortnite, targeting you, some bandwidth, try high OneWeb, and these markets, terms in that Thank you. ViaSat-X? not of matters Starlink typer there. constellations. deliver ability speed these versus to limitations high But how of do the of or

Mark Dankberg

Okay.

our So position been pretty has consistent.

have bandwidth, latency enough you really If is important.

from have bandwidth, the which million-ish driver most advantages people biggest the and as like the DSL don't people to you the enough latency. We effects you then that on If that are latency broadcast video is and think And subsidies big in XX think architecture addressing to We isn't there other important cost is market, is switch demand mask in our over-the-top because trying big congestion the have video. bandwidth addressed to the enormous. effectively. by are delivering be

tons they evaluating really yes, industry. ones. spent time all see to, innovation in to excited have going the And other of are We these are we

understand we of lot And them with are or LEO, think a another. MEO these non-geosynchronous We involved systems way one in I well.

is effective. confident in most and our really scalable We going are to cost be approach the

Bruce Dirks

question tonight. constraints. This last I going be have to for our Okay. but Bruce. apologize, That's have some we is time

Operator

for Ladies Everyone, and the you rest does your This thank of the like conference. we gentlemen, disconnect. you all conclude and in today's enjoy participating day. program to may right. All would

Viasat (VSAT) 7 Feb 202020 Q3 Earnings call transcript