KVH Industries, Inc. (KVHI) Earnings

Management highlights

- The shift to LEO continues to gain traction, and first quarter results show KVH is capitalizing on momentum. - Total revenue increased sequentially with strong shipments of communication terminals driving growth. Service revenue was consistent with prior quarter due to seasonality. - Record connectivity unit shipments of ~3,100 units, a 70% increase over previous high, positioning well for activation growth. - Subscriber base ended at ~9,600 vessels, with LEO services now over 45% of airtime revenue. - Stand - alone VSAT subscriber base decreased as industry shifts to LEO, but still view it as important part of portfolio. - Newer service offerings like IT service gaining traction, Link content platform making progress, and efforts to expand global footprint in regions like India and Latin America.

Guidance

- Anticipated activation growth in second quarter as a result of record connectivity unit shipments. - LEO services target to continue increasing their share of airtime revenue. - Continued focus on expanding onboard role beyond connectivity, with new service offerings like IT service and Link content platform progressing. - Efforts to expand global footprint in key growth regions like India and Latin America to capture long - term growth opportunities.

Segment performance

Total revenue for the quarter was $32.3 million, increasing sequentially from the fourth quarter of 2025. Growth was primarily driven by strong shipments of communication terminals. Service revenue was consistent with previous quarter. Record level of connectivity unit shipments at approximately 3,100 units, a 70% increase over previous high. Ended the quarter with approximately 9,600 vessels. LEO services now represent over 45% of airtime revenue. Stand - alone VSAT subscriber base saw a decrease during the quarter.

Analyst Q&A

• Q: Brent, a question for you. I mean you did say 3,100 units shipped in the quarter because I think like the best you've ever done is 1,600 previously.

  A: Yes, Chris, 3,100 is correct. The previous high was approximately 1,800.

• Q: Was there -- I mean this is sort of a crazy number. Was there something unusual going on in the quarter maybe related to Iran? Or do you think that is just uptick in the new markets?

  A: It didn't have anything to do specifically with Iran. We did sell a number of units into the Asia - Pac region for low data plans that will be used on fishing fleets. But nevertheless, they will still turn into paying subscribers.

• Q: So do you -- I mean is that level sustainable? I think I only had like 3,400 net adds this year. And what sort of transition are you seeing from shipment? Is it still the sort of 60 to 90 days from shipment to initiation of service?

  A: That's pretty typical. 60 to 90 days, and it does take a while. Would I anticipate that we're going to stay at this rate? Not necessarily. I think that we'll stay at a good rate. But I think this quarter, in particular, I'd just like to point out that it was particularly high. And I think it has to do with the seasonality aspects, too, in that although the revenue was flat because of suspended vessels, it's the time of the year where both in the leisure and in particular, fishing, they're getting their boats in and ready to go.

• Q: And there was no new market expansion. You have talked about stepping up your efforts in India and Latin America. Does that involve incremental costs of people on the ground or advertising?

  A: Yes, there'll be incremental costs. We're looking to expand our sales team in addition to marketing efforts, but not beyond what we had anticipated this year and the budget that is embedded into the guidance that we provided.

• Q: Now India has not yet given the full license for Starlink or OneWeb service at this point, have they?

  A: No. OneWeb, I believe, is further along. And VSAT is still -- is being widely adopted there.

• Q: Until the LEO shows up so...

  A: So they're trialing OneWeb right now. So they're a bit ahead. So our focus is on both VSAT, OneWeb and Starlink when it's ready to go.

• Q: Again, back to the unit shipped this quarter, was the greater availability of OneWeb a major factor in that or any pricing changes? I'm just trying to get to the bottom, that's kind of a shockingly big number.

  A: Well, OneWeb wasn't a major factor. As I'm sure you're aware, Starlink has made their antennas even more affordable. As I say, and I think a lot of this was prepped for the upcoming seasons for both leisure and fishing.

• Q: Anthony, when you look at the roll - off of the GEO capacity, and I know you've got some step - downs in the contracts for GEO capacity. Has anything changed from last quarter or last year in terms of the margin profile that you expect out of that business for the year?

  A: Not particularly. We disclosed previously the drop in the commitment. And so where we are, we're fairly happy with. I think the decline has been very steady. So it has been more predictable in recent times. So no, Chris, the short answer is no.

• Q: The managed IT services, where do those revenues land? And again, like the market expansion, are there any anticipated significant costs with stepping this up? Or can you generally match costs as you scale with revenue?

  A: Well, there are costs, but it's the same answer as the previous one. The budgeted costs is embedded with the guidance that we provided.

• Q: Just CommBox, any updates there on product features, distribution, attachment rate?

  A: Yes, that's a great question. We recently introduced a paywall, which will enable point - of - sale type of purchases for our customers that take it from us. They need to set up the payment stream, and we have plans to increase that where we would actually have the point - of - sale application come to KVH where we could sell crew bandwidth directly. So that's the biggest development in CommBox this past quarter.