KVH INDUSTRIES INC \DE\ Q3 FY2024 earnings call

• High-level overview: Q3 airtime and service revenue down $5M y-o-y; airtime margins up sequentially due to Starlink bulk deal. Total revenue down 13% y-o-y due to VSAT decline. - New product/service initiatives: Increased subscribing vessel count for 2nd consecutive quarter; shipped record communication antennas for 3rd consecutive quarter (driven by Starlink terminals, VSAT units, CommBox Edge); Starlink demand strong with over 1,500 terminals activated, expanded Starlink to land-based applications. - Introduced MAILlink+ and expanded KVH Link delivery options. - Responded to Intelsat satellite anomaly; hybrid LEO/GEO deployments increasing.

Airtime and service revenue for the third quarter was $24.4 million, down $5 million from Q3 2023. Airtime gross margin was 36.5%, up from the prior quarter's 36.0%. Total revenue for the quarter was $28.9 million, a roughly 13% decrease from the previous year, due to continuing decline in VSAT product sales and corresponding service revenue. Subscribing vessel count at the end of Q3 was just below 6,800, approximately 2% up from the prior quarter. Reported Q3 gross profit was negative $0.2 million compared to negative $0.7 million in Q3 2023. Q3 operating expenses were $11.3 million, including a $1.1 million impairment charge. Adjusted EBITDA for the quarter was $2.9 million.

• Narrowed full-year 2024 revenue guidance to $114M-$117M and adjusted EBITDA to $8.5M-$11.5M. - Changes due to US Coast Guard contractual reductions and ARPU pressure.

• Impact of technological disruptions in maritime industry. - Potential compression of airtime margins with new Starlink plans. - Uncertainties related to US Coast Guard contractual changes.

Q: Follow up on vessel count, Starlink vs VSAT, bundling strategy, vessel reporting change, Starlink pipeline, land market move, prepaid runoff, inventories, R&D, OneWeb pipeline A: Brent and Anthony discuss vessel count trends, Starlink bundling with VSAT, reporting change to vessel count, Starlink pipeline growth, land market entry ease, prepaid runoff expectation, inventory increase due to raw materials and Starlink inventory, R&D spend stability, OneWeb pipeline being early