ViaSat, Inc.

Welcome to Viasat's fiscal year 2023 first quarter earnings conference call. Your host for today's call is Mark Dankberg, chairman and CEO. You may proceed, Mr. Dankberg.

Okay, thanks. Thanks for joining us today. We released our shareholder letter shortly after the market closed today, and it's available on our website. We'll be referring to it on the call. Joining me on the call today are Rick Baldrige, our Vice Chairman now, Kevin Harkenreiter, our Chief Operating Officer, Sean Duffy, our Chief Financial Officer, Robert Blair, our General Counsel, Paul Froelich, Corporate Development, and Peter Lopez, Investor Relations. So I'll let Robert provide our safe harbor first.

Thanks, Mark. As you know, this discussion will contain forward-looking statements. This is a reminder that factors could cause actual results to differ materially. Additional information concerning these factors is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q. Copies are available from the SEC or from our website. Back to you, Mark. Okay, thanks.

Our results for the first quarter were consistent with the outlook that we described in our fiscal year 22 fourth quarter year-end call in May. Several factors, including seasonality, delays in certifying some of the new information security products, and some transient supply chain issues affected our sequential top line. But an improved revenue mix across our service networks and lower R&D spend in the quarter heavily offset the lower revenue as well as our growing VISAG 3 ground infrastructure operating expenses that are in preparation for this fall's launch. So collectively resulting only a slight sequential decline in adjusted EBITDA. It's worth noting that consolidated service revenue and satellite services segment revenue both achieved new records in the quarter, partially offset by the impact of product revenue from some of the factors I just described. We expect our first quarter EBITDA to be the low point of the fiscal year, with good sequential growth from here throughout fiscal year 23, driven largely by scheduled in-flight connectivity installations and activations, significant government backlog and strong government systems orders in the first quarter and also, so far, in the second quarter. We're expecting that we'll grow our fleet of active in-flight aircraft by about 500 over the remainder of this fiscal year on both new and retrofit aircraft for both new and existing customers. We've had three programs making good progress as the first satellite enters final assembly any mechanical environmental testing, and the second payload is now at Boeing for spacecraft integration. Launch and in-service scheduled targets for the first flight have been holding from last quarter. We also wanted to add a little color on the point in the letter regarding the $62 million payment we collected just after the close of the first quarter from Acacia Communications. The payment is for Acacia's use of our intellectual property It includes contractual and statutory interest. We had previously won a jury verdict ordering Acacia to pay for its use of our technology and had subsequently obtained verdict insurance at an economical premium so that we could be certain of the payments. And that was prior to ultimately also winning the public court decision that upheld that verdict. While we didn't expect to receive the payment quite this soon, it was factored into our outlook for the year. In addition, the funds will help offset the pre-launch year-over-year ground infrastructure expenses that lead up to the BISAC 3 launch and support additional discretionary investments in the significant growth opportunities we're targeting in both the fixed and mobile business areas. So with that as a little bit of background, we'll open it up to questions.

At this time, if you would like to ask a question, simply press star followed by one on your telephone keypad. To withdraw your question, star one again. Please stand by while we compile the Q&A roster. We will now take the first question from the line of Landon Park with Morgan Stanley.

Great. Thanks very much for taking the questions. Good afternoon, everyone. I'm wondering if we can start on the government side of the business. There's obviously been some press releases about news reports about potential strategic options for part of that business. I'm just wondering if you can update us on your views there in terms of willingness to part with portions of that business and and maybe also just provide some disclosure around what is the right way to think about the size of the major pieces of that business, and if there's any margin differentials within the different parts of that business. So I'll start with that, and then I just have one follow-up. Okay.

Okay. So first, let's start with don't comment on speculation or rumors about what we may or may not do around the business. I can... I can give you the answers to the other parts of your question that are around what the makeup of the business is and the relative size. There's roughly three main components to it. One is tactical data links. That's primarily business around what's called link 16. That's been a long time and steadily growing part of the business. Think of it as in the range of maybe a third of that business, of the total government business. There's another piece, which is information security-based and cybersecurity-based. That's a little less than a third of the business. And then there's one more piece, which is satellite-oriented, and that includes both technology products that we sell and satellite services. You know, kind of the fastest-growing part of the business is business. satellite services business that has the most synergy with the rest of our satellite services business. And that kind of describes the landscape there.

Are there any margin differentials between the different portions of the business that you would highlight?

In general, the services businesses tend to have the highest margins. But the businesses as a whole, it It's not enormously disparate in terms of the margin characteristics of those businesses.

Okay. And I understand that you don't want to comment on press reports, but maybe can you just refresh us on your strategic view in terms of how you think about potential optionality for that business and your willingness to... to surface value if you don't feel like, I don't know if you think you're getting full credit for the value of that business today, but how are you thinking about that?

Well, the main way we tend to think about all of our businesses is really in the way that they provide synergy with each other. We don't really like having just a collection of disparate businesses. And so far, that's paid off well for us. Clearly, of the defense business is the one that's probably got the greatest amount of synergy with the overall direction of the company. It is the satellite part and the satellite services part. But the main thing, I think that we've done well in order to grow as steadily as we have over a long period of time is we've been pretty good at being able to determine the relative growth opportunities of our different areas and then with the greatest amount of growth. And I think if you want to think about how we think strategically and how that drives the tactics, that's probably the underlying, the most fundamental underlying factor in the way we deal with our businesses.

And how would you say that the encryption portion of the business figures into the long-term strategic view that you have for the company as a whole?

Well, just on the encryption part, what we've tended to think about is encryption as an overall component of cybersecurity. And there's a lot evolving in the cybersecurity space, in the cybersecurity segment. And what we believe is there's going to be more and more spillover on the cybersecurity side into commercial markets. And so that That's an example of one of the areas where we're looking at synergies. The way I put it is we wouldn't have the collection of businesses that we do if we didn't see synergy opportunities across them. The only thing I would say is that the degree of significance made will tend to respond to that. And sometimes it's not so much that there's less opportunity in a given area. Sometimes there's just way more opportunity in other areas. I think those are the things that we've done a good job of managing. And that's what we're constantly trying to assess, I would say.

Okay. That's all very helpful, Mark. And just one last one for me, just switching gears to Inmarsat. I might have missed him in the release, but can you give us your latest timeline in terms of closing expectations and just maybe how you're thinking about the EU review that was recently announced along with the other CMA and DOJ reviews that are ongoing?

I think we've made pretty steady progress in a few of the milestones that based on the actions and activities that we need to do. We're entering into a period where we need some responses from the government that they need to draw some conclusions or inferences from that. We have a little bit less control over that, but overall our target is still, we haven't learned anything that would say that we should deviate from the target that we had. Basically, we still have to wait through We'll get more information over the next few months, and so we're going to have to factor that in. But right now, we're still aiming kind of for where we were. I think we're closing in on nine months, so it's probably going to be more biased towards the back end of that than it would be towards the front end.

The prior, I guess, ideal was to close by the end of calendar year. Is that still within the realm of possibilities?

That's a way to put it. It's within the realm of possibility. It's hard for us to anticipate, especially on the regulatory side, how the responses will come back from the agencies given the information that we provided. So we will get a lot more information over the next two or three months. And it's possible that we can still close by the end of the year. It's possible that it'll extend out to the 18 months or, you know, it's conceivable to go beyond. We just, we will learn a lot more over the next few weeks to a month or two.

And the EU review, was that expected and anticipated or was there any surprise?

Yeah, it was expected. Yes, it was expected because, uh, Most of the activity that we have in these sectors, it covers both the EU and the UK, so that's not surprising.

Great. Well, thanks very much for taking the questions.

Thank you, Lenny.

Your next question comes from the line of Philip Cusick with JPMorgan Chase.

Phil, you're on mute if you're trying to talk. Maybe we should take a question from somebody else and come back to Phil.

The next question comes from Chris Quilty with Quilty Analytics.

Thanks, Mark. I wanted to follow up on the, I think you said you expect to add about 500 aircraft or 500 incremental orders going into the year. How much visibility do you have into that number, and does that include Southwest orders?

Yes, the 500 includes, as I mentioned, it includes both new planes and retrofits for both new and existing customers. And that would include new, with Southwest in particular, we have new aircraft that we'll deliver equipment to that will be line fit. So they'll take them as new. And we have, I think that's a pretty reasonable target. There are factors that could

Gotcha. And, you know, given there's capacity shortages internationally and here in the U.S., it's a pretty saturated market in terms of airlines that have already picked solutions, so we're seeing some switching. When can you reasonably start to target more international airlines, you know, given the timing of your second satellite coming online? Okay. The

So first of all, roughly ballpark, it's probably 30-ish thousand aircraft. That's kind of a rough estimate of aircraft. So probably all in, we're in the 15% to 20% penetration of existing aircraft. And people think that's going to 40-ish thousand aircraft kind of by the mid to late 30s. So we think there's still a lot of growth. in the market as a whole, we've been mostly most successful in the US market and in some international traffic to and from the US. And that's where most of the installs are coming in this current fiscal year. We've done well on international in the places where we have coverage. And that's really been the main factor in determining our success. And so recently we've announced more transatlantic international. So I think that airlines are looking at the deployment on BISAT-3. They see the progress they're making. And I think that's really kind of two-factor. This is where we've had international coverage. We've done well. The other one is that airlines, you know, tend to see good in-flight connectivity as a competitive, you know, it's a competitive differential. Yeah, that's a good word for it. And so in the U.S., where it's most prevalent, that's fantastic. That's kind of been a factor on the major long-haul international airlines, intercontinental flights. I think there's still a lot of opportunity among more regional airlines, and that will become more and more a factor as you see the penetration grow. I think those are the things that we've got our eye on as the overall penetration in the commercial in-flight market expands.

And do you have or will you have an antenna product for those regional aircraft?

Uh, there are.

Yes, short answer is yes. OK, I think that the the airlines views of what the purpose is for outfitting regional aircraft is evolving. As they see, you know, having in flight connectivity is sort of an integral product to their entire fleet and all their services, including on connecting flights and on these shorter flights. So I think that their view of what's needed is evolving, and I think we'll be well equipped to deal with that. And there are, you know, there are, I'd say we're seeing more, I'd say more interest in outfitting regional jets with a more expansive view of what that means, too, as well. Like a view of how you outfit regional jets, kind of, going forward is probably different than the way you might have looked at it two or three or four years ago. Great.

And if I can, one final question. Last week, EchoStar talked about losing subs directly to Starlink in part because of latency, and they're introducing a hybrid cellular satellite solution to try to address that. And, of course, we also had the acquisition announcement with Utilsat and OneWeb, and, again, in part, you know, Eutelsat trying to get a latency solution. Do you still feel that a geo-only solution for consumer or IFC markets is sufficient, or are you seeing an increasing need to do something to address latency?

So, I think our view hasn't really changed that much, and I would say One of the unique things about satellite is we do think that there's a little bit of a trade-off between bandwidth and speed on the one hand and latency on the other. We think that we can manufacture bandwidth really efficiently from geo and aim it into places where there's demand and have the flexibility to move it around with that demand, especially mobility. But the farther out you go from the Earth, the longer the So there's this tradeoff where you just have to hit the right mix for each particular vertical market segment. And one of the things we've said is we think that hybrid solutions are a good way to deal with that tradeoff, that we can mix in lower latency options. for terrestrial options to try to hit the sweet spot of each of the vertical markets and the geographic areas that we're trying to serve. So we've done work on that. Right now, what we think is especially with just the booming growth in streaming and more and more video entertainment hours switching from broadcast to streaming, You know, I think that's a lot of what we see is going on in satellite industry is kind of a big pivot to being able to support data. And some of that's going to be through high throughput, you know, high capacity or high throughput geosatellites. Some of them might be, you know, from the latency perspective on MEO or layout. So, you know, what we've been really focused on is that bandwidth component. We think that streaming is really driving substantial growth in demand. That's kind of 30-ish percent year-over-year on a per-subscriber basis. So we're really focused on being able to address that. We think that we'd like to be able to address low latency as kind of the next thing, the most important thing behind that. Well, the other thing that we've been really interested in is hybrid solutions, including multi-orbit. We've been working with several non-geosynchronous operators or prospective operators in order to be able to do that. We don't think that we necessarily need to own a non-geosynchronous constellation in order to be able to do hybrid solutions, hybrid multi-orbit solutions. I do think that just to elaborate a little bit more, there's some sense that only the geosynchronous operators are saying that multi-orbit makes sense, but the non-geosynchronous operators don't think that there's a need for geo at all. That non-geosynchronous is just kind of obsolete geosynchronous. And one of the things that's interesting about the OneWeb and Gittlesat deal is that you've got a non- geosynchronous operators saying multi-orbit is the right answer. And that's kind of not, I mean, this might be the most, the first most explicit case of that. But you've also got SES that's investing in both MEO and geo-satellites. You've got Telesat, that's a significant geo-operator that's also doing multi-orbit. So what we think is, you know, that it just is indicative that multi-orbit makes sense from either direction. And that's kind of how we see it as well. But I think that the other point, just one way I can utilize it, that sort of highlights is one of the things that we've been looking at when we try to do this is to get as much commonality in the network infrastructure as we can. And so, for instance, in choosing to acquire In Marsat, one of the good things is their broadband network is K-band, just like ours is. And especially in the mobility space, where you've already got a need for tracking antennas, you can use phase array antennas as one of the things we've been working on and demonstrated there as well. It's a lot simpler to do them in the same operating band as opposed to doing it in two different bands. And so that's an example of one of the things that we're looking to do when we do hybrids between geo and non-geo is try to get some of those same cost efficiencies and the ability to work with the infrastructure from both sides in a simpler, more unified way. Those are kind of the main things that we've been thinking. Things are still evolving in the space. But we, you know, we still are interested in multi-orbit to the, and again, I want to emphasize this, to the extent that our customers are and that it delivers more value to them and to their users.

Great. Thanks for the detailed answer. You're welcome.

Your next question comes from the line of Rick Prentice with Raymond James.

Thanks. Good afternoon, everyone. A couple questions. One housekeeping one on the legal settlement. The $62 million, I assume that was a revenue. It sounded like you might have done some kind of payment to lock it in. What should we think the EBITDA effect of that legal settlement was?

Hey, Rick. This is Shawn. So, yeah, you're right. A good amount of it is going to come in the revenue line, but we do have some costs that are going to offset that. some of the insurance costs and some legal costs. So I would think of it as probably net around 50-ish. That should be EBITDA contributing.

In the second quarter. In the second quarter.

Yeah, second quarter. And let me just, a little bit would go into interest income as well.

Sure. Okay. And then, Mark, kind of strategic thinking for, We saw that the FCC voted 4-0 recently to have an effort on reviewing, quote, the space race. What do you think the FCC is looking to do, and what would you like to see the outcome of that be? And then I have one final follow-up.

Well, you know, I think that, on the one hand, I think that the FCC is anticipating that the options of doing things in space are increasing, and I think that what they've said what regulations that they may have that could turn out to inhibit that or be bottlenecks and then try to address those in the context of preserving access to space. And that's a good thing. I think that's wise. We're interested in some, there's some elements of structures in space that are really interesting for the kinds of things that we do. So we think I think that when you asked about what I would like to see, I think that a lot of the risk in space comes from very large numbers of relatively large space paths that represent a lot of mass, a lot of cross-sectional area, and that is really being dominated by these large megaconstellations. very difficult to see that when you think about this notion that academics and other researchers and quite a few organizations are orienting around, which is the notion of carrying capacity, which is how much stuff in space is sustainable, how much is too much, how do you measure that, that that's really likely to be driven by these megaconstellations. And so what we'd like to see is that they don't look past the issue with the megaconstellations to focus on something that's probably not likely to represent as much of a risk to congestion in the space environment as some of the issues that we're already dealing with.

Okay. And one more follow-up on the government side. Help us understand on the tactical Link-16 side, How, what kind of synergies are you looking at there? What kind of opportunities between your different business cycles to the tactical link 16 kind of offer?

Well, so one of the, a couple of things that are going on that are interlinked. One of the biggest sort of long-term themes in defense communications and actually in sort of overall intelligence and battle management is different names for it, but one of the main names is what we call JADC2 or Joint All-Domain Command and Control or Command and Communications. And what that is intended to do is to synthesize a number of disparate communications links and intelligence sources into one sort of seamless, comprehensible whole. And so when you think about that, there are definitely things that you can do with terrestrial networks, Link-16 being an important one for that, in the way you combine that with space. So that's one of the avenues that we've been looking at because we're familiar with both the space and the terrestrial parts of that. I think we have quite a bit to contribute to that. And we've been pretty successful in participating in it. One of the other areas that is, that's got significant synergy opportunities is the notion of Link 16 from space. And we've been, you know, that's one of the areas that we've been pretty successful in as well. And as well, the notion, we think of, So there's definitely synergy opportunities there. I think just to go back to what I said before in response to Landon's question, really the issue for us is just trying to assess all those different synergy opportunities. Which ones have the greatest growth opportunities? Where can we play? Where can we be the most successful? Just make sure that we're focused on that. Those are the two main threads when it comes to the technology. that we're growing.

Okay, and final one for me, and then I'm sure Phil wants to get back in. The space industry has been trying for a long time to consolidate. All of a sudden, we're seeing a bunch of ones proposed. Biosat, Inmarsat, Utilsat, OneWeb, rumors of SES and Intelsat. What do you think the industry is looking at now that they're trying to solve for, and how do those differing potential permutations affect how you view your opportunity?

Okay, that's a good picture question. The one thing that I want to point out, when people talk about consolidation, a lot of times what they kind of mean is that growth is slowing and we want to take advantages of cost energies. And what we see is, think of it as like the age of satellite as a broadcast mechanism is sort of winding down. But the age of satellite as a data transmission medium is really just getting started. That's kind of how we look at it. And so, you know, from our perspective, you know, what we did is we took two companies, us and Inmarsat, that were never really in broadcast business, were really focused on data. And we're trying to combine them in a way that creates more opportunities for growth. That was really the thesis for what we're trying to do. I think that there's another theme, which is more among the large legacy operators, which is how did they more pivot from broadcast to data. And so a lot of the other combinations that are being, you know, that are either happening or being speculated on are really kind of around executing that using maybe the broadcast business to charge up the data business. What we think is that the data business is so different from the broadcast business in almost every way. The analogy that we always use is if you look at the companies that were preeminent in using terrestrial broadcast frequencies, none of those companies are the ones that really did effective in the data business, customer data business, which is primarily the mobile cellular business. So we just think they're really, really different. We've got really good skills in that. We've got good growth. We think MRSAT has a great customer base, good assets that we can leverage. That's kind of our thoughts on it. I think there's the theories behind some of the other combinations are a little bit different than that.

That really helps. Thanks, Mark. That was so well Thanks, Rick.

Your next question comes from the line of Ryan Kuntz with Needham and Company.

Thanks for the question. I wanted to ask your updated view of how we should think about the Viasat 3 kind of revenue ramp here of next year. How long until you can fully monetize that capacity? What percentage is kind of spoken for today with your current business plans? And secondly, Is there going to be any cannibalistic effect on your current business from a lower-priced, lower-cost-per-bit platform? Thank you.

Okay. Yeah, so just to review kind of what we've done with both Biosat 1 and Biosat 2, and we think things will play out fairly similarly on Biosat 3. One and two, we really grew predominantly at the beginning on the residential base because that was the one that we could address the fastest. And a lot of times what you're seeing is if new operators are trying to get into the data space, they've also tried to scale around the residential space. Then what we did with one and two is we really started growing the mobility business. around that and some of the government business. So now coming to BIFAP three, the mobility businesses for us have more scale than they did when we did one and two. So we can scale those by expanding them a little bit by using our existing business as a platform for that by providing more services to some of our existing customers by making some of the services that we'll do for existing customers. And as we talked about before, when it comes to competitive differentiation in areas, you know, being able to do streaming videos is a really attractive feature for in-flight communications. So that, you know, that, I think we'll get more contribution early on from the mobility businesses with FISAC 3 than we did with 1 or 2, but we also see big opportunities in the fixed and residential business as well. And just going to the point that you talked about, sort of like deterioration, kind of the way we've framed this, we didn't put it in this current letter, but if you look at our past shareholder presentations, kind of our main focus has been the productivity of bandwidth. So if we can get a lot more bandwidth for the same amount of capital investment What our strategy has been has been to share that with our customers. So what we can do is we can give existing customers more bandwidth for roughly the same amount of money. Or we may come up with different price tiers, but the theme will be more bandwidth value per dollar. But as long as our productivity improvements are greater than what we shared with our customers, then it's like we both think. from that. So that's the theme, and it's that increased bandwidth value that's what's enabled us to grow our customer base each time we've launched a new satellite with better economics. And so we see the same things here. The other thing that we've been able to do pretty consistently, and we see that happening here as well, is kind of aim to have the satellite So you can say it's full. That is, we've sold all the bandwidth within like two to three years. But then what we tend to do is we follow up by constantly evolving that user base towards more and more economically valuable applications, which helps to drive our margins and our revenue. And that's what we've done each time. So rather than, you know, One thing you can imagine as well, if I just sold a whole bunch of it for the life of the satellite at the beginning, maybe I'd be getting rid of risk. But on the other hand, my opportunity to sort of groom that base and identify the applications and the customers that place the most value on it or to use it in new markets where we can apply additional products and services to increase the value, that's what's really enabled us to grow the revenue and the margins on the existing satellites for the last 10 or 11 years that we've been doing this. And we see the same things happening this time. That's helpful.

That makes a lot of sense. And it sounds like a lot of the terminals you've shipped, at least for some of the recent past, is upgradable to support Biosat 3.

Yes. Given that we've known what the architecture is, that's what we've been aiming to do. There are... But basically, each time, what we've been able to do is we've been able to make the existing terminal set can be used on the new satellites. But the new terminal sets have additional features or capabilities that make them more useful or economical. And out of that comes one of the things I think is a little bit underappreciated in this is what we're doing is we're mixing many different types of service level agreements and value propositions on the satellite. And in order to do that efficiently, you need to be able to, what we call schedule. It's like, how do I fit together all these disparate types of services on these satellites so that we get very, very high efficiency of use? One great example would be if you're in the airline mobility space and you have a hub airport with connecting flights, from one airline or a bunch of different airlines, several times a day, you have enormous demand at that airport for maybe an hour or so. And then in between that, the demand is way, way lower. So what you really want to do is you don't want to take all that other man without a service just because you're waiting for that next wave of use. So the idea there is how do you schedule your band with resources to get high efficiency? And those peak to average demand easily between high-peak areas and low-peak areas. So what we tend to do is we build into the network and the latest generation of terminals more and more capabilities that schedule it really, really efficiently. Those are some of the things that drive our ability to increase margins and revenues even after we've filled up the satellite. That's really helpful, Mark. Thank you.

Thanks, Brian.

Your next question comes from the line of Mike Crawford from B Rally.

Thank you. Just to go back to the Acacia award, does that mean that Cisco now Acacia has a downstream license? Do their customers like Momentum that use their DSP?

This is Pam Lopez. Sorry I missed your call. Please leave a message, including your phone number, and I will return your call as soon as possible.

Hello?

Did you hear the first part of my question?

I think so. So Acacia has...

Downstream customers like Momentum that use its DSP, do they need a license or is that incorporated in this agreement?

So there's, just to be clear, Mike, there's no agreement. This was the result of a verdict. So they paid a judgment and so those damages are for their use of our technology under an agreement that they did not pay us under. So they were ordered to pay us for the use of the technology through 2018. That's what that verdict is. is related to. So a license would have been provided under that agreement had they paid. They didn't. They were ordered to pay. So that's what the verdict covers. Does that answer your question?

Well, partially. So that's what I was getting at. So now you're paid up to 2018, but there's another four years under past the bridge plus others using that DSP. So Is there an expectation you might be able to get some more out of this, or is this issue settled, in your opinion?

Yeah, so we have two pending lawsuits against Acacia. They were stayed pending the outcome of the appeal. They are still stayed and will be probably restarted in the next month or so. One of them relates to the same technology that was at issue in the first case from the period after the end of 2018 to the present, and the other one relates to additional technology. So those cases are still pending, and I'm not going to speculate on or comment on pending litigation and what might happen with those, but those things will be restarted here probably within, certainly in this current quarter, hopefully within the next month or so.

Excellent. Great. That's kind of what I thought. And then just switching gears, with The fluster failure on this ANIC-FT satellite that powers some of your Northwest U.S. residential subscribers, I understand that satellite is going to move to an inclined orbit and have an end sooner than expected end of life. So what's the risk to your U.S. subscribers on that satellite? There's going to be a void in service, particularly since we don't appear to have an official report launch date or window for VICE.3, although you do say that you hope to have that launched by the end of December.

Yeah.

I mean, ANACAT 2 has been a good satellite for us for longer than its expected life. But just to put things in perspective, it's less well under 1% of our satellite capacity. So that We've been able to constantly make improvements. We've been able to constantly make improvements on the existing satellites that sort of make up for the variance in data. But in the cases of individual customers who have terminals that are aimed at that satellite, what we'll do is we'll provide an upgrade path for those customers if we need to move them to a different satellite.

Okay, it was my understanding, like, you know, say my father in Peekaboo, Idaho, that that was the only satellite that he could hit from Biosat.

No, no, that's not. No, Wild Blue, as an example, Wild Blue overlaps Holomanic F2, and we may have other resources as well. Yeah, oh, and yeah, Biosat 2 provides the whole coverage too. Thanks.

Okay, and then final question is, you talked about these robust tactical data link orders in this quarter. Does that include trellisware waveforms?

No, so the trellisware is a different waveform than Link16 is, and it's got a different application, different use. It's more for personal communications than machine-to-machine.

Right. And given that that's super high margin revenue, I think mostly royalty revenue for you. Can you characterize what's going on with Trellisware right now?

Okay. Yeah. So Trellisware, just to recap, it's a subsidiary. We own a little more than half of that subsidiary. One of their biggest businesses is they developed waveform under a government wanted a library of licensed local waveforms and their waveform was one of the most popular in that library. So a fair amount of their revenue is licensed revenue for either modules or products that use that waveform. And there's No, that revenue stream would continue on for quite a few years. I think we're relatively early in the process of deploying the radios that use that waveform. And there are multiple companies building radio products that use the transfer waveform.

Okay, thank you, Mark.

Thanks, Mike. Mike, I just wanted to clarify real quick. I think I might have misspoke on when I mentioned the third Acacia case. I said different technology, I think. It's the same technology, different Acacia products that are issued. So I just wanted to clarify that. Okay.

Thanks, Robert. So I think that all the questions that we have for today. So just to summarize... We believe this is the low point in terms of quarterly financial performance, and we expect solid sequential organic growth throughout the rest of the year. We've got good revenue, visibility, and communications, really good government systems awards, and we expect that those transient bottlenecks that really were more of a factor in the fourth quarter and the first quarter will be resolved and overall support our year-over-year and longer-term guidance. So we're expecting the Biosat 3 Americas launch should be coming up very shortly after our next earnings call. And we're making good progress on the Inmarsat integration. We think those are both really great catalysts for continued strong growth. So for all the rest of our team, thanks for joining us this afternoon. And please don't hesitate to contact Peter Lopez or anybody on our team if you've got Other questions on our results or other topics that we discussed today? So with that, I'll hand it back to the operator.

This concludes today's call. You may now disconnect.