KVH Industries(US:KVHI)2019-05-06 01:17Financial Data and Key Metrics Changes - Q1 revenue remained relatively flat at $40 million compared to $40.1 million in Q1 2018 [7][25] - Gross profit margin decreased to 38.6% from 43.3% in the same quarter last year [29] - Net loss for Q1 was $6.2 million compared to a net loss of $3.9 million in the same period last year [30] - Non-GAAP EPS loss for the quarter was $0.17 per share compared to a non-GAAP EPS loss of $0.06 per diluted share last year [31] Business Line Data and Key Metrics Changes - Mobile Connectivity segment saw airtime revenue grow by 11% or $1.8 million compared to Q1 2018, driven by a 14% increase in total subscribers [9][28] - Inertial Navigation segment's fiber optic gyro sales were $300,000 below Q1 of last year and over $2 million below plan for the quarter [19] - Product revenue for the first quarter was approximately $13 million, a decrease of about $1 million or 8% from the prior year [26] Market Data and Key Metrics Changes - AgilePlans revenue increased 14% sequentially over Q4 2018 and more than 500% from a year earlier [10] - Total backlog at the end of Q1 was $18.2 million, with approximately $13.7 million scheduled for delivery during 2019 [31][32] - The company shipped its 9,000th VSAT system this quarter, setting a new record for first quarter shipments [9] Company Strategy and Development Direction - The company aims to accelerate subscriber growth on its HTS network and push into the maritime IoT market with a new subscription service [8] - Plans to commercialize photonic chip-based fiber optic gyros by the end of the year [8][20] - The company is focusing on maintaining momentum in military A-PNT programs and expanding its service capabilities [8][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth in the FOG business in Q2 and the second half of the year, despite short-term challenges [24][41] - The company anticipates making announcements regarding a major new maritime industry partner for IoT capabilities in early June [18] - Management noted that the loss of the IS-29 satellite was managed effectively, ensuring continuity of service for customers [16][47] Other Important Information - Capital expenditures for 2019 are expected to be in the range of $15 million to $20 million [34] - The company has established favorable service agreements with satellite provider partners to manage costs and add predictability [13] Q&A Session Summary Question: What caused the guidance miss in Q1? - Management indicated that the majority of the miss was due to a military drone order that was received but not shipped [36] Question: What is the visibility on future revenues? - Management noted that while there are many moving parts, they have a solid subscriber base and strong backlog, particularly in FOG products [38][41] Question: What are the typical plans and ARPUs for AgilePlans? - Management stated that AgilePlans ARPUs are slightly above typical ARPUs, with average ARPUs in the $1,200 to $1,300 range [44][45] Question: How did the Intelsat satellite failure affect the company? - Management reported no significant changes to revenue or cost streams due to the Intelsat issue, as they had planned for additional satellite capacity [46][48] Question: What is the status of TACNAV programs? - Management mentioned a new international order for TACNAV 3D and expected a pickup in the AMPV program in Q4 2019 [57][58] Question: What is the outlook for the leisure marine market? - Management indicated that Q2 is typically a strong quarter for leisure marine, and they expect some sales to be pushed into Q2 due to a cold spring [74]