Good day, and thank you for standing by. Welcome to the Q4 2025 KVH Industries, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Anthony Pike. Please go ahead.

Thank you, Tanya. Good morning, everyone, and thank you for joining us today for KVH Industries, Inc.'s fourth quarter results, which are included in the earnings release we published earlier this morning. Joining me on the call is the company's Chief Executive Officer, Brent C. Bruun. A copy of the earnings release and a recording of today's call will be available on our website at ir.kvh.com. This conference call contains forward-looking statements that are subject to uncertainties that may cause actual results to differ materially from those expressed in these statements. Words such as “expect,” “may,” “intend,” “anticipate,” “will,” and similar expressions identify forward-looking statements, which include projections, plans, initiatives, and other future events. We undertake no obligation to update these statements, and you should review the cautionary statements in our most recently filed Form 10-Q under the heading Risk Factors. We will also discuss adjusted EBITDA, a non-GAAP financial measure. Our press release defines this term and reconciles it to GAAP net income or loss. Brent?

Good morning, everyone, and thank you for joining us. The maritime connectivity market is undergoing a fundamental transformation, and 2025 was the year KVH Industries, Inc. proved it is positioned to lead it. Let me explain what I mean. For years, the maritime satellite industry was built on GEO technology: reliable, established, but limited in speed and capacity. The arrival of LEO constellations changed everything. Vessels that once relied on modest bandwidth can now access high-speed, always-on connectivity at sea. New providers are entering the market, customer expectations are rising, and the addressable opportunity is expanding rapidly. KVH Industries, Inc. saw this shift coming. We made a deliberate strategic decision to reposition our business around LEO airtime, subscriber growth, and high-value managed services. 2025 was the year that strategy began to pay off. Here is what we delivered. In the fourth quarter, service revenue grew to $28.3 million, a 27% increase from 2024. We contracted for our second Starlink data pool, a 300% increase from our initial pool, representing a $45 million 18-month commitment. We made this commitment with confidence. Demand for LEO airtime across our customer base is strong and growing. And we delivered our strongest adjusted EBITDA quarter of the year. For the full year, service revenue grew 2% to $98.4 million. That headline number understates the real momentum in our business. Stripping out the $7.7 million in U.S. Coast Guard revenue that did not reoccur in 2025, underlying service revenue grew 11%, a meaningful reflection of what our core maritime connectivity business looks like. We grew our subscriber base by approximately 2,000 vessels, a 28% increase, ending the year with more than 9,000 vessels under contract. That is a significant and growing installed base that generates recurring revenue and creates the platform for everything we are building.…

Anthony?

Thank you, Brent. With respect to our fourth quarter financial results, service gross profit was $9.8 million, which is up $1.1 million from the prior quarter. Service gross margin was 34%, which remained flat compared to the prior quarter. Airtime depreciation expense, which is a non-cash charge, represented 89% of service revenue in the fourth and third quarters, respectively, which impacted these gross margins. It is also worth noting that our cost of service sales related to our legacy network will reduce in 2026 as our minimum bandwidth commitment reduces by $7 million compared to 2025. As Brent mentioned, total subscribing vessels at the end of Q4 were just above 9,000, which is up 1% from the prior quarter and 28% from the beginning of the year. Vessel growth in the fourth quarter was lower than prior quarters this year due to the termination of two Southeast Asian low-ARPU fishing fleets. These two fleets contributed very little to our service gross profit. Total subscribing vessels were up 8% in the fourth quarter excluding the loss of these fleets in Q4, and 37% from the beginning of the year. Q4 operating expenses totaled $10.5 million compared to $9.5 million in the prior quarter. However, Q4 operating expenses included $900,000 of nonrecurring costs, which related to transaction costs from the acquisition we completed in Q4 as well as some restructuring costs. As Brent mentioned, our adjusted EBITDA for the quarter was $3.1 million, and capital expenditure for the quarter was $2.4 million, of which $1.4 million related to our ongoing ERP project and the fit-out of our new U.S. headquarters. Both of these projects will conclude in 2026. This compares to adjusted EBITDA of $1.4 million and capital expenditure of $1.6 million in the third quarter 2025. Our ending cash balance of $69.9 million was down approximately $2.9 million from the beginning of the quarter, and this decrease was driven by the acquisition we completed in Q4. Overall, we are very pleased with the fourth quarter performance, which shows a continuation in the execution of our strategy to focus on our recurring revenue business and the transition from our legacy to a LEO-driven maritime satcoms market. Our subscribed vessel count continues to grow, churn in our legacy network is being managed well, revenue has increased for the third quarter in a row with consistent margins, and our costs have remained under control, all of which resulted in our strongest quarterly adjusted EBITDA performance of the year. With all that considered, our guidance for 2026 is revenue of $130 million to $145 million and adjusted EBITDA of $11 million to $16 million. This concludes our prepared remarks, and I will now turn the call over to the operator to open the line for the Q&A portion of this morning's call. Operator?

We will now open for questions. 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question will be coming from the line of Christopher David Quilty of Quilty Space. Your line is open, Chris.

Thanks, gentlemen. Good results here. I had a question for you just first on the acquisition. I cannot remember when you bought it in the quarter. Is that $2.5 million sort of a good run rate that we should assume for that business on a go-forward basis?

Yes. The business is actually a bit larger, Chris. But yes, $2.5 million is really the net impact. We did have a number of vessels that we were providing our VSAT service through this particular customer, and obviously, we will pick up the incremental margin on that, but $2.5 million per quarter is a pretty accurate close estimate.

And I am assuming part of the acquisition is you will—would you actively convert those over to LEO, or let them sort of mature on their own?

No. We will actively look to understand our customer base, we will work with them, and we will provide them with the best solution that is available for them. Our LEO-based services, to a large degree, are the best services that we could provide today. As we have demonstrated, we are doing great in providing LEO services. We are growing our installed base, the usage is up, and we have our new data pool, so it goes without saying that is our focus.

And on the new data pool, Anthony, should we assume similar margin trends that we have been seeing with the prior pool? And the length of that of 18 months, I think, is shorter than your original plan, or was that also 18 months?

Let me jump in there first, Anthony. It was a similar 18-month commitment. The fact of the matter is we depleted the pool prior to 18 months, so it might appear like it was less, but we still had some runway to go on that, which we did not need, which we are hopeful will be the same case with our next pool. As far as the margins, we anticipate consistent margins, but as I am sure you are aware, Starlink has implemented a terminal access charge, which in essence is a pass-through, so that might have a slight impact on the overall margins for the Starlink piece of our business, but I will let Anthony answer the specific question.

Just as Brent said, really, the only change we expect on margins is probably driven a little bit by the terminal access charge. From a dollar gross profit perspective, that should not be materially affected at all, and the new deal we have should help us maintain our margins.

Very good. And when you look at the product margins here, obviously, I actually just signed up for Starlink, and my antenna is free now—at least on the consumer side. We have seen some pressure across enterprise. Is that a business where you think you can maintain a breakeven, or does that become a loss leader over time?

The plan is to maintain breakeven, but it is an enabler to the airtime. Breakeven or slightly better.

Got it. Great. I will circle back into the queue.

Thanks, Chris.

I am showing no further questions. This will conclude today's program. Thank you for participating. You may now disconnect.