Good day, ladies and gentlemen. Welcome to ViaSat's Fiscal Year 2016 Second Quarter Earnings Conference Call. Your host for today's call is Mark Dankberg, Chairman and CEO. You may proceed, Mr. Dankberg. Mark D. Dankberg - Chairman & Chief Executive Officer: Okay, thanks. Good afternoon, everybody, and welcome to our earnings call for our second quarter fiscal 2016. So I'm Mark Dankberg, Chairman and CEO, and I've got with me Rick Baldridge, our President and Chief Operating Officer; Shawn Duffy, our Chief Financial Officer; and Keven Lippert, our General Counsel. And before we start, Keven will provide our Safe Harbor disclosure. Keven K. Lippert - Secretary, Vice President & General Counsel: Thanks, Mark. As you know, this discussion contains 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. With that said back to you, Mark. Mark D. Dankberg - Chairman & Chief Executive Officer: Okay, thanks. So we'll be referring to slides again. They're available over the web. I'll start with some highlights and a top-level business overview, and then Shawn will go into more detail on financial results. Then I'll give some additional color on our business and strategy, and then I'll summarize our outlook. And we'll take questions. So starting with our financial highlights, remember Q2 last year was when we reached our legal settlement with Space Systems/Loral that resulted in recognizing a one-time benefit of about $21 million to revenue and about $40 million in total. So when you normalize for the settlement impact, our results were in line with our outlook and keep us on track for a…

Thank you. Our first question is from Tim Quillin of Stephens. Your line is open.

Hey, good afternoon. Mark, it sounds pretty exciting around the development of ViaSat-3, and you alluded to a three-satellite constellation. How firm is the plans to build three? Would you do it in partnership with other companies? And I know you don't want to get maybe into the position of timing, but what are you thinking in terms of the timing of launching the first, the second, and third satellites? Mark D. Dankberg - Chairman & Chief Executive Officer: So it's pretty much like I said. We're currently working on the plans for the first one. That's the contract that we'll announce – that we expect that we'll announce first. The second and third, we are looking at partnerships... is one of our main approaches. But we have plans to deploy them anyway. Just based on the operational cash flow of the satellites that we already have, it's really more a question of what the timing will be. Until we announce the first one, it's kind of premature to speculate on the second and third.

And in terms of tempo, just on the first five ViaSat-3 class satellite would you be thinking a couple years after the launch of ViaSat-2, or just if you could bracket that up a little bit and also maybe bracket up what it might cost for the satellite? Mark D. Dankberg - Chairman & Chief Executive Officer: So on the cost, one of the things we said – we mentioned in there that one of the objectives is to actually decrease the cost of the satellites. So that's what we're working on, and hopefully we'll be able to provide more information on that when we announce the first contract. In terms of spacing between the satellites, probably the fastest it would go is six-month centers from the launch of the first one. And then it could be one-year centers, but it's not going to be a lot longer than that, I would think, under any circumstances.

Okay, great. That sounds exciting. And then just a couple other questions: one is that R&D is trending even a little bit higher than I thought. As you had alluded to, the development or rapid development this year, more spending on R&D this year, does it stay at that level throughout the year and then drop off next year, or should we kind of view this as a new normal, kind of given those plans for ViaSat-3? And then if you could, just a detailed question, would you be able to estimate for us what kind of revenue you're getting from in-flight revenue today? Thank you. Mark D. Dankberg - Chairman & Chief Executive Officer: Okay. So first we'll answer your R&D question in two parts. One part I wanted to point out is that we do – when we're looking at the development that we're doing, we are looking at the systems as a whole. And so one of the things that we're finding now for instance around ViaSat-2 development is that, by spending a little more on R&D, we can reduce our capital investments fairly substantially. And so some of it's just a question of which buckets some of the spending falls into, and we're going to do things that minimize our total expenses and dependent of how the buckets fall. But that's part of what you're seeing now. I mean, Shawn can give you a little more detail on what we expect on R&D. Shawn Lynn Duffy - Chief Financial Officer & Senior Vice President: Yeah. Mark D. Dankberg - Chairman & Chief Executive Officer: And what we expect on revenue. Shawn Lynn Duffy - Chief Financial Officer & Senior Vice President: Yeah. I think from an R&D perspective, looking at this quarter, it's probably going to trend similar to those levels for the rest of the year. I mean, those are things that we can kind of lever based on the pace of some of the next-generation solutions. But I probably expect it to be about similar to Q2. Mark D. Dankberg - Chairman & Chief Executive Officer: At then we're not breaking out the in-flight R&Ds – the in-flight connectivity revenue separately on our Satellite Services.

Okay, and I said that was the last question, but also, Mark, if you could comment on the latest expected timing on the launch of ViaSat-2. Thank you. Mark D. Dankberg - Chairman & Chief Executive Officer: We're still planning on a launch in last quarter of 2016.

All right, thank you.

Thank you. Our next question is from Rich Valera of Needham & Co. Your line is open. Richard F. Valera - Needham & Co. LLC: Thank you. A question about the Satellite Service revenue and particularly the sequential increase over the first quarter – was there anything kind of one-time nature in that, or is that sort of a new baseline we should look at going forward for the Satellite Service revenue? Shawn Lynn Duffy - Chief Financial Officer & Senior Vice President: Yeah, I would say for that quarter there wasn't anything that wasn't non-recurring in nature in this quarter. It was all pretty much our core recurring revenues in Q2. Richard F. Valera - Needham & Co. LLC: Got you. And then I noticed the churn did tick up pretty meaningfully quarter-over-quarter, at least by our calculation. It sounds like from some of your comments that some of that is actually planned and that you want to sort of manage the number of subs in various themes to make sure you keep your service quality up. Is that an accurate way to characterize the way you're sort of managing the total net subscriber base? Mark D. Dankberg - Chairman & Chief Executive Officer: No, I think churn picked up marginally, but I wouldn't say significantly. Richard F. Valera - Needham & Co. LLC: Okay. Mark D. Dankberg - Chairman & Chief Executive Officer: And I don't think there is really a trend there. Actually if anything, longer term we've been doing pretty well at trying to identify sources of churn and to try to improve it. One effect that's helping is our ability to understand it and to address it, I think, fairly effectively. Another one that makes it harder is constantly increasing expectations for bandwidth. And so…

Our next question is from Matt Robison of Wunderlich. Your line is open.

Thanks for taking the question. I just want to try to get to this sequential uptick in satellite revenue again, given that's what you can impute from your ARPU and sub add data. Did you add closer to 300 aircraft or closer to 400 aircraft in the quarter? And then my other question would be if we should expect R&D to be comparable to the second quarter – the current quarter. Mark D. Dankberg - Chairman & Chief Executive Officer: Okay, on the aircraft I think we said we added 35 sequentially. That was the increase in aircraft sequentially.

Okay. I guess I must have figured something because it seems like the sequential increase net revenue is much more than what we've talked about for your per-plane type of revenue. Was there a revenue from fitting up planes that was in there that was different than normal? Mark D. Dankberg - Chairman & Chief Executive Officer: No, not in Satellite Services. Satellite Services, really it's dominated right now with a combination of consumer services and the in-flight connectivity just in services components.

Okay, we'll have to take it offline. What about the R&D? Mark D. Dankberg - Chairman & Chief Executive Officer: We already answered that. Shawn Lynn Duffy - Chief Financial Officer & Senior Vice President: Yeah, I think we hit on that already. But I'd expect it to be real similar to the Q2 levels. We may have some slight pacing things based on how we close out the year, but pretty close to Q2.

Thanks. Sorry I missed it the first time.

Our next question is from Mike Crawford of B. Riley & Co. Your line is open. Mike Crawford - B. Riley & Co. LLC: Thank you. Mark, you mentioned with the ViaSat-3 class satellites that there would also potentially be a shorter time to build and launch the satellite. Could you qualify that at all? Mark D. Dankberg - Chairman & Chief Executive Officer: Yeah, I mean, right now one of the things people always sort of grumble about with these powerful geosynchronous satellites is that the lead time from the time you decide to acquire it till you have it in service is three to four years. And a lot of that is because the satellites are customized. That is they're customized from an orbital slot, and they're customized for their coverage and often for the distribution of coverage. So the theory with these satellites is that they're largely assembly line (39:15) allow you to pipeline them so that you could imagine you could build a flow of satellites that are not dependent on a particular orbital slot or particular coverage area. And then those satellites could be, you can imagine, customized from there and launched, say, within a year of ballpark of the time that you choose a particular market or identify a market need. Mike Crawford - B. Riley & Co. LLC: Okay. So hypothetically if you announced a contract on a certain date, call that time zero, then you could get that satellite potentially into an orbital slot, as long as you can arrange a launch, in as quickly as a year-and-a-half, are you saying? Mark D. Dankberg - Chairman & Chief Executive Officer: Yeah. So it wouldn't naturally be a one-year construction time from the time you start a satellite. So think of it as…

Thank you. We have a follow-up with Tim Quillin with Stephens. Your line is open.

Hey, thank you for taking my follow-up. And I'll probably be confused for a few years about ViaSat-3, so forgive me. But as we think about the build cycle on that for the first ViaSat-3 class satellite, after you select the vendor, should we be thinking about it launching and going into service on the first one roughly three years after that? Mark D. Dankberg - Chairman & Chief Executive Officer: Yeah, roughly. I mean, the gap between ViaSat-1 and ViaSat-2 – ViaSat-1 was launched in 2011. ViaSat-2 should be launched end of 2016. That's a five-year gap. We think the gap between ViaSat-2 and ViaSat-3 will be less than five years. So if it's four years, that would put it in the 2019-ish range. That's kind of the ballpark.

And in terms of the next build then – the second ViaSat-3 class and third – it really depends on what kind of partnerships you could align. So those could theoretically... it would be built somewhat simultaneously with the first one. Mark D. Dankberg - Chairman & Chief Executive Officer: Yeah, I think it won't be simultaneous. I'd say there's probably a minimum of six-month centers. That's kind of what we think makes sense – six-month centers, meaning that the second one would be scheduled to follow six months after the first. And the reason we're talking to customers and partners is we're – and part of this is what we talked about in the government business. We're already building up a big base of government services. Lots of those services could be run on these ViaSat-2 and ViaSat-3 satellite... on the ViaSat-3 satellites – the second and third satellites. So essentially we're just going through a planning exercise on cost avoidance, new cost growth, cash flow, and the timing of those cash flows. And then I'd partners sort of not at the front of that line, but at the end of that line – factors that'll determine the space in between the satellites.

Got it. Yeah, makes sense. And then on ViaSat-2, can you remind us what CapEx you have in front of us – what will fall in fiscal 2016, and what will fall in fiscal 2017 – and then how you might massage the plans after you launch ViaSat-2, where caps might go and what you're thinking about where you want to take the throughput as well? Shawn Lynn Duffy - Chief Financial Officer & Senior Vice President: Sure, I think from just a pacing and timing of ViaSat-2 from a spend profile, at the end of the quarter we're about 67% complete on the satellite itself. So that kind of, I think, helps you kind of tee up what we have left to go. And probably the rest of this year, you're going to have spend that is pretty close to what we've had on a year-to-date basis average per-quarter spend.

And then the plans market? Mark D. Dankberg - Chairman & Chief Executive Officer: So one of the things we've talked about a lot over the last couple of years is this relationship between what our service plans are and how big the target market is. And one of the things we've shown – and we have really good data on this – is that even when we don't increase the speeds – we get 12 megabits per second – just by increasing the volumes or making the volume caps go way, we appeal to a much broader segment of the market . So actually we will be test introducing higher speed services this quarter, I believe – very soon. So we'll have speeds that are significantly faster than the ViaSat-1 Exede plan that we've had so far. So that'll let us test that element. We've said ViaSat-2 service speeds can be well over 100 megabits a second. So we're figuring out what we'll bring to market – what price points. The other point is that we've been looking at how to make caps that are not scary or that are virtually uncapped where subscribers don't experience a failure load, which is, oh, I've reached my cap and so my speeds are slow, or I have to pay more money. So those are really the two main ingredients that we think we'll be able to get to with ViaSat-2. Obviously ViaSat-3 gives us a lot more maneuvering room above that and lets us turn a lot of the bandwidth economics that we get into some combination of expanded markets, sort of higher margins, or better services. We're still assessing that in each of these different vertical applications. But those are the main ingredients... are faster speeds and essentially uncapped services in all of these markets – services that don't have a failure mode of a cap.

Right, right./ Makes sense. And then on the Commercial Networks business, the award flow over the trailing 12 months has been relatively low – I think something like $185 million in trailing-12 month reported awards. Generally I think about revenue eventually trending towards award levels. And so if we stay at these same levels, maybe we should go down to that revenue level. Are there things in the pipeline that would make me believe that we're going to pop up to better award levels and get growth going in the right direction on the Commercial Network side? Mark D. Dankberg - Chairman & Chief Executive Officer: On the Commercial Network side, over the last four years or five years, we've had two big drivers which were ground infrastructure projects for Eutelsat and for NBN. We've had some other Ka-band ground infrastructure projects. And one of the things we talk about again as well is that there's kind of the big divergence between the kind of Ka-band satellites we're making and what we're seeing other people buy. Generally what we're tending to see people buy are 10-gigabit, 20-gigabit, 30-gigabit Ka-band satellites. And you can see we're aiming at 1,000-gigabit satellites. And so there's kind of a mismatch in our infrastructure investments – that we're investing in things that aren't really optimized for these smaller satellites. Now we think when services come to market that the bigger satellites are going to be far more competitive in the market, and that's a better way to monetize the technology. So more and more we've kind of gone away from the selling of commercial technology and more into being able to bring commercial services globally. So that's part of it. Now flip side is we do have a base of commercial technology products that will continue on. We're doing earth sensing, imaging infrastructure. We have some really interesting plans to actually grow that market. Also when we sell things like airborne terminals to potential customers, those things show up in there. So there's a base in there, and it's going to be kind of add some product to what those markets will be. Richard A. Baldridge - President & Chief Operating Officer: I would add – this is Rick, and I would add that, when NBN goes into service, we'll start shipping terminals there, and same thing with FCI in ViaSat-2 launches. But it's large projects like what we're seeing (53:06) pipeline. Mark D. Dankberg - Chairman & Chief Executive Officer: When we talk about our growth prospects, more and more of it will be realized through the Government segment and the Satellite Services segment.

Okay, I appreciate that. Thank you very much. Mark D. Dankberg - Chairman & Chief Executive Officer: Okay, thanks.

Our next question is from Jonathan McLean of Morgan Stanley. Your line is open.

Hi. Thanks for taking the question. ViaSat's been around since 1986, and I'm sure your business has changed over the decades. As a macro question, what do you see as your biggest risk currently or coming down the road? Would it be competition or technology change? Or you're a small cap. Do you see a potential of a bigger company coming in or acquiring you? Just kind of the macro question. Mark D. Dankberg - Chairman & Chief Executive Officer: Okay, well, so personally I consider myself an entrepreneurial side of the company with two other friends, and we tend to see opportunities more so than risk. I think the biggest opportunity that we see – and I think this will deal a little bit with your risk question – is that there's really nobody else that's aiming to do the things we're doing in terms of these really high-capacity satellites that... We think that the key to making satellites more competitive is driving down bandwidth costs. So at some point, I think there was some sense that there was risk that that value proposition wouldn't play out – that we could make bandwidth arbitrarily cheap and arbitrarily fast, and nobody would want it. And we're not seeing that at all as a matter of fact. We're seeing really good demand for bandwidth at the speeds and price points that we can deliver. So right now I think what we're focused on is just communicating that value proposition. It's still not totally clear to everybody in our ecosystems, so there is that. I mean, things can develop at a slower pace than we think, but we see a lot of opportunity in the value proposition, and we don't see other people competing to create the same value proposition. I think that's the dominant story for us in the big picture looking out ahead.

Thank you. Keven K. Lippert - Secretary, Vice President & General Counsel: Operator, maybe one more last question.

The final question is from Rich Valera of Needham & Co. Your line is open. Richard F. Valera - Needham & Co. LLC: Thank you. From your chart, it looks like you're expecting the bandwidth economics of VS-3 to be, I guess, around 5x that of VS-2. Is that about right, Mark? Mark D. Dankberg - Chairman & Chief Executive Officer: We will finalize it when we announce it, but it's in that range; could be a little better. Richard F. Valera - Needham & Co. LLC: So how much of that just roughly, proportionally, do you expect to come from the lower absolute cost of the satellite versus greater efficiency from the satellite, or is it sort of too early to sort of... Mark D. Dankberg - Chairman & Chief Executive Officer: No, that's a very fair question, and what I'll tell you is, well, the thing we're really focused on is more and more throughput – big step increase in throughput and I'd say meaningful but not nearly as big reduction in the cost of the satellites. It's mostly from productivity or yield of the satellite – getting a lot more bandwidth through the satellite. So when you think of a whole satellite system, for instance, our approach is take advantage of the space infrastructure – things like solar panels, propulsion, navigation – so you have all of those things centralized. You want to put as much payload as you can on those. That's one way to improve efficiency. So you do that. I mean, launch costs are still pretty substantial. So you're not going to be able to get a 4x reduction in the satellite in space, but you can get a 4x or more increase in the throughput of the satellite. And those are the things…