Welcome to ViaSat's Fiscal Year 2018 First Quarter Earnings Conference Call. Your host for today's call is Mark Dankberg, Chairman and CEO. You may proceed, Mr. Dankberg.

Okay. Thanks, and good afternoon, everybody. Welcome to our earnings call for our first fiscal quarter of 2018. I'm Mark Dankberg, I'm Chairman and CEO. And I've got with me Rick Baldridge, our President and Chief Operating Officer; Shawn Duffy, our Chief Financial Officer; Robert Blair, our General Counsel; Bruce Dirks, our Treasurer; and Paul Froelich, our VP of Corporate Development. Before we start, Robert will provide our Safe Harbor disclosure.

Thanks, Mark. As you know, this discussion will contain forward-looking statements. This is simply 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. That said, I'll turn it back over to Mark.

Okay. So we'll be referring to slides that are available over the Web, and I'll start with some highlights and a top level business overview. After that, Shawn will discuss the consolidated and segment level financial results in some detail. And then I'll go into more depth on each of our segments. Then we'll review our outlook and take questions. So there's a lot to discuss this quarter, but certainly, the highlight of our first quarter was the successful launch and continuing orbital progress for ViaSat-2. That satellite's a valuable source of growth for us across all our businesses. It's been frustrating to have it sit on the sidelines due to a series of unfortunate launch-related events, but now that's behind us. There will be about a six-year gap from the in-service dates for ViaSat-1 and ViaSat-2, and that creates some near-term challenges to manage in this quarter, but we, our customers, our distribution partners are all highly energized by the launch and the in-orbit progress to date. So we'll go into more depth on the short-term challenges and our approach to them later in the call. The second important theme for this quarter in our year as a whole is growth. Government Systems had an exceptional quarter, outperforming an already very strong five-year track record and double-digit revenue and earnings growth. We'll go into more detail later, but highlights there include 26% growth in revenue, over 88% year-over-year growth in new orders, over 50% growth in EBITDA and record backlog. Most of that is being driven by what are called non-developmental items, or NDIs, that we invested into served targeted high-growth markets with unique technology and value propositions. Those investments are really paying off with the biggest opportunities still in front of us and gaining momentum. In-flight connectivity is…

Thanks, Mark. Although Mark already hit on some of the Government segment highlights, I thought it was worth noting right upfront the outstanding momentum we've seen across many of our government business units this quarter. We generated 26% Government segment revenue growth and EBITDA gains of over 50%. This coupled with Q1 government awards that were 36% higher than segment revenues created a new record high segment-level backlog of $696 million and total company backlog of nearly $1.1 billion. So we're pretty excited about our Government business and the enduring growth prospects we see, which Mark's going to touch in on a bit later. So now I'll hit on some of the other first quarter high points, starting with our Q1 revenues, which continued to reflect year-over-year growth, up 5% from last year to $380 million. In Satellite Services, our revenues were flat year-over-year. But what you don't see is that the top lines grew strongly in our emerging commercial air business and we continued to see modest revenue growth in our consumer broadband business. However, these increases were offset by a $6.6 million year-over-year revenue decrease associated with the completion of the Loral settlement payments in Q4 of fiscal 2017. In earnings, we also saw the year-over-year settlement impact, plus costs associated with the ramping ViaSat-2 service launch activities and preparations for the large-scale in-flight Wi-Fi ramp we expect later this year, altogether driving lower year-over-year quarterly segment operating profit and adjusted EBITDA. In a few slides, I'll spend a bit more time walking through Satellite Services' segment trends as well as highlight some trends we should expect to see in upcoming months. In Commercial Networks, quarterly revenues were down about $20 million as a result of reduced fixed terminal sales supporting Australia's nbn initial service launch, which occurred…

Okay. Thanks. So we've described the high-level Satellite Services segment summary results which are flat revenue consisting of a slight increase in consumer broadband revenue based on ARPU growth, offset by subscriber count attrition, plus strong growth in commercial mobility driven by more aircraft in service and greater bandwidth usage, and then both offset by the conclusion of the SS/L government payments. EBITDA declined due to the end of the SS/L payments and start-up costs associated with the ViaSat-2 network and planned rapid growth in in-flight connectivity based on installing existing backlog. It's important to decompose all the factors to get more insight into our competitive landscape and growth outlook. We'll start with consumer subscriber attrition. There were multiple factors that worked in the first quarter in addition to normal seasonal factors that affected ARPU, gross adds, and disconnect rates. First, DISH switched from a branded retail model to an agency model at the end of our fourth quarter. While we're working on mutually beneficial service plans with DISH under their new agency model, we don't expect those to start until the second half of this fiscal year. We also saw increased disconnect pressure due to both unlimited mobile LTE plans and the new Hughes Jupiter-2 plans. Their Jupiter-2 promotional pricing essentially tilted remaining DBS TV channels for hard and soft cap plans in their favor and also affected disconnects for our lower and retail and wholesale plans. But our dealer distribution channels and our higher value plans were much less affected by these competitive pressures. Strong growth in commercial and government mobility also meant we allocated more of our bandwidth to those applications, leaving somewhat less for consumer broadband. Finally, all these factors are manifested differently in different geographic areas, so it requires some detailed analysis till we optimize…

Thank you. And our first question will come from the line of Mike Crawford with B. Riley & Company. Your line is now open. Mike Crawford - B. Riley & Co. LLC: Thank you. Could you provide an update on the status of the two JVs you're creating with Eutelsat?

Sure. Yes. The first JV is one that uses their existing – well, let's see (43:33). We created two joint ventures, one for infrastructure and one for retail. Those are the two JVs. And the first application of those joint ventures is using the existing Eutelsat KA-SAT satellite. So the first things we've been doing there, basically, working with them to analyze what their current performance is and to make changes to the distribution system and the service plans to get financial results that are more like what we've gotten from ViaSat-1. And I'd say that is going well. We've got basically a top level agreement with Eutelsat to make changes in both the plans and the way we distribute them and to introduce some of our newer services, like in-flight connectivity and government applications to KA-SAT, and will also help with the financial results. It's going to take a little while, and right now the changes there aren't really material to our results. For the next stage of that joint venture is to incorporate the European ViaSat-3 bandwidth into the two entities and we are still working with Eutelsat on that. I think we both talked about the end of this calendar year as kind of a good target for trying to reach an agreement on that part of the joint venture. Mike Crawford - B. Riley & Co. LLC: Okay. Thank you, Mark. And then just to get back into this satellite capacity explanation where you helped provide the Shannon's Theorem. How else is that capacity shaped by some of the other technologies you bring to market, like some of the beam forming techniques you have in ViaSat-2 and ViaSat-3 that weren't in ViaSat-1?

Okay. Yeah. So there's really two parts – we think of it in two parts. Part number one is, how do you get a lot of capacity? And the whole point of that discussion is the way you get capacity is through bandwidth, through use, and it's exactly the same in terrestrial or mobile. If you want to increase capacity of a terrestrial network you either get more towers to get more bandwidth per tower, or both. So that's the first part. But the second part is really being able to apply that bandwidth in the places where the demand is greatest and where you can get the greatest return for it. So think about that as moving the bandwidth around and in some cases what you'd rather have it is actually less in the peak amount of bandwidth, if the peak bandwidth is wasted in places where there's not demand. So that's what our technologies around bandwidth flexibility or bandwidth portability are about. And we didn't really even go into that part because the first part was such a huge difference. Look, we're pretty confident that there aren't any other satellites that have any of the bandwidth flexibility that ViaSat-2 and ViaSat-3 have at the scale of bandwidth that they can deliver. We think that that flexibility is just another kicker on the value of satellites. But the point of what we're trying to go through is just really to compare the total amount of capacity. Mike Crawford - B. Riley & Co. LLC: Okay. Thank you. And then just last question would be, you said that you're invested in the line-fit. So on what platforms are you line-fit now?

So the 737 MAX.

Yes, we've announced a line-fit on the 737 MAX. We have others in process. Mike Crawford - B. Riley & Co. LLC: Okay. Thank you.

Thanks, Mike.

Thank you. And the next question will come from the line of Andrew Spinola with Wells Fargo. Your line is now open.

Thanks. Mark, I was wondering if you could sort of dig a little bit further into the subscriber result in fiscal Q1. I think on the last call you felt relatively confident that fiscal Q1 would look a lot like fiscal Q4 and obviously net ads were much worse. What changed? And maybe – I know you gave a couple of reasons, whether it's DISH or sats (47:58) and LTE unlimited. Can you kind of break down some of these things in terms of what impact they're having? And then from there take us into the next quarter.

So I think from what we said in the last quarter was that we did think that subscribers would continue to decline in the first quarter but that the growth in ARPU may compensate for that. And that's what happened in this quarter. But the decrease in subscribers in net was really all the factors that we described. Some of it was seasonal, some portion of it was due to more competition from unlimited mobile wireless, a little bit of it was from competition from the new JUPITER 2 satellite. The JUPITER 2 satellite really only entered service in the April time – in the April timeframe which was this quarter. And then also we talked about some of it being because we migrated bandwidth away from the consumer service into the mobility services and we basically accumulated some bandwidth inventory.

Over half of it came from wholesale. (49:13)

Because you have no gross adds in that period.

Yes. Right. And we talked about the DISH thing. And then the DISH – switching from wholesale to this agency model. And then the other one was in the other TV channels where they're basically just comparing our services to the new Jupiter services they got a much bigger fraction of those gross adds than we got in the previous quarter, in the fourth quarter. So some of those factors will continue. On the other hand, the things that do continue to work for us are dealer distribution and our higher-end plans, which by definition are – the higher-end plans they use more bandwidth, they yield higher ARPU and that was what drove the ARPU growth. So we'll see – we expect to see kind of the same trends in the second quarter but we believe that we'll have some initiatives that will mitigate churn in this quarter and that will increase gross adds relative to the prior quarter which means we probably won't have as much attrition but we do expect it. The attrition this quarter, third quarter we think things will be significantly different than they will be in the second quarter.

And maybe can you expand on that? It seems like, my assumptions is ViaSat-2 is not available until January. So, how could things be so different in the third quarter that you could turn this around?

Well, because I said we were getting some bandwidth inventory back and we're going to repackage that inventory into plans that are more ViaSat-2 like, and then also take advantage of some of the technical improvements that we're going to do on the ViaSat-2 services, which will lead to higher bandwidth yield for that bandwidth in terms of some combinations of subscribers and ARPU. But, think of it as, what we'd really like to do is scale up our services, scale up basically our distribution channels, and our gross adds going into our fourth quarter which is when ViaSat-2 is really available. So, we do that, what we want to do is package that bandwidth inventory that we're getting into these ViaSat-2 forms (51:42) and basically just go out with those services as opposed to dribbling it out beforehand.

Got it. One last question for...

We'll also increase advertising in kind of September, and October, and November.

Yeah. Leading up to those services and that was a factor as well. But the way that the amount that we're investing in advertising based on the staging of the new ads that we'd like to get.

Understood. Just one last one for me. I think you made the comment that the R&D associated with the satellites will dissipate. Can you be any more specific into fiscal 2019 from fiscal 2018, any magnitude of what that step down in R&D will be in an absolute sense?

Sure. I think, so just to kind of reiterate what we kind of said for you Andrew, what we said is that there's kind of two parts, right, that's significant (52:38) on ViaSat-3 as well as the mobility. On ViaSat-3, I think we'll see those start to, at the end of the year, come down a little bit. Hopefully with some of the good opportunities we have in commercial air, we'll see commercial air step up a little bit. I think if you continue forward, looking into 2019, you're probably going to see levels, that are kind of pre ViaSat-3 kind of type levels.

I guess, let me just push on that. I mean pre ViaSat-3, your R&D was sort of $77 million in fiscal 2016 instead of something like $145 million, $150 million, or $160 million even. I mean, are we talking about that type of step down?

I think you have to think about it as a percent of revenue and, it steps back down to and that was a more normal level as a percent of revenue. So I think that's – wouldn't you say, Shawn?

Yes. I think that's right.

Like 5% or 6% of revenue?

And it won't happen – it won't just snap from March to April, but it should be down considerably by March.

Very helpful. Thanks, guys.

Thank you. And the next question will come from the line of Ric Prentiss with Raymond James. Your line is now open. Ric H. Prentiss - Raymond James & Associates, Inc.: Thanks. Good afternoon.

Hey, Ric. Ric H. Prentiss - Raymond James & Associates, Inc.: A couple questions following on some of the earlier ones. When you think about the STCs, obviously, investing, important to get those, what percent of the aircraft type do you think you've already got the STCs for? What's your target as far as what you're shooting for over the next one or two years, kind of piggy-backing on that mobility investment you were talking about?

Okay. Yes. So the 737 MAX is going to be the, probably the single most popular mainline single aircraft going forward. So that's great that we got that one done first. We're on a bunch of Airbus 320 series, which is kind of the Airbus analogy to that. We're not line-fit on that one yet, and that clearly would be valuable to a number of our existing airline partners. So that's an example of one that we would target. Those two, from a line-fit perspective and an STC perspective, cover a lot of the markets that we've been going after, which are sort of North American markets, intra-European markets, the Australian market, for example. But with ViaSat-2, we're really getting in position for the transatlantic market and with ViaSat-3 for these global long-haul markets. So that's going to be an increasing focus with the timeframe for getting those STCs and line-fits kind of lining up with the ability of us to serve those airplanes. Ric H. Prentiss - Raymond James & Associates, Inc.: Okay. And that's kind of why maybe even a multiyear process on the mobility R&D is staying up high on a percent of revenue?

Yes. Ric H. Prentiss - Raymond James & Associates, Inc.: Okay. Obviously, you've spent a lot of time, and I appreciate all the charts in the presentation talking about the bandwidth and the markets you'll attack and not fiber homes. But obviously, you're going to be targeting kind of above the median level, I think you mentioned. How should we think about that as far as your target ARPU range then? Because you would think higher-value plans mean higher ARPU. What ranges should we be thinking about where ARPU could head in this transition, pre-ViaSat-2 and then as you roll out ViaSat-2?

Yes, so pre-ViaSat-2, it's a little bit unclear, partly because a big part of the attraction of the JUPITER 2 plans has been the promotional pricing that they've used, which makes a lot of sense for them given that they can add a lot of subscribers. For us, we'll have to think of – we're going to have a response that, but we have to be a little more muted. The promotional pricing is a factor in our ARPU based on how that blends into our existing base. So, I would say in the next quarter or two, it's a little bit unpredictable whether or not it will go up much, or conceivably it could come down. I'm not sure about (57:01).

Well, I think so (57:02).

That's conceivable. But in the long-term, we think ARPU is going to go up meaningfully because these higher speed plans, which are really attractive, carry much higher retail pricing. So, I don't want to put any numbers on it, because I think it will evolve over time, but I do think that ARPU will continue to grow. I would say that rates that we've seen over the last few years, you could roll those forward, by the time we get ViaSat-2 in full swing. Ric H. Prentiss - Raymond James & Associates, Inc.: Okay. And my final question is, cash went up for the quarter. I think Shawn you mentioned something about a pre-payment from a Canadian area. How should we think, going forward the rest of this fiscal year, into next fiscal year, kind of a cash burn rate and when we might target free cash flow positive out into the future as you invest for the future right now?

Yeah. I'd probably, I think you guys or hopefully we've given you a lot of color on our EBITDA trends are and what we see the generation there. So, really the solver there (58:13) is CapEx. And it's probably going to be, it really can bump around based on the milestone payments. They can move $25 million, $50 million one quarter to the next. But, a range of around $550 million, $600 million in CapEx total all, a good more than 50%, 60% of that being the satellite, so that might be a good kind of 2018 range. Ric H. Prentiss - Raymond James & Associates, Inc.: And then, longer term as far as free cash flow positive targets. Any long-term thoughts out there? I know you've got ViaSat-2, you've got all this government work that's pretty exceptional. But when should we think about free cash flow positive on the horizon?

Yeah. Well, I think honestly, it's really pacing (58:58) on what our activities are and when we start the APAC satellite. I think if we looked outwards, it happens pretty quickly, but it can be real lumpy with the investments that we're making in sat (59:12) and how accelerated we go (59:13). Ric H. Prentiss - Raymond James & Associates, Inc.: Great, thanks for all the...

Just on our free cash flow, on a free cash flow basis, what we've been saying is that will really occur when ViaSat-3, the first of the ViaSat-3's are in service. That's kind of the timeframe.

(59:27) There's a lot of comfort around that, yes.

Yeah. Ric H. Prentiss - Raymond James & Associates, Inc.: But then is that solely like a kind of the 2020 timeframe then?

Yeah. Well, a couple years after that because you have to – you're ramping on as you go up there but as that gets into service, yes. That's an important time where the operating cash flow should overcome the CapEx spend. Ric H. Prentiss - Raymond James & Associates, Inc.: Right. Perfect.

And then at that point, even with additional satellite builds, free cash flows, should be very strong and staying positive. Ric H. Prentiss - Raymond James & Associates, Inc.: Great. Thanks for all the extra information.

Yes. Thank you.

Thank you. And the next question will come from the line of Andrew DeGasperi with Macquarie. Your line is now open. Andrew DeGasperi - Macquarie Capital (USA), Inc.: Thanks. So I guess the first question on the savings you achieved on ViaSat-2. I was just wondering that 10% number, do you think it's achievable on ViaSat-3. I know it's a different satellite but just wondering if there's a possibility there. And then secondly, I was just wondering for ViaSat-2, I know you mentioned some allocation of the capacity and bandwidth to different verticals. Do you have a rough idea of where you think residential, in-flight and government will likely fall?

I didn't quite understand the first question. Could you repeat that please? Andrew DeGasperi - Macquarie Capital (USA), Inc.: I believe that you mentioned a satellite, VS-2 came in at $580 million versus the initial costs estimate. And I was just wondering if that's potential to achieve that as well on ViaSat-3.

Oh. It's a case-by-case basis, so it's way too early to tell what the ViaSat-3 outcome will be. A lot of the ViaSat-2 stuff turned out – near the end, we achieved certain program objectives, especially in gateway infrastructure, and that's where a lot of those cost savings materialized. We're not far enough along on ViaSat-3 to predict that.

We did the same thing on ViaSat-1, but what we've tried to give you guys is numbers that we feel like we can hit. So a little bit of conservatism in them. Andrew DeGasperi - Macquarie Capital (USA), Inc.: Yeah. Got it. And, sorry, on the allocation of bandwidth, how should we think about that for VS-2?

It's going to depend on how the rate of growth for some of these different services, including government and the commercial in-flight. But when we first did ViaSat-1, we were thinking about, at least at the beginning, about 90% of it would go towards consumer broadband. And I think when we start ViaSat-2, it might look that way, but I think it'll evolve to be a greater fraction than that. That will go towards mobility and government applications. And then we're also just starting some enterprise and pay-per-use Wi-Fi services that also could end up being, I'd say, disproportionate, contribute more towards margins than they do to bandwidth use. Andrew DeGasperi - Macquarie Capital (USA), Inc.: And last question as far Inmarsat and what's going on there in Europe. I'm just wondering if you could add any color as far as your viewpoint there and what do you think timing is as far as what you can do?

Our viewpoint is that we don't think that the S-band air-to-ground network is consistent with the objectives of the – and the requirements of that S-band application. So we made that case and we're still waiting for that to play out. We think it's a pretty clear case. I don't think that it – we don't think it had been considered in the way that we framed, and we'll find out. Andrew DeGasperi - Macquarie Capital (USA), Inc.: Great. Thanks.

Thank you. And the next question will come from Philip Cusick with JPMorgan. Your line is now open.

Hi. This is – thanks for taking the question. This is actually Sebastiano (01:03:47) on for Phil. I just had quick question. In terms of how we should think about EBITDA trending for the remainder of the year, I think Satellite Services revenue flattish, I think you have communicated that as Loral kind of settlement payments kind of go away. You also have additional start-up costs related to the ViaSat-2 broadband offerings, investments in the fiber and ground networking. So I just had a question. How should we think about the trend of that? Obviously, the start-up cost is probably back half loaded, same to assume the fiber and ground network investments as well will follow a similar trend. And with that, as well as the somewhat elevated R&D, I think which should wane in the back half of the year, I'm just trying to think about what the full year fiscal year EBITDA trend should be with all those factors.

Sure, sure. So this is Shawn. So I think, obviously, one thing, keeping in mind the government can be a bit lumpy, but this is always sequelling (01:04:51) one of the toughest quarters for government, and it was a fantastic quarter. But on the backdrop of that, obviously, just all the dynamics that you talked about is – we're going to have – our R&D is going to be a little bit heavier in the first half than the second half overall, but it's going to stay elevated for the next couple of quarters, and then we'll have strong growth with ViaSat-2. So it's probably good to think about it as a little bit of pressure in the next couple of quarters, and then we'll have strong growth as we look to the second half.

And if you just take the government, build this and then profile that, (01:05:30) we don't think there's material changes in our trajectory there. And then it's – Shawn showed you that chart that showed what happened to EBITDA as we started up on ViaSat-1. I think the same effects we see occurring on ViaSat-2, somewhat offset by R&D reduction. But it's – we don't really give indiscrete guidance so we're trying to give you guys the pieces.

That's helpful. Thank you. And then just one other question just on the IFC segment. I think last quarter you've mentioned that, as you get into early next calendar year, installs should hit about 100 per quarter, obviously, should we expect that to ramp as we go through the remainder of the year somewhat obviously (01:06:19) in the September quarter as maybe aircraft availability for installs increases a little bit there and just what is the, I guess, expectations to get to that 100 per quarter? Is it a calendar 1Q kind of thing or a 2Q? How should we think about that? And just another question for IFC is, the ARPA trend, I guess, overall, obviously, revenues were up nicely in this first quarter. But as you move from a wholesale, I guess, capacity provider model to more of a direct service provider, how should we think about ARPA trending as well as maybe some of the IPTV and in-flight entertainment initiatives you've been working on, I guess, maybe post Arconics? So just trying to think of the revenue trends in that segment of your business. Thank you.

Okay. I'll talk about the second part first. So, the second part, we think ARPA is generally trending higher and for the reasons that, well, one of the reasons we described was that there's more passengers using and the passengers using more bandwidth. So that's a factor. We are adding additional services including in-flight entertainment. That's one of the things that we talked about. For some airlines that are also interested in TV, although one of the things we're excited about is delivering TV through over-the-top services as opposed to broadcast, which plays a little bit into the overall theme that we talked about in the first part which is bandwidth, getting to more passengers and having passengers use more bandwidth. We're also trying to work with our airline customers to help them offload those bandwidth usage costs as well in multiple ways. But the general trend we think is going to be up in terms of ARPA. And then the issue on the installs, I would say, first or second quarter of calendar 2018 is when we'll hit that – when we're targeting to hit that 100 a quarter type of range.

And we're hoping it continues to grow that through other wins (01:08:43).

Yeah.

Great. Thank you very much.

Thank you. And the next question will come from the line of Chris Quilty with Quilty Analytics. Your line is now open.

Thanks, Mark. Question on the government mobility, is that growth coming from growth in the number of aircraft platforms or the amount of bandwidth you're using? And the second part of the question is, given that that was historically not a (01:09:14) requirement, where is the money coming from?

Okay. So, first, it is coming from, basically, the two things, both of the things that you said, which is getting on more platforms and those platforms using more bandwidth, both. And bandwidth usages depend on the missions for the platform and the requirements, the amount of bandwidth that they want us to hold to assure that they get the services that they need for their missions. The point that I made about requirements, as an example, you won't see a program requirement for – in certain types of command and control, in-flight connectivity for a number of new platforms that we're trying – that we're actually not trying to get on that were being tested on. And some of those include rotary-wing aircraft, as an example, that we've talked about in the past, where operational elements are finding that, if they do have in-flight connectivity that they can perform their mission better. So, rotary wings are really interesting market because there are lots and lots of them that would be a really big growth area for us. That'd be an example of one or multiple applications that we don't really or can't really talk about where, by putting connectivity on certain types of platforms, they can either enhance their mission or add missions that they don't currently perform.

Or in many cases reduce flight hours required for a certain mission, so...

Yeah.

That's why pilots love that. (01:11:00) Two questions on consumer. One is, I think you've been running around 40,000, 50,000 gross adds. Is it fair to assume that if you're warehousing some capacity that the gross adds were down pretty significantly in the quarter? And second question, if you're migrating customers now to 25-meg plans, what happens with the introduction of ViaSat-3 and the new set of plans with higher tiers?

Yes. So, okay. With ViaSat-3 or ViaSat-2 on your question?

Let's stick with ViaSat-2 for now.

Yeah. Okay. Okay. So, yes, we expect to introduce higher-speed plans. One of the things we expect when we introduce higher-speed plans is – and this is exactly what happened when we introduced ViaSat-1 – one is that customers with lower-speed plans will want to migrate to those services. So, with ViaSat-1 and ViaSat-2 for speeds that are in the 25-megabit-per-second range, we actually have the option of migrating them on either satellite. We may add infrastructure to ViaSat-1 that would allow us to migrate customers on that satellite to plans that are higher. What we expect, and we've talked about this multiple times, is that, as we migrate customers to higher speeds and plans that use more bandwidth, ViaSat-1 will have fewer customers on it, and we're starting to see that effect, but ViaSat-2 will add a lot more. And that effect will be to have more subscribers than we had with ViaSat-1 only, but especially one of the effects that we've seen with ViaSat-1 is that the marginal earnings that come from adding additional subscribers are much higher than our average earnings. So, by adding marginal subscribers, we can grow our earnings a lot faster than we can grow revenues. That's basically the approach that we will use, which will add, think of it as a ViaSat-1-like amount of subscribers on ViaSat-2, and that the actual ViaSat-1 subscribers would go down.

Go you. And would it be a (01:13:29)?

Did that answer your question?

I think so, but with – I think with WildBlue, I think you went from like a peak of 415,000 subs down to – whatever the number is, 100,000, 150,000 – do you expect to see that order of magnitude of decline on ViaSat-1?

No.

Or is it a little more gradual?

No, it's more gradual. So it'll...

It went from 500 kilobits on ViaSat – on WildBlue-1 with certain... (01:13:57) (01:14:00)

Speeds went up by a factor of 20, (01:14:02) bandwidth consumption also went up. So with ViaSat-2, we're really looking (01:14:08) at speeds that would go up – range from 2 to maybe as high as 8, right as we – or given that we already have 25-megabit subscribers, think of them as 2 to 4 type of blended range. So I think what we've – and also, we've talked about bandwidth economics for ViaSat-2 being kind of double what they were for ViaSat-1 because we under-ran our budget, economics were actually a little bit better than that. So those are kind of the ways to think about it. Well, what we've said multiple times is that we want to go out and find in the market the way that we can best optimize performance by this combination of speed and volume.

Also not just subscribers, we're able to – we've been able to reuse WildBlue-1 and (01:14:57) for other purpose, mobility is one, for example. And so having that fleet allows us to – I just think subscriber count isn't really the key.

It's not the only way to measure it, yeah.

We're really focused on revenue and earnings growth.

And the gross adds in the quarter?

I think we told you guys with the – then Mark told you what they key drivers were in the quarter and we said over half the net adds came from the zero gross add source which was our wholesale source.

Okay. Fair enough. Thank you.

Thank you. And the next question comes from the line of Louie DiPalma with William Blair. Your line is now open. Louie DiPalma - William Blair & Co. LLC: Hi, Mark, Rick and Shawn. Can you hear me?

Yes.

Yeah.

Yes.

Sure. Louie DiPalma - William Blair & Co. LLC: Government bookings growth this quarter ramped to the strongest it's been in at least seven years. Was that mainly due to demand for your traditional data encryption appliances and Tactical Data Links, or were there new products like the BATS-D contributing to that?

It's mostly – for that quarter is mostly more traditional existing products. I think we've got good prospects ahead for some of the newer products, but right now, it's more existing. Louie DiPalma - William Blair & Co. LLC: Okay. And when do you think the BATS-D and the Small Tactical Terminal chain become programs on record?

So the Small Tactical Terminals already happened. So, the history there was, originally, there was going to be a variant of a JTRS radio, the air mobile version, AMF version, that was going to get used on small platforms. And that program basically didn't complete successfully. So, we – one of the things we talked about in the last few months is that we were selected for the Apache helicopter, which is one of the biggest applications of that small form factor radio. So, that's already happening, and I think that the prospects for getting more and more of the platforms that are sort of orphaned by the JTRS program going way are really good for the small tactical radio. The BATS-D Handheld Link 16 application is something that's really not envisioned at all in any of the DoD radio programs but has been shown to provide great value. And we think it's a really good example of the type of market that we're going after. So that one has been in some evaluations, has gotten really favorable reviews. And we think over the next year or so that we'll start to see some meaningful revenue from that product. Louie DiPalma - William Blair & Co. LLC: Okay. And then, lastly, is the timeline for the ViaSat-3 Americas launch still in late 2019? And what are the future milestones that we should monitor ahead of that launch?

Yeah. So we've been talking about late 2019, early 2020. Don't want to mislead people, there's still – this is really hard stuff. There's still uncertainty associated with those dates. The kind of the main milestones along the way, one is we've got a critical design review for the payload coming up this month. So that's where we would freeze the design. That's a big milestone for us. Other milestones will be commencement of the actual in-flight payload hardware. And one of the artifacts you'll see associated with that is that's where we'll start capitalizing more of the satellite and decreasing the amount of R&D expense associated with that. So you should see that happening shortly after the CDR. I think those would probably be the next near-term milestones. Louie DiPalma - William Blair & Co. LLC: Great. Thanks, Mark.

But just to reiterate, we have not announced any kind of slip in that schedule. That's where it's been a while.

Yeah. Louie DiPalma - William Blair & Co. LLC: Thanks, Rick.

Okay. I think that's it, Mark, the last call, last question.

Okay. Good. Thanks a lot. I know we covered a lot of material. Thanks a lot for your patience and everybody dialing in, and be back with you next quarter.