Q4 2024 Viasat Inc Earnings Call

Participants

Kumara Guru Gowrappan; President; Viasat, Inc.

Lisa Curran

Mark D. Dankberg; Co-Founder, Chairman & CEO; Viasat, Inc.

Shawn Lynn Duffy; Senior VP & CFO; Viasat, Inc.

Caleb Henry; Director of Research; Quilty Space Inc., Research Division

Richard Hamilton Prentiss; Head of Telecommunication Services Equity Research & Research Analyst; Raymond James & Associates, Inc., Research Division

Ryan Boyer Koontz; MD & Senior Analyst; Needham & Company, LLC, Research Division

Simon William Flannery; MD; Morgan Stanley, Research Division

Xin Yu; Research Analyst; Deutsche Bank AG, Research Division

Presentation

Operator

My name is Sarah, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Viasat's Fourth Quarter Fiscal Year 2024 Earnings Results Conference Call. (Operator Instructions).
I would now like to turn the call over to Ms. Lisa Curran, Vice President of Investor Relations. Ms. Curran, you may begin your conference.

Lisa Curran

Thanks, Sarah. We will present certain non-GAAP financial measures on today's call. Information required by the SEC relating to these non-GAAP financial measures is available in our fourth quarter fiscal year '24 Shareholder Letter, Investor Relations section of our website. Please note that to provide a more meaningful comparison of our results of operations year-over-year, results for the fourth quarter and fiscal year 2024 are compared against supplemental combined results for prior year periods. These supplemental combined results are based on the combination of Viasat's historical reported results from continuing operations with Inmarsat's historical reported results for periods prior to the acquisition, with adjustments to reflect purchase price accounting, the conversion of Inmarsat's results from IFRS to GAAP, and conforming changes to reflect Viasat's presentation of its results. The supplemental combined financial information was prepared to better illustrate for investors the performance of our business following our acquisition of Inmarsat.
Unless otherwise noted, the presented financial measures reflect year-over-year increases or decreases relative to the supplemental combined financial data in our fourth quarter fiscal year 2024 Shareholder Letter on the Investor Relations section of our website.
During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. We will also make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we expect or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties and actual results might differ materially from any forward-looking statements that we make today.
Information regarding these factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings and subsequent report on Form 10-K. These forward-looking statements speak only as of the date they are made, and we do not assume any obligation to update any forward-looking statements.
With that, I'll turn it over to Mark Dankberg, Chairman and CEO.

Mark D. Dankberg

Good afternoon, and thanks for joining us today. With me, I have Guru Gowrappan, our President; and Shawn Duffy, our CFO.
We encourage reading the Shareholder Letter that we posted on our website earlier this afternoon for more details. I'll give an overview of the main points, and then Guru will cover our operational results and highlights and our growth outlook, and then we'll take questions.
We achieved fiscal year 2024 revenue and adjusted EBITDA growth above the high end of our guidance, driven by mobility and government. Fiscal year 2024 was a big year for us. We closed the Inmarsat acquisition, dealt with the satellite anomalies, immediately undertook integrating the companies to eliminate redundancies, capture synergies and drive productivity.
Our objective is to integrate Inmarsat's global customer base, distribution partners, global satellite coverage and leading global L-band spectrum rights and aeronautical and maritime safety services with Viasat's technology, domain expertise in aeronautical and government and systematic methodology to achieve high utilization and productivity to cost efficiently deliver reliable services to mobility customers, including in the highest demand prices and times.
Within about 6 months of close, we made difficult but necessary reductions and achieved operational and recurring capital synergies of approximately $200 million, ahead of the planned schedules as we aligned our organization and optimized our satellite networks. We reorganized the company to help drive efficiency and productivity by integrating engineering, operational, distribution and support functions. We've also added a number of key people to our leadership team.
In fiscal year '24, we achieved another approximately $175 million reduction in CapEx, largely through investment prioritizations and synergies along with some savings due to satellite system delays. We strengthened our capital structure and extended about $2 billion in debt maturities. We have stayed focused on achieving our main operating financial goals for fiscal '24 and as previously mentioned, achieved above the high end of guidance.
All that, while continuing investments to support mobility and government growth, including new in-flight entertainment and connectivity functionality and additional monetization options for our airlines and next-gen encryption and advanced technology programs for government customers.
Now our highest priority for fiscal '25 is establishing a foundation for accelerated multiyear revenue adjusted EBITDA growth in fiscal year 2026 and beyond, as we multiply our total global bandwidth resources substantially with new satellites entering service. Getting those satellites launched and their network infrastructure into service will enable us to continue to normalize CapEx with additional savings in fiscal '26, providing a clear line of sight to an inflection to positive free cash flow by the end of the first half of calendar '25, which is also the end of first quarter of fiscal '26. Guru will update our capital budget outlook in a few minutes.
During fiscal '25, we will also continue to improve operational efficiencies that drive steadily increasing utilization and productivity from our satellite fleet and partner satellite networks. Starting in the first quarter of '25, we'll also be resegmenting our financial reporting to give investors lower transparency into our business areas, while also be extending our hybrid multi-orbit multi-band network services, adding broadband LEO. We've already executed premiums for real components for Maritime and Enterprise and anticipate providing hybrid multi-orbit to all our mobility services.
Our Shareholder Letter provides a satellite road map and schedule. It includes satellite in-service dates consistent with our financial outlooks, the in-service dates are the same as we assumed last quarter.
The next one's entering service are GX-10A and 10B that are planned for early to mid-2025 -- calendar 2025. They will support government and enterprise mobility in the polar region.
The Via-1, ViaSat-3 antenna deployment anomaly is motivating us to reduce the capital cost and schedule for individual future satellites through design approaches that will benefit return on invested capital, and further drive down fleet wide bandwidth fulfillment costs while also improving service quality.
Also fiscal '25, we anticipate introducing the first scalable commercial 3GPP cellular standards based on direct-to-device service for customers, consumer mobile devices on 5 continents on our existing L-band network and partnering with like-minded mobile satellite services operators.
We're working with the Mobile Satellite Services Association to promote mobile satellite services ecosystem offering the greatest amount of license satellite spectrum. We have unique advantages and a technical approach to preserve and evolve our large base of safety service aeronautical and maritime customers to next-generation capabilities, building on the D2D infrastructure.
We understand the satellite communications competitive landscape is evolving. Viasat entered the Satellite Services sector by focusing on driving down bandwidth costs to deliver greater value to our customers in terms of speed and consumption volume and do that via cost-effective user terminals. We offer leading service level agreements, giving customers confidence their service will meet expectations even in the highest demand places and times and innovations that help our customers leverage connectivity to achieve their operational needs and increased passenger and crew satisfaction.
We're adding low latency services from LEO broadband partners. We've always expected increasing speed and volume value along with innovative new business models would drive industry growth through steadily increasing total addressable markets with pronounced price elasticity. That's clearly happening.
Viasat has evolved very successfully through several transformational stages in our history. This next phase is very competitive but with commensurate growth opportunities. Inmarsat has a heritage cooperative engagement with all nations to create timely new services, a unique international ecosystem. We see opportunities to synthesize complementary investments from satellite companies and regional space champions into cohesive multi-band multi-orbit solutions for enterprising governments, emphasizing global mobility. We're helping foster interoperable architectures that enable us and others to preserve and responsibly extend our services profitably to multi-orbit multi-band networks.
[Since the] past year we have faced challenges and embraced a major acquisition. We have taken difficult measures, maintained our focus, met our business objectives, achieving results above our guidance for the year. As we meet the rising customer expectations for quality and certainty, we are capturing more and more real world data on how, when and where our customers and their customers use connectivity?
We have leveraged that knowledge to help our customers compete and win dynamically managing our own network ecosystem and shaping future space systems architectures and services. We're focused on serving our customers, our employees, our partners and our shareholders. We continually evaluate our portfolio for opportunities to bring even more value. We're energized by the pace of change. We know we have work to do, and we're up to the challenge.
With that, I hand over to Guru to cover operational results.

Kumara Guru Gowrappan

Great. Thanks, Mark. I will cover 3 topics; financial performance, near term priorities and update on our outlook. Viasat generated good financial performance during FY '24. We earned combined revenue growth of 9% year-over-year and combined adjusted EBITDA growth of 6% year-over-year, driven by Mobility and Government, excluding the onetime catch-up benefits of the litigation settlement in Q2 FY '24. The pressure on operating leverage reflects incremental R&D investments to deliver mobility growth, including new in-flight entertainment and connectivity functionality, next-generation encryption offerings and ramp up for the ViaSat-3 satellites entering service in FY '25.
For Q4 FY '24, we grew combined revenue by 5%, while combined adjusted EBITDA declined 3% year-over-year. Adjusted EBITDA in Q4 was favorable to guidance last quarter due to accelerated cost savings from synergies alongside slightly improved top line performance in Government and Commercial segments. The Q4 cost savings were previously slated to begin Q1 FY '25.
Some of the key highlights from the quarter include: we completed ViaSat-3F1 handover from Boeing, our satellite control center is now operating the spacecraft. In March, we demonstrated speeds over 200 MBPS to an aircraft and we continue to expect to place ViaSat-3F1 into commercial service later this Q1 FY '25.
Government Systems had another quarter of strong demand for information assurance, high-speed network encryption products increasing just over 40% year-over-year. We also had a strong quarter in tactical SATCOM networks, driven by growth in Blue Force Tracking L-band services revenue. We were awarded a contract from Northrop Grumman to support the U.S. Air Force Research Laboratory initiative called The Defense Experimentation using commercial space, Internet program and our ViaSat-3 satellite network will enable users to access high-bandwidth satellite internet connectivity from existing aircraft or ground vehicles.
Our Satellite Services segment benefited from strong growth in aviation. Commercial IFC ended the year with 3,650 aircrafts in service, up about 17% year-over-year on a combined basis with over 1,350 aircraft in backlog. U.S. fixed broadband revenue declined as expected, fewer residential subscribers were partially offset by higher ARPU. We continue to deprioritize U.S. fixed broadband to support our rapid and higher-margin IFC growth.
We developed a hybrid multi-orbit managed service for Maritime called NexusWave. It's expected to launch this Q1 FY 2025 and is a scalable solution with global coverage, speed, capacity, security and resilience to meet enterprise class operational lease and crew welfare. NexusWave will seamlessly integrate ViaSat-3 capacity as they enter [so.]
And finally, Mark described the full year impact, but in Q4, we extended the maturity of $1.3 billion out of $1.68 billion of term loan B debt and paid down $84 million with cash. We also extended the Inmarsat revolver for 3 years in an amount of $550 million. We continue to optimize our balance sheet while retaining ample liquidity to act opportunistically.
Now some color on the financial results. Q4 FY 2024 revenue was $1.2 billion, up 73% compared to $666 million in Q3 FY 2023. Combined revenue was up 5% year-over-year, driven by growth in Government Systems products and aviation services and products. In maritime, our Ka- and L-band hybrid offerings, fleet express continued to grow with some ARPU pressures slowing the overall trend and while expected declines in L-band-only fleet broadband continued.
Given the recurring nature of the business shifts up or down in revenue trajectory tend to be gradual. That said, we expect improvement later in the year with new multi-orbit NexusWave installations, which also lay a foundation for maritime customers on to ViaSat-3.
Net loss from continuing operations was $85 million for Q4, up from [$22] million net loss in the year-ago period primarily due to increased interest expense associated with the Inmarsat acquisition. Adjusted EBITDA for the quarter was $358 million, an increase of 188% year-over-year. Combined adjusted EBITDA decreased 3% year-over-year, reflecting an expected decline in fixed broadband service revenue, lower product revenue which tends to be lumpy and higher R&D expenditures in the quarter, largely offset by approximately 30% growth in aviation. Sequentially, net leverage declined 0.2x to approximately 3.6x estimated combined LTM adjusted EBITDA as of Q4 FY 2024, which is substantially favorable to plan at the time the Inmarsat acquisition was announced.
We ended the quarter and year with $3 billion of liquidity, including $1.9 billion in cash and cash equivalents and short-term investments at quarter end and no near-term maturities and a fully funded path to positive free cash flow by end of Q1 FY '26. Finally, insurance recovery claims are proceeding well. The first claim submitted was for the I-6 F2 satellite, and we have received 100% of the insurance proceeds or $348 million. We are in the process of collecting ViaSat-3F1 insurance proceeds, and to date, we have collected about 55% of $421 million expected. Overall, it was a good quarter for Viasat, and we delivered above the high end of previous adjusted EBITDA guidance.
Now I'll touch on the 3 priorities we discussed in our letter. First, build operational momentum and financial performance of our core businesses. FY '24 was a good year achieved through focused execution, continued strength in awards, and we extended a meaningful portion of our debt maturities.
Our second priority was executing the Inmarsat integration to achieve operating capital and revenue synergies to reduce costs and expand the scale and scope of our products and services. We accelerated delivery of the $100 million in annualized cash operating savings, bringing forward about $25 million of the savings into Q4 FY 2024. Capital synergies and disciplined allocation reduced FY 2024 CapEx to $1.5 billion or about $175 million below our previous $1.7 billion outlook as we drive towards positive free cash flow.
In Q3 of FY '24, we announced operating expense synergies, as I just mentioned, alongside the rationalization of our satellite road maps, which is yielding $100 million of CapEx synergies for a total of $200 million, as Mark said earlier. Today, we're announcing an additional $100 million of CapEx synergies related to network and platform integration. You also noticed $75 million of CapEx shifting from FY '24 into FY '25 due to the ebbs and flows of satellite milestone payments.
Third, sustain and improve mobility business growth while advancing the inflection point to positive free cash flow. We are proud of the businesses and trusted customer reputation we've built, our portfolio enjoys a strong right to win, good margin profile and long-term attractive growth in mobility focused markets. We are progressing on putting $3.3 billion of satellites under construction into service, that positions us for profitable growth through higher performing satellites and partnerships with other operators. We are making steady progress and have line of sight to positive free cash flow by end of Q1 FY 2026.
Now to outlook. We are initiating our FY 2025 outlook and a preliminary view of FY 2026. We exclude satellite impairment charges and the catch-up benefit from the litigation settlement announced in Q2 FY 2024 from our guidance. As Mark said, FY 2025 is about setting a foundation. For FY 2025, we expect roughly flat year-over-year revenue with low to mid-single-digit year-over-year adjusted EBITDA growth. We've also provided additional segment level detail in the outlook section of our Shareholder Letter.
While we are getting positive operating leverage, we are remaining prudent with our top line guide given uncertainties with delayed OEM commercial aircraft deliveries. Given these pressure points, we've taken targeted measures to resume top line growth in FY '26, building on our strong backlog and anticipated awards growth. We may have opportunities to resume growth earlier and we'll provide additional updates as warranted.
In FY 2025, we expect capital expenditures to decline to a range of $1.4 billion to $1.5 billion. The FY 2025 range excludes the benefit from insurance recoveries and capitalized software and network synergies offset a portion of the FY 2024 expenditures that moved into FY 2025. We include capitalized interest in our CapEx guidance, which is approximately $200 million per year, but it will decline in future years as we place satellites into service. In FY 2024, our investments in our satellite network projects and success-based CapEx we're over 2/3 of our total capital spend that's less than 1/3 associated with other maintenance and general CapEx activities.
A preliminary view of FY 2026 indicates we expect to grow revenue and adjusted EBITDA again in FY 2026 relative to FY 2025 as a majority of our $3.3 billion assets under construction go into commercial service. Capital expenditures for FY 2026 are expected to continue to decline to a range of $1.1 billion to $1.2 billion. Again, FY '25 is foundational to multiyear accelerated sales growth, adjusted EBITDA growth and continued step down in CapEx in FY 2026.
In an effort to communicate our outlook more consistently, we will be providing all outlook comments based on fiscal years rather than a mix with calendar years. So let me just be clear. Our target has not changed. We continue to expect an inflection point to positive free cash flow by the end of Q1 FY 2026, our path to positive free cash flow is expected to be driven by double-digit operating cash flow growth and continued declines in capital expenditures as we normalized capital expenditure in line with satellites going into commercial service.
Before wrapping up, I have 2 important updates to share. As Mark referenced, in May, we initiated a new segment reporting structure to give additional insights into our portfolio and drivers of value. Going forward, we will have 2 reportable segments. Communication Services and Defense and Advanced Technologies. We listened to our investor feedback and we will include revenue data for each major business unit within segment. We plan to provide recasted historical financials ahead of our first quarter call so that you have time to update your models.
Secondly, we are continuing to gather feedback both from our direct outreach and the perception study that is wrapping up as we enhance communications and planning for an Investor Day and/or other opportunities to highlight market potential, competitive strategy, growth runway and our playbook for improved returns and sustainable cash generation. We will come back with future updates.
Despite some challenges, our operational performance in FY '24 and Q4 was good, and we are capturing substantial operational and capital synergy. In FY '25, we expect to make significant progress on our satellite road map and towards positive free cash flow with good increases in operating cash flow and moderated CapEx.
With that, I'll pass it back to Mark.

Mark D. Dankberg

Okay. Thanks, Guru. Before we take additional questions, I just wanted to clarify one point, we have gotten some questions, which is what is the exact adjusted EBITDA base for FY '24 that we're using as a reference for our growth into FY 2025? So that number is $1.489 billion of adjusted EBITDA in FY '24. That's the base that we're using. And that's shown on Page 3, the FY 2024 year in review of the letter, where if you look at the middle right chart, what we described as the combined space for FY 2024 was 15 -- $1.575 billion. And then we had referenced that there was $86 million of onetime catch-up gain associated with the litigation settlement. So subtracting $86 million from $1575 million is what gives that $1489 million. And then the growth outlook of low to mid-single-digit growth for FY '25 would be off that base. So I just wanted to clarify that at the beginning, and then we can -- now we can open it up to additional questions.

Question and Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Simon Flannery with Morgan Stanley.

Simon William Flannery

Thanks for all the color and for the new disclosures on things like the satellite schedules. We appreciate that. If I can sort of dig into that a little bit, perhaps you could just give us a little bit more on the current status of the F2 and F3 satellites to kind of preparation and where you are in the kind of the cycles for getting them on the schedule for launch and for commercial deployment? Any updates on what's happened in the last 90 days there.
And perhaps you could just update us on your thoughts on how you're going to distribute the capacity once they're launched, you've talked in the past about maybe moving some of them from EMEA or Asia Pac over the Americas? Any updated thoughts on that as well?
And also just interesting to see the NexusWave product coming out. I think you said in your comments, you might extend that to IFC. Is that something that we'll see this year, a similar product set? Or any more thoughts on when we'll see that integrated product?

Kumara Guru Gowrappan

Simon, thank you for the question. This is Guru. I'll start it off and then I think Mark will chime in on a couple of the points. On the ViaSat-3F3 and F2, just to point to the document or the letter as well, Page 10, actually includes the overall road map now. That's a new thing that we've added for everybody's reference.
So on F3, in terms of schedule and where we are, we continue to expect to bring F3 into service in mid- to late calendar year 2025, which is a little more than a year from now. And a key milestone, which is thermal vacuum testing is expected to begin this quarter on the F3 spacecraft.
And then in terms of ViaSat-3F2, we continue to anticipate bringing F2 into service in late calendar year 2025. And we expect the improved reflectors, which include the corrective actions to be delivered to Boeing in late calendar 2024. And you will notice, just to clarify, we are only giving in-service dates as these are the most critical milestone for our customers and also most relevant for you, as they best inform our growth outlook as well.
I'll pass it to Mark in terms of overall coverage. And I think you have a question on NexusWave, he may ask you to repeat that, but Mark?

Mark D. Dankberg

Yes. On the locations of the satellites, remember, one of the things we did originally was each satellite can be used in any region. So we have flexibility there. The -- I think one of the things that we are looking at and I think you talked about is -- maybe relocating them so that we would probably ultimately have Flight 2 over the U.S. and Flight 3 will go into Asia Pacifico directly from launch. And then Flight 1 would be moved to EMEA area. That's what we think is going to optimize the use of satellites.

Kumara Guru Gowrappan

Your question NexusWave, that agreement is specifically for Maritime. We expect to have additional agreements that will go into service for in-flight connectivity. The agreements are kind of optimized for each of the markets in which we'll be [present].

Simon William Flannery

And this is with OneWeb, is that right?

Mark D. Dankberg

Yes, for the NexusWave. But we're working -- we actually are working with almost all of the NGSOs. And so that we'll be mixing and matching as appropriate based on the deals.

Simon William Flannery

Great. And just maybe one last follow-up. Just this point on substantially lower OEM deliveries. Is that something that's changed dramatically in the last few days? I don't remember really -- last few months -- weeks. I don't remember you talking about that before perhaps you could just slash that out a little bit because it does seem like you've got a pretty good backlog still.

Mark D. Dankberg

Yes. So we do have a good backlog. The main issue is following the Alaska Airlines event. Boeing has reduced. It's pretty much cut its delivery of 787 -- 737, excuse me, 737s in half. And so that affects a fair number of our customers. And so that is a change to what they're receiving relative to what we believed last quarter until we are flowing those through into our outlook for FY 25. That is one of the factors for our FY '25 outlook.

Operator

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

Richard Hamilton Prentiss

A couple of questions. I appreciate that -- with NexusWave -- with the current quarter results, we'll get the new reporting segment. Can you give us a sneak peek into what you think we're going to see as far as those major business units under those 2 comm services and defense advanced technologies?

Shawn Lynn Duffy

Rick, this is Shawn. I can help you out. I think what we talked about is we're going to have 2 segments underneath the new reporting. And the goal there is really to better reflect our strategies and mobility and our overall portfolio drivers. There's more data, it's going to come, but I think some high-level thoughts, is that the Communications Services segment, that's going to be all of our businesses that utilize the satellites. And so that means that, that's going to include the government SATCOM as a service, which is in our Government segment today.
Whereas in Defense and Advanced Technologies, that's going to consist of all of our other businesses and you think of that as, for example, our encryption business. So within that, we're also going to give additional top line revenue data for most of the major revenue drivers in those segments. You can think of that as like aviation or maritime or network encryption. And we'll give more color relative to the contributions as well.
So a couple of other highlights, I think just to kind of give you that as well. An example would be our IFC equipment revenues. Those are going to now flow into the Commercial Services segment alongside the recurring aviation revenue streams. And then another would be like our antenna systems product. That's now going to be reported in the Defense and Advanced Technologies segments. So that's probably some key takeaways. You'll see R&D move along those as well. For example, our R&D and commercial networks and related to bringing our networks into service, that's going to flow over, for example, in the Communication Services. Hopefully, that's helpful.

Richard Hamilton Prentiss

Yes. Yes, it is. And I appreciate the color that you've provided to us before we go into the next earnings season to help us kind of use the quiet time to update models. So I appreciate that.
When you think competitively about these segments then, so Comm Services and Defense Advanced Technologies, who do you see as the top competitors that you're competing against in Comm Services versus Defense and Advanced Technologies?

Mark D. Dankberg

Well, I think everybody is pretty focused on Starlink in these satellite services market, so, so are we. So we're positioning ourselves to compete with them.

Richard Hamilton Prentiss

And from the launch schedule as far as in-service, keeping kind of where we were, make up some of the delays in launch, we can get the in-service a little quicker. What is the Flight 1 capacity you're expecting that you'll be able to bring into service versus what we originally thought? And I think that's just a couple of months away then for F1 to come in service.

Mark D. Dankberg

Yes. Our view of that hasn't changed from what we said in the past, which is that we think we would get up to 10%, roughly up to about 10% of the originally anticipated capacity on the satellite. So that's from a total bandwidth perspective. The big thing is that we still have really good flexibility in how we apply that bandwidth. And so it will punch above its weight relative to older satellites in those markets.

Richard Hamilton Prentiss

Okay. Last one for me. The directed device, 3GPP, you touched on that a little bit. But there could be something this fiscal year. Can you help us understand how do we size that opportunity? It's complicated [and second I think because] the ecosystem involves so many people, chips, handsets, carriers, satellite companies. Help us understand kind of what the go-to-market strategy is there and what the opportunity is, particularly since we've got this -- the next fiscal year, we don't really have capacity coming online from Flight 2 or Flight 3 then.

Mark D. Dankberg

Yes. So for the D2D market, I think there's at least a couple of different target markets for that. One is literally the direct-to-device market, which is getting a lot of attention. And what that refers to is pretty much any smartphone being able to communicate directly to a satellite. I think there's -- clearly, that's never been done before. And so there's just unknowable. So unknowns about how big that market will be.
One of the things that we're aiming to do -- then this is what we've talked about with the -- what's called the Release-17 3GPP standard, which is also known as the narrowband internet of things nonterrestrial network standard that, that does enable messaging or emergency communications to smartphones. And so one example, the emergency communications example is what's Apple kind of kicked this thing off with their iPhones over Globalstar.
So we are working on being able to deliver those capabilities through our satellites and partner satellites during fiscal year '25 in 5 different continents. So that uses the Inmarsat fleet and partner fleets. And one of the things that we aim to measure with that is how many of the phones that are capable of implementing that service or signed up in some way or another for service and what types of use do they get. That's one of the ways that we'll be able to get a better handle on how that market might grow. And that's one of the things we're looking forward to reporting on.
There are a number of really interesting and popular phones that will be equipped with chipsets that are capable of performing to that standard. And so we are working with the ecosystem of chip makers, device makers and mobile network operators to create service plans that should be interesting to those customers. And then we'll report on that as that comes into service.
The other market that's also really, really interesting is to upgrade the existing mobile satellite services market. So Inmarsat has a pretty interesting base of customers in aeronautical services, maritime services and land mobility which are pretty basic services performed by their fleet, which don't have the existing fleet, which don't have a lot of throughput and that just reflects kind of what the state of the art has been in L-band. What we believe is there's real opportunities to improve that. And so -- and those will be reflected in new satellites that evolve from the narrowband version of direct-to-device to what's called the New Radio 5G version. And that -- I think that's where -- what most people think is really the big potential prize is getting that New Radio version, which can do voice and higher-speed media services to those same cell phones in addition to just texting and emergency service.
So the satellite set to do that will also be capable of greatly enhanced mobile satellite services. And those, we think, fit really well with power of a large base of customers and prospective customers in aeronautical, aviation and land mobile. So those are the markets that we're going after. It'd be kind of premature for us to put any numbers around them, but we think we'll get data on those as in -- as we start rolling out these services.
And the one thing I also do want to reemphasize is that, this is all consistent with our forward-looking plan for capital investments. So anything that we do here will be consistent with the capital budget guidance that we've been giving.

Operator

Your next question comes from the line of Edison Yu with Deutsche Bank.

Xin Yu

First one on the Maritime partnership. I'm wondering if you can give us a sense on the economics, the go-to-market of this type of arrangements?

Mark D. Dankberg

Well, the -- so what we're aiming to do with this is to provide services that are both -- that include things that -- there are enhancements of things that we do, but these would be crew services and operational services to maritime users integrated through a single provider. And then also, as we add the Low Earth orbit component to it, we also can provide low latency services, which are interesting both for both of those applications for some portions of the crew used and some portions of the operational use. So we'll be integrating that into both our direct and indirect service plans.
We haven't announced all the details of those, but there are a few really important concepts that are described in the press release and one of those is untapped services, which is one of the things that people are really looking for. So the -- I think those are the main points is high-speed, uncapped, including low latency. And the idea is that those will be -- all those services will be delivered through our management of those 2 services. It's not just 2 side-by-side things. We're not just going to present 2 services next to each other, that they'll be integrated in a way that actually allows us to fulfill our commitments on speed, volume and latency more effectively than either one could on its own.

Xin Yu

Understood. And just a follow-up, more generally on Maritime on the Viasat side. Have we been seeing any sort of incremental pressure from Starlink. And as in the context of, I think, some competitors out there are seeing a lot of pressure, but the Inmarsat Viasat growth has actually been pretty solid. So are we more resilient? And is this partnership going to kind of reinforce that?

Mark D. Dankberg

So first of all, yes, so we believe that our broadband maritime service is pretty resilient. It's continued to grow. I think that's not maybe the case for all other competitors. But our Ka-band service has continued to grow. In Maritime, we offer a land -- we offer both Ka-band services, branded generally as Fleet Express. And the older L-band services, which are branded fleet broadband. We've -- the fleet broadband, which is kind of the L-band version of broadband, that's been declining for a number of years. The Fleet Express is still growing. And we have opportunities to refresh the fleet broadband as well.
But yes, it's a competitive environment. We see the competition just as others do. I think that it's a combination of our services and our market segments that have helped us to be resilient. And there's -- it's a big market. We believe it is segment, certainly, certain segments have been seeing more, I'd say, more competition from Starlink and others. The enterprise segments, which do depend on operational and sometimes safety at sea certifications. Those are the most resilient ones.

Xin Yu

If I could just sneak in one clarification. I think you made a comment -- comment there was about the growth CapEx over 2/3. Did I hear that right? And is that for the full year or for the quarter?

Mark D. Dankberg

I think the 2/3 was around maintenance CapEx versus...

Shawn Lynn Duffy

Yes, I can help you with this. So the 2/3 is just to give you what the percentage of our CapEx spend that's related to essentially satellite ground networks and our success-based CapEx for a year, given a year.

Mark D. Dankberg

Full year.

Shawn Lynn Duffy

Yes.

Xin Yu

Fiscal 2024, full year?

Shawn Lynn Duffy

Yes.

Mark D. Dankberg

Correct.

Operator

Your next question comes from the line of Caleb Henry with Quilty Space.

Caleb Henry

Broad question just for Mark. I was curious with the Nexus program. Has your philosophy around Low Earth orbit changed at all? I know you've talked in past calls and years passed a lot about LEO, but this seems like a little bit of a shift from Viasat's logics from years past?

Mark D. Dankberg

First of all, I think my philosophy matters a lot less than what customers really want. And so the first thing we're going to do, make sure we're responding to what customers want. There is a desire for low latency. We have talked about that. And so what we do see is an opportunity to combine low latency and geo to deliver a complete suite of services.
The other thing that we have focused on a lot is being able to deliver service level agreements wherever customers are. And so the combination of a geo can be helpful doing that. It can lower our overall fulfillment costs, if we can manage that as a single service. And so we get that in addition to the low latency. But we recognize that low latency is something that customers want. So we are integrating that. As mentioned, certainly mainly in a big way this year with Maritime, but we expect to do the same in all of our Global Mobile services as well.

Caleb Henry

Okay. And then on the integration there, assuming it's starting with OneWeb, they're a Ku-band system, whereas the current satellites in the Viasat fleet are Ka- and L-band does that present any sort of integration challenges? And if so, how do you work through those?

Mark D. Dankberg

Well, so that's one of the reasons we're starting with Maritime, where shipboard operators seem to be completely fine with the notion of having separate LEO and GEO antenna component. So this goes along with what a number of shipowners and operators have been open doing -- it's a little bit more complicated on other platforms where we may end up with, for instance, working with our Ka-band and is working with Ka-band with LEOs.

Caleb Henry

Next question, I know Viasat hasn't given the number in a little bit, but can you share how many consumer subs the company has today? And kind of is the plan to continue with that business? Or do you see that eventually kind of closing as you focus purely on mobility and other high ARPU sectors?

Mark D. Dankberg

So we haven't disclosed the exact subscriber numbers for a while. It's been -- one of the things that we would point out is that as we -- especially as we ship bandwidth, from that market to the mobile markets. There's been a relatively steady rate of decline in that business. That's one of the areas that is affecting our FY '25 revenue outlook. So even though our revenue outlook is relatively flat, we will be overcoming all of that in FY '25. With essentially no major new satellite additions in that year.
I'd say, going beyond FY '25, one of the things that we do see is opportunistic uses in residential. We think that based on the feedback -- initial feedback that we've gotten from some of our newer residential service plans we do believe that we can -- we may be able to flatten that out or improve it depending on the amount of bandwidth that we allocate to that market in out years.

Caleb Henry

A couple more questions. On the schedule for satellites. It looks like the SWISSto12 HummingSats have incurred a 2-year delay. I think last year, they were supposed to launch in 2026, now it's in 2028. Can you kind of give any -- shed any light on the reason for that? And does that have any impact on the plans for shoring up L-band capacity?

Mark D. Dankberg

No. I think there is a misunderstanding there. I think that those satellites are pretty much on the schedule on which they were originally procured. Inmarsat had procured them prior to the close of the merger, we were aware of them. And that is one of the purpose that you mentioned is one of the main purposes is to provide additional coverage and resiliency for the safety services. And that schedule is consistent with that.

Caleb Henry

Okay. And then just the last question. I was curious if Viasat sees any opportunities with the Space Development Agency with TWSA? I know a lot of that seems to be focused on providers of the satellites, maybe some of the ground network infrastructure, but is there any way for Viasat to contribute to that program?

Mark D. Dankberg

Yes. I don't know if you want to (inaudible). The answer to that is definitely yes. We've been involved in some of the programs in the past. But we do see we do see a number of opportunities to participate in that program on a go-forward basis through some of -- a lot of it -- a lot of what they're doing is satellite technology, and that's really what the opportunity is for us, is in satellite technology.

Caleb Henry

So could that look like supplying payloads or space hardware? Or is it something else?

Mark D. Dankberg

No. It's really around payloads specific subsystem hardware or specific missions of those satellites. All those are kinds of the kinds of ways in which we could be involved and have in the past.

Operator

We have time for one more question. It will come from the line of Ryan Koontz with Needham.

Ryan Boyer Koontz

On the IFC side, and kind of your puts and takes there relative to slow shipments from Boeing to Alaska and maybe some push out and available capacity. If you exclude the Alaska impacts, would you say -- how would you characterize the growth in IFC from '24 to '25? Is it demand issue? Is this a capacity issue? What kind of growth are we talking about here at a high level? [not immediately you] have to quantify it, but is it in line with your goals, I guess, my question.

Shawn Lynn Duffy

Yes. So I think, Ryan, I can take this. And we've had some good momentum this year with respect to new installs. And even though we're seeing some of that shifting into next year, we're going to continue to have a good install activity into the year as a whole. So I would say that as we look outward, aviation is a big part of our growth, both from services and products.
And maybe just to clarify, Ryan, just to clarify there, just one thing because just to bring it back, and I still think that we're expecting around 4,200 aircraft in service by the end of fiscal year '25.

Ryan Boyer Koontz

Great. With regards to the quarter that's in the books here, Q4, we saw a step down in gross margins. Is that primarily driven by pricing in these maritime and fixed markets or something else going on there on the gross margin side?

Shawn Lynn Duffy

Yes. So overall in gross margins, I think there is multiple components. We saw some cost growth, for example, in our government business and the programs. We also saw a bit of if I go below the lines, we saw some R&D adventures. But I think if you're looking at the gross margin line, it's predominantly some a little bit of cost growth that we had on the program side.

Operator

This concludes the question-and-answer session. I will turn the call to Mark Dankberg for closing remarks.

Mark D. Dankberg

Okay. Thank you. So we try to give you a good discussion about our initiatives and our approach to competing in this evolving and what we feel is a rapidly growing global mobility market. We've got work to do. We know we have a lot of work to do. We know we also have a cause, have a lot of opportunity to grow in those markets in a rewarding manner.
So thanks, everyone, for participating in this call, and we look forward to updating on our next call.

Operator

This concludes today's call. We thank you for joining. You may now disconnect your lines.