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Viasat Inc  (NASDAQ:VSAT)
Q3 2019 Earnings Conference Call
Feb. 07, 2019, 5:00 p.m. ET

Contents:

Prepared Remarks:

Operator

Welcome to Viasat Fiscal Year 2019 Third Quarter Earnings Conference Call. Your host for today's call is Mark Dankberg, Chairman and CEO. You may proceed, Mr. Dankberg.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Yes, thanks, good afternoon everybody and welcome to Viasat's earnings call for our third fiscal quarter of 2019. I'm Mark Dankberg, Chairman and CEO and I've got with me here, Rick Baldridge, our President and Chief Operating Officer; Shawn Duffy, our Chief Financial Officer; Robert Blair, General Counsel; Bruce Dirks, our Treasurer; and Paul Froelich, our VP of Corporate Development. Before we start, Robert will provide our Safe Harbor disclosure.

Robert Blair -- Vice President, General Counsel and Secretary

Thanks, Mark. As you know, this discussion will contain 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 report on Form 10-K and Form 10-Q. Copies are available from the SEC or from our website. Back to you, Mark.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Okay, thanks. So our primary goal entering this fiscal year was to capitalize on all the investments we've made in prior years in in-flight connectivity and Government Systems, the launch of ViaSat-2 by showing substantial growth in revenue and adjusted EBITDA. We've been progressing steadily toward this objective throughout fiscal 2019 and our results for the third quarter are another big step forward.

Third quarter revenue was up 45% year-over-year driven by growth across all segments. Our third quarter adjusted EBITDA was up 93% year-over-year and 40% sequentially quarter-over-quarter. As you'd expect, adjusted EBITDA growth generally translates into non-GAAP and GAAP earnings generation. In fact, third quarter non-GAAP earnings were $7 million, up over $9 million from a $2.4 million loss same quarter last year.

We're achieving these results by executing on the growth drivers we described going into this fiscal year, in-flight connectivity equipment shipments and activations, government products and services growth, and focused management in the fixed US broadband. We're working hard to sustain the factors that set the stage for this year's strong growth. A solid order book, significant competitive advantages in total bandwidth and bandwidth economics, large addressable markets, vertical integration and strong customer relationships, particularly with government organizations and airlines and we're continuing to develop nascent, but potentially, very substantial new markets such as community Wi-Fi and broadband enterprise services. All these factors, plus year-to-date orders being up 39% compared to this time last year supports sustained opportunities for growth into fiscal 2020 and beyond.

The combination of strong adjusted EBITDA growth and receipt of the ViaSat-2 insurance proceeds is improving our balance sheet too. As expected, net leverage decreased significantly from 5.0 at the end of our second quarter to 4.0 as of the third quarter. We're working to maintain a prudent balance sheet as we continue to invest in future growth, primarily through our global ViaSat-3 constellation.

As anticipated, we reached an agreement with Boeing for the third, our Asia-Pacific satellite which is planned for launch in the second half of calendar '22. We believe our strong growth affirms our basic strategy that broadband service success is driven by superior bandwidth productivity. We're achieving that productivity through a combination of vertically integrated technology and go-to-market strategies that allow us to overcome structural satellite industry bottlenecks that were artifacts of a broadcast-centric business model.

As we discussed in some depth last quarter, we're aiming to apply those bandwidth productivity advantages across a broad range of attractive growth markets, many of which are either completely disconnected and unserved today or in some cases are severely underserved in an environment where more and more services depend on reliable, affordable connections to the Internet, to cloud-based services and the coming Internet of Things.

The top level financial highlights are pretty exceptional. So it's worth summarizing them upfront. Third quarter revenues were up 45% year-over-year to a record $555 million. Year-to-date were up 31% to $1.5 billion. While we're achieving exciting growth in terrestrial tactical data links and information assurance and cyber, the bulk of our revenue growth is being driven by our unique version of satellite broadband connectivity across government, commercial aviation and fixed broadband markets.

We're encouraged that we're seeing more and more acknowledgment in our target markets that are bandwidth economic strategy is differentiated in ways that are valuable to end-users and our revenue growth is a powerful reflection of that. Third quarter revenues benefited from a bulge in IFC equipment shipments driven by demand from our airline customers, which is a good thing because it helps bring more airplanes into service sooner and helps our airline partners benefit from the competitive advantages they can derive from reliable, high-speed, low-cost broadband Internet. As expected, we're turning strong revenue growth into even stronger adjusted EBITDA growth. Third quarter adjusted EBITDA was up 93% year-over-year to $109 million while year-to-date adjusted EBITDA was up 29% on a year-over-year basis.

Also as expected, we're showing strong progress in overcoming the start-up costs of bringing ViaSat-2 into service and the investments needed to enable the surge in in-flight connectivity. Our sequential quarter-over-quarter results indicate that continuing to execute on our backlog and increasing the momentum of our flywheel of satellite services can continue to translate into attractive revenue growth and then into strong adjusted EBITDA growth. New contract awards for fiscal '19 year-to-date are at $1.8 billion, that's up 39% year-over-year, which is even higher than year-to-date revenue growth and it's yielding a year-to-date book-to-bill of about 1.2 and another indication of good opportunities for continued growth in revenues and adjusted EBITDA.

So with that backdrop, I'll turn it over to Shawn.

Shawn Duffy -- Senior Vice President and Chief Financial Officer

Thanks, Mark. To reiterate what Mark said, we had an excellent financial results for the quarter and year-to-date periods posting both record revenues and adjusted EBITDA for the quarter and this growth was broad-based with top line and adjusted EBITDA increases in all three segments, both year-over-year as well as sequentially for the second quarter in a row (ph). Looking at our Q3 results, the 45% increase in revenues over the prior year period was driven by a 72% increase in product revenue and a 23% increase in service revenue. The exceptional product revenue growth was driven by record IFC terminals as well as strong sales across most of our government businesses.

As Mark indicated, some of our sales growth was pulled forward from Q4 as we meet the strong installed base at American Airlines, which is correspondingly should help the accelerated pace of our IFC service revenue growth in the upcoming quarters. We closed third quarter with $109 million in adjusted EBITDA reflecting very strong growth year-over-year, increasing $52 million or 93% and $31 million or 40% increase on a sequential quarter basis.

Looking first at Government Systems, results continue to be impressive with revenues reaching a new high of $250 million, up 38% and adjusted EBITDA record, reaching $69 million, up 44% year-over-year and 11% sequentially. This performance was driven by a higher mix of NDI or Non-Developmental Item product revenues across our data links, information assurance, SATCOM and government mobile product suites versus those generated on a more traditional government funded development programs. In addition to the strong sales growth, we also saw improved adjusted EBITDA margins from scale efficiencies in our government service revenue base plus G&A and R&D activities, all reflecting lower cost as a percentage of revenues. Segment awards for the quarter were $156 million driving year-to-date to a record $909 million, up 44% year-over-year and backlog to $888 million, which grew 26% compared to fiscal of 2018 Q3 end. And to be clear, this backlog only includes $56 million of the $560 million eight-year contract win for global IFC services on US Government senior leader aircraft we secured in our second quarter.

In Satellite Services, revenues were a record $178 million, up 23% from the prior year period and 9% sequentially from Q2. This quarter, our US fixed broadband business hit a new record high alongside our fast growing IFC business, each contributing significantly to our year-over-year top line growth. In our consumer business we closed ending (ph) subs essentially flat to Q2 and up versus the 577,000 sub-count a year ago. Our Q3 ARPUs reflected another quarter of good growth, up 5% sequentially to a record $77.93 and up 14% compared to the same period last year. Most of this ARPU growth is being driven by improving product mix with take rates of our higher-speed, premium service plans in ViaSat-2 approaching 50%. In addition to higher ARPU, these plans tend to have better churn profiles. In our IFC business, we ended the quarter with 1,123 tails in service, nearly double the number last year and up 225 from the second quarter. American Airlines is now our largest IFC customer with over 380 aircraft in service and growing. As Mark will highlight later, the increase in tail count along with growing suite of services beyond pure connectivity is driving our non-consumer service revenue mix to record highs. Segment adjusted EBITDA was also very strong at $57 million, which represented a year-over-year increase of 22%. Additionally this quarter included a $4 million gain offsetting G&A related to our ViaSat-2 insurance recovery activities to date. By the end of Q3, we collected approximately $172 million of our insurance claims with a higher than expected overall recovery rate leading to the gain recorded this period. And there could be additional gains in the future if we're successful in resolving the remaining outstanding claim matters.

The healthy adjusted EBITDA growth year-over-year was driven by strong revenue growth and a very high sequential revenue to adjusted EBITDA conversion of 87%, which illustrates the operating leverage inherent in this business plus the value of the diversifying portfolio. While our US fixed broadband and IFC businesses are driving strong adjusted EBITDA gains, we're beginning to grow our international fixed broadband and community Wi-Fi activities as well. These businesses should add to total segment EBITDA, but could moderate EBITDA conversion efficiencies going forward.

In Commercial Networks, quarterly revenues were up dramatically at 129% year-over-year, which was driven by accelerated terminal sales to our IFC partners, record revenues in our antenna systems division and growing satellite network product sales. Delivery of 234 (ph) IFC terminals to our airline partners was another record. Most of these terminals were installed during the period, so we should begin to see the corresponding service revenues next quarter in the Satellite Services segment. Adjusted EBITDA in the segment also improved materially year-over-year due to higher revenues, substantially improved gross margins, and lower absolute R&D expense, which together reduced the loss recorded from last year by 55%. This quarter, our total R&D investments were $29 million reflecting a fiscal 2019 low point in total dollars as well as a percent of revenues. Looking out, we may see R&D as a percent of revenues closer to the target range of around 6% to 6.5% we've previously noted based on the mix of NextGen satellite, mobility and other platform development efforts. On a sequential basis, adjusted EBITDA improvement reflected our higher revenues plus higher gross margins along with a lower G&A as a percentage of sales. Commercial segment awards in the quarter were $107 million, up 23% compared to the same period last year with Q3 marking the third consecutive quarter of plus $100 million in award flow in this segment. Collectively, this brought our year-to-date awards to $345 million or an 87% increase year-over-year and segment backlog to $351 million, a 19% increase compared to our Q3 fiscal 2018.

So to recap, we closed the quarter with record revenues, substantial EBITDA growth and a backlog position of $1.8 billion, up significantly from the same period last year. Slide 6 has revenue and adjusted EBITDA performance for the first three quarters of fiscal 2019 compared to same period last year. In the Government segment, revenues increased 23% year-to-date and adjusted EBITDA was up 18% due to largely the same factors I discussed for the Q3 period. Satellite Service revenues were up 11% year-to-date due to higher revenues in both fixed broadband services and IFC, while year-to-date adjusted EBITDA was below last year's level as a result of the higher fixed operating costs and the marketing activities associated with our ViaSat-2 service launch. However, on a sequential basis, we are seeing very strong adjusted EBITDA growth as a result of our growing diversified revenue base and the overall operating leverage inherent in our service business, which converts a high percent of each incremental revenue dollar into adjusted EBITDA.

Finally, in Commercial Networks, our year-to-date top line performance was more than doubled year-over-year and reflected essentially the same drivers as our Q3 results. This generated a substantial segment EBITDA loss improvement of approximately 44% with about two-thirds of that improvement coming from our lower R&D expenditures and the remainder from our improved margin.

Turning to Slide 7, we have a summary income statement for the third quarter and our year-to-date periods with a comparison to the prior-year period. For the third quarter, we posted non-GAAP net income of nearly $7 million compared to a non-GAAP net loss of almost $2.5 million in the prior year period. On a year-to-date basis, although our adjusted EBITDA was up 29%, you can see that we posted larger GAAP and non-GAAP losses. This is due to $41 (ph) million of higher net interest expense primarily related to our reduced interest capitalization effects and $52 million of additional depreciation and amortization all associated with the commencement of service on ViaSat-2 in Q4 of fiscal 2018.

This was partially offset by higher net tax benefit and the fact the prior year period also included a one-time $10 million charge associated with our bond refinancing. Year-to-date cash flow from operations was $215 million, which was lower than the prior year period primarily as a function of interest expense that's now running through the income statement plus the comparative impact of last year's $84 million prepayment by Xplornet for the ViaSat-2 satellite services in the Canadian region.

Looking at CapEx, the year-to-date figure was $340 million net, which represents $513 million of investment less $172 million of insurance proceeds associated with ViaSat-2. So comparing the $513 million to last year's figure of $410 million, the increase is comprised of higher expenditures on ViaSat-3 program, GP (ph) investments associated with our growing ViaSat-2 subscriber base, and investments in our back office software platforms and international networks collectively offset by lower ViaSat-2 related investments.

Turning to our overall capital structure, we had outstanding balances of $325 million on the revolver, $700 million of notes and $152 million on our Ex-Im loan. The reduction in the Ex-Im loan balance from $362 million at this time last year reflects the application of the $172 million of ViaSat-2 insurance proceeds plus the two (ph) scheduled principal repayments. Sequentially, our debt balances have dropped approximately $54 million, bringing our total liquidity position to nearly $500 million at the end of the quarter.

So before I move on to our Q3 leverage level, I'll quickly provide an update on the next large accounting standard change, ASC 842, related to accounting for leases, which is scheduled to go into effect in our fiscal 2020 Q1. Based on our implementation work thus far, we expect a standard adoption to have minimal impact to our reported financial performance and related income and adjusted EBITDA measures. The primary impact we expect is a growth (ph) of the balance sheet with our right to use assets as basically the present value of our then outstanding operating leases, offset by a corresponding lease liability in the same amount. We expect the new lease expense to run through the income statement to be materially same to what we record today and these ASC 842 lease liabilities are not expected to impact our leverage ratios or other covenant metrics.

Now looking to the leverage chart on the lower right, we ended the quarter at 4 times adjusted EBITDA, down a turn from 5 times at the end of Q2. Higher adjusted EBITDA this quarter drove more than three-quarters of the improvement with the balance coming from the application of ViaSat-2 insurance proceeds and operating cash flow, partially offset by CapEx. Despite our continuing investments in long-term growth platforms such as the ViaSat-3 constellation and success-based investments such as CPE, our goal is to grow adjusted EBITDA in a relative ratio basis at least as fast as our overall capital spending, which should contribute to slight deleveraging over the next few quarters.

I'd also like to point out that we recently amended our $800 million revolving credit facility with the primary objective of improving pricing as well as resetting the five-year term. The bank group was very supportive and we were able to improve pricing by 50 basis points to 75 basis points across the pricing grid, a pretty strong endorsement from our lenders especially considering how difficult the market conditions were this last December. So with that, I'll turn it back to you, Mark.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Okay, thanks, Shawn. So as we described last quarter, we're very focused on growing our Satellite Services segment profitably. Cash flow from Satellite Services is anticipated to fund a large part of our global ViaSat-3 constellation. Third quarter Satellite Services revenues were up 9% sequentially quarter-over-quarter from $163 million to a record $178 million. Conversion from sequential revenue growth to sequential adjusted EBITDA growth was exceptional at about 87%.

Consistent with our plan, in-flight connectivity, community Wi-Fi and other new broadband businesses contributed a little more to growth than fixed US broadband. So as the chart in the lower left shows, our annualized year-to-date revenues grew significantly compared to the same chart that we showed last quarter and the proportion of revenue associated with other services increased from 20% to 21% also on a year-to-date annualized basis.

US fixed broadband subscribers were flat, but ARPU was up 14% year-over-year. On our last call, we explained how prioritizing ARPU growth over subscriber growth optimizes cash flow in the business. This quarter's results were consistent with that as our subscriber mix continues to shift favorably to a greater proportion of retail and higher value plans.

We continued to make progress in new emerging businesses in enterprise and community Wi-Fi. We're putting some emphasis on better understanding demand characteristics in these new markets, so we can get a better handle on the growth prospects and the factors that can drive sustained profitable growth in each.

We mentioned that as of the end of third quarter, we're already within walking distance of well over 1 million people in Mexico and still growing fast. The map gives a sense of the geographic reach we are attaining. In-flight connectivity is leading the charge in terms of growth of the other businesses. So we'll go into more depth on that in the next couple of charts.

So last quarter, we showed how our in-flight connectivity market share is growing in the US. Well, Q3 was another really good quarter. We brought another 225 commercial airplanes into service. That gets us to a total of over 1,123 tails, a 91% increase from the same period last year. We've included some data from Valour Consultancy below that shows our increasing share of the net global in-flight connectivity installations for the last three calendar quarters and as you can see, we've been growing much faster than any other player over that time interval. In fact, over the last three quarters, they show that we've added more aircraft net than all of the other competitors combined. Third quarter was exceptional in that we captured about 80% of net additions. We anticipate that installations in the current fiscal year '19 fourth quarter will also be robust.

After that, we will have completed a lot of our retrofit installations on American Airlines. So our growth rate will moderate. We'll be in a very strong position in North America though. Our earned reputation for quality and performance has enabled us to extend key relationships with existing airline partners and today, we announced expanded contracts with both United Airlines and Aeromexico. On United, we'll bring our latest generation in-flight entertainment and connectivity system to an additional 34 A319 aircraft that will be joining United's Airbus fleet, and Aeromexico, executed an option to increase the total number of Viasat-equipped Boeing 737 MAX aircraft from 18 to a total of 60 planes, its full fleet of the latest narrow-body.

We're aiming to leverage our success in North America, Europe and Australia into comparable performance on a global basis. Based on our existing Ku and Ka-band global network, combined with the progress on the first two ViaSat-3 satellites and now having executed a third Asia-Pacific satellite agreement with Boeing, we believe we are well positioned to capture a good portion of the global market.

Also, we are very intent on helping our existing customers leverage the capabilities of our network to gain competitive advantages relative to carriers with less capable systems and that's a topic of the next side. So one of the peculiarities of in-flight connectivity is that even when a relatively small fraction of passengers buy it, high quality Wi-Fi extols a very meaningful impact on passengers choice of airlines. JetBlue and Qantas leverage our in-flight connectivity system including free Wi-Fi as one of their amenities and by partnerships with valuable Internet brands, which help increase passenger engagement.

We believe increasing passenger engagement with high quality Internet service can be a powerful competitive advantage for all our airline partners compared with competing carriers whose in-flight connectivity system can't reliably serve a high proportion of passengers. And airlines can use the Internet and all it enables to differentiate themselves based on the broader partnerships, relationships and characteristics they use to define and project their valuable brands. Our rapid growth is enabling an opportunity to engage hundreds of millions of passengers a year across multiple airlines around the world and that group of people being transported at 30,000 feet for hours at a time is an appealing captive audience for many Internet, media, and consumer brands.

Last week, American Airlines and Apple announced a program that allows Apple Music subscribers free access to Apple's music streaming service and also provides free access to prospective subscribers to sign up while in flight. This capability is only available on the American Airlines planes equipped with Viasat Wi-Fi and that will be a substantial majority of the Americans mainline domestic fleet. We've also been experimenting with American and their media partners on live streaming events like the Willie Nelson concert on Austin City Limits that's shown on this side.

An article in the L.A. Times last week described the American Airlines-Apple agreement as an example of how airlines are competing through various forms of in-flight entertainment. It equated the Apple Music offering to free movies or broadcast linear TV or seat back entertainment on other airlines. What the article overlooks is that buying entertainment whether it's broadcast TV, movies, music or others and offering that to passengers free and/or seat backs is actually a pretty expensive thing for airlines to do. With Apple Music, American Airlines is enabling the best in high-quality popular content to its passengers, leveraging the personal relationships that Apple already has or creates with new subscribers directly to the devices they already own.

To the extent passengers see it as a desirable substitute for the expensive content competing airlines have to buy and/or seat back display systems and their associated operational costs, it can be a meaningful competitive advantage for American. We've been working hard to demonstrate that our in-flight connectivity makes innovative agreements like this possible and we think there are many more opportunities in multiple Internet, media, entertainment, information, commerce and other categories and forms. The objective is to engage more people with high quality entertainment or other relevant Internet services on their own devices, leveraging pre-existing or new individual relationships between passengers and Internet brands. There are benefits all around, to the airline, its passengers, the Internet and media companies and to us as well, but it takes a lot of bandwidth available in the right places at the right times to deliver a great user experience at scale. Nobody wants to find out that if their offering is popular and drives high engagement, that very success causes the in-flight connectivity to break or congest.

We think we can outperform competitors and turn great in-flight connectivity into compelling passenger engagement and create an even more powerful intangible advantage for our airline partners. We're really pleased with the progress in the market, the prospects for innovation on the airline and Internet brand sites and are enthusiastic about the opportunities ahead.

So our Government Systems business had another really excellent quarter. Revenue hit a new record at $250 million, up 38% year-over-year. EBITDA for the third quarter was up 44%, also a record for the segment. We still have a backlog of almost $900 million, which is up 26% compared to the same time last year. The backlog value excludes the out years of incrementally funded multi-year contract such as our US Air Force AMSS agreement.

Our business is being driven by strong growth in both products and government specific services. A significant part of our growth is being catalyzed by products and services that we are initiating and creating based on our own discretionary R&D investments. One of the themes we've been working on is to take products that provide substantial benefits to relatively small groups of the lead or special user organizations and make those products and/or the information they generate or distribute available to a much larger mainline forces.

For instance, we're making tactical data link terminals smaller, lighter, less expensive and easier to use. We're doing similar things with network information security and access to reliable and resilient broadband satellite. In some cases, we need to scale up to support larger organizations such as with multi-gigabit network security for data centers.

The upshot is we can make variance of products that have addressed markets of thousands of users or tactical platforms and make them useful to markets of tens or even hundreds of thousands. So far, things are going pretty well and we've been able to steadily grow both revenues and earnings in our Government Systems. As we scale to support larger numbers of users with more globally distributed demand, there's actually more synergy with many of our commercial efforts such as in-flight mobility or emerging markets Internet.

One example of such synergy would be among global Ku, Ka-band services for commercial in-flight connectivity in business jets and our $0.5 billion multi-year government aeronautical mobility contract. Another would be commonality between distribution of cloud-based tactical video products and live over the top audio or video streams for in-flight connectivity. Overall, we continue to be pleased with our steady growth in Government Services and our opportunities to sustain that growth into the future.

Okay, so finally, our outlook and key growth drivers message is very similar to what it was last quarter, which we think is a good thing. As expected, the combination of in-flight connectivity products and services growth has been the largest contributor to our growth this year. Based on strong demand from our airline partners, we've overachieved our internal plan in the last two quarters, shipping and activating more terminals than we expected and that was a significant contributor to this quarter's exceptionally strong adjusted EBITDA growth.

In-flight connectivity shipments and activations should continue to be strong in Q4, though not necessarily at these exceptional third quarter levels. Meanwhile, the flywheel effect of bringing all those new planes into service during this fiscal year is gaining momentum. While in fiscal '19 we're seeing significant benefits from equipment sales, entering fiscal '20, we'll see greater cumulative benefits in our Satellite Services segment from the associated services.

We also have a number of opportunities we are pursuing with new airlines as well as opportunities to expand with existing partners such as United and Aeromexico and we're working with all our airline partners to better leverage our in-flight connectivity to project their brands, engage more passengers, avoid costs associated with other forms of entertainment and help them create new revenue streams.

Also, as expected, Government Systems has been the next largest contributor to growth this year. We've had strong order flow benefiting substantially from well-aimed discretionary R&D in prior periods and we've turned that into product shipments and service revenue. We see good opportunities to sustain our growth into the next several fiscal years.

Looking out further, we see the ViaSat-3 constellation as a strong catalyst for government services growth and we continue to position ourselves to capitalize on that. As always, government segment revenues and earnings can be quite lumpy and it's important to consider results in that context.

As we said previously, we remain committed to profitably grow US fixed broadband revenue through a judicious combination of ARPU and subscriber count. This quarter, it was our ARPU, but we believe future growth will include subscriber growth consistent with our financial objectives. We're aiming to grow total Satellite Services segment revenues and earn good incremental adjusted EBITDA margins on our fixed cost investments. This quarter on a sequential basis, we generated about $13 (ph) million of incremental adjusted EBITDA, excluding the $4 million gain Shawn talked about earlier on $15 (ph) million of incremental revenue, which is excellent, better than our historical flow through and affirms our prudent financial approach.

We won't necessarily do the same each quarter, but it's indicative of the way we're managing the business. Simultaneously, we are making investments in more nascent community Wi-Fi and enterprise businesses that are small, but growing rapidly and have significant upside potential. As we've said, our R&D expenses are moderating primarily on the ViaSat-3 constellation as it ships into the more capital intensive manufacturing phase. Third quarter is at or near the floor in terms of both absolute R&D expenses and as a percentage of total revenue. We believe our strong growth this fiscal year shows that we've done a good job of allocating discretionary R&D into attractive markets in the past and we'll continue to do so on an opportunistic basis.

We continue to make significant capital investments into the ViaSat-3 constellations and are making good progress on the production of the first two, the Americas and Europe, Middle East Africa satellite. We're well into the manufacturing stage. The first ViaSat-3 class satellite is targeted to launch late calendar 2020 to early 2021. Some scheduled phases of the first satellite program are taking longer while others have shortened. On balance, an early 2021 launch is more likely now than it was last fall, which would be a little later than previously anticipated. Our financial and bandwidth management planning is conservative and it takes this into account.

As expected, we reached agreement with Boeing for the third Asia-Pacific satellite and that launch is targeted in the second half of calendar '22. We are working on concluding launch arrangements for the constellation as a whole. Also as expected, we significantly reduced our net leverage through a combination of strong adjusted EBITDA growth and the ViaSat-2 insurance proceeds. We can continue to finance capital investments largely through cash flow from operations augmented by debt while maintaining a strong balance sheet with plenty of liquidity. We are seeing some very attractive potential growth opportunities unlocked by our success in in-flight connectivity, Government Systems and emerging markets community Wi-Fi and we continue to consider and or act on those as they arrive.

Our significant backlog and order book continues to build confidence in continued revenue growth and so we see good opportunities for a sustained adjusted EBITDA growth through the balance of fiscal '19 and into fiscal '20. So that concludes our prepared remarks and at this point we'll be happy to take questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions) And your first question comes from Simon Flannery with Morgan Stanley. Your line is open.

Landon Park -- Morgan Stanley -- Analyst

Thank you. This is Landon Park on for Simon. I was just wondering if you can talk about the margin progression in Sat Services from here after the strong incremental flow through this quarter and when we might start to see ViaSat-3 costs begin to come online and what those might look like for each of the three different satellites?

Shawn Duffy -- Senior Vice President and Chief Financial Officer

Sure, so I think one is we had fantastic (ph) flow through this quarter and we're going to -- we expect to see our, of course, next year, good revenue gains and EBITDA gains that outpace revenue gain, but I wouldn't expect the margin flow throughs to be at the same levels that you saw this quarter. So I think looking closer to what you saw in the earlier part of this year is a better look forward for the next two (ph) quarters.

Landon Park -- Morgan Stanley -- Analyst

And then longer-term, how should we think about the timing of the fixed cost for ViaSat-3 satellites, when those might start to come online and what magnitude those might be for at least the first two satellites?

Shawn Duffy -- Senior Vice President and Chief Financial Officer

Well, I think you're going to see something as far as trend basis, similar to what you saw with ViaSat-1 and ViaSat-2 in the sense that, the year before the launch of service on the satellites, we tend to start having those fixed costs come on and they tend to grow right up to right before the service launch. So, you know, I think that we can provide a little bit more context to the magnitude of those based on -- as we sort out the ground network and the proportion that we're lighting up when we go service but I would expect there to be some fixed cost and they tend to grow quarter-by-quarter right up to before launch.

Landon Park -- Morgan Stanley -- Analyst

Okay. And then just one last one on the residential ARPU side. Can you talk about for the gross adds that you saw in the quarter, what the average ARPU loading was at and is there much remaining retail/wholesale shift that's flowing through and impacting that number?

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Well, I mean obviously because the ARPU grew so much, the incremental ARPU or the ARPU of the plans that we are selling is quite a bit higher. There's kind of steady decline of the wholesale base mostly because the wholesale plans are older plans. They're not the current ones. We are offering upgrades to those wholesale plans for wholesalers that are interested in that. So there's still -- I guess the upshot is there is still room for ARPU growth based on the new plans we're offering and as Shawn kind of alluded to in hers, we're doing a pretty good job of selling the mid and higher tier plans as opposed to just the lower tier plans and that mix between the plans is another factor that's been helping with ARPU growth, but I'd say there is an element of us learning the market, discovering the market and doing a better job of micro targeting those markets and I'd say it's a little bit -- it's a little bit hard for us to forecast what that mix will be, but to the extent that we can capitalize on demand for these more premium plans -- the point is we'd like to do that.

Landon Park -- Morgan Stanley -- Analyst

Okay, have you started reselling any capacity on ViaSat-1 or is that still not taking on new subscribers?

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

So as there's churn on ViaSat-1 and we can then repackage that bandwidth into plans that we can offer. There is also some complex geographical considerations in what plans we offer, on which satellite, in which places and I would say, part of what happened -- what's been going on through kind of the December quarter and give us a little more maneuvering room now is we have created more opportunity to sell plans on ViaSat-1. Now those are ViaSat-1 type plans and we're still looking at what the best mix of those will be and so that -- that will or may change the trajectory of ARPU versus net subscribers during calendar year '19 and it takes a little while for all those things to take effect.

Landon Park -- Morgan Stanley -- Analyst

Great, thank you.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Sure, thank you.

Operator

Thank you. Your next question comes from Philip Cusick with JPMorgan. Your line is open.

Sebastiano Petti -- JPMorgan -- Analyst

Hi, this is Sebastiano on for Phil. Thanks for taking the question. Just in regards to the ViaSat-1 to ViaSat-2, you're migrating the subscriber base. Any color you can provide us on where you are in the transition of ramping down legacy ViaSat-1 offerings and trying to move subs over or -- and for those subs, I mean you did talk about, you're still selling some legacy ViaSat-1 type plans, I think I heard you say that. Are you also at the same time, offering more you know ViaSat-2 like plans on that original satellite -- ViaSat-1 satellite, and if so, any color on churn characteristics for subs that do migrate to higher plans, anything like that?

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Okay, so just to be clear, I think what I intended on the last question was to say, we have subscribers who are wholesale subscribers on ViaSat-1 plans and that's -- the fact that they are the older plans is what's leading to churn off of the wholesale base so that one of the factors driving ARPU gains is that the mix between wholesale and retail is shifting to be more retail, so that will drive ARPU.

Now in terms of the new -- when we bring on new gross adds, the plans that we're using are really more of the ViaSat-2 unlimited type, but on ViaSat-1, the top speeds are more capped by the network infrastructure on ViaSat-1. The -- and then as I mentioned, we're basically learning what the market offers us in terms of demand for these higher-priced, higher value plans and that varies beam by beam and then more and more we are able to target more finely, more granularly on these beams and tap into demand for these higher-priced, higher value plans. So that's basically what's going on is we're doing what we said last quarter, which is, and I'm just going to use this as a gross example is that if we can sell one (ph) $100 plan, there is demand for that, that's better than selling two $50 plans and we like to do that as long as we can to the extent the market offers. So that's the effect and it's a little bit harder to predict or forecast exactly how that mix will play out over time, but right now we are happy -- the players were happy with the results, we're happy with the flow through, it's very capital efficient. So to the extent that we continue to do that, we will, we can augment it with other plans in places that we need to, we will -- we'll do that too.

Sebastiano Petti -- JPMorgan -- Analyst

And then just -- thank you for the color, apologize for the wholesale, getting confused there. Just any incremental color or any thoughts you guys might have currently in regards to whether it be partnering on the residential broadband side, whether it's with wireline providers to potentially try to sell into certain geographies or again just selling in -- partnering with the likes of an Amazon or Hulu and YouTube TV, things along those lines, any considerations or how you would think about it.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

The answer is yes, we are looking at ways to partner with different terrestrial service providers in a way that could either improve our product offerings or increase our distribution. I think it's a little premature to talk about that hopefully in the next quarter or two, we'll have more color on it.

Sebastiano Petti -- JPMorgan -- Analyst

Thanks.

Operator

Thank you. Your next question comes from Ric Prentiss with Raymond James, your line is open.

Ric Prentiss -- Raymond James -- Analyst

Yes, hey, It's Ric. Obviously a big quarter for you guys beating estimates. We got pushed back, our numbers were too high, but you blew us away. Big question we got is where do you go from here? When we think about revenue and margins, Mark, you talked a little bit about Sat Services, but it's getting harder to model you guys as far as what's US versus international? What's residential versus enterprise? How should we think about modeling you guys going forward from the outside?

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Okay, the one thing that we've talked about, which is a big factor this year is really just looking at things like our order backlog because you can see there was a lot of good growth in product shipments both in defense and in the commercial side. One of the things that I think people should be paying attention to is especially if it's more straightforward on the commercial side, when we bring airplanes into service that you can model those as driving Satellite Services revenue.

And we are not breaking out the details of all that, but in the past, we've said that you can think of it like getting an airplane is like 100 subscribers, that's sort of the ballpark number we've used and what's going on is we're adding ancillary revenues to the in-flight connectivity space and we talked about especially on American Airlines adding live TV, now you have the Apple Music service, that's good, but so even as ARPU has grown like 50-ish -- plus 50%, 60% over the last several years, for that ratio to take hold, clearly you want to be doing better in the in-flight connectivity space as well.

They're not going to go in lockstep but that's a way to think about how we can drive the services growth and then we've also given some view into what is the general progression in the trends as we turn these other satellite services, like in-flight conductivity, the international stuff, how does that relate to our total satellite services revenue, right and we've shown over the past few years, it's grown from like 10% to 20% and it is still growing and that will give you some parametric ways to think about how to turn the product stuff which is a little more visible because the backlog into services stuff, which you know it depends on these blends and things that we're still getting out the market. Does that help?

Ric Prentiss -- Raymond James -- Analyst

It does and then on the government side, obviously it can be quite lumpy. How should we think about seasonality in that business and does the government shutdown have a impact or are you expecting any impact on the kind of your flow. I would expect not given how mission critical it is, but thought we'd ask.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Yes, the government side it is lumpy -- as we do well the September quarter because it's government fiscal year-end is an opportunity for us to capture good awards and it's really us capturing those awards is indicative of the demand associated with our non-developmental item products, especially, you know, I think the other things that can help, when you think about government demand and it doesn't deal with the lumpiness, but it gives you, when you think of things over a longer term, some of these ordering agreements and multi-year contracts, which don't show up in backlog but are multi-year agreements you can sort of anticipate. Our history has been very good at those agreements even though they're not binding contracts in the out years tend to be executed over that period of time. So that's another way to help get some -- at least some form of predictability underlying, not necessarily on a quarter basis but on an annual basis.

Richard Baldridge -- Director, President and Chief Operating Officer

So Ric, this is Rick, one more thing I'd add to that is Mark gave you some key fundamentals for considering longer term how these things flow from orders into revenue. One of the things I wanted to point out, we pulled some shipments forward from what we expected to ship in our Q4 into Q3 and so Q3 would come up relative to what we expected. Q4 would be down for a similar amount. So just in the near-term, factor that into consideration. The other one is back on this government stuff, we'll see because of government funding things, we see some jigsaw (ph) effects a little bit, but definitely expect the trend to be up.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

And then regarding the shutdown, we haven't seen any short-term impacts of that. I mean, it might take a little while, but right now, it hasn't -- we're not aware of material impacts.

Ric Prentiss -- Raymond James -- Analyst

Right and the last one for me is the wireless guys have been reporting results and we spent a lot of focus on 5G, it's picking up a lot of buzz and several of the wireless carriers have talked about targeting a fixed wireless broadband solution. How do you think about that and what it might change in the competitive dynamics with your satellite offerings?

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Well, so far, I mean based on all the work that we've done and basically we voraciously consumed all the research that's available on it. You know, wireless even with the 5G -- it's 5G call it millimeter wave spectrum its basically LMDS, which has been around for a while. Those things only tend to work well in geographic markets where household density is sufficiently high. Both household density is sufficiently high and ability to pay is sufficiently high. And so, kind of, our sense is that the biggest impact there, if there is any, we think there's lots of issues with over builders in terms of any technology, but if there is to be an impact probably the place you'd see it first is in the cable market, not necessarily in the places where we are. We find that when we go into those markets that have those levels of high density, those subscribers tend to churn more often (ph). They are less valuable to us in the long run and so we actively are seeking other geographic markets than those.

Ric Prentiss -- Raymond James -- Analyst

Yes, It's OK, it makes sense. Just we're getting a lot of questions on it obviously.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Yes, thanks.

Operator

Thank you. Your next question comes from Rich Valera with Needham & Company. Your line is open.

Richard Valera -- Needham & Company -- Analyst

Thank you. I just wanted to follow up on the modeling aspect for the consumer business, is there anything you'd be willing to say about where ARPU could go -- sort of where are the high-end plans today and assuming you could convert a very significant percentage of your subs to these high-end plans, what's sort of a theoretical high-end ARPU? And then Mark you alluded in your prepared remarks to the fact that it sounds like you do expect to have net adds in some quarters, is there any more color you could give on that so from a modeling perspective, we could have any sense of how we should think about net adds over the next few quarters or couple of years as the case might be until VS-3.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Okay. So one, just on ARPU, one of the things that we look at are measures of ARPU for other forms of broadband ISP services that come either from the government or from other providers (ph) terrestrial and I would say that our ARPUs are approaching, but not higher than indices that the government uses for trying to set subsidized broadband pricing in very rural areas and those indices tend to be growing, you know, increasing. So we don't have a number in mind and basically our subscriber base is a relatively small fraction, less than 1% of the total subscriber base, so it can vary from that. Those are the things we look at, we're not just trying -- we're looking to see what the market offers and especially in the time prior to ViaSat-3, we're going to see what the market offers to us in the places that we have bandwidth and it wouldn't be meaningful for us to make net sub (ph) forecasts in the next few quarters because we don't really -- we are responding to what we see in the market and I would say that if we can get to sustain the types of earnings growth that we have in flow through (ph), we'd be happy. We know -- we are always looking to do better in every one of our segments, but we're going with the market.

Richard Valera -- Needham & Company -- Analyst

Sure. Fair enough. And then on the IFC front, first, the planes you mentioned in the prepared remarks, the ones you'd with United and Aeromexico, are those in the backlog that you reported for the quarter or those after the end of the quarter?

Shawn Duffy -- Senior Vice President and Chief Financial Officer

Those are -- I don't think that all of those are within the backlog in the quarter. (multiple speakers).

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Definitely, Aeromexico is not.

Shawn Duffy -- Senior Vice President and Chief Financial Officer

Yes, for sure. And remember our backlog (multiple speakers). Yes...

Richard Valera -- Needham & Company -- Analyst

I'm sorry, what was that last part? So, Aeromexico is not. Are the United ones in as well or not?

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

No, they are not either.

Richard Valera -- Needham & Company -- Analyst

Got it. And then just wondering if you could give a little color on the landscape in terms of sort of the pipeline for IFC opportunities, you sounded sort of optimistic there. I mean, one thing we've been hearing out there obviously is that there is some rebids going on. Can you guys just talk about the opportunities there in terms of going after things that might be rebid and just in general how you kind of see the landscape for additional IFC wins?

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Yes, I mean, I'm glad that it comes across that we're optimistic. I think the reasons we're optimistic are I think if you look at our growth rate and our -- it's the customer satisfaction in both the passengers and the airlines. Technically, it's a very challenging business. I think we're doing well. I think that our vertical integration helped us. We feel like our reputation is strong. When we've been -- when we can help some of our customers do things like this Apple Music thing, it can be really meaningful to airlines that are under intense cost and competitive pressures.

So I think airlines are looking at those, the big and just to be clear, what's gone on so far is in the markets where we have all Ka-band and that is North America, now Central America, Europe, Australia, we've competed very, very well. What we're really aiming to do is to get into the global market and so some of that will come with the timing of our satellite launches relative to airline acquisition of new planes. And so just to remember, one of the ways that we've been pretty successful in penetrating airlines and once we get in with them is in establishing good relationships is we get into their new planes and then based on them liking us or liking the service that we do or the reliability and the economics, that whole package, we get opportunities to go after retrofits and sometimes replacements of existing ones.

So that's kind of the way we're going about the global market, which is as we look at the ViaSat-3 constellation and you look at the time frame of that, airlines are seeing that line up with their new orders and that's clearly good fertile ground for us. Then the other thing that we're doing is airlines can start looking at how much of their total seat miles are under our Ka-band satellite, can we augment that with our Ku-band global network and that's also getting their interest both for new planes and retrofits.

So those discussions are, have been going on and I can tell you there is -- we feel like there's been good progress, but the execution of those contracts and the announcements are all going to be at the pleasure of the airlines and we've got to respect that and so it's hard for us to be specific about specific airlines or locations. One of the things Ric is I think you're going to see some competitors making desperate attempts in some of these recompetes or competitions and I think we're trying to stay away from that and really, really focus on how do we help the airline accomplish what they want to accomplish and not just milk them for every last dollar, but don't go in and do compete in a desperate way where we can't deliver high quality service.

Richard Valera -- Needham & Company -- Analyst

Sure, makes sense. Just one more if I could, on the first ViaSat-3 launch delay. I wasn't clear exactly what caused that and could you give a sense of the magnitude of that delay. Thank you.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Yes. So we just said what we had been saying end of '20 -- calendar '20 (ph) launch could be early '21 for launch. The thing we're saying is there is a schedule includes multiple phases, some phases have lengthened, some we're doing better. Obviously, we're trying to shorten the future phases to the extent we can and I would think of it more as a probability distribution than I would a point estimate and so what we've said is that probability distribution has shifted a few months more (ph) into early '21.

There's also -- and that's the launch. There's other factors and it would be false precision for us to try to describe each phase in detail, but there's other factors, things we're also working on, and I think we're making progress on and we'll discuss later is shortening the post-launch phases as well, things like orbit raising, in-flight testing as well. So right now, I would say, we talked about probably the potential of a few months or an increased likelihood of a few months delay.

Richard Valera -- Needham & Company -- Analyst

Got it. Perfect, thank you gentlemen.

Operator

Thank you. Your next question comes from Mike Crawford with B. Riley, your line is open.

Mike Crawford -- B. Riley -- Analyst

Thanks, staying on launches. If ViaSat-3 Americas and then six months later, EMEA go as expected in say 2021 and then you launch the APAC satellite in the second half of 2022. Would you expect 2022 to already be a year where Viasat would be generating free cash flow?

Shawn Duffy -- Senior Vice President and Chief Financial Officer

I think, this is Shawn, so I think it is highly based on the timing of these -- of our activities and a little bit is reliant on the level of the ground network build out that we do at in service, but I think what we've been saying is that free cash flow should kind of be in that time a couple years after our first ViaSat-3 launch. So I think that's the right point line (ph) to look out right now and we'll keep you updated.

Mike Crawford -- B. Riley -- Analyst

Okay, thank you. And then, also in a couple of weeks, there's going to be the first few (ph) OneWeb, CubeSat's launch. Now SoftBank has really stopped talking about OneWeb as one of its Vision Fund investments. They've listed a whole bunch of companies in their last couple of six months updates, not OneWeb, I think they are about $1 (ph) billion short of equity needed to launch the kind of constellation they were initially talking about but if that's a reduced size constellation, how, if at all, do you see that impacting anything that ViaSat might do or not impacting?

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Okay, so first of all, one of our points and I think others have made this as well is that the amounts of bandwidth that we're talking about in these constellations, which are low terabits per second represents less than 1% of the estimated access network bandwidth that would be in play in global markets in that time. So one is, we don't want to come across as a winner-take-all zero-sum game. We really like our position. I think our economics are really good. I think that if the -- to the extent that costs are increasing (inaudible) people are recognizing higher (ph) constellation costs for the LEOs and total capacity is going down because they use fewer satellites or that the satellites have to cover a larger area on the ground, which reduces the average gain that they get, reduces bandwidth efficiency, all these things tend to degrade unit economics. That is what is their cost of unit of bandwidth and for us that's the thing that we're most likely to compete really favorably on and we think that's the dominant metric that people look at in the market is how much bandwidth do I have and what's the unit cost. So we don't see -- in general, we don't see our position eroding. I think as more things have come to light, I think our position looks stronger in terms of competing on the both the unit bandwidth basis and then also being able to deliver sufficient bandwidth into the highest demand places. So we're happy with our position, we think it's improving, it doesn't mean that all the others are doomed to fail. I do think that some of the things that you're seeing in the market are making their unit economics more difficult though.

Mike Crawford -- B. Riley -- Analyst

Okay, thank you. And then a final question is on your hotspot business. Given rapid expansion in Mexico or maybe other markets to pursue in Central America, down in South America maybe using your capacity in Brazil, how do we -- how should we think about the cash conversion on the hardware that needs to be put in to all of these sites?

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Okay. Yes, so far, the way we look at it is, think of it as a SAC cost except that now instead of having a subscriber acquisition cost devoted to a single residential subscriber, we choose a site, we invest it in that site and then we get a return from that site from the aggregate of all people that use that. And right now, those unit economics look more favorable than do our individual subscriber economics. So to the extent that we can sustain that and it looks like there is underlying demand. So if we can sustain that in the sites that we have and then we can find more sites that have the same characteristics. That's a good business, so we continue to do that as much as we could.

Robert Blair -- Vice President, General Counsel and Secretary

I think of that Mike as that starts what Mark's talking about, that starts with connectivity and that's good, but after you are in those places for a while, there's other ways to monetize those highlights. (multiple speakers).

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

But that's on our list, yes.

Mike Crawford -- B. Riley -- Analyst

Thank you.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Thanks, Mike.

Operator

Thank you. Your next question comes from Wilton Fry with Royal Bank of Canada. Your line is open.

Wilton Fry -- Royal Bank of Canada -- Analyst

Yes. Good evening. Your press release on December 10th stated you just hit 1,000 aircraft mark. That's 102 aircraft in the first 70 days of the quarter. You end up doing 225 which means I guess you did 123 in the last 20 days of the year. I was wondering if you can explain that 400% increase in the installation rate per day as you hit sort of the last part of the --last part of the quarter, were there any sort of contractual/financial obligations you had to meet (inaudible) help explain that? Thanks.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

You talking about the press release? Is that what he's talking about? the 1,000 -- press release.

Wilton Fry -- Royal Bank of Canada -- Analyst

Yes, you put out a press release on December 10th.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

You can't measure those -- the timing as absolute perfectly. So we start that process, we hit a milestone and start that process, but in the week (ph) in preparing that, there were probably another -- probably another couple dozen aircraft that were delivered, so it's not that precise.

Wilton Fry -- Royal Bank of Canada -- Analyst

Sorry, the press release did say it hit 1,000 mark that day. So I took it as a precise release. Okay. Were there any Q4 aircraft brought forward into Q3?

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

There were, yes. Aircraft that we had planned for Q4 that were delivered in Q3, yes.

Robert Blair -- Vice President, General Counsel and Secretary

Also I think we'll have situations, especially with new airlines where they'll be flying terminals for a while, but not declare them in service. So it's not like they were all literally installed in that time.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

But you're right, there was a lot of pressure and it wasn't from us, it was from our airline partners trying to get these aircraft in service. So American has done a phenomenal job of stepping that up.

Wilton Fry -- Royal Bank of Canada -- Analyst

Okay, great. Thank you.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Okay.

Operator

And this concludes our question-and-answer session. I'd like to turn the call back over to Mr. Mark Dankberg for closing remarks.

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Okay, thanks. Thanks very much everybody for dialing into our call today and we look forward to speaking again a quarter from now.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you all may disconnect. Everyone have a wonderful day.

Duration: 71 minutes

Call participants:

Mark Dankberg -- Chairman of the Board and Chief Executive Officer

Robert Blair -- Vice President, General Counsel and Secretary

Shawn Duffy -- Senior Vice President and Chief Financial Officer

Landon Park -- Morgan Stanley -- Analyst

Sebastiano Petti -- JPMorgan -- Analyst

Ric Prentiss -- Raymond James -- Analyst

Richard Baldridge -- Director, President and Chief Operating Officer

Richard Valera -- Needham & Company -- Analyst

Mike Crawford -- B. Riley -- Analyst

Wilton Fry -- Royal Bank of Canada -- Analyst

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