ViaSat (VSAT) Q4 2022 Earnings Call Transcript

ViaSat (VSAT 1.93%)
Q4 2022 Earnings Call
May 25, 2022, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Hello, and welcome to Viasat's fourth quarter and fiscal year 2022 earnings conference call. Your host for today is Richard Baldridge, president and CEO. Sir, you may proceed.

Rick Baldridge -- Chief Executive Officer

OK. Thanks for joining us today. I just want to point out that we released our shareholder letter shortly after market close, and it's available on our website. We'll be referring to it throughout the call.

So joining me today on the call Mark Dankberg, our executive chairman; our CFO, Shawn Duffy; Robert Blair, our general counsel; and Paul Froelich, corporate development; Peter Lopez from investor relations. So today's call, we'll just go through a few brief opening remarks and follow that by Q&A. So before we get started, let's have Robert provide our safe harbor.

Robert Blair -- General Counsel

Thanks, Rick. 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 reports on Form 10-K and Form 10-Q.

Copies are available from the SEC or from our website. Back to you, Rick.

Rick Baldridge -- Chief Executive Officer

OK. Thanks, Robert. Fiscal '22 was a great year for Viasat. We delivered the financial results that we had targeted and previously communicated to our investors, and we continue to execute on a number of very strategic and operational fronts.

For the year, we achieved record revenue of 2.8 billion and record adjusted EBITDA of 611 million. For revenue, this was a 24% year-over-year increase. And for adjusted EBITDA it was a 15% increase, which was consistent with our guidance of double-digit revenue growth and mid-teens adjusted EBITDA growth. We have goals for the year.

While we outperformed in the first three quarters, we knew Q4 would be sequentially softer based on the factors we communicated in our last call. With increased ground network costs for the upcoming ViaSat-3 American satellite, increased R&D investments and changes in product mix, which had -- which were exasperated by certain government-secured product certification delays, as we described last quarter, as well as some sudden, but since -- resolve supply chain issues that impacted certain government product shipments. I'll touch on briefly on satellite services. As anticipated, we're seeing very good growth to date in our IFC business, both aircraft returning to service and additional aircraft from new and existing customers.

We also had contributions from the recent RigNet and EBI acquisitions. Fixed project growth was a little weaker than we -- as we manage our limited bandwidth supply in the U.S. in support of higher value data plans and growing IFC demand. At IFC, we're adding new customers and increasing the tel counts with existing customers.

We're very proud of our agreement with Southwest Airlines, which was announced subsequent to the end of the quarter. Although we continue to be hampered by bandwidth constraints in the U.S., which has resulted in continued subscriber mark, we're making steady progress in fixed broadband elsewhere. For example, since recently, we surpassed the 50,000 subscriber mark in Brazil after only having nationwide commercial service there for about 18 months. Let me -- confidence in our ability to successfully execute retail service launches in some of the new international markets we're going after.

And the letter does a good job covering our government and commercial segments. So let's move on to the ViaSat-3 constellation, where we've cleared several large risk reduction milestones in the last several months. The ViaSat-3 Americas satellite has completed vacuum and extreme temperature testing. And we are pleased to see payload performance better than expected during testing.

We should be complete with the vacuum chamber by the end of today, allowing us to move the space scratch out and proceed with the rest of the integration effort. Alpha testing on the ViaSat-3 ground network has gone very well, and we're on track to have sufficient infrastructure in place to enable commercial services, which we were targeting for early in our fiscal fourth quarter, within a week or so of where we're planning last quarter. ViaSat-3 and [Inaudible] payloads modules are now complete and is undergoing final testing at our Tempe, Arizona facility for shipment to Boeing, which is expected to occur in -- sometime in this quarter. Based on our experience on the Americas Satellite, this second payload was completed much faster with a more predictable schedule, the same is holding true for the third satellite, the Asia Pacific satellite.

So, turning to Inmarsat. We're continuing to advance on various transaction milestones and since the last quarterly update, we have completed an agreement with the U.K. government for certain economic undertakings, which demonstrates our long-term commitment to U.K. We filed a definitive proxy statement with the SEC and set a date of June 21 for a special meeting of our shareholders regarding the transaction.

Inmarsat just reported another quarter of solid financial operational results, which are highlighted on Page 10 of the shareholder letter. And you can go to their website, too, I believe. We're targeting to complete the transaction by the end of this calendar year with antitrust approval processes in the U.S. and U.K.

being the pacing items just because of their process -- or the nature of their process. In March, we, Viasat completed a term loan for $700 million of financing, which was used to pay down our revolver with the remainder of the cash to be used to continue funding the ViaSat-3 constellation. And I'll remind everyone that we have all the remaining transaction financing in place as this financing was fully committed at the time we signed our purchase agreements last November and includes provisions that limit the impact of the current debt, market volatility it might have on our ability to close the transaction, achieving our financial objectives post-closing. Turning to our outlook.

Companywide outlook remains strong. We continue to leave we'll achieve our stand-alone financial targets, including our average annual adjusted EBITDA growth in the mid-teens for FY '23 relative to FY '22. This as we achieved them for our last fiscal year. The last quarterly revenue -- the quarterly revenue and EBITDA trajectory for this year, our FY '23 will be weighted toward the second half as we ramp up commercial airlines in service over the course of the year to an anticipated 2,400 tails approximately.

As we begin commercial services on ViaSat-3 in our fourth fiscal quarter -- in our -- in ViaSat-3 in our Q4, normal seasonality and near-term certifications and supply chain issues we described in our letter. Longer term, we also continue to believe that we're on track to achieve more than double-digit adjusted EBITDA by FY '25 relative to FY '20 on a stand-alone basis. Well, of course, we're very excited about the upcoming ViaSat-3 launch and Inmarsat acquisition. Our strong operational and financial performance demonstrates our teams continue to focus on solid day-to-day execution, and I think the same can be said for Inmarsat based on their results.

So with that, let's take your questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] Please stand by while we compile the Q&A roster. Our first question comes from the line of Landon Park with Morgan Stanley. Your line is open.

Landon Park -- Morgan Stanley -- Analyst

Great. Thanks for taking the questions, everyone. I'm wondering if you can just confirm in terms of the actual launch timing for the ViaSat-3 satellite versus the late summer window that you had given last quarter? And then beyond that, I'm wondering if you can double a little bit more into some of the mobility markets. Maybe what you're seeing out of the RigNet now that we're seeing some better demand in the oil and gas industry.

And maybe touch on your ambitions within the business aviation market and where you're at with your ESA development?

Rick Baldridge -- Chief Executive Officer

OK. On the ViaSat-3 schedule, we -- it has list -- it's weeks since our last call. Right now, I think, we were anticipating being in service by the end of the year, and we're early into the -- what our fiscal fourth quarter, so in the January time frame is what we're expecting now. So it's been weeks.

And I think the -- and what we have is a launch window and so where we fall within that window, it's going to -- it was moving it a little bit to the left or to the right. But that's what we expect. We've been able to mitigate a little bit of the physical slip of the delivery for launch, just with the build-out of our ground network and ongoing testing. So we're doing some of the testing that we would have normally done on the orbit, we're being able to do that with some of our existing satellites in our ground network.

So trying to mitigate a little bit of the impact, and that's kind of how we get to early next year service launch. So that's -- that part, I'll talk about RigNet. I want to talk on the last part. The oil and gas part at RigNet, when we acquired RigNet, the real prize here isn't really large growth in oil and gas side.

It's really being able to substitute bandwidth, which we really do need the ViaSat-3 satellites for how they were doing business and grow the types of offerings we can make in their market segments. So some of that growth really depends on us getting this constellation up. And so what we've been doing in the meantime is integration efforts with RigNet. And Inmarsat helps with that as well in some of the Inmarsat assets that they have because RigNet is a customer of theirs as well.

So being able to do that integration is really what drives future value with the RigNet businesses.

Landon Park -- Morgan Stanley -- Analyst

And can you size that in any way?

Rick Baldridge -- Chief Executive Officer

Well, yeah, I think we -- it's kind of like -- it's not really -- what you don't want to do in these markets because you go in and replace what they're currently doing with something that's cheaper. Instead what you want to enable is a lot more services that they would do if they had the bandwidth. And so on a per-site basis, it could be multiples of what they have as opposed to 10% or 20% more. Yes.

Landon Park -- Morgan Stanley -- Analyst

And in terms of the synergy number and timing?

Rick Baldridge -- Chief Executive Officer

On RigNet?

Landon Park -- Morgan Stanley -- Analyst

Correct. Yes.

Rick Baldridge -- Chief Executive Officer

Most of the synergies that we've achieved the cost synergies that we've laid out in our initial objective. Most of the synergies with RigNet are in the ability to stop paying ongoing fees to other satellite operators and replace that with our own capacity. And so those will occur as we bring on these ViaSat-3 satellites.

Landon Park -- Morgan Stanley -- Analyst

OK.

Mark Dankberg -- Executive Chairman

Business debt?

Rick Baldridge -- Chief Executive Officer

Mark, go ahead.

Mark Dankberg -- Executive Chairman

Yeah, business debt has been growing for us, been growing for Inmarsat as well. The main things that we've been focused on are working with OEMs because OEMs are pretty straightforward way to get built on to aircraft and create service opportunities and then also in working with fleet operators, again, it's a good way to grow the business. And then we're also increasing the ways in which we work with distributors to make the services more attractive. The biggest thing on business is getting more coverage with ViaSat-2 and having European coverage that is a fair amount of market for us, but now as ViaSat-3 comes up with the Inmarsat which is the combination of kind of their coverage on assays looks really promising in the market.

Landon Park -- Morgan Stanley -- Analyst

And your ESA development.

Mark Dankberg -- Executive Chairman

Yes. So from an ESA perspective, we already did a flight demo on that. We did it on business jet, was the first one. What we're working on now is converting that into commercial products for both kind of think of a bit of project -- one of the main focus for us is our commercial market is having a follow-on product there that's kind of future-proof in multi-orbit, but then we're also going to be able to apply the same technologies ultimately into the business jet and the smaller jet market as well for commercial jet or regional markets as well.

But the technology, the main thing that we're doing right now is productizing what we demonstrated earlier.

Landon Park -- Morgan Stanley -- Analyst

Great. Thanks very much, Mark.

Mark Dankberg -- Executive Chairman

It's also directly applicable to our land mobile markets in the future. So a lot of that comes through our product.

Landon Park -- Morgan Stanley -- Analyst

OK. And just some really quick ones for Shawn. I'm just wondering if you could provide some more details in terms of the types of rates that you're locked into on the financing? And maybe just anything you can say on the capex outlook for the fiscal year.

Shawn Duffy -- Chief Financial Officer

Yes, sure. So with respect to the rate, we're not going to give all the details of the underlying agreements. But the way I think you can think about it is because these were kind of U.K. file deal overall.

The financing that we've put in place that was -- as Rick mentioned. And so the rate and the major terms are kind of conditioned to the market back in November. And so that gave you a little bit of a kind of a framework with respect to the kind of the protections that are built in there. And that gives us that upper limit benefit -- relative to the outlook.

And then -- sorry, you asked about capex as well. So I think you can see that our capex for this year was a little bit lighter than what we were targeting. So next year, you can think of it. We're getting into the fixed part of the program, both this year and next year.

So I think next year, thinking about around 350 or so per quarter is a good range, might be a little thicker in the last couple of quarters, but that's a good range.

Landon Park -- Morgan Stanley -- Analyst

Great line, Shawn. Thanks, everyone.

Rick Baldridge -- Chief Executive Officer

Yeah. Thanks, Landon.

Operator

Thank you. Next question comes from the line of Ric Prentiss with Raymond James. Your line is open.

Unknown speaker -- Raymond James -- Analyst

Hey, everyone. This is Brent on for Ric. Good afternoon. A few questions.

First, I appreciate the updates on the ViaSat-3 timeline. I'm also wondering, what are the current expected timelines for launch, as well as in service for the EMEA and APAC satellites.

Rick Baldridge -- Chief Executive Officer

Well, we've said for a while that they're kind of six-month centers from the other one. But I'd say the second one hasn't slipped when we've had these last weeks. So it could be coming in just inside that. But by the end of calendar '23, our third launch is right around that year-end, March.

So I mean it's possible it slips into early -- calendar '24 or stays in calendar '23, but the count on that schedule could be a little earlier.

Unknown speaker -- Raymond James -- Analyst

OK. That's helpful. And you talked about increasing spending as you get ready for that on the opex side. How much did you spend in 4Q really specific to the ground systems and Viasat through on the opex side? And what's the magnitude in pacing of opex related to ViaSat-3 preparation from here forward?

Shawn Duffy -- Chief Financial Officer

Yeah. So in -- this is Shawn. In Q4, the number was, say, $7 million to $8 million, and that's going to keep increasing sequentially quarter to quarter to next year. So you can think of next year full year probably across the fleet, somewhere around 60.

Unknown speaker -- Raymond James -- Analyst

Great. Got it. And then you also talked about R&D spending and some exciting projects on the government and mobility side and mentioned a few projects there. Which of these projects should we be most excited about as far as near-term, mid-term and long-term opportunities?

Mark Dankberg -- Executive Chairman

Well, probably the ones with the closest timelines are going to be the government ones because they represent opportunities to get integrated onto new types of aircraft or to extend our -- basically to extend our reach and with certain types of existing customers. But the kind of the long-term ones are really, both air mobility and land mobility are the kind of the two big ones. The air mobile stuff, we think -- the market is still pretty lightly penetrated and there's 30,000 commercial aircraft going to 40,000. We think the commercial air mobility market is still a really, really exciting one.

But going into the general aviation markets right now, we're kind of the largest being able to move down to the mid-tier and even lower, that's a really guiding market. The one that's -- that we're just getting into and report some of our investments are going are in land mobile as well. And land mobile is -- we can see a lot of similarities to the air mobility markets, a lot of them are driven by people and passengers, but there's also some really interesting kind of broadband IoT markets. And that one, I think, is -- that's going to be -- is a good market.

But what we're really looking to do is to make sure that we have presence in all those mobility markets that we've outlined in our total addressable market, the things that head up to that $1.5 trillion. I think it's -- one of the things that we see is really important, is serving a broad range of those markets, driving bandwidth consumption, and getting the revenue from that enables us to keep moving down the learning curve on the bandwidth productivity. That's what's made this possible so far. So I think it's kind of all those aggregate markets.

Unknown speaker -- Raymond James -- Analyst

OK. And last one for -- yeah, that's helpful. And last one for me on the Inmarsat timeline. What do you think would cause you to exceed or miss the timeline of year-end? And what's your biggest concerns right now?

Rick Baldridge -- Chief Executive Officer

Well, it really is just the process on the antitrust reviews. So in the U.K., it's the CMA and here is DOJ. And we're producing tens of thousands of documents for those reviews. And so it's just -- and it really just is a process.

We don't see any issues of that, it's been going quite well. The discussions have been. We went into this thing kind of understanding what all the questions would be. We think we've got a very good case, and they're two totally different processes.

So they work differently. And we've made very good progress. The undertaking is an example in the U.K. with that group, we've made really good progress in multi-countries for working through the hurdles.

And -- so we don't really see anything -- anticipate anything negative. I haven't seen any indication of that. It's really just -- there's a way in which they go about your submittals and then questions and your responses and their review cycle. So if that goes slower, that could push us.

If we -- one request goes into another request, then that's another delay. And that's what guides us, I think. I think what we've -- we still feel good about the nine- to 18-month guideline that we gave out.

Unknown speaker -- Raymond James -- Analyst

OK. Thanks, everyone. Stay well.

Operator

Thank you. Our next question comes from the line of Ryan Koontz with Needham and Company. Your line is open.

Ryan Koontz -- Needham and Company -- Analyst

Thanks for the question. Most of my questions have been answered, but I wonder if you could give us a ballpark on the magnitude of the slip out on revenue in the government systems side from these NSA approvals and such would be helpful. Thank you.

Shawn Duffy -- Chief Financial Officer

Yeah. I can try to give you at least a feel for what we're thinking. I mean one of the things I can get rolling from mine. So we talked about last quarter that we saw these pressures come in Q4 and into the early year, and I think that's exactly what we're seeing.

The other thing is Q1 is seasonally our lightest quarter in that government segment. So you've got to keep both of those things in play. I think that can be when you think about the sequential performance, that will be the highlight.

Rick Baldridge -- Chief Executive Officer

So to -- just last time, we talked about these delays and certifications moving out of last out of -- we actually had expected them in our December quarter. And then we said, what's going to happen in Q4, could happen in Q1 or Q2 of our FY '23 so June or September. But we don't see it occurring in Q1. We think it's going to move into the September quarter, which means you won't start really getting deliveries of those products until Q3 and Q4.

Now -- so we've said that we haven't seen any reduction in demand. These are really just getting to the certification process so they can be delivered. So we don't see an overall reduction in terms of what the value of those are going to be. This is just the light.

Ryan Koontz -- Needham and Company -- Analyst

Got it. [Inaudible]

Rick Baldridge -- Chief Executive Officer

We also had some part shortages that have occurred in the last couple of quarters, a couple of products that we're resolving that have been resolved for right now, that's just start shipping. But like Shawn said, we expect another sequentially down quarter in our June quarter versus the March quarter, overall, until that starts to come back.

Ryan Koontz -- Needham and Company -- Analyst

Got it. Very helpful. Thanks so much.

Rick Baldridge -- Chief Executive Officer

Yeah. Thanks, Ryan.

Operator

Thank you. Our next question comes from the line of Louie DiPalma with William Blair. Your line is open.

Louie DiPalma -- William Blair -- Analyst

Rick and Mark, good afternoon.

Rick Baldridge -- Chief Executive Officer

Hi, Louie.

Louie DiPalma -- William Blair -- Analyst

What drove the sequential decrease in satellite services revenue? Was it like entirely driven by like lower subscribers on the consumer broadband side due to the capacity shift toward mobility? Or were there any like one-time items in the quarter that drove that decrease?

Shawn Duffy -- Chief Financial Officer

Hey, Louie, it's Shawn. So primarily, we did have a little bit of fixed broadband pressure in U.S. that was offset from growth in LatAm. But the other thing is there's a little bit of seasonality that you see in Q4 from Q3 in the ISP business as well.

So that's something to keep in mind.

Louie DiPalma -- William Blair -- Analyst

Sounds good. And with the expected launch of an entry into service of ViaSat-3, I think you said for January, should that lead to a stabilization for the residential broadband revenue? Or do you expect residential broadband revenue to continue to decline in fiscal 2023 and for that to be like more than offset by increases in the aviation revenue?

Mark Dankberg -- Executive Chairman

So overall, in '23, in the first three quarters, we expect residential to continue to decline as we allocate more of the bandwidth to the in-flight. And we've talked about the number of airplanes that we expect to activate and that's really what's going to drive the decline in the residential subscriber count. But in the fourth quarter, we're expecting that to turn around and start growing again. And we do have expectations of growing the residential subscriber count in the U.S., as well as internationally going forward from there.

Rick Baldridge -- Chief Executive Officer

So one point you should see first as it stabilized a little bit and then start to grow. One thing I'd just like to comment on about this is, remember when the IMT business got hit with COVID, that we put a lot of resources toward offsetting that on the residential side. And then with IFC coming back that you're seeing residential contract as we allocate bandwidth again. So that's one of the things we like about having multiples of these businesses so that we can allocate resources in real time around those market areas.

Louie DiPalma -- William Blair -- Analyst

Great. So ultimately, you expect both U.S. consumer broadband subscribers and like potentially like ARPU to increase beginning, I think, toward the end of fiscal 2023?

Mark Dankberg -- Executive Chairman

Yes. On a sequential basis, we expect subscribers to start growing in the fourth quarter as we get capacity. I think from an ARPU perspective, we will -- we're going to look at what the market is. But one of the things that has driven our ARPU up is the fact that we didn't have very much bandwidth.

So we have a lot more bandwidth then we'll probably be able to grow in multiple segments of the market, not just the way we've been growing, which is through higher ARPU. So I think we'll have better plans that are more valuable plans. Some of those will be higher priced than what we have now. But I think we'll also be able to introduce plans that are a lower price than what we have now because we have a lot more bandwidth inventory to work with.

So I think ARPU trajectory -- we'll have more clarity on that, once we start going to market with those services.

Louie DiPalma -- William Blair -- Analyst

Sounds good. And related to Inmarsat, are there any plans to develop a Ka-band antenna that would be compatible with both the ViaSat and the Inmarsat network such that when you're like bidding on like international aircraft right now, and like when you equip aircraft over the next two years that they would be compatible with either network, so there's like increased redundancy?

Mark Dankberg -- Executive Chairman

Yes. So as a matter of fact, right now, one of the things that we've done is we try to make our Ka-band terminals compatible with a large number of different Ka-band satellites. So for instance, we don't use all these compatibilities yet, but just talking about our own network right now. For instance, we work on NBN Satellites in Australia, we work on Brazilian Telebras Satellite.

In Brazil, we work on Viasat satellites. We work on other third-party satellites in Europe and we can work on satellites in Asia. So the antenna systems can work on all those. With respect to Inmarsat satellites in particular, all of our antennas are capable of working on the Inmarsat satellite.

The Inmarsat terminals are capable of working on our satellites. There may be a network or modem compatibilities that we'll have to work out, either on individual airplanes or we also can work -- do those things within the network gateways, which have -- high all the -- airplanes that connect to those gateways. So we have quite a bit of maneuvering room to be able to get to that. But our objective is really to be able to get global coverage pretty much immediately between the between the two fleets and to have that additional redundancy that you're referring to with our own satellites and that as well.

And that's -- we think that's going to be a really attractive feature for our customers. Just think of it as building Rome of the networks. Yeah. Good room on ours or vice versa.

Louie DiPalma -- William Blair -- Analyst

Thanks. And one final question. Do you have a rough estimate of your backlog for aviation, like commercial aircraft under contract? I know you said that you have 1,830 online, and you expect to have 2,400 online by the end of fiscal 2023. But how much -- how many more planes will you have in backlog like at the end or -- like right now or like at the end of fiscal 2023 to install in the future?

Shawn Duffy -- Chief Financial Officer

So Louie, right now, we have just under 1,000. And you can think -- and just to be clear, that does include the Southwest quarter. So yes. So a good healthy backlog.

Louie DiPalma -- William Blair -- Analyst

And for that backlog, it seems interesting in that, I think, two years ago or three years ago, like you announced like an order for United Airlines 737 MAX. And I think it was for like a small quantity, but I think they have like a very large order of MAX aircraft, and they have a lot of like options and a lot of your customers like Delta have options with the A321neo and I think American Airlines has options with the A321neo. Does your backlog contain like options? Or are they just for like firm orders for aircraft?

Rick Baldridge -- Chief Executive Officer

It's just the firm orders that they've made today. It's always in our backlog. Some of those orders include aircraft that those customers have, for instance, the Southwest order includes aircraft at Southwest that are yet to be delivered to Southwest. So it's not -- some of these are on new aircraft that they've got worse, for example.

But in the cases of low -- what we're -- our goal is to be kind of the best provider to each one of these guys so that when they do order to aircraft, those are coming with our service. And that's our mission is to make those customers very happy to provide the best available connectivity and value to the airline customers so that all their future orders have already booked. And that's plan A.

Mark Dankberg -- Executive Chairman

And that's pretty much worked. The other thing -- the other part of this, because we do get questions on that as well. What we want to do is make it so that the surface on the plane is better equipped with ours are so good that they're motivated to update their existing fleet as well. And that's gone well.

So those are the ways in which we continue to grow orders with existing customers. I think the -- although the fixers can play with pretty much all will the airlines that we serve now.

Louie DiPalma -- William Blair -- Analyst

Can I ask another question actually on this topic for a lot of your airline contracts, have you contemplated the potential transition to free Wi-Fi? And like are you able to like -- at a high level, estimate what would be like the potential impact to like average revenue per aircraft in that type of transition?

Mark Dankberg -- Executive Chairman

So yes, OK, yes, to both of those. I think that one of the things that -- here's the kind of I think the way that I would put it, what's going on in the airline industry in the last couple of years is for a while, there was a focus on connecting individual planes. Let's take an individual plane fly it on a route, show me what you can do on that plane. I think what has happened is as people at airlines see the value utility of Wi-Fi, and they realize that they get some kind of customer satisfaction from passengers that use the connectivity, the notion of making it free has become more important.

And when they make it free and the usage grows, what they find is that the real issue is less connecting individual planes and more making that service reliable for their fleet as a whole, especially in the places that their hubs elsewhere, where there will be the most planes. So that's where the focus has gone. And what that means is that when airlines make Wi-Fi purchase decisions, that issue about, OK, what would have you liked for us to go free. We want that as an option.

And what does that mean for connectivity at our hub cities, what does that mean for service level agreements, that becomes a part of the negotiation. And I think that from our perspective, yes, it's good for us that it gets more usage. And not we're thinking working with airlines to make sure that's good for them as well. So those are the two things to publish it.

The way in which they do it, would have some impact on the specific -- the revenue numbers or the other numbers, every revenue per airplane that we would get. But the other thing is it's certainly going to be good for us to get more usage and we think it will be in different area as well. That's what we're aiming for.

Rick Baldridge -- Chief Executive Officer

Well, one of the reasons why we're using -- not as potentially sometimes as transparent as some of the competition on some of this is because it's important to our airline customers to that they communicate what their strategy is and that we follow them. Sometimes it might easier and for us to describe it as like I said, some of our competition has, but we found that to the extent that we're allowing them to communicate their strategy, that's a better partnership for us with them.

Louie DiPalma -- William Blair -- Analyst

Sounds good. Thanks.

Shawn Duffy -- Chief Financial Officer

This would be super clear in nature, it was clearly said in our backlog that I gave you coming out of the year and just under the solid aircraft, this definitely does not include anything from Southwest.

Rick Baldridge -- Chief Executive Officer

Does not include anything from Southwest. OK.

Louie DiPalma -- William Blair -- Analyst

OK. So with Southwest, there might be like 1,400 or so?

Mark Dankberg -- Executive Chairman

Look, yes, sure. There are different estimates about what Southwest's purchase plans are for new planes, which is what's covered under the agreement. And so probably the thing to do will be to look at estimates for what's Southwest and what their deal would be. And I think we have a good shot at capturing all those.

Louie DiPalma -- William Blair -- Analyst

Yeah, you didn't use any qualifier. You just said all like future aircraft from Southwest. So that's a pretty long timeline, you know?

Mark Dankberg -- Executive Chairman

I mean there are 737s, they're going to the MAX version. So the opportunity is there, and we just feel -- we'll have to continue to earn it.

Louie DiPalma -- William Blair -- Analyst

That's a great. Thanks, Shawn, for the clarification; and thanks, Rick and Mark.

Operator

Thank you. Our next question comes from the line of Chris Quilty with Quilty Analytics. Your line is open.

Chris Quilty -- Quilty Analytics -- Analyst

Thanks. I know you just said that it's better that your customers communicate their strategy, but one notable aspect of that Southwest announcement as they've historically been all Ku. So do you see this as a permanent forward shift by Southwest to a Ka-band system?

Rick Baldridge -- Chief Executive Officer

I don't really think it's an issue of Ka or Ku. I think it's an issue of Southwest. Our job right now is to go make Southwest the planes that fly on our network with Southwest, such a good quality of service that they wanted on the rest of their fleet. I mean that's the challenge.

And it's their job to go figure out what to the extent that they're going to do that, or do they have another supplier they're happy with. And we'll let that play out. I think that truly about Ka or Ku.

Mark Dankberg -- Executive Chairman

Well, look, what I would say is, we designed satellites and space systems to take advantage of the things that you do Ka-band, right? It don't come automatically because we believe Ka is different, right? So they come from having some of the features that we have in our satellites and especially in ViaSat-3, that should give us the ability to deliver a better service. And that's what we're aiming for, and we think that they should and want to do the best they can with the service that they have to now to give them the option to do better.

Rick Baldridge -- Chief Executive Officer

So what we really want, Chris, is there's this concept of purchase intent, right? Somebody buying or what's probably they will fly on you again within the next year. And to the extent that we can positively impact purchase intent by having our service award, that's really our mission for every airline. Yes.

Chris Quilty -- Quilty Analytics -- Analyst

Great. Shifting gears in the Commercial Networks segment, you've been on fire on the ground antenna segment -- and I'm just looking out to the next fiscal year. And should we expect that trend to continue? Or should we see it level off a bit. And can you maybe detail what you see as the factors that have been driving that growth?

Shawn Duffy -- Chief Financial Officer

Yeah. Sure, Chris. So I think when you think about next year, it's a couple of pieces, right? At one is part of our growth -- a big part of our growth this year was IFC terminal delivery. And that's going to be a big part of our growth next year, too.

So this year, I think we delivered around 450 and we're going to do plus 600 next year. So we're excited about that.

Rick Baldridge -- Chief Executive Officer

It's a little lower in Q4, and in Q1.

Shawn Duffy -- Chief Financial Officer

Yes, really tied to our customer demands and their networks, we're meeting their schedule.

Mark Dankberg -- Executive Chairman

Aircraft deliveries and also top certification, completions. But those are kind of the gating drivers. And then also on the ground antenna business.

Shawn Duffy -- Chief Financial Officer

Yeah, it's fantastic. I mean, they had some significant wins, and I think that they're going to continue to grow into next year, too.

Mark Dankberg -- Executive Chairman

And Chris, I think your question just sort of highlights the point, which is we have kind of -- we tend to get business in lumps, whether it's government contracts or some of your big antenna contracts or airline wins. And so the timing of growth in a lot of those businesses is really dependent on the timing of those things. The one business that we have that's really not subject to that, which is the U.S. residential business, is actually the one that we're using to feed the in-flight business.

So that's what's really contributing to the lumpiness that you're seeing than in Q4 and going into one and two and then the way that fiscal year '23 will play out. So the good thing is that we have most of the lumps in the pipeline now. But that -- those are the things that drive the rate of growth. On an annual basis, it's pretty good.

On a quarterly basis, it can be unpredictable.

Chris Quilty -- Quilty Analytics -- Analyst

Gotcha. And on the ground equipment side, was it mostly earth observation driven?

Mark Dankberg -- Executive Chairman

Yes. Yes. And the other thing. On that side, I think one of the things that in the long run that will help with that is that this CSP, Communications Services Project award that we got from NASA, which is really intended to kind of leverage the combination of the ground antenna business that we have with space relay, for both commercial and government customers.

I think that those two things are pretty synergistic, and it's worth highlighting that as it relates to kind of the future prospects or ground antenna business.

Chris Quilty -- Quilty Analytics -- Analyst

Gotcha. And I hate to keep asking antenna questions. But where -- have you made any progress? Or do you have any prognostication on your electronically steered flat panel antenna when that should be in the market and where specifically you're looking to position that relative to a dozen or more competitive products that are coming to market.

Mark Dankberg -- Executive Chairman

OK. So our main objective, and we think this should be what our customers' main objective is for those antennas is to deliver services most cost effectively. So that's what -- I think that's what's going to differentiate our antennas. We -- in order to do that, you may need our network capabilities.

Some of the things that we're building in are a little bit unique to our networks. So we're a lot more focused on our antennas as the delivery mechanism for our service that we are -- antennas as a stand-alone product. And that causes us to look at some of the features or specifications of some of these competing products differently than somebody who's just in the market for an antenna might, OK? So that's kind of the guiding principle for us. And some of those things really impact, not your ability to make a connection, but the flexibility that you have in scheduling these connections among all the different services that we have.

Just to build on a theme. You know that we're very focused on this productivity measure, some of which comes from high-capacity satellites. Some of it comes from our ability to move bandwidth around and deliver on a service level agreements reliably, really efficiently. And so some of the features that we built in just make scheduling the bandwidth a lot more efficient or the ability to use multiple orbits really efficiently.

That's the other thing that we're putting in. Some of the first applications that you'll see for that maybe in land mobile, applications using some of -- some more copies of the antennas that we've followed, for instance, in business aviation. And -- but one of the main products that we have it aimed for is the commercial aviation market. We'll talk about that more as we get closer to it and give our customers an opportunity to weigh in on the specifics that we focused it on.

But that does --

Rick Baldridge -- Chief Executive Officer

The answer to your question, Mark. Just to try to clarify, one way to approach this would be you're building antennas for a mass market, I call it the lowest common denominator approach. No one is -- we would buy antenna if they had the features that we wanted, right? But they don't -- so talk a little bit about that. You said that.

Mark Dankberg -- Executive Chairman

Yes, Chris. So I think just to build on Rick's point, which is an important one, is a lot of times, when people buy antennas as a product, one of the things to look at is what is the worst case performance of that under a particular combination of look angles or satellites that you're using. They'll look at sort of what's the worst-case performance because if they go off and buy service from a third party, they're not quite sure what the attributes of the satellites that deliver that service will be. For us, knowing that we have a pretty big fleet with some very unique capabilities what makes a lot of sense is for us to come up with an antenna specification that delivers the best weighted average performance under all operating conditions for those customers.

So even -- so as an example, if we have a worst-case performance specification, but that condition arose only a very small fraction of the time and still it allow us to reliably meet our service level agreement, we would choose that as an acceptable criteria. If -- and what it did was it enabled way better performance most of the time under the operating conditions that we expect for that customer. So there's difference between sort of expected or weighted average and worst case can have a really big impact on your choice of antenna technology. When you're just selling third-party antennas, customers might rationally choose a different one.

Rick Baldridge -- Chief Executive Officer

So we're not doing these things so we can be able to sell a bunch of antennas and make money on antennas in vast markets, and really to enable the type of services that we're trying to own in the markets that we're addressing.

Mark Dankberg -- Executive Chairman

That -- does that make sense?

Chris Quilty -- Quilty Analytics -- Analyst

Yes. Gotcha. So you're designing an antenna that's optimized for your service.

Mark Dankberg -- Executive Chairman

Yeah, which ultimately involves not just their own satellites, but a whole bunch of partner satellites as well, including a number of partners that haven't yet discussed, but we think we're going to be really valuable in the future.

Rick Baldridge -- Chief Executive Officer

And multi-orbit.

Mark Dankberg -- Executive Chairman

Yes.

Chris Quilty -- Quilty Analytics -- Analyst

Great. Do you want to elaborate on that multi-orbit strategy?

Mark Dankberg -- Executive Chairman

No, other than to say, we think that what we're trying to do is a multi-orbit strategy is get the best of each of orbit's attributes, right? So for the geosynchronous satellites, what we've got is, we think really, really low-cost bandwidth and the ability to deliver a lot of bandwidth in these very congested places like airline just for example, port would be another example. So you'd want to use that to the extent that you have traffic that benefits from a lower propagation delay or lower latency then you'd like to use non-GEO for that or if you want coverage in places that GEO doesn't reach as well. You want non-GEO for that. And also, depending on what customers you get and how traffic evolves, we also can have hotspots in areas that we didn't expect.

And so to the extent that we can use partner satellites to serve those that can let us get customers that we wouldn't otherwise be able to get because we can fill in those hotspots. So those are main reasons for using multiple satellite partners, as well as non -- with non-GEOs being one set of those partners.

Chris Quilty -- Quilty Analytics -- Analyst

Gotcha. So I'll wait until next quarter, so you can tell us who's non-GEO. I appreciate the feedback. OK.

All right. Thanks, guys.

Rick Baldridge -- Chief Executive Officer

OK. Thanks, Chris.

Operator

Thank you. Our final question comes from the line of Landon Park of Morgan Stanley with a follow-up. Your line is open.

Landon Park -- Morgan Stanley -- Analyst

Great. Thanks for taking my follow-up, guys. I was just wondering if you could elaborate on the U.S. residential terrestrial competition that you talked about in the letter? And then just one, quick one for you, Shawn.

Just taking the $700 million EBITDA guidance with the $1.4 billion capex guidance, should we be thinking about cash burn in the $700 million range? Or are there other working capital or other considerations to think about?

Shawn Duffy -- Chief Financial Officer

Yeah. I would think one thing to keep in mind and to say it out in first is we're going to be growing, and we're going to be working to kind of see the channel for that growth to ahead of ViaSat-3. So I set a little better working capital burn in there relative on a year-over-year basis. I think what we've also said we kind of expect next year's leverage to be around four and a half mark.

So that kind of gives you some places to try and give it a run.

Mark Dankberg -- Executive Chairman

OK. And then on the residential market, probably the kind of a longer-term biggest factors are probably going to be government subsidies. And kind of build out of fiber and cable terrestrial networks. So that's what we're really looking at is what impact that has on the addressable market.

I think others have talked about that, too. We think the addressable market will go down. But we think it creates opportunities maybe at different price points than what we've operated at now. And if you look at kind of long term.

So I think a couple of years ago, we gave a pie chart that showed our expectations of what our satellite services markets or total markets would be in FY '25. And that FY '25 had -- it showed sort of modest growth in the U.S. residential market as a whole, but a much larger fraction of our total business coming from these international mobility markets. That's still the way we see it, taking into account what's going on in the build-out and subsidy in the U.S.

market. I think we have room to grow by in this like hundreds of thousands. We're not talking about growing by millions of subscribers in the U.S. market.

Rick Baldridge -- Chief Executive Officer

You'd say that we'll be able to dramatically increase our addressable market and plan tight on that, but have a much smaller share of market of our addressable market with -- so that's what we're anticipating.

Landon Park -- Morgan Stanley -- Analyst

And when -- are you guys started testing those new plans before ViaSat-3 actually enter service or?

Mark Dankberg -- Executive Chairman

Yes, yes, we are. And you'll see -- we're doing -- right now, I would say one of our most promising plans is really around higher quality and more video streaming. And that's gone really, really well. But it's hundreds of subscribers that we're testing that -- that's come really, really well.

That will be one of the things that we do with ViaSat-3. You'll see us also begin testing on higher speed plans than we have now. Right now, we talk about 100-megabits a second, we'll probably go to meaningfully higher speed plans. I think what you'll see is us kind of moving in both directions, both the planes that are better, premium, more premium than what we have now and then others that are more value-based, which could involve improvements in performance, but also could be at a little lower price points.

The other point I would make on subsidies is one of the ways in which the government is using subsidies is with what they call the ATP program, which is basically a way -- it's like a voucher program for lower income fixed broadband subscribers. And that is available to satellite service providers as well. And so that's something that we're just going to be adopting kind of at the end of -- sometime this quarter, and that will help with our kind of markets that are more price sensitive. We're economically stressed than we've had before.

Landon Park -- Morgan Stanley -- Analyst

OK. So you didn't participate in the EBB program?

Mark Dankberg -- Executive Chairman

Yes. EBB program, I think, is going to be more significant than that. And it's a pretty straightforward program people qualify they get like, I think it's $30 a month, that's pretty meaningful. I think that's the one -- I think -- I'm not sure I think we are a part of the EBB one --

Rick Baldridge -- Chief Executive Officer

We are.

Mark Dankberg -- Executive Chairman

But I think the ATP one we thought is going to be probably more impactful. And it does appear that, that will continue on. It's a pretty popular program.

Landon Park -- Morgan Stanley -- Analyst

Right. And you talked about fiber and cable, are you seeing fixed wireless at all?

Mark Dankberg -- Executive Chairman

Well, we do. I mean, we see each of those. I think that it's kind of like the T-Mobile version, Mid-band is probably going to be more representative of a fixed -- if it's a fixed wireless that rides on a mobile service that's probably going to be more impactful than dedicated fixed wireless. I think it's probably the long-term thing.

But if you look at the way T-Mobile has done is they've done it subordinate to their mobile service. So that is going to have an impact on geographically where it can roll out, the extent to which it can roll out and the kind of the long-term duration of that. But that's probably the kind of most -- the biggest potential impact. I think one of the things that's really going to -- that we see repeatedly is people coming and going, especially when they're economically stressful time.

People just go into a mobile plan and not having a fixed plan at all. And we actually think there's some opportunity around augmenting some of that stuff as well. So we think on -- we never want to think it's always business as usual, and using the same tools in different markets. So whenever there's change, there's opportunity.

But I think our -- the main -- I'd say, the biggest theme for us, it did play out in the fourth quarter, one of the statistics that we put in our letter was, I think in the fourth quarter, of FY '22, 39% of our satellite services revenue came mobile and international compared to 15% in the same quarter a year ago. So that's a long-term trend. I think we definitely -- we're not -- it's not like we're abandoning or it's going away in the residential market, but we think the real growth is in the mobility market. And a lot of growth internationally, where some of those factors that are impinging on the U.S.

aren't happening and are unlikely to happen.

Landon Park -- Morgan Stanley -- Analyst

OK. Thanks, everyone.

Rick Baldridge -- Chief Executive Officer

Thanks, Landon.

Operator

Thank you. I would now like to turn the call back over to Mr. Baldridge for closing remarks.

Rick Baldridge -- Chief Executive Officer

OK, thanks. So first of all, I would say thank you, guys, for showing up. We know there were a bunch of conflicts right now and the -- we many couldn't it because there was a conflict, but we appreciate all the good questions and you guys for listening to the call. I'd make a couple of points before we just finish one is that like we did in Q4 and this year, we constantly balance investments and EBITDA to try to make sure we're hitting the targets that was out there and make sure that we can borrow the money, we're trying to borrow, finish the ViaSat-3 and get it up.

And to the extent, we have a little bit more room, both to accelerate or on some of the things we think are valuable. And to the extent that we don't, we kind of constrain that. And so, we're constantly doing that. I think you guys that have been around for a while know that, it's really exciting because of the upcoming ViaSat-3 launch, it's in our sights and -- so we're excited about that.

So just for Mark and me and the rest of the team, I just want to thank you guys for being on the call, another really good year, we think. Our operational momentum is really strong and very positive. And on top of that, getting to that first ViaSat-3 launch, which we've been waiting for the capacity and we sorely need regionally. It allow us to improve our service offerings.

This is what we've been waiting for. And while Inmarsat gives us the global capabilities and opportunities that enhance our standing mobile focus on a global basis, we're excited about that. And at the same time, our teams here remain hyper focused on executing the plan so that enables us to go expand the business. So don't hesitate to contact Peter or the rest of our team, if you have more questions on our results or other topics today.

We look forward to updating you next quarter. Thank you.

Operator

[Operator signoff]

Duration: 64 minutes

Call participants:

Rick Baldridge -- Chief Executive Officer

Robert Blair -- General Counsel

Landon Park -- Morgan Stanley -- Analyst

Mark Dankberg -- Executive Chairman

Shawn Duffy -- Chief Financial Officer

Unknown speaker -- Raymond James -- Analyst

Ryan Koontz -- Needham and Company -- Analyst

Louie DiPalma -- William Blair -- Analyst

Chris Quilty -- Quilty Analytics -- Analyst

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