KVH CFO: Mini-VSAT Service Investments Driving Long-Term Growth
KVH‘s 2010 capacity expansion efforts enabled the company to deliver more than 60 terabytes of data and 1.5 million international voice calls via its mini-VSAT Broadband network, which drove its fourth quarter VSAT product and service revenues up 70 percent from the same period last year, according to KVH CFO Patrick Spratt.
"The increase in VSAT revenues this quarter illustrated that the combination of our TracPhone V7 system and mini-VSAT Broadband service are a disruptive and appealing approach to satellite communications, offering a unique solution that meets the need to stay in touch while at sea," said Spratt.
Spratt said that KVH’s top- and bottom-line performance during the quarter was "within the range that we expected but, overall, not quite as strong as we would have liked."
KVH’s overall 2010 fourth quarter revenue increased 3 percent to $27 million compared to revenues of $26.3 million in the final quarter of 2009. The company’s full-year revenues jumped 26 percent to $112.2 million, with net income of $8.3 million.
"During the fourth quarter and in early 2011, we expanded capacity significantly in North America, Europe, Africa, Asia, the Indian Ocean, Australia and New Zealand. The result is that our VSAT business is now larger than our core marine satellite TV business on a run-rate basis," KVH CEO Kits Van Heyningen said in a statement.
KVH increased its ongoing investments for mini-VSAT broadband sales and support, acquiring Virtek Communication in September. Spratt said while these investments have increased KVH’s operating expenses, the company’s business model is based on cementing its long-term position.
"We are on a solid path of executing our strategic plans to expand our VSAT, marine satellite TV and FOG (fiber optic gyro) businesses. These efforts form the basis for building toward progressively stronger financial results with four- to five-year targets of annual revenue greater than $300 million, more than half of which would be generated by our VSAT business, along with operating margins of 15 percent," said Spratt.