Good morning, and welcome to the Iridium Communications First Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ken Levy, please go ahead.

Thanks Steven. Good morning, and welcome to Iridium's first quarter 2019 earnings call. Joining me on today’s call are our CEO, Matt Desch; and our CFO, Tom Fitzpatrick. Today's call will begin with a discussion of our first quarter results, followed by Q&A. I trust you've had an opportunity to review this morning's earnings release, which is available on the Investor Relations section of Iridium's website. Before I turn things over to Matt, I'd like to caution all participants that our call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts and include statements about our future expectations, plans and prospects. Such forward-looking statements are based upon our current beliefs and expectations and are subject to risks which could cause actual results to differ from forward-looking statements. Such risks are more fully discussed in our filings with the Securities and Exchange Commission. Our remarks today should be considered in light of such risks. Any forward-looking statements represent our views only as of today, and while we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views or expectations change. During the call, we'll also be referring to certain non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with Generally Accepted Accounting Principles. Please refer to today's release in the Investor Relations section of our website for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures. With that, let me turn things over to Matt.

Thanks, Ken and good morning, everyone. So, first quarter has been a really busy period for our company. The completion of the Iridium NEXT upgrade, the rollout of our groundbreaking Iridium Certus broadband service and most recently the commercial launch of Aireon’s global aviation tracking service, all occurred within a few weeks of each other. As you can imagine achieving these has been extremely rewarding and exciting. It’s been our many years of planning and efforts come to fruition and we’re looking forward to taking full advantage of our powerful new network. We’re also generating a lot of news and media coverage about the company and that’s great for our brand, for recruiting and for attracting new business partnerships. Most importantly we’ve a customer base of about 1.2 million subscribers who appreciate and value Iridium’s network and the impact we’ve on global communications, commerce and safety. Servicing and growing this customer base remains our top priority. Apart from media appearances and satellite operations, we’ve also been busy with the investment community. We had the chance to visit with many of you during the first quarter through our participation at several investor conferences and our hosting of our 2019 Investor Day on March 7, which many of you told me was quite helpful in understanding our business and potential. The presentation slides and webcast reply from that event reside on our Investor Relations’ website and should continue to serve as good background as well as a clear roadmap for our business plans as we move through the year and execute on our near term capital strategies. One of this year’s key milestones is the renegotiation of our two key contracts with the U.S. Government. As you saw in our release this morning, we’ve completed one, the gateway maintenance agreement and signed…

Thanks, Matt, and good morning, everyone. I’ll get started by summarizing our key financial metrics for the first quarter and provide some color on the trends we’re seeing in our major business lines. Then I’ll recap the 2019 guidance we formed this morning and close with a review of our capital structure and liquidity position. Iridium generated total revenue of $133.7 million in the first quarter which was a 12% increase to last year’s comparable quarter. This improvement was attributable to growth in our commercial business and increased revenue from the completion of the Iridium NEXT program. Operational EBITDA was $78 million which was up 14% from the prior year’s quarter. On the commercial side of our business we reported service revenue of $85 million in the first quarter, which was 25% higher from the prior year’s period. This increase reflected growth in both voice and IoT revenues as well as incremental hosted payload revenue. Voice and data revenue rose 11% this quarter, this increase was driven by an increase in ARPU to $45 that primarily reflected price changes in our handset program adopted in April of last year. Momentum continued in commercial IoT following a record year of growth in 2018. Growth in the first quarter remained robust led by ongoing demand for personal location services. IoT ARPU in the first quarter was $11.32 down 10% or $1.27 from the comparable quarter last year. It is important to point out that IoT usage levels were higher in the first quarter of 2018 then in succeeding quarters of the year. As a result we expect that subsequent quarterly year-over-year declines will moderate from here and be more in-line with the 8% to 9% decline we experienced in the full year 2018. The driver of this year-over-year ARPU decline continues to…

Thank you. [Operator Instructions] And our first question comes from Ric Prentiss with Raymond James. Please go ahead.

Thanks, good morning guys.

Good morning, Ric.

Hi, Ric.

Hi, thanks. A couple of quick housekeeping questions and then a larger picture one. I appreciate the color on the seasonality items Tom you mentioned. Can you also, just want to double check on the hosted payloads of 1Q'19 that included a $2.3 million true-ups, so that would drop back down then after the true-up I assume for the rest of the year till you hit the ramp?

That well, it's the full-year we think it's going to be about $40 million in hosting and that reflects a step-up in respect of the Aireon data service related to customer contract milestone. The true-up related to a Harris data services contract where Harris paid for all the data upfront. It was a three-year contract and we didn’t have any usage information relative to that contract. We now do and on reflection, knowing what they're using and what they're likely to use, we would have recorded more of the revenue sooner than we did. And so, that's what that true-up reflected Ric.

Okay. And then, one other minor one, the R&D expenses came in a little light. How should we think about as you move forward with the Certus product, narrowband, broadband, what should we think about R&D or was this a kind of unusually low quarter as you kind of pivot from the launching to developing?

No. it wasn’t a low quarter. So, R&D is going to be down on the full-year, sort of $8 million to $10 million because the NEXT R&D is behind us. And so, you'll see it down like I said $8 million to $10 million on the full-year.

Okay. And I appreciate the color on the levered free cash flow. Obviously the capital holiday's pretty close to begin in. how should we think about as you approach the capital markets, what kind of interest rates are you seeing out there? Is the convert market interesting to you and from a timing standpoint, capital markets seems to close in the summertime, do you think you can get out after the government contract but before the capital markets kind of their own holiday in the summer?

Well, I would just say we're keeping our eye on it, Ric. And obviously, that development that we do the developments on the government contract is favorable and so we're keeping our eye on the capital markets. I don’t think it's appropriate to comment on exactly what we're going to do because I said we're keeping our options open.

Okay. But the focus will be on free cash flow and I think you mentioned at the Analysts or Investor Day that rates will be a little higher than the existing French facility. Any thoughts of what ballpark ranges you're seeing out there from the capital markets from the banks?

Well, they'll definitely be higher but the flexibility that we'll get under the facilities that we're thinking about in terms of principle amortization, the ability to pay dividend, the ability to buy back shares makes such a refinancing most compelling notwithstanding the fact that's going be a bit more expensive.

Makes sense, all right, thanks guys.

Our next question comes from Greg Burns with Sidoti and Company. Please go ahead.

Hi, good morning. So obviously, Aireon just launching but is there any early feedback you're getting from now Canada and U.K. and that's about the data they're seeing, are they seeing the benefits of the system that you would expect success in narrowing fly past and creating those efficiencies. Is there any maybe update you're getting for them from the early data that would kind of validate the utility of Aireon?

I would say more in line with it's exactly what they expected it to be. It's a very -- they expected it to be a valuable service, it's turning out to be that way. I may have heard anecdotal thing about controllers who are excited about seeing airplanes they’ve never seen before and feeling like they can perform in more effective service. I would say that while they're actively controlling airplanes with it, they're not completely changing everything in the North Atlantic. For example, they haven’t eliminated the North Atlantic track system yet. This is all about in preparation for that. That would really provide almost free flight ability to go point-to-point and get the maximum value. But the important part is they need to get experienced with it, how their controllers operate it with it for a period of time etcetera before they would be something quite that drastic and they need to coordinate with others including the FAA and others on exactly how that would all work. But I've only heard really positive statements from their customer base, I think it's generating a lot of enthusiasm around the world for non-customers who seem to be now more actively engaged with them and I think it's proving to be everything that they thought it would be.

Okay, great. And then, somewhat and the early feedback you're seeing from Certus, some of the early adopters, what's the feedback, then and kind of what's the pipeline of customers maybe lining up for the service look like. Thanks.

Yes. Again, it's quite robust I would say. The partner base is very pleased as I said with the performance of the product. It's doing exactly what it said was supposed to do, reliably everywhere in the world. So, it's expanding both the coverage and providing the speeds and value that they thought. It's also providing the margins and business potential for the distribution channels that they were looking for. So, we're hearing really positive things about them that kind of what they've been looking for in terms of a real choice and ability to offer something that was superior to their customers as being realized. We've had some really, there are some things on line that you'd might even be able to get access to with a couple of fleets that have been really positive about how they say is performing. Some and some major partners who were saying they're really pleased with it so far. So, I've only heard good news. It is still early. This is going to take time to ramp up completely around the world. Not every partner is able to sell yet because it's still onboarding and getting connected and doing everything that they need to do. So, said it's still kind of early but I'm really pleased with its right on line with sort of how we thought the take up would occur.

Okay. Then lastly, did you recognize any service revenue this quarter and I know you talked about it not being material this year but it's kind of maybe an updated view on the revenue contribution from Certus this year. Thanks.

There were revenues in the quarter, I don’t think that they were compared to other sides of the company, weren’t all that material yet. This is still going to be not a big first year in terms of our projections right now. I think it's really more and more ramps into 2020 and 2021 in terms of then sizeable ramp to hit the expectations that we've been pretty clear we expect to see coming out of 2021. So, said it's -- by the way, the other aspect of it is ARPU's are as we sort of expected it to be above also in both kind of ARPU's more in-line with what you would expect to see from a higher speed product.

Great, thank you.

Thank you.

Our next question comes from Hamed Khorsand with BWS Financial. Please go ahead.

Hi, good morning. So first off on the IOT side, the ARPU continues to decline. Are you expecting that to stabilize anytime soon?

No, we’ve said for a long time that we see that the ARPU is the downward sloppy line. If you look at the net subscriber ads, they are heavily personal communication services. So that's sub $5 kind of an ARPU and we love that business because they don't use the network very much at all so it's very, very profitable business for us and we think that that is a mass scale consumer product and the fact that it causes the overall ARPU to decline a bit is, we don't mind that at all. It's great business.

The only thing that will turn that around eventually is, as we add more speed to that product so as we get into Iridium service narrow-band, services starting next year and the following year, some of our IoT customers have told us about applications they have that have more data requirements and therefore would be higher ARPU requirements. But, I think that they'll constantly be sort of overwhelmed by just a mass number of personal communication devices that love our network. So it's going to be hard to kind of really turn that ARPU around, but I don't see why that's important since every incremental dollar falls to the bottom line regardless of what its ARPU is.

And for the commercial voice data revenue line, Q1 is seasonally a low point for you. Is it purely a drop off this year not being a significant prior because of the pricing increase that you implemented last year? Was there more just as subscribers just holding on to their subscription during the quarter?

No you're saying the effect we implemented the price increase in April of last year so the first quarter is seeing the benefit of that.

And then lastly, has there been some sort of sticking point as far as the extension process with the government contract? I mean, I know what you guys have said but obviously it hasn't renewed on time it's expected. So was there something there, they're asking for that you guys haven't been able to agree upon?

No, I wouldn't say that. I mean we haven't obviously come to agreement yet. It took to the last minute in 2013 and it took to the last minute again and didn't get over the line. So, we are pretty confident that it should conclude here in the next 30 days based on everything we see, but it just requires us both to finalize the deal. But I don't think, I would say anything specific that I would point to.

The only thing I would add Matt is, we're quite confident that the revenues in all years of what we expect to be a five-year contract will be higher than the last year of the existing contract.

Thank you.

Our next question comes from Anthony Klarman with Deutsche Bank. Please go ahead.

Hi thanks. Few questions, Tom, I realize you guys have guided previously to equipment revenue being down in 2019 for a few reasons. But I guess, I'm wondering if we'll be able to look at equipment revenue in future periods in future years as a leading indicator of timing around the ramp in some of the Certus broadband revenue that you're expecting to hit that $100 million exit run rate. In other words is there a correlation between equipment revenue and future leading service revenue growth and can we use that as a barometer to see the progress that you make towards going from that two or two and a quarter million MRR to the eight and a quarter million as you exit 2021?

No. Equipment revenues are not a barometer for service. Remember our partners are selling the equipment. So that's atypical. The driver in our equipment revenues margin is our handset and that was uncharacteristically strong in 2018. If you look at our commentary in 2018, we were surprised by the strength, we were happy to enjoy it but we called it down in 2019 because if you just look at the three-year trend and I would call your attention to the -- there's a page in our Investor Day that shows the handset trend and what was unusual was the 2018 number and we called that and it's turning out as we expected it. So that answers your question.

And is there a plan on that side to sort of have, is there a place for Certus I guess on that handset side as the availability is rolled out more broadly?

Yes, on the Certus narrowband side, the 9770 transceivers I said is the first of a number of devices that we plan that will -- some of them will make them into what you would call handset or a hotspot or some sort of other personal communication device as well as sort of next-generation IoT devices. And as I said, I'm expecting that sending pictures and low res video and that sort of thing will generate higher ARPUs etcetera than some of the existing voice and data business that we have today so that that certainly could be a positive there. But as I said, going back to what Tom said today we sell open port terminals. There are a couple of thousand dollars. We do sell Certus modems to those terminal manufacturers but they're a fraction of that cost and really we sell those to enable them to have a successful equipment business as opposed to ourselves because what we really want to do is get a wide variety of terminals out in the marketplace that are attractive to the maritime, land mobile and aviation business. So that's going to as we transition from some even open port terminals to Certus modem devices you're going to see sort of a drop in actual revenue, but actually a increase in service revenue. So that's a good trade-off we will always make.

Right, understood. The shift from equipment really to service revenue. Couple of clean-up questions, there's an item on the cash flow statement purchases of other investments in this period of 10 million which is outside of the CapEx as you have reported. I was just wondering what that was?

We made it small investment in a partner.

Got it and is it related to one of your businesses in particular?

Yes.

And then, just on with respect to cash, you mentioned that you've got about $60 million in payments to sort of finalize the spend on NEXT. In the Q it mentions that you made some final payments to SpaceX, is that the full quantum of the 60 that you made in April or are there other payments that still happen over the course of 2Q?

Yes. So, 2Q is going to have I don't know in the area of 35 to 40 of NEXT spillover and then it looks, and then the third and fourth quarters look clean. We should be down on that sort of 35 million-ish run rate on CapEx and you should be able to see that as you look at the Qs in the third and the fourth quarter. Second quarter is going to have a little NEXT residual in it.

And then, just a question kind of on how you think Tom about cash as you think about this and liquidity as you think this capital structure going forward. You've got, call it 275 million of cash today. You've got some one-off payments to make in the area of 60 million. You also have the DSRA which supports the BPI facility of 193 million. When you do your ultimate refinancing, does the DSRA become unrestricted or does that cash get used to facilitate the refinancing and then how would you think about what the minimum cash levels are, you would want to have in the business given the business by then will be generating a pretty significant recurring levered free cash flow?

Yes, the DSRA become, once we take the BPI facility that's just regular cash and we would use that as a source of funds and as we think about the re-fi. And in terms of cash, in the area of a hundred feels right to us, then we put a facility and we probably have a revolver in it for additional kind of cushion. But as far as cash in the balance, a hundred feels right to us.

Thank you.

By the way Andrew, just I want to go back, I don't want to be there any confusion. You mentioned, you asked about that or Tom mentioned that we made an investment in a partner just so you're not confused it was not any partners. It's one we announced on Investor Day and that was the investment we made into Telus which is our satellite time and location business. We see really a lot of potential in that business. We wanted to suppress that unique technology that really can't be performed any other way and we think long term there is some value in that investment. So, we thought it was prudent to make, but we discussed that at Investor Day.

And that Matt was an equity stake that you took?

That's right. It was yes, an equity stake and so we're part owner in that with a number of others and that kind of allows them to sort of expand their business and their sales efforts, which we think has some real potential in both government and commercial applications to this timing and anti-GPS jamming and spoofing sort of protection and the ability to bring time into lots of different IoT type applications. So, it's an exciting technology and we thought it was a prudent sort of use of a small bit of our cash.

Thank you.

Our next question comes from Mathieu Robilliard from Barclays. Please go ahead.

Yes, good morning. All I had two questions please. First in terms of your searches IRO product, are you still on track where with the comments you made at the Investor Day regarding the timing of the launch of that product? And second, more an accounting question looking at your cost of goods sold, does it be increased year on year on this quarter? I was wondering if there is anything to it or just some seasonality there? Thank you.

Yes Mathieu, I'm sorry you said our Certus, which product did you say? Aero.

For aero, yes, for the aviation segment, yes.

Yes. I mean our partners are developing their terminals right now. There are a lot more, there's some complexities to that in terms of the size of the terminals and all that sort of thing that have to and more importantly the regulatory things that have to go through to put anything on commercial aircrafts that just take more time. So, it really does use the core platform that we have. So that's available. There's not anything to do on our satellites or modems but it's more in the availability of the terminals to the partner base and there are a number of them being developed, but they've kind of informed us that it's later this year that those will be in trials and out in the marketplace and would be more of a 2020 kind of getting on aircraft type timeline.

And then, the question on the cost of goods sold. The increase directly relates to the increase in revenues, in engineering and support which is episodic. So you see the revenue stepped-up from three six to five seven and the increase in cost of goods sold directly relates to that increase in revenues. It's like I said it's the revenues episodic in nature and the cost moves with it.

Thank you.

[Operator Instructions] And our next question comes from Chris Quilty with Quilty Analytics. Please go ahead.

Matt, just wanted to follow up on that aero question. Can you give us an idea of when you think you'll be able to achieve safety services? I know that Inmarsat for example took them a year or two to achieve that clearance.

Yes. It does take time because after you get the product in the market, the FAA and other regulatory bodies want to see extensive sort of service time in the air to demonstrate that it performs as expected. So it's not completely just a paper exercise. It really does require product in the field. In the regulatory process we're involved in that today. It's understood that Certus is going to get safety services and we'll go through that whole process, but it really doesn't start until as we said later this year. So I wouldn't expect to sort of see safety services on Certus until at least a year after that and who knows maybe just a tiny bit longer depending upon just the length of time it takes. In the meantime, of course, we do have safety services available today. I think it's the most attractive safety services product out there. It's getting deployed, continued quite widely. Our partners are happy with it. It might be put than our narrowband sort of safety services possibly they're going to be put into some of the initial Certus terminals so they can provide that in an integrated package. But obviously, the long-term benefit is just to have a single service that's quite attractive that does both cockpit communications, cabins communications and potentially safety services as well.

Great and a clarification on the EMSS contract that is currently update on the existing services and I'm assuming those discussions do not include any Certus related services and if not are you having those negotiations in parallel or is that something that sort of starts after the EMSS contract is in place?

So you're right. It does not include Certus. It's not the exact scope, but it's pretty much the same sort of narrowband services that we had in the last five-year contract. The Certus really has been, for the most part you will negotiate in the sense that the government is deploying the infrastructure to implement Certus. They know what the price of Certus is likely to be. We have selected a partner, who has great experience selling broadband to the government in COMSAT and they know the pricing that they get from us and they will be really either have negotiated or negotiating the costs to the government. The government has already deployed some Certus technology today and is actually deploying it using through COMSAT. It happens to be connected to our network through our commercial gateway instead of the DoD gateway right now, but they're very happy with the performance of that already. So it really is a completely sort of independent activity to the EMSS contract and it will have its own trajectory.

[Audio Gap] was due to the way you were going to market, the nature of the customer base or the device that you’re offering?

A little bit of all those three things. I would say, our primary, while our Iridium extreme phone which has been the primary device for our PTT service works well according to our customers. It wasn't purpose-built to be a PTT device. It wasn't a ground up consumer or industrial PTT type product for example, having a very loud speaker on its own. It was really something that you needed augment a little bit. And so while it was fine it wasn't really ideal for PTT services. Icom and Kinetic for that fact have really come to the market with purpose-built devices from years of experience of industrial enterprise and consumer sort of services and our partners are telling us this is exactly the kind of product that will be very appealing to first responders and NGOs and militaries, etcetera. So that's one thing. The other thing is, Icom has experience in the global special mobile radio or that kind of safety services market on the terrestrial side. So they're excited to take satellite to their customers and it's a little bit like our relationship with Amazon Web Services. We can supply their service, but it's equally exciting that they're kind of, can bring Iridium to their IoT customers as well. So I think it's a little bit of a couple factors and we're encouraged really from what we're hearing about the potential on PTT. It's still not going to be a massive part of our business, but I think it's always sort of underpinned one potential growth area in our voice and data business that we like.

Great, thank you very much.

Thank you.

Our next question comes from Louie DiPalma with William Blair. Please go ahead.

Good morning Matt, Tom and Ken.

Hello Louie.

Tom, at the Analyst Day you discussed how Aireon could be able to contribute dividends to Iridium at a rate similar to I think next year's revenue. Do you have any sense broadly on the timing that Aireon could accomplish that?

So, what we said Louie is that, we expect dividends no later than 2024 and we said that eventually the dividends would be greater than the revenues which as you know are $39 million.

And do you have any sense on the timing beyond eventually?

Well, it's good to depend on their ramp. I mean, we put two stakes in the ground intentionally dividend, material dividend in 2024 and that just decided for investors that if you're thinking about the hosted payload growth profile, the growth profile is going -- we're going to enjoy that in the form of dividends and the size of way that will eventually be more than the revenues.

Great and for Matt, in regards to the IoT market there appears to be a litany of new entrants in the small set space that are pursuing the very low end of that market with like less frequent data updates and bandwidth over VHF spectrum. Does Iridium have a product in the works possibly related to the 9770 line that is going to be able to target this ultra low end of the market?

Yes, we are very interested in that sort of development of those networks. We don't see them as really competitive with the kind of high quality, low latency industrial-strength services we provide today that are very attractive. They are, as you said are very low-power, so the devices often last for years without sort of being updated and they're very, very high latency in the sense that it can be tens of minutes or hours between sort of being able to get the information from one of those devices. So they're typically one-way devices not two-way like our products. That said, we've had a number of discussions with potential network operators. We've announced actually some of the -- at least one of those, but we have one partner of those who's launching some satellites, who's using our IoT products sort of to help bridge the gap for when they eventually are able to put our products. But, we sort of see the eventual maybe dual mode type products and potentially offering their products to our customers or them offering our products to their customers and that they would all probably fit together pretty well. So we're keeping an eye on the market. It's very, very early days. There's really only trial satellites up there today and we're keeping close tabs with those networks on the progress they're making and I still think that's a few years away for really being able to offer sort of their services or vice versa. So I don't think it's really going to be a near-term kind of activity, but it's an interesting development really in our industry that we welcome.

Great and following the $10 million investment into say Telus, is that the 16% ownership that you guys disclosed at the Analyst Day or did it increase beyond that?

We have a 16% and interest in Telus, that's the right number Louie.

Thanks guys.

Thanks Louie.

Our next question is a follow-up from Ric Prentiss with Raymond James. Please go ahead.

Hey guys, appreciate the opportunity for follow-up. Just want to circle back to the CapEx question. Tom, you mentioned the final CapEx of 60 million but then to Anthony's question, there was a number of 35 to 40 million. Is the difference 60 millions what you expect CapEx in the second quarter with maintenance or what was the difference between the 60 million out of 35-40 million?

So, I think that the 35 million, 35-ish number is the NEXT capital in the second quarter and NEXT capital will aggregate 60 million on the full year.

Full year. As far as beyond 1Q you mean?

Yes. They will probably about in the area of 25 in the first quarter. They'll be around another 35 in the second is our expectation and then we're done.

Got you, okay that makes sense. And then, one other area obviously Matt you guys have climbed that mountain as you talked about it at the Investor Day and the land of milk and honey but stock based comps, share based comps was really high in the quarter or should we be expecting a pop at some point. How is it structured as far as stock based comp as we should look over the next couple of years?

I am not really sure. Tom, do you know because its stock based comp. We do have a program for like the international partners, but that's really more in our expenses like --

That's cash. Yes.

So is that 3.3 million we saw in 1Q 2019 for share based compensations that we should be thinking about kind of as that level maybe a little higher as we look out into the future just? You can get back to me afterwards --

Yes let's get back. I think that's in the area 3.3, but let's double back with you on that Ric.

All right, and do you guys expect, obviously you're focusing on leverage free cash flow. Do you expect to report that into the future? Was that the Analyst Day you kind of referenced it in your prepared remarks as well. So is that something we should be looking at being reported in the future?

It'll be discussed, but I'm not sure about reported but we laid out our methodology pretty clearly in the Investor Day. So it'd be easier to track.

There's certainly a little bit of it going on about the best way of sort of representing and positioning ourselves whether we do that sort of on a regular basis or periodically or obviously we want people to see that because we think it's a unique attribute of Iridium that many others don't have, but exactly how, it's all computable obviously but what we described someone talk about.

Let me just double back with you on the share based comp. We ran 2014 and 2018 and that's a good expectation for 2019.

That helps. Matt, the reason I bring it up is, obviously you guys are moving beyond just an EBITDA story that capital holiday makes a lot of sense and at the Analyst Day you talked about power companies and other free cash flow stories. So just trying to think as we think of valuation and where the stock could go I think it is important to kind of think about that leverage free cash flow and how the value of the company?

And we have been talking quite a bit about that obviously since Investor Day and seem to be getting some good traction from the people we've talked to that appreciate that that is sort of a unique attribute of us. So I appreciate the question.

Last one for me. Margin path, I think guidance, a couple of years ago was like, well we hope to get to 60, you guys have mentioned a couple times in the call hell there's a lot of good revenues that flow through the bottom line. How should we think about the EBITDA margin progression, where you're at today kind of that stakes in the ground like you did with Aireon dividend? Where could that head overtime and are there any milestones along the way we should think about EBITDA margin trends?

Sure, mature satellite companies are 70%- 80% Ric. The operating leverage in this business is going to cause margins to expand overtime. There could be years where it's just, it's kind of flat and like what happened last year we were very equipment heavy and so that equipment is excellent business, but it's 40% margin as opposed to service revenues which have much less variable cost. So, we see a logical progression from where we are today moving towards 70%.

Great, thanks a lot for the follow-ups.

Thanks.

And this concludes our question-and-answer session. I'd like to turn the conference back over to the company for any closing remarks.

Thanks. It was another good quarter and look forward to seeing you all on our next quarter call and perhaps that some of you at Satellite 2019, which is I think in about two weeks here in DC. So we'll see you there.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.