Welcome to ViaSat Fiscal Year 2015 Third Quarter Earnings Conference Call. Your host for today's conference is Mark Dankberg, Chairman and CEO. You may proceed, Mr. Dankberg.

Thanks. Good afternoon, and welcome to ViaSat's earnings call for our third quarter and fiscal year 2015. I’m Mark Dankberg, Chairman and CEO, and I have got here with us today, Rick Baldridge, our President and Chief Operating Officer, Shawn Duffy, our Chief Financial Officer, and Keven Lippert, General Counsel. Before we start, Keven will provide our Safe Harbor disclosure.

Thanks Mark. As you know this discussion will contain forward-looking statements. This is a reminder that certain 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 SEC or from our website. Back to you, Mark.

Okay, thanks. So we will be using slides that are available over the web. And then I will start with some highlights in a top level overview. And then Shawn will discuss the segment level financial results. Then I’ll give some additional details and color and we’ll summarize our outlook and then we’ll take questions. So our earnings grew significantly this quarter, adjusted EBITDA for third quarter was $86 million up 51% over the same quarter last year. Earnings are driven by steady gains in the Exede broadband services segment and with very good margins in the government business. Total revenue grew slightly and we received $313 million in new orders and ended the quarter with a healthy backlog of about a $1 billion. We added 18,000 net subscribers on the Exede consumer service and that lead to 675,000 in total and over 580,000 of those are on ViaSat-1. In our commercial air business we added 68 new airplanes into service that plus steady gains in the consumer ARPU yielded 26% increase in revenues on a year-over-year basis. The combination of topline growth and favorable services metrics resulted in an increase in year-over-year adjusted EBITDA of 107% for that segment. Government segment still doing well despite the macro sector contraction. Revenue was down slightly from the second quarter and about 7% year-over-year, but new orders are still strong at a $142 million and that brings our overall book-to-bill for the government segment this year about 1.3 to 1 and we believe our revenue will grow as we observe these new awards. Adjusted EBITDA was higher both year-over-year and sequentially for government due to the better overall margins. So now I will turn it over to Shawn and she will quickly review the financials in more detail.

Thanks, Mark. Overall we were quite pleased with our fiscal 2015 third quarter financial results. Revenue for the quarter was up slightly compared to the prior period with strong growth across both our consumer and mobile broadband offerings and our satellite services segment, which more than offset declines in Government Systems and Commercial Networks. Satellite Services revenue growth was multifaceted. Our total consumer subscriber base grew, average revenue percent was up and we are generating more revenues in the mobility market across commercial air, general business aviation and maritime with total platform served increasing alongside of growing revenue per unit. Within Government Systems lower BFT revenues were partially offset by mounting strength across a number of products and services. Including additional military Wi-Fi revenues, brand newly acquired NetNearU. And Mark will provide some further details on the government segment in a few slides. The Commercial Network segment booked lower [indiscernible] revenues as we continue winding down the initial development for that program activities and lower consumer terminal revenues. Those are offset by strong results from our antenna systems group and the ramping up of our Canadian network programs for Xplornet. Turning to earnings, our third quarter adjusted EBITDA was $86 million reflecting strong year-over-year growth of 51%. The scale of our Satellite Services segment now representing 36% of our revenue base is certainly a large factor in our year-over-year performance. However, both absolute EBITDA and EBITDA margins grew across all three segments compared to the same period last year. Satellite Services adjusted EBITDA was up a 107% a function of the organic subscriber growth, coupled with improved marginal unit economics as well as year-over-year reduction in legal fees plus our current quarter license revenue. In Government Systems an increased level of higher margins service revenues and lower R&D spending contributed…

Okay thanks Shawn. The top left chart on this page shows growth in subscribers and segment EBITDA for the last 10 quarters in satellite services. EBITDA this quarter was up 107% year-over-year and 35% on a sequential basis. The chart excludes the nonrecurring impact of the SS/L settlement from our second quarter. EBITDA is growing much faster than subscriber count due to scale effects, operational improvements, refinements and service plans that have been driving APRU and growth in our in-flight Wi-Fi. The top right chart shows growth adds for the quarter - last quarter and then the year ago quarter. Changes in gross adds reflect a number of factors including seasonality, sales filtering affects, variations in advertising and promotional spend, demand for new service plans, capacity availability and changes in distributions and fulfillment channels. Net adds in the third quarter were a little higher than the second quarter mostly due to better churn which averaged about 2.6% per month for the quarter over the entire subscriber base. Churn can still vary quarter-to-quarter due to differing effects in different distribution channels. The lower left chart shows blended consumer ARPU on a year-over-year and quarter-over-quarter basis. A decline in a non-recurring revenue component in this quarter led to atotal consumer ARPU being sequentially essentially flat. But recurring consumer revenue is still trending up. And we believe ARPU will continue to grow on a go forward basis. Retail ARPU continues to grow due to a favorable mix of higher value, higher bandwidth plans, higher proportionate retail subscribers in total and attachment rates for our VoIP telephony service. We believe we are making good and steady progress in retail distribution fulfillment product refinements and cost effective marketing and promotional strategies. And that progress is reflected in the growth and margins. We also believe this…

[Operator Instructions] And our first question comes from the line of Michael Funk of Bank of America. Your line is now open.

Yes, hi guys thank you taking the question. Maybe a couple if you could I mean some more color maybe on your expectations for the shape of net adds in this coming calendar year maybe some more commentary on the seasonality. Second maybe more thoughts on some of the gross add share that you are seeing in the satellite broadband space. And then finally, any update on the expectations for ViaSat-2 and how that’s going to maybe add to gross add, growth over time why you are thinking about that?

On the first place, this is Rick, Michael, the first one you know I think that’s we don’t have any reason to think that the shapes going to change that the eighth turns out March, April and May are the toughest months have been the toughest months now for a while. But we kind of expect that will – we will tweak our advertising spend accordingly and around that cycle, as we don’t want to just waste money. But I mean it’s so far we are still finding markets where we can grow you know the new freedom plans have helped and it creates some demand some of the end market, so we work in some as well last year, so where we continue to play around with a couple of those things. So I’ll let Mark answer the second part.

The Wi-Fi two part and so you know that the one things we mentioned before is that using sort of the lower demand areas of ViaSat-1 we test marketing plans that are in which they have a lot more bandwidth. So the freedom plans, we have plans that also have higher volume limit. So we’ve said in the past we think volume limits are kind of the main inhibitor to demand. So with ViaSat-2 we think we are going to improve the plans pretty significantly and be able to put what we think will be our best plans in the highest demand markets and that should let us get gross add rates that are higher than what we achieved on VisSat-1 even in the peak periods. So that’s sort of the level of detail we put out so far I think we get closer – we will be able to give more specific guidance I think.

And do you have any thoughts or comments on how you are thinking about gross adds share if I heard that in the answer to your gross adds shares of the satellite broadband subscriber coming online and maybe how that moves going forward. I think last quarter, we heard maybe about some relatively full spot beams and one of your competitors maybe thought you’re taking more growth to add share is that still an issue, any commentary there?

No, I mean if you look at I mean one of things about our services that our subscriber base is very highly retail oriented. I think EchoStar has become lot more wholesale oriented and so it’s a little bit hard to make direct comparisons. And what we’re actually - we sort of said this in the past we’re most focused on and sort of figuring out what the market for satellite broadband can be. And a lot of that has to do with how it compares to terrestrial. And that’s really been the area that we’re most focused on is how we compare to terrestrial. Last quarter, we talked about the chart that FCC Chairman Wheeler showed that showed availability of zero, one, two or three source has a broadband for different speed ranges. And I think that kind of perspective is more what we use to determine our service plans, our technology offering, and our pricing things like that.

, :

Well, thank you for the time, guys and I appreciate it.

You bet.

Thank you. And our next question comes from the line of Matt Robison of Wunderlich. Your line is now open.

Hey, thanks for taking the question. I was hoping to get a better understanding of how the revenue for the in-flight Wi-Fi comes in, it looks like it was flatten maybe down a little bit sequentially and how do we see that those additional planes come into your P&L?

I don’t know how you calculated that, but we book the equipment.

I was just subtracting at the 6.9 from the satellite revenue and then trying to do the arithmetic with adding subscribers or maybe you can correct me and explain?

It wasn’t down. So the real issue is timing of retail subs and subscriber subs if for when they come in. It is going to dictate the revenues in those quarters, same thing on the aircraft or when they go into service, but revenue from both of them grew in the period and also when we deliver the equipment if we are selling the equipment we book those equipment sales into our Commercial Networks business and we book the service portion in the Satellite Services segment.

How do you get the revenue from the services or just revenue sharing with the airlines?

We are looking at a variety of different metrics, but basically we get paid based on usage, so depending on the number of passengers that use it or the volume of bandwidth that used that’s how we get paid.

And I kind of thought we were looking maybe for an uptick in R&D are called mention of using the fund forward from the litigation to fund some more R&A and it didn’t seem to happen in the third quarter, when should we expect to see that?

Yes, okay. So that is exactly what we said we are going to do, is that we are going to drive some of that settlement recurring revenue into R&D which we are doing. One of the things Shawn mentioned those that we have some programs that have been funded R&D that are now becoming a revenue recognition especially the Canadian portion of ViaSat-2, so you are seeing those two effects, just are just seeing the net of those two effects.

All right, thanks a lot.

Thank you. And our next question comes from the line of Chris Quilty of Raymond James. Your line is now open.

Thanks gentlemen, just a question on the retail business given the capacity constraints is it unreasonable we think that net add should probably stay in this level call it 25,000 to 30,000 on a go forward basis until ViaSat-2 comes online?

Net adds I think in the last couple of quarters have been like 15,000 and 18,000 and that’s I would say in general maybe in the 15,000-ish to 20,000-ish range is a good range, but it’s going to vary quarter-over-quarter and it’s little bit hard to tell because there is a variety of effects, but we don’t expect at this spike and we don’t expect it to go way down other than if we have seasonal effects.

Okay, and did you see any tangible impact from the freedom plans in the quarter?

Yes, I mean we talk about those freedom plans are offered in small number of beams, demand for that has been good and people seem loan to pay a higher price for a lot more bandwidth and so we think that’s a good sign, but because of the limitation in the number of beams we offer it and so hard to discern that from the total of numbers.

Okay, and is that - you had mentioned do you think there is still some upside on the ARPUs, is it primarily freedom plans or is it adding ancillary services VoIP or security or other things that will move the ARPU up, or is it simply people mobbing to higher bandwidth plans - higher data plans, excuse me.

Yes, I mean pretty much all of the things that you said except that we're not selling home security, but we are getting people choosing higher value plans, people trading up to higher bandwidth, higher value plans, VoIP and also in general as the customer base shifts to be more retail that’s also driving total ARPU.

Okay and on the government business, can you tell us what the revenue contribution maybe revenue and ARPU was from the NetNearU in the quarter and a clarification that goes into service side, correct?

Yes, so the NetNearU definitely goes into government and they are primarily services. So I think we talked about the year-over-year growth coming from NetNearU was about $7 million.

Okay, so pretty consistent with what you saw last quarter?

Yes.

Yes.

And when you launched the Exede service for government and that’s entirely new if I’m correct, would those revenues spill in government service or would they go in satellite service?

So when you said when we launched the Exede service for government…

I think doing it ViaSat-1 will be relatively new.

The service on ViaSat-1, so the real issue would be they will roam in and out of the high capacity footprint.

Yes.

And we will book that service in government services.

Okay and final question on the government services, you mentioned a contract renewal, I think it was $28 million in the government services. Was that consistent with the legacy contract an increase, decrease, about the same?

That one was for a customer, a specific customer and it was down somewhat from last year.

Okay and probably fair to assume related to areas of operations?

Yes one of the things that we talked about it that we are sort of – one of the things we think is good is we are sort of migrating our government mobile broadband services from being sort of geographically specific to more DoD wide and probably more global.

Okay. Thank you.

Yes.

Thank you and our next question comes from the line of Mike Crawford of B. Riley. Your line is now open.

Thank you. On the government GIP aircraft, I understand those plains will roam in and out of your high capacity footprint. Do you have any sense of what percent of the time they are in say a ViaSat-1 covered region today as well as with maybe KA-SAT where they are in a more of high throughput region.

Yes, well if you look at government satellite – commercial satellite use in total, kind of there’s three regions that represent about 85% of all the usage in the U.S., North America, Europe and Middle East. And for a time period Middle East was the highest, U.S. is second. So we have roaming agreements for Europe and the U.S. and as all these airplanes come online when ViaSat-2 which covers the ocean, so we will have to the - extent of these aircraft and we think they sort of overall represent or that will have representative use compared to the government as a whole with that most of it will come under these Ka-band satellites that we either have or we have roaming agreements.

Mark is there anything you can share relative to the revenue potential per aircraft?

Not yet, I mean its good the government spends they have a program for a small number of VIP aircraft. A lot smaller than what we expect to get runs about 50-ish million a year that’s not our contract but that’s an exciting contract. That’s for less than 20 aircraft. So we don’t think – we are not sure we are going to do exactly the same as that but its sort of illustrative of what the value of the business could be.

Okay. Thank you and then on the what you’ve done with the SkyTerra-1 satellite where you are demonstrating to put something that would work on a car. Is that some type of service you are looking to bring to market in the near future?

Yes, we are working with now LightSquared which has that [indiscernible] and then also other partners and other parts of the world, we try to get higher speed services that could have gone mobile platforms. And these are if you are looking what that an issue is, but we have funding from customers to develop a products for that. So right now we’re sort of testing it out.

With that be – more for fleet management applications and tell…

Yes, that’s one example I mean there is a definitely lot of interest in fleet stuff. And I don’t think of it yet as connected cars but think of it more as enterprise business fleet management things like that.

Or M2M type stuff.

Yes, it’s a little bit of that, I mean one way to view it is it sort of a little bit faster, consumer - commercialized version of Blue Force Tracking, essentially what that is.

Also that’s bit of a repeat, so final question for me is, if you look at the FCC’s new definition of broadband has been 25-megabit per second. How does that related to capacity of a system, say if a ViaSat-2 if you were to provide say that level of service. And I know there is a lot of variables here given all the other things you wanted to do with the satellite, how many consumer broadband subscribers do you think you could support providing that level of service and compared let’s say someone using the system that worked a lot more like ViaSat-1?

Okay, ViaSat-2, the main thing we’ve said is it’s got double the bandwidth economics. So we have a - if we offer the same plans we could offer, we could get probably as twice as many subscribers. The main thing I would say is especially over the last year, we’ve learned that. There is definitely more demand even at higher price points for higher bandwidth, higher speed plans and we haven’t up the speeds yet on ViaSat-1 I would think that we can, it’s capable of supporting those speeds. So right now we are just kind of looking at the economics of optimizing revenue and earnings given the resources that we have with ViaSat-2, certainly be able to offer those kinds of speeds. What we are trying to figure out is go to the right price points and go to the right service plan definitions and probably a little early to comment on that. But I don’t want to get into the same thing where people are just trying to match us against some orbitary target, when we are really trying to do is maximize total economic value. So I am not going to give a specific number on subscribers.

All right. Thank you.

Thank, Mike.

Thank you. And our next question comes from the line of Chris Quilty of Raymond James. Your line is now open.

All Right, thanks want to follow-up on the dual-band Ka/Ku antenna that you are going to introduce, I think you said later in your fiscal year. Can you remind us is that going to use your Yonder network and the Arc-Light Modem on the Ku side or you designing something that’s more, Ku agnostic where you could use an iDirect modem and use some of the existing infrastructure that’s out there?

Yes, some of those things are to be determined, one of the things that we’ve been suggesting to our customer especially government customers is this concept of best available network which we think is really driven by this satellite economic. So in most cases we think we’ll be how to use our client network we have an existing global archived network, archived license and how we developed is it’s very bandwidth efficient and Ku-band is a lot of infrastructure for it and so we think that sort of the dominant mood, but the antenna itself can support other Wi phones and other networks and if we can deliver services to our customers using third-party modems and then sure if we could do that. We don’t see a lot of demand for it yet, but we certainly can do it if our customers want.

Okay, and on the network I think your network map shows that it’s pretty global in terms of the footprint that you have now, is it sufficient or is it sufficiently robust to handle multiple airlines or volume of government customers or is there a significant ramp in transponders that you are going to have to bring on to the network in orders supported. I am just thinking some of the companies that do this for a living like the Panasonics of the world are probably spending $50 million a year in transponder capacity or you mostly already there in terms of observing those costs or do we have a lot of incremental costs to come online?

I think we have done a very good job in general of matching our transponder spending to our revenue which is sort of the trick there. The thing I would say differentiates us in order to other is that we have the ability to bring online through ourselves or ViaSat-2 is an example and or through partners then we are working on more arrangements like this all the time and we expect to be talk about some of those over the next year or so to bring much, much more cost effective bandwidth into play than what other people are committing to. So we don’t want to do to make large amounts of money for a long periods of time for transponder prices that will become I think absolutely fairly soon.

Okay, and one question for Shawn regarding the XM launch is the volume set to going somehow be important overseas shell corporation or something in order to qualify for XM which is suppose to be a export related?

Yes, so basically I can quite touched on this a little bit last quarter, we are pretty global operations and we have quite a few international subsidiaries, if you recall we have a subsidiary already over in UK that we acquired a couple of years ago. Our swap that we are going to have coming through the UK, the launch and operation licensing will be in UK entities, so we are going to be primarily holding the satellite there and we're going to be serving multiple geographic footprints with the coverage maps that’s we have. I think we noted before or talked about the lot of the Xplornet program which is a Canadian and we're going out further international and geographical for our customers as well.

I think we cover over 30 countries.

Yes.

Over 40 countries with this satellite.

Okay, is the Xplornet relationship similar how you structured it with the ViaSat-1 satellite or is it different?

No, its different, ViaSat-1 we had an arrangement with Loral Space & Communications which was the parent of SS/L and they essentially acquired bandwidth from us as an equal partner of construction, in this one we acquired the satellite and where we made services and equipment deal with Xplornet.

So more traditional.

Yes, you could say that I guess.

Okay. All right. Thank you.

Thanks Chris.

Thank you and our next question comes from the line of Mike Crawford of B. Riley. Your line is now open.

Thank you. Can you talk about probabilities of ViaSat getting involved with some of these proposed small satellite networking projects and as well as what challenges there might be to seeing these things come to fruition?

Okay, so one is we have worked on most every [indiscernible] satellite system in existence so far, we did on the original meridian system and we did out of the ground infrastructure on the next iridium, we are doing payload electronics on O3B which was a K-band broadband system, we did a lot of the network infrastructure and user terminals. So I think there is pretty decent change that we will get involved as a module subsystem supplier to new legal systems, I think we are pretty vertically integrated and we feel we have a good technology there and we're interested in doing that. We are also interested in all new technology and we maybe interested in being a partner in some other way, but the thing we're more focused on ourselves is this issue I described which is delivering speed and bandwidth to subscribers and we're still trying to figure out, why a LEO network would be better than what we are doing now. We’ve invested a bunch in the geo stuff, we had really good metrics or what we can achieve, we think we’ll be bringing that to market in the timeframe that’s probably sooner than the LEO system as well and so far customer acceptance seems to be really high for the bandwidth and speed value propositions. So we are going to - to the extend we make our own investments, we’re going to probably do those in technologies that we think are, where we think we can get the greatest economic return. So far it looks like sort of what we are doing with our own payload stuff.

And the main problem you are seeing is how to get the bandwidth on target where you want it?

Well, I mean there is not a lot of public information about these others, we’ve done a bunch of work ourselves and so far we haven’t seen things that inconsistent with that, but basically you are going to end with highly integrated - in order to do whether its LEOs orGEOsyou can end with highly integrated satellite payloads which are a lot more integrated than what you see in current generation technology. And in general what we think is if you just look at efficiency measures that bigger satellites that have more payload or going to be more efficient satellites with little payload. There is a question about whether making hundreds or thousands of satellites is a feature or a bug, one way you could represent it as a feature where I’m going to make a lot of them and so I’ll make them cheap. In another way you could look at it is, but I want to have a reasonable ground terminal. I need hundreds or thousands in order to have reasonable look angles to the satellite and so now we’re trying to make lemonades out of lemons, which is I got to have all these satellites. So I think figure out some way to do that effectively. So there is that issue and then there is also the issue of the geographic distribution of the bandwidth. And those are sort of hard economic problems independent one and how the technology works. Two and we’re pretty focused on metrics that have worked and for a long period of time and seem to be reflective of customer demand and to the extent that we can do better than that with other technologies, we are open to that.

Okay, thank you. And then final question would be any progress report or change in probability on securing some kind of partial payload or other deal with ViaSat-2 type of architecture for someone partnering with you?

I didn’t say there has been a lot of activity around ViaSat-2 partnerships for other parts of the world and we’re happy about that obviously that the deals are big that you’ve got $0.5 billion class investments and so I think it take some work and we’ll see if any of them actually make economic sense for all parties I think we’ll know lot more in this calendar year about what the prospects are for that.

Okay, thank you.

Thanks, Mike. End of Q&A

Thank you, and I am showing no further questions at this time, I’d like to turn the conference back over to Mr. Mark Dankberg for any closing remarks.

Okay. Well, thanks everybody for your time and interest and look forward to speaking to you in the next quarter.