Good morning and welcome to the Iridium second quarter 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Kenneth B. Levy, Vice President of Investor Relations. Please go ahead. Thanks, Drew. Good morning and welcome to Iridium second quarter 2024 earnings call. Joining me on the call this morning are our CEO, Matt Desch, and our CFO, Tom Fitzpatrick. Today's call will begin with a discussion of our second quarter results, followed by Q&A. I trust you've had the 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 fact 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, including operational EBITDA, pro forma free cash flow, free cash flow yield, and free cash flow conversion. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. Please refer to today's earnings release and the Investor Relations website for a further explanation of our non-GAAP financial measures in a reconciliation to the most directly comparable GAAP measures. With that, let me turn things over to Matt. Thanks, Ken. Good morning, everyone. As you saw in our earnings release this morning, we delivered another good quarter of revenue and subscriber growth and remain on track for our full-year guidance. Our unique network and service continue to attract new customers and drive service revenue, allowing us to keep returning capital to shareholders. We're also investing in our future with R&D and new partnerships to broaden our device and service lines and remain very confident in our competitive position and market offerings going forward. We continue to believe that Iridium's growth and free cash flow generation validate our strategy and make our shares an attractive investment opportunity, especially at current market valuations. The passage of time will demonstrate that the durability and strength of our business provide investors more appreciation of Iridium's unique position in the satellite industry, particularly as service revenue growth accelerates and our progress in the emerging D2D and standard-based IoT arena gets more attention. Our global reach and specialized safety services will continue to be differentiators and allow us to achieve our long-term guidance through 2030 and beyond. Iridium's unique service offering is not a commodity, and our performance in the coming years will demonstrate to investors that we are very different from the cable companies that they continue to compare us to. As I noted during our April call, we completed our first company acquisition with Satelles in the second quarter, and the integration with other parts of our business is going very well. This acquisition now makes Iridium the market leader in alternative PNT, and we're excited about the business opportunities this new offering provides, especially given the growing threats to GPS signals around the world that support critical data and infrastructure. Since our entry into PNT with the Satelles deal, we've already expanded the footprint of the service to Europe and Asia to allow our partners to more easily address opportunities with their customers for secure PNT in data centers, maritime, in-building wireless, and other market areas. I don't think investors completely understand the potential of our satellite-based time and location service yet, as there aren't many real competitors to us in this space, and coverage of the growing threats to GPS are more frequent in conflict areas, which may seem quite distant at this time to consumers. Our STL service solves a lot of important use cases as it uses our powerful paging channel to offer a secure position navigation and timing signal that is 1,000 times stronger than GPS. This service has growing relevance beyond conflict areas as jamming and location spoofing become more prevalent. Our STL offering adds redundancy and protection to critical infrastructure and even in-building networks. We especially like the fact that Iridium's STL is a wide-area broadcast service that supports an unlimited number of users while using minimal network resources. On the engineering and support front, we continue to see our work and revenues expand with the U.S.-based development agency as our team, along with General Dynamics Mission Systems, builds the ground infrastructure to support the SDA's new LEO network. That constellation should start launching in earnest later this year and into 2025. Our scope of work on this multi-year project has expanded over the past year, and we expect it to drive record engineering support revenue in 2024, all while continuing to expand the capability of our satellite operations team and give us great insight into cutting-edge LEO technologies to help inform our future plans. In the second quarter, we also announced a new contract with the U.S. government to continue to secure and support the long-standing private network that we maintain in partnership with them, which many of you know as the EMSS program. This new five-year contract expands our relationship with the Space Force and will produce greater than 50% more revenue than the previous support contract. That's more than $90 million in revenue to Iridium over five years. This contract's term also straddles the current EMSS contract and a successor contract we expect with the U.S. government. On that front, we are starting to plan for those initial conversations and what we expect to be a favorable renewal at the end of the current contract term. Moving to our capital market activities, many of you saw that we completed the repricing of our term loan last month, which will save Iridium about $4 million in annual interest expense on a go-forward basis. The transaction underscores the support we have from credit investors and the durability with which they view our business and cash flows into the future. Let me be clear: we share their optimism. We think our equity is undervalued in light of how we believe our business and our cash flow will continue to grow. As a result, we've been more aggressive with our share buyback activities. You'll see we drew on our revolver in the second quarter to help repurchase 3% more of our outstanding shares during the quarter, and we expect this activity to continue. Tom will share more details on this activity shortly. I want to also highlight that we increased our quarterly dividend with our June payment to $0.14 per share. This increase reflects our confidence in Iridium's ability to grow free cash flow well into the next decade and will result in a 6% increase to our dividend for the full year. Overall, our business is performing well, and we remain on track for our full-year forecast. The quality, resilience, and reach of Iridium's network remain strong selling points to partners and their customers. We continue to add new commercial and government partners and deliver more services through our global network of resellers. We've already certified a record 39 new partner devices just in the first half of this year, which matches 2023's full-year total. I think this shows the pace of investment that's taking place around our network by Iridium's partners, which will only add to our growth. Our business partners understand Iridium's differentiated service and reliability, as well as the performance of our network services. They are excited about our new IoT technology coming to market and how it will expand their applications. They are particularly looking forward to the prospects for even lower-cost end-user devices based on 3GPP standard narrowband IoT services, which we are developing through our Project Stardust program. While 2024 is a bit of a transition year for Iridium, I feel very good about our strong market position and growing opportunities, as well as the investments we're now making. They align well with our unique brand position and extend the utility of our differentiated services to a broader set of industries and users. With that, I'll turn the call over to Tom for a review of our financials. Tom. Thanks, Matt. Good morning, everyone. I'd like to start my remarks by summarizing our key financial metrics for the second quarter and providing some color on the trends we're seeing across the business. I'll recap the 2024 guidance, which we affirmed this morning, and close with a review of our liquidity position and capital structure. Iridium continued to execute on its annual plan, delivering 5% service revenue growth in the second quarter and generating strong subscriber growth with net additions of 80,000. Operational EBITDA was $114 million in the second quarter, with growth from commercial service revenue and engineering and support largely compensating for equipment sales returning to more normalized levels. In our commercial business, service revenue was up 6% this quarter to $126 million, with the increase reflecting continued strength in IoT. Voice and data revenue rose 3% from last year's comparable quarter to $56.5 million. The increase was driven by subscriber growth as demand for Iridium's push-to-talk services remained healthy. Commercial IoT continued to benefit from demand for personal satellite communications, as well as traditional industrial services. Revenue rose 20% from the prior year quarter to $41.6 million, in part reflecting the new two-year contract we signed earlier this year with a large, fast-growing partner. As I discussed during our April call, this new contract has the effect of materially increasing revenue from this customer in 2024 compared to 2023, which served as a tailwind to IoT ARPU for the quarter and the first half of the year. Revenue and commercial broadband fell 4% from the year-ago period to $13.5 million, even as we grew subs by 4% from the year-ago period. As we have previously noted, we're forecasting a reduction in broadband ARPU this year related to vessels where Iridium was being used as the primary communications device. During the quarter, we added 83,000 net new commercial subscribers. Commercial IoT data subscribers now represent 81% of billable commercial subscribers, up from 79% in the year-ago period. Hosting and other data service revenue was $14.4 million this quarter, down 4% from last year's comparable quarter. As we've discussed previously, the decline from the year-ago quarter reflects lower revenue recognition from extending the useful life of our satellites. The extension of the useful life has no bearing on cash flow and only impacts the time over which we recognize revenues from the associated fixed-price hosting contracts. As Matt noted, in the second quarter, we also started to recognize retail revenue from Iridium STL, the time and location business we acquired in the Satelles transaction that closed on April 1st. We see a tremendous revenue opportunity in broadening the availability of Iridium's alternative position navigation and timing service and believe it will generate over $100 million in annual service revenue by 2030. Government service revenue was stable during the quarter at $26.5 million, reflecting the terms of our EMSS contract with the U.S. government. Subscriber equipment was $22.8 million in the second quarter and continues to return to more normalized levels following two years of heightened demand owed to supply chain constraints and customer inventory buildup. Engineering and support revenue was $25.8 million in the second quarter as compared to $20.6 million in the prior year period. The rise reflects growing activity with the U.S. government and the increasing scope of work with the Space Development Agency. As Matt noted, Iridium was also awarded an upsized contract with the government earlier this year to support maintenance and engineering work on our EMSS contract through 2029. In light of our second quarter results, we are affirming our full-year guidance on service revenue and EBITDA. To aid with your financial models as we look to the second half of 2024, I would like to highlight some trends that provide context and support our outlook. We continue to expect service revenue growth of between 4%-6%, primarily driven by momentum in commercial IoT. 2024 IoT revenue growth in the mid-teens represents an increase in the growth rate compared to both 2022 and 2023. The Satelles acquisition, which we completed in April, will be additive to the service revenue growth, but the impact is expected to be limited this year at less than 100 basis points to our full-year forecast. Revenue from our EMSS contract with the U.S. government will rise in the second half of the year with a contractual step up in mid-September. Full-year revenue in our government business will be $106.3 million in 2024. As we previously discussed, equipment sales will moderate this year. We saw this moderation begin in the second half of 2023, which will make year-over-year comparisons easier as we move to the second half of 2024. On the expense side of the ledger, our R&D will remain higher this year, up about $5 million, as we make progress on our standards-based initiatives to support narrowband IoT and direct-to-device. We had initially expected that SG&A would be in line with 2023 for the full year 2024. We now expect SG&A will be up about 15% in 2024 over last year. This change gives effect to the Satelles acquisition, which was not contemplated in our original guide, and to a reclassification of certain expenses from cost of service as originally modeled to SG&A. This reclassification does not change our EBITDA outlook, as the increased SG&A is offset by lower cost of services than was originally modeled. Depreciation and amortization will be significantly lower than a year ago as a result of the change in our satellite useful life. We would advise modeling 2024 D&A close to $200 million. Iridium still expects cash taxes of less than $10 million through 2026. Lastly, on interest expense, I would highlight that we increased outstanding debt under the term loan, which we used for the Satelles acquisition, and drew on our revolving facility in the second quarter. Iridium also repriced its term loan in the second quarter, which reduced the spread paid on the credit facility by 25 basis points to SOFR plus 225. The repricing transaction will save $4 million in annual interest expense. However, for 2024, the additional interest on the new borrowings will outpace the lower facility rate. Based upon the current outstanding term loan and prevailing interest rate, we expect interest expense to total about $86 million in 2024. Taken together, this outlook allows us to reiterate our forecast for service revenue growth between 4% and 6% and operational EBITDA between $460 million and $470 million this year. Moving to our capital position, as of June 30th, Iridium had a cash and cash equivalence balance of $63.5 million. During the second quarter, we utilized cash from an upsized term loan to complete the acquisition of Satelles, which closed on April 1st. As of June 30th, Iridium's term loan balance was $1.62 billion. We ended the quarter with net leverage of approximately 3.5x our EBITDA. With our earnings update today, I would note that we have updated our interim guidance for net leverage to provide additional capacity for share repurchases in light of recent trading levels. We believe that Iridium stock is undervalued today and represents a compelling value at current levels. In fact, during the second quarter, we drew $50 million on our revolver to facilitate additional open market purchases. While we had guided to net leverage of below 2.5x our EBITDA as a 2026 exit rate, we are increasing net leverage guidance to below 4x our EBITDA through 2026. This update reflects our plans to raise additional debt to facilitate increased share repurchases in the near term. We continue to forecast Iridium's net leverage will fall below 2x our EBITDA by the end of 2030. The rate at which we expect Iridium to naturally deliver makes us very comfortable with this long-term guide, notwithstanding the projected uptake in leverage in the near term. In the second quarter of 2024, Iridium retired approximately 3.3 million shares of common stock at an average price of $29.25. This activity leaves Iridium with an outstanding balance of 180.8 million under our board-approved authorization through December 31st, 2025. As I've noted, we believe that Iridium's equity offers a compelling investment opportunity at current levels. We will continue to execute on our buyback program, balancing the desire to maximize return on investment with our long-term objective for deleveraging. During the second quarter, we made a quarterly dividend payment of $0.14 per share paid on June 28th. This was up from $0.13 in the first quarter and will result in a full-year increase of approximately 6% to Iridium's annual dividend from 2023. Between our dividend program, which started in 2023, and the commencement of our share repurchases, Iridium has already returned more than $900 million to shareholders. Capital expenditures in the second quarter were $12.4 million. We expect capital expenditures to reach close to $70 million in 2024 as we invest in new product development initiatives like Project Stardust. Thereafter, it will trend below $60 million in the latter part of the decade to average $60 million annually during the period from 2023 through 2030. Turning to our pro forma free cash flow, if we use the midpoint of our 2024 EBITDA guidance and back off $86 million in net interest pro forma for our current debt structure, approximately $69 million in CapEx for this year, $5 million in cash taxes, and $6 million in working capital, inclusive of the appropriate hosted payload adjustment, we're projecting pro forma free cash flow of approximately $299 million for 2024. These metrics would represent a conversion rate of EBITDA to free cash flow of 64% in 2024 and a yield of close to 10%. A more detailed description of these cash flow metrics, along with the reconciliation to GAAP measures, is available in a supplemental presentation under events on our investor relations website. Iridium continues to execute well on this year's plan, and we see meaningful growth ahead to support free cash flow generation and service revenue expansion. We remain comfortable with our long-term guidance for $1 billion in service revenue by 2030 and our capacity to return $3 billion to shareholders from 2023 through the end of the decade. With that, I'll turn things back to the operator and look forward to your questions. We will now begin the question and answer session. To ask a question, you may press Star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Ric Prentiss with Raymond James. Please go ahead. Hey, good morning, everybody. Hey, Ric. Hey, Ric. Hey. A couple of questions. First, on the service revenue guidance, maintaining it at 4%-6% year-over-year increase. I think last quarter, though, you thought you might be heading to the higher end of the service revenue guidance. Any update from what you were thinking last quarter to what you're thinking this quarter as far as in that range? No, not really, Ric. What I'd say is Satelles was not contemplated in our original guide. So as much as we did the acquisition, it represented kind of goodness to that original guide. But we sized it at less than 100 basis points. So kind of we're in a similar circumstance as to where we were last quarter. What I would say is we're very comfortable reiterating the original guide of four to six, and more importantly, in reiterating the billion-dollar service revenue guide for 2030. Okay. And obviously, taking the leverage up to see opportunity in your stock price, is there something that goes on when leverage is above 3.5 but less than 4%, kind of on what happens with the debt or prepayments or cash sweeps? I was reading through the 10-Q a little bit there. Not between 3.5 and 4. When you get over 4, there are certain things happen. And when you get over 4, they're manageable, but we just like keeping it inside of 4x. And that provides a lot of capacity for additional share repurchases. Okay. And the last one for me is on the IoT. You did have that ARPU increase. You called it out a little bit in your prepared remarks. Talk to us a little bit about that competitive positioning of those IoT devices versus what's going on with direct-to-device of other operators out there. And should that ARPU trend upward and net adds? Just trying to think the competitive dynamics on that particular line item. Well, in terms of competitive aspects, I mean, one of the reasons it's trending upwards is that we're introducing new devices into the market that offer higher speeds, more capabilities, the ability to send in consumer devices, pictures, and voice snippets, and things like that. And we think that that will help in terms of driving some ARPU in those kind of products. But in addition, I mean, we really have a strong competitive advantage over everyone in IoT because we're a global service day one. I mean, the other activities people have are either typically non-real-time or they are regional. We're expecting, for example, we don't really compete with cellular IoT. We supplement it. We support it. But it only covers the low-teens part of the world. And even with Supplemental Coverage from Space coming, that only adds a couple of points to sort of the IoT footprint. So we're expecting still to have an important kind of global role for that. And then, yeah, on top of that, that we've been in service for many, many years in IoT and have hundreds of partners and potentially thousands of solutions out there today that are deeply embedded in all kinds of industries and expanding into more industries. So we're real comfortable with our position in IoT. In fact, it's even a particular strength right now in our results and what we're looking at going forward. And as far as getting into the D2D yourself, still a couple of years to get kind of designed through the standards body, 3GPP. How should we think about kind of the cost and then the revenue curve of that effort? Well, again, I think it will continue to add and support the growth that we're continuing to have as we're able to add more use cases and lower the cost of our products. I mean, we have plans to lower the cost of our products dramatically even before standards and then kind of seamlessly go into standards environments, which would allow consumer well, it would allow terrestrial devices that have already been sold in places to roam onto our network, which would then add kind of new revenue streams to us. The development of Stardust is going very well. We've selected a lot of our partners. Development has occurred. We've already seen some sort of demonstrations of narrowband IoT across our unique waveform. We're well embedded into standards processes and discussions with chip vendors and all that sort of thing. So we've gotten off to a great start on Stardust. It will be a couple of years before I think it adds considerably, but nothing's going to decline in the meantime, and I think it's just added juice to our growth. Great. Thanks, guys. Thank you. The next question comes from Simon Flannery with Morgan Stanley. Please go ahead. Great. Thank you very much. Good morning. If I could just come back to the leverage point, it's a pretty significant increase from the 2.5 to the 4. And I understand that your stock is attractive. One, is there anything else going into this? I think you confirmed the CapEx guidance, but any other changes, or is this all essentially keeping leverage higher to return more capital to shareholders? And just what was the decision to go to up 1.5 turns rather than, say, keep it in that 3x-3.5x or whatever? How did you balance that and come up with this ratio? Good morning, Simon. So yeah, the additional leverage is exclusively to repurchase more shares. I would say the thinking is an evaluation of our circumstance competitively and the commitment to the $1 billion in service revenue. We think that we've done a thorough review and think that the stock is undervalued. And taking it up to just inside of 4x can be done. As I said, there's no implications on the credit facility. It's just a little bit of additional interest. And you won't go over 4 times, I think you told Ric, right? We're going to stay inside of 4 times. But think about the amount of capacity that that frees up for share repurchases. It's hard to imagine that we'd be less than $500 million in EBITDA in 2026. So at a turn and a half, you're talking about $750 million in capacity for share repurchases on a company with a $3 billion market cap. So that's significant, and we think it's appropriate at these trading levels. Great. And then on commercial broadband, I think you'd sort of talked about this is going as expected given some of the primary to complementary. Can you just help us? What inning are we in on this? ARPU's down to $2.69. Are we near the bottom of this sort of rate of percentage decline, or is there a couple more quarters before we can sort of say we're seeing some sort of easing of that pressure? Which sport do you want to use? Baseball or—I guess it was baseball. I think we're in the latter part of the game here. Maybe third or fourth quarter. I don't know what sport you'd like, but it definitely feels like we're mostly through a lot of that. We're kind of getting to the environment where I think the predominant use these days is us as a companion service. And the development's going very well and is on track for adding GMDSS to our broadband service so that one terminal can really do all the safety as well as companion aspects, which we think is a real dynamite product. So I think we're really very well positioned to sort of continue our broadband business there. And where should that ARPU settle out in the kind of mid-200s, or? I think that's fair. Yeah, I think that's about right. Yeah. And then just one last one. You talked about the $90 million in incremental revenue over the next five years from the U.S. government. How does that flow through the next several years? It's pretty. It's in engineering and support, Simon. Yeah, it's pretty flat. The previous contract, as we said, was lower than that, and it was pretty flat each year. This one obviously steps it up roughly 50% or so. So that will just be an increase over the next five years to that. And when's the first quarter you get the step-up? I think a little bit comes in this year and then into next year. Then next year is sort of a full-year effect. Not a huge effect, but it's positive and one of the many positive things. Okay. Appreciate it. All right. Thanks a lot. Thanks, Simon. The next question comes from Walter Piecyk with LightShed. Please go ahead. Yeah. Hi, guys. This is Joe on for Walt. You've cited maritime in terms of the area that's being impacted by or that's impacting broadband. Are there any other verticals that are at risk? So maybe you can describe a little bit what's going on in those other verticals in the broadband market. Well, I mean, the two other main ones that we, well, three, I guess you could say, would be land mobile, aviation, and government. Government's still in the early days, and we're in the emergency or contingency anyway there in their PACE model of primary, alternate, contingency, emergency. We're still well positioned there. Land mobile has been a small business for us as sort of an alternative for things like trains or remote assets. We think that's kind of has been a niche. It hasn't really been impacted per se, but it's a small business overall for us that we think will, again, fit in. We're always a bit more in the alternative category. Then aviation, that's a safety business for us. That's where we're in the cockpit of airplanes. That work is completing right now. We're seeing the first sort of broadband terminals go out on helicopters and corporate jets and into commercial airliners. We'll see that accelerate into the coming years as final safety sort of certifications come later this year and in next year for that. So that's an area where we have a unique position. There's really few that can do that, and that isn't sort of a service that a lower-cost Ka or Ku band service can do. So it's really pretty much just been maritime has been the only impact that we really kind of seen. Okay. And then on SG&A, I know there was some reclass, and there's some step-up for Satelles. And then Tom mentioned that the guide year over year should be plus 15%. So that implies, I guess, that SG&A will be a little lower in Q3 than it was in Q2 and in Q4. So is there some one-timer that's in that $47 million that was in Q2 that was like a non-return? In the second quarter, there was the reclass that made the second quarter number higher. So a lot of the year-to-date reclass occurred in the second quarter. You're right to observe that SG&A will move down sequentially in the third and the fourth from where you see it in the second. Model it $165-$170 million, that ought to be good. Okay. And then what specifically was reclassed out of SG&A? Certain costs in support of our SDA contract, where on reflection, it was more appropriate for them to be shown as SG&A than cost of service. So we just made that reclassification. As I said, no impact on EBITDA, just bucketing, if you will. Okay. And then last one on CapEx, it's been kind of, I guess, light in the first half. Is that expected to ramp each quarter into the end of the year to get to this $70 million-ish guidance? Yes, that's our expectation. Okay. Thanks. The next question comes from Hamed Khorsand with BWS. Please go ahead. Hey, good morning. So first off, on the IoT front, excuse me if you already answered this, but what drove the ARPU and IoT going up on that side? Was it consumer? Was it industrial? Consumer, and it's on the back of the new contract that we referred to with the large, fast-growing customer. Got it. And it. And then is that just going to be a one-time benefit, though? Or is it going to be consistent pricing? The contract is two years, so it's a two-year two-year. Front-load increase in a one-time benefit and then just tapers off. Right. So the fundamental trend in IoT, if you look at it over a multi-year basis, is personal communications is growing faster than industrial in terms of subs. So there'll be a natural move towards the ARPU of personal communications, which is in the $4 range, which is lower than the overall ARPU in the $7 range. So that's the fundamental. That's what you've been seeing for years, and that will continue to be the case as personal comms continues to grow really fast. Okay. And then my last question is, is your partner, the same partner that we're talking about, are they promoting their product more that includes you, or are they doing anything to increase the units sold? Yeah. I mean, they're heavily promoting their products. Obviously, that's the whole point of this and why the revenue has gone up, is that they've been very successful and are introducing new products to the market with new capabilities, etc. And we're working together to make that a success for them and for ourselves. Okay. Thank you. Yep. Thanks. The next question comes from Chris Quilty from Quilty Space. Please go ahead. Thanks. Tom, just quickly, are we safe modeling sort of high 30s margins for equipment? And what's sort of the range there for full year? Yeah, I think that's about right. I I think that's about right. Yep. Okay. Second question. Tom, did I hear you mention you have partners on the Stardust program? I hadn't heard you specifically mention that previously. Well, suppliers when you build into new equipment to support the standard new equipment in the gateway, that sort of thing. I don't know that I refer to them as partners as opposed to, well, maybe I did. We view them that way, I guess, in some ways. But as we work together to implement the capability into our network, we aren't doing it all ourselves. So there is some new hardware and on-the-ground infrastructure that's required and, obviously, software reprogramming and the satellites and that sort of thing. So that's really what I was referring to. We haven't announced the kind of partnerships I expect you're really talking about yet, though we're talking to many companies about it and are getting a lot of encouragement and support. And as we get closer to things, I think we're going to obviously be able to talk about some of those sort of things. Okay. Just checking. So I was looking at your DoD subs, and they're still kind of fluctuating around. And you kind of look at what's going on in the world as sort of, what would they call in the 1990s, a revolution in military affairs that's happening with drone warfare. Apparently, there are sensor networks all around Ukraine that pick up the drone signals. It would seem to be the sort of market activity for you with secure communication devices that you would be seeing large activities or programs within the government. I haven't seen anything. The PLEO contract doesn't seem to be the vehicle for that. So could you give us an update on both the PLEO and what you're seeing out there? Well, yeah, our sub count is very, it moves around a lot. I think we're in kind of a transition period right now with the government on sort of subscribers. There's both cleanups and additions and all kinds of stuff. The trend going forward, we believe, is going to be very positive. There's a number of new contracts and areas that we're working with the government that would drive a lot of subscribers in the coming years. So, given it's a fixed-price contract, we're not exactly worried about the day-to-day subscriber counts, but more focused on making sure that we are embedded in all the right activities that they have, that we're an important technology in services, and that we see kind of long-term growth in that area. That's the most important thing for a continued good relationship with the government. So you're right. You don't see it quite in the sub count—you're not going to be able to see it right in the sub count in the short term, but I think that will turn positive, I think, in the coming years. And do you still feel that the strategy of selling service as separate from the EMSS contract, does that still look like a solid plan? Yeah, I think so. I mean, I think we're continuing to see niches of things that we can do well that others can't, and it's a bit of a niche service. I think we're going to see it finally being installed at the government gateway soon, which will help continue to see sort of us as a contingency backup sort of service for other technologies there too. So I think we're still well positioned with that technology on the broadband side and then really well positioned in sort of the midband and what I'd call narrowband side of the service technology as well in applications. Final question. Don't ask why. I was looking at a pre-pandemic Inmarsat annual report, and they were sizing, I think, the aviation safety market that you and they share. And I think like $250 million and growing to $1 billion whenever, right? I think your business there is still probably around $30 million, I think, Tom. And what do you think is the outlook for that market? Obviously, you need to get your certification in place, but is it really about getting equipment deliveries? Is it aircraft deliveries? Is it the OEM activity of getting all the STCs for aircraft? And how is that activity being managed? Yeah, I can't speak off the top of my head on the market forecast that you saw from them. I mean, I don't see it that way. We believe aviation is a growth factor for us, particularly given how well we're positioned and the new products and our partners having their products certified with us and getting them approved by the FAA and going through the safety certification stuff that is going on. We also know that we can address certain parts of that market that others can't address from GEO because things like, for example, rotorcraft, which we've always had an advantage to. Our antennas are smaller than others, so they really fit on different kinds of aircraft. We're really excited about the drone market, which still hasn't developed that significantly yet, but there's an awful lot of activity to fit drones into the national airspace system. And we think we're one of the few technologies to do that, and we're kind of at the heart of this beyond visual line of sight stuff. I think that in the coming years will be a big growth driver as well. So I can't put numbers on it other than it's bigger, nicely bigger than where we are today, and I think it's one of the contributors as we go out to 2030. To the incremental contributor next year? Yeah, I think so. Yeah, absolutely. Okay. All right. Thank you. Yeah. Thanks, Chris. The next question comes from Mathieu Robilliard with Barclays. Please go ahead. Good morning. Thank you for the presentation. My first question was about the trajectory of the gross margin on service revenues. Over the past years and quarters, we've seen the margin go down a bit. I understand that part of that is explained by the fact that some of the government services come with lower margin. I was wondering if there was anything else impacting the trajectory of the gross margin on the service revenues beyond the mixing revenues. Good morning, Matthew. No. The overall gross margin or EBITDA margin, any reduction in that or decrease in that is exclusively related to engineering and support. So the SDA contract is large and it's lower margin business. And so that's what's causing the decrease in EBITDA margin. The service revenue margin, if you will, is alive and well and will continue to demonstrate operating leverage year in and year out. So if that's clear. Yep. That's very clear. A second question was on your satellite phone business, the legacy part. I guess I was hoping to get a little bit more granularity about the kind of customer and usages you have there because, obviously, the underlying question is, could it be impacted by all the initiatives on D2D? I understand that for some of your customers, I mean, going through a commercial network, even if it's enabled by satellite on their iPhone, it doesn't work or it's not what they want. But if we could maybe get a sense of what kind of clusters of customers and where you think there's maybe a little bit of risk from D2D and where there isn't, that would be super helpful. Well, D2D right now, as it's been proposed, and I think most people are, they think Starlink and perhaps some others down the road, is only right now, in any way, being proposed using terrestrial spectrum. Terrestrial spectrum, or what the FCC calls supplemental coverage from space, that's sort of how I've been describing it, is really a coverage enhancer within specific markets where there is spectrum that can be used sort of border to border. That's only a couple of countries right now. I mean, it's a real handful of countries where it's likely to happen, assuming the regulatory issues and technical issues and all that kind of get resolved. I expect that they ultimately will over time. To the extent that that makes your cell phone work a little bit better within a few markets, it really doesn't make it into a global service, which has been our brand. It's been the primary capability, especially you talk about IoT. People use us for IoT because their assets, no matter where they are in the world, will work very well. People have embedded us into many, many industries and applications and services because of our reliability anywhere in the world. That's really not what D2D is offering today. It is true that there will be some services and stuff on certain phones that work better in certain markets, but that really wasn't why people were buying our satellite phones. That wasn't why they were buying or using our devices. I've often said someone doesn't buy a satellite phone in Wyoming to use in Wyoming. They buy it because they're a first responder who might be dispatched to Haiti or someplace where there's a hurricane or will use it when they travel into South America and beyond, where D2D isn't going to be offered anytime soon, nor will it be offered anytime soon in Africa or Europe or a number of other places. And our services work there perfectly well. So we believe it's really at the margins. We believe we understand what's happening and coming in D2D. We think we've included that in our forecasts and our expectations between now and 2030. And as I said, we'll still deal with people who don't appreciate that and will be reading press releases and stuff. But it'll take some time when people realize that we can coexist and our growth is compatible really with that. And that we'll be able to participate in that market as well as a global kind of, I think, glue that we'll be able to put in products that will provide a certain level of services that can be dependent on globally because of our global L-band allocations. So hope that helps. Got it. It does. And then I'll try a last one. With regards to your new leverage target for year-end 2026, and that was discussed already in previous questions. I was wondering if the decision to move from 2.5 to 4 was maybe also linked to the fact that you had been looking at some deals potentially, and in the end, you're deciding not to go for these, and that's why you have this new flexibility. No, that's not it at all. We're taking the leverage guide up exclusively to repurchase shares given their current trading levels. Okay. So it's not like you were looking at stuff and it's not happening. No. No. I mean, I'm always looking at things, and that's a separate aspect. And if something can pay for itself, we'll be interested in looking at that independently. There may be opportunities for that sort of thing in the future, but the focus on this was strictly shareholder-friendly activities. Right. And the only interplay between doing deals and the leverage was when we acquired Satelles, we had gotten questions about would we back off of the share repurchases given the funding of Satelles. And we said, "Absolutely not. We'll take leverage up because of where the stock is trading." So I think this move is consistent with what we said there. We just think that the shares are at this level. We need to take the leverage up a bit. Okay. Thank you very much. The next question comes from Bryce Sandberg with William Blair. Please go ahead. Matt, Tom, and Ken, good morning. Morning. I just wanted to ask about the Thuraya outage this quarter, if you saw any positive impact from that outage and if you're able to quantify that impact at all. There has been positive impact in the sense that Asia-Pacific customers are looking for alternate solutions. Thuraya is really not going to be assuming that they have a successful launch and all that sort of thing are going to be kind of out of the market for two years here. And I think the reliability of GEO solutions has been put to test here between themselves and Inmarsat's outages in Asia as well. So we are getting a lot of positive reception. It takes time for that to kind of develop. We're seeing, certainly, particularly around the handset, but in some cases, IoT customers in that region are looking for different solutions. So it's certainly been supportive. Will it move the needle substantially? We'll see. We certainly hope so, but it's a little too early to call that yet. Great. Thanks, Matt. That's all for me. Thanks. And our final question is a follow-up from Chris Quilty from Quilty Space. Please go ahead. Anything to update on Aireon and if not, okay. There's a board meeting a couple of months ago, as I remember, and hearing Don talk about it, there was a lot of bullishness in terms of the computer—I mean, the ADS-B business, the data services business. They have a number of new products they're developing. They're expanding their team because of the opportunities, continued sort of expansion of their footprint around their customers or renewing. We've been working with them on this sort of system engineering work around a possible global VHF service to add to ADS-B. I mean, that's something that they're kind of looking at long-term, haven't made any decisions about. It'll take a long time to develop a service like that successfully, but we would want to be part of that maybe with our next constellation. So I'd say only positivity right now. I think it was good that they got their financing sort of refinanced in a way that kind of took their cuffs off a little bit. And so I'd say things are quite positive over there right now. Very good. Good to hear. Thanks, guys. Yep. Thanks, Chris. This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Nope. Thanks for joining us. We'll see you again in August and talk to you, I'm sure, individually. Thanks for your time. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.