KVH Industries(KVHI) - 2024 Q4 - Annual Report

Sales Performance - Global high-throughput satellite (HTS) airtime service sales accounted for 71% of consolidated net sales in 2024, down from 81% in 2023[17] - Product sales represented 15% of consolidated net sales in 2024, an increase from 13% in 2023[17] Business Strategy - The company plans to wind down capital-intensive manufacturing activities by the end of 2025 due to reduced demand and increased competition[21] - The company plans to discontinue most manufacturing activities by the end of 2025, transitioning to third-party hardware for its solutions[59] - Significant inventory is held to support customer demand, with a ramp-up in production to meet anticipated needs before ceasing manufacturing[64] Product Offerings - The KVH ONE OpenNet Program allows vessels with non-KVH VSAT antennas to subscribe to KVH's global HTS network without hardware exchanges[27] - An exclusive multi-year agreement with Kognitive Networks was signed to integrate enterprise-grade network management tools into maritime communication services[28] - The company offers AgilePlans, a Connectivity as a Service (CaaS) model, which includes satellite communication hardware and services for a single monthly fee[24] - KVH Media Group distributes licensed entertainment content, contributing to the company's content service sales[30] - The global HTS network utilizes 182 Ku-band transponders on 31 satellites, with 138 transponders on high-throughput satellites[26] - TracNet H-series terminals offer data speeds of up to 20/3 Mbps for the H90 model, supporting a wide range of vessels from 40 feet to superyachts[38] - TracNet Coastal, introduced in late 2024, provides data speeds up to 300 Mbps and enables automatic switching from satellites to shore-based Wi-Fi[41] - The company began selling Starlink terminals in March 2023 and became an authorized reseller in September 2023, offering a hybrid solution with KVH's services[45] - A distribution agreement with Eutelsat OneWeb was announced in January 2024, aiming to expand multi-orbit hybrid network services with over 630 LEO satellites[46] - The company offers a range of products including TracPhone V30 and TracVision UHD7, catering to both leisure and commercial vessels[40][49] Market Competition - Competition is intensifying, particularly from SpaceX's Starlink and Eutelsat OneWeb, which are entering the high-speed marine market[68] - The company is facing increased competition from providers offering fully managed IT services, which may complicate its competitive position[74] Workforce and Operations - The global turnover rate for the company in 2024 was 37%, primarily driven by a reduction-in-force cost savings initiative[85] - Approximately 40 team members, or 15%, are directly involved in supporting technology in roles such as engineers, technicians, or software developers[84] - The company's total headcount as of December 31, 2024, was 260, including 247 full-time employees[81] - The average length of employee service at the company is 9 years, indicating a stable workforce[86] - The company has established relationships with major universities and professional associations to attract talent, hiring 15 professional level team members in 2024[92] Safety and Compliance - The company's OSHA total recordable incident rate in 2024 was 1.1%, compared to the national average of 2.4%[90] Research and Development - The company is focusing on research and development related to cellular products and emerging non-geostationary satellite orbit (NGSO) products and services[75] - The company anticipates ongoing demand for hybrid connectivity solutions offering GEO, LEO, and 5G/LTE Cellular connectivity in 2025[74] - The company expects to continue offering KVH-manufactured VSAT and satellite TV terminals through 2025 and potentially into 2026[72] Intellectual Property - The patent portfolio includes approximately seven issued patents and one pending application, with expiration dates between May 2031 and May 2037[55]