KVHI: Solid Q2, Strong 2Half

KVHI announced their Q2 numbers today and they were exceptional. The company keeps growing its FOGs business, getting close to 1,00o subscribes on mini-VSAT, major improvements in TACNAV, and aviation mini-VSAT starting to provide revenue. The quarterly results were strong and management feels extremely good about the second half of the year. Key highlights from today’s conference call:

  • Management expects to ship its 1,000th mini-VSAT in Q3. There is a 3-6 month lag between shipment of product and installation/initiation of service. At $2,000 per month of subscription revenue, we are looking at $24M in recurring revenue. I think 1,000 products in service is a great milestone for the company, with plenty of growth still left to come.
  • The company recently announced $13M order, the biggest in the company’s history. Management believes they can bag much more revenue in the company years
  • The company’s FOGs business grew 49% year-over-year in Q2. The company also signed another leading remote weapon station manufacturer, creating opportunity for further revenue growth.
  • Management sounds extremely bullish about the second half of FY.
  • The company has a strong balance sheet w/ 45M of cash and zero debt.

This company has an exceptional growth potential from its FOGs and mini-VSAT business. The company’s other businesses (mini-VSAT for airlines, TACNAV) keep performing strong and can be strong cash flow generators that I never counted for in my valuation.

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