KVH INDUSTRIES INC \DE\ 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction The statements included in this quarterly report on Form 10-Q, other than statements of historical fact, are forward-looking statements. Examples of forward-looking statements include statements regarding our future financial results, operating results, business strategies, projected costs, products and services, competitive positions and plans, customer preferences, consumer trends, anticipated product development, and objectives of management for future operations. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology. Any expectations based on these forward-looking statements are subject to risks and uncertainties and other important factors, including those discussed in the section entitled “Risk Factors” in Item 1A of Part II of this quarterly report on Form 10-Q. These and many other factors could affect our future financial and operating results and could cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by us or on our behalf. For example, our expectations regarding certain items as a percentage of sales assume that we will achieve our anticipated sales goals. The following discussion and analysis should be read in conjunction with our consolidated interim financial statements and related notes appearing elsewhere in this report. 23 Overview We are a leading global provider of innovative and technology-driven connectivity solutions to primarily maritime commercial, leisure, and military/government customers. We provide global high-speed Internet and Voice over Internet Protocol (VoIP) services via satellite to mobile users at sea and on land. We are also a leading provider of commercially licensed entertainment, including movies, television programming, news, and music, to commercial customers in the maritime market, along with supplemental value-added cybersecurity, email, and crew internet services. We generate a substantial majority of our revenues from sales of satellite Internet airtime services. We provide, for monthly fixed fees and per-usage fees, satellite connectivity encompassing broadband Internet, data and VoIP services, to customers via our global HTS network. In mid-2022, we launched our KVH ONE hybrid network, which integrates global satellite service (including Ku-band VSAT using the Intelsat (acquired by SES in July 2025) HTS network along with Starlink, OneWeb, Iridium, and other satellite services), KVH-provided cellular service in more than 150 countries, and shore-based Wi-Fi access. Revenue from our cellular airtime service has supplemented, and we expect will continue to supplement, our satellite-only airtime revenue. In addition, we earn monthly usage fees from sales of third-party satellite connectivity for VoIP, data and Internet services to our Inmarsat, Iridium, and Starlink customers who choose to activate their subscriptions with us. In March 2023, we began selling Starlink terminals and, in September 2023, we became a Starlink authorized hardware and airtime reseller offering Global Priority data plans for maritime use. In October 2024, we expanded our portfolio to include Starlink Local Priority data plans, which will primarily be used for stationary and in-motion commercial use on land. In December 2024, we introduced our TracNet Coastal and TracNet Coastal Pro terminals, expanding our extensive multi-channel portfolio of maritime products and services with a 5G/cellular and Wi-Fi system. We expect to earn usage fees from our offering of OneWeb service, which we launched in January 2025. We also generate service revenue from product repairs and extended warranty sales. Our service sales also include the distribution of entertainment, including movies, television programming, news and music, to commercial customers in the maritime market through KVH Media Group, along with supplemental value-added services. Historically, our Ku-band VSAT communications service has been the primary driver of revenue growth. However, these services represent a declining percentage of our revenues in the face of increased demand for and competition from emerging LEO services. Our satellite-only and hybrid products enable marine customers to receive data, VoIP, and value-added services via satellite, cellular, and shore-based Wi-Fi networks onboard commercial, leisure, and military/government vessels. In addition, our in-motion television terminals permit customers to receive live digital television via regional satellite services in marine vessels, recreational vehicles, buses and automobiles. We sell our products through an extensive international network of dealers and distributors. We also sell and lease products to service providers and end users. In February 2024, we announced a staged wind-down of our product manufacturing operations at our Middletown, Rhode Island location. The wind-down was driven by reduced demand for our hardware products in the face of intensifying competition in the third and fourth quarters of 2023. We concluded that we should discontinue our capital-intensive manufacturing activities and concentrate our efforts on growing sales of our multi-orbit, multi-channel, integrated communications solutions. We expect that we will continue our product manufacturing activities in order to generate a targeted amount of inventory of maritime satellite connectivity and satellite television terminals to meet anticipated demand into 2026 and that we will cease substantially all manufacturing activity by the end of 2026. This wind-down has been extended from the end of 2025 because the reduced workforce has been prioritizing fulfilling LEO product orders and refurbishing AgilePlan terminals over manufacturing new units. We expect to continue to facilitate customer transition to third-party hardware products compatible with our mobile satellite communications services. We also plan to continue to conduct maintenance, service, warehousing, shipping and receiving activities at the Middletown, Rhode Island location until our anticipated relocation by early next year. As part of this restructuring, we reduced our headcount by approximately 75 employees, or approximately 20% of our total workforce as of the time we announced the restructuring. As of June 30, 2024, all employee terminations were completed. During 2024, we incurred $3.9 million of severance charges for this and other restructurings. The $3.9 million of severance charges incurred during the year consisted of approximately $3.6 million of cash charges and approximately $0.3 million of non-cash charges arising from pre-existing contractual obligations to accelerate vesting of certain outstanding equity compensation awards. 24 During the second quarter of 2024, we expanded our relationship with Starlink through a bulk data distribution agreement. Under the agreement, we prepaid $17.0 million for access to a large block of Starlink Global Priority data at favorable rates. The new agreement offers us increased flexibility in the development and sale of custom airtime plans using Starlink’s Global Priority service. During the third quarter of 2024, we commenced our plan to sell the warehouse building and surface parking lot located at 75 Enterprise Center in Middletown, Rhode Island (“75 Enterprise Center”). As of September 30, 2024, 75 Enterprise Center had a carrying value of approximately $7.8 million. We determined that all of the criteria to classify 75 Enterprise Center as held for sale had been met as of September 30, 2024. The estimated fair value was determined based upon the anticipated sales price of these assets based on current market conditions and assumptions made by management, less selling costs. We recorded an impairment charge of $1.1 million in 2024, as the carrying value of 75 Enterprise Center at the time the asset for sale criteria were met exceeded the fair value less costs to sell. In December 2024, we entered into an agreement to sell 75 Enterprise Center for $8.5 million. Consummation of the transaction is subject to customary closing conditions. Under the purchase agreement, the buyer has six months to obtain specified zoning approvals, with up to three 30-day extensions, as well as a 60-day inspection period, subject to potential extension. The buyer may terminate the agreement at any time before the expiration of the inspection period and may also terminate the agreement if the specified zoning approvals are denied before the expiration of the zoning approval period. Upon consummation of the sale, we will remain in possession of the property as a tenant under a triple-net lease having an initial term of six months, which we can extend for up to an additional three months. Rent during the initial term is approximately $25,000 per month, which would increase to approximately $44,000 per month during any extension. We anticipate that this sale will be completed in September 2025 and we plan to lease this property until the end of March 2026. Additionally, in the third quarter of 2024, we commenced our plan to sell the property, building, improvements, and land located at 50 Enterprise Center in Middletown, Rhode Island (“50 Enterprise Center”). As of September 30, 2024, 50 Enterprise Center had a carrying value of approximately $3.6 million. We determined that all of the criteria to classify 50 Enterprise Center as held for sale had been met as of September 30, 2024. The estimated fair value of 50 Enterprise Center at that date exceeded its carrying value. In December 2024, we entered into an agreement to sell 50 Enterprise Center, subject to the buyer’s right to terminate the agreement during an inspection period. In January 2025, before the end of the inspection period, we received notice of termination from the buyer. In March 2025, we entered into an agreement with another buyer to sell 50 Enterprise Center for $5.3 million. The sale was completed in June 2025, resulting in a gain of $1.3 million, which is included in other income (expense), net in our consolidated statement of operations for the three and six months ended June 30, 2025. The sale generated $4.9 million of net cash. Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated interim financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these interim financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure at the date of our interim financial statements. Our significant accounting policies are summarized in Note 1 to the consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2024. Critical accounting estimates are those estimates made that involve a significant level of estimation uncertainty and have had or are reasonably likely to have an impact on our statement of operations. We believe that our accounting estimates for intangible assets and other long-lived assets are the only estimates critical to an understanding and evaluation of our financial results for the six months ended June 30, 2025, as discussed below. 25 Results of Operations The following table provides, for the periods indicated, certain financial data relating to our operations expressed as a percentage of net sales: Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Sales: Service 86.6 % 86.1 % 85.9 % 85.8 % Product 13.4 13.9 14.1 14.2 Net sales 100.0 100.0 100.0 100.0 Cost and expenses: Costs of service sales 53.4 53.9 54.7 50.9 Costs of product sales 12.3 15.0 13.5 16.6 Research and development 3.4 8.1 4.0 9.3 Sales, marketing and support 18.8 18.6 19.2 18.5 General and administrative 13.4 14.4 13.7 16.3 Total costs and expenses 101.3 110.0 105.1 111.6 Loss from operations (1.3) (10.0) (5.1) (11.6) Interest income 2.2 3.1 2.2 3.1 Other income (expense), net 3.1 (1.3) 1.6 (1.0) Income (loss) before income tax expense (benefit) 4.0 (8.2) (1.3) (9.5) Income tax expense (benefit) 0.4 — 0.2 0.1 Net income (loss) 3.6 % (8.2) % (1.5) % (9.6) % Three months ended June 30, 2025 and 2024 Net Sales Our net sales for the three months ended June 30, 2025 and 2024 were as follows: Change For the three months ended June 30, 2025 vs. 2024 2025 2024 $ % (dollars in thousands) Service $ 23,049 $ 24,674 $ (1,625) (7) % Product 3,574 3,999 (425) (11) % Net sales $ 26,623 $ 28,673 $ (2,050) (7) % Net sales decreased by $2.1 million, or 7%, for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Service sales decreased by $1.6 million, or 7%, to $23.0 million for the three months ended June 30, 2025 from $24.7 million for the three months ended June 30, 2024. The decrease in service sales was primarily due to a $1.9 million decrease in our airtime service sales, which reflected a $2.5 million reduction in sales related to the U.S. Coast Guard contract downgrade in the third quarter of 2024, as well as a decrease in other VSAT subscribers. These decreases in VSAT service sales were partially offset by an increase in LEO service sales. For the three months ended June 30, 2025, LEO services sales represented over 30% of airtime services sales, as compared to less than 10% for the three months ended June 30, 2024. The increase in LEO service sales as a percentage of total airtime sales resulted from both a substantial increase in LEO service sales and a substantial decrease in VSAT service sales. Alternative solutions offered by recent LEO entrants have heightened competition in the global leisure segment and in commercial and government markets. 26 Product sales decreased by $0.4 million, or 11%, to $3.6 million for the three months ended June 30, 2025 from $4.0 million for the three months ended June 30, 2024. The decrease in product sales was primarily due to a $0.5 million decrease in Starlink product sales and a $0.2 million decrease in TracVision product sales, partially offset by a $0.3 million increase in OneWeb product sales and a $0.2 million increase in VSAT Broadband product sales. The decrease in product sales was primarily due to discounted pricing on Starlink products. Competition from low-cost alternatives to VSAT, which include streaming capabilities, has had a significant impact on sales of our TracVision products. Costs of Sales Costs of sales consists of costs of service sales and costs of product sales. Costs of sales decreased by $2.3 million, or 12%, in the three months ended June 30, 2025 to $17.5 million from $19.8 million in the three months ended June 30, 2024. The decrease in costs of sales was driven by a $1.3 million decrease in costs of service sales and a $1.0 million decrease in costs of product sales. As a percentage of net sales, costs of sales were 66% and 69% for the three months ended June 30, 2025 and 2024, respectively. Our costs of service sales consist primarily of satellite service capacity, depreciation, service network overhead expense associated with our VSAT Broadband network infrastructure, direct network service labor, product installation costs, media materials and distribution costs, and service repair materials. For the three months ended June 30, 2025, costs of service sales decreased by $1.3 million, or 8%, to $14.2 million from $15.5 million in the three months ended June 30, 2024, primarily due to a $1.2 million decrease in airtime costs of service sales. As a percentage of service sales, costs of service sales were 62% and 63% for the three months ended June 30, 2025 and 2024, respectively. During the second quarter of 2024, we purchased from Starlink access to a large block of data at favorable rates. As a result of this purchase, during the three months ended June 30, 2025 our gross margin percentage on Starlink airtime services improved year over year. Our costs of product sales consist primarily of materials, manufacturing overhead, and direct labor used to produce our products. For the three months ended June 30, 2025, costs of product sales decreased by $1.0 million, or 24%, to $3.3 million from $4.3 million in the three months ended June 30, 2024, primarily due to a $0.8 million decrease in various manufacturing and other unabsorbed expenses and a $0.6 million decrease in Starlink cost of product sales. These decreases were partially offset by a $0.3 million increase in OneWeb cost of product sales. As a percentage of product sales, costs of product sales were 92% and 108% for the three months ended June 30, 2025 and 2024, respectively. Cost of product sales decreased as a percentage of product sales primarily due to the decrease in various manufacturing and other unabsorbed expense. Operating Expenses Research and development expense consists of direct labor, materials, external consultants, and related overhead costs that support our internally funded product development and product sustaining engineering activities. Research and development expense for the three months ended June 30, 2025 decreased by $1.4 million, or 61%, to $0.9 million from $2.3 million for the three months ended June 30, 2024. The decrease in research and development expense resulted primarily from a $1.2 million decrease in salaries, benefits and taxes, after giving effect to $0.3 million in costs incurred during the three months ended June 30, 2024 related to the reduction in our workforce. As a percentage of net sales, research and development expense was 3% and 8% for the three months ended June 30, 2025 and 2024, respectively. Sales, marketing, and support expense consists primarily of salaries and related expenses for sales and marketing personnel, commissions for both in-house and third-party representatives, costs related to the co-development of certain content, other sales and marketing support costs such as advertising, literature and promotional materials, product service personnel and support costs, warranty-related costs and bad debt expense. Sales, marketing and support expense also includes the operating expenses of our sales office subsidiaries in Denmark, Singapore, Brazil, and Japan. Sales, marketing and support expense for the three months ended June 30, 2025 decreased by $0.3 million, or 6%, to $5.0 million from $5.3 million for the three months ended June 30, 2024. The decrease in sales, marketing and support expense resulted primarily from a $0.3 million decrease in salaries, benefits and taxes and a $0.3 million decrease in facilities expense, partially offset by a $0.2 million increase in professional fees and a $0.2 million increase in warranty expense. As a percentage of net sales, sales, marketing and support expense was 19% for both the three months ended June 30, 2025 and 2024. 27 General and administrative expense consists of costs attributable to management, finance and accounting, information technology, human resources, certain outside professional services, and other administrative costs. General and administrative expense for the three months ended June 30, 2025 decreased by $0.6 million, or 13%, to $3.6 million from $4.1 million for the three months ended June 30, 2024. The decrease in general and administrative expense resulted primarily from a $0.5 million decrease in salaries, benefits and taxes, after giving effect to $0.3 million in costs incurred during the three months ended June 30, 2024 related to the reduction in our workforce. In addition, there was a $0.2 million decrease in depreciation expense. These decreases in expense were partially offset by a $0.4 million increase in facilities expense. As a percentage of net sales, general and administrative expense was 13% and 14% for the three months ended June 30, 2025 and 2024, respectively. We currently plan to migrate our Rhode Island operations to a leased facility in the spring of 2026, at which point our general and administrative expense will include lease expense at the rate of approximately $0.6 million for the first year of the lease (excluding three months of free rent). Interest and Other Income (Expense), Net Interest income represents interest earned on our cash and cash equivalents, as well as from investments and our sale-type lease receivables. Interest income decreased by $0.3 million to $0.6 million for the three months ended June 30, 2025 from $0.9 million for the three months ended June 30, 2024, primarily as a result of lower cash balances in 2025 as a result of the $17.0 million prepayment in June 2024 for access to a large block of Starlink Mobile Priority data at favorable rates. Of the current period interest income of $0.6 million, $0.5 million is attributable to interest earned on cash and cash equivalents, while the remaining $0.1 million was attributable to interest from lease receivables. Other income (expense), net changed by $1.2 million to other income, net of $0.8 million for the three months ended June 30, 2025 from other expense, net of $0.4 million for the three months ended June 30, 2024. This change was driven primarily by a $1.3 million gain on the sale of 50 Enterprise Center in June 2025. Income Tax Expense Income tax expense for the three months ended June 30, 2025 was $0.1 million and primarily related to withholding taxes imposed in foreign jurisdictions. Income tax benefit for the three months ended June 30, 2024 was less than $0.1 million and related to taxes on income earned in foreign jurisdictions. 28 Six months ended June 30, 2025 and 2024 Net Sales Our net sales for the six months ended June 30, 2025 and 2024 were as follows: Change For the six months ended June 30, 2025 vs. 2024 2025 2024 $ % (dollars in thousands) Service $ 44,691 $ 49,712 $ (5,021) (10) % Product 7,346 8,228 (882) (11) % Net sales $ 52,037 $ 57,940 $ (5,903) (10) % Net sales decreased by $5.9 million, or 10%, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. Service sales decreased by $5.0 million, or 10%, to $44.7 million for the six months ended June 30, 2025 from $49.7 million for the six months ended June 30, 2024. The decrease in service sales was primarily due to a $5.4 million decrease in our airtime service sales, of which $4.9 million related to the U.S. Coast Guard contract downgrade. In addition, there was a decrease in other VSAT subscribers, which was partially offset by an increase in LEO service sales. For the six months ended June 30, 2025, LEO services sales represented over 25% of airtime services sales, as compared to less than 10% for the six months ended June 30, 2024. The increase in LEO service sales as a percentage of total airtime sales resulted from both a substantial increase in LEO service sales and a substantial decrease in VSAT service sales. Alternative solutions offered by recent LEO entrants have heightened competition in the global leisure segment and in commercial and government markets. Product sales decreased by $0.9 million, or 11%, to $7.3 million for the six months ended June 30, 2025 from $8.2 million for the six months ended June 30, 2024. The decrease in product sales was primarily due to a $0.7 million decrease in TracVision product sales, a $0.4 million decrease in Starlink product sales and a $0.3 million decrease in accessory and service parts product sales, partially offset by a $0.3 million increase in OneWeb product sales and a $0.2 million increase in VSAT broadband product sales. The decline in product sales was primarily driven by product sales mix and discounted pricing on Starlink units. Competition from low-cost alternatives to VSAT, which include streaming capabilities, has had a significant impact on sales of our TracVision products. Costs of Sales Costs of sales decreased by $3.7 million, or 9%, in the six months ended June 30, 2025 to $35.5 million from $39.1 million in the six months ended June 30, 2024. The decrease in costs of sales was driven by a $2.6 million decrease in costs of product sales and a $1.1 million decrease in costs of service sales. As a percentage of net sales, costs of sales were 68% for both the six months ended June 30, 2025 and 2024. For the six months ended June 30, 2025, costs of service sales decreased by $1.1 million, or 4%, to $28.4 million from $29.5 million for the six months ended June 30, 2024, primarily due to a $1.1 million decrease in airtime cost of service sales, partially offset by a $0.4 million increase in content services cost of services sales. As a percentage of service sales, costs of service sales were 64% and 59% for the six months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025, costs of product sales decreased by $2.6 million, or 27%, to $7.0 million from $9.6 million in the six months ended June 30, 2024, primarily due to a $1.9 million decrease in various manufacturing and other unabsorbed expenses, a $0.5 million decrease in TracVision cost of product sales and a $0.5 million decrease in Starlink cost of product sales, partially offset by a $0.3 million increase in OneWeb cost of product sales. As a percentage of product sales, costs of product sales were 96% and 117% for the six months ended June 30, 2025 and 2024, respectively. Cost of product sales decreased as a percentage of product sales primarily due to the decrease in various manufacturing and other unabsorbed expense. 29 Operating Expenses Research and development expense for the six months ended June 30, 2025 decreased by $3.3 million, or 61%, to $2.1 million from $5.4 million for the six months ended June 30, 2024. The decrease in research and development expense resulted primarily from a $2.8 million decrease in salaries, benefits and taxes, after giving effect to $1.1 million in costs incurred during the six months ended June 30, 2024 related to the reduction in our workforce. As a percentage of net sales, research and development expense was 4% and 9% for the six months ended June 30, 2025 and 2024, respectively. Sales, marketing and support expense for the six months ended June 30, 2025 decreased by $0.7 million, or 7%, to $10.0 million from $10.7 million for the six months ended June 30, 2024. The decrease in sales, marketing and support expense resulted primarily from a $0.7 million decrease in salaries, benefits and taxes, after giving effect to $0.4 million in costs incurred during the six months ended June 30, 2024 related to the reduction in our workforce. In addition, there was a $0.3 million decrease in facilities expense and a $0.3 million decrease in expensed materials, partially offset by a $0.3 million increase in warranty expense. As a percentage of net sales, sales, marketing and support expense was 19% for both the six months ended June 30, 2025 and 2024. General and administrative expense for the six months ended June 30, 2025 decreased by $2.3 million, or 25%, to $7.1 million from $9.4 million for the six months ended June 30, 2024. The decrease in general and administrative expense resulted primarily from a $2.1 million decrease in salaries, benefits and taxes, after giving effect to $0.9 million in costs incurred during the six months ended June 30, 2024 related to the reduction in our workforce, and a $0.5 million decrease in depreciation expense, partially offset by a $0.6 million increase in facilities expense. As a percentage of net sales, general and administrative expense was 14% and 16% for the six months ended June 30, 2025 and 2024, respectively. Interest and Other Income (Expense), Net Interest income decreased by $0.6 million to $1.1 million for the six months ended June 30, 2025 from $1.8 million for the six months ended June 30, 2024, primarily as a result of lower cash balances in 2025 as a result of the $17.0 million prepayment in June 2024 for access to a large block of Starlink Mobile Priority data at favorable rates. Of the current period interest income of $1.1 million, $0.9 million is attributable to interest earned on cash and cash equivalents, and $0.2 million was attributable to interest from lease receivables. Other income (expense), net changed by $1.4 million to other income, net of $0.8 million for the six months ended June 30, 2025 from other expense, net of $0.6 million for the six months ended June 30, 2024. This change was driven primarily by a $1.3 million gain on the sale of 50 Enterprise Center in June 2025. Income Tax Expense Income tax expense for the six months ended June 30, 2025 was $0.1 million and primarily related to state taxes and withholding taxes imposed in foreign jurisdictions. Income tax expense for the six months ended June 30, 2024 was $0.1 million and related to taxes on income earned in foreign jurisdictions. Liquidity and Capital Resources Our primary liquidity needs have been to fund general business requirements, including working capital requirements and capital expenditures. In recent years, we have funded our operations primarily from the sale of two businesses in 2022, the sale of a business in 2019, the sale of 50 Enterprise Center, a PPP loan, cash flows from operations, bank financings and proceeds received from exercises of stock options and the issuance of stock. On August 9, 2022, we sold our inertial navigation business to EMCORE Corporation for net proceeds of $54.9 million, less specified deductions. As of June 30, 2025, we had $55.9 million in cash and cash equivalents, of which $3.0 million in cash and cash equivalents was held in local currencies by our foreign subsidiaries. We held no marketable securities as of June 30, 2025 as all excess cash has been invested in an interest-bearing account with Bank of America, N.A. since the fourth quarter of 2024. As of June 30, 2025, we had $109.9 million in working capital. 30 Based upon our current working capital position, current operating plans and expected business conditions, we expect to have sufficient funds, through at least twelve months from the date that this report is filed with the SEC, to fund our short-term and long-term working capital requirements, including capital expenditures and contractual obligations. Our funding plans for our working capital needs and other commitments may be adversely impacted if our underlying assumptions regarding our anticipated revenues and expenses are not realized. If our operating results fail to meet our expectations, we could be required to seek additional funding through public or private financings or other arrangements. In that event, adequate funds may not be available when needed or may be available only on terms which could have a negative impact on our business and results of operations. In addition, if we raise funds by issuing equity securities, our stockholders may experience dilution. Net cash generated in operations was $3.8 million for the six months ended June 30, 2025 compared to net cash used in operations of $15.5 million for the six months ended June 30, 2024. The $19.3 million change in net cash provided by operations was primarily the result of an $17.3 million decrease in cash outflows related to prepaid expenses and current assets, which included the $17.0 million purchase of the Starlink data pool, a $6.4 million decrease in cash outflows relating to inventories, a $4.8 million decrease in net loss, a $2.4 million decrease in cash outflows relating to accrued compensation, product warranty and other expenses, and a $0.5 million increase in cash inflows relating to deferred revenue, partially offset by a $5.9 million increase in cash outflows related to accounts payable, a change of $3.8 million related to non-cash items, a $2.0 million decrease in cash inflows relating to accounts receivable, and a $0.3 million increase in cash outflows relating to other non-current assets. Net cash provided by investing activities was $2.6 million for the six months ended June 30, 2025 compared to net cash provided by investing activities of $14.4 million for the six months ended June 30, 2024. The $11.8 million decrease in net cash provided by investing activities was primarily the result of a $19.6 million decrease in proceeds from net sales of marketable securities, which was driven by the liquidation of our marketable securities held by Wells Fargo in 2024, partially offset by proceeds of $4.9 million for the sale of 50 Enterprise Center, a $1.6 million decrease in capital expenditures and $1.2 million of proceeds from the sale of fixed assets. Net cash used in financing activities was $1.2 million for the six months ended June 30, 2025 compared to net cash provided by financing activities of $0.1 million for the six months ended June 30, 2024. The $1.3 million increase in net cash used in financing activities is primarily attributable to a $1.3 million increase in cash outflows related to the purchase of treasury stock and $0.1 million decrease in cash inflows relating to proceeds from the exercise of stock options and purchases under our employee stock purchase plan. Other Matters On December 9, 2024, our Board of Directors authorized a share repurchase program pursuant in which we may purchase outstanding shares of our common stock for an aggregate purchase price of up to $10 million. Under the program, we, at management’s discretion, may repurchase shares from time to time through various means, including on the open market, in privately negotiated transactions or block transactions, or through an accelerated repurchase agreement. We may elect to make purchases under Rule 10b-18 under the Securities Exchange Act of 1934, as amended, which imposes certain volume limitations, and/or under Rule 10b5-1 under that act, which would permit repurchases to occur during periods when we might otherwise be precluded from making purchases under insider trading laws or our company policy. The volume and timing of any such repurchases will depend on a variety of factors, including the availability of shares, price, market conditions, alternative uses of capital, liquidity, general business conditions, satisfaction of debt covenants, and applicable regulatory requirements. The program does not obligate us to repurchase any minimum number or dollar amount of shares, and the program may be modified, suspended or terminated at any time without prior notice. During the three months ended June 30, 2025, we repurchased 211 shares of common stock in open market transactions at a cost of approximately $1.1 million. During the six months ended June 30, 2025, we repurchased 242 shares of common stock in open market transactions at a cost of approximately $1.3 million. Except as noted above, there were no other repurchase programs outstanding. 31