Maritime Connectivity Shifts with Starlink Deal
KVH Industries has started seeing a positive shift after purchasing satellite capacity from SpaceX’s Starlink.
During an earnings call on August 1, KVH CEO Brent Bruun shared that more vessels are now subscribing to their connectivity services, showing a small uptick after previous declines.
Even with this increase, KVH’s revenues dropped by 15% compared to last year, totaling $28.7 million, due to competition from Starlink impacting their traditional satellite business. They also faced a $2.4 million net loss this quarter, quite a change from the $0.8 million net income of last year.
“The maritime industry continues to undergo significant changes, driven by the emergence of NGSO networks,” said Bruun.
“We have taken aggressive steps this year to reposition the company for the future. We’re already seeing encouraging results.”
Though VSAT service revenues decreased by $5.6 million in the quarter, Starlink service sales rose by $1.7 million after KVH activated over 1,000 terminals from SpaceX since January. They also cut about 75 jobs, which is 20% of their staff, to save costs.
Buying from the Competition
In June, KVH announced a prepaid deal to access a big chunk of Starlink data for over a year at favorable rates. They spent around $17 million in the second quarter for this non-geostationary satellite capacity, which offers better coverage and lower latency.
Vessels choosing KVH for Starlink get specialized customer and technical services, and KVH helps integrate Starlink with 5G and other satellites, although they expect VSAT sales to keep dropping.
Subscribers to Starlink through KVH doubled between March and June, making it the company’s fastest-growing service ever.
Bruun mentioned that smaller leisure boats are switching from VSAT to Starlink, while bigger yachts and commercial ships are adding Starlink for more flexibility and backup options. Though standalone Starlink users bring slightly less revenue, combined offerings tend to be more profitable.
Sometimes I think the tech world moves faster than we can keep up.
Vessels not previously using VSAT are now signing up for Starlink, expanding KVH’s market reach.
“Starlink is opening up a larger market,” Bruun said, including leisure and light commercial markets like fishing.
However, Starlink still poses a threat to KVH’s broader business. The U.S. Coast Guard, a major KVH customer, is moving its primary satellite service to Starlink, leading to expected revenue declines from late 2024 into 2025.
Meanwhile, KVH is also testing OneWeb’s NGSO constellation to future-proof their services, expecting these to be available soon.
