KVH Industries — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue reached $38.4 million, a 35% increase year-over-year (YoY) from $28.5 million in Q3 2025 and a 14% increase quarter-over-quarter (QoQ) from $33.7 million in Q2 2026.
• Service revenue was $33.0 million, up 30% YoY from $25.4 million and 11% QoQ from $29.7 million.
• Service gross profit was $11.1 million, up 28% YoY and 5% QoQ.
• Service gross margin was 34%, flat compared to 34% in Q3 2025 but a decrease from 36% in Q2 2026.
• Net loss was $0.6 million ($0.03 per share), a significant improvement from a net loss of $6.9 million ($0.36 per share) in Q3 2025.
• Non-GAAP adjusted EBITDA was $3.9 million, up 188% YoY from $1.4 million and 30% QoQ from $3.0 million.
• Capital expenditures were $1.5 million, flat YoY from $1.5 million in Q3 2025 and up 26% QoQ from $1.2 million.
• The company holds $50.7 million in cash and cash equivalents with no debt.
• Non-GAAP results exclude non-cash inventory write-downs of $2.3 million in Q3 2026 and $5.5 million in Q3 2025.

Guidance and Future Outlook:

• KVH narrowed its full-year 2026 revenue outlook to $137–143 million, raising the low end from the prior range of $130–145 million.
• Full-year 2026 Non-GAAP adjusted EBITDA outlook was raised to $13–15 million, up from the prior range of $11–16 million.
• The company expects to raise prices for Starlink plans effective December 1, 2026, following Starlink's price increases for resellers and maritime customers.
• KVH anticipates the price increase will boost service revenue and reduce service gross margin, though it does not expect a material change in service gross profit.
• The narrowed outlook reflects continued top-line momentum, a modest benefit from Starlink repricing, and disciplined cost management driving operating leverage.

Business Segments and Product Lines:

• LEO revenue represented 58% of service revenue in Q3 2026, up from 51% in Q2 2026 and 39% in Q3 2025, driven by customer migration from VSAT.
• Managed IT services began generating revenue in the third quarter.
• KVH expanded its CommBox Edge Pro offering in September with enhanced cybersecurity and IT tools.
• The company launched "Link Live" in September to add live TV streaming to its crew content offering.
• Product sales revenue was $5.5 million, contributing to the total revenue mix alongside service revenue.

Market and Competitive Landscape:

• Customers are increasingly choosing KVH for LEO connectivity and expanding their reliance on managed IT, cybersecurity, and crew content services.
• Starlink announced price increases for all resellers and maritime customers, prompting KVH to adjust its own pricing structure.
• The company notes a continued migration of customers from VSAT to LEO services.

Risks and Challenges:

• KVH depends on reseller arrangements with a small number of airtime providers, particularly Starlink, creating risk if terms, pricing, or networks change.
• There is a risk of being unable to reach a new agreement with Starlink on favorable terms or at all.
• Risks include the inability to consume prepaid Starlink Global Business data within the contract period, leading to expense of unused portions.
• Potential for additional inventory write-downs and declining product sales and margins.
• Risks related to manufacturing wind-down, operational relocation, and a smaller workforce.
• Competition from lower-cost providers and other LEO or satellite systems is reducing demand for geosynchronous satellite services.

Management Commentary and Tone:

• CEO Brent C. Bruun stated that results reflect steady growth in the recurring service business and that customers are increasingly relying on KVH for services beyond connectivity.
• Management emphasized the importance of growing recurring service revenue and converting it into cash flow as LEO pricing evolves.
• The tone indicates confidence in the transition to LEO and the value of expanded service offerings like managed IT and cybersecurity.

Other Key Points:

• KVH repurchased approximately 1.2 million shares for $10.7 million during the third quarter, completing its $15 million repurchase program.
• The company does not currently have a repurchase authorization in place.
• Capital allocation priorities include growing the LEO customer base, expanding value-added services (managed IT, content), and pursuing selective tuck-in acquisitions that add recurring revenue.
• Deferred revenue increased to $1.5 million at September 30, 2026, from $1.2 million at December 31, 2025.
• Inventories decreased to $8.9 million at September 30, 2026, from $14.9 million at December 31, 2025.