Company: KVHI
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001007587-25-000012
Chunk: 158

Company: KVH INDUSTRIES INC \DE\
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 8
Chunk 158
---
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, 202