Company: KVHI
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001007587-25-000012
Chunk: 7

Company: KVH INDUSTRIES INC \DE\
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 2
Chunk 7
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 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