Company: KVHI
Filing Date: 2025-05-07
Form Type: 10-Q
Source: 0001007587-25-000008
Chunk: 5

Company: KVH INDUSTRIES INC \DE\
Filing Date: 2025-05-07
Form: 10-Q
Item: Part I, Item 2
Chunk 5
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Service$21,642 $25,038 $(3,396)(14)%Product 3,772 4,229 (457)(11)%Net sales$25,414 $29,267 $(3,853)(13)%

Net sales decreased by $3.9 million, or 13%, for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Service sales decreased by $3.4 million, or 14%, to $21.6 million for the three months ended March 31, 2025 from $25.0 million for the three months ended March 31, 2024. The decrease in service sales was primarily due to a $3.5 million decrease in our airtime service sales, of which $2.5 million was related to the U.S. Coast Guard contract downgrade. In addition, there was a decrease in VSAT-only subscribers, partially offset by an increase in LEO 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 $0.5 million, or 11%, to $3.8 million for the three months ended March 31, 2025 from $4.2 million for the three months ended March 31, 2024. The decrease in product sales was primarily due to a $0.5 million decrease in TracVision product sales and a $0.2 million decrease in accessory and land mobile connectivity product sales, partially offset by a $0.2 million increase in Starlink product sales and a $0.2 million increase in CommBox Edge product sales. The decline in product sales was primarily driven by product sales mix. Competition from low-cost alternatives to VSAT, which include streaming capabilities, has had a significant impact on sales of both TracVision and VSAT Broadband products.

Costs of Sales

Costs of sales consists of costs of service sales and costs of product sales. Costs of sales decreased by $1.4 million, or 7%, in the three months ended March 31, 2025 to $18.0 million from $19.4 million in the three months ended March 31, 2024. The decrease in costs of sales was driven by a $1.6 million decrease in costs of product sales, partially offset by a $0.2 million increase in costs of service sales.