Company: KVHI
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001007587-25-000012
Chunk: 70

Company: KVH INDUSTRIES INC \DE\
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 1
Chunk 70
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EO service sales and a substantial decrease in VSAT service sales. Alternative solutions offered by recent LEO entrants have heightened competition in the global leisure segment and in commercial and government markets.

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Product sales decreased by $0.4 million, or 11%, to $3.6 million for the three months ended June 30, 2025 from $4.0 million for the three months ended June 30, 2024. The decrease in product sales was primarily due to a $0.5 million decrease in Starlink product sales and a $0.2 million decrease in TracVision product sales, partially offset by a $0.3 million increase in OneWeb product sales and a $0.2 million increase in VSAT Broadband product sales. The decrease in product sales was primarily due to discounted pricing on Starlink products. Competition from low-cost alternatives to VSAT, which include streaming capabilities, has had a significant impact on sales of our TracVision products.

Costs of Sales

Costs of sales consists of costs of service sales and costs of product sales. Costs of sales decreased by $2.3 million, or 12%, in the three months ended June 30, 2025 to $17.5 million from $19.8 million in the three months ended June 30, 2024. The decrease in costs of sales was driven by a $1.3 million decrease in costs of service sales and a $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