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Welcome to Morgan Stanley's annual TMT conference. My name is Justin Lang. I'm a space tech analyst at Morgan Stanley, part of the A&D research franchise here. I'm delighted to kick off our firesides for this conference with COGO, and especially thrilled to have CEO Chris Moore and CFO Zach Kontner up here with us. So welcome both. Thank you. Before we begin, I do have to read some disclosures. For important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com backslash research disclosers. You're going to hear a lot of that for the next few days. But, look, we have a lot to ground to cover. Exciting time in your business. You just reported earnings on Friday. This will not be an extended callback, I promise. But I think the discussion is very timely. So, you know, I want to just start, though, high level with you because, again, a lot of change in the business. transformational merger a little over a year ago with SATCOM direct and and go go so maybe just step back with me for a second Chris and talk about sort of the original thesis but more importantly how you grade things a little over a in here as you brought these two companies together yeah I think as acquisitions go it was a really good strategic move by go go to buy SATCOM I think on a number of levels mostly for international coverage. GoGo was predominantly a US centric business and with the air-to-ground network and they were rolling out the Leo service but they hadn't got any international locations, staff, revenue, so this is really just accelerated that. And then the other big thing with the acquisition as well is satcom direct also um had a good strong business in the military government sector as well so really when you look at combined portfolio from a technical perspective there wasn't a lot of overlap um satcom director was predominantly a satellite communications provider go goes predominantly an air-to-ground provider with the air-TO-GROUND technology and was getting into Satcoms but it was still early stage so actually from a Synergy point of view, Zach and I were able very quickly, we did the deal on December 3rd and by the end of Q1 we'd already done quite a large portion of the Synergies which was mostly headcount but like a year on from that we're done with all the synergies. There's some kind of things that we can still kind of refine from a financial perspective, but the businesses came together quite quickly. And when you look at a lot of other M&A around the space from the operator level, that's a lot more difficult. If you look At the recent acquisitions of Viasat and Marsat, they're still going through a lot Of those synergies, SES with Intelsat, still a lot OF synergies Because on the technical side, even though you might be in the satellite industry, the technology is still very proprietary. Whereas from a go-go perspective with the acquisition of SATCOM, our technology is very multi-network, which is on a satellite side, which is really beneficial so that you can actually move a lot quicker. You're not married to one technology. really our technology is like a foundational platform and that can go across multiple networks so that enabled us to do a lot of synergy savings quickly and i think the business now is on a good trajectory to really now we've got the synergies done is really now transforming the customer base which is a little bit more difficult from legacy based technology to the new technologies of 5G on air-to-ground, and when I say 5G, it's really broadband, true broadband, so you can stream, do Microsoft Teams in the back of the cabin, and then going into LEO broadband, which again, stream, you can do kind of broadband-capable things, and then if you look at GEO, it's more like an underlying architecture from a, these are all orbits, right, LEO, GEO. But that technology lends itself to being more global than Leo at this point in time. So for a lot of our customers, they want two services for redundancy. So that's really now what we're focused on is kind of we've got a lot of legacy customer base that we need to migrate into the new technology. Got it. That makes a lot sense. And I want to spend a little time on Galileo and your Leo-based solution. So maybe talk a little bit more about what the offering is and then give us the flavor on HTX and FTX? Yeah, so what Galileo is, is it's a LEO service. And at this point, we're partnered with UTELSAT OneWeb based out of Europe. And we're utilizing their constellation. The one thing we've done on GEO, which is an important point to make, is we've always been agnostic. So we have KUKA band versions, usually within satellite. There's two flavors the operators usually pick. It's either KU or KA. Our geo services are agnostic across KU and KA. At some point, I see that being the same for Leo, potentially. But at this point in time, our Leo service is predominantly KU. It comes in two form factors, HDX and FDX. HDX is really a 60 by 6 to 10 meg service. What does that mean? Really, the uplink is 6 to10. And when you look at that, what does that enable you to do in a plane? If you look At small jets that at this point don't have the ability to put geo services on, geo services going on the tail, or you put air-to-ground services on the belly of the airplane, the LEO service actually goes onto the fuselage. It looks like two laptops kind of size. It goes onto The fuselge. you fix it onto the fuselage and now you've got the same broadband capability that you would have in your home um or in the office so you can run your vpn services be completely tied into the office and um that's kind of the entry point is hdx so you Can get on really small planes like think of it like six person passenger planes like a phenom 300 by Embraer or a pc24 by pilatus so very small planes. It could also be supplemented or standalone with the 5G service, which I can cover in a bit, but that's really HDX. Then going into FDX, that's designed for mid to large cabin airplanes. That's really going from either a Dassault Falcon 2000 right through to a Goldstream G800 or a Global Express 8000. There's a lot of technical terms, unfortunately, in our business. So these are just airplane types, or you could go into an Airbus or a Boeing business aircraft. So really, we've got from our new technology, when you think of 5G, which is more focused at the smaller aircraft as a primary communications method, and a backup for the mid to large jets, we're going to be able to do that. We've got something for every single one of our customers. So we've Got something that goes on to a very small aircraft, right through to a very large aircraft. The other exciting thing with HDX going into the government market, we can also put that product onto a drone. So that form factor can actually go onto a UAV. And with that government market that opens that up. And then the other thing with SDX was nothing else can do in the market. We can actually put the HDX terminal into the tail of the airplane. And our competition can't do that. And that lowers the cost of installation. So the one thing we can do is get the cost of installation of this equipment cheaper than anybody else, which is really kind of important to open up the market opportunity. That's great. You mentioned on Friday that the target for this year is 700 aircraft online equipped with Galileo. Yeah. And I think as of the end of 4Q, you're about 75 aircraft. So nice ramp there. So talk to me a little bit about the confidence you have in that number. Is that a conservative estimate? Do you see upside there? What are you seeing on sort of equipment side, STCs, that de-risk the 700? I think it's an aggressive number, but we feel confident in putting out something aggressive at this point in time. When you look at our pipeline, our sales pipeline, we have over 1,000 aircraft in there. The qualified pipeline, which is effectively, when we say qualified most of it's qualified but we go 50 and above so um really that means you're very close to closing that customer um from a sales perspective there's a number of metrics in there um we have over 400 um this is what i said on the call last week anyway um so we feel very confident with the 700 number although it's aggressive if you think of it in terms of like our competitor who's very fast moving um for the industry that means in the same time period we've put on like double what they have so i think that kind of shows a strength of robustness to the business so that which is great i think the it's a very realistic number to focus on and i thinkthe fact that we've now got contracts with all the oems who make the aircraft um outside of a few um we're very confident within the next 12 months you will not be able to order a business jet without selecting this as an option a bit like when you're ordering a really fancy car you know you kind of might put options i don't know anything about that oh hey i was kind of on the road yeah precisely but you if you want to upgrade the vehicle you might want to put something like um an option on there the jets and specifying jets is very similar process you end up putting this as on as an option um when you're choosing the carpet the interior the veneer you choose the internet so you will not be able to order a business jet without as selecting as an auction that's a big deal and then we have a very extensive mro market globally that can fit this on in what they call the aftermarket which is really important and we can do that so again that strengthens our confidence in the number and then they're actually actively selling not only our sales teams actually selling our product those MROs and OEMs are actually actively telling our product because they want to sell either an upgrade option because that's good for them or the MRO's are trying to get maintenance work in And at that point, they will fit it onto the jet. So we feel confident about that. And then our government business, they've got a good target on them for LEO services this year as well. And we believe that market will be slower to ramp just because of the sales cycles. Typical sales cycle from activation from shipment in our business is three to six months because you've got to put it on a plane. so that means that the equipment leaving our docks and going to an MRO and OEM we expect it to be activated on the network within that period of time and then government can be a little bit longer six to twelve so if you kind of think of it that way I think the numbers this year are good robust what's being kind of hidden you know that's a really explosive growth for Leo from our perspective but that's being probably dampened a little bit with the positive shift that we're now making with our customer base from going from more legacy connectivity services to those services so if you look at our total numbers it's it's kind of being a littlebit massive at this point in time on because we're in this technical transformation of the business right i want to get there and and um i want to hit 5g as well yeah according to it so you know another product just you know it was a long time coming finally you turn the network live you know early this year must feel good um also the target is 400 aircraft online with 5g by the end of the year maybe just a handful as of today also a very steep ramp yeah talk to us a little bit about where that slots in in sort of the overall Google portfolio? Yeah, I think that's the bit where, just to reiterate, I think now we've got, if you think of the business, say if you're purchasing something from us, you've got the entry point, which is 5G, and that entry point really serves small jets. Could be interesting as well from a governmental perspective for that we need to prove that case out. But if you are specifying, kind of speccing a small jet, like a Phenom 300, PC-24, a Citation aircraft. You'll be able to get it line fit from Textron this year. And Embraer as well. That's a really great entry point to a true broadband service. And our more legacy services on the air-to-ground have been fantastic. But I would put it this way on transformational technology. This is like everybody in this room and it's all going back to a BlackBerry or a Nokia and then giving you an iPhone. You know, it's a completely transformative technology. And the usability of the system is completely different. So, you know, we have a test aircraft. We've both flown on it. And you can have simultaneous Teams meetings. You can have somebody on Teams, somebody on Netflix, somebody on the corporate network. this is really transformation the kind of those air-to-ground customers and it's a great entry point and also added a level of we keep talking about multi network multi orbit that also for more higher-end customers gives them a level of resilience within the u.s. because the air-2-ground networks just a US network is it gives them our level of resilience that we have a lot of of customers who will not fly unless they have internet connectivity so we believe that service is is really there it's really nice now that we've got a true service that all of our air-to-ground customers can now migrate to if they want to that is a very low cost option for them to upgrade and we just load the pricing of the equipment so that we know we can get an installation of that, around $150,000 total on an airplane, which is very different to putting LEO services on an airline, which really entry point to that is like $300,000. So it's half the price of putting this equipment on board. And if you're just flying domestically in the U.S., it's a great service. So we're pretty excited about it. That's great. So you'll have, between Galileo and 5G, about 1,000 net new aircraft ads at the end of the year. Just maybe unpack a little bit about the transition underneath that's masking it a little bit. It sounds like Legacy will ebb to sort of wash out the numbers this year. Yeah, we're migrating a number of services. So we're end-of-lifing one of our networks, and it has a new network. Actually, it's FCC-funded, kind of what we call our LTE network. We have a lot of boxes and a lot of networks, so it kind of gets a little confusing. But if you think of air-to-ground, we have an entry point into broadband, and we can take our legacy customers into that entry point in broadband and grow them into 5G. That's the easiest way of looking at it. That deactivation of those customers is really where we're seeing some of those customers fall off the network and we're anticipating some won't come back. What's the reason for that? Is it that migrating to alternative technology? They could be. Or is it also the age of the airframe? So if you look at, like, business jets, everybody tends to focus on the high end. You know, the $70 million airplanes, they look nice and they're good to talk about. But the reality is the bulk of the U.S. fleet is also more older airframes. And that could range anything from a million and a half dollar jet right through to what I just said, an $80 million jet. And within that, we've been very successful in the past. We built a really good moat around the business with the classic air-to-ground business, if we call it that. So really, it's migrating those customers across. And some of those customers will fall off because they will not make an investment on the aircraft. That being said, we have a migratory service called C1, which we have a lot of boxes, a lot names. What does that do? It really picks that customer up at no cost to them. The FCC funds it and migrates them to be able to take advantage of the entry point into broadband. And that's been very successful to us. It was a bit of a slow ramp. But now where we stand on those numbers, we feel very confident that we can take a good proportion of those customers, there will naturally be some fall-off, but we've then got a good base to grow into 5G, so that's kind of, I don't know whether you want to expand on that. Yeah, no, I think the only other point is probably mentioning GEO in with this whole piece, is like, the, you know, GEO is what SATCOM kind of brought to the table, and it's held up incredibly well, and this is all in the larger aircraft, right, because it goes in the tail um and it's a higher arpa and i think like we've been thinking it was going to drop more for the past two years but it's held up because it is very expensive to upgrade it right and for a lot of people the geo works great especially the flex network which is the ku and so we do expect that to come down again this year um and we're working with a lot the geo operators to to work on backup solutions to make sure they keep we keep the real estate on so again back to your point about the the match the numbers are a little confusing because we have all these strong shipments and ramp but you have a large bulk of legacy products across the board that just will naturally decline at some rate and i think kind of to the point of on the atg side i think the 5g was was so late that was that's part of the problem is if we got that launch three years ago i think we would have had a better moat to build off of but um you know we we feel confident we can do it, but you have a lot of moving pieces with legacy networks that are just the nature of it. Chris and I at SATCOM SATCOM was 25 years old and it had been through three or four of these. The key is you have to start it well in advance. I think some of these took a little longer to get going and we're doing them all at the same time. Chris, one area that you've been pretty bullish about the past few quarters I've heard you talk about is the fleet opportunity. Yeah. You had the Vistajet win, which was a big win. Maybe it didn't get recognition in the market that it probably deserved. And then you had this NetJets announcement late last year that the stock reacted pretty sharply to. So maybe just talk about it. I mean, I thought you gave good color on Friday's call, but we can flesh it out a little bit. How are you thinking about contextualizing the NetJet's announcement and any shifts to the sort of fleet strategy or as steady as she goes? No, I think the fleet strategy is, ultimately, I think the big thing for people to get their head around, we have a competitor. And I think for the classic go-go business, like I said, it had really good moats around the business and really didn't have serious competition. And now, I thinks it's real for people who have been invested in the stock for a long time, now you're looking at every win or loss, and you're going to have win and losses on both sides. So I think that's quite an important point for, conceptually, you're in a competitive market. That doesn't mean that every time your competitor wins something and you haven't won it, one of you is going to go out of business. I think there are many competitive markets in the world. Most people, I think competition is a really healthy thing. You should have competition. It makes you better. So that's an important part. important point to make. Regarding NetJets specifically, we have a fantastic relationship with NetJet. Interestingly, when we announced the NetJETs win in our press release, we never actually said we won the whole fleet. We were very specific about what we'd won. And what we said in that press release still stands today. So we've won a portion of the fleet and we're rolling out on NetJetz Europe. And we will also be rolling out on specific airframes of NetJets North America. What was probably disappointing from our perspective, but not a shock, is we're still rolling out the technology. So the antenna, which is called the FDX, we just got that through the FAA regulations late in the summer last year. We're just rolling out STCs. That usually takes a 6- to 12-month program. And the reality is NetJETs couldn't wait any longer and they needed to upgrade some of those aircraft, which is specific to that type of antenna. And they chose to go on those airframes at this point in time with our competition. However, NetJet's also, in my belief, some of the best negotiators I've ever come across, and they're amazing. They have an amazing procurement team. So we'll see how that goes. I think they've always been a mixed fleet operator when it comes to connectivity because they really do a good job of leveraging their purchasing power. So this wasn't a big shock from my perspective. The other thing is just if you focus on the upside with NetJets, we also do cockpit communications. So we do the data link VHF, which is a really important part of our business. So like safety services through that. We don't have that with Net Jets today. That's with another competitor. The geo business, we don'thave with NetFlex, NetJet today. So none of that is impacting how people view us, but that just gives you a good, broader perspective that NetJets has somebody else look after their geo business, they've got two LEO providers, and somebody else looks after the cockpit. So from my perspective, I think there's a lot of potential upside with our fleet strategy is, can we convince NetJet that we have good enough services in some other areas? They've also been a great air-to-ground customer for us for a long time. So does that mean in our numbers we've been very conservative, we've removed those out of our model, but those pieces of equipment haven't been removed off the fleet. So is that a thing that from a redundancy perspective is that important to NetJet? So it's those things that we're still working through with the client. And then pivoting back to VistaJet, if you look at Vistajet, that's a huge win for us. They've just put a potential $5 billion order in with Bombardier. They've announced they're rolling us out across a large proportion of their fleet. They've been a very good customer, as has NetJets, by the way. But they're really a proponent to our strategy, and they're really vocal about why they went with us and why they didn't go with our competition. The other thing with the competition, we actually beat them out of that bid. They had two choices. as all the competitors, and they chose us for a number of reasons. And then if you look at Lux Aviation, who we've announced multiple hundreds of aircraft, Avconjet, over 100 aircraft. If you actually look at our fleet strategy, we still believe we've got over 1,000 aircraft with fleet customers that are with us today. Wheels Up are rolling out our services and actually did an announcement that it's quite revolutionary, the internet, on board, and they're actually going to speed up their rollout. Again, no impact on our stock with this, which is kind of frustrating from mine and Zach's point of view, but we kind of try not to look at the stock and just focus on running the company at this point. But I think we're in that kind of prove-it-out piece, like Zach said, like, you know, our numbers at this moment, you know? We've got so many moving pieces, But we feel very good about our technology roadmap that if we execute, we can transform these customers into new services. And at the same time, we have a very fierce competitor, but we're winning business against the competitor. So I think that's a really important point to make. But, you know, we're still focused on these fleet operators. And I think we're clearly getting votes of confidence from significant players in the market. That makes sense. The only other point I would add, which I think might have been lost, too, is when we started reporting the LEO units online, Galileo, a large portion of those were NetJets, our NetJet, and they're in Europe. So I think that's also the thing, you know, the announcement people assumed that, you know. It's the halo effect, right? Like, oh, if they're not happy, then who else is not going to be happy? But they are a large customer, and они они вырабатывают это, and it's a piece of the business that you saw at your end. We're going to end up having hundreds of aircraft on with us with NetJazz. I mean, they are still a major significant customer from our point of view, very supportive, and we feel good with the rollout to Zach's point. They're still going as planned with Netjazz. Yeah, that's great, and that's encouraging. I want to come back to the military government opportunity set because that seems super exciting. that when I think about the TAM, you've got manned aircraft, drones. I think we got a report over the weekend, U.S. one-way drones in Iran were linked with satellite-based connectivity. So drones, EV tolls, sort of a nascent business, but, you know, potentially promising. So just talk to us about how you frame the opportunity set for MilGov. Yeah, I think, again, we're a business in many parts of this. the, where we're, because we've been around for over 20 plus years, like Zach said, that business, we are currently pivoting it away from some narrow band services with sat phones, which it has significant business around. And really focusing on aviation broadband. So if we look at our aviation broadband for our government business, it grew 38% last year. and we said that on the call last week. That's a significant growth trajectory and our international market was, I can't remember the percentage, it was like almost double that. Yeah, it was a small book of business, right? 90%, right? 90 plus percent, the international business. Sorry, that number just went out of my head but very, very significant growth. So if you look at that, focus that on aviation. The LEO product is really interesting for them because UCELSAT-1Web doesn't have as big a name as the competition, but it is a European network, so we're seeing a lot of interest from NATO. Our HDX product that we talked about before is very small, can get into a UAV. The other thing is the cost of installation because we really do know aviation very well. We've brought the cost of install down, so it makes it more cost effective because everybody thinks just instantly when you're dealing with a government customer, they just have an open check, but that is not the case. So we've really brought the costs of ownership down, and we think that's a really interesting space for us. and also we have within the satcom direct acquisition a global footprint and we've been selling to heads of state government for a while so we have really good key relationships and a lot of them will not buy from our competition just purely out of a sovereign based communications need security needs and we built up this underlying architecture in our business as well on the ground that serves um you know nato usdod and other countries really really well so we're really super excited about it i think um obviously um going to the other point evitol we're talking to evitol players that model is still not proven out yet you know let's see when these guys start flying um i think there's a lot of airspace challenges but i'm sure somebody's going to get there 100 i think from our perspective short term the next two to three years the government uav business and government opportunity with the underserved airframes if you look at u.s government had a 25 by 25 say 25 meg on 25 of his air force aircraft and it failed that and a lot of these guys are nowhere near you know is a very under-penetrated market. So I think the under- Penetrated Market, just the DoD, NATO is even worse because they haven't been funding as much as the Do... I mean, nobody funds as much as the DOD anyway. So if you just look at a C-130, there's over a thousand of them operational in the world today. It's quite clear that 25% of them do not have broadband connectivity. If you're just outside of the UAVs and we just focus on that, we have a C- 130 certified product on geo and we can also get leo into that kind of mix as well and we can really pivot those opportunities over to go go we think that's pretty exciting I think two other points that are really critical that we've harped on a lot but two phrases one's called vendor lock the other one's got a pace planning yeah so pace planning refers to the military's view that on all these missions you need to have it's an acronym primary alternative contingency and emergency so backup after backup after back up and I think that's what's critical because we are one of the only people that can do that whether it's Geo Leo ATG we can provide the pace planning and that's also we've tried to kind of push in to the the business aviation market is making sure you always have backup and connectivity and then the vendor lock is kind of another critical concept because they have gotten stuck with vendors before where they you know can get gouged right they put all these antennas on then they have no agnostic or flexible flexible capabilities and that's one thing that we've really tried to push is again we're the vendor where the face where the storefront so to speak but we will use all these other guys in the background to get you the best deal and I think you know and it's like you said it's tough because you know there was no milgov business art go go before but and it operates very differently but we're still incredibly bullish just these cycles you know take a long time and i think like you saw our q4 numbers were up pretty substantially in the milgov business and i know folks were trying to when is that going to hit when it was going to hit and you know we're starting to see traction we've got uh under a minute here but i want to stick with you actually okay just to close um you know we talked a little bit about the moving pieces in 2026. you've talked in the past about the the balance sheet, essentially trying to refire, lower the cost of debt. Talk to us about what we should expect in 26, if anything. Yeah, so we've been actively talking to our bankers and the board pretty regularly about this for the last probably six months. And, you know, from my perspective, the single biggest, best use of for capital allocation is a deleveraging. And we're exploring different ways. We've already been analyzing whether it's a regular debt buyback or a Dutch auction, but it's kind of been the views of the board and a lot of our banking partners that, look, we do need to do that. We do have to address the balance sheet, but, you know, it kind of maybe we should wait and see how much traction we get in the first quarter or two to kind of help with the debt pricing. But I think we've said it over and over. We have more cash than we need, but making sure we deploy it at the right time and making sure We give what we need because the debt does mature in April of 2028. So it's just being thoughtful about deleveraging versus also making sure we get the maturity extension that we need and all that. So that's my biggest focus this year is kind of pushing that forward. Good. Okay, we're out of time. Thank you both. Appreciate your time. Thank you. Great. Thank you, Steve.