The following employee questions were submitted for the Dec. 20, 2022 All Hands meeting.
Q: What are the three greatest success stories from Anuvu in 2022?
Josh Marks: We started 2022 with real uncertainty about how our business lines would recover after the pandemic, and whether we would get “back to normal” during the year. In January 2022, flight schedules were still subdued, international flying required extensive COVID testing and border crossings were generally difficult. This impacted business travel in particular. During 2022, flight levels rose significantly, though airlines were held back by operational factors and couldn’t meet surging demand from leisure passengers, and from the second half of the year from business passengers.
Given that backdrop, I’m particularly proud of three things we achieved in 2022. First, our Southwest modernization program – and the introduction of Dedicated Space, our in-house modem technology – had a big impact on our 2022 revenue and demonstrated the engineering and development prowess of our IFC team. We rolled out an industry-leading product in record time, with a unique approach to delivering an order-of-magnitude improvement in capacity to the Southwest fleet. The new technology won the Crystal Cabin award, which showed industry recognition for what our teams accomplished. The Southwest modernization program continues in 2023, and every day our teams respond to supply chain challenges and the sheer scale of the program as we focus on completing installations in mid-2023. I want to note that the IFC team drove Southwest modernization while also managing a very complex program with Turkish Airlines, which continues to install aircraft in 2023.
Second, across the Connectivity unit and led by the MEG team, I’m proud of how we’ve pivoted our mindset to LEO. LEO constellations, with fast throughput and low latency, will transform our customers’ requirements. There’s an important role for us to play, providing the design, installation, management, and complementary network capacity our customers will need, but we have to shift our thinking and adapt our GEO offering. We’ve developed relationships with multiple LEO partners (as opposed to putting all our eggs in one basket) and worked proactively with our customers to bring LEO into our GEO solutions. This isn’t going to be an easy transition for us – we need to build new muscle in LEO technology and service delivery – but if we can lead the industry here, we’ll enable many new growth markets in coming years, especially as new LEO constellations come online.
Finally, I want to acknowledge the technology and product leadership by our Media & Content team. This was our first full year operating on Open, and the platform keeps evolving with new capabilities and automation. But last year I think customers started to recognize the advantages the platform brings for on-time delivery, content selection and customized programming. We’re now free to expand our content partnerships, unrestricted by our technology – and in 2023, we’ve deepened our focus on finding, licensing, and distributing unique global content that differentiates Anuvu against other CSPs. I view this leadership as critical – we’re not going to be the cheapest provider in the market, so we need to demonstrate how our capabilities are better suited to today’s passengers.
A final point – we’re a lot better now at telling our story, too. Last year, our RFP responses became cleaner and more sophisticated, and our social media presence is much stronger now. That certainly helps us in the market.
Q: Why is there no formal strategic planning session conducted by the Aviation business unit as we prepare for 2023?
Mike Pigott: Our Connectivity business (including aviation connectivity) filled 2022 with many team accomplishments across the board. The work effort needed to make everything happen in 2022 required long-term strategic planning to be handled in an ad hoc versus formal way. Some of that 2022 ad hoc work included key leaders being challenged with identifying “moon shot” ideas that could drive our business forward, and our product management team creating vetted hardware product roadmaps to guide our efforts in development of modems and antennas for years to come. As we look forward, a key initiative for our Connectivity team is to improve our formal business operations, including quarterly Connectivity leadership team in-person meetings to discuss strategy for 2023 and beyond.
Q: What are we doing to assess and improve on the benefits offering from this year? The offerings required either the selection of worse coverage to maintain costs OR spending significantly more to maintain coverage. Positioning this as cost savings makes it feel like Anuvu is saving costs by shifting it to the employees. Are there plans to improve this for next year?
Amy Horan: Thank you for your question. Please note that roughly 70% of employees experienced premium savings with the new plan while Anuvu maintained the same premium costs as 2022. The ICHRA plan is unique to location and individual needs which makes it a unique process and outcome for each employee. We will continue to assess the feedback, coverage and costs of the ICHRA plan throughout the year prior to making recommendations for next year.
Q: Are we planning to start operating in new business units, other than Aviation and Maritime?
Josh Marks: We are constantly looking at adjacent markets where our products and services are relevant. In Media, we already serve non-aviation markets through our Criterion business unit, which performed quite well in 2022. Criterion serves schools, prisons and other non-theatrical markets. In MEG, we acquired Signal Mountain last summer, expanding our government services business, and our Energy market is a focus for 2023. So the first step in diversifying beyond Aviation and Maritime is to simply expand what we’re already doing in these business units.
Looking ahead, I believe LEO and 5G point-to-point integration services will be applicable far beyond Aviation and Maritime. Low-latency, high-throughput services where fiber and terrestrial wireless don’t reach – connecting the unconnected – will be the growth markets on which LEO depends. There will be opportunities beyond airlines – eVTOL, drones, and business aviation – as well as off-grid terrestrial mobility and enterprise applications. However, we need to see these LEO technologies get to a higher level of reliability and scalability than they are today before we can go all-in.
Q: What are our expectations for 2023 in terms of growth and expansion?
Josh Marks: Given the uncertain macroeconomic environment, high interest rates and inflation we expect this year, we’re taking a cautious approach to 2023. We have a significant amount of revenue growth “built-in” from existing programs and flight schedule increases. We want to continue growing in our non-Aviation/Maritime business units. However, as we continue to manage our supply chain and rising cost structure, we’re going to pick a handful of Connectivity R&D/development programs to fund that set us up for more rapid growth in 2025-2026 as LEO constellations scale. In Media, our focus is going to be on operational excellence. We’ve made a lot of progress technologically with Open, and this year we’ll introduce our new Explore portal for customers. However, we need to make sure that our operational processes, quality and compliance work – our ‘team’ versus our ‘technology’ – keeps pace as our airline customers scale. Beyond that, we’ll continue to look for small plug-in acquisitions like Signal Mountain that diversify our client base or deepen our technology portfolio.
Q: What are the 2023 objectives from our Board?
Josh Marks: Our Board recognizes the uncertainty of the macro environment and the incredible team effort it’s taken to drive year-over-year growth in 2022 and 2023. They’re focused on how we can manage high interest rates and inflation, on top of a constrained supply chain and LEO transformation. We’ve got a lot on our plates! As a result, their directive to us is to manage liquidity and cash flow, finding ways to operate more efficiently while funding those targeted investment programs we need to diversify our content base, build customer-focused technology, and prepare for a LEO-centric world in coming years. Beyond that, they continue to be supportive about targeted M&A and recruiting key talent to the organization.
Q: I have been in multiple meetings in which there were significant concerns discussed regarding the 2023 health care, and the reduction of coverage / increased pricing for available plan options. When is the next update on these challenges projected to take place?
Amy Horan: As stated in an earlier response, we also had a high volume of very positive feedback. The ICHRA plan is unique to location and individual needs which makes it a unique process and outcome for each employee. We will continue to assess the feedback, coverage and costs throughout the year prior to making recommendations for next year.
Q: What are our plans for the India office?
Josh Marks: India is now, and will continue to be, a major center of activity for Anuvu. It’s an important center of excellence for our Media business, as well as our Global Technology Services team. We recognize the unique challenges our Indian employees have faced with work-from-home and office space, and that Anuvu’s leadership presence in India needs to improve. Those are priorities for us in 2023.
Q: Do we see any impact of economic slowdown on our business?
Josh Marks: Economic slowdown per se is not impacting our business – travel remains a high priority for leisure and business customers around the world, and airlines are seeing record demand. Interest rates and inflation though are impacting us. In other words, product demand is strong, but our cost structure is under pressure, and our ability to deliver services is constrained by our suppliers.
Q: What are our long-term goals for our Company?
Josh Marks: I believe the biggest problem we’ve had in the past is lack of differentiation in our services beyond scale. For years, Global Eagle spent money on acquisitions as opposed to transformative technology. They bought market share – they didn’t earn it through technology leaps. That’s why you’ve seen us change our approach in recent years to focus on technology bets – Open, Dedicated Space, the Anuvu Constellation – that lay the foundation for transformative growth. As we look to coming years, it’s critically important that we have products and services we can call our own. Where we add unique value to our customers and aren’t just a common reseller. In Connectivity that means we need to design and deploy our GEO capabilities to work in harmony with LEO, but with keen focus on integration, reliability, support and software-defined services. Where we see other low-latency technologies where we can ‘go deep’ we will. In Media, we need to build scale on Open while helping our airlines monetize their content investments – this will be critically important in five years when airlines will have to justify IFE investments as LEO networks provide fast, global, streaming-class networks to widebody airliners. Across our business, we need to be as efficient and automated as we can – so that we can fund the targeted investments we need to make to enable this future.
Q: In regards to IFE, what do you feel is the biggest challenge our clients face today? And how do you think Anuvu can bring our clients a solution for this challenge?
Estibaliz Asiain: Airlines have two main challenges with regards to IFE. The first is maintaining pre-pandemic budgets as many airlines reduced their spending considerably during this period. The second is keeping up with travelers’ expectations that inflight will replicate their content behaviors on the ground. Passengers are accustomed to having fresh content at any time, anywhere, and airline systems and content cycles do not allow for such demand. This is where Anuvu has a big opportunity to help airlines fill these needs.
Q: What is your largest source of innovative energy going into 2023? What are your externally chosen driving forces?
Mike Pigott: My biggest source of innovative energy right now is watching the industry we are in and the products we deliver move closer to being absolutely critical to our customers, and listening to our customers challenge us to make our products and services better. Some of those conversations are difficult, but also the type of intellectual challenge that created our business in the first place. My external driving forces are my family and challenging myself every day to stay curious about the world around us.
Estibaliz Asian: Without a doubt it’s the inflection point where the industry finds itself today. Connected entertainment is now a reality, and Anuvu is uniquely positioned to deliver on that promise as it has the vision, the technology and the team to make it happen. The Anuvu team have worked for years on the convergence of connectivity with entertainment and the team keeps me energized to accomplish this dream. Externally, obviously my family and friends, most especially my children, who teach me every day something different and how sacrifice and hard work eventually pay back.
Q: In terms of media & content, which aspect generates the most profit?
Estibaliz Asiain: Technical Services in general are the most profitable service delivered by the M&C team as the main cost of sales is Anuvu staff costs. Anuvu Distribution content is also reasonably profitable as it has a double positive impact on the P&L.
Q: Is it possible to have a centralized platform with all available content including niche content, with search function of theme/keywords (not only the title)? It helps for curating content and upsell.
Estibaliz Asiain: This is the goal of our Explore portal and the different software elements behind it. As we continue increasing the content, we supply our customers in Open, the available content universe to other customers will be bigger and bigger, enabling the search and recommendation function you suggest.
Q: Given the recent loss of some good employees, how would the company address that and any approach to retain the current employees?
Amy Horan: Employee retention is consistently top of mind for the ELT. As an organization we are committed to continuously monitoring things like the market competitiveness of our compensation and benefits packages, enhancements that can be made to our development programs or automation that can be built to simplify the employee experience. In addition, we conduct an annual engagement survey designed to obtain feedback directly from employees. We use this feedback to prioritize improvements or enhancements that are top of mind for employees.
