Ladies and gentlemen, welcome to the SES third quarter 2026 results conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions- and- answer session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to Christian Kern, Head of Investor Relations. Please go ahead, sir.
Thank you, Gaia. Good morning, everyone, and thank you for joining us today. It is my pleasure to welcome you to SES Q3 2026 results call on behalf of our management team. Before proceeding with the management presentation, we would like to inform you that the financial information contained in this document has been prepared under International Financial Reporting Standards. As usual, this presentation may contain announcements that constitute forward-looking statements, which are no guarantee for future business performance and involve risks as well as uncertainties. Also, certain results may materially differ from those in these forward-looking statements due to several factors. We invite you to read the disclaimer on Page two of this presentation, which is also available on our company webpage. Today, I am joined by our CEO, Adel Al-Saleh, and our CFO, Lisa Pataki, who will take you through the presentation followed by a Q&A session.
Adel, with further ado, over to you now.
Great. Thank you, Christian. Good morning, everyone. The first nine months' performance was solid, demonstrating the resilience of our business. Third quarter was a strong quarter as expected, supported by important contract awards, strong commercial execution, realization of synergies, disciplined cost management, and strong cash performance on the back of achieving key milestones in IRIS² and several other strategic programs. Overall, this is reinforcing our confidence in achieving our reiterated 2026 financial outlook. At the same time, we continue to execute successfully on integration and repositioning the business for sustainable long-term value creation. Let's begin our presentation on Slide number four. The recent results are shown on a like-for-like basis, with 3Q 2026 being fully consolidated with Intelsat. Lisa will provide more color and details regarding our nine months 2026 results.
Q3 strong performance demonstrates a clear recovery in revenue, adjusted EBITDA, and cash, reinforcing the strength of our core business and building momentum for the remainder of the year. Revenue increased 4.2% year-on-year and over 15% quarter-on-quarter, while adjusted EBITDA grew 18.6% year-on-year and is up 28.4% from Q2, reflecting both strong operational execution and the contribution from key contract wins secured earlier in the year. Cash performance was the standout metric this quarter, ending the quarter with EUR 1.26 billion on our balance sheet. Media delivered strong performance in Q3, with an expected recovery from first half, and brought in several long-term contract renewals which extend beyond 2035, which I will expand more in a few minutes, reinforcing the resilience, cash generation, and strategic relevance of the business.
In Government & Defense, we generated a strong growth in Q3, with increase in both U.S. and global government. U.S. government in particular had a very strong quarter, resulting in double-digit growth in total government when you exclude IRIS². IRIS² had a light quarter due to the timing of milestones. Demand for secure and sovereign connectivity remains robust, supported by strategic space mission prime awards such as Protected Tactical Satellite Communications-Global, or what we call PTS-G, and IRIS², as well as critical contract extensions and new business capture. The combination of key award wins and continued commercial traction provides strong visibility into Q4 and beyond. In Aviation, ESA, which is Electronically Steered Antennas installations, picked up during the third quarter, while year-to-date aircraft wins exceeded 250 tails, reflecting both fleet expansion by existing customers and new awards.
The business also benefited from a forecasted contract restructuring during the quarter. While Fixed Data remains challenging, we did see some sequential improvement from Q2. We also continue delivering on our synergies, and the continued focus on operational cost discipline has driven the contribution margin and adjusted EBITDA recovery. We entered the period with a strong cash position, with EUR 1.26 billion of cash and cash equivalents on our balance sheet. This healthy cash position reflects the fundamental shift in our business model. Lisa will provide more color on our actions around cash flow. Importantly, our growing backlog and commercial momentum provide clear visibility into Q4, with a EUR 10 billion backlog, up from EUR 6.4 billion in Q2, including EUR 5.8 billion of new wins and renewals, with the majority coming from our growth segments.
These new wins and renewals include EUR 3.4 billion total contract value of IRIS² MEO segment attributable to SES. Excluding IRIS², gross backlog grew over EUR 350 million from Q2 to Q3, the second sequential increase this year. With this backdrop going into Q4, we expect government and defense, IRIS² performance obligations, base revenue, and media to be key contributors to our end-of-year performance. Against this positive backdrop, we reiterate our financial year 2026 outlook. Turning now to Slide number five to walk you through the main contributors to Q3 strong performance. In Media, we continue to reinforce our position as a trusted global distribution partner for many of the world's leading broadcasters and content providers. We signed close to EUR 500 million in contracts this quarter and EUR 900 million contracts year- to- date.
During the quarter, we secured several important agreements, including a strategic partnership extension with Canal+ through 2040, a new multi-year renewal with Sky UK and Ireland, and a new agreement with JioStar in India. These sizable renewals are on top of the earlier long-term awards from ARD, Dish TV, Televisa, and more. These wins are significant not only because of the quality of the customer involved, but also because they demonstrate the enduring role satellite plays in content distribution strategies around the world. As audiences continue to demand access to premium live sports, news, and entertainment, broadcasters are increasingly focused on solutions that can deliver content at scale with unmatched reach, reliability, and resilience. Our customers are planning their satellite requirements beyond the next decade, reinforcing SES's unique fleet capabilities around the world and service quality.
Overall, these contracts strengthen the visibility of our Media business, underscore the durability of customer demand, and demonstrate SES's ability to secure long-term partnerships with leading media companies across multiple regions. Turning to Government & Defense. This was an outstanding quarter for the Government & Defense team and a key driver of our performance. Growth continues to be fueled by strategic space mission prime awards secured in the first half of 2026, most notably PTS-G and IRIS², alongside strong demand across our managed services portfolio, including GAN renewal, which is our largest contract with the U.S. forces, as well as MGS extension, which is our unique MEO contract with NATO, sponsored by U.S. and Luxembourg, and several other wins on both sides of the Atlantic. Our Government & Defense business remains healthy, with MEO renewals on track and GEO capacity sales continuing to stabilize.
We are seeing a steady improvement in business fundamentals since 2025. The rate of decline we saw between 2023 and 2025 continued to moderate, supporting improving business fundamentals. As a result, Government & Defense is delivering a strong year, and we remain confident in the outlook through 2026 and into 2027, supported by a robust pipeline of strategic prime opportunities, a high-quality backlog, as well as growing demand for resilient and secure communications. That confidence is reflected in the backlog growth. Excluding IRIS², Government & Defense backlog has increased by approximately EUR 800 million since the start of the year. We added EUR 3.4 billion of IRIS² TCV, excluding SES's commercial revenue after the network goes live. This is very important to understand. The backlog further growing the Government & Defense backlog to EUR 4.8 billion. This provides strong visibility for future revenues.
Looking ahead, we see multiple drivers of sustained growth. Near-term momentum will continue to come from signed strategic government programs and managed services contracts, as well as a strong pipeline of strategic programs that we are working on. Over time, growth will increasingly be driven by multi-orbit and multi-band solutions, secure MILSATCOM services through GovSat-1 and GovSat-2, and meoSphere-enabled unique offerings such as hosted payloads, data relay services, and sovereign network capabilities, which are all new to SES's revenue profile. We are already demonstrating these capabilities in the market. This month, SES launched a demonstration payload supporting NASA's communication services project, leveraging GEO and O3b mPOWER to showcase our low Earth orbit relay services and its ability to deliver persistent, low-latency connectivity for various future space missions.
Going a little bit off script, just latest news that came in just yesterday, we won the first phase of the NASA NEXUS project, which is basically the replacement of the future Ka-band relay services contract. We are very excited about that. These differentiated recruiting services expand our addressable market, support attractive margin growth, and further strengthen our position as a trusted provider of resilient and secure communications. We will expand on these points during the Capital Markets Day. Moving on to Slide number six and an update on IRIS² program, Europe's secure sovereign constellation, post-Rendez-vous 1 closing. In August 2026, Rendez-vous successfully closed, and we have signed the implementation agreement where SES is the lead on the MEO segment, as well as delivery of governmental secure services and common user terminal development.
SES will design and build the payloads for the 15 MEO satellites and perform satellite assembly, integration, and test, what is called AIT, from its facilities in Luxembourg. For the platform, we have already signed a contract for 18 MEO platforms with OHB, specifically for IRIS². Owning payload development, manufacturing, and final AIT provides SES with ownership, overall intellectual property, and greater control over the value chain, enabling more effective cost management and driving a significant double-digit percentage reduction in the overall constellation cost. IRIS² is the largest European public-private partnership in the space sector, de-risking our investment into the constellation as we are benefiting from significant public funding and built-in protection mechanisms of the contract. The remaining total contract value attributable to SES is approximately EUR 3.4 billion, excluding revenues already recognized in 2026.
These development and construction revenue are expected to be recognized in line with certain performance obligations throughout the development phase up until the start of operations, and they are expected to be at lower margins. The consideration includes approximately EUR 2.1 billion of funding by the European Commission. That is equivalent to 60% of the total contract value. This funding is expected to be received during the development, deployment, and operational phases, and manufacturing phase up until the launch of the satellites, of which we have already received a sizable portion in prepayment this quarter. The total contract value has increased from the EUR 2.8 billion announced previously to remaining EUR 3.4 billion, as SES is also in charge of the operations and user terminals. This additional contract value is fully funded by the European Commission.
SES's contribution to the contract remains at EUR 1.35 billion, unchanged from our previous guidance, with the EC continuing to fund approximately 60% of the total contract value. We reiterate our minimum 10% projected project IRR for IRIS². By 2030, IRIS² is expected to be an operational multi-orbit architecture with 330 LEOs and 18 MEO satellites managed by SpaceRISE, with SES as the consortium leader delivering secure, resilient services for all of Europe. Beyond 2030, with the constellation in operation, SES will be able to commercialize 90% of MEO capacity, equivalent to a range of 830 Gb to 1.2 Tb of the usable and sellable commercial capacity, which will support revenue generation until the end of life of the satellites, roughly until 2040. IRIS² and meoSphere are highly complementary networks. The two networks will create a unique MEO-dense network with seven inclined orbits, pole-to-pole coverage, and 5G NTN capabilities.
IRIS² and meoSphere are the drivers of our verticalization strategy, strengthening our future position at the center of Europe's secure connectivity ecosystem. Let's now turn to Slide number seven and our key customer renewals and strategic wins throughout the first nine months of 2026. Our Aviation business delivered another strong quarter, securing new awards from several airlines, including the recently announced ones from Finnair and Air Astana, while also expanding relationships with existing customers through incremental aircraft wins at American Airlines, LATAM, and Avianca. Year- to- date, we have installed and activated more than 230 ESA-equipped aircraft, increasing our installed base to roughly 650 aircraft. At the same time, commitments to our ESA program grew to more than 1,330 aircraft, reinforcing confidence in the long-term growth trajectory of the business.
Looking ahead, we expect these positive commercial and operational trends to continue in the fourth quarter, providing a strong foundation for value creation in 2027. In Maritime, performance was in line with our expectations as we continue to execute the restructuring of our declining wholesale business while navigating the anticipated competitive headwinds. Cruise business remains stable, gated by mPOWER supply constraints. We remain a leading provider of maritime connectivity with over 16,000 vessels operating on the FlexMaritime global platform, and year-to-date secured important renewals, demonstrating the continued value of our services and strength of our long-term customer relationships. In Fixed Data, we continue to face significant headwinds, although we saw some improvement in performance during the third quarter, with the rate of declining moderating compared to the first half of the year. This was driven by stronger renewal activity, particularly in capacity services.
We also saw growth across both our GEO and MEO offerings, serving sovereign and enterprise customers in this segment. Looking ahead, we expect further momentum in the fourth quarter, supported by continued growth in managed cellular backhaul and sovereign services, as well as customer investments in gateways infrastructure designed to leverage our expanding O3b mPOWER network. However, we do expect the competitive environment to remain difficult in this segment. Moving to Slide number eight and a brief update on the latest meoSphere developments. We have taken a great step in advancing our satellite manufacturing, having started construction of our 16,000 sq m manufacturing facility in the south of Luxembourg. The new facility marks a major milestone in SES's transformation and redefinition of traditional space industry models, designed to accelerate innovation, optimization of supply chain, and expansion of SES's solution portfolio.
We already have operating engineering labs in approximately 1,200 sq m with certified SMT line producing early versions of our payload designs. Our ambition is to create a world-class center for advanced space systems development, manufacturing, and engineering excellence that enables faster development cycles, greater innovation, and more efficient delivery of next-generation multi-orbit solutions to our customers. On the development side for meoSphere, I'm proud to announce that Pathfinder 1, which is in orbit, has completed the first-ever space-to-ground bidirectional file transfer via optical links from a K2 bus. This successful transmission is a great development in the testing phase, and from here, we will continue to optimize the connection and use these learnings for more testing and apply to Pathfinder 2 and then Pathfinder 3, of which we have already started producing and testing, and ultimately, our meoSphere constellation.
meoSphere continues to be targeted to enter service by 2030, significantly expanding the capacity and capabilities of our future MEO network, with IRIS² acting as a highly complementary network and anchor customer. meoSphere and IRIS² payloads use many of the same technologies and manufacturing processes, creating synergies and leverage as we develop the two networks. These initiatives position SES at the heart of Europe's secure connectivity ecosystem, enhance our technological leadership, improve cost efficiency, and create a strong platform for sustainable growth and value creation for decades to come. Let's now move to Slide number nine to give you an update on the Upper C-band clearance and the transition plan in more detail. As you're aware, the Federal Communications Commission has published its Report and Order for the Upper C-band clearance on July 24th.
It establishes transition deadlines of December 2030 and June 2031 for repurposing 160 MHz of the Upper C-band spectrum for wireless services in the United States. To ensure we meet these deadlines, we have entered into agreements to commence the manufacturing of seven satellites with our partners, who have also secured required launches to launch these satellites in 2029. We have developed a compelling solution that transitions our C-band customers to a new hybrid Ku solution, augmented by terrestrial recovery network that will provide our clients with substantially the same service as they enjoy today. As a result, we expect our U.S. media clients to continue to use satellite services for their content distribution post the Upper C-band clearance. The deadline to submit the transition plan to the FCC is today, and we are on track to deliver that.
Similar to the Lower C-band clearing program, it will now be open for formal comments and amendments. A clearinghouse will be selected soon, through which reasonable and necessary Upper C-band transition costs will be reimbursable, meaning that these costs are not expected to impact our long-term capital allocation. Finally, the Upper C-band spectrum bidding process is expected to conclude by July 2027, making another key milestone in the overall transition timeline. We're exploring a path to bring forward a portion of the C-band proceeds. This work is already underway. If we're successful, we intend to accelerate our deleveraging and investor returns. We'll give updates on our progress in the future calls. With this, I'm now going to hand it over to Lisa to discuss further details on our nine months 2026 financial performance.
Thank you, Adel. Good morning, everyone. Before reviewing our nine months 2026 results, I'd like to remind you that the press release on our website contains supplementary financial disclosures, including like-for-like revenue by vertical and adjusted EBITDA, assuming the Intelsat transaction had been consolidated from January 1st, 2024. As always, our IR team remains available for any follow-up questions. Let us now turn to slide 11 for our year-to-date financial highlights. Q3 marks our fourth full quarter operating as a combined company, and we are very pleased with our results in the quarter. As a reminder, when I speak to reported results, the prior year only includes Intelsat from July 17th on. I'll now walk through the financials on a year-to-date basis and provide further details on both Media and Networks. I'll then touch on our actions around cash management, capital allocation and priorities, and debt maturity profile.
Finally, we will close out with a slide on our full-year guidance before opening up the call for questions. Let me start with revenue. For the first nine months of 2026, SES reported revenue of EUR 2.5 billion, representing a 45.5% growth rate on a reported basis versus 2025. On a like-for-like basis and at constant foreign exchange rates, revenue was down 2% compared to the same period last year. Mobility continued to be a key contributor to our year-to-date results. In Aviation, we negotiated favorable contract restructurings in both Q1 and Q3 while continuing to add new tails this quarter, resulting in over 250 tails won so far this year. In Government & Defense, we saw strong growth in Q3 as well on a year-to-date basis, supported by solid execution across both the U.S. and global government businesses.
Demand for secure connectivity solutions remains robust, and recent strategic space mission prime awards, including IRIS² and the PTS-G program, further reinforce our growth trajectory heading into the final quarter of the year. In Media, solid performance in Q3 improved the year-to-date trend, as expected and discussed on our last call, and we continue to sign important long-term contract renewals and new wins, which provide a solid backlog extending well into the next decade. Looking at adjusted EBITDA, our solid Q3 performance brings our year-to-date 2026 total to EUR 1.1 billion, representing growth of 40% year-over-year on a reported basis and 1.4% growth on a like-for-like basis, with a margin of 45.8%. As I just mentioned, we closed on another important contract restructuring in Aviation this quarter of EUR 54 million, which we alluded to on our last call.
Importantly, this restructuring allows us to free up capacity for new customers. I should mention that excluding this item, our Q3 adjusted EBITDA on a like-for-like and constant FX basis was above last year's Q3 adjusted EBITDA. We continue to drive synergies in the business and have seen a 4% reduction in total operating expenses year- to- date versus last year, with an 11% reduction in staff costs and 12% reduction in controllable operating expenses. These positive factors helped offset the expected impact from business mix, including lower volumes in Media and Fixed Data year- to- date, and the equipment-heavy mix in our Aviation business, and the mix of development and manufacturing programs in Government & D efense. Moving now to slide 12, I will touch on some of the specifics by vertical.
Media's nine-month 2026 revenue of EUR 875 million, accounting for 36% of total revenues, increased by 30.1% versus prior year on a reported basis. On a like-for-like basis, Media declined 6.8% year-over-year, closer to our expected mid-single-digit declines for the year, reflecting a solid recovery in Q3, supported by important long-term contract renewals and new wins, with some contracts extending to 2040 and others into the middle of the next decade. The strength and resilience of the Media business is reflected in the approximately EUR 900 million in renewals and new business secured year- to- date, contributing to a gross backlog of EUR 3 billion, with long-term agreements in markets such as Germany, the U.K., Central and Eastern Europe, Asia, Africa, and the Caribbean, with key customers including Canal+, Sky UK, and major U.S. broadcasters.
As Adel mentioned, these long-term commitments provide strong revenue visibility and support the continued cash generative and highly profitable profile of Media, and reiterate the critical role of satellite in global content distribution. Networks' nine-month 2026 revenues of EUR 1.6 billion, representing 64% of total revenues, were up 54.4% on a reported basis compared to the prior year. On a like-for-like basis, Networks revenue grew by 1% versus the prior year, with growth momentum in Mobility and Government & Defense partially offsetting Fixed Data declines. In Mobility, revenues for nine months 2026 were EUR 655 million, 98.8% higher on a reported basis and up 9.7% on a like-for-like basis year-over-year.
This performance was driven by Aviation, including the positive contract restructurings I mentioned earlier, as well as higher service revenue from existing customers, partially offset by lower ESA shipments and the decommissioning of certain customers, as we have discussed previously. Looking ahead, we expect service revenue to continue to increase. As we have discussed previously, contract restructurings are a normal part of our business. The financial impacts we've seen this year reflect specific program dynamics, which can vary from period to period. The impacts we've seen this year are not necessarily representative of what we would expect in the near term. Government & Defense had nine- month 2026 revenues of EUR 597 million, which were up 27.4% year-over-year on a reported basis. On a like-for-like basis, Government & Defense was up 2.7% year-over-year, driven by growth in both the U.S. and global government segments.
Growth was primarily driven by strategic space mission prime awards that were secured in the first half of the year, including PTS-G and IRIS², and strong demand related to our long-term managed service contracts, including Global Access Network, or GAN renewal, equipment sales, and MEO General Services, or MGS extension. These all contributed to our expected Q3 recovery, and we anticipate further growth into Q4 with an emphasis on IRIS². Finally, our Fixed Data business revenues in year-to-date 2026 totaled EUR 322 million. This represented a growth of 45.3% year-over-year on a reported basis. On a like-for-like basis, revenues declined by 15.2%. Fixed Data market conditions remain competitive, with Q3 trends improving slightly as we focus on customers most aligned with the value of our dedicated capacity and managed service reliability.
Year- to- date, we continue to see strong commercial momentum across our Networks businesses, driven by sustained demand for space-based connectivity solutions. This momentum was reflected in the strong contract awards secured in Q3, bringing year-to-date 2026 Networks new business and renewals to EUR 4.9 billion, including EUR 3.4 billion for IRIS². As a result, Networks gross backlog increased to EUR 7 billion, up from EUR 3.5 billion from Q2 2026, marking a second consecutive quarter of backlog growth, underpinned by growth in Aviation and Government & Defense. Before turning to our capital allocation priorities, let me spend a minute as we look ahead to finish the year. IRIS² revenues are expected to contribute meaningfully to the fourth quarter and build progressively thereafter based on progress against our contractual performance obligations.
The approximately EUR 3.4 billion now included in our gross backlog will drive revenue over the life of the MEO segment contract prior to satellite operations, with recognition linked to the achievement of defined performance obligations. This provides strong visibility into future revenue growth and supports our medium-term outlook as we make progress on IRIS². As we looked to our fourth quarter and finish out the year, we have good visibility on our growth pipeline supported by recently awarded contract and continue progress on strategic government program including IRIS². We expect Q4 to be a solid quarter and are reiterating our full year 2026 financial outlook. Turning now to slide 13, let me provide our perspective and actions related to cash management.
Our combined like-for-like adjusted net debt to adjusted EBITDA ratio at the end of the period stands at 3.7x versus 4.4x in the previous quarter, driven by the timing effects of operating cash flows. This results in an ending cash and cash equivalents balance of EUR 1.26 billion, which excludes EUR 172 million of restricted cash related to the SES-led consortium's involvement in the IRIS² program. Our strong cash performance this period is a result of proactive changes in working capital management and efforts to obtain advance payments from sovereign and government customers. In the third quarter, we received approximately EUR 700 million from advances and milestone payments in the Government & D efense segment. This cash will fund our program execution over the near term, as we look ahead and transition more to a space solutions company, especially in Government & D efense.
We expect to continue to negotiate contracts and milestone payments that have a positive effect on our working capital and cash flow. As these programs transition from development and manufacturing phases into recurring service revenues, we expect the quality and durability of cash flows to continue improving over time. I should highlight that we are pursuing similar structures across other opportunities, including with our next-generation MEOs and several government and commercial projects currently in the pipeline. This approach improves cash generation and return on invested capital by aligning customer funding with network build-out, rather than requiring SES to carry the full investment burden upfront like we did in the past. Turning to capital expenditures. Thus far, we have spent EUR 536 million to support our core business, which includes meoSphere and excludes EUR 105 million relating to the C-band clearing.
For the full year, we are reducing our core business CapEx outlook to EUR 600 million versus our prior guidance of EUR 700 million for an overall improvement of EUR 100 million this year. As we've said before, our CapEx has been front-end loaded this year, driven by the launch of our final three mPOWER satellites, which occurred in September. Finally, C-band-related CapEx for 2026 is still expected to be in a range of between EUR 100 million and EUR 150 million this year. As a reminder, C-band-related expenses will be reimbursed through the C-band clearing process approved by the FCC. Turning to slide 14, I'll touch on our capital allocation priorities and our debt maturity profile as of 30 September 2026.
We continue to benefit from a debt profile with a weighted average cost of around 4.2%, approximately 74% of debt at fixed interest rates, and an average maturity of roughly five years. Our capital allocation priorities remain disciplined and unchanged. We continue to focus on strengthening the balance sheet, reducing leverage, and maintaining robust liquidity while preserving access to diversified funding sources and the flexibility to invest in the business and execute against our strategic objectives. A key priority has been the proactive management of our debt maturity profile. During the nine-month period, we repaid debt maturities of approximately EUR 1.32 billion, including our EUR 650 million senior bond and EUR 525 million deeply subordinated securities. This includes approximately EUR 134 million repaid in the third quarter.
Following the end of the third quarter, we took another important step by successfully raising EUR 500 million of senior notes due in 2031, which financed the tender for EUR 363 million of our EUR 500 million notes due November 2027. Our intent was to address a meaningful part of the 2027 refinancing requirement well ahead of maturity, reduce near-term refinancing concentration, and extend our maturity profile while market conditions were constructive. Beyond the actions taken on our 2027 maturities, we remain focused on the efficient management of the remaining 2026 debt obligations with ample liquidity on our balance sheet. Furthermore, we remain focused on disciplined capital allocation and a path to deleveraging. We continue to evaluate opportunities to optimize our capital structure, including potential avenues to accelerate C-band monetization or value accretive, providing additional flexibility to further strengthen the balance sheet and potentially accelerate our progress towards leverage targets.
These actions demonstrate our proactive approach to addressing upcoming maturities well ahead of time, further extending our maturity profile, reinforcing our liquidity position, and progressing our stated objective of reducing net leverage to our net leverage target of 3x or below and improving our shareholder returns. After we achieve our net leverage target, at least a majority of future exceptional cash flows are expected to be prioritized for shareholder returns, in line with the capital allocation framework we have consistently communicated. With improving operational momentum, a proactive approach to balance sheet management, and clear visibility into our growth drivers, we remain confident in our FY 2026 outlook and committed to creating long-term value for shareholders. With that, I'd like to hand it back to Adel for his closing remarks.
Reiterating our full-year financial outlook for 2026. Through the commercial momentum in Q3, which further strengthened our growing backlog, we have increased visibility into Q4 and have a clear roadmap driven by Government & D efense and Media, which support our confidence in the trajectory. We reiterate our full-year 2026 outlook of stable revenue and stable adjusted EBITDA year-on-year. Integration and efficiency initiatives remain on track, and we continue to deliver our synergy objectives while maintaining a strong focus on operational excellence. Finally, moving to Slide number 17. We have rescheduled our Capital Markets Day to coincide with the publication of our full-year 2026 results o n March 11th, 2027.
On Capital Markets Day, we look forward to discussing with you the strategic evolution of SES's business model, including verticalization, strategic pivoting towards Government & D efense, while continuing to build on our strong position in Mobility and Media, and development of new revenue streams in our portfolio. We plan to provide mid-term financial targets and our long-term financial ambitions. With regards to our financial and capital allocation policy, we aim to update you on our deleveraging path and our plans to potentially bring forward a portion of C-band proceeds. Given this full preliminary agenda, we have decided to reschedule the CMD to allow us to close the year and include additional information and proof points. On this basis, we look forward to engaging with you in an in-depth capital market discussion about the complete picture of the new SES.
Our ambitions hasn't changed, to be an industry leader in advanced space solutions in selected verticals and mission-critical applications where we can truly differentiate, and be the integrated full-service provider of choice with the inclusive partner ecosystem. We remain firmly focused on execution. We're delivering on our strategy, maintaining a disciplined financial policy, and leveraging our strong commercial momentum to drive sustainable growth, supported by an increased visibility on growing backlog and a clear path to deleveraging. We're confident in our financial year 2026 outlook and committed to creating long-term value and attractive returns to our shareholders. With this, we're now ready to answer your questions.
Ladies and gentlemen, if you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six. Please limit your questions to two. The first question is coming from Roshan Ranjit from Deutsche Bank. Your line is now open. Please go ahead.
Great. Morning, everyone. Thank you for the question. Two, please. The first one is just regarding the contract restructurings or the carry forward. Should we perhaps think of this as a more regular component going forward? I think you had previously mentioned that they were occurring in prior years, but it seems to be more material driver. Just thinking about the comps going forward and the growth outlook for 2027, given we've had the EUR 54 million this quarter, the EUR 81 million in Q1, how we should think about that ahead. Secondly, just on the CapEx efficiencies. So this is the second year where you have realized efficiencies on the investments. Adel, you previously mentioned the fast tracking of synergies.
Can you give us an update there if it is kind of a combination of efficiencies and timing, or if we can believe in real upside to the initial synergies given as part of the Intelsat deal? Thank you.
Great. Thank you, Roshan. Lisa, you want to just tackle the first part, then I will do the second? Contract restructuring?
Yes, absolutely. Yes, sure. As you all know, contract restructurings are a normal course of business for the company, and we do tend to see these from time to time. As I alluded to in the prepared remarks, the contract restructurings for aviation in both Q1 and Q3, they are higher than what we normally tend to see. I did want to make that clear that kind of going into the near term, we shouldn't be seeing contract restructurings of that magnitude. I think that is important to understand. We are looking forward to the Capital Markets Day and giving you a better near-term outlook on our business. The other thing I think that is just important for all of you guys to mention, especially as Adel goes into kind of the CapEx answer, is that on the Aviation restructures, those are non-cash revenues.
I think just so that you understand that from a modeling standpoint. Adel, you want to take the CapEx?
Yeah. Thanks, Lisa. Roshan, look, in general, efficiencies are well underway. Synergies that we're driving with the integration of Intelsat. In Capital Markets Day, we'll give you a little bit more insight where we are both on OpEx and CapEx. But specifically on CapEx, you've heard it, you're absolutely right. This is the second year in a row and multiple quarters in a row where we're able to rationalize our investments. We have put a strict discipline around CapEx investments with focus on improving our return on capital employed, which is something the company needs to improve going forward, and that's what we're doing with our board. We're finding opportunities, right?
We're finding opportunities both in terms of duplicate investments that Intelsat and SES were doing, which we can easily rationalize, but also making some hard decisions, right, in terms of what do we really need and what's really going to drive the return on capital employed that then gives us clear decisions on what we continue to invest in and what we're not. That's what resulted in this EUR 100 million improvement. Now, you'll see, as we committed to the market in the past, right, we did say we're going to get to kind of a run rate of EUR 600 million-EUR 650 million before we talk about IRIS² and meoSphere. That's exactly where we're heading. We'll give you a lot more in the CMD in terms of visibility, how to think about it going forward. Thanks, Roshan.
Great. Thank you.
The next question is coming from Halima Elyas from Goldman Sachs. Your line is now open. Please go ahead.
Hey. Yes, good morning, and thank you for taking my question. I just have one, please. The CMD agenda you released includes updates on potentially bringing forward a portion of C-band proceeds. Can you provide any more color on that ahead of the CMD? For example, how could you execute this, and how much of the total proceeds could realistically be brought forward? Thank you.
Hi, Halima. Look, I think it is very premature to get into a lot of details, but let me expand on what we just mentioned, right? There are very important milestones that we are working through and progressing steadily, as we described, right? So, for example, today, we are submitting the transition plan, which is an official plan that will be visible to the market, that there will be comments on it and amendments to it, which is a really important element of solidifying the plan. Clearinghouse to be appointed at the end of the year. This is the mechanism then to reimburse us, which is very critical, right, to start making sure that we get all of these expenses reimbursed. Then we need to wait for the actual auction that needs to happen. All these milestones are very important before we can realize any potential opportunities of pulling forward.
But we are seeing interest in the market, and we are exploring those interests, and we have work that is well underway to assess how we could do that. Lisa said it very clearly in her remarks that it needs to make sense to us, right? We would like to do it. I mean, this is something that will be very attractive to accelerate our deleveraging, think about our shareholder returns, but it needs to make sense. Financially, it needs to have value accretion to us overall and to our shareholders.
We are working through that, and that is why also we wanted to delay the CMD, because this will be an important topic. We will walk you through during that CMD, and then we will give you a lot more insights on how much we are talking about, when could it happen, by doing all the work until then. Thanks, Halima.
The next question is coming from Aleksander Peterc from Bernstein. Your line is now open. Please go ahead.
Yes, good morning. Thank you for taking my questions. I would like to start with Media. The like-for-like year-on-year in the third quarter was almost flat, and we have not done that in many years now at SES and at other satellite operators. It is very good results. Could you maybe go into more detail what drove that? Were there any timing or accounting in the recent renewals that were behind this, and how we should think about modeling the fourth quarter? Will it be the same kind of flattish year-on-year, or at what point do you think you are going to revert to that single-digit decline that is the secular decline of this business? And then second question will be on your net leverage, which fell very materially in the third quarter. You have a little CapEx left in the fourth quarter, so that is a positive.
I would like to understand if there were any movements that may reverse in your working capital. I understand a lot of it is down to the advances. You mentioned that EUR 700 million, so was that the key driver for this lower leverage, and are we going to finish the year at or below this 3.7x ? Thank you.
Well, let me take the first one, and then Lisa, you will take the net leverage question. Look, media third quarter was exactly as we were planning, as we expected. Alex, what drove that is contract renewals, right? We had a bunch of very large contract renewals where certain accounting treatments helped media to perform in Q3. That was all planned. As we have been saying from the beginning of the year, we will see Media kind of stabilize in the mid-single digit, 6%-7% to 8% kind of numbers versus the double-digit decline we have seen over the last four quarters that we had. Those renewals that we have seen give us very good visibility going forward.
As you model the year, you should be modeling the year in those ranges, right, where the business is going to finish in those kind of high single-digit versus double-digit declines. Going forward, we will see that business kind of stabilize around those areas in the mid-single, mid-higher single kind of declines. We have visibility now going forward. That is what drove Media and their performance, and we are still very confident in the full year outcome for Media being the way we described it in the past. Lisa, if you just cover the next question, which is the leverage.
Yeah, absolutely. As I mentioned, we are really pleased with the work around working capital and our proactive work to obtain funding upfront. That helped really to reduce from the 4.4x that we saw last quarter to the 3.7x . Again, given where we are in the planning process, we aren't providing beyond 2026, but we do expect to end 2026 in line with where we ended the September period.
Lisa, just to emphasize, right? I think this is really important. There's a lot of improvement beyond the upfront payments that we're negotiating with the customers, right? In terms of our working capital, the discipline we have, and our terms and conditions that we're driving in the business, the discipline we have in our inventory, the discipline we have in looking at when do we get paid versus when do we have to pay for certain things. That improves our position. But these contract prepayments, they're not just luck, team, right? This is a deliberate management of the contracts negotiations with the customers to ensure that we are not spending a lot of money before we get paid, right? I think this is an incredible job by the team, being able to achieve that.
It's not just IRIS², it includes our other contracts like GovSat contracts and other government contracts. PTS-G also reached milestones that allow us to get paid on those things as well. All those things, as Lisa also said in her prepared remarks, is we have more coming, right? We have more contracts like that we're negotiating with the customers. The NEXUS NASA contract is another important contract that's in line with our strategy of being the prime and using our technologies. By the way, leveraging, this is the thing that's really important and a big focus area for us. We focus on signing contracts to continue to leverage the investment we're doing in meoSphere/IRIS², right?
The NEXUS agreement and what we're going to be trying to do is leverage a lot of these investments that we had, and that gives us a very good platform to continue to improve the working capital of the company.
Yeah, let me just add to that because, Adel, I think you made a really good point on what we've been doing on the customer negotiation standpoint. Let me just follow up with also, we have, since the beginning of the year, we have had working capital targets that we have set for the business. We've changed our processes, I think, as most of you know. The other thing is that we have really been taking a rigorous look at CapEx. You know that we canceled two of the satellites. We talked about that in the first quarter. We've diligently gone through every single line item of CapEx to get to where we are.
So, both in terms of how we price things, how we negotiate things with customers, as Adel mentioned, and then also on the working capital side, I think we're really pleased with the results as of this period.
Great. Thank you very much.
The next question is coming from Nick Dempsey from Barclays. Your line is now open. Please go ahead.
Yeah. Good morning, guys. I've got two questions left, please. First of all, just to understand the revenues from IRIS² going forward and how you're going to recognize them. So effectively, you're recognizing the CapEx spent by EC and also your own CapEx in your revenue line, and that's inevitably going to come at a very low margin, I guess. But will you be reporting that as a separate line? Will we be able to have visibility on this inside your government line? Because it seems to me like that is quite a different sort of revenue to the normal government revenue. Second question, just in terms of the meoSphere and its impact on CapEx.
You talked just earlier about 600 million-ish of CapEx, then stack IRIS² on top, and then I guess we need to put some meoSphere CapEx on top of that as well. But when do we start stacking some meoSphere CapEx on top? What's the kind of frame for that? Because you talked about service beginning in 2030.
Lisa, you want to take the revenue recognition on IRIS² first, and then I'll tackle the second one?
Yeah, absolutely. Okay. IRIS² revenue recognition, it is going to be percent complete revenue recognition. The full amount of the contract value, especially for the MEO portion, as you correctly alluded, it is a public-private partnership. The European Commission's portion of that has always been considered to be on the revenue line, and you'll have the cost of sales associated with that. We will recognize that as, again, percent complete. It's very similar to what you would do in an aerospace and defense contract, long-term construction contracting. It will be at low margin. The second component, which is the SES investment, will also be considered as revenue. And it's because we have 90% access rights to those satellites once they become operational. So it's effectively considered to be a payment in kind.
Going forward, and we will model this out for all of you for the Capital Markets Day, how to kind of think through IRIS² revenue recognition in the near term. But those are essentially the mechanics of it. Adel, do you want to take the meoSphere CapEx?
Yeah. Nick, the meoSphere CapEx has already been flowing in our numbers, right? When we guided the market in our CapEx, we always combined IRIS² and meoSphere kind of in our guidance, because there is such an overlap between the two systems. They are not two different systems. You got to keep that in mind. The payload of meoSphere and IRIS² are very, very similar. There are elements in IRIS² that has some security elements and crypto and things like that meoSphere will not have unless customers in the future will order it, and then it will be an additional feature we will be selling in the marketplace. So, meoSphere is already flowing in our numbers. We will give guidance in CMD on what that CapEx should look like in 2027 up to several years going forward.
That is how you got to look at it, right? Important also, and again, we will major on this in our Capital Markets Day, but I think everybody should understand that our old model, which we had for a long time, meant basically where we architected the satellites and defined what the system looks like, and then we spent a lot of CapEx, billions and billions, right? We had no cash flow from that. It was all cash out of the company, right? Until we got the satellites and we launched them and we started generating the services revenue.
In our new model, what we are driving and how we are verticalizing and building those things, we are getting customers to come and pay us early for the development of these satellites, therefore reducing our CapEx needs for building these constellations going forward, improving our cash flow going forward, and still getting us to the point when we get those satellites up and running for the services business. Our business model is now not just about pay a ton of money, do not own IP, launch the satellites, generate service revenue, actually creating new service lines, new revenue lines for us, where it improves our capital efficiency because customers are paying upfront, and you have seen demonstration of that even in IRIS² and other customers with EUR 700 million just coming in this last quarter.
And that flows through our cost of sales and through revenue, and therefore down to the adjusted EBITDA.
But then we also have the revenue that comes from the services business. When we meet you guys at Capital Markets Day, we will lay out those revenue lines. We will explain to you how that evolve, that model evolves going forward. Nick, regarding your question, are you going to separate it from the rest of the business? That is something we are working through and thinking through how to do it. It is clearly going to be an important element of our revenue going forward, and we will decide and then share with you guys during the Capital Markets Day how you are going to be able to see it going forward.
Yeah, just to add to that, in the disclosures for the financial statements, we have already been disclosing IRIS² revenue, and we will continue to do that in the notes to the financial statements. But as Adel said, I think we are really looking forward to the Capital Markets Day and being able to lay this out for you.
Thank you.
The next question is coming from Stéphane from ODDO BHF. Your line is now open. Please go ahead.
Yeah, good afternoon. Thank you for the questions. The first one is regarding savings. I was just wondering whether you could provide a little more color on where you stand with the Intelsat synergies. I would add to that, if that's possible, any indication already you could tell us about what sort of savings you think you could be able to achieve from the SES factory. My second question is regarding the Aviation contracts. I mean, two new contracts you've been able to add. I was just wondering whether you could share with us what your clients are telling you about the pros and cons of choosing you with Intelsat LEO versus obviously Starlink. Thank you.
Okay, Stéphane, I'll try those and then Lisa will complement. Look, you can see our savings in terms of synergies in our OpEx lines, right? Those should be very clear to everybody. I mean, our labor synergies, and correct me if I'm wrong here, Lisa, is - 11% our labor cost.
Yeah.
This quarter, right? That tells you kind of what's going on. If you look at our controllable cost year- to- date, it's also significant decline year on year. So the synergies in the OpEx are coming through very clearly for us. We will show you more during Capital Markets Day, but we are well on track on the savings that we promised during our integration and during our acquisition of Intelsat. Obviously, you all know this, right? We've had weaknesses in our businesses as we entered into the integration, and our synergies have been a huge help in driving the business to where it is today, right? That will continue. So this is something you got to watch out. On the CapEx, we just talked about that, right?
I mean, we have reached the CapEx levels that we said to the market we're going to reach two years from now, right? That's why we continue to do better on CapEx than what we've been forecasting even ourselves, because we're driving those synergies very, very hard, and we continue to do that, right? We're doing that to make room to then invest in the new areas, but also obviously to generate the type of cash flows that we need to start deleveraging the company going forward. So more to come on that, Stéphane, when we meet you in the Capital Markets Day to give you a much better quantification. On the factory, overall factory production and verticalization, Stéphane, look, we are seeing today high double-digit savings by doing the verticalization ourselves and building the satellites ourselves versus the old model. We're seeing that.
Now, it is very early to declare victory, right? We are just getting into it. We are getting the factory up and running. We have changed the model. I mean, we talked about the Pathfinder missions. We are testing our early versions of payload and buses in space in addition to on the ground, which we never did in the past, right? We tended to find a lot of problems in space, and what we are doing now is actually de-risking our programs by doing these Pathfinders going forward. That also reduces cost as we go forward, right? We optimize the platform. We are very confident that this- can you guys hear me? Hello?
We can hear you. We can hear you.
Yeah, there is some kind of a wrinkle. Anyway, Stéphane, just wrapping it up, we are confident in the strategy and the cost improvements that we will drive there. Look, on Aviation contracts, the customers, and you can see it in the signings, we have signed 250 tails this year already, do see a big value in our Electronically Steered Antennas, which has OneWeb capability and GEO capability on it as well. I personally flew on flights that have that services, and you have seen also industry analysts and industry reporters do the same thing. The service is very good, right? As a matter of fact, we have taken a flight from L.A. to Chicago, and I had a few of our Board members on the flight. We not only did our normal emails, one of our Board members actually had a video conference throughout the flight, and that was seamless experience.
Our offering is competitive, and it is available, right? We feel quite confident in the offering and the type of uptick we are seeing with the customers. We are also seeing customers in aviation begin to tell us that they want options, right? They are not looking for just one solution, and that plays well into the capabilities that we have. Thank you, Stéphane.
The next question is coming from Ben Rickett from New Street Research. Your line is now open. Please go ahead.
Hi, guys. Thank you. I had two questions, please. Firstly, coming back to meoSphere CapEx, how should we think about the return on capital for that project? Specifically thinking about the fact that 10% return on capital for IRIS², where it is very heavily subsidized, does that imply a lower return on capital, or how should we think about that? My second question, I wonder if you could say anything about, now that the Elveo Mobile merger has closed, do you say anything about your plans for that relationship, and specifically whether you think there is a role for Elveo Mobile to play in the European S-band? Thank you.
Very good. Lisa, you want to take the first one, and then I will take the second one?
Sure. On the CapEx, and I think I heard you properly, but if not, just let me know. I think it was related to IRIS². We are committed to the business case that generates an IRR of 10%. Including how the contract is structured today, that is obviously an important clause that is built into our contractual relationship with the ESA and with the European Commission, that we will maintain a 10% IRR going forward. That is how that is set up, and we discussed the revenue recognition mechanics, and that is all built into that.
Very good. I will just add a little bit to Lisa here, Ben. I mean, we are now very focused as a team on improving our return on capital employed, right? This is something we need to do. We know the track record, what it is, and therefore, every investment, similar to IRIS², same thing with PTS-G, NEXUS the same thing, meoSphere as well, we go through rigorous analysis of what that capital will look like and what the returns are going to be. As I said, what we will see going forward, Ben, is an improvement in our return on capital employed because the model is changing. It is a fundamental shift in our model, where in the past, the capital we had to come up with to pay for the constellations with pure cost to the company, we didn't have any offsets.
Going forward, we are offsetting that investment with customer co-investment with us or prepayments that the customer come in, or early contracts that people are buying the constellation capacity going forward. That is the model that takes a lot of heat and a lot of pressure off the balance sheet in the early years. Then we generate our returns because the accretive part of our business model is we get to our traditional margins when we get into our services revenue. IRIS² is the same way, meoSphere will be the same way, and so on, right? The important part for us is that we have certain platforms and standards that we can continue to scale in different projects. NEXUS is the next project that we have been awarded now with a first phase first. We are going to convince the customer to use our existing platforms.
The investment in building these new capabilities is already available to us, and that will give us the leverage and the expansion on the return on capital employed. So, that is how we are thinking about this and how it is going to go forward. Now, your second question on Elveo relationship, and we have talked about it in the past. I mean, we really like the direct-to-device capability that Elveo has developed, and we have invested in Elveo, as disclosed in the past, and we have a very interesting relationship, not just from an investment point of view, but actually combining our networks and leveraging SES's multi-orbit capability to make direct-to-device more efficient, meaning moving data from LEO to MEO to our ground infrastructures. So the relationship is broader than just us investing.
It is using our MEOs as backhaul for the networks, being able to move traffic using our ground infrastructure that is available, and we have this relationship between the two companies that we are going to be commercializing this capability going forward. That is another approach of low capital investment from our side to access new market capabilities. Now, regarding your question on the European S-band spectrum, the answer is yes, we are interested in that spectrum. We are going to be competing for that spectrum going forward, and we will be, of course, partnering with Elveo, and potentially other players as well, to be able to get access to that spectrum. But I suspect that spectrum is going to be highly sought after and quite competitive, Ben, so we will see how it works out.
That is good.
Thanks, Ben.
Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question is coming from Paul Sidney from Berenberg. Your line is now open. Please go ahead.
Yeah, thank you very much for taking questions. Just a couple, but they're slightly related. But the standout KPI from your presentation was the backlog figure for me, the 56% Q-on-Q increase to EUR 10 billion. I was just wondering, how much of that is related to IRIS², how much is related to the recent MEO launches, and should we read from this that SES can be competitive in the current space climate? The second question is sort of a follow-on from that. We get a lot of investor pushback on SpaceX, Starlink, and I'm absolutely sure I'm not the only one. But if the addressable market figures put out by SpaceX, and with your successful MEO launches and your plans looking forward, IRIS² coming on board in the future, is there enough demand for all of these planned constellations to succeed, including SES?
I appreciate these sort of big-picture questions, but these are the questions that we're getting from investors. Any comments you can help us with ahead of your CMD would be much appreciated. Thank you.
Thank you, Paul. Well, look, I'll start, and Lisa can complement me. Look, I think the market should be mature enough now to understand that it's not one winner takes it all in this market. I mean, that narrative should not exist anymore in the marketplace. If investors still think about that, we're doing then a very poor job explaining to them what space is all about. I mean, you can see the space is being very buoyant. A lot of capital inflow into the space because the applications and the demand for the services coming through space are expanding, and they're expanding continuously. I mean, SES is a good example of that.
As we verticalize, we are beginning to generate new revenue streams, including things like hosted payloads that have different feature function capabilities that do not exist today in our portfolio, like alternate PNT on our satellites, like missile tracking and missile awareness, space situational awareness, military payloads, including UHF communications. Those are just examples of the capabilities we are building, and we are winning contracts that we keep describing to you guys in those areas going forward. Airlines continue to invest and look at not just one provider or two providers. They are splitting the businesses. We lose some airlines, no question about it, but we are winning others. Cruise and maritime continues to be a very strong hold for us as a company.
The point is as follows. We as a company, we focus ourselves to go into the segments where we can differentiate, where we are not pivoted head-to-head against Starlink or other competitors.
We show differentiation, whether it is a multi-orbit capability, the managed services capabilities, or the type of services that require multi-orbit. Government and defense, there is no question, and please research, that governments have declared they want multi-orbit capabilities, and it is purely from security and resilience of the networks that you need. You cannot have everything in one. Just like on the ground, you never have networks that are just single-threaded. You never do that. You do not even do it in data centers. I managed data centers before coming to SES. We never had a data center that had one broadband line coming into it. We always had multiple providers. We always had multiple lines coming into the data center, and we had satellites in the data centers to give us the backups. So the market needs multiple solutions. Paul, there is plenty of demand.
Demand is there in the marketplace, right? Our portfolio happens to have things that are declining and things that are growing, and the things that are declining actually are a very accretive portfolio element because it generates a lot of cash for the company. So as we grow in the new areas, we are leveraging the cash generative capabilities that we have in the company to be able to transition and to move there, which is quite unique for SES being in the marketplace. You can compare us to our peers. So yes, there is plenty of demand, and yes, the customers want options, and yes, government and military particularly need multi-orbits. Thanks, Paul. I hope that was I answered your questions.
Yeah, that is actually-
I will.
Oh, sorry. Sorry, Lisa.
I will follow up. Yeah, no worries. I will just follow up with a little bit of color on the backlog as well, because I think we are quite happy with the strength of the backlog at this point, and obviously it drives some of the growth of our future revenue streams. So, even if you exclude IRIS², the orders that came in in the period were very much driven by government, which was about EUR 800 million in new orders, and in media, which was EUR 900 million in new orders. So, if you kind of extrapolate and you take out IRIS², that kind of leaves you with a book- to- bill that is a little bit over 90%, which is actually quite good on a year-to-date basis. So overall, pretty strong backlog at the end of this period, which we are happy about.
Yeah, thanks, Lisa. I lost that part. Thank you for catching it.
Sorry. Just a quick comment. Sorry for a very simplistic question, but is that backlog, is it pretty much guaranteed? Is that where your backlog definition is? That is pretty much revenue that is going to come in?
Yeah, it is mostly secured backlog. Of course, you have parts of that that are funded and unfunded, but we do not tend to include options as part of backlog, so it is mostly secured.
Yeah. Paul, it is contractually secure, right? Sometimes you have TCVs that well beyond the contractual terms in the contract. We do not include those in our backlog, right? We include the secured legally contractual. Now, some of the contracts you have to meet the milestones, right? So it is not like everything is going to happen. You got to meet the milestones, like in IRIS², for the backlog to continue to flow into the revenues, right? But that is now in our hands, right? It is execution.
That is great. Really appreciate it. Thank you both.
Thank you, Paul.
There are no more questions at this time, so I hand the conference back to Christian Kern for any closing remarks.
Thank you for joining today's call and your questions. The IR team is at your disposal for any potential follow-ups as usual, and again, thanks for joining today and have a good day. Take care.
Thanks for joining today's call. You may now disconnect.