Core Insights - Viasat has launched its HaloNet™ portfolio, a modular connectivity solution designed to unify space and terrestrial communications for various mission requirements [1][4][5] - The HaloNet system aims to support the growing demand for agile, reliable, and secure communications infrastructure in the low Earth orbit (LEO) sector [2][4] - HaloNet can connect thousands of space vehicles across various orbital inclinations and altitudes, providing a comprehensive solution for both government and commercial users [3][5] Company Overview - Viasat, Inc. is a global leader in satellite communications, with a mission to connect people and systems worldwide through advanced communication technologies [8] - The company recently completed the acquisition of Inmarsat, enhancing its capabilities and resources in the global communications market [8] Product Features - HaloNet offers a range of services, including telemetry, tracking, and command (TT&C) data relay, high-capacity data relay, and direct-to-Earth (DTE) services [6] - The system supports various data transport options, utilizing multiple frequency bands (L-band, Ka-band, and optical links) with data rates from tens of Kbps to over 10 Gbps [5][6] - HaloNet's mobile command and control platform allows for secure data transport from virtually any location, enhancing operational flexibility [6]

Company Overview - Viasat is a global communications and defense technology company operating in two segments: Communication Services and Defense and Advanced Technologies (DAT) [1] - The Communications Services segment includes fixed broadband, government, maritime, and inflight communications, while the DAT segment focuses on defense-technology platforms for information security, cyber defense, and tactical networking [1] Activist Involvement - Carronade Capital Management LP, an activist investment firm, owns 2.60% of Viasat and has called for the separation of the DAT business through a spin-off or IPO [2][3] Financial Performance - Viasat's revenue breakdown shows Communications contributing 73% of revenue and 80% of EBITDA, while DAT accounts for 27% of revenue and 20% of EBITDA [4] - The Communications segment is experiencing a decline in broadband revenue, down over 27% year over year, but other areas like Government and Inflight Communications (IFC) are growing at approximately 25% and 22% respectively [5] - Viasat's share price has significantly underperformed, down 21.12%, 51.56%, and 57.98% over the past 1, 3, and 5 years [4] Market Perception and Misunderstanding - Carronade argues that Viasat is misunderstood by the market, perceived as a small-cap legacy satellite company overshadowed by competitors like Starlink [5] - The DAT business is highlighted as a hidden gem with best-in-class EBITDA margins of 28% and significant growth potential in next-generation defense technologies [6][7] Valuation Analysis - Carronade estimates the DAT business could be valued between $6.3 billion to $16.2 billion based on a 20-times to 51-times EBITDA multiple, while the entire company has an enterprise value of approximately $8 billion [8] - The Communications segment is valued at $4.9 billion, with an additional $1 billion from a legal settlement, leading to a total valuation range for Viasat of $48.93 to $112.49 per share, representing a potential return of 76% to 304% [8] Strategic Direction - Carronade's proposal to spin-off or IPO the DAT business aims to unlock intrinsic value and mitigate negative market sentiment surrounding the satellite business [8] - Viasat management has indicated consideration of selling parts of the DAT business, suggesting alignment with Carronade's value proposition [9]

Core Viewpoint - Viasat's recent stock surge of over 22% is attributed to a strong first-quarter earnings report that exceeded expectations, challenging the prevailing bearish sentiment surrounding the company [2][3][4] Financial Performance - Viasat reported a non-GAAP EPS of $0.17, surpassing analyst estimates of a $0.15 loss, and generated revenue of $1.17 billion, exceeding forecasts [4] - The company achieved $60 million in positive free cash flow, a $210 million improvement year-over-year, indicating a significant shift in financial health [5][6] - Capital expenditures (CapEx) decreased by 34% year-over-year, with full-year guidance lowered to approximately $1.2 billion, reflecting improved capital discipline [6] Debt Management - Viasat's $6.7 billion debt load is being addressed through increased cash flow generation, presenting a credible path for deleveraging and achieving financial stability [7] - The company plans to utilize its growing free cash flow to pay down debt, which will reduce interest expenses and free up additional cash for growth [15] Business Segments - The Defense and Advanced Technologies (DAT) segment is highlighted as a key growth driver, providing secure communications for government and military clients, with a stable revenue base from long-term contracts [9] - Viasat's commercial aviation business saw a 14% increase in service revenue, benefiting from the recovery of the travel sector and securing major airline contracts [10][14] Future Catalysts - The upcoming launch of the ViaSat-3 F2 satellite is expected to enhance Viasat's bandwidth and revenue opportunities in various markets [12] - A potential settlement with Ligado Networks could provide a new revenue stream of approximately $16 million per quarter, which has not yet been included in financial guidance [13] - The backlog of contracted future revenue surged by 49% to $1.1 billion, indicating strong demand for Viasat's services [14] Overall Outlook - The recent financial performance and strategic initiatives suggest a fundamental shift in Viasat's trajectory, moving towards cash generation and operational stability [16][17]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents Viasat, Inc.'s unaudited condensed consolidated financial statements for Q1 FY2026 and Q1 FY2025, including Balance Sheets, Statements of Operations, Cash Flows, and Equity [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $1,177,492 | $1,612,105 | | Total current assets | $2,455,805 | $2,887,943 | | Property, equipment and satellites, net | $7,339,470 | $7,405,664 | | Goodwill | $1,626,221 | $1,622,132 | | **Total assets** | **$14,895,806** | **$15,448,784** | | **Liabilities & Equity** | | | | Total current liabilities | $1,161,343 | $1,676,654 | | Total long-term debt (Senior notes & Other) | $6,532,615 | $6,532,284 | | **Total liabilities** | **$10,293,834** | **$10,804,224** | | **Total equity** | **$4,601,972** | **$4,644,560** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Three Months Ended June 30 (in thousands, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total revenues | $1,171,054 | $1,126,460 | | Income (loss) from operations | $46,672 | $59,735 | | Net income (loss) | $(47,724) | $(21,687) | | Net income (loss) attributable to Viasat, Inc. | $(56,434) | $(32,912) | | Diluted net income (loss) per share | $(0.43) | $(0.26) | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Three Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $258,460 | $151,096 | | Net cash used in investing activities | $(175,950) | $(221,519) | | Net cash used in financing activities | $(513,819) | $(22,453) | | **Net decrease in cash and cash equivalents** | **$(434,613)** | **$(89,434)** | | Cash and cash equivalents at end of period | $1,177,492 | $1,811,599 | [Notes to the Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) - As of June 30, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations (backlog) was **$3.5 billion**. The company expects to recognize **approximately half of this over the next 12 months**[31](index=31&type=chunk) - Revenues from the U.S. Government comprised **15% of total revenues** for the three months ended June 30, 2025, **down from 16%** in the prior year period[33](index=33&type=chunk) - On May 2, 2025, the company redeemed in full its remaining **$442.6 million** in principal amount of **5.625% Senior Notes due 2025**[93](index=93&type=chunk)[114](index=114&type=chunk) - In June 2025, Inmarsat agreed to a binding term sheet with Ligado Networks, under which Viasat anticipates receiving **$568 million** in **fiscal year 2026**, subject to bankruptcy court approval[140](index=140&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Discusses Viasat's financial condition, results of operations, and liquidity, including segment overview, performance trends, and capital resources [Company and Segment Overview](index=35&type=section&id=Company%20and%20Segment%20Overview) - Viasat operates through two reportable segments: Communication Services and Defense and Advanced Technologies[158](index=158&type=chunk) - As of June 30, 2025, the Communication Services segment had in-flight connectivity (IFC) systems installed on **approximately 4,230 commercial aircraft** and **2,050 business jets**[160](index=160&type=chunk) - The U.S. fixed broadband business had **approximately 172,000 subscribers** with an average monthly revenue per user (ARPU) of **$115** as of June 30, 2025[160](index=160&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) Consolidated Results of Operations (in millions) | Metric | Q1 FY2026 (3 mo ended Jun 30, 2025) | Q1 FY2025 (3 mo ended Jun 30, 2024) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,171.1 | $1,126.5 | $44.6 | 4% | | Cost of Revenues | $761.6 | $710.8 | $50.8 | 7% | | SG&A | $262.8 | $251.1 | $11.7 | 5% | - Total revenue increased by **4% YoY**, driven by a **13% increase** in product revenues, primarily from the Defense and Advanced Technologies segment[194](index=194&type=chunk) - Cost of product revenues increased **20% YoY**, outpacing product revenue growth, partly because the prior period included higher-margin intellectual property licensing revenues[195](index=195&type=chunk) - SG&A expenses increased by **5% YoY**, mainly due to higher support costs, including legal expenses related to the Ligado settlement[196](index=196&type=chunk) [Segment Results](index=44&type=section&id=Segment%20Results) Communication Services Segment Results (in millions) | Metric | Q1 FY2026 | Q1 FY2025 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $827.4 | $826.8 | $0.6 | 0% | | Operating Profit | $40.9 | $41.9 | $(1.1) | (3)% | - Communication Services revenue was **flat YoY**, as growth in aviation services was offset by an expected decrease in fixed services due to bandwidth reallocation to the IFC business[203](index=203&type=chunk) Defense and Advanced Technologies Segment Results (in millions) | Metric | Q1 FY2026 | Q1 FY2025 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $343.7 | $299.7 | $44.0 | 15% | | Operating Profit | $71.5 | $84.0 | $(12.5) | (15)% | - Defense and Advanced Technologies revenue grew **15% YoY**, driven by a **20% increase** in product revenues from information security and space systems. Operating profit decreased due to higher SG&A, R&D costs, and a less favorable product mix compared to the prior year[206](index=206&type=chunk)[207](index=207&type=chunk) [Backlog](index=46&type=section&id=Backlog) Firm and Funded Backlog as of June 30, 2025 (in millions) | Backlog Type | Communication Services | Defense & Advanced Tech | Total | | :--- | :--- | :--- | :--- | | Firm Backlog | $2,489.8 | $1,058.9 | $3,548.7 | | Funded Backlog | $2,469.5 | $823.0 | $3,292.5 | - Total new awards were **approximately $1.2 billion** for the quarter, consistent with the prior year period[210](index=210&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had **$1.2 billion in cash and cash equivalents** and **$1.3 billion in working capital**[213](index=213&type=chunk) - Total available liquidity under revolving credit facilities was **$1.15 billion** (**$595.6 million** from Viasat facility and **$550.0 million** from Inmarsat facility)[213](index=213&type=chunk) - Cash from operating activities increased to **$258.5 million** from **$151.1 million** in the prior year period, mainly due to favorable changes in working capital[219](index=219&type=chunk) - Cash used in financing activities was **$513.8 million**, primarily due to the redemption of the remaining **$442.6 million** of the 2025 Notes[222](index=222&type=chunk) Contractual Obligations Summary (in thousands) | Obligation | Next 12 months | Thereafter | | :--- | :--- | :--- | | Operating leases | $89,227 | $590,353 | | Senior notes and other long-term debt | $613,612 | $8,550,277 | | Purchase commitments | $1,147,018 | $1,246,605 | | **Total** | **$1,849,857** | **$10,387,235** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details the company's exposure to market risks, primarily interest rate risk from variable-rate credit facilities and foreign exchange risk from international business - The company's primary interest rate risk relates to its variable-rate Credit Facilities. A hypothetical **10% increase in interest rates** would increase annual interest expense by **approximately $25.4 million**, prior to capitalization effects[237](index=237&type=chunk) - Exposure to foreign currency risk is considered insignificant, with a hypothetical **5% variance** in foreign currency rates having a minimal impact on pre-tax income[238](index=238&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2025[240](index=240&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, such controls[241](index=241&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, but management believes their resolution will not materially adversely affect financial condition or operations - The company states that while litigation outcomes are uncertain, it believes the resolution of its current pending legal matters **will not have a material adverse effect** on its business, financial condition, or liquidity[242](index=242&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended March 31, 2025 - There have been **no material changes** to the risk factors described in the Annual Report on Form 10-K for the fiscal year ended March 31, 2025[243](index=243&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) Reports no director or officer adopted or terminated a Rule 10b5-1 trading plan or non-Rule 10b5-1 trading arrangement during the quarter - During the three months ended June 30, 2025, **no director or officer adopted or terminated a Rule 10b5-1 trading plan**[244](index=244&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including stockholder agreements and CEO/CFO certifications

Core Insights - ViaSat reported revenue of $1.17 billion for the quarter ended June 2025, marking a 4% increase year-over-year and a surprise of +3.71% over the Zacks Consensus Estimate of $1.13 billion [1] - The company's EPS was $0.17, a significant improvement from -$0.26 in the same quarter last year, resulting in an EPS surprise of +440% compared to the consensus estimate of -$0.05 [1] Revenue Breakdown - Product revenues reached $344.68 million, exceeding the estimated $320.18 million, reflecting a year-over-year increase of +12.7% [4] - Service revenues totaled $826.37 million, slightly above the estimated $815.37 million, with a year-over-year change of +0.7% [4] - Communication Services revenue was $827.37 million, surpassing the two-analyst average estimate of $804.49 million [4] - Defense and Advanced Technologies revenue was $343.68 million, slightly below the two-analyst average estimate of $345.17 million [4] Stock Performance - ViaSat shares have returned +27.3% over the past month, significantly outperforming the Zacks S&P 500 composite's +1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Company Performance - ViaSat reported quarterly earnings of $0.17 per share, exceeding the Zacks Consensus Estimate of a loss of $0.05 per share, and improved from a loss of $0.26 per share a year ago [1] - The earnings surprise was +440.00%, contrasting with a previous quarter where a loss of $0.02 was reported against an expectation of $0.03, resulting in a surprise of -166.67% [2] - Revenues for the quarter ended June 2025 were $1.17 billion, surpassing the Zacks Consensus Estimate by 3.71%, and up from $1.13 billion year-over-year [3] Stock Performance - ViaSat shares have increased approximately 138.3% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.6% [4] - The current consensus EPS estimate for the upcoming quarter is -$0.09 on revenues of $1.15 billion, and for the current fiscal year, it is $0.06 on revenues of $4.64 billion [8] Industry Outlook - The Wireless Equipment industry, to which ViaSat belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, indicating potential challenges ahead [9] - Ubiquiti Inc., another company in the same industry, is expected to report quarterly earnings of $1.94 per share, reflecting a year-over-year change of +11.5%, with revenues anticipated to be $615.07 million, up 21.2% from the previous year [10]

Financial Data and Key Metrics Changes - The company reported a net loss of $56 million for Q1 fiscal 2026, compared to a net loss of $33 million in the same period of 2025, primarily due to increased depreciation and amortization and a higher income tax provision [6][20][21] - Revenue grew by 4% year over year, driven largely by double-digit growth in the defense and advanced technology segment [6][20] - Adjusted EBITDA increased by 1% year over year, reaching $408 million, primarily from double-digit growth in information security and cyber defense [6][20][21] Business Line Data and Key Metrics Changes - Communication services revenue was $827 million, flat compared to the prior year, reflecting growth in aviation and government SATCOM, offset by the sale of the energy system integration business and declines in maritime and U.S. fixed broadband [22][24] - Aviation revenue grew by 14%, driven by a 9% year-over-year increase in commercial aircraft and service [22] - The defense and advanced technologies segment saw awards of $428 million, a 22% increase year over year, with revenue of $344 million, up 15% compared to the previous year [26][27] Market Data and Key Metrics Changes - The maritime revenue declined by 5% year over year, while the fixed services and other revenue decreased by 13% due to a decline in U.S. fixed broadband subscribers [24][25] - The company ended the quarter with 172,000 fixed broadband subscribers and an average revenue per user of $115 [25] - The government SATCOM revenue grew by 4% year over year, primarily reflecting airtime services for U.S. government satellite services [22] Company Strategy and Development Direction - The company aims to optimize the integration of ViaSat and Inmarsat resources and establish growth opportunities to yield attractive cash conversion [10][11] - The focus remains on reducing capital intensity while investing for growth in target markets, with plans to exit fiscal 2026 with a solid foundation for accelerated growth and cash generation [11][30] - The company is working to deliver commitments and position franchises for sustained and profitable growth, particularly through the rollout of NexusWave and the deployment of ViaSat-three satellites [33][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the operating environment, including pressures in fixed broadband and OEM aircraft delivery rates, but expressed confidence in the company's ability to navigate these challenges [13][14] - The outlook for fiscal 2026 includes expectations for low single-digit revenue growth and flattish year-over-year adjusted EBITDA growth, with a focus on cash flow generation [29][30] - Management emphasized the importance of improving operational and capital productivity while capturing share in large and growing markets [33][34] Other Important Information - The company generated $60 million of positive free cash flow in the quarter, bringing the trailing twelve months total to $88 million [21] - The company is focused on reducing leverage, with a goal to achieve a long-term leverage ratio below three times EBITDA [32] Q&A Session Summary Question: How does Trellisware compare with mobile ad hoc networking peers? - Trellisware operates in the mobile ad hoc networking space with a proprietary networking waveform, while competitors may use WiFi-based systems. The U.S. government and allies have adopted Trellisware's waveforms as standards, driving growth [40][41] Question: Can Trellisware's technology be used for aerial platforms and weapon systems? - Yes, Trellisware's technology can extend to unmanned aerial vehicles and other platforms, although initial focus has been on specific military applications [44][45] Question: What is the general penetration of next-generation encryption products? - There is a significant upgrade cycle driven by the need for national security encryption systems to be robust against quantum computing, leading to increased sales for encryption products [46][47] Question: How does the company view the potential for spin-offs? - The company evaluates its portfolio based on synergy and capital needs, considering whether keeping businesses together provides benefits or if separating them could enhance value [59][62] Question: What is the company's approach to shared infrastructure among satellite operators? - The company believes in creating shared infrastructure to reduce capital intensity and improve efficiency, allowing multiple operators to benefit from shared resources [66][67] Question: What is the company's strategy regarding spectrum holders? - The company aims to work with spectrum holders to create a shared infrastructure model that reduces capital investments and provides a utility-like service, ensuring fair treatment among all operators [100][101]

Financial Data and Key Metrics Changes - The company reported a net loss of $56 million for Q1 fiscal 2026, compared to a net loss of $33 million in the same period of 2025, primarily due to increased depreciation and amortization and a higher income tax provision [6][19] - Revenue grew by 4% year over year, driven largely by double-digit growth in the defense and advanced technology segment [6][19] - Adjusted EBITDA increased by 1% year over year, reaching $408 million, with a 35% adjusted EBITDA margin [14][19] Business Line Data and Key Metrics Changes - Communication services revenue was $827 million, flat compared to the prior year, with growth in aviation and government SATCOM offset by declines in maritime and U.S. fixed broadband [21] - Aviation revenue grew by 14%, driven by a 9% year-over-year increase in commercial aircraft and service [21] - Defense and Advanced Technologies segment awards increased by 22% to $428 million, with revenue up 15% to $344 million, primarily from InfoSec and Cyber Defense [24][25] Market Data and Key Metrics Changes - The maritime business saw a 5% year-over-year decline in revenue, while fixed services and other revenue decreased by 13% due to a decline in U.S. fixed broadband subscribers [22][23] - The company ended the quarter with 172,000 fixed broadband subscribers and an average revenue per user of $115 [23] Company Strategy and Development Direction - The company aims to position fiscal 2026 as a launch year, focusing on optimizing the integration of ViaSat and Inmarsat resources to establish growth opportunities and enhance earnings power [10][11] - The strategy includes reducing capital intensity while investing for growth in target markets, with a goal to exit fiscal 2026 with a solid foundation for accelerated growth and cash generation [11][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges such as slow recovery in OEM aircraft delivery rates and pressures in U.S. fixed broadband until the ViaSat-three flight two is in service [13][14] - The company expects fiscal 2026 revenue to increase by low single digits year over year, with flattish adjusted EBITDA growth [28] Other Important Information - The company generated $60 million of positive free cash flow in the quarter, bringing the trailing twelve months total to $88 million [20] - Capital expenditures for the year are expected to be about $1.2 billion, including $250 million for the completion of the ViaSat-three constellation [29] Q&A Session Summary Question: How does Trellisware compare with mobile ad hoc networking peers? - Trellisware's system is based on a proprietary networking waveform designed for ad hoc mesh networking, while competitors like Silvis primarily use WiFi [39][40] Question: What is the general penetration of next-generation encryption products? - There is a significant upgrade cycle driven by the need for national security encryption systems to be robust against quantum computing [45][46] Question: Can Trellisware's technology be used for aerial platforms and weapon systems? - Yes, Trellisware's technology can extend to unmanned aerial vehicles and other platforms, although the initial focus has been on specific military applications [43][44] Question: What is the company's philosophy regarding potential business separations? - The company evaluates its portfolio based on synergy and capital needs, considering whether keeping businesses together provides benefits or if separation would be more advantageous [59][62] Question: How does the company view shared infrastructure in satellite operations? - The company believes shared infrastructure can reduce capital intensity and improve efficiency, allowing multiple operators to benefit from a common system [65][66]

Financial Performance - Viasat's Q1 FY2026 revenue increased to $1.171 billion, a 4% increase year-over-year[15] - Adjusted EBITDA for Q1 FY2026 was $408 million, a 1% increase year-over-year[15] - The company generated $60 million in free cash flow during the quarter, a $210 million improvement compared to the prior year period[12] Segment Highlights - Defense and Advanced Technologies (DAT) segment revenue grew by 15% year-over-year[15] - DAT segment awards increased by 22% year-over-year, driven by information security and cyber defense[15] - Communication Services (CS) segment Adjusted EBITDA increased 5% year-over-year[15] Backlog and Awards - Total backlog decreased to $3.549 billion, a 2% decrease year-over-year[15] - DAT backlog increased 49% year-over-year[15] - DAT awards increased 225% year-over-year in information security and cyber defense, reaching $224 million[36] Guidance - Viasat maintained its FY2026 guidance for total revenue to grow at a low single-digit rate[43] - Capital expenditures are expected to be approximately $1.2 billion[43]

[Letter to Shareholders](index=2&type=section&id=Fellow%20Shareholders) Viasat reported stronger than expected Q1 FY2026 results with 4% year-over-year revenue growth, driven by the Defense segment [Overview and Strategic Priorities](index=2&type=section&id=Fellow%20Shareholders) Viasat achieved stronger than expected Q1 FY2026 results, driven by Defense segment growth, while progressing on ViaSat-3 satellites and focusing on integration, cash flow, and deleveraging - Progress on ViaSat-3 satellites is a high priority, with VS-3 F2 expected to ship for launch by the end of September 2025 and VS-3 F3 undergoing environmental testing preparations[5](index=5&type=chunk) - The VS-3 F1 satellite services continue to scale, having served over **60,000 flights** to date[6](index=6&type=chunk) - The strategic focus for FY2026 is to optimize Viasat and Inmarsat integration, enhance competitive positions, reduce capital intensity, and improve cash flow to deleverage the balance sheet[8](index=8&type=chunk) Q1 FY2026 vs Q1 FY2025 Financial Summary | Metric | Q1 FY2026 | Q1 FY2025 | Change | Note | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | - | - | +4% YoY | Driven by double-digit growth in Defense and Advanced Technologies | | **Adjusted EBITDA** | - | - | +1% YoY | Driven by growth in information security and cyber defense | | **Net Loss** | $56 million | $33 million | Increased | Primarily due to higher depreciation, amortization, and income tax provision | [Financial Highlights](index=3&type=section&id=Q1%20FY2026%20Financial%20Results) Viasat's Q1 FY2026 revenue grew 4% to $1.17 billion, driven by Defense, while net loss widened to $56 million [Q1 FY2026 Financial Summary](index=3&type=section&id=Q1%20FY2026%20Financial%20Results) In Q1 FY2026, Viasat's revenue grew 4% year-over-year to $1.17 billion, propelled by a 15% increase in the Defense and Advanced Technologies segment, while net loss widened to $56 million due to higher depreciation and tax provisions - Revenue growth was primarily driven by a **15% YoY increase** in the Defense and Advanced Technologies segment, while the Communication Services segment revenue remained flat[13](index=13&type=chunk) - The increase in net loss was mainly due to higher depreciation and amortization and a larger income tax provision, which offset improved operating performance[13](index=13&type=chunk) - New awards in the Defense and Advanced Technologies segment grew **22% YoY**, while Communication Services awards declined **7% YoY**[13](index=13&type=chunk) Q1 FY2026 Financial Summary | Metric | Q1 FY2026 | Q1 FY2025 | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue** | $1,171 million | $1,126 million | +4% | | **Adjusted EBITDA** | $408 million | $404 million | +1% | | **Net Loss** | ($56.4 million) | ($32.9 million) | +71% | | **New Awards** | $1,183 million | $1,162 million | +2% | | **Backlog** | $3,549 million | $3,640 million | -2% | [Segment Performance](index=4&type=section&id=Segment%20Performance) Viasat's segment performance shows flat Communication Services revenue offset by strong Defense and Advanced Technologies growth [Communication Services](index=4&type=section&id=Communication%20Services) The Communication Services segment reported flat year-over-year revenue at $827 million, as aviation growth was offset by declines in fixed and maritime services, while Adjusted EBITDA grew 5% - Service revenue growth in aviation (**+14% YoY**) and government satcom (**+4% YoY**) was offset by declines in FS&O (**-13% YoY**) and maritime services (**-5% YoY**)[22](index=22&type=chunk) - Key business developments include a binding term sheet with Ligado Networks for a **$568 million settlement**, over **1,000 vessel orders** for the NexusWave service, and selection by LATAM Group to implement the Viasat Amara connectivity service[24](index=24&type=chunk) - Commercial and business aviation aircraft in service grew to approximately **4,130** and **2,050**, respectively, while U.S. fixed broadband subscribers ended the quarter at approximately **172,000**[22](index=22&type=chunk) Communication Services Metrics | Metric | Q1 FY2026 | Q1 FY2025 | YoY Change | | :--- | :--- | :--- | :--- | | **Awards** | $754 million | $811 million | -7% | | **Revenue** | $827 million | $827 million | 0% | | **Adj. EBITDA** | $322 million | $308 million | +5% | [Defense and Advanced Technologies](index=5&type=section&id=Defense%20and%20Advanced%20Technologies) The Defense and Advanced Technologies segment achieved strong revenue growth of 15% year-over-year to $344 million, driven by information security, despite a 10% decline in Adjusted EBITDA due to lower IP licensing and increased R&D - Revenue growth was primarily driven by an **84% YoY increase** in information security and cyber defense product revenues and a **20% increase** in space and mission systems product revenues[34](index=34&type=chunk) - The segment's backlog increased **49% YoY** to **$1.1 billion**[33](index=33&type=chunk) - Key contract awards include **$224 million** for high-assurance encryption products and selection by the U.S. Space Force for the Enterprise Space Terminal program to develop optical laser communications[36](index=36&type=chunk) Defense and Advanced Technologies Metrics | Metric | Q1 FY2026 | Q1 FY2025 | YoY Change | | :--- | :--- | :--- | :--- | | **Awards** | $428 million | $351 million | +22% | | **Revenue** | $344 million | $300 million | +15% | | **Adj. EBITDA** | $87 million | $96 million | -10% | [Balance Sheet, Cash Flows and Liquidity](index=6&type=section&id=Balance%20Sheet%2C%20Cash%20Flows%20and%20Liquidity) Viasat demonstrated significant improvement in cash generation, producing $258 million in operating cash flow and $60 million in free cash flow for Q1 FY2026 [Cash Flow and Capital Structure](index=6&type=section&id=Balance%20Sheet%2C%20Cash%20Flows%20and%20Liquidity) Viasat significantly improved cash generation in Q1 FY2026, with $258 million in operating cash flow and $60 million in free cash flow, while maintaining a stable capital structure and $2.3 billion in liquidity after debt redemption - The YoY increase in operating cash flow was primarily due to a decline in working capital and the timing of interest payments[38](index=38&type=chunk) - During the quarter, Viasat redeemed the remaining **$442.6 million** aggregate principal amount of its senior notes due 2025[41](index=41&type=chunk) Q1 FY2026 Cash Flow and Liquidity | Metric | Q1 FY2026 | YoY Change/Note | | :--- | :--- | :--- | | **Operating Cash Flow** | $258 million | +$107 million YoY | | **Capital Expenditures** | $198 million | -34% YoY | | **Free Cash Flow** | $60 million | +$210 million YoY | | **Net Debt** | $5.6 billion | Flat sequentially | | **Liquidity** | $2.3 billion | Consists of $1.2 billion cash and $1.1 billion undrawn credit | [Outlook](index=7&type=section&id=Outlook) Viasat reaffirms its FY2026 guidance for low single-digit revenue growth and flattish Adjusted EBITDA, with improved capital expenditure outlook and expected positive free cash flow in H2 FY2026 [Fiscal Year 2026 Guidance](index=7&type=section&id=Outlook) Viasat reaffirms its FY2026 guidance for low single-digit revenue growth and flattish Adjusted EBITDA, with an improved capital expenditure outlook of approximately $1.2 billion and an expected inflection to positive free cash flow in the second half - **Revenue:** Continue to expect low single-digit YoY growth[48](index=48&type=chunk) - **Adjusted EBITDA:** Continue to expect flattish YoY performance[48](index=48&type=chunk) - **Capital Expenditures:** Now expect approximately **$1.2 billion**, an improvement of **$100 million** from prior guidance[48](index=48&type=chunk) - **Free Cash Flow:** Continue to expect an inflection to positive free cash flow in the second half of FY2026[48](index=48&type=chunk) - Guidance by segment remains consistent: Communication Services revenue is expected to be flat, while Defense and Advanced Technologies revenue is projected to grow in the mid-teens[48](index=48&type=chunk) [Viasat Satellite Roadmap](index=8&type=section&id=Viasat%20Satellite%20Roadmap) The satellite roadmap details the progress of Viasat's key satellite programs aimed at expanding global capacity and coverage [Satellite Fleet Status and Timeline](index=8&type=section&id=Viasat%20Satellite%20Roadmap) Viasat's satellite roadmap outlines the status of key programs, with ViaSat-3 F1 and GX-10A/B in service, ViaSat-3 F2 and F3 anticipated for early to mid-2026 service entry, and GX-7/8/9 and Inmarsat-8 planned for 2027 and 2028 - The in-service date for ViaSat-3 F3 has been slightly adjusted to better reflect potential schedule uncertainties post-shipment[5](index=5&type=chunk) Satellite Fleet Status and Timeline | Satellite | Status | Anticipated Service Entry | | :--- | :--- | :--- | | **ViaSat-3 F1** | In service | - | | **ViaSat-3 F2** | Assembly, Integration & Test (AI&T) | Early 2026 | | **ViaSat-3 F3** | Assembly, Integration & Test (AI&T) | Early - Mid 2026 | | **GX-10A/B** | In service | - | | **GX-7/8/9** | Design | 2027 | | **Inmarsat-8** | Design | 2028 | [Appendix](index=9&type=section&id=Appendix) The appendix provides essential disclaimers regarding forward-looking statements and detailed financial reconciliations [Forward-Looking Statements](index=10&type=section&id=Forward-Looking%20Statements) This section provides a standard safe harbor warning, advising that statements concerning future financial performance, satellite launches, strategic plans, and market trends are forward-looking and subject to significant risks and uncertainties - The shareholder letter contains forward-looking statements regarding financial projections (revenue, Adjusted EBITDA, free cash flow), satellite performance, strategic initiatives, and market trends[60](index=60&type=chunk) - Actual results could differ materially due to various risk factors, including satellite launch or operational failures, competition, changes in government spending, and the final approval and execution of the Ligado settlement[60](index=60&type=chunk) [Financial Reconciliations and Statements](index=11&type=section&id=Financial%20Reconciliations%20and%20Statements) This section presents detailed financial data and reconciliations to supplement the main report, including consolidated statements, non-GAAP metric reconciliations, and revenue breakdowns by segment - The appendix provides detailed reconciliations for non-GAAP measures, including GAAP Net Income to Adjusted EBITDA, GAAP Net Income to Non-GAAP Net Income, and Net Cash from Operating Activities to Free Cash Flow[72](index=72&type=chunk)[73](index=73&type=chunk)[81](index=81&type=chunk) Q1 FY26 vs Q1 FY25 Financial Summary | (In millions, except per share) | Q1FY26 | Q1FY25 | YoY Change | | :--- | :--- | :--- | :--- | | **Revenues** | $1,171.1 million | $1,126.5 million | 4% | | **Net loss (GAAP)** | ($56.4 million) | ($32.9 million) | 71% | | **Adjusted EBITDA** | $408.5 million | $403.9 million | 1% | | **Diluted EPS (GAAP)** | ($0.43) | ($0.26) | 65% | Q1 FY26 vs Q1 FY25 Segment Results Summary | (In millions) | Q1FY26 | Q1FY25 | YoY Change | | :--- | :--- | :--- | :--- | | **Communication Services** | | | | | Revenues | $827.4 million | $826.8 million | 0% | | Adjusted EBITDA | $321.5 million | $307.7 million | 5% | | **Defense and Advanced Technologies** | | | | | Revenues | $343.7 million | $299.7 million | 15% | | Adjusted EBITDA | $86.9 million | $96.3 million | (10)% |