ViaSat(VSAT) - 2026 Q1 - Quarterly Results

Letter to Shareholders Viasat reported stronger than expected Q1 FY2026 results with 4% year-over-year revenue growth, driven by the Defense segment Overview and Strategic Priorities 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] - The VS-3 F1 satellite services continue to scale, having served over 60,000 flights to date[6] - 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] 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 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 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] - 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] - New awards in the Defense and Advanced Technologies segment grew 22% YoY, while Communication Services awards declined 7% YoY[13] 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 Viasat's segment performance shows flat Communication Services revenue offset by strong Defense and Advanced Technologies growth Communication Services 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] - 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] - 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] 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 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] - The segment's backlog increased 49% YoY to $1.1 billion[33] - 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] 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 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 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] - During the quarter, Viasat redeemed the remaining $442.6 million aggregate principal amount of its senior notes due 2025[41] 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 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 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] - Adjusted EBITDA: Continue to expect flattish YoY performance[48] - Capital Expenditures: Now expect approximately $1.2 billion, an improvement of $100 million from prior guidance[48] - Free Cash Flow: Continue to expect an inflection to positive free cash flow in the second half of FY2026[48] - 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] Viasat Satellite Roadmap The satellite roadmap details the progress of Viasat's key satellite programs aimed at expanding global capacity and coverage Satellite Fleet Status and Timeline 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] 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 The appendix provides essential disclaimers regarding forward-looking statements and detailed financial reconciliations Forward-Looking Statements 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] - 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] Financial Reconciliations and Statements 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][73][81] 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)% |