ViaSat(US:VSAT)2025-02-06 23:30Financial Data and Key Metrics Changes - Revenue for the third quarter was $1,120 million, essentially flat compared to the prior year quarter, reflecting declines in fixed broadband and product revenue within Communications Services, offset by strong growth in Aviation and Defense segments [29][32] - Adjusted EBITDA was $393 million, an increase of 3%, primarily driven by growth in the Defense and Advanced Technologies segment [30][36] - Net loss increased to $158 million from $124 million a year ago, mainly due to a non-cash loss on extinguishment of debt [29][30] - Operating cash flow was $219 million, up more than 60% year over year, driven by decreased working capital and lower cash taxes [30][31] - CapEx was $253 million, down 40% year over year from $421 million [31] Business Line Data and Key Metrics Changes - Aviation service revenue increased approximately 12% year over year, with a total of 3,950 aircraft in service, up about 130 sequentially [25][32] - Defense and Advanced Technologies segment grew revenues almost 20% year over year, with awards up 49% and backlog up 26% [8][26] - Maritime revenue declined 8% due to legacy L band offerings and ARPU pressure [32][34] - Fixed broadband services revenue was down 6%, reflecting subscriber declines [32][34] Market Data and Key Metrics Changes - The aviation market saw a 13% year-over-year growth in aircraft in service, indicating strong demand [5][6] - Government SATCOM business grew revenue by 4%, driven by strong demand for connectivity [32][34] - The backlog was $3.5 billion, down $181 million due to the removal of the Energy Services System Integration backlog [28][32] Company Strategy and Development Direction - The company aims to sustain and enhance its strong positions in attractive and growing satellite services and technology markets [5][10] - Focus on reducing leverage and generating free cash flow as top priorities for capital allocation [17][18] - The company is targeting a return to growth in its maritime business in fiscal year 2026, supported by the rollout of Nexus Wave and the entry of ViaSat-3 flight two into service [9][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal year 2025 guidance, with expectations for revenue to be flat to slightly up year over year and adjusted EBITDA growth in the mid-single digits [36][39] - The company is optimistic about the long-term growth opportunities in the satellite communications industry, emphasizing the importance of partnerships and cooperation in space [41] - Management acknowledged challenges in the U.S. fixed broadband business but remains focused on building earnings power in aviation and government SATCOM [24][39] Other Important Information - The company completed the sale of the Energy Services System Integration business, which generated approximately $50 million in annual revenue but had minimal strategic synergies [31][32] - The company is making steady progress on integrating capacity from multiple satellite operator partners to expand coverage and capacity [6][10] Q&A Session Summary Question: Update on Flight two and Flight three - Management confirmed that Flight two is planned for The Americas and Flight three for Asia Pacific, with flexibility in satellite locations based on customer demand [46][47] Question: Impact on in-flight connectivity contracts - Management indicated no impact on customer contracts due to the timing of Flight three [52] Question: Fiscal year 2026 revenue growth and EBITDA expectations - Management clarified that expectations for modest adjusted EBITDA growth in fiscal year 2026 are based on closer insights into the business [53] Question: Update on DAT asset sales - Management is focused on reducing debt and unlocking value in equity but did not comment on specific transactions [62] Question: Framework for spectrum monetization - Management is modeling different monetization options for spectrum and will make decisions based on public interest benefits and market conditions [65][66]