Viasat, Inc. (VSAT) Earnings

Management highlights

### Strategic Updates - Welcomed two new independent directors to the Board of Directors, both appointed to the strategic review committee, bringing deep technology, M&A, and financial governance experience - Finalized a cooperation agreement with Karen Aid Capital Management following constructive dialogue over the past year - Completed all deployments for Viasat-3 Flight 2 post-quarter end; FCC authorization is pending for service entry. Viasat-3 Flight 3 launched successfully post-quarter end, with orbit raising underway; it is expected to reach station in one month and enter service in August/September 2026, covering the Asia Pacific region - Viasat-3 satellites are the most advanced commercial satellites globally, with industry-leading adaptive beamforming, solar power generation, and thermal dissipation, foundational for future space data center development ### Key Strategic Initiatives 1. **Fleet Expansion**: Viasat-3 will roughly triple total bandwidth inventory, add adaptive beamforming flexibility for higher speeds, and expand multi-orbit maritime capabilities combining existing LEO and GEO resources. The ERA KA-band multi-orbit in-flight connectivity terminal is already through Boeing LineFit certification, and Telesat's first Pathfinder Lightspeed LEO satellite is scheduled to launch in 2026 with initial global service planned for late 2027. 2. **Equitas Shared Infrastructure Initiative**: A joint venture with Space 42 to build shared multi-tenant, multi-orbit L/S-band infrastructure for next-generation mobile satellite services, including direct-to-device (D2D) non-terrestrial network (NTN) services, global aero/maritime safety, and autonomous vehicles, with the goal of lowering capital intensity. Viasat will serve as initial technology prime contractor; the model maintains spectrum rights with participating licensees and enables 3GPP interoperable NTN services. Commercial service entry is targeted for 2029, with significant revenue expected from Viasat's technology provider role. 3. **DAT Segment Growth**: Sustain rapid DAT growth across defense and commercial markets, building on dual-use advanced technology. New technology development for Equitas is first incubated in the DAT segment. ### Operational Highlights - Achieved record new contract awards, record backlog, and record revenue/adjusted EBITDA, in line with full-year guidance, despite headwinds from the U.S. government shutdown in H2 FY26 - Generated positive free cash flow for five consecutive quarters, paid down $743 million in debt, and substantially improved leverage toward the 3.0x target - Secured a follow-on award for the U.S. government's Protected Tactical Satellite Global (PTSG) program, to deliver the first small, low-cost, maneuverable dual-band GEO tactical satellite, with meaningful follow-on domestic and international growth opportunities - Completed divestiture of Viasat's stake in Navarino in Q4 FY26 for $203 million gross proceeds

Guidance

- **Overall Fiscal Year 2027**: Expects mid-single digit consolidated revenue growth, with low single digit growth for Communication Services and mid-teens growth for DAT. Adjusted EBITDA is expected to be flat to slightly up, and results will be backloaded in the year. Excluding the revenue from the sold Navarino stake and declining intellectual property settlement income creates a 2 percentage point EBITDA headwind relative to FY26. - **Segment Specific Guidance**: Within Communication Services, aviation revenue will continue growing but growth will moderate due to increased competition; maritime vessel counts will decline modestly while the higher-value Nexus Wave installed base will grow; fixed broadband will continue declining until Viasat-3 enters service, when stabilization is expected; government SATCOM will continue growing. DAT expects continued strong revenue growth from encryption, with accelerated growth from space/mission systems and tactical networking, supported by a 23% YoY increase in DAT backlog. - **Capital Expenditure**: Fiscal 2027 reported CapEx is expected to be $950 million to $1 billion, with cash CapEx increasing modestly from $760 million in FY26 to ~$850 million. Capitalized interest will fall to $125 million to $150 million from ~$200 million in FY26. CapEx allocation: maintenance CapEx flat at ~$400 million; Viasat-3 CapEx falls $150 million to ~$50 million; success-based CapEx increases from $50 million to $150 million; growth CapEx of $225 million to $250 million is focused on non-Viasat-3 future satellites and DAT/government opportunities; Inmarsat CapEx of $325 million is included in consolidated guidance. - **Free Cash Flow and Leverage**: Expects ~$180 million in free cash flow, similar to FY26 (excluding one-time items). Management is evaluating potential capital structure restructuring following the material improvement in Viasat's credit profile from deleveraging. Significant DAT growth opportunities are expected to mature in H1 FY27, and guidance will be updated as those opportunities progress.

Segment performance

### Communication Services (Q4 FY26 YoY): Awards: $877 million, up 13%, driven by maritime, government SATCOM, and aviation. Revenue: $810 million, down 2%, which equals 67.5% of total Q4 revenue. Growth in aviation (+11% revenue, 4,450 commercial aircraft in service, +10% YoY, 1,000 unit backlog) and government SATCOM (+5% revenue, +18% YoY award/backlog growth) was offset by declines: maritime revenue fell 1% (1,315 Nexus Wave vessels in service, 1,500 in backlog), and fixed/other services fell 24% (130,000 fixed broadband subscribers remaining). Adjusted EBITDA: $287 million, down 6%, due to fixed services declines and higher R&D investment. ### Defense and Advanced Technologies (DAT, Q4 FY26 YoY): Awards: $403 million, up 2%, led by InfoSec and cyber defense growth. Revenue: $361 million, up 12%, which equals 30.1% of total Q4 revenue. Growth was driven by 24% revenue growth in InfoSec/cyber (high assurance encryption products) and 16% growth in space/mission systems (restricted payloads), with 4% growth in tactical networking. Adjusted EBITDA: $83 million, up 20%, driven by revenue growth and operating leverage, partially offset by incremental R&D. ### Full-Year FY26 Consolidated: Total revenue: $4.6 billion. Adjusted EBITDA: $1.55 billion. Free cash flow: $597 million ($177 million excluding the Legato lump sum payment), with positive free cash flow in each of the last five quarters. Net debt: $4.8 billion, net leverage ratio improved to 3.1x, down from prior year levels.

Risks & headwinds

- Increased competition in the commercial aviation in-flight connectivity market is expected to moderate Viasat's aviation revenue growth rate in FY27 - Maritime revenue growth has not yet reached the inflection point management expected, with sustained growth now pushed to later in FY27 - Fixed residential broadband services have not stabilized as expected, and continued declines are forecast until Viasat-3 enters service - Forward-looking statements around future satellite deployments, service entry, and Equitas development are subject to risks and uncertainties that could cause actual results to differ materially from projections - Scheduling for launch and satellite bus procurement is constrained by current manifest congestion, which could impact timelines for new satellite and Equitas deployment - Achieving the targeted net leverage ratio of below 3.0x requires additional work after reaching 3.1x at the end of FY26

Analyst Q&A

• Q: What is Viasat's value capture strategy for Equitas, and what partners is Viasat seeking for the initiative? /

  A: Equitas is modeled after shared terrestrial tower infrastructure, enabling multiple satellite spectrum licensees to share a common LEO infrastructure to reduce capital costs and improve spectrum efficiency, rather than each operator building their own system. Viasat is seeking two main groups of partners: regional satellite/terrestrial spectrum operators that can benefit from sharing the infrastructure to reduce their own costs, and partners to provide other elements of the infrastructure including satellite buses and launch services. Viasat will lead on core network payload and beamforming technology. Equitas is structured as an independent growth company that can scale with demand for mobile satellite and D2D services.

• Q: What is the status of the strategic review of the DAT business, and how would vertical integration benefits be preserved if a spinoff occurs? /

  A: Management has completed initial evaluation of a potential DAT spinoff, and confirms DAT is a high-growth appreciating asset that creates value either as a standalone business or within Viasat. The core advantage of the current structure is that vertical integration between DAT technology development and Viasat's satellite services business supports dual-use opportunities like PTSG, which require both technology development and end service operations. Management will retain DAT within Viasat as long as the integrated structure provides better positioning for the growing space and mission systems market, maintaining optionality for a potential future spinoff.

• Q: How does Equitas affect Viasat's flexibility to capture shareholder value from its spectrum assets, in light of high current spectrum valuations? /

  A: Equitas provides a capital-efficient vehicle for Viasat to bring its spectrum to market, rather than requiring Viasat to develop the infrastructure alone. Since Viasat retains full ownership of its spectrum licenses within the Equitas model, Viasat has full flexibility to pursue the highest value outcome for shareholders: it can choose to develop spectrum through Equitas, sell all or part of its spectrum, or a combination of the two across different geographies or market segments. Currently management sees a strong case for developing spectrum via the capital-efficient Equitas model to capture long-term growth value.

• Q: What existing Viasat capabilities position the company to enable space data centers, and what is Viasat's role in this opportunity? /

  A: Viasat's Viasat-3 satellites already deliver end-of-life power generation of 25 kilowatts, the largest of any commercial satellite, giving Viasat deep experience in large deployable solar structures, spacecraft stabilization for large structures, and high-capacity thermal dissipation — all core enabling technologies for space data centers. Viasat does not plan to build and operate space data centers itself; instead, the opportunity for Viasat is to partner with data center operators to develop and deploy the required enabling space technologies, leveraging Viasat's existing expertise, with opportunities coming from both government and commercial organizations, including Viasat's Equitas partner Space 42 and its parent AI-focused organization G42.