Viasat, Inc. Q2 FY2026 earnings call

Key Points

• Financial Performance: Q2 FY '26 net loss was $61 million, an improvement from $138 million in Q2 FY '25. Revenue grew 2%, with Communication Services up 1% and DAT up 3%. Adjusted EBITDA increased 3%.
• ViaSat-3 Progress: ViaSat-3 Flight 2 launch was scrubbed but ULA aims to launch in a week. Flight 2 and 3 are key milestones for the company.
• DAT Backlog: DAT backlog reached a record $1.2 billion, up 31% year-over-year.
• Capital Structure: Continues to strengthen capital structure, addressing debt maturities and evaluating portfolio reviews.
• Free Cash Flow: Q2 free cash flow was $69 million, with trailing 12-month free cash flow at $147 million. Awards in Communication Services were $1.03 billion, up 35%, and in DAT were $467 million, down 9%.

In Q2 FY '26, revenue was $1.1 billion. The Communication Services segment generated revenue of $837 million, a 1% year-over-year increase, accounting for approximately 76.09% of total revenue. It saw growth in aviation and government SATCOM, but fixed services and other declined. The Defense and Advanced Technologies (DAT) segment had revenue of $304 million, a 3% year-over-year increase, making up about 27.64% of total revenue. DAT had growth in Infosec and cyber but experienced declines in SMS and tactical networking.

Guidance

• Fiscal '26 revenue expected to be up low single digits year-over-year with flattish adjusted EBITDA year-over-year and quarter-to-quarter variability.
• Government shutdown in Q3 may delay DAT awards by up to $100 million and impact adjusted EBITDA by up to $20 million.
• Capital expenditures for the year are expected to be about $1.2 billion, with $400 million within Inmarsat. Anticipate negative free cash flow in the second half due to large CapEx spend, but expect positive free cash flow for fiscal '27.

Risks

• ULA scrubbed ViaSat-3 Flight 2 launch, delaying the milestone.
• Government shutdown in Q3 may delay DAT awards and impact adjusted EBITDA.
• Potential material differences between forward-looking statements and actual results due to various risks and uncertainties.

Q: Brent Penter asked about the evaluation of split, vertical integration, and spectrum value.

A: Mark Dankberg discussed continuous evaluation of split, vertical integration examples like Europe's IRIS², and spectrum being global with various monetization considerations.

Q: Brent Penter inquired about Equitus project.

A: Mark Dankberg explained Equitus helps bring modern infrastructure, shares infrastructure benefits, and is in discussions with regional operators.

Q: Sebastiano Petti asked about Space42 and Equitus milestones.

A: Mark Dankberg said progress is being made, with details to come on partners and milestones.

Q: Michael Crawford asked about HaloNet, crypto, and cash received.

A: Mark Dankberg and Shawn Duffy discussed HaloNet applications, crypto impact, and cash recognition as deferred revenue and interest income.

Q: Ryan Koontz asked about communication services backlog and aviation environment.

A: Mark Dankberg and Garrett Chase explained backlog is related to customer relationships and usage, and aviation trends involve greater penetration and monetization techniques.

Q: Colin Canfield asked about spectrum valuation and defense bookings.

A: Mark Dankberg talked about spectrum valuation factors and European defense demand related to sovereignty.

Q: Xin Yu asked about European spectrum renewal and ViaSat-3 impact.

A: Mark Dankberg discussed European spectrum renewal process and ViaSat-3's bandwidth and growth potential.