VIASAT INC Annual Report - How They Did This Year

I’ve put together this guide to help you understand Viasat’s performance this year. Instead of reading hundreds of pages of dense filings, you can use these key takeaways to decide if the company fits your investment goals.

1. What does this company do?

Viasat is a global communications company providing high-speed satellite internet and secure networking. Think of them as a bridge for connectivity, providing internet for airplanes, ships, and government defense operations. They are currently integrating their massive acquisition of Inmarsat, which has expanded their global satellite footprint and diversified their income beyond North American home internet.

2. How the Business is Organized

• Communication Services: This is their "connectivity" arm, covering in-flight Wi-Fi for airlines, maritime internet for ships, and home internet.
• Defense and Advanced Technologies: This is their "security" arm, where they build encryption, cybersecurity tools, and specialized satellite hardware for the military.

3. Major Wins and Operational Updates

• Aviation Growth: Viasat is successfully scaling their in-flight Wi-Fi. As of March 31, 2026, they serve approximately 4,580 commercial aircraft, up from 4,120 last year.
• Defense Momentum: This segment is a major growth engine. New contract awards grew from $0.6 billion in 2018 to $1.6 billion in fiscal year 2026, reflecting strong demand for secure defense communications.
• Satellite Expansion: The second ViaSat-3 class satellite (F2) launched in November 2025, followed by the third (F3) in April 2026. Both launches significantly expand the company's global capacity.

4. How They Make Money (And the Risks)

Viasat earns money through long-term service contracts and custom hardware.

• The "Contract" Model: Much of their revenue is predictable, coming from long-term government contracts and recurring fees from airline and maritime partners.
• Strategic Shifts: The company is moving bandwidth away from U.S. home internet to prioritize the faster-growing in-flight Wi-Fi market. While this caused a $133.9 million revenue drop in home services, aviation services grew by $143.2 million, effectively offsetting that loss.

5. Financial Health: The Debt Situation

This is the most critical area for investors to monitor.

• Debt Reduction: Viasat is making progress, reducing total debt from $7.2 billion last year to $6.6 billion as of March 31, 2026.
• Interest Costs: Lower debt helped them cut interest expenses by $61.7 million compared to last year.
• One-Time Boost: A $420 million legal settlement with Ligado provided a $152.5 million boost to their interest income this year.
• Future Obligations: They have nearly $2 billion in "intangible asset" costs from past acquisitions. These costs will be spread over the coming years, with roughly $260 million deducted from their books annually through 2029.

6. The Competitive Landscape & Risks

• Asset Health: Viasat regularly evaluates the value of their satellite fleet. Last year, they took a $169.4 million charge for exiting certain markets in Europe, the Middle East, and Africa.
• The "Innovation Trap": Developing new satellite technology takes four years or longer. If a design fails or has defects after launch, it can result in significant financial charges.
• Regulatory Risks: Viasat relies on government-granted rights to use specific radio frequencies. If these spectrum rights are reallocated to 5G providers, it could impact the company's ability to operate at full capacity.

7. Future Outlook

Viasat is shifting from a home internet provider to a global leader in mobile connectivity. Their future depends on generating enough cash to pay down their $6.6 billion debt while funding expensive new satellites. They increased research and development spending by 16% to $164.9 million this year to support these programs.

Investor Takeaway: When evaluating Viasat, watch to see if the growth in aviation and defense continues to outpace the costs of maintaining their satellite fleet and the ongoing accounting charges from their acquisitions. Focus on their ability to manage debt levels while successfully scaling their high-margin connectivity services.