The ViaSat-3 constellation. Photo: Viasat

Viasat’s shares were up more than 30% on Thursday after the satellite operator performed better than expected in the first quarter of fiscal year 2025 and slightly raised the low end of its guidance for the year. 

Viasat reported Q1 fiscal year 2025 results on Aug. 7, reporting $1.1 billion in revenue. This was an increase of 44% year-over-year with the contribution from Inmarsat. Comparing combined revenue to last year, growth was 6%. 

“Our ongoing services revenue, coupled with expected activations in aviation, good Defense and Advanced Technology orders, existing and new backlog and order pipeline, enable us to increase our outlook for fiscal year 2025,” CEO Mark Dankberg told investors on Wednesday. “We’re pleased with the financial results this quarter, but remain focused on our agenda … including overcoming the ViaSat-3 F1 anomaly.” 

Viasat also increased its adjusted EBITDA by 16% year-over-year with incremental revenue in defense and and double-digit adjusted EBITDA growth in both aviation and government satcom business lines.

The company also narrowed its net loss in Q1 to $33 million compared to net loss of $77 million in the same time last year with improved operating performance. 

Viasat reorganized its reporting segments and this was the first quarter with new segments Communication Services and Defense and Advanced Technologies. 

Viasat President Guru Gowrappan told Via Satellite the company wanted to clearly show the value of the Defense business and give investors better visibility into the growth and size of that segment. 

Post-Inmarsat acquisition, “We have a much larger business, but you didn’t see how big our product and defense product businesses were. Some of these products should be trading at a much higher value, so we are showing investors what that value means for them,” Gowrappan told Via Satellite on Wednesday. 

Communication Services 

Communication Services revenue in the first quarter increased 48% YoY to $827 million with the Inmarsat acquisition. However, combined segment revenue decreased 2% YoY, with the decline of U.S. fixed broadband. 

Communication Services encompasses the company’s broadband and narrowband satcom services across all markets including aviation, residential broadband, government, enterprise, etc. All legacy Inmarsat businesses are included in this segment.

Fixed services, which includes residential broadband, was down 18% year-over-year on a combined basis. Viasat reported its number of subscribers for the first time in years, reporting 257,000 subscribers. Industry analyst Tim Farrar noted that the company’s broadband subscribers peaked at 603,000 subscribers in September 2020. 

This segment faces competition from SpaceX’s Starlink constellation, and is also impacted by the ViaSat-3 anomaly. Viasat is focusing the limited capacity from the satellite on its aviation business instead of residential broadband. 

Service revenue is growing in aviation and government to offset the decline in fixed broadband. Aviation leads the Communications segment, with $257 million in revenue during the quarter. Commercial and business aviation ended the quarter with approximately 3,750 and 1,850 aircraft in service, respectively. 

Gowrappan said Viasat continues to secure new wins in aviation, with about 350 new aircraft going through contracts that are not yet in the backlog, including six new airlines. 

He confirmed that Viasat is on track to meet its goal of 4,200 planes in service by the end of the current fiscal year, despite OEM delays with aircraft deliveries (mainly Boeing), which impact the timeline for installing connectivity systems onboard. The Boeing delivery delays will cause a delay to service revenue coming online. 

Defense and Tech 

In the first quarter, Defense and Advanced Technologies revenue was $300 million, a 37% increase year-over-year. Segment product revenue grew even faster, at 45% year-over-year. 

Defense and Advanced Technologies products include encryption, cybersecurity, antenna systems, modems, and waveforms. 

Viasat reported that licensing agreements within advanced technologies business contributed to the largest component of the product revenue increase. The tactical networking business grew revenue as well. 

Viasat reported demand and contract wins in Type 1 high assurance encryption products; classified space payloads and missions; and antenna systems. 

Operator Updates Guidance, Maintains ViaSat-3 Schedule 

Viasat slightly raised its fiscal year 2025 outlook, with expectations for continued demand in defense and mobility solutions. The operator expects flat to slightly up year-over-year combined revenue growth, excluding a one-time benefit from a $95 million litigation settlement last year. This is benchmarked against combined revenue for fiscal year 2024 of $4.5 billion. 

The operator also maintained its guidance to reach positive free cash flow by the end of the first quarter of fiscal year 2026. 

Viasat is progressing toward launch for the second and third satellites in the ViaSat-3 constellation, after the first satellite recently entered service. 

ViaSat-3 F3 recently completed thermal vacuum testing and is expected to enter service in mid- to late 2025. ViaSat-3 F2 has completed mechanical environmental testing and is expected to enter service in late 2025.