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Viasat posted strong results for fiscal year 2022

Viasat posted strong results for fiscal year 2022 (FY2022) as revenue increased 24% year-over-year (YoY) to a record $2.8 billion, GAAP net income* declined to a loss of $16 million, largely on significant acquisition expenses and amortization of acquired intangibles, and Adjusted EBITDA increased 15% YoY to a record $611 million. These financial results are consistent with the expectations we previously described for FY2022, which were intended to reflect earnings growth potential, funding for ViaSat-3 investments, balance sheet and leverage targets, and a continued emphasis on growth investments.

While we achieved our Q4 FY2022 outlook and FY2022 goals, Q4 FY2022 had some challenges. ViaSat-3 ground network expansion and delays in both NSA certification of Information Security products and FAA approval of new Tactical Data Links products within the U.S. were expected, while spot supply chain issues affecting shipment of some government products were not. In the fourth quarter we also increased research and development (R&D) spending on attractive growth opportunities.

We believe the unexpected challenges in the quarter are transient, and discretionary spends are already accounted for in our FY2023 targets.

We believe we are well positioned to achieve our prior FY2023 earnings guidance and strategic objectives driven by the expected continued growth in commercial in-flight connectivity (IFC), resolution of procurement bottlenecks in our Government Systems segment and sustained growth in our Commercial Networks segment, offset somewhat by bandwidth supply constraints in fixed broadband and growing ground network expenses as we near the ViaSat-3 (Americas) launch. We have substantial tailwinds for FY2023 and beyond in IFC due to passenger demand growth in North America, rapid growth in aircraft terminal installations for existing customers, and awards from new airline customers – including Southwest Airlines. We now have 20 airlines on board and intend to help each leverage the best, most reliable in-flight Wi-Fi to serve their needs. We are especially appreciative that our airline partners choose to grow their fleets with us not only because of what we can do now, but because they resonate with our vision of how to deliver the best connectivity in the future. Until ViaSat-3 (Americas) enters commercial service later this fiscal year, continued growth in domestic IFC demand will continue to pressure our U.S. fixed broadband business. Anticipated ViaSat-3 commercial service activation early in Q4 FY2023, along with new service plans and network innovations, are expected to enable renewed growth.

During FY2022 and continuing into FY2023 our focus has been and will continue to be on the following near-term objectives:

› Deploy the ViaSat-3 constellation as quickly as we can within our target capital structure objectives

› Complete the Inmarsat transaction

› Prudently balance earnings growth, our balance sheet, potential strategic transactions, and investments to establish the resources to meet the needs of target markets and our international partners

› Emphasize rapidly growing global mobility segments including government, aviation, maritime, and new land mobile opportunities – along with international fixed broadband applications

› Constantly test, evaluate and refine our core customer value propositions in dynamic and intensely competitive markets to build confidence in our strategic approach and financial outlook

We have chosen a bold, aggressive, challenging and even contrarian path, one that can deliver very attractive returns for all of our stakeholders – customers, employees, shareholders, and suppliers alike. The enormous potential of the business segments we target is attracting formidable new entrants, but we are competitively and technologically well-positioned, and have a history of “punching above our weight.” Our value propositions, particularly in mobility, continue to resonate with both new and existing customers seeking state-of-the-art, reliable services, especially in high-demand locations. Two key milestones on our growth path are approaching: 1) launch and commencement of service for the first ViaSat-3 satellite and 2) consummation of the Inmarsat transaction. This letter provides context for FY2022 results, affirms our FY2023 and longer-term performance targets, and provides updates on our core business segments, ViaSat-3 constellation progress, and the Inmarsat transaction. We’ll discuss headwinds and tailwinds, and cover recent early FY2023 competitive awards that help frame both our short-term outlook and our long-term strategic opportunities.


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Financial Highlights

› Established new records in revenue and Adjusted EBITDA, up 24% and 15% YoY, respectively (organic growth at 14% and 8% YoY, respectively)

› Closed RigNet, Inc. (RigNet) and Euro Broadband Infrastructure Sàrl (EBI) acquisitions in early Q1 FY2022

› Generated $506 million in operating cash flow for FY2022

› Total capital expenditure of $1.1 billion, including $568 million related to our satellite constellation investments

› Net leverage increased 0.7x YoY to 3.6x, favorable to plan, reflecting ViaSat-3 capital expenditures, including ground network activation, international expansion and increased R&D investment

FY2022 Year in Review

Business Highlights

› Reached agreement to acquire Inmarsat, an innovative, global provider of mobile satellite services

› Conducted successful ViaSat-3 ground network “alpha” testing over existing satellites

› ViaSat-3 (Americas) satellite entered thermal vacuum chamber for final stage of payload testing, subsequently completed in Q1 FY2023

› Received IFC awards from new airlines including, in Q1 FY2023, Southwest Airlines

› Increased U.S. fixed broadband revenue despite reallocation of bandwidth to mobility services to meet IFC passenger demand

› Accelerated international subscriber growth driven by residential fixed broadband services in Brazil

› Named one of Via Satellite magazine's top 10 hottest satellite companies

› Published first edition of our Environmental, Social and Governance impact report


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› Revenue for Q4 FY2022 increased 18% YoY from growth in our Satellite Services and Commercial Networks segments, including the impact of the RigNet and EBI acquisitions completed in Q1 FY2022. Organic revenue grew at 8% YoY

› A net loss of $29 million reported for Q4 FY2022 compared to net income of $7 million in the prior year period was due primarily to higher depreciation, non-recurring acquisition[1]related expenses, acquired intangible amortization and interest expense, and lower Adjusted EBITDA

› Adjusted EBITDA for the quarter declined 9% YoY primarily from higher costs associated with the ramp-up for ViaSat-3 service launch, increased investments in growth R&D enabled by earnings in prior periods, certain product shipment delays due to spot supply chain issues, and product mix changes

› Satellite Services revenue increased substantially YoY mainly due to approximately 40% more IFC aircraft in service compared to the prior year period, growth in enterprise services as a result of the RigNet and EBI acquisitions and international fixed broadband organic growth

› Consolidated awards for the quarter increased 10% YoY to $653 million, resulting in a healthy consolidated backlog of $2.0 billion

› Entered into $700 million term loan facility, increasing our liquidity to $947 million as of quarter end. Net leverage increased sequentially to 3.6x LTM Adjusted EBITDA and favorable to year end targets due to strong earnings and focused working capital management

Government Systems


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Government Systems results have been treading water largely due to direct and indirect effects of the COVID-19 pandemic, but we believe we are positioned to resume roughly double-digit revenue and orders growth in FY2023 as pandemic[1]related bottlenecks are resolved and we make further inroads into emerging growth markets, including government space hardware and services, expanded cyber security products and services, and networking solutions for Joint All Domain Command and Control (JADC2) and defense 5G networks.

Segment Highlights

› Completed spacecraft integration on the XVI satellite, the first Link 16-capable low earth orbit (LEO) satellite, which is expected to demonstrate space-based range extension and interoperability beyond line-of-sight. This program paves the way for further opportunities for Link-16 in space › After quarter-end, selected by NASA to support its Communications Services Project to develop relay capabilities for a range of orbital spacecraft, via our global Ka-band satellite network, and our “Real-Time Earth” (RTE) shared global ground system. Viasat was awarded one of the largest contracts among a competitive field of incumbent and new entrant offerors

› Achieved Department of Defense Joint Interoperability Test Command Integrated Waveform certification for our VISION network management interface, for Ultra High Frequency satellite communications


In Q4 FY2022, Government Systems awards were $196 million, a decrease of 12% YoY largely reflecting expected delays in NSA certification timing and FAA approvals of new tactical datalinks applications within the U.S., as well as lumpiness of orders. Government Systems ended FY2022 with a backlog of $846 million, excluding approximately $3.7 billion of potential unawarded Indefinite Delivery Indefinite Quantity (IDIQ) contract value.


Government Systems revenue was $278 million in Q4 FY2022, nearly flat

YoY. Service revenue was a new quarterly record, up 6% YoY due to higher revenue from aircraft connectivity services, Blue Force Tracking solutions and cybersecurity, offset by lower product revenue challenged by anticipated delays in security device certification and unanticipated spot supply chain (parts) issues in Q4 FY2022.

Adjusted EBITDA

Q4 FY2022 Government Systems Adjusted EBITDA was $66 million, a decrease of 18% YoY due to product sales mix and delays in product deliveries along with higher SG&A, new business expenses and increased R&D investments focused on government global mobile connectivity opportunities.

We are making good progress on diversifying Satellite Services to a larger proportion of mobility and growing international markets. In Q4 FY2022, the proportion of revenue other than U.S. fixed broadband reached 39%, up from 16% in the prior year period. IFC is leading this growth. Amid intense competition we won new agreements with Breeze Airways, Porter Airlines and Virgin Atlantic in FY2022, and Southwest Airlines in Q1 FY2023. We’ve also earned new orders from existing customers attracted to our cost-efficient space strategy which enables state-of-the-art service reliably across the entire network, including during peak demands at the busiest hub airports. Our network plan resonates with airlines, who are masters of complex logistics and scheduling needed to ensure the right resources in the right place at the right time. U.S. residential competition from improving terrestrial alternatives, including government subsidies, is increasing. But we believe we will have growth opportunities with new higher speed plans, offering more video streaming, once ViaSat-3 (Americas) enters commercial service – currently targeted for early Q4 FY2023.

Segment Highlights

› Record FY2022 revenue of $1.2 billion, up 37% YoY, driven by IFC services,

along with the RigNet and EBI acquisitions and fixed broadband growth.

Organic revenue grew 15% YoY

› Ended the quarter with 1,830 aircraft in service, up 550 tails (~40% YoY)

including installs for new and existing customers and inactive planes returning

to service

› New install agreements and anticipated return to service of inactive aircraft

expected to grow tails in service to about 2,400 (up ~30%) by the end of

FY2023. New activations will be paced by new aircraft deliveries


Satellite Services Q4 FY2022 revenue grew 32% YoY to $305 million from

commercial IFC service revenue growth and the RigNet and EBI acquisitions,

while U.S. fixed broadband revenue declined slightly. Higher residential ARPU

largely offset a lower U.S. fixed broadband subscriber base as we allocated

more bandwidth in the U.S. to mobility services. Sequentially, Q4 FY2022

Satellite Services revenue declined slightly primarily due to lower U.S. fixed

broadband revenue.

Adjusted EBITDA

Full year FY2022 Adjusted EBITDA grew 27% and Q4 FY2022 Adjusted EBITDA

grew 7% YoY. Q4 FY2022 Adjusted EBITDA was constrained by ViaSat-3 ground

network activation expenditures, international activities, advertising costs, and

lower margin contributions from RigNet.

1,280 1,400


1,800 1,830 1,480 1,550


1,880 1,910











Shareholder Letter | Q4 Fiscal Year 2022 6




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Awards Revenue Adj. EBITDA

Q4 FY21 Q4 FY22







Awards Revenue Adj. EBITDA

FY21 FY22

Segment Highlights

› Posted exceptional segment YoY revenue growth of 40% in Q4 FY2022 and

60% for the full year, driven by advanced ground antenna systems and

commercial air IFC terminal deliveries

› Delivered over 450 IFC terminals, weighted to the first three quarters of

FY2022 based on FAA certifications and aircraft availability

› Expanded Real-Time Earth footprint with Arctic Space Technologies

partnership in Sweden

› In April 2022, received certification from the China Civil Aviation Administration

to install IFC mobility terminals on in-country Airbus A320 series aircraft


Segment awards in Q4 FY2022 were $154 million, up 15% YoY driven by antenna

systems and demand for enterprise products from RigNet. Order volume for

IFC mobility terminals stayed strong in FY2022, including new orders from

Breeze Airways, and has been boosted in FY2023 by Southwest Airlines.


Commercial Networks Q4 FY2022 revenue was $119 million, up 40% YoY fueled by increased deliveries of mobility terminal shipments to several airlines, antenna systems products, and enterprise product contributions from RigNet.

Adjusted EBITDA

Q4 FY2022 segment Adjusted EBITDA was a loss of $32 million, expanding 22%

YoY. Full year Adjusted EBITDA loss improved 6% from a loss of $106 million to a loss of $99 million. Product mix in antenna systems combined with investments for ViaSat-4 satellite payload and mobility terminals affected Q4 FY2022 Adjusted EBITDA.

ViaSat-3 Update

The ViaSat-3 (Americas) satellite has successfully completed all testing in vacuum, which exposed the satellite to vacuum and the extreme temperature ranges it will experience on orbit. Satellite launch is anticipated to support commercial services in early Q4 FY2023. Most of the complexity in service launch is in the ground network. “Alpha” testing of the ground network is proceeding successfully, as we scale the number of active Satellite Access Nodes needed for initial service launch. The second ViaSat-3 payload (EMEA) is anticipated to complete and ship to Boeing in Q1 FY2023.

Operating Cash Flow

Viasat generated $119 million in operating cash flow during the quarter, a decline of 30% YoY and 25% sequentially. The YoY comparison primarily reflects

higher working capital outflows and, to a lesser extent, the decline in earnings. Sequentially, the decrease relates primarily to the decline in earnings.

Capital Expenditure & Investment

Q4 FY2022 capital expenditures were $279 million, an increase of 53% YoY, driven by elevated expenditures related to the ViaSat-3 (EMEA) and ViaSat-3 (APAC) programs as they continue through the build and test phases, as well as expenditures related to the completion of the ViaSat-3 (Americas) satellite and accelerating ground deployment in preparation for service launch.

Debt and Leverage

Net debt increased $183 million to $2.2 billion at the end of Q4 FY2022 while net leverage increased to 3.6x LTM Adjusted EBITDA. As we discussed in prior quarters, we expected net leverage to increase throughout FY2022 into FY2023 as we approach ViaSat-3 (Americas) service launch and continue investing in the remainder of the global ViaSat-3 constellation. Leverage at FY2022 year end was favorable to plan.

During the quarter we entered into a $700 million term loan facility which increased our liquidity to $947 million at quarter end, which includes $310 million in cash and cash equivalents and the borrowing capacity under our $700 million revolving credit facility. In FY2022, we strengthened our balance sheet and expect that our record of strong execution and forecasted earnings growth will allow us flexibility in the capital markets as we position Viasat for its next phase of growth.

Inmarsat Acquisition Update

On November 8, 2021, we announced that we entered into a definitive agreement to acquire Inmarsat. The combination will create a leading global communications innovator with enhanced scale and scope to affordably, securely and reliably connect the world. The combined company intends to integrate the spectrum, satellite and terrestrial assets of both companies into a high-capacity multi-band, multi-orbit global hybrid space and terrestrial network, capable of delivering superior services in fast growing commercial and government sectors.

During Q4 FY2022 we achieved important milestones related to the acquisition,

including agreeing with the U.K. government on certain economic undertakings

and securing certain approvals and clearances under foreign investment laws and

antitrust and competition laws in various countries around the world. Subsequent

to FY2022 we filed a definitive proxy statement with the U.S. Securities and

Exchange Commission for a special meeting of stockholders (scheduled for

June 21, 2022) to approve the issuance of shares for the transaction and certain

related matters.

We are currently targeting to close the transaction by the end of calendar 2022,

subject to satisfying closing conditions under the purchase agreement. Until

that time, Viasat and Inmarsat continue to operate as independent companies.

Financial Update

Inmarsat recently posted results for the quarter ended March 31, 2022, which

included the following highlights:

› Revenue growth of 8% YoY

› EBITDA growth of 10% YoY

› Free cash flow increased by 44% YoY

› Strong top-line growth in its Aviation and Government businesses

In April 2022, Inmarsat paid a $299 million special dividend to its shareholders.

In accordance with the terms of the purchase agreement, the cash portion of the

purchase price will be commensurately reduced from $850 million to $551 million.

Acquisition Financing

In connection with the Inmarsat transaction, we obtained committed acquisition

financing for up to $1.6 billion. The terms and conditions for the financing that we

negotiated in November 2021 remain unchanged, including caps on interest rates,

and due to the cash purchase price adjustment described above we currently expect

to utilize approximately $1.3 billion of the committed financing.

Shareholder Letter | Q4 Fiscal Year 2022 9


Rick Baldridge Mark Dankberg

Coming off strong full year financial performance in FY2022 and with the upcoming launch of the ViaSat-3 constellation and the expected closing of the Inmarsat transaction, we are well positioned for strong and durable long-term growth emphasizing global mobility.

› For FY2023 on a stand-alone basis we expect to continue generating double[1]digit revenue and Adjusted EBITDA growth, even as we carefully manage our available bandwidth resources and growing market entry and network costs ahead of the ViaSat-3 constellation entering commercial service.

› We anticipate IFC will lead Satellite Services revenue growth from both new and existing customer aircraft additions and a continuing recovery in

passenger volumes. We expect no top-line growth in fixed broadband, as growth in consumer fixed broadband in Latin America and global enterprise fixed broadband is expected to be offset by declines in U.S. consumer fixed broadband. We expect margins to be constrained by increasing expenses associated with the ramping of the ViaSat-3 ground network and higher costs internationally. We expect segment growth to be weighted to the back half of FY2023 due to the cumulative effects of aircraft IFC activations and the commencement of commercial service on ViaSat-3 (Americas) targeted for early Q4 FY2023.

› We anticipate Government Systems revenue growth can resume in FY2023

on a YoY basis, weighted to the back half of the year as pandemic-related bottlenecks are resolved. While full year YoY revenue growth is targeted in the double digits for the segment, Adjusted EBITDA growth is expected to

be somewhat lower due to product mix, and lower margin early-stage R&D efforts in attractive growth areas including space, cyber, and JADC2/5G networking. Our substantial backlog and IDIQ portfolio are expected to support this segment.

› Commercial Networks is expected to continue growing revenue but at a more moderate pace compared to FY2022. IFC mobility terminal deliveries from existing orders, additional orders from current and new IFC customers, and

backlog in ground antenna systems are anticipated to be key drivers, and also support meaningful YoY segment Adjusted EBITDA gains.

› Net leverage is expected to gradually increase throughout FY2023 as we continue investing in the upcoming ViaSat-3 constellation and associated ground network.

We also reiterate our guidance of YoY mid-teens Adjusted EBITDA CAGR relative to FY2021. Having achieved that target for FY2022 with 15% Adjusted EBITDA

growth, we are aiming for similar growth for FY2023. We also expect to achieve our stand-alone FY2025 target of doubling revenue and more than doubling Adjusted EBITDA relative to FY2020. As we near consummation of the acquisition of Inmarsat, we are also confident in the enduring benefits that transaction will deliver to our customers, shareholders and employees.

On behalf of everyone at Viasat, we want to thank our shareholders, customers, partners and employees for their continued support.