ViaSat Announces Third Quarter Fiscal Year 2016 Results

Feb. 9, 2016

ViaSat Inc. announced financial results for the fiscal third quarter ended December 31, 2015.

"Our third quarter results show strong revenue and earnings growth in Satellite Services and Government Systems segments – driven from our ability to  create value in broadband markets through superior bandwidth economics," said Mark Dankberg, ViaSat chairman and CEO. "With revenues, earnings and margins still rising four years after ViaSat-1 entered service, it's clear that leading the global industry in satellite network capacity efficiency offers compelling growth prospects for ViaSat. Our new launch agreement with Arianespace builds greater confidence in bringing ViaSat-2 into service by our mid-2017 calendar year target. With double the productivity of any other satellite broadband system, ViaSat-2 provides the resources to improve our services; grow revenues, earnings and margin; expand our addressable consumer market; and further accelerate our momentum in global mobility. The ViaSat-3 class satellites are even more transformational. With total network capacity and data delivery costs that are expected to be approximately four times better than ViaSat-2, ViaSat-3 will be the world's first Terabit per second satellite – offering global connectivity with unrivaled economics and coverage flexibility."

Companion Announcements from February 9, 2016
In addition to its third quarter fiscal year 2016 results announcement, ViaSat today announced:

• ViaSat and Eutelsat have entered into an agreement to form a European broadband partnership that includes establishing a new retail consumer entity led by ViaSat with a 51% ownership position. ViaSat will also acquire a 49% interest in Eutelsat's existing European wholesale business.
  
• ViaSat secured two launches with Arianespace – one for ViaSat-2 and one for a ViaSat-3 class satellite. The transition of the ViaSat-2 launch to Arianespace builds confidence in the launch schedule to meet ViaSat's goals of bringing new high-speed service plans across North and Central America, the Caribbean and the North Atlantic Ocean by the middle of calendar year 2017. ViaSat has also designated a ViaSat-3 class satellite launch to long-term partner, SpaceX, using their Falcon Heavy.
  
• ViaSat unveiled the ViaSat-3 platform, the next big step for the Company to deliver a global broadband network with enough network capacity to enable more consumer choice with an affordable, high-speed, high-quality internet and video streaming service. ViaSat has started work on the first two ViaSat-3 payloads, and work has begun with Boeing Satellite Systems on the associated satellite bus platforms. Both satellites are expected to be integrated and delivered by Boeing in 2019.
  

Satellite Services
In the fiscal third quarter, ViaSat's Satellite Services segment achieved record high revenues, up 14% year-over-year. Revenue growth spanned all market sectors, with residential broadband offerings and emerging in-flight connectivity being the primary drivers. Adjusted EBITDA performance for the third quarter grew at more than double the rate of revenue, increasing 33% over last year's period, helping to drive the segment's Adjusted EBITDA margin up year-over-year to 45%. Highlights for the quarter include:

• Consumer subscribers were at 687,000 at the end of the fiscal third quarter, up 2% year-over-year.
  
• A continued focus on higher value plans drove another quarter of average revenue per user (ARPU) increase, up by 7% year-over-year to $56.74, a new record high. 
  
• ViaSat unveiled the Exede^® WiFi Modem offering download speeds up to 25 Mbps; no other U.S. satellite ISP today offers speeds this fast for residential use. ViaSat also introduced new Exede Business plans, offering affordable high-speed internet service options for primary connectivity, plus a new internet back-up plan.
  
• In-flight internet service expanded to 446 commercial aircraft as of ViaSat's fiscal third quarter, a 58% year-over-year increase. ViaSat's ability to deliver a free "best in air" connectivity and video streaming experience, especially on JetBlue and Virgin America, is gaining momentum among airlines and passengers with over one million device connections made per month, and is also helping to engage internet and media sponsors.
  
• JetBlue, in cooperation with ViaSat, is now going to allow passengers to access ViaSat's Ka-band satellite-supported service from gate-to-gate rather than only while above 10,000 feet.
• In Business Aviation, ViaSat formed a strategic partnership with Jet Aviation St. Louis to develop the first-ever hybrid Ku-/Ka-band radome to advance in-flight connectivity and video streaming on Gulfstream large cabin business jets. ViaSat also announced it is integrating its terminal and global Ku-band internet service with Rockwell Collins to advance in-flight cabin and flight deck connectivity.
  

The Satellite Services segment achieved strong year-to-date revenue growth of 12% to $413.8 million, and first nine months' Adjusted EBITDA growth of 16% to $180.0 million compared to the same period last year. Excluding the $39.7 million benefit from the fiscal 2015 second quarter portion of the Loral settlement, Satellite Services segment revenues grew 19% and Adjusted EBITDA grew 55% on a year-to-date basis compared to the same period in fiscal year 2015.

Commercial Networks
ViaSat's Commercial Networks segment experienced decreases in quarterly revenues and Adjusted EBITDA compared to the same period last year as the segment's largest infrastructure program for nbn™ transitions to service launch. Adjusted EBITDA results were also impacted by the segment's rising research and development (R&D) activities. Highlights for the quarter include:

• ViaSat received initial orders for residential terminals and other at-home equipment products from nbn, for its commercial service launch, expected in April 2016. 

The Commercial Networks segment year-to-date revenue and Adjusted EBITDA also declined compared to the same period last year.

Government Systems
In the third quarter of fiscal year 2016, ViaSat's Government Systems segment revenues and Adjusted EBITDA reached record highs. Revenue increased to $151.1 million, or 15% growth year-over-year, while Adjusted EBITDA grew 16% to $37.5 million compared to the prior year period. Revenue growth reflected an increase in government satellite communications systems products and tactical data link products sales, partially offset by lower information assurance products revenues. Adjusted EBITDA reflected the Company's expanded service revenue base as government mobile broadband platforms continue to grow, with nearly 400 government aircraft in service, as well as decreased R&D. Highlights for the quarter include:

• The continuing Appropriations Resolution, ended December 11, 2015, negatively impacted U.S. government ordering flows through the Company's fiscal 2016 third quarter, improving prospects for anticipated near-term contract awards. 
  
• ViaSat won an award from Boeing for the production of approximately 90 Link 16 Small Tactical Terminals for the Lots 5 and 6 of the AH-64E Apache Guardian Attack Helicopter production line. 
  
• ViaSat introduced the industry's first single-port 100 Gbps encryption device designed to scale from 10 to 40 to 100 Gbps, enabling customers to meet the increasing demand for bandwidth.
  
• In cybersecurity services, ViaSat received a CSO50 Award for its Cyber-intrusion Auto-response and Policy Management System work, as part of a U.S. Department of Energy grant study.
  
• ViaSat partnered with Cobham SATCOM to introduce new product and service offerings to the Mobile Satellite Services market. The Company also signed a Memorandum of Agreement with Addvalue to pursue new products and applications for use over ViaSat's L-Band managed service terminals.
  

On a year-to-date basis, ViaSat's Government Systems segment revenues grew 15% to a record high of $443.1 million and Adjusted EBITDA grew 19% to a record high of $100.1 million, compared to the same period last year.