Viasat Q2: Defense Grows 20%, Aviation Set to Shrink by 2028

Viasat grew second-quarter revenue 3% to $1.2 billion, but customer announcements will eventually strip 15% to 20% from its commercial aviation revenue, and the company expects that business to decline in fiscal 2028. The disclosure landed alongside a net loss of $129 million, widened by $68 million from the prior year. The defense engine is running; the question is whether it can carry the rest.

What drove the quarter?

Defense and Advanced Technologies, or DAT, expanded while the core communications business contracted. The split:

• DAT revenue rose 20% to $365 million; DAT adjusted EBITDA climbed 57% to $76 million.
• Communication Services revenue fell 3% to $815 million.
• Adjusted EBITDA companywide declined 4% to $370 million.

Chief Financial Officer Gary Chase attributed the wider net loss primarily to a higher income tax provision, increased research and development spending, and higher stock-based compensation. Those are accounting and investment items, not operational deterioration, but they still consumed cash-equivalent value in the quarter.

Free cash flow increased 14% to $78 million, built on operating cash flow of $285 million against capital expenditures of $207 million. Net debt fell to roughly 3.2 times trailing adjusted EBITDA, an improvement of 0.3 turns from a year earlier. Leverage is easing; it remains far from trivial.

How exposed is the aviation business?

Aviation revenue grew 8% in the quarter, and Viasat ended the period with about 4,490 commercial aircraft in service, up 6% year over year but down slightly from the prior quarter. Average revenue per aircraft rose 3%.

Chase said the company expects aviation revenue to decline in fiscal 2028 from fiscal 2027 levels and is evaluating the trajectory and potential cost mitigation. Pressed by an analyst, he acknowledged that customer announcements would ultimately affect 15% to 20% of aviation revenue, though he said the impact would not be abrupt. "Not abrupt" softens the message; it does not shrink the number.

The in-flight connectivity backlog stood at roughly 660 commercial aircraft after installations and removals tied to those same announcements. Chase expects continued installations and awards in the second half of fiscal 2027, alongside slight sequential declines in aircraft counts.

Elsewhere in Communication Services, the picture darkens. Maritime revenue fell 8% as vessels in service declined, even with 1,990 NexusWave vessels in service and an order book above 1,500. Fixed services and other revenue dropped 23%, leaving 100,000 U.S. fixed broadband subscribers.

Do the backlog and forecasts hold up?

Companywide awards totaled about $1.1 billion, down 24% year over year, though the prior-year figure included a $234 million SouthPAN award. Backlog rose 7% to $4.2 billion, led by 20% growth in DAT backlog. Tactical networking revenue rose 31%; InfoSec and cyber product revenue grew 27%.

CEO and Chairman Mark Dankberg said the company expects about $2 billion in DAT awards for the full fiscal year, against $1.6 billion last year. That is a target, not a booked result.

For fiscal 2027, Viasat now expects adjusted EBITDA approximately flat year over year, free cash flow above $225 million, and capital expenditures of $850 million to $900 million. The company still guides to mid-single-digit total revenue growth, with Communication Services roughly flat and DAT growing in the mid-to-high teens. Chase said stronger DAT revenue, adjusted EBITDA and free cash flow should arrive in the second half as awards and backlog convert into sales.

What about the satellites and the strategic review?

Dankberg said both ViaSat-3 flights two and three are in service and performing as expected, and the company is adding ground-network capacity and migrating terminals to the satellites. After the residential launch of ViaSat-3 Flight 2 in early October, Viasat began targeted plans to stabilize fixed broadband over the next few quarters, though Dankberg cautioned the U.S. residential market remains competitive and volatile. Fiscal 2027 capex includes $75 million for ViaSat-3, most of it already incurred in the first quarter.

The strategic review remains active. Dankberg said the company is evaluating options to create shareholder value and that the review committee's role has not changed. He offered no timeline. The planned shared-infrastructure venture with Space42, Equatys, still needs regulatory approvals; potential participants could subscribe to capacity, trade capacity from their own satellites, or invest. He did not give a timetable for partners or satellite launches.

Management says Viasat is shifting from infrastructure construction toward monetization and cash generation. The guidance assumes the shift arrives on schedule; the aviation number, 15% to 20%, is the caveat attached to every promise in this release.