ViaSat, Inc.

Please stand by. Your program is about to begin. My name is Meg, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Viasat's third quarter fiscal year 2025 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. I would now like to turn the call over to Ms. Lisa Curran, Vice President of Investor Relations. Ms. Curran, you may begin your conference.

Thanks, Meg. We will present certain non-GAAP financial measures on today's call. Information required by the SEC relating to these non-GAAP financial measures is available on our Q3 fiscal year 25 shareholder letter on the investor relations section of our website. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. We will also make forward-looking statements within the meaning of the federal securities laws including statements regarding events or developments that we expect or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, and actual results might differ materially from any forward-looking statements that we make today. Information regarding these factors that may cause actual results to differ materially from these forward-looking statements is available in our FCC findings and annual report on Form 10-K. These forward-looking statements speak only as of the date they are made, and we do not assume any obligation to update any forward-looking statements. With that, I'll turn it over to Mark Dankberg, Chairman and CEO.

Good afternoon, and thanks for joining us today. With me, along with Lisa, we have Gary Chase, our Chief Financial Officer, and Sean Duffy, our Chief Accounting Officers. As always, we encourage reading the shareholder letter and referencing the slides we posted on our website earlier this afternoon for more details. Our third quarter fiscal year 2025 results are good and moderately better than expectations, and we remain on track for our full year guidance. Gary will go into more details on those results, which are a blend of good growth in our strongest target markets, transitions to enhanced value propositions in maritime, and expected declines in fixed broadband. I'll give a quick overview of some of the factors enabling our growth and progress on areas we expect can sustain and accelerate that growth. Gary will show that we are also making steady progress in achieving capital synergies and operating cost efficiencies, supporting earnings, and driving cash conversion. We intend to sustain and enhance already strong positions in attractive and growing satellite services and technology markets. I'll spend a few minutes on this, and then Gary will cover the financial results and our growth outlook before we take questions. In aviation, commercial in-flight connectivity aircraft in service grew about 13% year-over-year. Business jets grew about 18%, and backlog grew and faster at 22% year-over-year. Aviation continues to be an attractive growth market for us, We have a compelling value proposition in invite connectivity and are expanding our customer base both in the U.S. and internationally. We've made very steady progress in integrating capacity from multiple satellite operator partners to expand our coverage and capacity. We're winning new airlines as well as new fleets with existing customers and going increasingly global with our full, fast, and free service plans for those airlines choosing that business model. And we're meeting service level agreements even on the busiest routes and at major hub airports. Customers are responding and, for instance, as we just announced, we're very pleased to expand to full fleet with Starlux in Asia Pacific. You'll also see in our online material a report from a Hawaii travel news website that recently described their experience with Viasat Wi-Fi on a United 737 MAX from Los Angeles to Hawaii. They got 130 megabits per second speeds on a Viasat 3 served plane that was testing our newest Wi-Fi technology free to passengers. We're anticipating even better performance with Viasat 3 flights 2 and 3. ISAT-3 Flight 1 and its ability to dedicate satellite beams to each individual plane has served over 10,000 flights today. On business aviation, we're upgrading legacy and Marsat jets to uncapped speeds and usage volume and continuing to grow planes in service. Our defense and advanced technology segment grew revenues almost 20% year-over-year in the third quarter. with each of its four business areas all increasing following exceptional new orders in the second quarter. Backlog is up year over year, as is our cumulative unawarded delivery indefinite quantity portfolio. We're pleased to see very positive customer feedback on our GEO and LEO multi-orbit enterprise maritime service called NexusWave. We're going step by step. After launching beta service last fall, we've grown our order pipeline, turned the leading edge of that into firm backlog, and this quarter we're accelerating turning backlog into ships in service, and then ships in service into revenue. Based on our order pipeline, customer service plan selection, and feedback from direct customers and global distribution partners, we're targeting a return to growth in our maritime business this coming fiscal year 26. We've been aggressive and ambitious in forming key partnerships with multiple geosynchronous and non-geosynchronous satellite operators and are integrating multiple new satellites into a more highly integrated version of the Inmarsat and Biosat satellite to deliver state-of-the-art services. We've made a ton of progress in techniques to expand geographic coverage and optimize resources to serve our mobility customers. That's contributed a portion of the CAPEX savings this year while still expanding total platforms and service and increasing bandwidth per platform and reducing near-term schedule risk for the BISAC-3s. And we've also made steady progress on getting those BISAC-3s into service. As we get closer to completion, schedule risk is diminishing. We anticipate flight two to be completed and shipped to Cape Canaveral this summer and in-service late calendar year 25 as expected. The Flight 3 manufacturing and test schedule outlook is unchanged from last quarter, but given our significantly increased coverage and capacity resources, we've chosen a less capital-intensive launch configuration that slightly extends the orbit-raising time and will likely shift the in-service date into calendar 26. We're also making good progress on our collaborative approach to transforming our L-band networks. We're very pleased that the European Space Agency has established an agreement with the Mobile Satellite Services Association and a new contract with Biosat intended to support and promote European participation in a standards-based open architecture LEO constellation that can augment existing GEO and LEO directed device satellite services we see global engagement and participation in directed device as a critical element in delivering 5G non-terrestrial network services that augment national telecommunications architectures while supporting their sovereignty and security and ensuring regulatory compliance. We believe it's a differentiated strategy that promotes global interest in participating in the space economy, technology innovation, and a safe and sustainable space environment. We and our partners in the Mobile Satellite Services Association are excited about the European Space Agency's involvement. Shared open architecture standards-based multi-tenant space infrastructure bring proven business models from terrestrial mobile networks, will reduce costs, and will help countries and companies compete effectively. From Biosat's own perspective, it helps reduce future capital outlays while enabling state-of-the-art networks and services. Lastly, we believe recent directed device transactions help underscore the value of our mobile satellite services spectrum and the benefits of supporting terrestrial 3GPP standards for narrowband Internet of Things directed device services on our existing fleet. Overall, we're making steady progress building our mid- to long-term outlook and we remain focused on growth, cash conversion, and deleverage. We continue to believe we have portfolio and strategic optionality in the means and sequences in which we address our challenges and opportunities, and we'll keep you updated as developments occur.