Viasat targets positive free cash flow in fiscal 2027 with ViaSat-3 launches and record $1.2B DAT backlog

Earnings Call Insights: Viasat, Inc. (VSAT) Q2 2026

MANAGEMENT VIEW

*
CEO Mark Dankberg emphasized "meaningful progress" on key priorities, highlighting awards growth, improved cash performance, and balanced investment for future growth and reduced capital intensity. Dankberg stated, "Revenue grew 2% year-over-year, led by a 3% growth in the Defense and Advanced Technologies segment and a 1% year-over-year increase in the Communications Services segment." He further noted, "Adjusted EBITDA increased by 3% year-over-year, as better-than-expected adjusted EBITDA growth in Communication Services was partially offset by an expected year-over-year decline in the DAT segment."

*
Dankberg announced the imminent launch of ViaSat-3 Flight 2, describing it as "a very meaningful milestone for the company," and noted that each ViaSat-3 satellite is designed to deliver more bandwidth capacity than the entire existing fleet. He also highlighted the company’s intention to form Equitus with Space 42 and other operators, aiming to "build on the value of our large, coordinated and highly strategic global position in mobile satellite services, while managing and reducing capital intensity and creating meaningful competitive advantages."

*
CFO Garrett Chase stated, "Our franchises are developing, and we've seen strong growth in aviation, government SATCOM and DAT, while we continue to win new awards that leave us with a backlog to underpin future growth in these areas." He reported, "On a trailing 12-month basis, we generated $147 million of free cash flow, and we've achieved positive free cash flow for 3 quarters in a row." Chase outlined a plan to repay the remaining $300 million on the original Inmarsat term loan B facility, noting, "This move will save about $23 million in cash interest payments annually."

OUTLOOK

*
Management continues to expect fiscal 2026 revenue to be "up low single digits year-over-year with flattish year-over-year adjusted EBITDA and expect continued variability quarter-to-quarter." Chase indicated, "We continue to expect cash from operations to grow double digits for the year."

*
Capital expenditures for the year are expected to be about $1.2 billion, with $250 million related to the completion of ViaSat-3. Management guided, "Once beyond those payments, we expect to return to free cash generation and have guided to positive free cash flow for fiscal '27."

FINANCIAL RESULTS

*
Viasat reported Q2 FY '26 revenue of $1.1 billion, a 2% increase year-over-year, and adjusted EBITDA of $385 million, up 3%. Net loss improved to $61 million from $138 million in the prior year period, attributed to favorable service revenue mix, lower depreciation and amortization, and lower SG&A expenses.

*
Cash flow from operations was $282 million, up 18%, with $69 million in free cash flow for the quarter. Awards totaled $1.5 billion, up 17%, and backlog reached $3.9 billion. The DAT segment backlog climbed to a record $1.2 billion, up 31% year-over-year and 14% sequentially.

*
Communication Services awards increased 35% to $1.03 billion, with aviation revenue up 15% and government SATCOM revenue up 9%. Fixed broadband subscribers declined as anticipated, ending the quarter at 150,000 with an average revenue per user of $113.

*
The company ended the quarter at approximately 3.5x trailing 12 months adjusted EBITDA in net leverage.

Q&A

*
Brent Penter, Raymond James: Asked about the status and rationale behind evaluating potential separation of government and commercial businesses and about spectrum monetization. Dankberg responded that the process is ongoing and involves "weighing the benefits of that compared to any potential benefits of a spin-off," also discussing the global scale and value of Viasat's spectrum position.

*
Penter inquired about the Equitus project and ideal customer profile. Dankberg explained the goal is "to help bring modern infrastructure to the spectrum allocations" and highlighted ongoing discussions with multiple regional operators, with details on CapEx to be provided as the program is further defined.

*
Sebastiano Petti, JPMorgan: Pressed for details on Equitus milestones and backlog monetization cadence. Dankberg indicated more partner announcements should be expected over the next quarters and years. Chase added, "We certainly have the backlog to underpin it, and the capacity is coming... with Flight 2."

*
Michael Crawford, B. Riley: Asked about HaloNet and quantum computing’s impact on encryption. Dankberg detailed HaloNet’s multi-market approach and noted quantum-resistant cryptography is driving a "big refresh in secure systems," with data center demand accelerating.

*
Ryan Koontz, Needham: Sought clarity on communication services backlog dependency on Flight 2 and aviation market evolution. Dankberg clarified that growth from Flight 2 will manifest in usage metrics rather than backlog, and outlined trends towards higher airline penetration and fee-free models.

*
Colin Canfield, Cantor: Queried spectrum valuation and European defense demand. Dankberg emphasized focus on using spectrum to deliver end-user value and described growing European demand for sovereign and secure satellite solutions.

*
Xin Yu, Deutsche Bank: Asked about European S-band renewal and incremental growth from F2 and F3. Dankberg described ongoing regulatory processes and said the satellites could "triple the amount of bandwidth that we would have," with monetization dependent on service mix and regional demand.

SENTIMENT ANALYSIS

*
Analysts maintained a tone of persistent inquiry around capital structure, spectrum value, and backlog monetization, with cautious but constructive questioning about new initiatives and pending launches.

*
Management’s tone was confident and forward-looking during prepared remarks, frequently referencing progress, backlog growth, and upcoming milestones. In Q&A, management remained measured and occasionally evasive on specifics regarding spin-off timing, Equitus CapEx, and European spectrum outcomes.

*
Compared to the previous quarter, analysts’ tone this quarter was slightly more focused on tangible monetization events and capital allocation, while management exhibited greater confidence in cash generation and deleveraging, balanced by acknowledgment of ongoing challenges.

QUARTER-OVER-QUARTER COMPARISON

*
Guidance language remained consistent, with continued expectation for low single-digit revenue growth and flattish adjusted EBITDA. Management reiterated the focus on positive free cash flow for fiscal 2027.

*
Strategic focus shifted towards the imminent ViaSat-3 launches and Equitus initiative, with greater discussion of spectrum monetization and capital efficiency versus the prior quarter’s emphasis on backlog strength and integration.

*
There was a notable increase in commentary around debt repayment, cash interest savings, and portfolio review, reflecting a stronger focus on deleveraging.

*
Key metric changes included a sequential improvement in net leverage (to 3.5x adjusted EBITDA from 3.6x in Q1) and record DAT segment backlog.

*
Analyst questions were more concentrated on the execution and value creation timeline for new initiatives, while management’s confidence in achieving growth and cash flow targets appeared strengthened.

RISKS AND CONCERNS

*
Management cited the potential impact of a U.S. government shutdown, estimating it could "delay DAT awards of up to $100 million and impact DAT adjusted EBITDA by up to $20 million" in Q3, but did not anticipate material year-end impact.

*
Fixed broadband subscriber decline continued as expected, with management indicating the capacity from Flight 2 would address this issue.

*
Regulatory uncertainty around European S-band spectrum renewal was noted, with ongoing applications and pending EU allocation decisions.

*
Analysts expressed concern about the timeline and monetization of Equitus, spectrum value realization, and the cadence of backlog conversion to revenue.

FINAL TAKEAWAY

Viasat’s Q2 2026 call highlighted progress on key launches, record backlog in Defense and Advanced Technologies, and a firm commitment to building free cash flow and reducing leverage. Management pointed to the imminent launch of ViaSat-3 Flight 2, growth in aviation and government SATCOM, and new initiatives like Equitus as drivers of future value, while maintaining a disciplined approach to capital allocation and operational efficiency. The company continues to anticipate positive free cash flow in fiscal 2027, even as it navigates regulatory and market uncertainties.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/vsat/earnings/transcripts]

MORE ON VIASAT

* Viasat, Inc. (VSAT) Q2 2026 Earnings Call Transcript [https://seekingalpha.com/article/4840730-viasat-inc-vsat-q2-2026-earnings-call-transcript]
* Viasat, Inc. 2026 Q2 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4840718-viasat-inc-2026-q2-results-earnings-call-presentation]
* Viasat: The Numbers Don't Add Up Yet [https://seekingalpha.com/article/4834112-viasat-the-numbers-don-t-add-up-yet]
* Viasat reports Q2 results [https://seekingalpha.com/news/4518959-viasat-reports-q2-results]
* Viasat Q2 2026 Earnings Preview [https://seekingalpha.com/news/4517394-viasat-q2-2026-earnings-preview]