VIASAT INC

Previous wording

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. We use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” variations of such words and similar expressions to identify forward-looking statements. In addition, statements regarding projections of earnings, revenue, costs or other financial items; anticipated growth and trends in our business or key markets; future economic conditions and performance; the development, customer acceptance and anticipated performance of technologies, products or services; the construction, completion, testing, launch, commencement of service, expected performance and benefits of satellites (including future satellites planned or under construction) and the timing thereof; the extent and impact of anomalies on the ViaSat-3 F1 and Inmarsat-6 (I-6) F2 satellites, the anticipated functionality or performance of such satellites and any potential remedial or mitigating measures that may be undertaken or insurance proceeds that may be recoverable in connection therewith; the expected capacity, coverage, service speeds and other features of our satellites, and the cost, economics and other benefits associated therewith; anticipated subscriber growth; plans, objectives and strategies for future operations; international growth opportunities; the number of additional aircraft under existing contracts with commercial airlines anticipated to be put into service with our in-flight connectivity (IFC) systems; and other characterizations of future events or circumstances, are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Factors that could cause actual results to differ materially include: our ability to realize the anticipated benefits of any existing or future satellite; unexpected expenses related to our satellite projects; risks associated with the construction, launch and operation of satellites, including the effect of any anomaly, launch, operational or deployment failure or degradation in satellite performance; capacity constraints in our business in the lead-up to the commencement of service on new satellites; increasing levels of competition in our target markets; our ability to successfully implement our business plan on our anticipated timeline or at all; risks that the Inmarsat Acquisition (as d…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. We use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” variations of such words and similar expressions to identify forward-looking statements. In addition, statements regarding projections of earnings, revenue, costs or other financial items; anticipated growth and trends in our business or key markets; future economic conditions and performance; the development, customer acceptance and anticipated performance of technologies, products or services; the construction, completion, testing, launch, commencement of commercial service, expected performance and benefits of satellites (including future satellites planned or under construction) and the timing thereof; the extent and impact of anomalies on the ViaSat-3 F1 and Inmarsat-6 (I-6) F2 satellites, the anticipated functionality or performance of such satellites and any potential remedial or mitigating measures that may be undertaken or insurance proceeds that may be recoverable in connection therewith; the expected capacity, coverage, service speeds and other features of our satellites, and the cost, economics and other benefits associated therewith; anticipated subscriber growth; plans, objectives and strategies for future operations; international growth opportunities; the number of additional aircraft under existing contracts with commercial airlines anticipated to be put into service with our in-flight connectivity (IFC) systems; and other characterizations of future events or circumstances, are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Factors that could cause actual results to differ materially include: our ability to realize the anticipated benefits of any existing or future satellite; unexpected expenses related to our satellite projects; risks associated with the construction, launch and operation of satellites, including the effect of any anomaly, launch, operational or deployment failure or degradation in satellite performance; capacity constraints in our business in the lead-up to the commencement of service on new satellites; increasing levels of competition in our target markets; our ability to successfully implement our business plan on our anticipated timeline or at all; risks that the Inmarsat Acquis…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

In May 2024, certain organizational changes were made that impacted our internal reporting and reportable segments. Established during the first quarter of fiscal year 2025, we conduct our business through two reportable segments: communication services and defense and advanced technologies, which replaced our prior three reportable segments (see Note 11 — Segment Information to our condensed consolidated financial statements for additional information). This new segment reporting structure better reflects our strategy following the Inmarsat Acquisition, diverse global end markets, and certain organizational changes, that allow us to better assess the operational performance of and allocate resources to our multiple business lines. Viasat, Inc. (Viasat) was incorporated in California in 1986, and reincorporated as a Delaware corporation in 1996.

Current wording

In May 2024, certain organizational changes were made that impacted our internal reporting and reportable segments. Commencing with the first quarter of fiscal year 2025, we conduct our business through two reportable segments: communication services and defense and advanced technologies, which replaced our prior three reportable segments (see Note 11 — Segment Information to our condensed consolidated financial statements for additional information). This new segment reporting structure better reflects our strategy following the Inmarsat Acquisition, diverse global end markets, and certain organizational changes, that allow us to better assess the operational performance of and allocate resources to our multiple business lines. Viasat, Inc. (Viasat) was incorporated in California in 1986, and reincorporated as a Delaware corporation in 1996.

Previous wording

Our communication services segment provides a wide range of broadband and narrowband communications solutions across government and commercial mobility markets, as well as for fixed and residential broadband customers. In addition, this segment includes the development and sale of a wide array of advanced satellite and wireless products and terminals that support or enable the provision of fixed and mobile broadband and narrowband services. We design, develop and produce space system solutions for multiple orbital regimes, including geostationary (GEO), medium earth orbit (MEO) and low earth orbit (LEO).

Current wording

Our communication services segment provides a wide range of broadband and narrowband communications solutions across government and commercial mobility markets, as well as for fixed and residential broadband customers. In addition, this segment includes the development and sale of a wide array of advanced satellite and wireless products and terminals that support or enable the provision of fixed and mobile broadband and narrowband services. We design, develop and produce space system solutions for multiple orbital regimes, including geostationary earth orbit (GEO), medium earth orbit (MEO) and low earth orbit (LEO).

Previous wording

Aviation, which includes industry-leading IFC services and wireless in-flight entertainment (W-IFE) services for commercial aircraft and private jets, narrowband safety services, and complementary aviation software services (such as cockpit, data safety and surveillance). As of June 30, 2024, we had our IFC systems installed and in service on approximately 3,810 commercial aircraft of which approximately 60 were inactive at quarter end (mostly due to standard aircraft maintenance). We anticipate that approximately 1,460 additional commercial aircraft will be put into service with our IFC systems under existing customer agreements with commercial airlines. However, due to the nature of commercial airline contracts and other factors such as OEM delays, there can be no assurance that anticipated IFC services will be activated on all such additional commercial aircraft.

Current wording

Aviation, which includes industry-leading IFC services and wireless in-flight entertainment (W-IFE) services for commercial aircraft and private jets, narrowband safety services, and complementary aviation software services (such as cockpit, data safety and surveillance). As of September 30, 2024, we had our IFC systems installed and in service on approximately 3,900 commercial aircraft (of which approximately 80 were inactive at quarter end, mostly due to standard aircraft maintenance) and 1,920 private jets with Ka-band communication services. We anticipate that approximately 1,510 additional commercial aircraft will be put into service with our IFC systems under existing customer agreements with commercial airlines. However, due to the nature of commercial airline contracts and other factors such as OEM delays, there can be no assurance that anticipated IFC services will be activated on all such additional commercial aircraft.

Previous wording

Maritime, which includes high-quality, resilient satellite-based broadband and narrowband communications services around the globe to commercial shipping fleets, offshore service vessel operators and commercial fishing companies, as well as NexusWave, a fully managed multi-layer connectivity service for merchant shipping companies that we expect to launch later this year.

Current wording

Maritime, which includes high-quality, resilient satellite-based broadband and narrowband communications services around the globe to commercial shipping fleets, offshore service vessel operators and commercial fishing companies, as well as NexusWave, a fully managed multi-layer connectivity service for merchant shipping companies. As of September 30, 2024, we provided Ka-band communication services to approximately 14,360 vessels.

Previous wording

Fixed services and other, which include high-speed, high-quality, reliable fixed broadband internet services to businesses and residential users (primarily in the United States as well as in various countries in Europe and Latin America), enterprise connectivity solutions, Internet-of-Things (IoT) and other narrowband services (such as L-band managed services that enable real-time machine-to-machine (M2M) position or high-value asset tracking), energy services, and prepaid internet services that provide innovative, affordable, satellite-based connectivity in communities that have little or no access to the internet. As of June 30, 2024, our U.S. fixed broadband business had approximately 257,000 subscribers with an average monthly revenue per user of $115.

Current wording

Fixed services and other, which include high-speed, high-quality, reliable fixed broadband internet services to businesses and residential users (primarily in the United States as well as in various countries in Europe and Latin America), enterprise connectivity solutions, Internet-of-Things (IoT) and other narrowband services (such as L-band managed services that enable real-time machine-to-machine (M2M) position or high-value asset tracking), energy services, and prepaid internet services that provide innovative, affordable, satellite-based connectivity in communities that have little or no access to the internet. As of September 30, 2024, our U.S. fixed broadband business had approximately 228,000 subscribers with an average monthly revenue per user of $115.

Previous wording

Our defense and advanced technologies segment provides a diverse array of resilient, vertically integrated solutions to government and commercial customers, leveraging our core technical competencies in encryption, cyber security, tactical gateways, modems and waveforms. The following are the primary business lines in our defense and advanced technologies segment:

Current wording

Our defense and advanced technologies segment provides a diverse array of resilient, vertically integrated solutions to government and commercial customers, leveraging our core technical competencies in encryption, cyber security, tactical gateways, modems and waveforms.

Previous wording

Our communication services segment revenues are primarily derived from aviation services (including IFC services), government satcom services, maritime services (including narrowband and safety of communication capabilities primarily acquired through the Inmarsat Acquisition), fixed broadband services, and energy services, as well as a wide array of advanced satellite and wireless products, networks and terminal solutions that support or enable the provision of fixed and mobile broadband and narrowband services.

Current wording

Our communication services segment revenues are primarily derived from aviation services (including IFC services), government satcom services, maritime services (including narrowband and safety of communication capabilities), fixed broadband services, and energy services, as well as a wide array of advanced satellite and wireless products, networks and terminal solutions that support or enable the provision of fixed and mobile broadband and narrowband services.

Previous wording

Our revenues are primarily derived from two types of contracts: fixed-price and cost-reimbursement contracts. Fixed-price contracts (which require us to provide products and services under a contract at a specified price) comprised approximately 96% and 93% of our total revenues for the three months ended June 30, 2024 and 2023, respectively, a majority of which are reported in our communication services segment. The remainder of our revenues for such periods was derived primarily from cost-reimbursement contracts (under which we are reimbursed for all actual costs incurred in performing the contract to the extent such costs are within the contract ceiling and allowable under the terms of the contract, plus a fee or profit), which contracts are mainly reported within our defense and advanced technologies segment.

Current wording

Our revenues are primarily derived from two types of contracts: fixed-price and cost-reimbursement contracts. Fixed-price contracts (which require us to provide products and services under a contract at a specified price), comprised approximately 96% of our total revenues for both the three and six months ended September 30, 2024, and approximately 96% and 95% of our total revenues for the three and six months ended September 30, 2023, respectively, a majority of which are reported in our communication services segment. The remainder of our revenues for such periods was derived primarily from cost-reimbursement contracts (under which we are reimbursed for all actual costs incurred in performing the contract to the extent such costs are within the contract ceiling and allowable under the terms of the contract, plus a fee or profit), which contracts are mainly reported within our defense and advanced technologies segment.

Previous wording

Satellites and other property and equipment are recorded at cost or in the case of certain satellites and other property acquired, the fair value at the date of acquisition, net of accumulated depreciation. Capitalized satellite costs consist primarily of the costs of satellite construction and launch, including launch insurance and insurance during the period of in-orbit testing, the net present value of performance incentive payments expected to be payable to the satellite manufacturers (dependent on the continued satisfactory performance of the satellites), costs directly associated with the monitoring and support of satellite construction, and interest costs incurred during the period of satellite construction. We also construct earth stations, network operations systems and other assets to support our satellites, and those construction costs, including interest, are capitalized as incurred. At the time satellites are placed in service, we estimate the useful life of our satellites for depreciation purposes based upon an analysis of each satellite’s performance against the original manufacturer’s orbital design life, estimated fuel levels and related consumption rates, as well as historical satellite operating trends. We periodically review the remaining estimated useful life of our satellites to determine if revisions to the estimated useful lives are necessary.

Current wording

Satellites and other property and equipment are recorded at cost or in the case of certain satellites and other property acquired, the fair value at the date of acquisition, net of accumulated depreciation. Capitalized satellite costs consist primarily of the costs of satellite construction and launch, including launch insurance and insurance during the period of in-orbit testing, the net present value of performance incentive payments expected to be payable to the satellite manufacturers (dependent on the continued satisfactory performance of the satellites), costs directly associated with the monitoring and support of satellite construction, and interest costs incurred during the period of satellite construction. We also construct earth stations, network operations systems and other assets to support our satellites, and those construction costs, including interest, are capitalized as incurred. At the time satellites are placed in commercial service, we estimate the useful life of our satellites for depreciation purposes based upon an analysis of each satellite’s performance against the original manufacturer’s orbital design life, estimated fuel levels and related consumption rates, as well as historical satellite operating trends. We periodically review the remaining estimated useful life of our satellites to determine if revisions to the estimated useful lives are necessary.

Previous wording

In accordance with the authoritative guidance for impairment or disposal of long-lived assets (ASC 360), we assess potential impairments to our long-lived assets, including property, equipment and satellites and other assets, when there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable. We recognize an impairment loss when the undiscounted cash flows expected to be generated by an asset (or group of assets) are less than the asset’s carrying value. Any required impairment loss would be measured as the amount by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and charged to results of operations. Except for the impairment related to certain of our satellites under construction and satellite programs (discussed in Note 1 — Basis of Presentation – Property, equipment and satellites above), no material impairments were recorded for the three months ended June 30, 2024 and 2023.

Current wording

In accordance with the authoritative guidance for impairment or disposal of long-lived assets (ASC 360), we assess potential impairments to our long-lived assets, including property, equipment and satellites and other assets, when there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable. We recognize an impairment loss when the undiscounted cash flows expected to be generated by an asset (or group of assets) are less than the asset’s carrying value. Any required impairment loss would be measured as the amount by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and charged to results of operations. Except for the impairment related to certain of our satellites under construction and satellite programs (discussed in Note 1 — Basis of Presentation – Property, equipment and satellites above), no material impairments were recorded for the three and six months ended September 30, 2024 and 2023.

Previous wording

The $31.5 million increase in selling, general and administrative (SG&A) expenses was driven primarily by an increase in support costs of $26.8 million, primarily reflected in our communication services segment. The increase in SG&A expenses was also driven by $4.7 million of higher selling costs, primarily reflected in our communication services segment. SG&A expenses consisted primarily of personnel costs and expenses for business development, marketing and sales, bid and proposal, acquisition and transaction related expenses, facilities, finance, contract administration and general management.

Current wording

The $876.5 million decrease in selling, general and administrative (SG&A) expenses was primarily driven by a net loss of $900.0 million related to satellite impairment, including liabilities associated with the termination of certain subcontractor agreements, net of estimated insurance claim receivables recorded in our communication services segment in the prior year period. The decrease in SG&A expenses was also due to lower selling costs of $8.9 million, mostly reflected in our communication services segment. The decrease in SG&A expenses was partially offset by an increase in support costs of $32.0 million, primarily reflected in our communications service segment. SG&A expenses are comprised primarily of personnel costs and expenses for business development, marketing and sales, bid and proposal, acquisition and transaction related expenses, facilities, finance, contract administration and general management.

Previous wording

We amortize our acquired intangible assets from prior acquisitions over their estimated useful lives, which range from two to 20 years. The $38.4 million increase in amortization of acquired intangible assets in the first quarter of fiscal year 2025 compared to the prior year period was primarily related to the amortization of new intangibles acquired as a result of the Inmarsat Acquisition in May 2023.

Current wording

We amortize our acquired intangible assets from prior acquisitions over their estimated useful lives, which range from two to 20 years. The $15.4 million decrease in amortization of acquired intangible assets in the second quarter of fiscal year 2025 compared to the prior year period was primarily related to the final valuation of certain acquired intangible assets completed in the first quarter of fiscal year 2025, within one year of the closing of the Inmarsat Acquisition as additional information was obtained.

Previous wording

For the three months ended June 30, 2024, we recorded an income tax provision of $1.2 million, resulting in an effective tax rate of negative 5%. The effective tax rate for the period differed from the U.S. statutory rate primarily due to a U.S. valuation allowance and foreign tax rate differences. For the three months ended June 30, 2023, we recorded an income tax benefit of an insignificant amount resulting in an effective tax rate of 1%. The effective tax rate for the period differed from the U.S. statutory rate due primarily to the benefit of federal R&D tax credits offset by expense for non-deductible transaction costs related to the Inmarsat Acquisition.

Current wording

For the three months ended September 30, 2024, we recorded an income tax provision of $5.9 million, resulting in an effective tax rate of negative 5%. The effective tax rate for the period differed from the U.S. statutory rate primarily due to a U.S. valuation allowance and foreign tax rate differences. For the three months ended September 30, 2023, we recorded an income tax benefit of $93.1 million, resulting in an effective tax rate of 11%. The effective tax rate for the period differed from the U.S statutory rate primarily due to a valuation allowance recorded against our U.S. net deferred tax assets.

Previous wording

Cost of revenues increased by $165.9 million due to an increase of $168.8 million in cost of service revenues, partially offset by a $2.9 million decrease in cost of product revenues. The cost of service revenues increase was primarily due to increased service revenues in our communication services segment, causing a $177.5 million increase in cost of service revenues on a constant margin basis. The increase in cost of service revenues was partially offset by higher margins primarily within our communication services segment. The cost of product revenues decrease relative to product revenue growth was primarily due to the mix of our product revenues. In the current year period, we had a higher percent of intellectual property royalty and licensing revenues that had relatively low costs of product revenues (see Note 9 — Commitments and Contingencies to our condensed consolidated financial statements for more information).

Current wording

Cost of revenues increased by $174.7 million due to a $188.2 million increase in cost of service revenues, partially offset by a $13.5 million decrease in cost of product revenues. The increase in cost of service revenues was primarily due to increased service revenues, mainly in our communication services segment, resulting in a $158.5 million increase in cost of service revenues on a constant margin basis. The cost of service revenues further increased due to lower margins, primarily reflected in our communication services segment. The higher cost of product revenues decrease relative to the product revenue decrease was primarily due to the mix of our product revenues. In the prior year period, we had a higher percent of intellectual property royalty and licensing revenues that had relatively low costs of product revenues (see Note 9 — Commitments and Contingencies to our condensed consolidated financial statements for more information).

Previous wording

The $9.6 million increase in independent research and development (IR&D) expenses was mainly the result of increases of $6.0 million in IR&D efforts in our communication services segment (primarily related to mobile broadband satellite communication systems for commercial airline platforms) and $3.6 million in our defense and advanced technologies segment (primarily related to tactical terrestrial networking products).

Current wording

The $9.5 million increase in IR&D expenses was mainly due to increases of $6.6 million in our defense and advanced technologies segment (primarily related to tactical terrestrial networking and other advanced technologies) and $3.0 million in our communication services segment (primarily related to our mobile broadband satellite communication systems for commercial airline platforms and other communication services).The increase in our communication services segment was partially offset by a decrease in IR&D expenses related to next-generation satellite payload technologies and the development of next-generation dual band mobility solutions.

Previous wording

The $3.6 million increase in interest income for the three months ended June 30, 2024 compared to the prior year period was primarily due to interest earned on cash acquired as part of the Inmarsat Acquisition.

Current wording

The $5.0 million decrease in interest income for the six months ended September 30, 2024 compared to the prior year period was primarily due to lower interest earned on cash invested in money market accounts as well as a result of interest income received from a litigation settlement in the prior year period (see Note 9 — Commitments and Contingencies to our condensed consolidated financial statements for more information). The decrease in interest income was partially offset by higher interest earned on cash acquired as part of the Inmarsat Acquisition.

Previous wording

The $49.8 million increase in interest expense for the three months ended June 30, 2024 compared to the prior year period was primarily the result of the effects of increased interest expense arising from our increased level of indebtedness following the closing of the Inmarsat Acquisition on May 30, 2023.

Current wording

The $79.0 million increase in interest expense for the six months ended September 30, 2024 compared to the prior year period was primarily the result of the effects of increased interest expense arising from our increased level of indebtedness following the closing of the Inmarsat Acquisition in May 2023.

Previous wording

Our communication services segment revenues increased by $266.5 million due to a $272.8 million increase in service revenues, partially offset by a $6.3 million decrease in product revenues. The increase in segment service revenues for the three months ended June 30, 2024 compared to the prior year period was primarily due to the Inmarsat Acquisition in May 2023. The Inmarsat Acquisition contributed approximately $298.6 million to the increase in service revenues in our communication services segment due to a full quarter of contribution compared to only one month in the prior period. The inclusion of a full quarter of contributions from Inmarsat and growth in aviation services was partially offset by an expected decrease in revenues from fixed services and other compared to the prior year period. We continue to allocate a greater proportion of our bandwidth to our IFC business in preference to our U.S. fixed services business due to bandwidth constraints. The decrease in segment product revenues was primarily driven by a $10.8 million decrease in aviation products, partially offset by a $3.2 million increase in fixed and other products driven by enterprise and energy.

Current wording

Our communication services segment revenues increased by $246.4 million due to a $250.0 million increase in service revenues, partially offset by a $3.6 million decrease in product revenues. The increase in segment service revenues was primarily due to the Inmarsat Acquisition in May 2023. The Inmarsat Acquisition contributed approximately $307.6 million to the increase in service revenues in our communication services segment, as a result of two full quarters of contribution compared to only four months in the prior year period. The inclusion of two full quarters from Inmarsat and growth in our aviation services were partially offset by an expected decrease in revenues from fixed services and other as we continued to allocate a greater proportion of our bandwidth to our IFC business in preference to our U.S. fixed services business due to bandwidth constraints. The decrease in segment product revenues was primarily driven by a $14.2 million decrease in aviation products, partially offset by a $13.6 million increase in fixed and other products, mainly driven by enterprise and energy.

Previous wording

The change in our communication services segment operating loss to an operating profit was primarily due to increased earnings contributions of $92.2 million, mainly due to an increase in revenues from the Inmarsat Acquisition in May 2023 and improved margins from aviation and government satcom as our aviation services continued to scale. The increase in earnings contributions was partially offset by higher SG&A costs of $34.3 million, primarily related to a full quarter of Inmarsat SG&A costs in the current year period compared to one month of SG&A costs in the prior year period, and higher IR&D costs of $6.0 million (primarily related to mobile broadband satellite communication systems for commercial airline platforms).

Current wording

The change in our communication services segment operating loss to an operating profit was primarily due to the recording of satellite impairment and related charges, net of estimated insurance claim receivables of approximately $900.0 million in the prior year period, as described above, as well as higher earnings contributions of $47.3 million, mainly due to an increase in service revenues as a result of the Inmarsat Acquisition and improved margins in our aviation services as they continued to scale. The change in our communication services segment operating loss to an operating profit was partially offset by an increase of $61.7 million in SG&A expenses (reflecting the inclusion of two full quarters of Inmarsat SG&A costs in the current year period compared to only four months of SG&A costs in the prior year period) and a $3.0 million increase in IR&D expenses (primarily related to our mobile broadband satellite communication systems for commercial airline platforms and other communication services), as noted above.

Previous wording

The firm backlog does not include contract options. As of June 30, 2024, a little less than half of the firm backlog is expected to be delivered during the next 12 months, with the balance delivered thereafter. We include in our backlog only those orders for which we have accepted purchase orders, and not anticipated purchase orders and requests. In our communication services segment, our backlog includes fixed broadband service revenues under our subscriber agreements, but does not include future recurring IFC service revenues under our agreements with commercial airlines. As of June 30, 2024, our IFC systems were installed and in service on approximately 3,810 commercial aircraft of which approximately 60 were inactive at quarter end (mostly due to standard aircraft maintenance). We anticipate that approximately 1,460 additional commercial aircraft will be put into service with our IFC systems under existing customer agreements with commercial airlines. Due to the nature of commercial airline contracts and other factors such as OEM delays, there can be no assurance that all anticipated purchase orders and requests will be placed or that anticipated IFC services will be activated on all such additional commercial aircraft.

Current wording

The firm backlog does not include contract options. As of September 30, 2024, a little less than half of the firm backlog is expected to be delivered during the next 12 months, with the balance delivered thereafter. We include in our backlog only those orders for which we have accepted purchase orders, and not anticipated purchase orders and requests. In our communication services segment, our backlog includes fixed broadband service revenues under our subscriber agreements, but does not include future recurring IFC service revenues under our agreements with commercial airlines. As of September 30, 2024, our IFC systems were installed and in service on approximately 3,900 commercial aircraft (of which approximately 80 were inactive at quarter end, mostly due to standard aircraft maintenance). We anticipate that approximately 1,510 additional commercial aircraft will be put into service with our IFC systems under existing customer agreements with commercial airlines. Due to the nature of commercial airline contracts and other factors such as OEM delays, there can be no assurance that all anticipated purchase orders and requests will be placed or that anticipated IFC services will be activated on all such additional commercial aircraft.

Previous wording

Our total new awards which exclude future revenue under recurring consumer commitment arrangements were approximately $1.2 billion and $803.0 million for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Our total new awards which exclude future revenue under recurring consumer commitment arrangements were approximately $1.3 billion and $2.4 billion for the three and six months ended September 30, 2024, respectively, compared to approximately $1.0 billion and $1.8 billion for the three and six months ended September 30, 2023, respectively.

Previous wording

We have financed our operations to date primarily with cash flows from operations, bank line of credit financing, debt financing, export credit agency financing and equity financing. At June 30, 2024, we had $1.8 billion in cash and cash equivalents, $2.2 billion in working capital, no outstanding borrowings and borrowing availability of $588.3 million under our $647.5 million revolving credit facility (the Viasat Revolving Credit Facility), and no outstanding borrowings and borrowing availability of $550.0 million under Inmarsat's $550.0 million revolving line of credit (the Inmarsat Revolving Credit Facility, and together with the Viasat Revolving Credit Facility, the Revolving Credit Facilities). At March 31, 2024, we had $1.9 billion in cash and cash equivalents, $2.2 billion in working capital, no outstanding borrowings and borrowing availability of $591.5 million under the Viasat Revolving Credit Facility, and no outstanding borrowings and borrowing availability of $550.0 million under the Inmarsat Revolving Credit Facility. We invest our cash in excess of current operating requirements in short-term, highly liquid bank money market funds primarily investing in U.S. government-backed securities and treasuries.

Current wording

We have financed our operations to date primarily with cash flows from operations, bank line of credit financing, debt financing, export credit agency financing and equity financing. At September 30, 2024, we had $3.5 billion in cash and cash equivalents (which included $1.94 billion in net cash proceeds from the issuance of the Inmarsat 2029 Notes, which was used, together with cash on hand, to redeem all of the outstanding Inmarsat 2026 Notes subsequent to quarter end), $1.5 billion in working capital, no outstanding borrowings and borrowing availability of $588.2 million under our $647.5 million revolving credit facility (the Viasat Revolving Credit Facility), and no outstanding borrowings and borrowing availability of $550.0 million under Inmarsat's $550.0 million revolving line of credit (the Inmarsat Revolving Credit Facility, and together with the Viasat Revolving Credit Facility, the Revolving Credit Facilities). At March 31, 2024, we had $1.9 billion in cash and cash equivalents, $2.2 billion in working capital, no outstanding borrowings and borrowing availability of $591.5 million under the Viasat Revolving Credit Facility, and no outstanding borrowings and borrowing availability of $550.0 million under the Inmarsat Revolving Credit Facility. We invest our cash in excess of current operating requirements in short-term, highly liquid bank money market funds primarily investing in U.S. government-backed securities and treasuries.

Previous wording

The general cash needs of our communication services and defense and advanced technologies segments can vary significantly and our future capital requirements will depend upon many factors, including cash required for our satellite projects and any future broadband satellite projects we may engage in, expansion of our IR&D and marketing efforts, and the nature and timing of orders. In particular:

Current wording

The general cash needs of our segments can vary significantly and our future capital requirements will depend upon many factors, including cash required for our satellite projects and any future broadband satellite projects we may engage in, expansion of our IR&D and marketing efforts, and the nature and timing of orders. In particular:

Previous wording

The cash needs of our communication services segment tend to be driven by the timing and amount of capital expenditures (e.g., payments under satellite construction and launch contracts and investments in ground infrastructure roll-out), IR&D expenditures, investments in joint ventures, strategic partnering arrangements and network expansion activities, investments to obtain Supplemental Type Certificates to enable the retrofit installation of our IFC and W-IFE equipment and investments in platforms and software to support services and entry into new markets, as well as the quality of customer, type of contract, mix of contracts in backlog and payment terms, and timing and amount of recoveries under satellite insurance claims.

Current wording

The cash needs of our communication services segment tend to be driven by the timing and amount of capital expenditures (e.g., payments under satellite construction and launch contracts and investments in ground infrastructure roll-out), IR&D expenditures, investments in joint ventures, strategic partnering arrangements, network expansion activities, investments to obtain Supplemental Type Certificates to enable the retrofit installation of our IFC and W-IFE equipment and investments in platforms and software to support services and entry into new markets, as well as the quality of customer, type of contract, mix of contracts in backlog and payment terms, and timing and amount of recoveries under satellite insurance claims.

Previous wording

Additionally, we will continue to evaluate other possible acquisitions of, or investments in complementary businesses, products and technologies which may require the use of cash or additional financing.

Current wording

Additionally, from time to time, we evaluate possible acquisitions of, or investments in complementary businesses, products and technologies which may require the use of cash or additional financing.

Previous wording

To further enhance our liquidity position or to finance the construction and launch of any future satellites, acquisitions, strategic partnering arrangements, joint ventures or other business investment initiatives, we may obtain additional financing, which could consist of debt, convertible debt or equity financing from public and/or private credit and capital markets. From time to time, we file universal shelf registration statements with the SEC for the future sale of an unlimited amount of common stock, preferred stock, debt securities, depositary shares and warrants, which securities may be offered from time to time, separately or together, directly by us, by selling security holders, or through underwriters, dealers or agents at amounts, prices, interest rates and other terms to be determined at the time of the offering. Additionally, we consider strategic divestitures from time to time, such as the sale of Link-16 tactical data link business that was completed in January 2023 for approximately $1.96 billion in cash, as well as divestitures of non-core assets or businesses.

Current wording

To further enhance our liquidity position or to finance the construction and launch of future satellites, acquisitions, strategic partnering arrangements, joint ventures or other business investment initiatives, we may obtain additional financing, which could consist of debt, convertible debt or equity financing from public and/or private credit and capital markets. From time to time, we file universal shelf registration statements with the SEC for the future sale of an unlimited amount of common stock, preferred stock, debt securities, depositary shares and warrants, which securities may be offered from time to time, separately or together, directly by us, by selling security holders, or through underwriters, dealers or agents at amounts, prices, interest rates and other terms to be determined at the time of the offering. Additionally, we consider strategic divestitures from time to time, such as the sale of our Link-16 tactical data link business that was completed in January 2023 for approximately $1.96 billion in cash, as well as divestitures of non-core assets or businesses.

Previous wording

We may, from time to time, seek to retire, prepay or repurchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. In July 2024, subsequent to quarter end, we repurchased $152.2 million in aggregate principal amount of our outstanding notes in open market transactions, consisting of approximately $101.7 million of Inmarsat 2026 Notes and $50.5 million of 2025 Notes.

Current wording

We may, from time to time, seek to retire, prepay or repurchase our outstanding debt (including some or all of the remaining 2025 Notes) through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. During the second quarter of fiscal year 2025, we repurchased $359.2 million in aggregate principal amount of our outstanding notes in open market transactions, consisting of approximately $101.7 million of Inmarsat 2026 Notes and $257.5 million of 2025 Notes. As a result, we recorded a loss of approximately $3.2 million, net on extinguishment of debt in (loss) gain on extinguishment of debt, net in the condensed consolidated statement of operations, mainly related to the repurchase of Inmarsat 2026 Notes. If any of the 2025 Notes are not repurchased, we intend to redeem the remaining 2025 Notes at maturity. Although we can give no assurances concerning our future liquidity, we believe that we have adequate sources of funding to meet our anticipated operating requirements for the next 12 months, which include, but are not limited to, cash on hand, borrowing capacity, and cash expected to be provided by operating activities.

Previous wording

Cash provided by operating activities for the first three months of fiscal year 2025 was $151.1 million compared to $103.7 million in the prior year period. This $47.4 million increase was driven by our operating results (net income (loss) adjusted for depreciation, amortization and other non-cash charges) which resulted in $252.9 million of higher cash provided by operating activities year-over-year, partially offset by a $205.5 million year-over-year increase in cash used to fund net operating assets. The increase in cash used to fund net operating assets during the first three months of fiscal year 2025 when compared to the prior year period was primarily due to the timing of deferred revenue recognized under certain long-term contracts in our defense and advanced technologies segment and under certain long-term contracts acquired through the Inmarsat Acquisition in our communication services segment. Cash paid for income taxes, net, during the first three months of fiscal year 2025 and 2024 were $32.4 million and $3.8 million, respectively. Cash paid for interest (net of amounts capitalized) during the first three months of fiscal year 2025 and 2024 were $116.4 million and $11.5 million, respectively.

Current wording

Cash provided by operating activities for the first six months of fiscal year 2025 was $390.3 million compared to $322.6 million in the prior year period. This $67.6 million increase was driven by our operating results (net income (loss) adjusted for depreciation, amortization and other non-cash charges) which resulted in $190.3 million of higher cash provided by operating activities year-over-year, partially offset by a $122.7 million year-over-year increase in cash used to fund net operating assets. The increase in cash used to fund net operating assets during the first six months of fiscal year 2025 when compared to the prior year period was primarily due to the increase in cash tax payments related to foreign subsidiaries and the timing of payments related to our accounts payable. Cash paid for income taxes, net, during the first six months of fiscal year 2025 and 2024 were $125.9 million and $58.4 million, respectively. Cash paid for interest (net of amounts capitalized) during the first six months of fiscal year 2025 and 2024 were $170.4 million and $82.7 million, respectively.

Previous wording

Cash used in investing activities for the first three months of fiscal year 2025 was approximately $221.5 million compared to $769.5 million in the prior year period. This $548.0 million decrease in cash used in investing activities year-over-year reflects $342.6 million in cash (net of cash acquired) used for the Inmarsat Acquisition in the first quarter of fiscal year 2024, $79.5 million of cash receipts related to satellite insurance claim proceeds received during the first quarter of fiscal year 2025, and a decrease in cash used for capital expenditures of approximately $73.9 million.

Current wording

Cash used in investing activities for the first six months of fiscal year 2025 was approximately $332.3 million compared to $1.0 billion in the prior year period. This $668.7 million decrease in cash used in investing activities year-over-year reflects $342.6 million in cash (net of cash acquired) used for the Inmarsat Acquisition in the first quarter of fiscal year 2024, $197.5 million of cash receipts related to satellite insurance claim proceeds received during the first six months of fiscal year 2025, and a year-over-year decrease in cash used for capital expenditures of approximately $210.8 million.

Previous wording

Cash used in financing activities for the first three months of fiscal year 2025 was approximately $22.5 million compared to cash provided by financing activities of $1.3 billion for the prior year period. Cash used in financing activities for the first three months of fiscal year 2025 was primarily comprised of debt repayments of approximately $19.5 million. Cash provided by financing activities in the first three months of fiscal year 2024 was primarily comprised of proceeds from debt borrowings of $1.3 billion in the first quarter of fiscal year 2024. See Note 7 — Senior Notes and Other Long-Term Debt for further information.

Current wording

Cash provided by financing activities for the first six months of fiscal year 2025 was approximately $1.6 billion compared to $1.3 billion for the prior year period. This $300.5 million increase in cash provided by financing activities year-over-year was primarily due to an increase in proceeds from debt borrowings of approximately $640.3 million, partially offset by an increase in debt repayments of approximately $355.5 million. See Note 7 — Senior Notes and Other Long-Term Debt for further information.

Previous wording

Our complementary fleet of 21 in service or operational satellites spans the Ka-, L- and S- bands, with 11 Ka-band satellites, eight L-band satellites (three of which are contingency L-band satellites that are operational but not currently in service), an S-band satellite that supports the European Aviation Network to provide IFC services to commercial airlines in Europe, and an I-6 class hybrid Ka-/L-band satellite (the I-6 F1 satellite). Subsequent to the quarter end, in late July 2024, the ViaSat-3 F1 satellite completed in-orbit testing and was integrated into our existing satellite fleet covering the Americas. Furthermore, we have ten additional geostationary (GEO) and highly-elliptical earth orbit (HEO) satellites under development: two additional high-capacity Ka-band GEO satellites (ViaSat-3 F2 and ViaSat-3 F3), three additional adaptive Ka-band GEO satellites (GX 7, GX 8 and GX 9), two Ka-band HEO satellite payloads intended to provide polar coverage (GX 10a and GX 10b) and three Inmarsat-8 L-band GEO safety service satellites. Our deep satellite fleet enables us to provide a wide array of high-quality broadband and narrowband services with near global coverage (including strong oceanic coverage) with greater redundancy and resiliency.

Current wording

Our complementary fleet of 21 in service or operational satellites spans the Ka-, L- and S- bands, with 11 Ka-band satellites, eight high-availability L-band satellites (three of which are contingency L-band satellites that are operational but not currently in commercial service), an S-band satellite that supports the European Aviation Network to provide IFC services to commercial airlines in Europe, and an I-6 class hybrid Ka-/L-band satellite (the I-6 F1 satellite). In late July 2024, the ViaSat-3 F1 satellite completed in-orbit testing and was integrated into our existing satellite fleet covering the Americas. In August 2024, we launched two Ka-band highly-elliptical earth orbit satellite payloads intended to provide polar coverage (the Inmarsat GX 10A and GX 10B satellites). Furthermore, we have eight additional GEO satellites under development: two additional high-capacity Ka-band GEO satellites (ViaSat-3 F2 and ViaSat-3 F3), three additional adaptive Ka-band GEO satellites (GX 7, GX 8 and GX 9) and three Inmarsat-8 L-band GEO safety service satellites. Our extensive satellite fleet enables us to provide a wide array of high-quality broadband and narrowband services with near global coverage (including strong oceanic coverage) with greater redundancy and resiliency.

Previous wording

In connection with the launch of any new satellite and the commencement of service on the satellite, we expect to incur additional operating costs that negatively impact our financial results. For example, when ViaSat-2 was placed in service in the fourth quarter of fiscal year 2018, this resulted in additional operating costs during the ramp-up period prior to service launch and in the fiscal year following service launch. These increased operating costs included depreciation, amortization of capitalized software development, earth station connectivity, marketing and advertising costs, logistics, customer care and various support systems. In addition, interest expense increased during fiscal year 2019 as we no longer capitalized the interest expense relating to the debt incurred for the construction of ViaSat-2 and the related gateway and networking equipment once the satellite was in service. As services using the new satellite scaled, however, our revenue base for broadband services expanded and we gained operating cost efficiencies, which together yielded incremental segment earnings contributions. We anticipate that we will incur a similar cycle of increased operating costs and constrained bandwidth supply as we prepare for and launch services on future satellites, including our ViaSat-3 constellation, followed by increases in revenue base and in scale. However, there can be no assurance that we will be successful in significantly increasing revenues or achieving or maintaining operating profit in our communication services segment, and any such gains may also be offset by investments in our global business. In addition, we may experience capacity constraints on our existing satellites in the lead-up to the commencement of service on new satellites, such as the capacity constraints we experienced during fiscal years 2023 and 2024.

Current wording

In connection with the launch of any new satellite and the commencement of commercial service on the satellite, we expect to incur additional operating costs that negatively impact our financial results. For example, when ViaSat-2 was placed in commercial service in the fourth quarter of fiscal year 2018, this resulted in additional operating costs during the ramp-up period prior to service launch and in the fiscal year following service launch. These increased operating costs included depreciation, amortization of capitalized software development, earth station connectivity, marketing and advertising costs, logistics, customer care and various support systems. In addition, interest expense increased during fiscal year 2019 as we no longer capitalized the interest expense relating to the debt incurred for the construction of ViaSat-2 and the related gateway and networking equipment once the satellite was in commercial service. As services using the new satellite scaled, however, our revenue base for broadband services expanded and we gained operating cost efficiencies, which together yielded incremental segment earnings contributions. We anticipate that we will incur a similar cycle of increased operating costs and constrained bandwidth supply as we prepare for and launch commercial services on future satellites, including our ViaSat-3 constellation, followed by increases in revenue base and in scale. However, there can be no assurance that we will be successful in significantly increasing revenues or achieving or maintaining operating profit in our communication services segment, and any such gains may also be offset by investments in our global business. In addition, we may experience capacity constraints on our existing satellites in the lead-up to the commencement of commercial service on new satellites, such as the capacity constraints we have been experiencing since fiscal year 2023 pending our ViaSat-3 constellation entering commercial service.

Previous wording

As of June 30, 2024, the aggregate principal amount of our total outstanding indebtedness was $7.5 billion, which was comprised of (1) $700.0 million in aggregate principal amount of Viasat's 5.625% Senior Notes due 2025, $600.0 million in aggregate principal amount of Viasat's 5.625% Senior Secured Notes due 2027, $400.0 million in aggregate principal amount of Viasat's 6.500% Senior Notes due 2028, $733.4 million in aggregate principal amount of Viasat's 7.500% Senior Notes due 2031 (the 2031 Notes) and $2.08 billion in aggregate principal amount of Inmarsat's 6.750% Senior Secured Notes due 2026, (2) $686.0 million in principal amount of outstanding borrowings under Viasat's $700.0 million senior secured term loan facility (the 2022 Term Loan Facility), $612.1 million in principal amount of outstanding borrowings under Viasat's $616.7 million senior secured term loan facility (the 2023 Term Loan Facility), $1.6 billion in principal amount of outstanding borrowings under Inmarsat's $1.6 billion senior secured term loan facilities (the Inmarsat Term Loan Facilities), no outstanding borrowings under the Revolving Credit Facilities, and $29.5 million in principal amount of outstanding borrowings under Viasat's direct loan facility with the Export-Import Bank of the United States (the Ex-Im Credit Facility), and (3) $23.7 million of finance lease obligations. For information regarding our outstanding indebtedness, refer to Note 7 — Senior Notes and Other Long-Term Debt to our condensed consolidated financial statements.

Current wording

As of September 30, 2024, the aggregate principal amount of our total outstanding indebtedness was $9.1 billion, which was comprised of (1) $442.6 million in aggregate principal amount of Viasat's 5.625% Senior Notes due 2025, $600.0 million in aggregate principal amount of Viasat's 5.625% Senior Secured Notes due 2027, $400.0 million in aggregate principal amount of Viasat's 6.500% Senior Notes due 2028, $1.975 billion in aggregate principal amount of Inmarsat's 9.000% Senior Secured Notes due 2029 (the Inmarsat 2029 Notes), $733.4 million in aggregate principal amount of Viasat's 7.500% Senior Notes due 2031 and $1.97 billion in aggregate principal amount of Inmarsat's 6.750% Senior Secured Notes due 2026 (which were redeemed in full with the net proceeds of the Inmarsat 2029 Notes subsequent to quarter end), (2) $686.0 million in principal amount of outstanding borrowings under Viasat's $700.0 million senior secured term loan facility (the 2022 Term Loan Facility), $610.5 million in principal amount of outstanding borrowings under Viasat's $616.7 million senior secured term loan facility (the 2023 Term Loan Facility), $1.6 billion in principal amount of outstanding borrowings under Inmarsat's $1.6 billion senior secured term loan facilities (the Inmarsat Term Loan Facilities), no outstanding borrowings under the Revolving Credit Facilities, and $29.5 million in principal amount of outstanding borrowings under Viasat's direct loan facility with the Export-Import Bank of the United States (the Ex-Im Credit Facility), and (3) $20.8 million of finance lease obligations. For information regarding our outstanding indebtedness, refer to Note 7 — Senior Notes and Other Long-Term Debt to our condensed consolidated financial statements.