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 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.

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 impact of anomalies on the ViaSat-3 F1 and Inmarsat-6 (I-6) F2 satellites including any potential 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; plans to exit certain ground network infrastructure locations in the EMEA markets and associated impairment charges and liabilities; 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; the ability to realize an…

Excerpt shortened here; the source contains the full paragraph.

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 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.

Current wording

Aviation, which includes industry-leading IFC services and wireless in-flight entertainment (W-IFE) services for commercial aircraft and business jets, narrowband safety services, and complementary aviation software services (such as cockpit, data safety and surveillance). As of December 31, 2024, we had our IFC systems installed and in service on approximately 4,030 commercial aircraft (of which approximately 80 were inactive at quarter end, mostly due to standard aircraft maintenance) and approximately 2,000 business jets with Ka-band communication services. We anticipate that approximately 1,570 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. As of September 30, 2024, we provided Ka-band communication services to approximately 14,360 vessels.

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 December 31, 2024, we provided Ka-band communication services to approximately 14,300 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 September 30, 2024, our U.S. fixed broadband business had approximately 228,000 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 December 31, 2024, our U.S. fixed broadband business had approximately 205,000 subscribers with an average monthly revenue per user of $115.

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% 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.

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 nine months ended December 31, 2024, and approximately 96% and 95% of our total revenues for the three and nine months ended December 31, 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

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.

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 nine months ended December 31, 2024 and 2023.

Previous wording

Our total revenues decreased by $103.2 million as a result of a $77.8 million decrease in product revenues and a $25.4 million decrease in service revenues. The decrease in product revenues was driven primarily by a $80.5 million decrease in our defense and advanced technologies segment (primarily the result of $95.0 million in non-recurring catch-up contributions from certain licensing agreements in advanced technologies and other received in the prior year period (see Note 9 — Commitments and Contingencies to our condensed consolidated financial statements for more information)), partially offset by a $2.7 million increase in our communication services segment. The decrease in service revenues was driven by decreases of $22.9 million in our communication services segment and $2.5 million in our defense and advanced technologies segment.

Current wording

Our total revenues decreased by $4.8 million as a result of a $16.1 million decrease in service revenues, partially offset by a $11.3 million increase in product revenues. The decrease in service revenues was driven by decreases of $13.4 million in our communication services segment and $2.7 million in our defense and advanced technologies segment. The increase in product revenues was driven by a $52.5 million increase in our defense and advanced technologies segment, partially offset by a $41.1 million decrease in our communication services segment.

Previous wording

Cost of revenues increased by $8.8 million due to an increase of $19.3 million in cost of service revenues, partially offset by a $10.5 million decrease in cost of product revenues. The increase in cost of service revenues was primarily driven by lower margins, primarily in our communication services segment. The increase in cost of service revenues was partially offset by a decrease of $15.8 million as a result of lower service revenues, primarily reflected in our communication services segment. The decrease in cost of product revenues was primarily driven by higher margins, primarily in our defense and advanced technologies segment prior to the effects of certain 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). The decrease in cost of product revenues was partially offset by an increase in cost of product revenues of $18.6 million on a constant margin basis, due to increased product revenues mainly in our defense and advanced technologies segment.

Current wording

Cost of revenues decreased by $5.3 million due to a decrease of $18.3 million in cost of product revenues, partially offset by an increase of $13.0 million in cost of service revenues. The decrease in cost of product revenues was primarily driven by higher margins primarily in our defense and advanced technologies segment due to a higher mix of our product revenues associated with our royalty and licensing agreements versus hardware and other product related revenues. The increase in cost of service revenues was primarily attributable to lower margins, partially offset by a decrease in cost of service revenues of $10.0 million on a constant margin basis as a result of lower service revenues, both of which were mainly in our communication services segment.

Previous 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.

Current wording

The $33.7 million decrease in selling, general and administrative (SG&A) expenses was primarily due to lower support costs of $17.5 million and lower selling costs of $8.9 million, both of which were mainly in our communication services segment. The decrease in support costs reflects a reduction in our global workforce in November 2023 and related one-time costs included in the prior year period as we continue to integrate our business post-Inmarsat Acquisition and streamline our global operations. 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

Independent research and development (IR&D) expenses were flat year-over-year as a result of a $3.0 million decrease in our communication services segment (primarily related to next-generation satellite payload technologies), partially offset by a $3.0 million increase in our defense and advanced technologies segment (primarily related to advanced technologies and other).

Current wording

The $5.0 million decrease in independent research and development (IR&D) expenses was due to a $7.3 million decrease in our communication services segment (primarily related to narrowband and safety of communication capabilities), partially offset by a $2.3 million increase in our defense and advanced technologies segment (primarily related to advanced technologies and other).

Previous 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.

Current wording

We amortize our acquired intangible assets from prior acquisitions over their estimated useful lives, which range from two to 20 years. The $25.9 million decrease in amortization of acquired intangible assets in the third 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

The $29.2 million increase in interest expense for the three months ended September 30, 2024 compared to the prior year period was primarily attributable to a decrease in the amount of interest capitalized in the current year period.

Current wording

The $39.1 million decrease in interest expense for the three months ended December 31, 2024 compared to the prior year period was primarily attributable to an increase in the amount of interest capitalized in the current year period.

Previous wording

For the six months ended September 30, 2024, we recorded an income tax provision of $7.1 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 six months ended September 30, 2023, we recorded an income tax benefit of $93.6 million, resulting in an effective tax rate of 10%. 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.

Current wording

For the three months ended December 31, 2024, we recorded an income tax benefit of $11.8 million, resulting in an effective tax rate of 7%. The effective tax rate for the period differed from the U.S. statutory rate primarily due to a U.S. valuation allowance, foreign tax rate differences, and decreases in our unrecognized tax benefits. For the three months ended December 31, 2023, we recorded an income tax benefit of $34.5 million, resulting in an effective tax rate of 22%. The effective tax rate for the period did not differ significantly from the U.S. statutory rate despite a valuation allowance recorded against our U.S. net deferred tax assets primarily due to the impacts of purchase price allocation adjustments with respect to the Inmarsat Acquisition recorded in the quarter.

Previous wording

Our communication services segment revenues decreased by $20.2 million due to a $22.9 million decrease in service revenues, partially offset by a $2.7 million increase in product revenues. The decrease in segment service revenues was primarily due to a $61.6 million decrease in fixed services and other (primarily related to fixed broadband services) and a $9.2 million decrease in maritime services. The decrease in segment service revenues was partially offset by a $37.9 million increase in aviation services and a $10.0 million increase in government satcom services. 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 increase in segment product revenues was primarily due to a $10.4 million increase in fixed services and other products, mainly driven by enterprise and energy, partially offset by decreases of $3.6 million in government satcom products and $3.4 million in aviation products.

Current wording

Our communication services segment revenues decreased by $54.5 million due to a $41.1 million decrease in product revenues and a $13.4 million decrease in service revenues. The decrease in segment product revenues was primarily due to decreases of $27.4 million in aviation products due to accelerated IFC terminal deliveries in the prior year period, $11.4 million in government satcom products and $3.1 million in fixed services and other products, mainly driven by enterprise and energy. The decrease in segment service revenues was primarily due to a $48.8 million decrease in fixed services and other (primarily related to fixed broadband services) and a $11.2 million decrease in maritime services. The decrease in segment service revenues was partially offset by a $27.9 million increase in aviation services and a $18.7 million increase in government satcom services. The IFC service revenue increase was driven primarily by the increase in the number of commercial aircraft and business jets receiving our in-flight services through our IFC systems, with our IFC systems installed and in service on approximately 4,030 commercial aircraft (of which approximately 80 were inactive at quarter end, mostly due to standard aircraft maintenance) and approximately 2,000 business jets as of December 31, 2024, compared to approximately 3,540 commercial aircraft (of which approximately 40 were inactive at quarter end, mostly due to standard aircraft maintenance) and approximately 1,700 business jets as of December 31, 2023. 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.

Previous wording

The decrease in our communication services segment operating loss was primarily due to lower SG&A costs related 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, and by lower IR&D expenses of $3.0 million (primarily related to next-generation satellite payload technologies), partially offset by lower earnings contributions of $44.9 million and a $27.4 million increase in SG&A expenses (mostly related to support costs).

Current wording

The increase in our communication services segment operating profit was primarily due to lower SG&A expenses of $26.1 million (mostly related to support costs) and lower IR&D expenses of $7.3 million (primarily related to narrowband and safety of communication capabilities), partially offset by lower earnings contributions of $30.7 million driven by the decrease in segment revenues.

Previous 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).

Current wording

Cost of revenues increased by $169.4 million due to a $201.1 million increase in cost of service revenues, partially offset by a $31.7 million decrease in cost of product revenues. The increase in cost of service revenues was primarily attributable to increased service revenues, resulting in a $147.9 million increase in cost of service revenues on a constant margin basis and also lower margins, both of which were mainly in our communication services segment. The decrease in cost of product revenues was primarily driven by higher margins primarily in our defense and advanced technologies segment due to a higher mix of our product revenues associated with our royalty and licensing agreements versus hardware and other product related revenues.

Previous wording

The $845.0 million decrease in SG&A expenses was driven primarily due to 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 further driven by lower selling costs of $4.2 million, primarily reflected in our defense and advanced technologies segment. The decrease was partially offset by higher support costs of $58.8 million, primarily reflected in our communication services segment.

Current wording

The $878.7 million decrease in SG&A expenses was primarily due to a net loss of $905.5 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 further driven by lower selling costs of $13.1 million, partially offset by higher support costs of $41.2 million, both of which were mainly in our communication services segment.

Previous 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.

Current wording

The $4.5 million increase in IR&D expenses was mainly due to an increase of $8.8 million in our defense and advanced technologies segment (primarily related to tactical terrestrial networking and other advanced technologies), partially offset by a $4.3 million decrease in our communication services segment (primarily related to next-generation consumer broadband integrated networking technologies).

Previous wording

We amortize our acquired intangible assets from prior acquisitions over their estimated useful lives, which range from two to 20 years. The $23.1 million increase in amortization of acquired intangible assets in the first six months of fiscal year 2025 compared to the prior year period was primarily due to two full quarters of amortization of acquired intangibles assets from the Inmarsat Acquisition in May 2023, compared to only four months in the prior year period. The increase in amortization of acquired intangible assets was partially offset by 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.

Current wording

We amortize our acquired intangible assets from prior acquisitions over their estimated useful lives, which range from two to 20 years. The $2.8 million decrease in amortization of acquired intangible assets in the first nine months of fiscal year 2025 compared to the prior year period was primarily due 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

The $8.6 million decrease in interest income for the three 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 from a litigation settlement in the prior year period (see Note 9 — Commitments and Contingencies to our condensed consolidated financial statements for more information).

Current wording

The $8.2 million decrease in interest income for the nine months ended December 31, 2024 compared to the prior year period was primarily due to lower interest earned as a result of lower average invested balance in combination with lower interest rates, in addition to 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).

Previous 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.

Current wording

The $40.0 million increase in interest expense for the nine months ended December 31, 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 and the refinancing of certain debt at a higher interest rate.

Previous 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.

Current wording

For the nine months ended December 31, 2024, we recorded an income tax benefit of $4.7 million, resulting in an effective tax rate of 2%. The effective tax rate for the period differed from the U.S. statutory rate primarily due to a U.S. valuation allowance, foreign tax rate differences, and decreases in our unrecognized tax benefits. For the nine months ended December 31, 2023, we recorded an income tax benefit of $128.1 million, resulting in an effective tax rate of 12%. 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

Segment Results for the Six Months Ended September 30, 2024 vs. Six Months Ended September 30, 2023

Current wording

Segment Results for the Nine Months Ended December 31, 2024 vs. Nine Months Ended December 31, 2023

Previous 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.

Current wording

Our communication services segment revenues increased by $191.8 million due to a $236.6 million increase in service revenues, partially offset by a $44.7 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 $321.7 million to the increase in service revenues in our communication services segment, as a result of three full quarters of contribution compared to only seven months in the prior year period coupled with higher revenues contributed by Inmarsat in the current year period. The inclusion of three full quarters from Inmarsat, the Inmarsat revenue increase 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 IFC service revenue increase was driven primarily by the increase in the number of commercial aircraft and business jets receiving our in-flight services through our IFC systems, with our IFC systems installed and in service on approximately 4,030 commercial aircraft (of which approximately 80 were inactive at quarter end, mostly due to standard aircraft maintenance) and approximately 2,000 business jets as of December 31, 2024, compared to approximately 3,540 commercial aircraft (of which approximately 40 were inactive at quarter end mostly due to standard aircraft maintenance) and approximately 1,700 business jets as of December 31, 2023. The decrease in segment product revenues was primarily driven by a $41.6 million decrease in aviation products due to accelerated IFC terminal deliveries in the prior year period and a $14.2 million decrease in government satcom products, partially offset by a $10.6 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 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.

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 $905.5 million in the prior year period, as described above, as well as higher earnings contributions of $16.6 million, mainly due to increased service revenues as a result of the Inmarsat Acquisition. The change in our communication services segment operating loss to an operating profit was also attributable to lower IR&D expenses of $4.3 million (primarily related to next-generation consumer broadband integrated networking technologies), partially offset by an increase of $35.5 million in SG&A expenses (reflecting the inclusion of three full quarters of Inmarsat SG&A costs in the current year period compared to only seven months of SG&A costs in the prior year period).

Previous wording

The increase in our defense and advanced technologies segment operating profit was primarily due to higher earnings contributions of $21.5 million, primarily driven by increased revenues and improved margins in tactical terrestrial networking products, as well as lower SG&A costs of $6.7 million. The increase in operating profit was partially offset by a $6.6 million increase in IR&D expenses (primarily related to tactical terrestrial networking and other advanced technologies products).

Current wording

The increase in our defense and advanced technologies segment operating profit was primarily due to higher earnings contributions of $52.8 million, primarily driven by increased revenues and improved margins in tactical networking products (mostly related to tactical terrestrial networking products) with a higher mix of our product revenues associated with our royalty and licensing agreements versus hardware and other product related revenues, as well as lower SG&A costs of $8.7 million. The increase in operating profit was partially offset by a $8.8 million increase in IR&D expenses (primarily related to tactical terrestrial networking and other advanced technologies products).

Previous 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.

Current wording

The firm backlog does not include contract options. As of December 31, 2024, approximately 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 December 31, 2024, our IFC systems were installed and in service on approximately 4,030 commercial aircraft (of which approximately 80 were inactive at quarter end, mostly due to standard aircraft maintenance). We anticipate that approximately 1,570 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 $1.3 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.

Current wording

Our total new awards which exclude future revenue under recurring consumer commitment arrangements were approximately $1.1 billion and $3.5 billion for the three and nine months ended December 31, 2024, respectively, compared to approximately $1.2 billion and $3.0 billion for the three and nine months ended December 31, 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 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.

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 December 31, 2024, we had $1.6 billion in cash and cash equivalents, $1.3 billion in working capital, no outstanding borrowings and borrowing availability of $585.5 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 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 business 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, 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), the timing and amount of investments in IR&D activities (including with respect to next-generation satellite payload technologies), 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

In our defense and advanced technologies segment, the primary factors determining cash needs tend to be the type and mix of contracts in backlog (e.g., product or service, development or production) and timing of payments (including restrictions on the timing of cash payments under U.S. Government procurement regulations), contract duration and program performance. For example, if a program is performing well and meeting its contractual requirements, then its cash flow requirements are usually lower.

Current wording

In our defense and advanced technologies segment, the primary factors determining cash needs tend to be the type and mix of contracts in backlog (e.g., product or service, development or production), timing of payments and payment terms (including restrictions on the timing of cash payments under U.S. Government procurement regulations), as well as contract duration and program performance. For example, if a program is performing well and meeting its contractual requirements, then its cash flow requirements are usually lower.

Previous 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.

Current wording

We may, from time to time, seek to retire, prepay or repurchase our outstanding debt (including some or all of the Viasat's 5.625% Senior Notes due 2025 (the 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's 6.750% Senior Secured Notes due 2026 (the Inmarsat 2026 Notes) and $257.5 million of 2025 Notes. During the third quarter of fiscal year 2025, we redeemed the remaining Inmarsat 2026 Notes in full. As a result, we recorded a net loss on extinguishment of debt of approximately $96.6 million and $99.8 million in (loss) gain on extinguishment of debt, net in the condensed consolidated statement of operations, for the three and nine months ended December 31, 2024, respectively, mainly related to the redemption of the Inmarsat 2026 Notes (attributable to the related unamortized fair value adjustment made in purchase accounting). If any of the 2025 Notes are not repurchased, we intend to repay the remaining 2025 Notes at maturity in September 2025. 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 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.

Current wording

Cash provided by operating activities for the first nine months of fiscal year 2025 was $609.7 million compared to $456.2 million in the prior year period. This $153.5 million increase was driven by our operating results (net income (loss) adjusted for depreciation, amortization and other non-cash charges) which resulted in $165.4 million of higher cash provided by operating activities year-over-year, partially offset by a $11.9 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 nine 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 (including acquired through the Inmarsat Acquisition) in our communication services segment. Cash paid for income taxes, net, during the first nine months of fiscal year 2025 and 2024 were $174.6 million and $176.4 million, respectively. Cash paid for interest (net of amounts capitalized) during the first nine months of fiscal year 2025 and 2024 were $271.0 million and $179.9 million, respectively.

Previous 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.

Current wording

Cash used in investing activities for the first nine months of fiscal year 2025 was approximately $524.9 million compared to $1.5 billion in the prior year period. This $927.0 million decrease in cash used in investing activities year-over-year reflects decreases of $379.0 million in cash used for capital expenditures, $342.6 million in cash (net of cash acquired) used for the Inmarsat Acquisition in the first quarter of fiscal year 2024 and $240.0 million of cash receipts related to satellite insurance claim proceeds received during the first nine months of fiscal year 2025.

Previous 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.

Current wording

Cash used in financing activities for the first nine months of fiscal year 2025 was approximately $435.9 million compared to cash provided by financing activities of $1.2 billion for the prior year period. Cash used in financing activities in the first nine months of fiscal year 2025 was primarily comprised of debt repayments of $2.4 billion, partially offset by proceeds from debt borrowings of $2.0 billion (which primarily related to the repurchase and refinancing of the Inmarsat 2026 Notes). Cash provided by financing activities in the first nine months of fiscal year 2024 was primarily comprised of proceeds from debt borrowings of approximately $1.3 billion incurred in connection with the Inmarsat Acquisition. See Note 7 — Senior Notes and Other Long-Term Debt for further information.

Previous 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.

Current wording

As of December 31, 2024, the aggregate principal amount of our total outstanding indebtedness was $7.2 billion, which was comprised of (1) $442.6 million in aggregate principal amount of the 2025 Notes, $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, $733.4 million in aggregate principal amount of Viasat's 7.500% Senior Notes due 2031, (2) $682.5 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 aggregate 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 $19.7 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) $164.4 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.

Previous wording

To the extent that the interest rate on any long-term debt is variable, amounts reflected represent estimated interest payments on the applicable current outstanding balance based on the interest rate at September 30, 2024 until the applicable maturity date, net of interest rate cap contracts (maturing in February 2025) set up to hedge the variable interest rates under the Inmarsat Term Loan Facilities. The interest rate cap contracts provide protection from Compound SOFR rates over 2% and covered the total nominal amount of the Inmarsat Term Loan Facilities of $1.6 billion.

Current wording

To the extent that the interest rate on any long-term debt is variable, amounts reflected represent estimated interest payments on the applicable current outstanding balance based on the interest rate at December 31, 2024 until the applicable maturity date, net of interest rate cap contracts (maturing at the end of February 2025) set up to hedge the variable interest rates under the Inmarsat Term Loan Facilities. The interest rate cap contracts provide protection from Compound SOFR rates over 2% and covered the total nominal amount of the Inmarsat Term Loan Facilities of $1.6 billion.

Previous wording

Our condensed consolidated balance sheets included $2.4 billion and $2.5 billion of “other liabilities” as of September 30, 2024 and March 31, 2024, respectively, which primarily consisted of deferred income taxes and the long-term portion of deferred revenues. These remaining liabilities have been excluded from the above table as the timing and/or the amount of any cash payment is uncertain.

Current wording

Our condensed consolidated balance sheets included $2.2 billion and $2.5 billion of “other liabilities” as of December 31, 2024 and March 31, 2024, respectively, which primarily consisted of deferred income taxes and the long-term portion of deferred revenues. These remaining liabilities have been excluded from the above table as the timing and/or the amount of any cash payment is uncertain.