Viasat Shareholder Letter: Q1 Fiscal Year 2023 Financial Results

Q1

FY23

SHAREHOLDER LETTER

Fellow Shareholders,

Financial results for the fiscal first quarter ended June 30, 2022 were consistent with the expectations we communicated following Q4 FY2022 year end, and we remain confident in our plans for FY2023. Revenue for Q1 FY2023 was $678 million, a 2% year-over-year (YoY) increase from Q1 FY2022. GAAP net loss* for Q1 FY2023 was $22 million compared to net income of $17 million in the prior year period, while Adjusted EBITDA** was $132 million, a 17% decrease YoY. Service revenue reached a new record, up 10% YoY, while product revenue was negatively impacted by similar factors as in Q4 FY2022. Satellite Services earned record revenue in Q1 FY2023, where growth in in-flight connectivity (IFC) service revenue more than offset a decline in fixed broadband service revenue, largely as a consequence of allocating more of our existing bandwidth to IFC. As expected, Government Systems was impacted by delays in NSA certification of encryption products and by certain supply chain shortages. Commercial Networks had lower IFC terminal shipments in the quarter compared to a very strong Q1 FY2022, partially offset by strength in advanced ground antenna systems and energy market product revenue. Factors impacting Adjusted EBITDA in the quarter included increasing ground network operating costs ahead of ViaSat-3 (Americas) launch, market entry and support costs, and higher sales and marketing expense.

Total consolidated awards in Q1 FY2023 were $783 million, 32% higher than a year ago, reflecting growth in Government Systems awards for space, 5G and mobile broadband, as well as increased awards for commercial air IFC terminals. Government Systems awards were up 29% YoY and 65% sequentially. We ended the quarter with backlog of $2.1 billion (excluding $3.6 billion of potential value under Indefinite Delivery Indefinite Quantity (IDIQ) awards), slightly lower compared to the prior year period. New business awards to date in Q2 FY2023 are also robust, particularly in Tactical Data Link products.

We continue to target launch of ViaSat-3 (Americas) in Q3 FY2023 with commencement of commercial service in early Q4 FY2023. The last subsystems are being integrated onto the satellite in preparation for final environmental, vibration and acoustic testing. The ground infrastructure has passed initial performance tests and residential terminals are operating on an Alpha over-the-air network. In early July, the second ViaSat-3 (EMEA) payload module was delivered to Boeing for integration and testing, with launch targeted for mid-calendar year 2023. The third ViaSat-3 (APAC) payload has 80% of the modules installed and is preparing for payload performance testing.

At a special meeting on June 21, 2022, Viasat received shareholder approval for the proposed acquisition of Inmarsat. The company received overwhelming support for the transaction, with more than 99% of the votes cast "for" the transaction-related proposals. Closing of the transaction remains subject to the receipt of domestic and international regulatory approvals and clearances as well as other customary closing conditions.

Key events during the quarter and subsequent to quarter end lend confidence to our outlook for achieving record results for FY2023, consistent with our previous guidance of mid-teens Adjusted EBITDA growth YoY compared to FY2022. Key factors include:

• As previously disclosed, in Q1 FY2023 Viasat was selected by Southwest Airlines to provide IFC, factory line- fit, for their new Boeing 737 MAX fleet, with deliveries anticipated to begin in the third quarter of this fiscal year. Southwest Airlines has firm orders for approximately 465 new 737s, and options for 167 additional aircraft. Total IFC orders from existing and new customers support our expectation of significant growth in IFC services revenue in the back half of FY2023. Passenger traffic on activated aircraft is expected to continue to be robust for the US domestic market, which constitutes the majority of our IFC business.
• Total consolidated awards for Q1 FY2023 were $783 million, yielding a book-to-bill ratio of 1.2x and backlog of $2.1 billion. Product orders for Government Systems and Commercial Networks provide solid backlog for our anticipated 2nd half of FY2023 revenue and earnings growth.
• Immediately following Q1 FY2023 close we collected a $62 million litigation verdict after it was upheld by a California appeals court. The payment, which came earlier in our fiscal year than expected, is for Acacia Communications, Inc.'s use of our intellectual property. A portion of the payment will contribute to FY2023 Adjusted EBITDA.

We'll provide more detail on the impact of these factors, among others, in the following sections of this letter.

* Net income (loss) as used herein is defined as net income (loss) attributable to Viasat, Inc. common stockholders	Shareholder Letter | Q1 Fiscal Year 2023	1
** A reconciliation of Adjusted EBITDA to its closest GAAP equivalent is provided at the end of this letter

Q1 FY2023 Financial Results

• Revenue increased 2% YoY, to $678 million, primarily from growth in Satellite Services, partially offset by transient product revenue pressure in Government Systems and Commercial Networks
• Achieved record service revenue of $409 million, an increase of 10% YoY, which represented 60% of total revenue compared to 56% in the prior year period
• The net loss of $22 million reported for Q1 FY2023 compared to net income of $17 million in the prior year period was due primarily to lower Adjusted EBITDA and higher depreciation, intangible amortization and non- recurring acquisition related expenses
• Adjusted EBITDA for the quarter declined 17% YoY, primarily from higher costs associated with the ramp up to ViaSat-3 (Americas) service launch, higher SG&A supporting new business opportunities and product mix changes

• Satellite Services revenue increased 14% YoY, mainly due to 36% more IFC aircraft in service compared to the prior year period, growth in enterprise services as a result of the RigNet acquisition, organic growth in international fixed broadband and higher fixed broadband ARPU, which was offset by fewer U.S. residential subscribers resulting from capacity constraints
• Consolidated awards for the quarter increased 32% YoY to $783 million, driven primarily by strong bookings in both Government Systems and Commercial Networks, resulting in a healthy backlog of $2.1 billion and a book- to-bill of 1.2x
• Net leverage increased sequentially to 4.2x LTM Adjusted EBITDA, with net debt slightly lower than our quarter end target

AWARDS	REVENUEAWARDS	OPERATING INCOME (LOSS)
$ in millions	$ in millions	$ in millions

$832

$783

$720

$665

$701

$702

$678

$653

$16.3

$595

$569

$8.3

$4.5

($20.8) ($27.1)

Q1

Q2

Q3

Q4

Q1

Q1

Q2

Q3

Q4

Q1

Q1

Q2

Q3

Q4

Q1

FY22

FY22

FY22

FY22

FY23

FY22

FY22

FY22

FY22

FY23

FY22

FY22

FY22

FY22

FY23

AWARDSNET INCOME (LOSS)*

NON-GAAP NET INCOME (LOSS)*

ADJ. EBITDA**

$ in millions

$ in millions

$ in millions

$17.0

$3.3

$33.3

$159

$155

$163

$134

$132

$25.4

$24.7

($6.6)

$10.6

($21.6)

$4.8

($29.2)

Q1

Q2

Q3

Q4

Q1

Q1

Q2

Q3

Q4

Q1

Q1

Q2

Q3

Q4

Q1

FY22

FY22

FY22

FY22

FY23

FY22

FY22

FY22

FY22

FY23

FY22

FY22

FY22

FY22

FY23

Shareholder Letter | Q1 Fiscal Year 2023

2

AWARDS, REVENUE AND ADJ. EBITDA

$ in millions

$323
$250	$272	$253
		$72	$51
Awards	Revenue Adj. EBITDA
	Q1 FY22	Q1 FY23

AWARDS, REVENUE AND ADJ. EBITDA

$ in millions

$1,118$1,107$1,077$1,068

	$303 $260
Awards	Revenue Adj. EBITDA

LTM Prior Year LTM Current Year

BACKLOG AND UNAWARDED IDIQ

$ in millions

$3,985 $3,638

$920	$895
Backlog	Unawarded IDIQ
	Q1 FY22	Q1 FY23

Government

Systems

Segment Highlights

• Selected by U.S. Department of Defense to conduct 5G network research for Expeditionary Advanced Base Operations. The research will leverage Viasat's 5G and tactical networking System Integration Lab to integrate digital twin capabilities using network modeling and emulation software for enhanced network planning and simulation
• Received $53 million NASA Communications Services Project award to provide real-time space data relay capabilities for NASA, providing a commercial capability to replace the TDRS system
• Opened new office in Aberdeen Proving Ground, strengthening our presence with the U.S. Army's C5ISR campus and deepening our ability to support the U.S. Army's network transformation
• Joined the UK Space Cluster on the Harwell Science and Innovation Campus. Harwell houses over 100 organizations, including the UK Space Agency and the European Space Agency, and is the largest concentration of space expertise in the UK

Awards

Government Systems awards in Q1 FY2023 were $323 million, an increase of 29% YoY and 65% sequentially, resulting in a 1.3x book-to-bill ratio. Space and government mobile broadband was the largest driver of the YoY increase with a significant award from NASA's Communication Services Project for space relay capabilities and multiple awards to provide Link-16 capabilities for the Space Development Agency's Tranche 1 Transport Layer. Government Systems ended the quarter with a backlog of $895 million, excluding approximately $3.6 billion of potential unawarded IDIQ contract value.

Revenue

In Q1 FY2023, typically a seasonally light quarter for this segment, Government Systems revenue was $253 million, a decrease of 7% YoY. Decreased product sales from government mobile broadband and tactical satcom modems were the main contributors of the YoY decline. We expect revenue growth to resume next quarter and continue in the second half of FY2023 as bottlenecks and spot supply chain issues are resolved.

Adjusted EBITDA

Q1 FY2023 Government Systems Adjusted EBITDA was $51 million, a decrease of 29% YoY, primarily due to decreased revenue, lower margin product sales mix and higher SG&A.

Shareholder Letter | Q1 Fiscal Year 2023

3

AWARDS, REVENUE AND ADJ. EBITDA

$ in millions

$275 $317 $274 $312

			$106	$103
Awards	Revenue Adj. EBITDA
		Q1 FY22		Q1 FY23

AWARDS, REVENUE AND ADJ. EBITDA

$ in millions

$1,236 $1,227

$941 $941

	$372 $427
Awards	Revenue Adj. EBITDA

LTM Prior Year LTM Current Year

REVENUE MIX

Annual and Quarterly Trends

Satellite Services

Segment Highlights

• Achieved record quarterly revenue of $312 million in Q1 FY2023, driven by strong growth in commercial air IFC services, the impact of the RigNet acquisition, including underlying organic revenue growth, and LATAM fixed broadband
• Reached 1,900 commercial aircraft in service at the end of Q1 FY2023, up 36% YoY, and announced a new contract with Southwest Airlines
• Launched new Choice packages - our fastest home internet plans that deliver enhanced download speeds of up to 150 Mbps - in select areas of the U.S.
• Enabled U.S. residential broadband plans to be available through the Affordable Connectivity Program, allowing eligible households to qualify for the benefit program that offers discounted internet services

Revenue

Satellite Services achieved record revenue in Q1 FY2023, reaching $312 million, up 14% YoY, led by commercial air IFC. We ended the quarter with 1,900 aircraft in service and about 500 more expected by fiscal year end paced by new aircraft deliveries in the second half of FY2023. U.S. fixed broadband revenue declined YoY on a lower subscriber base, as we allocated more bandwidth to mobility, partially offset by higher ARPU. International fixed broadband continues to grow YoY, mostly in Brazil with slight offsets from Europe. We continue to grow the proportion of mobility, international and enterprise fixed broadband revenue, reaching a record 42% this quarter, and expect sustained growth for this metric.

Adjusted EBITDA

In Q1 FY2023, Satellite Services Adjusted EBITDA was $103 million, a 3% decrease YoY and a 3% increase sequentially. Adjusted EBITDA margins were affected by growing expenses associated with activating more of the ViaSat-3 ground network, international activities, and lower margin contributions from RigNet.

16% 20%

23% 12%

35%

FY18 FY19 FY20 FY21 FY22

29%

35%

37%

39%

42%

Q1	Q2		Q3	Q4	Q1
FY22	FY22	FY22	FY22	FY23
		U.S. Fixed		Mobility / International
		Broadband		/ Other

1,700

1,550

1,620

1,400

Q1 Q2

FY22 FY22

1,880

1,910

1,930 Aircraft Installed

1,800	1,830	1,900	Aircraft In-Service***

Q3	Q4	Q1	Commercial
FY22	FY22	FY23	Aircraft

***Excludes approximately 150, 80, 80, 80 and 30 aircraft that were inactive as of Jun 2021, Sep	Shareholder Letter | Q1 Fiscal Year 2023	4
2021, Dec 2021, Mar 2022 and Jun 2022 respectively, due to the COVID-19 pandemic