Global satellite communications provider Viasat (NASDAQ: VSAT) fell short of the market’s revenue expectations in calendar Q3 2026 (fiscal Q2 2027) as sales rose 3.4% year on year to $1.18 billion. Its non-GAAP loss of $0.32 per share was significantly below analysts’ consensus estimates.

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StockStory’s take

Viasat’s third quarter results saw the company fall short of Wall Street’s expectations for both revenue and non-GAAP earnings, reflecting near-term headwinds in its Communication Services segment and higher research and development spending. CEO Mark Dankberg pointed to continued strength in the Defense and Advanced Technologies (DAT) segment, which benefited from elevated demand for secure communications and networking solutions. The company’s management acknowledged intensified competition in commercial markets but emphasized that new contract awards and backlog growth in DAT are helping to offset pressure elsewhere.

Looking ahead, Viasat’s management is focused on monetizing recent infrastructure investments—particularly the ViaSat-3 satellite deployments—while maintaining capital discipline and exploring strategic options through its ongoing review committee. CFO Gary Chase highlighted that the company expects mid-single digit revenue growth for the year, with DAT driving the majority of expansion. Management also noted potential declines in aviation revenue over the next year, but expressed confidence in growing free cash flow and leveraging new business opportunities, stating, “We are entering a fundamentally different phase, characterized by expanding growth opportunities, lower capital intensity, and increasing financial and strategic optionality.”

Key insights from management’s remarks

Viasat’s latest quarter was marked by ongoing challenges in Communication Services, offset by robust growth and contract wins in DAT, while the company transitions toward monetizing its infrastructure investments.

• DAT segment acceleration: The Defense and Advanced Technologies segment experienced around 20% year-over-year revenue growth, fueled by strong demand for secure communications, cybersecurity, and tactical networking products. Management credited this segment’s backlog and contract wins as leading indicators for multi-year growth.
• ViaSat-3 deployment impact: Both ViaSat-3 Flights 2 and 3 entered service and began supporting commercial and government applications, providing improved bandwidth and user experience. Management believes these satellites will help stabilize and eventually grow both residential and government SATCOM businesses.
• Communication Services headwinds: The Communication Services segment continued to face declines in fixed broadband and maritime, partially offset by modest growth in aviation and government SATCOM. Management cited competitive pressures and seasonal churn as contributors to the segment’s underperformance.
• Strategic review ongoing: The company maintained its strategic review committee, signaling continued evaluation of portfolio optimization and capital allocation to maximize shareholder value. Management noted growing interest in the value of underlying assets and a widening set of strategic options.
• Capital discipline and free cash flow: Viasat is shifting from a phase of high infrastructure spending to one focused on cash generation and debt reduction. Management emphasized that capital expenditures for the year are expected to be lower, with improving free cash flow as a key priority.

Drivers of future performance

Management’s outlook centers on leveraging DAT momentum and ViaSat-3 assets, while navigating challenges in aviation and fixed broadband amid a sharper focus on capital efficiency.

• DAT and government growth: Management expects continued double-digit revenue increases in the DAT segment, supported by a robust backlog and new government technology awards. The company sees rising demand for encryption, tactical networking, and resilient space architectures as key drivers.
• Aviation revenue decline and cost actions: Viasat anticipates a decline in aviation revenue next year due to recent customer announcements, which could impact up to 20% of segment sales. Management is actively evaluating cost mitigation strategies and working to offset these pressures through new orders and product enhancements.
• Capital intensity reduction: The company is transitioning out of its peak capital investment cycle, focusing on monetizing ViaSat-3 infrastructure and growing free cash flow. This shift is expected to provide greater financial flexibility, allowing selective investments in growth opportunities and ongoing debt reduction.

Catalysts in upcoming quarters

In the coming quarters, the StockStory team will monitor (1) the pace at which DAT contract awards convert to revenue and whether backlog continues to expand, (2) stabilization in Communication Services, especially as ViaSat-3 capabilities are rolled out to residential and government customers, and (3) updates on the Equatys joint venture, including regulatory milestones and new partner announcements. Execution on capital discipline and free cash flow improvement will also be important signposts.

Viasat currently trades at $60.04, up from $59.38 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free).

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