If you had a chance to listen to the Viasat earnings call for the second quarter of our 2018 Fiscal Year, you heard our Government Systems segment marked another record quarter of growth, with year-over-year double-digit Government Systems segment operating profit and Adjusted EBITDA growth and revenues that were 7 percent higher year-over-year. This growth was achieved in large part due to increased interest in our tactical data link products, government mobility platforms and secure networking products – all of which solve real-world warfighter problems in a rapidly changing macro defense environment.
To some this success may come as no surprise – as multiple industry rankings over the past year have highlighted our strong government business growth:
- In Washington Technology’s Top 100 Contractors list, as determined by prime contract awards, Viasat was listed as No. 56, up 42 spots from 2012’s No. 98 spot.
- According to Frost and Sullivan’s calendar year 2016 U.S. Department of Defense (DoD) Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance market report, Viasat was the No. 1 communications contractor to the DoD for 2015 based on contract award amounts.
- In the Defense News Top 100 list, Viasat moved up two spots to No. 82, with a defense revenue growth rate of 13 percent from 2016 to 2017. Comparisons to market peers show 37 percent of the Top 100 companies saw negative growth.
- In the Bloomberg BGOV200 ranking, Viasat ranked 130 out of 200 international vendors, based on value of prime, unclassified contracts awarded by U.S agencies in fiscal 2016. Viasat is up 148 spots on the BGOV200.
So what’s our secret? How is Viasat managing to outperform our peers in this challenging defense market?
“Our success is based on collaborating with our customers to understand what they really need —focusing on solving their most urgent problems,” said Ken Peterman, president, Government Systems at Viasat. “We bring commercial innovation, technology and thinking to the defense market, which allows us to effectively deliver cutting-edge solutions that enable dramatically improved customer outcomes.”
Commercial innovation in defense
Bringing commercial innovation to the defense sector is an interesting and evolving concept — one that Viasat has put a great emphasis on. We see a shift among some of our military customers — they’re now interested in leveraging the enormous investment being made by the private sector in new technologies, along with the rapid commercial technology development cycles, for their military applications. All this comes without the military bearing the development cost or risk associated with a dedicated military development program. This is a huge and largely untapped opportunity.
An early success story
We’ve seen early success from our commercial innovation programs, with the most recent being our AN/PRC-161 Battlefield Awareness and Targeting System-Dismounted (BATS-D) handheld Link 16 radio. This small form factor tactical radio was developed at private expense to meet forecasted warfighter requirements. As a non-developmental item (NDI), the AN/PRC-161 delivers capabilities significantly faster and at significantly lower total lifecycle costs to the U.S. Government as compared to traditional government programs-of-record while being fully interoperable with program-of-record terminals such as MIDS-LVT (Multifunctional Information Distribution System Low Volume Terminal) and MIDS JTRS (Multifunctional Information Distribution System Joint Tactical Radio System).
So now you understand our approach to success: Understand warfighter needs, use agile development processes to deliver useful solutions to market faster and at a lower cost, and encourage military users to take full advantage of these new capabilities without the significant investment and development risks that come with developing their own products. We feel this will continue to be a winning approach.