Viasat Reports Narrower Q1 Loss on Higher Revenues

Viasat Inc. VSAT reported relatively healthy first-quarter fiscal 2025 results, with the top line surpassing the Zacks Consensus Estimate. The company reported higher revenues year over year, backed by solid demand trends in both segments. In addition, incremental revenues from Inmarsat contributed significantly to the top-line growth. An improved operating performance further led to a narrower-than-expected loss.

Net Income

The company incurred a net loss of $32.9 million or a loss of 26 cents per share compared with a net loss of $77 million or a loss of 83 cents per share in the year-ago quarter. The improved performance was primarily attributable to higher revenues. The bottom line was narrower than the Zacks Consensus Estimate of a loss of 42 cents.

Excluding non-recurring items, Viasat reported a non-GAAP net income of $39 million or 30 cents per share against a net loss of $0.4 million or break-even results in the year-earlier quarter.

Revenues

Revenues surged 44% to $1.13 billion, driven by solid defense orders, healthy services revenues, an incremental contribution from Inmarsat and a robust order pipeline. The top line surpassed the consensus estimate by $45 million.

Product revenues were $305.9 million, up from $236.4 million in the year-ago quarter. Net sales from Service improved to $820.7 million from $543.4 million a year ago.

During the quarter, Viasat restructured its operating segments to better reflect its existing businesses and offer investors greater transparency about its future growth opportunities. Effective from the first quarter of fiscal 2025, the company will have two distinct segments — Communication Services and Defense and Advanced Technologies.

The Communication Services segment encompasses four key business lines — Aviation, Government Satcom, Maritime, and Fixed and Other. The Defense and Advanced Technologies segment comprises Information Security and Cyber Defense, Space and Mission Systems, Tactical Networking, and Advanced Technologies and Other.

Revenues from the Communication Services segment improved to $826.8 million from $560.3 million in the year-ago quarter. The improvement is driven by strong growth in commercial and business aviation IFC services along with solid contribution from Inmarsat. A decline in the U.S. fixed broadband portfolio partially affected the net sales. The segment's adjusted EBITDA nearly doubled to $307.7 million from $155.6 million, backed by Inmarsat revenues.

Revenues from Defense and Advanced Technologies were $299.7 million, up from $219.5 million in the year-ago quarter. Higher revenues from recurring licensing agreements and tactical networking products led to the year-over-year growth. Adjusted EBITDA came in at $96.3 million compared with $27.7 million a year ago.

Other Details

In the June quarter, the company reported an operating profit of $59.7 million against an operating loss of $41.5 million in the prior-year quarter. Adjusted EBITDA was $403.9 million, up from $183.3 million in the year-ago quarter.

Cash Flow & Liquidity

During the first quarter of fiscal 2025, Viasat generated an operating cash flow of $151 million compared with $104 million in the prior-year period. As of Jun 30, 2024, the company had $1.81 billion in cash and cash equivalents, with a net debt of $5.6 billion. Capital expenditures declined 20% year over year to $301 million, primarily due to lower satellite expenditures, customer premise equipment and general infrastructure costs.

Outlook

For fiscal 2025, management expects total revenues to remain roughly flat or increase slightly year over year. Adjusted EBITDA from continuing operations is projected to grow by mid-single digits. Revenues from Communication Services are expected to be slightly down in fiscal 2025, as a decline in U.S. fixed broadband revenue and non-broadband service components of maritime will more than offset strong growth in aviation services and government satcom services.

Defense and Advanced Technologies revenues are expected to increase in low-single digits, driven by tactical networking products, antenna systems solutions, recurring contributions from certain licensing agreements and strong demand for AI applications.

Viasat currently has a Zacks Rank #4 (Sell).

Upcoming Releases

Cogent Communications Holdings, Inc. CCOI is scheduled to release second-quarter 2024 earnings on Aug 8. The Zacks Consensus Estimate for earnings is pegged at a loss of $1.31 per share, suggesting a decline of 907.7% from the year-ago reported figure.

Akamai Technologies, Inc. AKAM is slated to release second-quarter 2024 earnings on Aug 8. The Zacks Consensus Estimate for earnings is pegged at $1.54 per share, indicating growth of 3.4% from the year-ago reported figure.

Akamai has a long-term earnings growth expectation of 4.8%. AKAM delivered an average earnings surprise of 5.4% in the last four reported quarters.

Keysight Technologies, Inc. KEYS is due to release third-quarter fiscal 2024 earnings on Aug 20. The Zacks Consensus Estimate for earnings is pegged at $1.35 per share, implying a decline of 38.4% from the year-ago reported figure.

Keysight has a long-term earnings growth expectation of 5.5%. KEYS delivered an average earnings surprise of 4.4% in the last four reported quarters.

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