Viasat (VSAT) Beats Q2 Earnings Estimates on Solid Revenues
Viasat Inc. VSAT reported healthy second-quarter fiscal 2024 results, with both the bottom line and top line beating the respective Zacks Consensus Estimate. The company reported higher revenues year over year, backed by healthy demand trends in all verticals. Growth in commercial air IFC services, rising shipments and installments of mobility terminals, and growing demand for information assurance products supported the top line during the quarter. However, the decline in fixed broadband subscribers partially reversed this trend.
Net Income
The company incurred a net loss of $767.2 million or a loss of $6.16 per share compared with a net loss of $48.2 million or a loss of 64 cents per share in the prior-year quarter. High interest expenses and satellite impairment charges adversely impacted the bottom line during the quarter.
Excluding non-recurring items, Viasat recorded a non-GAAP net income of $149.7 million or $1.19 per share against a net loss of $13.6 million or a loss of 18 cents per share in the prior-year period. The bottom line beat the Zacks Consensus Estimate of 48 cents.
Viasat Inc. Price, Consensus and EPS Surprise
Viasat Inc. price-consensus-eps-surprise-chart | Viasat Inc. Quote
Revenues
Revenues surged 64.5% to $1,225.4 million driven by solid growth in product and service revenues. The top line surpassed the consensus estimate of $1,057 million.
Product revenues were $401.7 million, up from $261 million in the year-ago quarter. Net sales from Service more than doubled to $823.7 million from $402.6 million in the year-ago quarter.
Revenues from Satellite Services improved to $585.3 million from $300.5 million in the year-ago quarter. The nearly two-fold rise was driven by healthy demand for commercial air IFC services and incremental contribution from the Inmarsat buyout. The segment’s adjusted EBITDA more than tripled to $302 million from $92 million, backed by higher commercial air IFC service activations and a full quarter contribution from Inmarsat.
Commercial network contributed $275 million in revenues, up 52.8% year over year. Solid demand for Antenna system products and positive momentum of IFC orders supported the gain from this vertical. Adjusted EBITDA came in at $66 million, up from $21 million a year ago.
The Government Systems segment registered revenues of $365 million from continuing operations, up 99% year over year. Higher information assurance product deliveries supported the top line. The segment’s adjusted EBITDA from continuing operations was $118 million, up from $44 million, backed by the contribution from Inmarsat and solid product revenues.
Other Details
In the September quarter, the company reported an operating loss of $804.7 million against an operating income of $4.7 million in the prior-year quarter. Adjusted EBITDA was $486.3 million, up from $188.3 million in the year-ago quarter.
Cash Flow & Liquidity
During the second quarter of fiscal 2024, Viasat generated an operating cash flow of $219 million compared with $188 million in the prior-year period. As of Sep 30, 2023, the company has $1,961.6 million in cash and cash equivalents, with a net debt of $5.6 billion.
Outlook
For fiscal 2024, management expects revenues to increase high single digit year over year in the range of $4.1-$4.25 billion. Adjusted EBITDA from continuing operations is expected to increase mid-single digit. Viasat anticipates strong growth in Government Systems and Commercial Network segments with a relatively modest year-over-year growth in Satellite Services.
Zacks Rank & Stocks to Consider
Viasat currently has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arista Networks, Inc. ANET, carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 20.4% and delivered an earnings surprise of 12%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
United States Cellular Corporation USM, sporting a Zacks Rank #1, is the fourth largest full-service wireless carrier in the United States. The company provides a range of wireless products and services, and a high-quality network to increase the competitiveness of local businesses and improve efficiency of government operations.
U.S. Cellular has taken concrete steps to accelerate subscriber additions and improve churn management. The company aims to offer the best wireless experience to customers by providing superior quality network and national coverage. It is well-positioned to support the investment required for network enhancements, including the deployment of 5G technology. The company is well-positioned for continued demand for broadband.
Comtech Telecommunications Corp. CMTL, carrying a Zacks Rank #2, is another solid pick. Headquartered in Melville, NY, the company is a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies to commercial and government customers.
Comtech’s key satellite earth station modems incorporate forward error correction and bandwidth compression technologies, which enable its customers to optimize their satellite networks by either reducing their satellite transponder lease costs or increasing data.
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