ViaSat (VSAT) Down 5.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for ViaSat (VSAT). Shares have lost about 5.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ViaSat due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Viasat Misses Earnings and Revenue Estimates in Q4
Viasat reported weak fourth-quarter fiscal 2022 results, missing both the bottom-line and top-line estimates.
The weaker-than-expected results were attributable to the increased ground network costs for the upcoming ViaSat-3 American Satellite, increased R&D investments, alterations in the product mix and government product shipments that were affected by supply chain issues. Nevertheless, the company is experiencing growth in the IFC (In-Flight Connectivity) business and has received contributions from the recent RigNet and EBI acquisitions.
Bottom Line
Net loss reported in the quarter was $29.2 million or a loss of 39 cents per share against net income of $7.4 million or 11 cents per share in the prior-year quarter. The loss was primarily due to higher depreciation, non-recurring acquisition-related expenses, acquired intangible amortization and interest expense. The bottom line was wider than the Zacks Consensus Estimate of a loss of 6 cents.
The fiscal 2022 net loss amounted to $15.5 million.
Revenues
Revenues reported in the quarter were $701.7 million compared with $595.8 million in the prior-year quarter, reflecting growth of 17.8%. The growth was backed by successful ViaSat-3 ground network alpha testing over existing satellites, increased U.S. fixed broadband revenue despite reallocation of bandwidth to mobility services and accelerated international subscriber growth driven by residential fixed broadband services in Brazil. Revenues missed the Zacks Consensus Estimate by $20 million.
In fiscal 2022, the company reported record revenues of $2,787.6 million, increasing 23.5% year over year.
Segmented Revenues
The Satellite Services generated $304.9 million in revenues, reflecting growth of 32.3% from the prior-year quarter. The increase was backed by commercial IFC service revenue growth, RigNet and EBI acquisitions and higher residential ARPU. Adjusted EBIDTA grew 7% from the prior-year quarter. The growth was impeded by ViaSat-3 ground network activation expenditures and advertising costs.
The Commercial Networks segment generated $119 million in revenues, reflecting growth of 40.5% from the prior-year quarter. The rise was backed by increased deliveries of mobility terminal shipments to several airlines, antenna systems products and enterprise product contributions from RigNet. Adjusted EBIDTA fell 22% from the prior-year quarter. Adjusted EBIDTA was affected by investments in ViaSat-4 satellite payload and mobility terminals.
The Government Systems segment generated $277.8 million in revenues, nearly flat year over year. Service revenues grew 6% due to an increase in revenues from aircraft connectivity services, Blue Force Tracking solutions and cyber security. Adjusted EBIDTA decreased 18% from the prior-year quarter, due to product sales mix and delayed product deliveries.
Other Details
During the quarter, ViaSat reported an operating loss of $20.8 million against an operating income of $29.1 million in the prior-year quarter. Adjusted EBIDTA in the quarter was $134.4 million compared with $148.1 million in the prior-year quarter. The decrease was due to the higher costs associated with ViaSat-3 service launch and increased investments in R&D.
Cash Flow & Liquidity
During the fiscal fourth quarter, ViaSat generated $119 million in operating cash flow, reflecting a decline of 30% from the prior-year quarter. The decrease primarily reflects a decline in earnings. Operating cash flow for fiscal 2022 was $506 million. Cash and cash equivalents as of Mar 31, 2022, were $310.5 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 198.82% due to these changes.
VGM Scores
At this time, ViaSat has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise ViaSat has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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