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ViaSat (VSAT) Q1 Loss Narrower Than Expected, Revenues Miss

·4 min read

ViaSat, Inc. VSAT reported modest first-quarter fiscal 2023 results, incurring a narrower-than-expected loss but missing top-line estimates. The results were affected by the increased ground network costs for the upcoming ViaSat-3 American Satellite, higher R&D investments, alterations in the product mix and government product shipments due to supply chain issues. Nevertheless, the company is experiencing growth in the IFC (In-Flight Connectivity) business and healthy contributions from the RigNet acquisition.

Bottom Line

Net loss in the reported quarter was $21.6 million or a loss of 29 cents per share against net income of $17 million or 23 cents per share in the prior-year quarter. The decline in the bottom line despite top-line growth was primarily due to higher depreciation, non-recurring acquisition-related expenses and acquired intangible amortization. The Zacks Consensus Estimate was pegged at a loss of 49 cents.

Viasat Inc. Price, Consensus and EPS Surprise

Viasat Inc. Price, Consensus and EPS Surprise
Viasat Inc. Price, Consensus and EPS Surprise

Viasat Inc. price-consensus-eps-surprise-chart | Viasat Inc. Quote

Revenues

Revenues improved to $678.2 million from $664.9 million in the prior-year quarter due to record revenues from Satellite Services driven by solid IFC business. However, the top line missed the Zacks Consensus Estimate of $691 million.

Segment Performance

The Satellite Services generated $312.1 million in revenues, reflecting growth of 13.9% from the prior-year quarter. The increase was backed by commercial IFC service growth, an incremental contribution from the RigNet acquisition and higher fixed broadband revenues in the international market. The company ended the quarter with 1,900 aircraft in service. Adjusted EBIDTA declined 3% from the prior-year quarter to $103 million, owing to investments for activating more ViaSat-3 ground network and mobility terminals.

The Commercial Networks segment generated $112.8 million in revenues, reflecting a decline of 4.9% from the prior-year quarter due to lower IFC terminal shipments. Adjusted EBIDTA was negative $22 million compared with a negative $19 million a year ago due to lower revenues and higher legal expenses during the quarter.

The Government Systems segment generated $253.3 million in revenues, down 6.9% year over year due to lower product sales from government mobile broadband and tactical satcom modems. Adjusted EBIDTA decreased to $51 million from $72 million due to lower revenues and lower margin product sales mix.

Other Details

During the quarter, ViaSat reported an operating loss of $27.1 million against an operating income of $16.3 million in the prior-year quarter. Adjusted EBIDTA in the quarter was $131.8 million compared with $159 million in the prior-year quarter. The decrease was due to the higher costs associated with ViaSat-3 service launch, higher operating expenses and product mix changes.

Cash Flow & Liquidity

During the fiscal first quarter, ViaSat generated $40 million in operating cash flow, reflecting a decline of 39% from the prior-year quarter. The decrease primarily reflects a decline in earnings. Cash and cash equivalents as of Jun 30, 2022, were $221.5 million with net debt of $2,443 million.

Outlook

For fiscal 2023, ViaSat expects to record double-digit revenue and mid-teen EBITDA growth year over year with higher IFC revenues, improvement in Government System revenues and growth in Commercial Networks led by higher IFC mobility terminal deliveries.

Zacks Rank & Stocks to Consider

ViaSat currently has a Zacks Rank #3 (Hold).

Clearfield, Inc. CLFD, sporting a Zacks Rank #1 (Strong Buy), is another solid pick for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield delivered an earnings surprise of 33.9%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 101.9% since August 2021. Over the past year, Clearfield has gained a solid 161%.

Motorola Solutions, Inc. MSI carries a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 9% and delivered an earnings surprise of 7.4%, on average, in the trailing four quarters.

As a leading provider of mission-critical communication products and services worldwide, Motorola has ensured a steady revenue stream from this niche market. The communications equipment maker intends to boost its position in the public safety domain by entering into strategic alliances with other players in the ecosystem.

Aviat Networks, Inc. AVNW carries a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has been revised 18.7% upward since August 2021.

Aviat Networks pulled off a trailing four-quarter earnings surprise of 17.4%, on average. It has soared 212.3% in the past two years.


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