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Viasat (VSAT) Q2 Earnings & Revenues Beat Estimates, Up Y/Y

Zacks Equity Research

Viasat, Inc. VSAT reported solid second-quarter fiscal 2020 financial results, wherein both the bottom line and the top line surpassed the respective Zacks Consensus Estimate, and increased year over year.

Net Income

On a GAAP basis, net income for the September quarter was $3.2 million or 5 cents per share against net loss of $25.7 million or loss of 43 cents per share in the year-ago quarter. The improvement was primarily driven by top-line growth. The bottom line beat the Zacks Consensus Estimate by 17 cents.

Non-GAAP net income came in at $21 million or 33 cents per share against net loss of $9 million or loss of 15 cents per share in the prior-year quarter.

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

Quarterly total revenues increased 14.5% year over year to a record high of $592.3 million. This was driven by strong revenue growth in both satellite services and government systems segment, backed by sustained residential broadband top-line growth. While product revenues totaled $306.8 million, up 9.4% year over year, service revenues grew 20.4% to $285.4 million. The top line surpassed the consensus estimate of $569 million.

Segment Results

Revenues from Satellite Services increased 26.2% year over year to $205.7 million, setting a record high. Markedly, the segment achieved its seventh sequential quarter of revenue growth. The performance was led by record-high growth of average revenue per user to $86.94, as a higher percentage of its 587,000-subscriber base selected premium broadband service plans, driving U.S. fixed broadband revenues.

The segment’s operating profit was $5.1 million against loss of $24.8 million in the year-ago quarter. Adjusted EBITDA was $70.7 million, up 77.2% from $39.9 million.

Commercial Networks revenues were down 23.1% to $88 million, due to the accelerated American Airlines install schedule in the prior-year quarter. The segment’s operating loss was $46.8 million compared with loss of $39.2 million in the year-ago quarter. Adjusted EBITDA was negative $31.8 million compared with negative $24.6 million a year ago, due to reductions in IFC terminal deliveries, higher research and development costs and increased selling, general and administrative expenses.

Revenues from Government Systems increased 24.4% year over year to $298.5 million, owing to expanding positions in the data links, satcom and mobile networking product lines. The segment’s operating profit was $62.1 million, up 38.3% year over year. Adjusted EBITDA was $79.3 million, up 27.5% year over year, mainly due to strong performance across the segment's product lines, especially government satellite communication systems, tactical data links, tactical satellite communications radio products and global mobility/intelligence surveillance.

Other Details

Total operating income was $18.4 million against loss of $21.6 million in the year-earlier quarter. Adjusted EBITDA was $118.2 million compared with $77.5 million a year ago, underscoring the operating leverage that supports the company’s service businesses.

Cash Flow & Liquidity

During the first six months of fiscal 2020, Viasat generated $183.3 million of cash from operations compared with $111.3 million in the year-ago period.

As of Sep 30, 2019, the satellite and wireless networking technology provider had $87 million in cash and equivalents with $296.7 million of non-current operating lease liabilities.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader industry are Brooks Automation, Inc. BRKS and Ultra Clean Holdings, Inc. UCTT, each sporting a Zack Rank #1 (Strong Buy), and Intevac, Inc. IVAC, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Brooks Automation surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 74.5%.

Ultra Clean surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 25.4%.

Intevac surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 46.7%.

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