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Viasat's (VSAT) Q2 Earnings Beat Estimates, Revenues Miss

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Zacks Equity Research
·4 min read
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Viasat, Inc. VSAT reported mixed second-quarter fiscal 2021 results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed the same.

Net Income

On a GAAP basis, net income in the September quarter was $2 million or 3 cents per share compared with $3.2 million or 5 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 8 cents, delivering a positive surprise of 160%.

Non-GAAP net income came in at $20.5 million or 31 cents per share compared with $21 million or 33 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 and EPS Surprise

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

Revenues

Quarterly total revenues declined 6.4% year over year to $554.3 million. This was largely due to a decrease in U.S. commercial airline traffic. While product revenues totaled $255.9 million, down 16.6% year over year, service revenues grew 4.5% to $298.3 million. Also, the top line lagged the consensus estimate of $565 million.

Segment Results

Satellite Services revenues grew 5% year over year to $215.9 million. This was driven by subscriber demand for broadband, reflecting the work-from-home and school-from-home environment with substantial growth in video streaming. Average revenue per user was just above $100, as subscribers chose higher bandwidth and value data plans.

In-flight connectivity (IFC) services improved modestly during the quarter as airline customers began seeing more passengers. The company added about 5,000 subscribers in the quarter, ending it with 603,000 U.S. subscribers. The segment’s operating profit was $11.5 million compared with $5.1 million in the year-ago quarter. Adjusted EBITDA was $84.6 million, up 19.7%.

Commercial Networks revenues were down 10.3% to $78.9 million, primarily due to lower IFC terminal product shipments. This was, however, partly offset by higher sales of fixed broadband terminal products. The company is focused on strategic investments in higher throughput/lower cost per bit satellite payload, ground network and terminal development. The segment’s operating loss was $45.4 million compared with operating loss of $46.8 million in the year-ago quarter. Adjusted EBITDA was a negative $26.6 million compared with negative $31.8 million in the year-ago quarter.

Government Systems revenues fell 13.1% to $259.5 million. This compares to a very strong period last year. The segment benefited from demand across a broad portfolio of products and services. The company secured orders worth more than $450 million in the quarter. The segment’s operating profit was $47.9 million, down 22.9% year over year. Adjusted EBITDA was $72.3 million, down 8.8% on lower revenues.

Other Details

Overall, operating income was $12.7 million compared with $18.4 million in the prior-year quarter. Adjusted EBITDA came in at $130.3 million compared with $118.2 million a year ago. New contract awards during the quarter aggregated $730.6 million, up from $692.3 million. Sales backlog was record high at $2,304.7 million, up from $1,944.9 million a year ago.

Cash Flow & Liquidity

During the second quarter of fiscal 2021, Viasat’s cash from operating activities was record high of $177 million, driven by earnings and optimization of working capital. This compares to $137 million in the prior-year period.

As of Sep 30, the company had $350.4 million in cash and cash equivalents with $1,681.8 million of senior notes.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader industry are Turtle Beach Corporation HEAR, Corning Incorporated GLW and Viavi Solutions Inc. VIAV, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Turtle Beach delivered a trailing four-quarter positive earnings surprise of 41%, on average.

Corning delivered a trailing four-quarter positive earnings surprise of 40.7%, on average.

Viavi delivered a trailing four-quarter positive earnings surprise of 17.5%, on average.

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