It has been about a month since the last earnings report for ViaSat (VSAT). Shares have added about 2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ViaSat due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Viasat Q1 Earnings & Revenues Beat Estimates, Up Y/Y
Viasat reported solid first-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.
On a GAAP basis, net loss for the June quarter was $11.5 million or loss of 19 cents per share compared with net loss of $34 million or loss of 57 cents per share in the year-ago quarter. The improvement was driven by top-line growth.
However, non-GAAP net income came in at $6.4 million or 10 cents per share against net loss of $17.5 million or loss of 30 cents per share in the prior-year quarter. The bottom line substantially beat the Zacks Consensus Estimate by 39 cents.
Quarterly total revenues increased 22.4% year over year to $537 million. This was driven by 20% plus growth in both satellite services and government systems segment, which more than offset the expected ramp down effects of lower Phonetic terminal deliveries in commercial networks segment. While product revenues totaled $263.6 million, up 20.9% year over year, service revenues grew 23.9% to $273.4 million. The top line surpassed the consensus estimate of $503 million.
Revenues from Satellite Services increased 28.1% year over year to $196.8 million, setting a record high. Markedly, the segment achieved its sixth sequential quarter of revenue growth. The performance was led by growth in average revenue per user (ARPU) which resulted from higher value residential and enterprise plans, driving record U.S. fixed broadband revenues. Record revenues in commercial in-flight connectivity (IFC) as in-service aircraft increased 76% year-over-year and international growth in fixed residential service also acted as tailwinds.
The segment’s operating loss was $2.1 million compared with loss of $29.9 million in the year-ago quarter. Adjusted EBITDA was $67.1 million, up 95.6% year over year, as existing fixed broadband and commercial in-flight service businesses scaled efficiently alongside investments in global broadband businesses.
Commercial Networks revenues were down 16.9% year over year to $79 million, as IFC terminal deliveries returned to normalized levels following accelerated American Airlines deliveries in fiscal 2019. The segment’s operating loss was $49.9 million compared with loss of $47 million in the year-ago quarter. Adjusted EBITDA was negative $35.2 million compared with negative $32.7 million a year ago, primarily due to lower IFC terminal deliveries.
Revenues from Government Systems increased 37.3% year over year to $261.2 million, owing to very strong performances across the segment's product lines. The segment’s operating profit was $45.9 million, up 84.3% year over year. Adjusted EBITDA was $64.9 million, up 49.2% year over year, mainly due to higher revenues and lower R&D expenses.
Operating loss declined to $8.1 million from loss of $54.5 million reported in the year-earlier quarter. Adjusted EBITDA was $96.8 million compared with $45 million in the prior-year quarter, underscoring the operating leverage that supports the company’s service businesses.
Cash Flow & Liquidity
During the fiscal first quarter, Viasat generated $46.5 million of cash from operations compared with $53.8 million in the year-ago quarter. This reflected significantly higher adjusted EBITDA, however, offset by an increase in working capital.
As of Jun 30, 2019, the satellite and wireless networking technology provider had $129.9 million in cash and equivalents with $297.9 million of non-current operating lease liabilities.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted -88.46% due to these changes.
At this time, ViaSat has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
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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