Why Is ViaSat (VSAT) Down 18.7% Since Last Earnings Report?
A month has gone by since the last earnings report for ViaSat (VSAT). Shares have lost about 18.7% 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 catalysts.
Viasat Reports Q1 Loss Despite Higher Revenues
Viasat reported soft first-quarter fiscal 2024 results, with both the bottom line and top line missing the respective Zacks Consensus Estimate. The company reported higher revenues year over year, backed by healthy demand trends in all verticals. Growth in commercial air IFC services, rising shipments and installments of mobility terminals, and growing demand for information assurance products supported the top line during the quarter. However, the decline in fixed broadband subscribers partially reversed this trend.
Net Income
The company reported a net loss of $77 million or a loss of 83 cents per share compared with a net loss of $21.6 million or a loss of 29 cents per share in the prior-year quarter. High interest expenses and non-recurring acquisition-related costs impacted the bottom line during the quarter. From continuing operations, Viasat incurred a net loss of $76.9 million compared with a net loss of $38.6 million in the prior-year period. The bottom line missed the Zacks Consensus Estimate of an earnings of 22 cents.
Revenues
Revenues were up 36% to $779.8 million driven by growth in product and service revenues. However, the top line missed the Zacks Consensus Estimate of $1,064 million.
Product revenues were $236.4 million, up from $172.5 million in the year-ago quarter. Net sales from Service rose to $543.4 million from $402.6 million in the year-ago quarter.
Revenues from Satellite Services improved to $398 million from $312 million in the year-ago quarter. The 28% year-over-year growth was driven by healthy demand for commercial air IFC services. The Inmarsat buyout strengthened the company’s mobility and enterprise service businesses during the quarter. The segment’s adjusted EBITDA recorded a sharp increase of 51% year over year, backed by higher commercial air IFC service activations, the contribution from Inmarsat and greater U.S. fixed broadband ARPU.
Commercial network contributed $149 million in revenues, up 32% year over year. Solid demand for Antenna system products and positive momentum of IFC orders supported the gain from this vertical. Adjusted EBITDA came in at a loss of $28 million during the quarter.
The Government segment registered revenues of $233 million from continuing operations, up 55% year over year. Higher information assurance product deliveries supported the top line. The company signed a three-and-a-half-year extension with the DoD (Department of Defense) on an existing contract. During the quarter, it also secured a deal from Australia and New Zealand for Southern Positioning Augmentation Network satellite service. The segment’s adjusted EBITDA from continuing operations was $58 million, up from $24 million, backed by the contribution from Inmarsat and solid product revenues.
Other Details
In the June quarter, the company reported an operating loss of $41.5 million compared with an operating loss of $27.1 million in the prior-year quarter. Adjusted EBITDA was reported at $183.3 million, up from $131.8 million in the year-ago quarter.
Cash Flow & Liquidity
During the first quarter of fiscal 2024, Viasat generated $104 million in operating cash flow compared with $40 million in the prior-year period. As of Jun 30, 2023, the company has $1,958.5 million in cash and cash equivalents, with $3,607.8 other long-term debt.
Outlook
For fiscal 2024, management expects revenues to increase high single digit year over year. Adjusted EBITDA from continuing operations is expected to increase between high single-digit to low double-digit. Viasat anticipates strong growth in Government Systems with relatively modest year-over-year growth in Satellite Services and Commercial Network.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 150% due to these changes.
VGM Scores
Currently, ViaSat has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, ViaSat has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
ViaSat belongs to the Zacks Wireless Equipment industry. Another stock from the same industry, Motorola (MSI), has gained 0.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Motorola reported revenues of $2.4 billion in the last reported quarter, representing a year-over-year change of +12.3%. EPS of $2.65 for the same period compares with $2.07 a year ago.
Motorola is expected to post earnings of $3.01 per share for the current quarter, representing a year-over-year change of +0.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.
Motorola has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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