It has been about a month since the last earnings report for ViaSat (VSAT). Shares have added about 8.8% 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 its most recent earnings report in order to get a better handle on the important drivers.
Viasat Q2 Earnings & Revenues Beat Estimates, Up Y/Y
Viasat 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.
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.
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.
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.
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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 66.67% due to these changes.
Currently, ViaSat has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
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.
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