Viasat Revenue Rises 22% to US$537 Mil, Posts US$ 11.5-M Loss in Q1 FY20

Carlsbad, Calif., Aug. 8, 2019 -- Viasat Inc. (NASDAQ: VSAT), reported strong first quarter fiscal year 2020 performance with a year-over-year revenue increase of 22%, net loss decrease of 66% and Adjusted EBITDA growth of 115% for the fiscal first quarter ended June 30, 2019.

Viasat said Satellite Services segment achieved a new segment revenue high of US$ 196.8 million, Government Systems segment grew year-over-year revenues by 37% to US$ 261.2 million, and the company continued progress on early entry global expansion investments
"We're very pleased to report a robust start to fiscal year 2020," said Mark Dankberg, Viasat chairman and CEO. "Our fiscal year 2020 financial outlook benefits from, and builds on, the momentum from a record fiscal year 2019. Broadband satellite services set quarterly records powered by sustained demand for higher value residential service plans, and 76% year-over-year growth in active commercial aircraft using our in-flight connectivity systems."

Dankberg added:"Broadband service revenue also continues to diversify, boosted by growth in nascent vertical markets and geographic expansion. Government systems revenues jumped 37% compared to last year, and maintains a compelling growth outlook for products and services with robust new contracts and delivery order agreements. Company-wide Adjusted EBITDA of $96.8 million, up 115% compared to the same quarter last year, yielded lower net leverage even as capital investments in the ViaSat-3 network continued apace. We're augmenting investments in ViaSat-3 space and ground infrastructure with prudent early market entry strategies that we believe create long-term global growth opportunities beyond the regional surge we're enjoying now catalyzed by ViaSat-2."

Satellite Services

In the first quarter of fiscal year 2020, Viasat's Satellite Services segment achieved its sixth sequential quarter of revenue growth, setting a record high of $196.8 million. This reflected gains of 28% year-over-year and 4% sequentially. Key trends for the quarter include: Average Revenue Per User (ARPU) growth resulting 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 in-flight services expanded; and international growth in fixed residential service, expanded Community Wi-Fi hotspots and enterprise services. Year-over-year, new contract awards increased 25% to $192.0 million, segment operating loss decreased by 93% to $2.1 million and Adjusted EBITDA increased by 96% to $67.1 million, as existing fixed broadband and commercial in-flight services businesses scaled efficiently, alongside investments in global broadband businesses.

Commercial Networks

For the first quarter of fiscal year 2020, Viasat's Commercial Networks segment revenues decreased 17% year-over-year, as IFC terminal deliveries returned to more normalized levels, following accelerated American Airlines deliveries in fiscal year 2019. On a sequential basis, the Company grew expected IFC terminal orders under existing contracts at quarter end by 4% to approximately 510 IFC terminals, and advanced global market expansion opportunities. Segment operating loss was higher and Adjusted EBITDA was lower for the first quarter of fiscal year 2020 compared to the same period last year primarily as a result of the expected reduction in IFC terminal deliveries.

Government Systems

Viasat's Government Systems segment revenues for the first quarter of fiscal year 2020 were $261.2 million, an increase of 37% year-over-year with very strong performances reported across the segment's product lines. Operating profit increased 84% to $45.9 million and Adjusted EBITDA increased 49% to $64.9 million, compared to the prior year period, primarily due to higher top line revenues and lower research and development expenses.  

Commenting on the financial report, Quilty Analytics said, "Following three straight quarters of solid EBITDA “beats,” Viasat’s 1Q20 results were a bit of a letdown due to a more subdued upside (beat consensus by 2.6%), weak aero installs, and new management guidance that suggests higher near-term spending (promotion/mkt dvpmt) and higher long-term spending on R&D/capex (new Viasat-4 program)."   

Quilty said the Q1 aero shortfall (23 installs vs. estimate of 160) appears to be a blip, but will install rates move back to the triple-digits experienced in FY19 or remain anchored in the 20-70 range that preceded the American Airlines rollout?  It said Viasat’s aircraft backlog is down by 40% y/y and new customer wins will be difficult to come by in the North American market where Viasat’s capacity is concentrated. But it added Viasat’s dual-band (Ka/Ka) antenna may be the key to international wins until Viasat-3 EMEA comes online in late-2021.

It also noted satellite service revenue went up 28% with EBITDA margin up ~12 points y/y.  Fixed broadband revs up 18% and aero revenues up 2x with 76% more planes in-service. Quilty said consumer net adds remain weak (up 1,000) but ARPUs improved 16%y/y. Consumer effort shifting to intl (Mexico/Brazil), community Wi-Fi, and govt programs.

It also noted that Aero installationss cratered, down from 189 to 23 sequentially, marking end of AA rollout.  Backlog up 20 planes sequentially to 510, but down 40% y/y.

However Quilty praised the rise in Government revenues, which were up 37% y/y, propelled by a 49% increase in hardware and a 9% increase in service but Govt orders was a tad weak (B2B of 0.8x), but backlog improved 13% y/y. Commercial Networks revenues, however, were down 17% on lower aero sales. 

Quilty said it was lowering its EBITDA outlook from ($81) to ($125) on reduced aero outlook and higher R&D (including Viasat-4). It was also cutting FY20 EBITDA 1.5% and FY21 4.3% to reflect slower aero growth and steeper CN losses.

Visat stock was trading at 12.5x NTM consensus EBITDA, in-line with five-year average of 12.3x.