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Viasat (VSAT) Miss Earnings and Revenue Estimates in Q3
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Viasat, Inc. (VSAT - Free Report) reported soft third-quarter fiscal 2023 results, missing the estimates for the bottom and the top line. Declining U.S. fixed broadband subscriber base and high network activation cost for the upcoming ViaSat-3 launch combined with certification delays and supply chain issues hampered the company’s earnings prospect in the December quarter.
Net Income
From continuing operations, Viasat incurred a net loss of $ 42.2 million or a loss of 55 cents per share compared with a net loss of $ 6.6 million or a loss of 9 cents per share in the year-ago quarter. The reduction in net income was driven by greater operational costs, higher interest expenses and significantly higher income tax expense provisions compared with the year-ago quarter’s levels. Adjusted loss for the reported quarter were 61 cents per share, which fell short of the Zacks Consensus Estimate by 26 cents.
Revenues from continuous operations witnessed a 4% growth year over as it improved to $651.4 million from $625.3 million in the prior-year quarter. The upside is primarily driven by 10% year-over-year growth in product revenues and marginal growth of 1% in service revenues. In the third quarter, product revenues totaled $249.4 million. Revenues from service amounted to $226.8 million. However, the top line missed the Zacks Consensus Estimate of $673 million.
The Satellite Service witnessed a marginal decline of 2% year over year. It generated $302.4 million in revenues compared with $309.7 million in the prior-year quarter. Expansion in commercial air IFC service and cooperation with Microsoft's Airband initiative to provide Internet connections to 10 million people worldwide supported the segment’s growth. The gains from this segment were offset by a decline in U.S. fixed broadband subscribers. Adjusted EBIDTA dropped by 19% to $90.4 million year over year, mostly due to network activation costs for upcoming ViaSat-3 launches, reduction in U.S. fixed broadband services, declining energy service gross margins, and costs associated with international development.
Commercial Network saw a 20% gain in sales year over year to $167.2 million. Growth in this segment was primarily driven by healthy demand for commercial air IFC terminal orders. VSAT delivered over 240 IFC terminals, a significant jump over the prior-year period’s levels. Energy and satellite products also contributed to this segment. In the December quarter, the company incurred a loss of $19.2 million in terms of Adjusted EBITDA, marking an improvement of 33% year over year. A plunge in research and development costs for satellite payload and ground network development led to the upside.
The Government Systems segment generated $181.8 million in revenues from continuing operations, up 3% year over year. Adjusted EBIDTA from continuing operations increased 15% to $50.9 million due to higher gross margin from the services business that offset higher research and development expenses.
Other Details
During the quarter, Viasat reported an operating loss of $31.3 million compared with an operating loss of $28.7 million in the prior-year quarter. The company incurred higher costs for product and service revenues, leading to higher operating loss year over year. Adjusted EBIDTA in the quarter declined by 15% to $ 138.9 million compared with the year-ago quarter’s figure of $162.8 million. The downside was due to lower revenues from broadband services combined with higher network expenditure for the upcoming launch of ViaSat-3.
Cash Flow & Liquidity
During the third quarter of fiscal 2023, Viasat generated $89 million in operating cash flow compared with $188 million in the year-ago period. As of Dec 31, 2022, cash and cash stand at $182.1 million with $2,899 million of senior notes and other long-term debt.
Outlook
The company expects strong full-year 2023 earnings driven by the Link-16 TDL sale. Due to expected higher expenditures from ViaSat-3 ground network operations and delayed aircraft deliveries, management expects a relatively flat adjusted EBITDA in the coming quarter. For 2024, it anticipates double-digit growth in adjusted EBITDA from continuing operations. Management expects the first quarter of fiscal 2024 to be affected by increased expenditures related to ViaSat-3 launch, ground network expenses and waning demand for fixed broadband services in United States.
T-Mobile US, Inc. (TMUS - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 67.64%, on average, in the trailing four quarters. Earnings estimates for the current year stand at $6.66 per share.
T-Mobile US, Inc. is a national wireless service provider. The company offers its services under the T-Mobile, Metro by T-Mobile and Sprint brands. T-Mobile, through its subsidiaries, provides wireless services for branded postpaid and prepaid, and wholesale customers.
Motorola Solutions, Inc. (MSI - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 6.6%, on average, in the trailing four quarters. Earnings estimates for MSI for the current year have remained unchanged in the past 60 days at $10.20 per share.
Motorola is a leading communications equipment manufacturer with strong market positions in barcode scanning, wireless infrastructure gear, and government communications.
Jabil Inc. (JBL - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 8.7%, on average, in the trailing four quarters. Earnings estimates for JBL for the current year have remained unchanged in the past 30 days at $8.37 per share.
Jabil is one of the largest global suppliers of electronic manufacturing services. The company offers electronics design, production, product management and after-market services to customers catering to aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries.
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Viasat (VSAT) Miss Earnings and Revenue Estimates in Q3
Viasat, Inc. (VSAT - Free Report) reported soft third-quarter fiscal 2023 results, missing the estimates for the bottom and the top line. Declining U.S. fixed broadband subscriber base and high network activation cost for the upcoming ViaSat-3 launch combined with certification delays and supply chain issues hampered the company’s earnings prospect in the December quarter.
Net Income
From continuing operations, Viasat incurred a net loss of $ 42.2 million or a loss of 55 cents per share compared with a net loss of $ 6.6 million or a loss of 9 cents per share in the year-ago quarter. The reduction in net income was driven by greater operational costs, higher interest expenses and significantly higher income tax expense provisions compared with the year-ago quarter’s levels. Adjusted loss for the reported quarter were 61 cents per share, which fell short of the Zacks Consensus Estimate by 26 cents.
Viasat Inc. Price, Consensus and EPS Surprise
Viasat Inc. price-consensus-eps-surprise-chart | Viasat Inc. Quote
Revenues
Revenues from continuous operations witnessed a 4% growth year over as it improved to $651.4 million from $625.3 million in the prior-year quarter. The upside is primarily driven by 10% year-over-year growth in product revenues and marginal growth of 1% in service revenues. In the third quarter, product revenues totaled $249.4 million. Revenues from service amounted to $226.8 million. However, the top line missed the Zacks Consensus Estimate of $673 million.
The Satellite Service witnessed a marginal decline of 2% year over year. It generated $302.4 million in revenues compared with $309.7 million in the prior-year quarter. Expansion in commercial air IFC service and cooperation with Microsoft's Airband initiative to provide Internet connections to 10 million people worldwide supported the segment’s growth. The gains from this segment were offset by a decline in U.S. fixed broadband subscribers. Adjusted EBIDTA dropped by 19% to $90.4 million year over year, mostly due to network activation costs for upcoming ViaSat-3 launches, reduction in U.S. fixed broadband services, declining energy service gross margins, and costs associated with international development.
Commercial Network saw a 20% gain in sales year over year to $167.2 million. Growth in this segment was primarily driven by healthy demand for commercial air IFC terminal orders. VSAT delivered over 240 IFC terminals, a significant jump over the prior-year period’s levels. Energy and satellite products also contributed to this segment. In the December quarter, the company incurred a loss of $19.2 million in terms of Adjusted EBITDA, marking an improvement of 33% year over year. A plunge in research and development costs for satellite payload and ground network development led to the upside.
The Government Systems segment generated $181.8 million in revenues from continuing operations, up 3% year over year. Adjusted EBIDTA from continuing operations increased 15% to $50.9 million due to higher gross margin from the services business that offset higher research and development expenses.
Other Details
During the quarter, Viasat reported an operating loss of $31.3 million compared with an operating loss of $28.7 million in the prior-year quarter. The company incurred higher costs for product and service revenues, leading to higher operating loss year over year. Adjusted EBIDTA in the quarter declined by 15% to $ 138.9 million compared with the year-ago quarter’s figure of $162.8 million. The downside was due to lower revenues from broadband services combined with higher network expenditure for the upcoming launch of ViaSat-3.
Cash Flow & Liquidity
During the third quarter of fiscal 2023, Viasat generated $89 million in operating cash flow compared with $188 million in the year-ago period. As of Dec 31, 2022, cash and cash stand at $182.1 million with $2,899 million of senior notes and other long-term debt.
Outlook
The company expects strong full-year 2023 earnings driven by the Link-16 TDL sale. Due to expected higher expenditures from ViaSat-3 ground network operations and delayed aircraft deliveries, management expects a relatively flat adjusted EBITDA in the coming quarter. For 2024, it anticipates double-digit growth in adjusted EBITDA from continuing operations. Management expects the first quarter of fiscal 2024 to be affected by increased expenditures related to ViaSat-3 launch, ground network expenses and waning demand for fixed broadband services in United States.
Zacks Rank & Other Stocks to Consider
Viasat currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
T-Mobile US, Inc. (TMUS - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 67.64%, on average, in the trailing four quarters. Earnings estimates for the current year stand at $6.66 per share.
T-Mobile US, Inc. is a national wireless service provider. The company offers its services under the T-Mobile, Metro by T-Mobile and Sprint brands. T-Mobile, through its subsidiaries, provides wireless services for branded postpaid and prepaid, and wholesale customers.
Motorola Solutions, Inc. (MSI - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 6.6%, on average, in the trailing four quarters. Earnings estimates for MSI for the current year have remained unchanged in the past 60 days at $10.20 per share.
Motorola is a leading communications equipment manufacturer with strong market positions in barcode scanning, wireless infrastructure gear, and government communications.
Jabil Inc. (JBL - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 8.7%, on average, in the trailing four quarters. Earnings estimates for JBL for the current year have remained unchanged in the past 30 days at $8.37 per share.
Jabil is one of the largest global suppliers of electronic manufacturing services. The company offers electronics design, production, product management and after-market services to customers catering to aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries.