Dj Coo Harkenrider Acquires 3694 Of Viasat Inc >Vsat

Viasat Inc. VSAT reported mixed second-quarter fiscal 2025 results, with the top line surpassing the Zacks Consensus Estimate but the bottom line missing the same. The company’s top line marginally declined, owing to weakness in space and mission systems, maritime and advanced technologies and other verticals.

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Growth in aviation and government satcom verticals supported the top line during the quarter.

VSAT’s Net Income

The company incurred a net loss of $137.6 million or $1.07 per share compared with a net loss of $767.2 million or $6.16 per share in the year-ago quarter. Lower selling, general and administrative costs led to a narrower loss during the quarter. However, the bottom line was wider than the Zacks Consensus Estimate of a loss of 56 cents.

Excluding non-recurring items, Viasat reported a non-GAAP net loss of $29.4 million or 23 cents per share against a net income of $149.7 million or $1.19 per share in the year-ago period.

Viasat Inc. Price, Consensus and EPS Surprise

Viasat Inc. price-consensus-eps-surprise-chart | Viasat Inc. Quote

Revenues of Viasat

Revenues fell 8% to $1.12 billion, owing to declining trends in the Defense and Advanced Technologies segment. However, the top line surpassed the consensus estimate by $15 million.

Product revenues were $323.9 million, down from $401.7 million in the year-ago quarter. Net sales from Service decreased to $798.3 million from $823.7 million a year ago.

Revenues from the Communication Services segment decreased to $826 million from $847 million in the year-ago quarter. The improvement in aviation and government satcom was offset by weakness in maritime and fixed services verticals. The segment’s adjusted EBITDA declined to $318 million from $350 million.

Revenues from Defense and Advanced Technologies were $296 million, down 22% year over year. Demand softness in space and mission systems, advanced technologies and other end markets affected the top line. Solid demand for tactical networking products was a tailwind. Adjusted EBITDA came in at $57 million compared with $137 million a year ago.

VSAT’s Other Details

In the September quarter, the company reported an operating loss of $24.7 million compared with an operating loss of $804.7 million in the prior-year quarter. Adjusted EBITDA was $375 million, down from $486 million in the year-ago quarter.

Cash Flow & Liquidity for Viasat

During the second quarter of fiscal 2025, Viasat generated an operating cash flow of $239 million compared with $219 million in the prior-year period. As of Sept. 30, 2024, the company had $3.53 billion in cash and cash equivalents, with a net debt of $5.53 billion. Capital expenditures declined 37% year over year to $229 million, primarily due to lower satellite expenditures and ground infrastructure costs.

VSAT’s Outlook

For fiscal 2025, management expects total revenues to remain roughly flat or increase slightly year over year. Adjusted EBITDA from continuing operations is projected to grow by mid-single digits.

Revenues from Communication Services are expected to be down by low single digits in fiscal 2025 compared to fiscal 2024. Solid growth in aviation and government satcom services is expected to be offset by weak demand in U.S. fixed broadband and maritime verticals. Defense and Advanced Technologies revenues are expected to increase in the mid-teens, driven by tactical networking products, antenna systems solutions, recurring contributions from certain licensing agreements and strong demand for AI applications.

VSAT’s Zacks Rank and Key Picks

Viasat currently carries a Zacks Rank #4 (Sell).

Arista Networks, Inc. ANET sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last reported quarter, it delivered an earnings surprise of 8.25%. It provides cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 gigabit Ethernet switches and routers optimized for next-generation data center networks.

Ubiquiti Inc. UI sports a Zacks Rank of 1 at present. The company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises.

Its excellent global business model, which is flexible and adaptable to evolving market changes, helps it overcome challenges and maximize growth. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its UI’s visibility for future demand and inventory management techniques.

Workday Inc. WDAY carries a Zacks Rank #2 (Buy) at present. In the last reported quarter, it delivered an earnings surprise of 7.36%.

WDAY is a leading provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, making it easier for organizations to provide analytical insights and decision support.

Zacks Investment Research

ViaSat (VSAT) came out with a quarterly loss of $1.07 per share versus the Zacks Consensus Estimate of a loss of $0.56. This compares to loss of $6.16 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -91.07%. A quarter ago, it was expected that this provider of satellite and wireless networking technology would post a loss of $0.42 per share when it actually produced a loss of $0.26, delivering a surprise of 38.10%.

Over the last four quarters, the company has surpassed consensus EPS estimates just once.

ViaSat, which belongs to the Zacks Wireless Equipment industry, posted revenues of $1.12 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.38%. This compares to year-ago revenues of $1.23 billion. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

ViaSat shares have lost about 62.4% since the beginning of the year versus the S&P 500's gain of 21.2%.

What's Next for ViaSat?

While ViaSat has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for ViaSat: unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.37 on $1.15 billion in revenues for the coming quarter and -$1.50 on $4.53 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Wireless Equipment is currently in the bottom 44% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Ubiquiti Inc. (UI), has yet to report results for the quarter ended September 2024.

This computer networking company is expected to post quarterly earnings of $1.77 per share in its upcoming report, which represents a year-over-year change of +20.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Ubiquiti Inc.'s revenues are expected to be $535.03 million, up 15.5% from the year-ago quarter.

Zacks Investment Research