Viasat recently held its FY ’24 Q2 earnings call, revealing strong financial results and outlining its future growth plans. Despite experiencing two satellite anomalies, the company reported double-digit increases in revenue and adjusted EBITDA, driven by its government, aviation, and maritime businesses. Additionally, Viasat announced a 50% increase in product revenue for Garmin Systems and the award of a contract by the U.S. Space Force for proliferated LEO satellite-based services. However, the company did note a decline in U.S. fixed broadband revenue.
During the call, Viasat discussed key takeaways, including the two satellite anomalies that occurred. One of these incidents resulted in a total write-off, while the other affected less than 10% of the total throughput. Viasat plans to file insurance claims for both of these incidents. The company also highlighted the successful integration of Inmarsat and its transformation, which is currently ahead of schedule. They expect labor actions to save around $100 million annually in operating expenses, starting in FY 2025.
Looking ahead, Viasat anticipates continued growth in revenue and adjusted EBITDA for FY ’24 and ’25, with the goal of achieving positive free cash flow in the first half of calendar ’25. The company’s commercial in-flight connectivity (IFC) segment experienced strong growth, with 3,350 aircraft in service, representing a 19% year-over-year increase. CEO Mark Dankberg discussed the impact of delayed aircraft delivery rates on the installation of IFC systems but expressed confidence in the company’s backlog of orders and new airline pipeline.
Regarding satellite purchases, Viasat is considering off-the-shelf options but is yet to find any that match the technology capabilities of its ViaSat-3 and ViaSat-4 satellites. Despite the satellite anomalies, Viasat maintains a strong financial position, with over $3 billion in liquidity and a fully funded path to positive free cash flow.
In terms of future strategy, Viasat aims to lead specific market segments in commercial and government global mobility while leveraging Inmarsat’s L-band leadership. The company will continue its partnerships with companies such as Skylo, Samsung’s Chip Arm, and MediaTek as part of its direct-to-device initiative. Viasat also mentioned ongoing benefits from a confidential agreement, although no further details were given. The delivery of the final reflector component for the ViaSat-3 satellites is crucial to the launch timeline, and the executives expressed confidence in meeting the schedule. There is also the possibility of launching two satellites close together.
Based on InvestingPro data, Viasat has been experiencing accelerating revenue growth, which is expected to continue this year. The company’s net income is also projected to grow, reinforcing the forecast of continued revenue and adjusted EBITDA growth for FY ’24 and ’25. Furthermore, Viasat is trading at a low Price/Book multiple, indicating a strong financial position with liquid assets exceeding short-term obligations, as stated by InvestingPro Tips.
Overall, Viasat’s Q2 FY ’24 earnings call showcased its strong financial performance, future growth plans, and confidence in its market position.