Viasat, Inc. (NASDAQ: $VSAT) is a global communications company that provides connectivity solutions, including high-speed satellite internet services, secure networking systems for the military, home and commercial applications.
On Tuesday, after markets closed, Viasat released its Q4 results for fiscal 2024 to a negative market reaction, after a disappointing guidance.
Viasat Tops Estimates in Q4 Results
In the fourth quarter of fiscal 2024, Viasat reported sales of $1.15 billion, a 72.7% increase Y/Y, and above estimates of $1.094 billion. The company reported an adjusted loss per share of $0.24, compared to a positive EPS of $0.17 the previous year, but above estimates of a $0.63 loss per share.
Q4 Financial Highlights
In the fourth quarter, Viasat reported 3,650 commercial aircraft in service, compared to the average estimate of 3,637.
Service Revenue came in at $812.02 million, a 105.7% Y/Y increase but below estimates of $825.71 million.
Product revenue increased 24.6% Y/Y to $337.99 million, above estimates of $292.45 million, while Commercial Networks revenue increased 23% to $187.70 million, beating estimates of $173.04 million.
Government Systems revenue increased 77.1% Y/Y to $385.80 million, beating estimates of $356.34 million, while Satellite Services revenue rose 95% Y/Y to $4576.50 million, below estimates of $578.09 million.
The company reported $281.60 million in adjusted EBITDA for Satellite Service, beating estimates of $270.16 million, while Government Systems adjusted EBITDA came in at $117.30 million, beating estimates of $89.67 million.
The company reported a negative adjusted EBITDA of $41.10 million for Commercial Networks, worse than the anticipated $36.13 million.
Balance Sheet
In the fourth quarter, the company generated $232 million in operating cash flow, and $688 million for FY24. Capital expenditure in Q4 rose 21% Y/Y to $378 million, but declined 10% sequentially. The combined CapEx fell15% Y/Y, driven by lower expenditure from infrastructure costs.
It ended the year with $3 billion in liquidity, comprising $1.9 billion in cash and cash equivalents and $1.1 billion in credit lines. Viasat’s net debt at the end of fiscal 2024 stood at $5.6 billion.
Viasat Issues Outlook
In fiscal 2025, Viasat expects revenue to remain relatively flat compared to fiscal 2024. It expects low to mid-single-digit growth in adjusted EBITDA increase.
Satellite Services revenue is forecast to fall in the low to mid-single digits compared to fiscal 2024, while Government Systems revenue is forecast to grow in the high single digits in fiscal 2025.
The growth in Government Systems revenue will be boosted by a $1.3 billion backlog of over $1.3 billion, as well as growing recurring revenue. Meanwhile, Commercial Networks revenue is forecast to grow in the mid-single digits compared to fiscal 2024
The company forecast that CapEx in fiscal 2025 will decline to around $1.4 billion to $1.5 billion.
For fiscal 2026, the company expects revenue and adjusted EBITDA to grow compared to fiscal 2024 as over $4.3 billion worth of assets under construction go live.
In fiscal 2026, CapEx is expected to continue falling to around $1.1 billion to $1.2 billion.
By the end of the first quarter of fiscal 2026, the company expects to report positive free cash flow, driven by double-digit growth in operating cash flow and a reduction in CapEx.
Viasat Stock Performance
Following the tepid guidance for fiscal 2025, VSAT stock declined 13.75% on Wednesday morning to $16.25 as of 9:55 AM EDT.
Before the latest results, Viasat stock was up 25% over the past month, beating Zacks S&P 500 composite’s 7.1% gain. YTD, the stock is down 41.94%; over the past 52 weeks, it has lost 63.59% of its value.
The short interest has increased 5.94% over the past month to 12.31 million shares, representing 11.68% of the floating shares and 9.82% of the shares outstanding.
Analysts’ Outlook on VSAT Stock
According to one stock analyst, VSAT is a hold. The analyst’s price target for VSAT stock in the next 12 months is $28. Based on the most recent price, the price forecast is a 73.05% upside.
Should You Add VSAT to Your Portfolio?
Viasat’s fiscal 2025 forecast, and current balance sheet are concerning to investors. It has a low cash-to-debt ratio, while its debt-to-EBITDA ratio remains elevated. However, the company is working to cut capital expenditure while improving free cash flow. While the efforts look promising thus far, waiting on the sidelines and observing key financial metrics would be a prudent choice regarding VSAT.
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