Release Date: May 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Viasat Inc (VSAT, Financial) achieved fiscal year 2024 revenue and adjusted EBITDA growth above the high end of their guidance, driven by mobility and government sectors.
- The company successfully integrated Inmarsat, achieving operational and recurring capital synergies of approximately $200 million ahead of schedule.
- Viasat Inc (VSAT) reduced CapEx by approximately $175 million through investment prioritizations and synergies.
- The company extended about $2 billion in debt maturities, strengthening their capital structure.
- Viasat Inc (VSAT) is on track to achieve positive free cash flow by the end of the first half of calendar year 2025, with a clear line of sight to further CapEx savings in fiscal year 2026.
Negative Points
- Net loss from continuing operations was $85 million for Q4, up from $22 million net loss in the year-ago period, primarily due to increased interest expense associated with the Inmarsat acquisition.
- Combined adjusted EBITDA decreased 3% year-over-year in Q4, reflecting an expected decline in fixed broadband service revenue and higher R&D expenditures.
- The company faces uncertainties with delayed OEM commercial aircraft deliveries, impacting their fiscal year 2025 revenue outlook.
- Viasat Inc (VSAT) continues to experience pressure on operating leverage due to incremental R&D investments.
- The company is dealing with satellite anomalies, which have motivated them to reduce capital costs and schedules for future satellites.
Q & A Highlights
Q: Can you provide an update on the current status of the F2 and F3 satellites and their preparation for launch and commercial deployment?
A: We expect to bring ViaSat-3F3 into service in mid- to late calendar year 2025, with thermal vacuum testing beginning this quarter. ViaSat-3F2 is anticipated to be in service by late calendar year 2025, with improved reflectors delivered to Boeing by late 2024. (Kumara Guru Gowrappan, President)
Q: How do you plan to distribute the capacity of the new satellites once they are launched?
A: We have flexibility with each satellite's region. We are considering relocating satellites to optimize usage, with Flight 2 over the U.S., Flight 3 in Asia Pacific, and Flight 1 moved to EMEA. (Mark D. Dankberg, Co-Founder, Chairman & CEO)
Q: Can you elaborate on the NexusWave product and its potential extension to in-flight connectivity (IFC)?
A: NexusWave is specifically for Maritime, but we expect to have additional agreements for IFC. These agreements will be optimized for each market. (Kumara Guru Gowrappan, President)
Q: How will the new segment reporting structure look, and what major business units will be included?
A: We will have two segments: Communication Services and Defense and Advanced Technologies. Communication Services will include businesses utilizing satellites, while Defense and Advanced Technologies will consist of other businesses like encryption. We will provide additional top-line revenue data for major revenue drivers within these segments. (Shawn Lynn Duffy, Senior VP & CFO)
Q: Who are your main competitors in the new segments, and how do you plan to compete?
A: In the satellite services market, our main competitor is Starlink. We are positioning ourselves to compete effectively with them. (Mark D. Dankberg, Co-Founder, Chairman & CEO)
Q: What is the expected capacity of the ViaSat-3 Flight 1 satellite once it is in service?
A: We expect to achieve up to 10% of the originally anticipated capacity on the satellite. Despite the reduced capacity, it will still perform effectively in its markets. (Mark D. Dankberg, Co-Founder, Chairman & CEO)
Q: Can you provide more details on the direct-to-device (D2D) market and its potential impact?
A: The D2D market includes emergency communications and messaging to smartphones. We aim to deliver these capabilities through our satellites and partner satellites in fiscal year '25. We are working with chip makers, device makers, and mobile network operators to create service plans. (Mark D. Dankberg, Co-Founder, Chairman & CEO)
Q: How are the economics and go-to-market strategy for the Maritime partnership structured?
A: The partnership aims to provide high-speed, uncapped services, including low latency, through integrated management of LEO and GEO services. This approach allows us to fulfill commitments on speed, volume, and latency more effectively. (Mark D. Dankberg, Co-Founder, Chairman & CEO)
Q: Have you seen any incremental pressure from Starlink in the Maritime market?
A: Our Ka-band service in Maritime has continued to grow despite competition. The enterprise segments, which depend on operational and safety certifications, are the most resilient. (Mark D. Dankberg, Co-Founder, Chairman & CEO)
Q: What is the current status of your consumer subscriber base, and what are your plans for this business?
A: We have not disclosed exact subscriber numbers recently. The residential market has seen a steady decline, which affects our FY '25 revenue outlook. However, we see opportunistic uses in residential and may flatten or improve this market depending on bandwidth allocation in future years. (Mark D. Dankberg, Co-Founder, Chairman & CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
