Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Viasat Inc (VSAT, Financial) reported a 6% year-over-year combined revenue growth and a 16% increase in combined adjusted EBITDA, driven by defense and advanced technologies and aviation.
- Q1 FY25 revenue was $1.1 billion, up 44% compared to $780 million in Q1 FY24, indicating strong financial performance.
- Net loss improved to $33 million in Q1 FY25 from $77 million in Q1 FY24, primarily due to improved operating performance.
- Viasat Inc (VSAT) ended the quarter with $2.9 billion of liquidity, including $1.8 billion in cash and cash equivalents.
- The company raised the low end of its FY25 revenue and adjusted EBITDA outlook, reflecting strong Q1 results and confidence in market positions and pipeline.
Negative Points
- US fixed broadband revenue declined as expected, driven by fewer residential subscribers, impacting overall revenue growth.
- OEM delivery delays and airline overcapacity are expected to impact quarter-over-quarter results in the aviation segment.
- Q1 FY25 communication services combined revenue was down 2% year over year, driven by the expected decline in US fixed broadband services and segment product revenue.
- The ViaSat-3 F1 anomaly continues to pose challenges, with the company only able to utilize up to 10% of the satellite's capacity.
- Q1 FY25 adjusted EBITDA growth was partially offset by higher interest and tax expenses, impacting net profitability.
Q & A Highlights
Q: Just wanted to touch on the comment about strengthening the capital structure through cash flow, debt maturity extensions, and non-core portfolio monetization. Can you elaborate on that? Is this a shift in tone?
A: We wanted to ensure investors know we're taking a holistic view of our capital structure. This approach gives us options in addressing it and emphasizes creating durable competitive advantages and building shareholder value. It's more of a reminder of our approach rather than a change in strategy. We still aim to reach 4,200 aircraft in service by the end of FY25.
Q: Can you compare the service levels Viasat could bring to market versus what Astranis is talking about with up to 50 gigabits per second per omega satellite?
A: It's hard to comment on Astranis' strategy without full understanding. Different strategies exist to compete in space, and we are open-minded between big and large satellites. Our strategy is based on the incremental value of assets in space within our fleet and market context. We focus on capital efficiency across our entire fleet, including leased parts, to enhance individual satellite effectiveness.
Q: Could you compare and contrast Viasat's L-band spectrum holdings with other competitors and what the company has planned for Viasat's small GEO L-band satellites ordered with SWISSto12?
A: We have a strong position in L-band spectrum, primarily due to Inmarsat's mission of aeronautical and maritime safety. We are modernizing L-band capabilities to enter the direct-to-device market, which is substantial. We expect the I8 satellites to be in service by 2028.
Q: What effect have you seen from slowing OEM deliveries on your current growth rates in the IFC market?
A: The OEM delivery issues have been around for a while, and we have already seen their effects for at least a couple of quarters. The delivery rates have not worsened recently but are persisting. We expect our deliveries to be more back-weighted this year.
Q: What are the technical challenges in rolling out a unified service offering across Viasat, Inmarsat, and third-party partners?
A: The main challenge is harmonizing the different networks, especially in aviation, which requires FAA certifications. Maritime offers more flexibility for multiterminal solutions, allowing us to start harmonizing services sooner.
Q: What would be considered non-core in your portfolio?
A: We focus on mobility and government markets. Technologies that enhance our ability to deliver services in these areas are core. We constantly evaluate our technologies and may divest those that recede in importance.
Q: What capacity can you get out of ViaSat-3 Flight 1, and where will Flights 2 and 3 cover?
A: We estimate up to 10% capacity from ViaSat-3 Flight 1. The remaining two satellites will likely cover the Americas and Asia Pacific, with the impaired satellite over EMEA.
Q: Are third-party supply impacts noticeable on communication services margins due to Flight 1's capacity constraints?
A: We focus on return on capital, and leasing bandwidth strategically enhances this. Growth offsets the impact of third-party supply, and it's factored into our outlook.
Q: What is the revenue exposure if US funding for weapon systems or communication systems subsides under a new administration?
A: There are always risks, including competitive and program risks. Our outlook reflects our view of likely go-forward business in these areas.
Q: Will Viasat need a roaming partnership with a big US wireless carrier for direct-to-device implementation?
A: We expect roaming agreements between carriers, similar to terrestrial roaming. The services will likely be standardized, and major carriers will have roaming agreements with multiple providers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
