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ViaSat (VSAT) Q4 Earnings Miss Despite Record Revenues
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Following an impressive beat in the third quarter, ViaSat Inc.’s (VSAT - Free Report) fourth-quarter fiscal 2016 results fell far short of expectations as its adjusted earnings (including stock based compensation adjustments) of 12 cents per share missed the Zacks Consensus Estimate of 22 cents by a wide 45.5%.
The decline was due to a huge rise in operating costs, particularly in research and development, which more than offset the record top line.
GAAP earnings came in at 9 cents, tumbling 43.8% from 16 cents in the year-ago quarter.
For fiscal 2016, the company reported GAAP earnings of 44 cents, down 47.6% from the fiscal 2015 figure of 84 cents.
Inside the Headlines
The company posted record revenues of $372 million for the quarter, led by robust growth in Satellite Services and Government Systems segments. Revenues came ahead of the Zacks Consensus Estimate of $363 million and were up 2% year over year. Strong growth in these segments more than offset the decline in th commercial networks business.
For fiscal 2016, the company reported revenues of $1,417.4 million, up 2.5%.
Segment-wise, Satellite Servicesrevenues achieved a record high for the second consecutive quarter, up 11.5% year over year to $145.4 million. The impressive figures were driven by continued strength in residential broadband offerings and emerging in-flight connectivity business.
However, Commercial Networks revenues continued to show weakness and tanked 26% on a year-over-year basis to $62.2 million. This was owing to the winding down of the NBN Co. infrastructure project in addition to the completion of certain antenna systems and mobile broadband satellite communications systems programs. However, these declines were somewhat offset by strength in initial broadband terminal orders under the NBN project.
On the other hand, Government Systems reported record revenues, which were up 9.3% to $164.4 million. The numbers were primarily fuelled by strong performance in government satellite communications systems products and tactical data link products sales. However, low revenues from information assurance products limited growth to some extent.
During the quarter, sales backlog increased 2.9% year over year to $941.9 million.
Adjusted EBIDTA fell 9.5% from the comparable quarter last year to $80.7 million. The company commenced construction of the ViaSat-3 class satellites, which generated high R&D expenses and contributed to the fall in EBITDA. In fact, expenses related to the construction of ViaSat-3s are expected to rise in the upcoming quarters.
Notable Quarterly Developments
Concurrent with the earnings release, ViaSat announced a multi-year agreement with leading aerospace company, Dassault Aviation. Per the deal, ViaSat will equip the first Falcon 8X with its Ku-band terminal to deliver advanced internet and corporate network access to operators. The bundled global Ku-band broadband services offering will include in-flight connectivity service and in-cabin network equipment.
The company is progressing on the ViaSat-2 satellite program as well, with its launch window expected to come in less than seven months with launch partner Arianespace.
Also, ViaSat is ramping up investments in the development of its revolutionary ViaSat-3 broadband communications platform, and has commenced the construction of the first two ViaSat-3 class satellites. The ViaSat-3 platform will help to form a global broadband network with sufficient network capacity to allow better consumer choices with an affordable, high-quality, high-speed internet and video streaming service.
These launches will aid ViaSat progress toward its goal of delivering new high-speed service plans across major geographic regions by mid 2017.
Liquidity
ViaSat exited the quarter with cash and cash equivalents of $42.1 million, compared with $52.3 million as of Apr 3, 2015.
To Conclude
Going forward, ViaSat expects healthy growth as it capitalizes on its competitive advantage and strong demand for its cost-effective satellite bandwidth products. The company expects robust growth opportunities in satellite services and government systems segments, which should drive the top line in the coming quarters.
In addition, the company’s record new orders for fiscal 2016, combined with the disruptive satellite technology translate into attractive revenue growth prospects for the future.
ViaSat looks set to benefit from its fixed and mobile broadband businesses that are expected to grow further aided by high consumer, enterprise and mobile users demand worldwide for broadband solutions and high-speed and high-bandwidth broadband services.
ViaSat currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Ubiquiti Networks, Inc. , Sonus Networks, Inc. and Clearfield, Inc. (CLFD - Free Report) . While Ubiquiti sports a Zacks Rank #1 (Strong Buy), Sonus and Clearfield both hold a Zacks Rank #2 (Buy).
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ViaSat (VSAT) Q4 Earnings Miss Despite Record Revenues
Following an impressive beat in the third quarter, ViaSat Inc.’s (VSAT - Free Report) fourth-quarter fiscal 2016 results fell far short of expectations as its adjusted earnings (including stock based compensation adjustments) of 12 cents per share missed the Zacks Consensus Estimate of 22 cents by a wide 45.5%.
The decline was due to a huge rise in operating costs, particularly in research and development, which more than offset the record top line.
GAAP earnings came in at 9 cents, tumbling 43.8% from 16 cents in the year-ago quarter.
For fiscal 2016, the company reported GAAP earnings of 44 cents, down 47.6% from the fiscal 2015 figure of 84 cents.
Inside the Headlines
The company posted record revenues of $372 million for the quarter, led by robust growth in Satellite Services and Government Systems segments. Revenues came ahead of the Zacks Consensus Estimate of $363 million and were up 2% year over year. Strong growth in these segments more than offset the decline in th commercial networks business.
For fiscal 2016, the company reported revenues of $1,417.4 million, up 2.5%.
Segment-wise, Satellite Services revenues achieved a record high for the second consecutive quarter, up 11.5% year over year to $145.4 million. The impressive figures were driven by continued strength in residential broadband offerings and emerging in-flight connectivity business.
However, Commercial Networks revenues continued to show weakness and tanked 26% on a year-over-year basis to $62.2 million. This was owing to the winding down of the NBN Co. infrastructure project in addition to the completion of certain antenna systems and mobile broadband satellite communications systems programs. However, these declines were somewhat offset by strength in initial broadband terminal orders under the NBN project.
On the other hand, Government Systems reported record revenues, which were up 9.3% to $164.4 million. The numbers were primarily fuelled by strong performance in government satellite communications systems products and tactical data link products sales. However, low revenues from information assurance products limited growth to some extent.
During the quarter, sales backlog increased 2.9% year over year to $941.9 million.
Adjusted EBIDTA fell 9.5% from the comparable quarter last year to $80.7 million. The company commenced construction of the ViaSat-3 class satellites, which generated high R&D expenses and contributed to the fall in EBITDA. In fact, expenses related to the construction of ViaSat-3s are expected to rise in the upcoming quarters.
Notable Quarterly Developments
Concurrent with the earnings release, ViaSat announced a multi-year agreement with leading aerospace company, Dassault Aviation. Per the deal, ViaSat will equip the first Falcon 8X with its Ku-band terminal to deliver advanced internet and corporate network access to operators. The bundled global Ku-band broadband services offering will include in-flight connectivity service and in-cabin network equipment.
The company is progressing on the ViaSat-2 satellite program as well, with its launch window expected to come in less than seven months with launch partner Arianespace.
Also, ViaSat is ramping up investments in the development of its revolutionary ViaSat-3 broadband communications platform, and has commenced the construction of the first two ViaSat-3 class satellites. The ViaSat-3 platform will help to form a global broadband network with sufficient network capacity to allow better consumer choices with an affordable, high-quality, high-speed internet and video streaming service.
These launches will aid ViaSat progress toward its goal of delivering new high-speed service plans across major geographic regions by mid 2017.
Liquidity
ViaSat exited the quarter with cash and cash equivalents of $42.1 million, compared with $52.3 million as of Apr 3, 2015.
To Conclude
Going forward, ViaSat expects healthy growth as it capitalizes on its competitive advantage and strong demand for its cost-effective satellite bandwidth products. The company expects robust growth opportunities in satellite services and government systems segments, which should drive the top line in the coming quarters.
In addition, the company’s record new orders for fiscal 2016, combined with the disruptive satellite technology translate into attractive revenue growth prospects for the future.
ViaSat looks set to benefit from its fixed and mobile broadband businesses that are expected to grow further aided by high consumer, enterprise and mobile users demand worldwide for broadband solutions and high-speed and high-bandwidth broadband services.
ViaSat currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Ubiquiti Networks, Inc. , Sonus Networks, Inc. and Clearfield, Inc. (CLFD - Free Report) . While Ubiquiti sports a Zacks Rank #1 (Strong Buy), Sonus and Clearfield both hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>