ViaSat Inc ((VSAT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for ViaSat Inc. highlighted a blend of positive financial strides and strategic advancements, despite facing challenges such as a delayed satellite launch and declines in certain service areas. The company remains focused on cash generation and strategic initiatives, indicating a balanced outlook amidst some setbacks.
Improved Financial Performance
ViaSat reported a net loss of $61 million, a significant improvement from the $138 million net loss in Q2 FY 2025. This improvement was primarily attributed to a favorable service revenue mix, lower depreciation and amortization, and reduced SG&A expenses, showcasing the company’s efforts to streamline operations and enhance financial health.
Revenue and EBITDA Growth
The company experienced a 2% year-over-year revenue growth, with the Defense and Advanced Technologies segment seeing a 3% increase. Adjusted EBITDA also rose by 3% year-over-year, reflecting ViaSat’s ability to maintain growth momentum despite industry challenges.
Strong Awards and Backlog
ViaSat achieved $1.5 billion in awards, marking a 17% increase, while its backlog reached a record $1.2 billion, up 31% year-over-year. This robust growth in awards and backlog underscores the company’s strong market position and future revenue potential.
Positive Free Cash Flow
The company generated $69 million in free cash flow for the quarter and $147 million on a trailing 12-month basis, marking three consecutive quarters of positive free cash flow. This achievement highlights ViaSat’s effective cash management and operational efficiency.
Strategic Developments
ViaSat announced plans to form Equitus with Space 42 and potentially other operators to enhance their mobile satellite services. This strategic move aims to bolster ViaSat’s service offerings and expand its market reach.
Launch Delay of ViaSat-3 Flight 2
The launch of ViaSat-3 Flight 2 was delayed due to an issue with the Atlas booster liquid oxygen tank vent valve, with a new launch date set for the following week. This delay represents a temporary setback in the company’s satellite deployment schedule.
Fixed Services Revenue Decline
Fixed services and other revenue declined by 16% as U.S. fixed broadband subscribers continued to decrease. This decline highlights challenges in maintaining subscriber growth in a competitive market.
Government Shutdown Impact
The potential delay of DAT awards by up to $100 million and an impact on DAT adjusted EBITDA by up to $20 million due to the government shutdown was noted. This situation poses a risk to the company’s financial performance in the near term.
Forward-Looking Guidance
ViaSat’s guidance for fiscal year 2026 anticipates a reduction in net loss to $61 million from $138 million in the prior year, driven by a favorable service revenue mix and lower expenses. Revenue is expected to grow in the low single digits, with adjusted EBITDA remaining flat. The company projects positive free cash flow in fiscal year 2027, indicating a cautiously optimistic outlook.
In conclusion, ViaSat’s earnings call reflected a cautiously optimistic sentiment, with notable improvements in financial performance and strategic initiatives. Despite challenges such as a delayed satellite launch and declining fixed services revenue, the company is making progress in key areas, maintaining a focus on cash generation and strategic growth.