Press Release

Nov 07, 2019



Viasat Announces Second Quarter Fiscal Year 2020 Results


- Second quarter fiscal year 2020 revenues grew 14% year-over-year to a record $592.3 million, generating net income of $3.2 million, non-GAAP net income of $21.0 million and Adjusted EBITDA of $118.2 million, an increase of 53% year-over-year
- New quarterly highs in segment service and product revenues drove Satellite Services and Government Systems segment revenues to record levels of $205.7 million and $298.5 million, respectively
- Mobile and international fixed broadband markets have grown to represent over 24% of the Satellite Services segment revenues for the twelve months ended September 30, 2019
- Viasat named to Fortune Magazine's 2019 Change the World list, highlighting the Company's ability to connect the unconnected with an affordable, economically-sustainable broadband solution in emerging markets

CARLSBAD, Calif., Nov. 7, 2019 /PRNewswire/ -- Viasat Inc. (NASDAQ: VSAT), a global communications company, today announced financial results for the fiscal second quarter ended September 30, 2019.


"Sustained momentum in Satellite Services and Government Systems segments delivered record results and continued margin expansion," said Mark Dankberg, Viasat chairman and CEO. "Our latest in-flight connectivity (IFC) wins, including our first entry into South America with Azul and expansion to EL AL's full global fleet, are further proof points of our ability to leverage our leading North American reputation globally. We are focused on converting a healthy pipeline for global IFC opportunities, propelled by continued progress on the ViaSat-3 constellation, into sustained growth and market leadership. Record backlog, a solid quarterly book-to-bill of 117%, gains in fixed broadband subscriber average revenue per user (ARPU), mobile tail count, an expanding government segment addressable market, and leading competitive positions in attractive broadband vertical and geographic markets all create opportunities for continued growth."


Financial Results


(In millions, except per share data)


Q2 FY20


Q2 FY19


Year-
Over-
Year
Change


First 6
Months 


FY20


First 6
Months 
FY19


Year-
Over-
Year
Change


Revenues


$592.3


$517.5


14%


$1,129.3


$956.3


18%


Net income (loss)1  


$3.2


($25.7)


*


($8.3)


($59.7)


(86)%


Non-GAAP net income (loss)1 


$21.0


($9.0)


*


$27.4


($26.4)


*


Adjusted EBITDA


$118.2


$77.5


53%


$215.0


$122.5


76%


Diluted per share net income (loss)1


$0.05


($0.43)


*


($0.14)


($1.00)


(86)%


Non-GAAP diluted per share net income (loss)1


$0.33


($0.15)


*


$0.44


($0.44)


*


Fully diluted weighted average shares2


62.8


59.7


5%


61.2


59.5


3%









New contract awards3


$692.3


$738.6


(6)%


$1,198.1


$1,308.3


(8)%


Sales backlog


$1,944.9


$1,911.7


2%


$1,944.9


$1,911.7


2%









Segment Results


(In millions)


Q2 FY20


Q2 FY19


Year-
Over-
Year
Change


First 6
Months 
FY20


First 6
Months 
FY19


Year-
Over-
Year
Change


Satellite Services








  New contract awards3


$212.6


$164.7


29%


$404.6


$318.2


27%


  Revenues


$205.7


$163.0


26%


$402.5


$316.5


27%


  Operating profit (loss)5


$5.1


($24.8)


*


$3.0


($54.8)


*


  Adjusted EBITDA


$70.7


$39.9


77%


$137.8


$74.1


86%









Commercial Networks








  New contract awards


$62.1


$123.2


(50)%


$161.1


$237.3


(32)%


  Revenues 


$88.0


$114.5


(23)%


$167.0


$209.6


(20)%


  Operating loss5


($46.8)


($39.2)


19%


($96.6)


($86.2)


12%


  Adjusted EBITDA


($31.8)


($24.6)


29%


($67.0)


($57.4)


17%









Government Systems








  New contract awards


$417.6


$450.7


(7)%


$632.4


$752.8


(16)%


  Revenues 


$298.5


$240.0


24%


$559.7


$430.2


30%


  Operating profit5


$62.1


$44.9


38%


$108.0


$69.8


55%


  Adjusted EBITDA


$79.3


$62.2


27%


$144.1


$105.7


36%



1 Attributable to Viasat, Inc. common stockholders.


2 As the three months ended September 30, 2018 and six months ended September 30, 2019 and 2018 financial information resulted in a net loss, the weighted average number of shares used to calculate basic and diluted net loss per share is the same, as diluted shares would be anti-dilutive. As the six months ended September 30, 2019 financial information resulted in a non-GAAP net income, 62.6 million diluted weighted average number of shares were used to calculate non-GAAP diluted net income per share.


3 Awards exclude future revenue under recurring consumer commitment arrangements.


4 Amounts include certain backlog adjustments due to contract changes and amendments. Our backlog includes contracts with subscribers for fixed broadband services in our satellite services segment. Backlog does not include anticipated purchase orders and requests for the installation of in-flight connectivity systems or future recurring in-flight internet service revenues under our commercial in-flight internet agreements in our Commercial Networks and Satellite Services segments, respectively. 


5 Before corporate and amortization of acquired intangible assets.


* Percentage not meaningful.


COMPANY HIGHLIGHTS


  • Named #12 on Fortune Magazine's 2019 Change the World list
  • Named Global Satellite Business of the Year at the World Satellite Business Week 2019 conference
  • Named a 2019 Top San Diego Employer Brands in Hired's third annual Brand Health Report
  • Awarded one of the Best Places to Work for Disability Inclusion by the Disability Equality Index®
  • Won Intellectual Property lawsuit against Acacia Communications
  • Opened two offices in Brazil: São Paulo and Brasilia

SATELLITE SERVICES
 Q2 Fiscal Year 2020 Financials


  • Revenues reached a new high of $205.7 million, a 26% increase year-over-year and a 5% increase sequentially; which marked the seventh sequential quarter of revenue gains
  • New contract awards increased 29% year-over-year to $212.6 million
  • Segment operating income equaled $5.1 million, compared to a $24.8 million operating loss in the prior year period
  • Adjusted EBITDA increased by 77% year-over-year to $70.7 million

 Business Highlights


  • U.S. fixed broadband subscriber ARPU reached a record $86.94, an increase of 17% year-over-year; as a higher percentage of the 587,000 subscriber base selected the Company's premium broadband service plans
  • Since launch, Community Wi-Fi service in Mexico has reached more than 1.8 million people; trial programs launched in the State of São Paulo, Brazil
  • Viasat has now deployed over 10,000 sites in Brazil, and received a follow-on order for over 1,000 additional Governo Eletrônico - Serviço de Atendimento ao Cidadão (GESAC) sites
  • In business internet, Viasat announced telecom channel partners have access to sell ViaSat-2 business internet services in Mexico, Puerto Rico and the U.S. Virgin Islands; demonstrated ViaSat-2 business internet service availability in Jamaica with partner ReadyNet; and deployed satellite internet services to schools, government institutions and health clinics participating in Mexico's 'Internet para Todos' program
  • IFC service now active on 1,353 commercial aircraft – up 51% year-over-year; as of the end of second quarter fiscal year 2020 Viasat expects to install its IFC equipment on over 600 additional commercial aircraft under existing contracts
  • Announced new content partner deals with destination outfits, InflightFlix and GetYourGuide, to drive new ancillary revenue streams for airline customers
  • New IFC contracts during the quarter: SAS selected Viasat IFC for its new Airbus fleet additions of A321LR and A330-300E; and JetBlue selected Viasat IFC for its Airbus A220-300 aircraft (reported on last earning's call)
  • New IFC contracts disclosed after the close of the second quarter of fiscal year 2020:
    • Azul selected Viasat IFC to deliver in-flight Wi-Fi service on more than 100 combined Airbus A320neo and Embraer E195-E2 aircraft; and
    • EL AL Israel Airlines committed to go full fleet with Viasat, adding the latest Viasat equipment to its new Boeing 777 widebody and remaining Boeing 737 narrowbody aircraft

 Fiscal Year-to-Date Summary


  • Fiscal year-to-date, Satellite Services segment reached record revenue levels; operating profit and Adjusted EBITDA performance for the segment were higher compared to the same period last year reflecting the same year-over-year impacts seen in the second quarter of fiscal year 2020.

COMMERCIAL NETWORKS
 Q2 Fiscal Year 2020 Financials


  • Revenues were $88.0 million, a 23% decrease year-over-year due to the accelerated American Airlines install schedule in the prior-year period; sequentially, segment revenues were up 11% on record revenues in the Company's antenna systems product lines
  • New contract awards were at $62.1 million, a 50% year-over-year decrease
  • Segment operating loss was 19% higher and Adjusted EBITDA was lower compared to the same period last year due to expected reductions in IFC terminal deliveries, higher research and development costs and increased selling, general and administrative expenses

 Business Highlights


  • Progress continued on the ViaSat-3 spacecraft program: completed initial acceptance of the ViaSat-3 payload module for Europe, Middle East and Africa (EMEA); both ViaSat-3 (Americas) and ViaSat-3 (EMEA) payload modules are in the Viasat high bay in Tempe, AZ
  • Progress continued on the ViaSat-3 ground infrastructure program with major European fiber providers having been selected
  • Viasat's new fully redundant Satellite Control Center took control of the WildBlue-1 satellite in September 2019; remaining satellites expected to begin to transition in calendar year 2020

 Fiscal Year-to-Date Summary


  • Fiscal year-to-date, Commercial Networks segment revenue was lower, operating loss was higher and Adjusted EBITDA was lower compared to the same period last year, reflecting year-over-year impacts similar to those seen in the second quarter of fiscal year 2020.

GOVERNMENT SYSTEMS
 Q2 Fiscal Year 2020 Financials


  • Revenues were a new high of $298.5 million, an increase of 24% year-over-year led by expanding positions in the Company's data links, satcom and mobile networking product lines
  • New contract awards were at $417.6 million, generating a 1:4 to 1 book-to-bill ratio, and record segment backlog of $991.6 million. Backlog excludes the unexercised ceiling on Indefinite Delivery/Indefinite Quantity (ID/IQ) contracts
  • Operating profit increased 38% year-over-year to a new high of $62.1 million
  • Adjusted EBITDA increased 27% to a record $79.3 million

 Business Highlights


  • Awarded an ID/IQ contract by the Naval Information Warfare Systems Command for the purchase of supplemental units for Viasat's KOR-24A Small Tactical Terminal
  • Announced expansive line of network encryption products available for use by all Five Eyes partner nations: U.S., UK, Canada, Australia and New Zealand
  • Upgraded the North Atlantic Treaty Organization's Ultra-High Frequency satellite communications control station to comply with new Integrated Waveform on time and under budget
  • Demonstrated a Viasat Hybrid Adaptive Network concept at AFWERX Vegas, a U.S. Air Force event focused on multi-network, multi-orbit satellite communications system

Fiscal Year-to-Date Summary


  • Fiscal year-to-date, Government Systems segment revenue was higher, and operating profit and Adjusted EBITDA performance for the segment were higher compared to the same period last year reflecting strong performance across the segment's product lines, especially government satellite communication systems, tactical data links, tactical satellite communications radio products and global mobility/intelligence surveillance and reconnaissance offerings.

Conference Call
Viasat will host a conference call to discuss the second quarter fiscal year 2020 results. Details follow:


DATE/TIME:


Thursday, November 7, 2019 at 4:30 p.m. Eastern Time


DIAL-IN: 


(877) 640-9809 in the U.S.; (914) 495-8528 international


WEBCAST: 


investors.viasat.com.


REPLAY: 


Available from 7:30 p.m. Eastern Time on Thursday, November 7 until 11:59 p.m. Eastern Time on Friday, November 8 by dialing (855) 859-2056 for U.S. callers and (404) 537-3406 for international callers; conference ID 6058479.


About Viasat
Viasat is a global communications company that believes everyone and everything in the world can be connected. For more than 30 years, Viasat has helped shape how consumers, businesses, governments and militaries around the world communicate. Today, the Company is developing the ultimate global communications network to power high-quality, secure, affordable, fast connections to impact people's lives anywhere they are—on the ground, in the air or at sea. To learn more about Viasat, visit: www.viasat.com, go to Viasat's Corporate Blog, or follow the Company on social media at: FacebookInstagramLinkedInTwitter or YouTube.


Forward-Looking Statements
This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Forward-looking statements include, among others, statements that refer to opportunities, growth and outlook for the remainder of fiscal year 2020 and beyond; satellite construction and launch activities; the expected completion, performance, capacity, service, coverage, service speeds, availability and other features of our satellites, and the timing, cost, economics and other benefits associated therewith; international expansion plans, including in Brazil, Jamaica and Mexico; the transition of Viasat's satellites to the Satellite Control Center; the number of IFC systems expected to be installed under existing contracts with commercial airlines; and the impacts of new contracts entered into with, and the roll-out, ramp-up and uptake of products and services by, and services to be offered by, our airline partners and other customers. Readers are cautioned that actual results could differ materially and adversely from those expressed in any forward-looking statements. Factors that could cause actual results to differ include: our ability to realize the anticipated benefits of the ViaSat-2 and ViaSat-3 class satellites; unexpected expenses related to our satellite projects; our ability to successfully implement our business plan for our broadband satellite services on our anticipated timeline or at all; risks associated with the construction, launch and operation of our satellites, including the effect of any anomaly, operational failure or degradation in satellite performance; our ability to realize the anticipated benefits of our acquisitions or strategic partnering arrangements; our ability to successfully develop, introduce and sell new technologies, products and services; the number of purchase orders that are submitted and accepted for the installation of IFC systems with respect to aircraft under contract; audits by the U.S. government; changes in the global business environment and economic conditions; delays in approving U.S. government budgets and cuts in government defense expenditures; our reliance on U.S. government contracts, and on a small number of contracts which account for a significant percentage of our revenues; reduced demand for products and services as a result of continued constraints on capital spending by customers; changes in relationships with, or the financial condition of, key customers or suppliers; our reliance on a limited number of third parties to manufacture and supply our products; increased competition; introduction of new technologies and other factors affecting the communications and defense industries generally; the effect of adverse regulatory changes (including changes affecting spectrum availability or permitted uses) on our ability to sell products and services; orbital arc congestion affecting availability of Ka-band spectrum; the effect of changes in the way Ka-band spectrum is used by others; our level of indebtedness and ability to comply with applicable debt covenants; our involvement in litigation, including intellectual property claims and litigation to protect our proprietary technology; and our dependence on a limited number of key employees. In addition, please refer to the risk factors contained in our SEC filings available at www.sec.gov, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements for any reason.


Use of Non-GAAP Financial Information
To supplement Viasat's consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), ViaSat uses non-GAAP net income (loss) attributable to Viasat Inc. and Adjusted EBITDA, measures Viasat believes are appropriate to enhance an overall understanding of Viasat's past financial performance and prospects for the future. We believe the non-GAAP results provide useful information to both management and investors by excluding specific expenses that we believe are not indicative of our core operating results. In addition, since we have historically reported non-GAAP results to the investment community, we believe the inclusion of non-GAAP numbers provides consistency in our financial reporting and facilitates comparisons to the Company's historical operating results. Further, these non-GAAP results are among the primary indicators that management uses as a basis for evaluating the operating performance of our segments, allocating resources to such segments, planning and forecasting in future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation of specific adjustments to GAAP results is provided in the tables below.


Copyright © 2019 Viasat, Inc. All rights reserved. Viasat, the Viasat logo and the Viasat signal are registered trademarks of Viasat, Inc. All other product or company names mentioned are used for identification purposes only and may be trademarks of their respective owners.


Condensed Consolidated Statements of Operations


(Unaudited)


(In thousands, except per share data)











Three months ended 



Six months ended



September 30, 2019



September 30, 2018



September 30, 2019



September 30, 2018










Revenues:









Product revenues


$                   306,830



$                   280,435



$                   570,445



$                   498,564


Service revenues


285,426



237,039



558,848



457,779


Total revenues


592,256



517,474



1,129,293



956,343










Operating expenses:









Cost of product revenues


223,075



216,900



420,015



390,348


Cost of service revenues


187,024



175,230



374,543



346,662


Selling, general and administrative


127,391



113,120



252,523



225,762


Independent research and development


34,314



31,360



67,788



64,733


Amortization of acquired intangible assets


2,027



2,435



4,064



4,888


Income (loss) from operations


18,425



(21,571)



10,360



(76,050)


Interest expense, net


(9,127)



(14,045)



(19,376)



(25,333)


Income (loss) before income taxes 


9,298



(35,616)



(9,016)



(101,383)


(Provision for) benefit from income taxes


(2,390)



9,704



4,820



38,909


Equity in income of unconsolidated affiliate, net


1,154



314



2,521



1,379


Net income (loss)


8,062



(25,598)



(1,675)



(61,095)


Less: net income (loss) attributable to noncontrolling interests, net of tax


4,868



126



6,599



(1,361)


Net income (loss) attributable to Viasat Inc. 


$                       3,194



$                    (25,724)



$                      (8,274)



$                    (59,734)










Diluted net income (loss) per share attributable to Viasat Inc. common stockholders


$                         0.05



$                        (0.43)



$                        (0.14)



$                        (1.00)


Diluted common equivalent shares (2) 


62,761



59,734



61,200



59,470










AN ITEMIZED RECONCILIATION BETWEEN NET INCOME (LOSS) ATTRIBUTABLE TO VIASAT INC.


ON A GAAP BASIS AND NON-GAAP BASIS IS AS FOLLOWS:


(In thousands, except per share data)


Three months ended 



Six months ended



September 30, 2019



September 30, 2018



September 30, 2019



September 30, 2018










GAAP net income (loss) attributable to Viasat Inc.


$                       3,194



$                    (25,724)



$                      (8,274)



$                    (59,734)


Amortization of acquired intangible assets


2,027



2,435



4,064



4,888


Stock-based compensation expense


21,101



19,377



42,328



38,503


Income tax effect (1)


(5,329)



(5,042)



(10,747)



(10,087)


Non-GAAP net income (loss) attributable to Viasat Inc.


$                     20,993



$                      (8,954)



$                     27,371



$                    (26,430)


Non-GAAP diluted net income (loss) per share attributable to Viasat Inc. common stockholders


$                         0.33



$                        (0.15)



$                         0.44



$                        (0.44)


Diluted common equivalent shares (2) 


62,761



59,734



62,636



59,470










(1)The income tax effect is calculated using the tax rate applicable for the non-GAAP adjustments.


(2)As the three months ended September 30, 2018 and six months ended September 30, 2019 and 2018 financial information resulted in a net loss, the weighted average number of shares used to calculate basic and diluted net loss per share is the same, as diluted shares would be anti-dilutive. As the six months ended September 30, 2019 financial information resulted in a non-GAAP net income, diluted weighted average number of shares were used to calculate non-GAAP diluted net income per share.










AN ITEMIZED RECONCILIATION BETWEEN NET INCOME (LOSS) ATTRIBUTABLE TO VIASAT INC.


AND ADJUSTED EBITDA IS AS FOLLOWS:


(In thousands)


Three months ended 



Six months ended



September 30, 2019



September 30, 2018



September 30, 2019



September 30, 2018










GAAP net income (loss) attributable to Viasat Inc.


$                       3,194



$                    (25,724)



$                      (8,274)



$                    (59,734)


Provision for (benefit from) income taxes


2,390



(9,704)



(4,820)



(38,909)


Interest expense, net


9,127



14,045



19,376



25,333


Depreciation and amortization


82,338



79,474



166,350



157,271


Stock-based compensation expense


21,101



19,377



42,328



38,503


Adjusted EBITDA


$                   118,150



$                     77,468



$                   214,960



$                   122,464


 


AN ITEMIZED RECONCILIATION BETWEEN SEGMENT OPERATING PROFIT (LOSS) BEFORE


CORPORATE AND AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS AND ADJUSTED EBITDA IS AS FOLLOWS:


(In thousands)





















Three months ended September 30, 2019



Three months ended September 30, 2018




Satellite 
Services



Commercial
Networks



Government
Systems



Total



Satellite 
Services



Commercial
Networks



Government
Systems



Total


Segment operating profit (loss) before corporate and amortization of acquired intangible assets



$     5,118



$      (46,781)



$        62,115



$   20,452



$ (24,839)



$      (39,197)



$        44,900



$ (19,136)


Depreciation(3)



50,104



5,826



10,412



66,342



50,823



5,502



8,872



65,197


Stock-based compensation expense



6,405



7,273



7,423



21,101



5,733



6,758



6,886



19,377


Other amortization



7,907



1,879



4,183



13,969



7,051



2,328



2,463



11,842


Equity in income of unconsolidated affiliate, net



1,154



-



-



1,154



314



-



-



314


Noncontrolling interests



-



-



(4,868)



(4,868)



783



-



(909)



(126)


Adjusted EBITDA 



$   70,688



$      (31,803)



$        79,265



$ 118,150



$  39,865



$      (24,609)



$        62,212



$   77,468





















Six months ended September 30, 2019



Six months ended September 30, 2018




Satellite
Services



Commercial
Networks



Government
Systems



Total



Satellite 
Services



Commercial
Networks



Government
Systems



Total


Segment operating profit (loss) before corporate and amortization of acquired intangible assets



$     3,048



$      (96,642)



$      108,018



$   14,424



$ (54,775)



$      (86,205)



$        69,818



$ (71,162)


Depreciation(3)



103,698



11,345



20,101



135,144



100,833



10,995



17,162



128,990


Stock-based compensation expense



12,892



14,661



14,775



42,328



11,026



13,864



13,613



38,503


Other amortization



15,616



3,677



7,849



27,142



13,960



3,995



5,438



23,393


Equity in income of unconsolidated affiliate, net



2,521



-



-



2,521



1,379



-



-



1,379


Noncontrolling interests



-



-



(6,599)



(6,599)



1,707



-



(346)



1,361


Adjusted EBITDA 



$ 137,775



$      (66,959)



$      144,144



$ 214,960



$  74,130



$      (57,351)



$      105,685



$ 122,464



















(3)Depreciation expenses not specifically recorded in a particular segment have been allocated based on other indirect allocable costs, which management believes is a reasonable method. 


 


Condensed Consolidated Balance Sheets


(Unaudited)


(In thousands)












As of



As of




As of



As of


Assets


September 30, 2019



March 31, 2019



Liabilities and Equity


September 30, 2019



March 31, 2019











Current assets:






 Current liabilities: 





Cash and cash equivalents


$                     87,045



$          261,701



 Accounts payable 


$                   141,746



$          157,275


Accounts receivable, net


294,067



300,307



 Accrued and other liabilities (4)


330,011



308,268


Inventories


269,517



234,518



 Current portion of long-term debt 


29,962



19,937


Prepaid expenses and other current assets


105,004



90,646



 Total current liabilities 


501,719



485,480


Total current assets


755,633



887,172












 Senior notes 


1,284,329



1,282,898







 Other long-term debt 


159,636



110,005







 Non-current operating lease liabilities(4)


296,707



-


Property, equipment and satellites, net


2,363,916



2,125,290



 Other liabilities 


118,824



120,826


Operating lease right-of-use assets (4)


319,698



-



 Total liabilities 


2,361,215



1,999,209


Other acquired intangible assets, net


17,967



22,301



 Total Viasat Inc. stockholders' equity 


1,990,907



1,907,748


Goodwill


121,223



121,719



 Noncontrolling interest in subsidiary 


14,929



8,330


Other assets


788,614



758,805



 Total equity 


2,005,836



1,916,078


Total assets


$                4,367,051



$       3,915,287



 Total liabilities and equity 


$                4,367,051



$       3,915,287











(4)The balances as of September 30, 2019 reflect the Company's adoption of Accounting Standards Update 2016-02, Leases, commonly referred to as ASC 842. 



 


Cision View original content:http://www.prnewswire.com/news-releases/viasat-announces-second-quarter-fiscal-year-2020-results-300954299.html


SOURCE Viasat, Inc.


Viasat, Inc. Contacts: Chris Phillips, Corporate Communications and Public Relations, +1 760-476-2322, chris.phillips@viasat.com or June Harrison, Investor Relations, +1 760-476-2633, IR@viasat.com