ViaSat Announces Third Quarter Fiscal Year 2015 Results

Feb. 10, 2015

ViaSat Inc. announced strong fiscal year 2015 third quarter financial results that included revenues of $339.6 million and strong Adjusted EBITDA growth of 51% to $85.9 million, up from $56.7 million recorded in the same period last year. Non-GAAP diluted net income attributable to ViaSat common stockholders for the third quarter of fiscal year 2015 also grew sharply to $0.49 per share compared to $0.03 per share in the fiscal year 2014 third quarter, reflecting the strong growth in operating performance in addition to a $0.17 per share income tax benefit from the retroactive reinstatement of the federal research and development credit. Diluted GAAP net income attributable to ViaSat common stockholders was $0.31 in the third quarter compared to a net loss of $0.13 per share for the third quarter of fiscal year 2014.

ViaSat's fiscal year-to-date results also reflected strong earnings growth. Revenues were $1.0 billion and Adjusted EBITDA grew 56% compared to the same period last year, to $255.8 million. Net income attributable to ViaSat common stockholders also grew significantly, increasing to $1.22 per share on a non-GAAP diluted basis inclusive of the third quarter federal research and development credit benefit, or $0.68 on a diluted GAAP basis – compared to the prior year period net income of $0.35 and net loss of $0.13 per share, respectively.

"Our strong earnings performance this quarter was a result of the cumulative effect of steady gains in satellite services, and a solid quarter for government margins," said Mark Dankberg, ViaSat CEO and chairman. "We are continuing to see the benefits of building our retail consumer distribution, improving unit operational metrics, reducing churn, and introducing higher value service plans. Year-to-date company-wide new contract awards are favorable in terms of both book-to-bill, and in comparison to the same period last year – sustaining a healthy backlog and creating the opportunity for robust growth ahead."

Financial Results¹

 

Segment Results

 

Satellite Services

Our Satellite Services segment continued to grow, reporting revenues of $123.8 million for the third quarter of fiscal year 2015, rising 26% from $98.6 million in the third quarter last year. Consumer residential broadband revenues continued to drive our quarterly year-over-year growth, increasing 15% from the same period last year, reflecting year-over-year expansion in both total subscribers served and average revenue per subscriber.  Our third quarter fiscal 2015 subscriber metrics included 67,000 gross adds, 18,000 net adds, ending subscribers of 675,000, weighted average ARPU of $52.91 and further reductions in our average monthly churn, decreasing to 2.6%, a fiscal 2015 year-to-date low.  We continue to expand our commercial in-flight Wi-Fi service with over 270 aircraft in service at the end of our fiscal third quarter. In December 2014, Exede^® In The Air service on JetBlue hit the one year mark and already we are experiencing passenger engagement that is four times the levels seen on our nearest competitor, marking the differential that our high capacity Ka-band satellite system brings to in-flight Wi-Fi.  Third quarter fiscal year 2015 Satellite Services segment Adjusted EBITDA grew to $47.6 million, more than double the amount reported for the same period last year. This significant year-over-year earnings improvement resulted from not only our year-over-year revenue growth, but also continuing improvements in our quarterly per subscriber operating costs. On a year-to-date basis, our Satellite Services segment revenues also grew significantly, up 30% to $369.5 million, and segment Adjusted EBITDA grew 164% to $155.5 million compared to the same period last year (including $45.7 million derived from litigation settlement gains and associated technology access rights granted as discussed in our second quarter fiscal 2015 results).

Commercial Networks

Our Commercial Networks segment revenues were $84.0 million for the third quarter of fiscal year 2015 compared to $91.9 million for the same period last year. On a year-to-date basis, segment revenues decreased by 12% to $263.1 million. The quarterly and year-to-date revenue decreases compared to the same period last year reflect the continuing reduced construction and integration activities on our large Australian Ka-band infrastructure project as we move closer to completion. Partially offsetting this decrease was year-over-year growth in our large integrated antenna system programs, next-generation Canadian Ka-band network project activities, and increased general aviation terminal sales designed to deliver general business aviation with the fastest in-flight internet service for business aircraft available for the world's most heavily traveled routes – including over water.  Our segment Adjusted EBITDA for the third quarter of fiscal year 2015 was $6.0 million, a 158%  increase from fiscal 2014 third quarter, reflecting a near term shift in resources from research and development activities to more funded development projects and related key contractual milestone close outs. Segment year-to-date Adjusted EBITDA was $16.2 million, a 27% decrease compared to the same period last year reflecting the revenue decrease and revenue mix to more funded development activities versus terminal production contracts in our consumer broadband products, offset in part by growth from our large integrated antenna system programs.

Government Systems

Our Government Systems segment reported third quarter fiscal year 2015 revenues of $131.7 million, a decrease of $10.3 million compared to the same period last year. Year-to-date Government Systems segment revenues decreased by 9% to $385.2 million. These quarterly and year-to-date decreases were primarily due to completion of many production and service obligations under our Blue Force Tracking project and were nearly offset by revenue growth in advanced tactical radio and information distribution systems, information assurance and security products, and additional revenue contributions from our newly acquired subsidiary, NetNearU.  Our government segment fiscal year 2015 contract win performance continued to be strong.  Our segment fiscal third quarter year-to-date awards of $513.0 million grew government segment backlog sequentially and quarterly year-over-year to $404.8 million, setting government segment backlog to a new quarterly high for the last two-year period.   Quarter-to-date and year-to-date segment Adjusted EBITDA remained relatively flat at $32.2 million and $83.8 million, respectively, for the fiscal year 2015, compared to the same period last year, reflecting improved margins from our advanced tactical radio and information distribution systems and information assurance and security products,  offset by the year-over-year revenue impact.