CARLSBAD, Calif., Nov. 8, 2016 /PRNewswire/ -- ViaSat Inc. (NASDAQ: VSAT), a global broadband services and technology company, today announced financial results for the fiscal second quarter ended September 30, 2016.

"We had a very strong second fiscal quarter. Our government business showed exceptional growth, satellite services continued to steadily increase earnings and revenues driven by ARPU gains and growth in in-flight Wi-Fi services and our record new contract awards are indicative of sustained demand for both our products and services," said Mark Dankberg, ViaSat chairman and CEO. "For the first six months, Adjusted EBITDA grew twice the rate of revenue excluding the impact of R&D expenses associated with the internal development of our next-generation ViaSat-3 class satellite payloads. Continued earnings and operating cash flow growth demonstrated the attractive economics of our network in the residential and aero markets, where we now have contracts with eight commercial airlines globally, and we maintained strong positioning in key government sectors including tactical data links, broadband mobility and IP network security. The ViaSat-2 satellite is expected to ship before calendar year-end, and we're making exciting early progress on our ViaSat-3 platform, which will significantly expand our bandwidth resources, lower our costs, increase our geographic footprint and expand our addressable markets as we position to deliver abundant, cost-effective broadband access on a global scale."

 

Companion Announcement from November 8, 2016:

• Subsequent to the end of the second quarter of fiscal year 2017, ViaSat was selected by a North American airline to retrofit more than 500 aircraft from its existing, mainline domestic fleet with ViaSat's highly advanced in-flight internet system. Installation under this contract is expected to begin in summer 2017.

Satellite Services
In the second quarter of fiscal year 2017, ViaSat's Satellite Services segment recorded its fifth consecutive quarter of revenue growth, up 11% year-over-year. Operating profit increased 55% year-over-year to $32.6 million, and Adjusted EBITDA rose to $73.9 million, a 19% increase over the same period last year. Adjusted EBITDA margins also increased to over 47%, up 3% from the second quarter of fiscal year 2016. Profitable growth was driven by expanded residential services offerings, which drove higher Average Revenue Per User (ARPU), as well as an increase in the number of commercial aircraft that have installed ViaSat's high-speed in-flight internet system.  Highlights for the quarter include:

• ViaSat served 686,000 residential subscribers at the close of the second quarter of fiscal year 2017, which was relatively flat compared to the 687,000 residential subscribers at the end of second quarter of fiscal year 2016.
• Expanded residential broadband service offerings, including new premium service plans and value-added service bundles, drove ARPU in the residential broadband internet business to a new record high of $61.55, up $5.31 per subscriber or 9% on a year-over-year basis.
• ViaSat continued to execute on its global strategy to deliver high-quality satellite-based in-flight internet to the commercial air market with new European contracts announced with Finnair and SAS.
• At the close of the second quarter of fiscal year 2017, ViaSat's in-flight internet service was deployed on 533 commercial aircraft.

Year-to-date, Satellite Services segment results reached record highs, with revenue growth of 13% to $308.7 million and an operating profit increase of 67% year-over-year to $63.4 million. Adjusted EBITDA of $145.8 million was up 25% over the same period last year.

Commercial Networks
ViaSat's Commercial Networks segment, as anticipated, reflected higher investments in next-generation technologies. Quarterly revenues were down slightly compared to the same period last year. Research and development (R&D) expenses were up 63% year-over-year, primarily due to R&D expenses associated with internal development of the ViaSat-3 payloads and in expanding the commercial in-flight internet solution portfolio. As a result, segment operating losses were higher and Adjusted EBITDA was lower for the second quarter of fiscal year 2017, as compared to the same period last year. Highlights for the quarter include:

• ViaSat-2 successfully completed environmental testing and end-to-end terminal compatibility testing between the satellite and ground system. ViaSat-2 is currently undergoing the final integration phase and is on schedule for completion. The satellite is expected to be ready to ship to the launch site in early December 2016.
• One year into the ViaSat-3 program, the first two ViaSat-3 class satellites continued to be on schedule with spacecraft preliminary design review (PDR) planned for mid-November 2016. Engineering models of payload modules are running in laboratories at ViaSat's Tempe, Arizona facility, and Boeing Satellite Systems continues to proceed on schedule with design and development of the satellite platform.

Year-to-date, Commercial Networks segment revenues were lower, operating loss was higher and Adjusted EBITDA was lower compared to the same period last year. 

Government Systems
In the second quarter of fiscal year 2017, ViaSat's Government Systems segment achieved record highs in revenues, as well as strong increases in operating profit and Adjusted EBITDA. Strong new government contract awards of $385.6 million pushed second quarter segment backlog to $670.0 million and total company-wide backlog to $1.1 billion - each marking a new record. Revenues increased 21% to $177.4 million compared to the prior year period, while operating profit grew significantly, up 47% to $29.0 million, and Adjusted EBITDA grew 33% to $44.7 million. Operating profit and Adjusted EBITDA expansion were driven by strong growth in cybersecurity and information assurance products, as well as tactical data links product revenues and government managed Wi-Fi services revenues. Highlights for the quarter include:

• ViaSat was awarded a government contract for the Protected Tactical Service Field Demonstration, to develop a Protected Tactical Waveform modem and embedded cryptographic unit for wideband anti-jam communications across both government and commercial satellites.
• Space and Naval Warfare Systems Command awarded ViaSat a sole source contract for engineering, technical services and hardware/software products in support of the U.S. Navy's joint Ultra High Frequency military satellite communications system.
• ViaSat introduced the first 100 Gbps Type 1 Ethernet encryptor, and achieved National Security Agency-certification for two new network encryptors.
• NuWaves Engineering selected ViaSat to simulate the RF signal environment for the U.S. Army's Joint Scalable Tactical Emulated Network.
• ViaSat announced new service offerings to authorized Navy Exchange customers, including those located at Naval Station Guantanamo Bay in Cuba.
• Industry research firm Frost and Sullivan named ViaSat top 'Communications Contractor' to the U.S. Department of Defense in its latest Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) report. ViaSat was also recognized in the Defense News Top 100 Defense Contractor list, having moved up 12 positions, with the highest organic growth of any U.S. defense company.

On a year-to-date basis, ViaSat's Government Systems segment revenues grew 10% to $322.6 million. Operating profit increased 32% year-over-year to $47.0 million, generating Adjusted EBITDA of $77.5 million, a 24% increase over the same period last year.  

Conference Call
ViaSat will host a conference call to discuss the second quarter of fiscal year 2017 results.  Details follow:

 

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 fiscal year 2017 and beyond; satellite construction and launch activities; the performance and benefits of our ViaSat-2 and ViaSat-3 class satellites; the expected completion, 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; and the roll-out and uptake of products and services by, and services offered by, our airline partners as well as our commercial networks and government systems customers. Readers are cautioned that actual results could differ materially 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 consummate our proposed strategic partnership arrangement with Eutelsat and to realize the anticipated benefits thereof; our ability to successfully develop, introduce and sell new technologies, products and services; 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 on our ability to sell products and services; 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.

About ViaSat
ViaSat, Inc. (NASDAQ: VSAT) keeps the world connected. As a global broadband services and technology company, ViaSat ensures consumers, businesses, governments and military personnel have communications access - anywhere - whether on the ground or in-flight. The Company's innovations in designing highest-capacity satellites and secure ground infrastructure and terminal technologies coupled with its international network of managed Wi-Fi hotspots enable ViaSat to deliver a best available network that extends the reach and accessibility of broadband internet service, globally. For more information, visit: www.viasat.com, or follow ViaSat on Facebook, Twitter, LinkedIn or YouTube.

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 © 2016 ViaSat, Inc. All rights reserved. All other product or company names mentioned are used for identification purposes only and may be trademarks of their respective owners. ViaSat is a registered trademark of ViaSat, Inc.

 

 

 

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SOURCE ViaSat, Inc.