Viasat Shares Surge 38% Amid Strong Q1 Performance and Upbeat Revenue Outlook

Viasat saw its shares soar by 38% on August 8, following the company’s decision to revise its annual revenue expectations upwards. The positive revision comes amid substantial growth in its government and aviation broadband businesses, reflecting robust demand across key sectors.

The Carlsbad, California based company, known for its satellite communications services, now anticipates a slight increase in revenue growth for its fiscal year ending March 2025, an improvement from its previous forecast of flat growth. This updated outlook is buoyed by a 6% year-on-year jump in revenues to $1.1 billion for the quarter ending June 30, 2024, the first quarter of Viasat’s fiscal year 2025. This growth includes contributions from Inmarsat, the satellite operator Viasat acquired last year. Additionally, the company reported a 16% rise in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), which reached $404 million.

Key Growth Drivers

The primary driver behind the revenue surge was a 37% year-on-year increase in sales from Viasat’s Defense and Advanced Technologies business unit; which includes cybersecurity and ground equipment products, generated $300 million during the quarter.

Viasat’s communication services in the aviation market saw a 19% increase in revenue, reaching $257 million, despite ongoing delays in aircraft manufacturing.

Viasat currently has 1,460 contracted aircraft in its backlog, with an additional 350 aircraft expected to be added to its books later.

"not getting worse, they’re persisting," - Mark Dankberg, CEO

The company remains optimistic about reaching its target of 4,200 aircraft in service by the end of March.

Government satellite communications also performed well, with sales increasing by 11% to $184 million for the first quarter of fiscal 2025.

Challenges in Fixed Broadband and Maritime Services

Despite these successes, Viasat’s overall communication services revenue slipped by 2% to $827 million.

This decline was primarily driven by an 18% drop in its fixed residential broadband business, which continues to face stiff competition from SpaceX’s Starlink, a low Earth orbit constellation. Viasat’s U.S. fixed broadband subscriber base has dwindled to 257,000 as of June 30, a significant reduction from the 603,000 subscribers it had four years ago.

Additionally, Viasat’s maritime communication services revenue fell nearly 10% year-on-year to $124 million, reflecting further challenges in this segment.

Addressing Setbacks: ViaSat-3 F1 and Future Plans

Viasat’s fixed broadband struggles have been exacerbated by issues with its next-generation ViaSat-3 F1 satellite. The satellite lost at least 90% of its 1 terabit per second capacity due to an antenna deployment failure last year. Despite this setback, ViaSat-3 F1 entered service over the Americas in July, more than a year after its launch on a SpaceX Falcon Heavy rocket on April 30, 2023.

To mitigate the impact of the satellite’s defective antenna, Viasat has been reallocating available bandwidth from fixed broadband to higher-growth markets like aviation.

This strategic shift is expected to continue as the company prepares to deploy the remaining two spacecraft in the ViaSat-3 constellation. While ViaSat-3 F1 is expected to deliver up to 10% of its original design capacity, additional investments in ground equipment might be necessary to achieve these levels.

Looking ahead, ViaSat-3 F1 may be repositioned over Europe, the Middle East, and Africa once the follow-on satellites are deployed over the Americas and Asia Pacific. The next satellite in the constellation is expected to enter service by mid-to-late 2025, with the final satellite scheduled for deployment by the end of that year.

Boeing is the prime contractor for all three satellites, utilizing payloads provided by Viasat. Notably, ViaSat-3 F1 was insured for approximately $421 million.

Optimistic Financial Outlook

Reflecting its solid first-quarter performance, Viasat has also slightly increased its EBITDA forecast for fiscal 2025 to around 5%, compared to its previous estimate of low-to-mid-single-digit growth.

On August 8, Viasat’s shares closed at $24.49, marking a significant 37.82% increase from the previous day. However, the company’s stock is still down 12.66% since the beginning of the year, indicating ongoing market challenges.

As Viasat navigates these hurdles, the company’s focus on high-growth markets and strategic investments in new technologies could pave the way for a stronger financial performance in the coming quarters.