[Via Satellite 05-22-2014] Despite showing continued increase in revenue, ViaSat<\/b> struggled to overcome a high churn rate in its core consumer broadband business during its most recent quarter. For fiscal 2014, ViaSat brought in $1.4 billion in revenues, a 21 percent increase from last year, but net customer additions in its domestic consumer broadband business left investors with some concerns.<\/p>\n
\u201cViaSat grew revenue at 11 percent representing the company\u2019s weakest performance in two years, while coming up 1 percent short of consensus ($344 vs. $349 million),\u201d Chris Quilty, SVP of equity research at Raymond James and Associates <\/b>said in a research note. \u201cMore importantly, EBITDA was 4 percent below consensus ($57.4 vs. $59.9 million) and churn remains at an unacceptably high level (estimated ~2.9% vs FY13 of ~2.4%).\u201d<\/p>\n
The company\u2019s strongest showing was with its in-flight connectivity service, Exede In the Air Wi-Fi. Installations for JetBlue<\/b> and United Airlines <\/b>reached 100 aircraft and connectivity speeds have stayed at 12 Mbps per passenger 90 percent of the time. ViaSat is equipping 400 planes total between the two airlines with Exede in the Air. This is expected to become an even stronger revenue source for the company going forward. ViaSat has also signed recently a key new deal with Israeli airline El Al Airlines<\/b>, as it looks to broaden its reach here to more international markets.<\/p>\n
On a less uplifting note, ViaSat\u2019s fourth quarter was also the fourth consecutive of lower than expected net subscriber additions in its domestic broadband business, with 21,000 total \u2014 a decrease of 54 percent year over year and the lowest in seven quarters. High churn contributed to this difficulty and is affecting satellite fill-rates.<\/p>\n
\u201cLooking forward, management remains convinced they can fill ViaSat 1 (~900,000 subscribers) by early CY2016, however by our estimate, this implies ~30 percent improvement in gross additions (CY15-CY16 vs. CY13-CY14) or a reduction in churn by nearly one-third from current levels. While the end result would like be a mix of the two, neither improvement will be an easy undertaking,\u201d wrote Quilty.<\/p>\n
On a company earnings call, Mark Dankberg, ViaSat\u2019s CEO remained confident that ViaSat can add more subscribers to ViaSat 1, but said the company is taking a more concentrated approach to adding customers.<\/p>\n
\u201cGiven that we are well over half full in total on ViaSat 1 and much more so on highest demand beams, we\u2019re being careful and selective in the way we are seeking new subscribers,\u201d he said. \u201cSo we are now comfortable with adding less than 90,000 to 100,000 quarterly installers than we were a year ago because the subscribers we\u2019re obtaining are more profitable, and they\u2019ve got a better experience with us. As long as we continue to leverage that productivity into improving unit economics, we believe that is a good trade off.\u201d<\/p>\n
During 2014, ViaSat increased its spending on research and development by $25 million with a heavy focus on new Ka-band technologies. The company\u2019s first Ka-band payloads are currently headed to production on third party commercial satellites. Shawn Duffy, ViaSat\u2019s chief accounting officer, attributed the recently won Xplornet<\/b> contract to R&D investments. Custom Ka-band payloads are also under construction.<\/p>\n
ViaSat spent $9 million in Q4 on litigation expenses for its lawsuit with SSL<\/b>. In April, a California District court determined ViaSat to be the winner of the case and awarded $283 million against SSL for three patent infringements and the breach of a non-disclosure agreement. The final conclusion of the case remains some way off, but the company understandably sees the victory as a positive sign.<\/p>\n
The first half of the year is seasonally slow for ViaSat\u2019s business, something the company acknowledged during the earnings call. ViaSat is looking at long-term strategies to continue seeing year over year revenue increases but while also reducing churn. Dankberg said this involves conducting some controlled experiments, but that progress is being made.<\/p>\n
\u201cWe would like to get more into like, 2.5 percent a month churn rate and we\u2019re not there yet \u2026 but right now that\u2019s sort of a good target for us given where things stand,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
[Via Satellite 05-22-2014] Despite showing continued increase in revenue, ViaSat struggled to overcome a high churn rate in its core consumer broadband business during its most recent quarter. For fiscal 2014, ViaSat brought in $1.4 billion in revenues, a 21 percent increase from last year, but net customer additions in its domestic consumer broadband business […]<\/p>\n","protected":false},"author":1,"featured_media":77446,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-77445","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/77445"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=77445"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/77445\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media\/77446"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=77445"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=77445"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=77445"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}