Viasat experienced a sharp decline in its shares, tumbling over 11% after-hours on Tuesday, following the company’s announcement of a revenue forecast below Wall Street expectations. The projection anticipates a slowdown in its satellite services business, particularly in its fixed broadband segment within the United States.
The company cited increased competition from wireless carriers like T-Mobile US (NASDAQ:TMUS), offering more affordable plans, as a primary factor contributing to the anticipated decline in revenue from its satellite services. In response, Viasat has been redirecting its focus towards its mobility business, which specializes in delivering satellite-based connectivity solutions to various government sectors.
In a strategic move to expand its satellite and land-based communications services, Viasat completed the acquisition of British competitor Inmarsat in a deal totaling $7.3 billion last year. However, despite these efforts, the company faces challenges stemming from an uncertain economic landscape and heightened competition from competitors like Starlink.
Guru Gowrappan, President of Viasat, emphasized the importance for governments to diversify their partnerships to mitigate dependency risks, particularly in the realm of satellite services.
In its government systems segment, Viasat reported a significant revenue increase of 77% to $385.8 million compared to the previous year, surpassing analyst expectations. However, the company’s overall revenue forecast for fiscal year 2025 indicates nearly flat growth compared to the previous year, contrary to analysts’ projections of approximately 7% growth to $4.57 billion.
Despite exceeding expectations in fourth-quarter revenue, totaling $1.15 billion, Viasat reported a per-share loss of 80 cents, contrasting with a profit per share of $15.56 in the same period last year. The company attributed this shift partly to increased interest expenses associated with the Inmarsat deal, resulting in a quarterly net loss from continuing operations of $90 million, up from $62 million a year ago.