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ViaSat Busy in Both Commercial And Government Spaces

Satellite communications specialist ViaSat Inc. publicly opened the books on its second quarter, reporting a net loss of $13.7 million on revenue of $393.1 million. ViaSat (Nasdaq: VSAT) has an unusual fiscal year, so its second quarter ends Sept. 30 (yes, it’s the midpoint of fiscal 2018).

On top of the quarterly financial news, the business set a February date to begin commercial service on its ViaSat-2 communications satellite (which I got to see up close in the cavernous Boeing Co. factory in El Segundo, prior to its June 1 launch). Boeing (NYSE: BA) is finishing the process of raising the satellite to its proper orbit, and is expected to hand over control of the satellite to ViaSat before year’s end.

ViaSat also announced an expanded relationship with JetBlue Airways Corp., which plans to offer in-flight Wi-Fi through ViaSat-2 and the future ViaSat-3 constellation. Financial terms weren’t disclosed.

Carlsbad-based ViaSat fared a little better in the second quarter of last year. It reported net income of $11 million on slightly higher revenue of $399.2 million. Increased R&D spending hurt financial results in the just-ended quarter. Last year, ViaSat had some extra income from the Space Systems/Loral settlement — a benefit it did not have this year. ViaSat collected $100 million, plus interest, following a patent infringement and breach of confidentiality lawsuit.

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CEO Mark Dankberg touched on the airline cabin Wi-Fi business in a prepared statement: “In-flight connectivity investments delivered key milestones with new customers including American Airlines and Qantas that clear the way for rapid growth in airplanes in service in the quarters ahead.” He added that company leaders were very pleased with the JetBlue (Nasdaq: JBLU) news. JetBlue will start fitting its aircraft with new satellite communications equipment compatible with ViaSat-2 next fall.

As of Sept. 30, some 576 commercial aircraft equipped with ViaSat’s in-flight internet system were in service. The business said that under existing contracts, it expects to install its system on 833 more aircraft.

The business reported a sales backlog of $1.08 billion, down 1 percent from the same time last year.

ViaSat has many customers, including consumers. In the satellite services segment, ViaSat said it grew average revenue per user (that’s called ARPU) in the residential business 9 percent to a record high of $67.35. That reflects more customers choosing premium service plans and value-added services. Total residential subscribers at the close of the second quarter decreased to 589,000 as the company started to deemphasize older service plans.

Helping ViaSat take risks in the commercial space is the government systems work going on in the background. Government systems revenue in the second quarter was up 7 percent from a year ago, to $189.2 million. However, new contract awards were down 53 percent year-over-year to $182.6 million.

In other news, ViaSat entered a partnership with the European Space Agency to develop user terminals for its upcoming ViaSat-3 satellites by 2019.

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