Viasat (VSAT)

Global satellite communications provider Viasat (NASDAQ:VSAT) missed Wall Street’s revenue expectations in Q3 CY2025 as sales only rose 1.7% year on year to $1.14 billion. Its non-GAAP profit of $0.09 per share was significantly above analysts’ consensus estimates.

Company Overview

Operating a fleet of 23 satellites that orbit the Earth and beam connectivity from space, Viasat (NASDAQ:VSAT) provides satellite-based communications networks and services for airlines, maritime vessels, governments, businesses, and residential customers worldwide.

Satellite telecommunication is generally buoyed by rising global demand for connectivity in costly-to-connect and remote areas. IoT (Internet of Things) expansion and government-backed space and defense initiatives also help. As advancements in low Earth orbit (LEO) technology happen, companies in the space will have more favorable competitive positions, which could lead to further partnerships with mobile network operators to extend coverage. On the other hand, headwinds include high capital expenditures for satellite deployment as well as regulatory hurdles related to spectrum allocation. Competition from larger players like SpaceX’s Starlink and Amazon’s Kuiper could also intensify over time, especially if tech advancements lead to better unit economics and financial prospects.

Viasat competes with other satellite communications providers including SpaceX's Starlink, Intelsat, SES, Eutelsat, and EchoStar. In the aviation connectivity market, it faces competition from Panasonic Avionics, Gogo, and Thales Group, while its defense business competes with L3Harris, General Dynamics, and BAE Systems.

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $4.58 billion in revenue over the past 12 months, Viasat is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions.

As you can see below, Viasat’s 15.1% annualized revenue growth over the last five years was incredible. This is an encouraging starting point for our analysis because it shows Viasat’s demand was higher than many business services companies.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Viasat’s annualized revenue growth of 17.4% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Viasat’s revenue grew by 1.7% year on year to $1.14 billion, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 3.5% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt, and taxes.

Although Viasat was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average adjusted operating margin of negative 6.1% over the last five years. Unprofitable business services companies require extra attention because they could get caught swimming naked when the tide goes out.

Analyzing the trend in its profitability, Viasat’s adjusted operating margin decreased by 4.1 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Viasat’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Viasat generated an adjusted operating margin profit margin of 3.1%, up 5.3 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Viasat, its EPS declined by 21.5% annually over the last five years while its revenue grew by 15.1%. This tells us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into Viasat’s earnings to better understand the drivers of its performance. As we mentioned earlier, Viasat’s adjusted operating margin expanded this quarter but declined by 4.1 percentage points over the last five years. Its share count also grew by 102%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Viasat, its two-year annual EPS declines of 62% show it’s continued to underperform. These results were bad no matter how you slice the data, but given it was successful in other measures of financial health, we’re hopeful Viasat can generate earnings growth in the future.

In Q3, Viasat reported adjusted EPS of $0.09, up from negative $0.23 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Viasat’s full-year EPS of $0.35 to grow 44.8%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

While Viasat posted positive free cash flow this quarter, the broader story hasn’t been so clean. Viasat’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 12.2%, meaning it lit $12.23 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that Viasat’s margin expanded by 12.2 percentage points during that time. In light of its glaring cash burn, however, this improvement is a bucket of hot water in a cold ocean.

Viasat’s free cash flow clocked in at $68.54 million in Q3, equivalent to a 6% margin. This result was good as its margin was 5.1 percentage points higher than in the same quarter last year. We hope the company can build on this trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Viasat has shown solid business quality lately, it struggled to grow profitably in the past. Its five-year average ROIC was negative 2.5%, meaning management lost money while trying to expand the business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Viasat’s ROIC has stayed the same over the last few years. We still think it’s a good business, but if the company wants to reach the next level, it must improve its returns.

Viasat reported $1.23 billion of cash and $7.01 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.56 billion of EBITDA over the last 12 months, we view Viasat’s 3.7× net-debt-to-EBITDA ratio as safe. We also see its $330.6 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Viasat beat analysts’ EPS expectations this quarter. On the other hand, its revenue slightly missed. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 2.7% to $38.64 immediately following the results.

Updated: January 7, 2026 at 9:02 AM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Viasat.

In our opinion, Viasat is a good company. First off, its revenue growth was exceptional over the last five years. And while its relatively low ROIC suggests management has struggled to find compelling investment opportunities, its rising cash profitability gives it more optionality. On top of that, its projected EPS for the next year implies the company’s fundamentals will improve.

Viasat’s P/E ratio based on the next 12 months is 85.8x. This multiple tells us that a lot of good news is priced in. Add this one to your watchlist and come back to it later.

Wall Street analysts have a consensus one-year price target of $36.25 on the company (compared to the current share price of $43.13).