By some metrics, ViaSat (VSAT) reported uninspiring financial results for its second quarter which ended in September. But the firm continues to generate strong cash flows, while it is obtaining an impressive amount of new orders.
Also importantly, VSAT still has multiple, potential, powerful catalysts, and its valuation is attractive.
As a consequence of these situations, I recommend that long-term growth investors consider buying the shares.
Mixed Q3 Results
Viasat’s revenue only climbed 2% last quarter versus the same period a year earlier to $1.1 billion, and its EBITDA, excluding certain items, rose just 3% year-over-year to $385 million. But the firm’s operating cash flow jumped to $282 million during the quarter, representing a surge of $43 million versus the same period a year earlier.
And it obtained a record $1.5 billion of contract awards for the quarter, representing a YOY surge of 17%. On the other hand, its backlog increased by only $140 million YOY to $3.9 billion. However, the sale of its energy system integration unit last year lowered its backlog by $106 million. If the latter amount was factored into its current backlog, the metric would have increased by $246 million YOY, representing a healthy YOY gain of 6.5%.
Among the areas of strength for VSAT have been its satellite communications revenue from governments, which increased 9% YOY in Q2, its aircraft WiFi business, whose installed base soared by 425 planes in the 12 months that ended in September, and its new maritime WiFi offering, NexusWave, whose installations soared by 40% last quarter versus the previous period.
Powerful, Positive, Upcoming Catalysts
As I’ve asserted in past columns, Viasat’s ability to provide service from its satellites directly to unmodified smartphones should significantly boost VSAT stock. And the company’s ability to offer such service appears to be improving rapidly.
In September, VSAT launched a a joint venture called Equatys with UAE-based Space42. According to the firms, Equatys “is expected” to launch a satellite-based network that will offer service “to standard smartphones and (Internet of Things) devices.” VSAT and Space42 expect to provide service “to billions of people and devices worldwide.” They expect to launch the service “within three years,” CEO Mark Dankberg reported on the Q2 earnings call. The CEO noted that Equatys’ service would save regional telecom companies a great deal of money, and he reported that VSAT is already holding talks with a number of telecom companies that are “really interested” in utilizing Equatys’ offering.
Viasat expects to launch a new satellite, VS-3 F2, in early 2026, and it intends to put another satellite, VS-3 F3, into orbit in mid-2026. “Each of the new VS-3 satellites is designed to enable more bandwidth capacity than our entire existing fleet,” said the CEO. The capacity added by VS-3 F2 will improve the company’s ability to provide cellular service, Lisa Curran, Senior Vice President Strategic Finance and Investor Relations, reported on the earnings call.
According to Dankberg, another positive catalyst for VSAT and its peers is “increased reliance on space-based assets, both domestically and internationally, for national security purposes.”
The company’s Defense and Advanced Technologies (DAT) unit is already benefiting to some extent from this trend, as its revenue climbed 9% in the first six months of Viasat’s current fiscal year versus the same period a year earlier.
Part of the reason for the huge rally of VSAT in 2025 (the shares had soared 310% year-to-date as of November 19) is the effort by activist investor Carronade to push the company to spin off DAT and VSAT’s subsequent decision to evaluate the move. If VSAT spins off the unit and provides shares of it to the owners of VSAT stock, DAT’s shares are likely to fly higher, benefiting VSAT’s shareholders.
And finally, VSAT stock should be boosted by the continued proliferation of its WiFi on planes and ships.
Valuation and the Bottom Line on VSAT
In the first two quarters of VSAT’s fiscal year, its operating cash flow came in at $258 million and $282 million, respectively. That adds up to $540 million and equate to an annualized run rate of $1.1 billion. The shares have a market capitalization of $4.7 billion, meaning that they are changing hands for just 4.3 times the company’s annualized operational cash flow.
Given Viasat’s strong, positive potential catalysts, I think that VSAT stock remains dramatically undervalued despite its rally.
*This article is intended to be informational only; it is not financial advice.
