Iridium Posts Higher Net Income but Revenues Drop 5% in 1Q

McLean, VA., May 2, 2013 — Iridium Communications Inc. on Friday reported a net income of $14.9 million, or $0.17 per diluted share, for the first quarter of 2013 compared to $12.4 million, or $0.16 per diluted share, for the first quarter of 2012. Operational EBITDA for the first quarter was $46.8 million compared to $43.9 million for the prior-year period, representing year-over-year growth of 7 percent and an OEBITDA margin of 53 percent.

Iridium said first-quarter total revenue of $89.2 million consisted of $68.8 million of service revenue and $20.4 million of equipment, engineering and support revenue. Total revenue declined 5 percent versus the compared to the same period in 2012, while service revenue grew 3 percent from the year-ago period.

Iridium attributed to revenue decline to 20 percent lower equipment revenue resulting from fewer overall unit sales. Service revenue, which represents primarily recurring revenue from Iridium's growing subscriber base, was 77 percent of total revenue for the first quarter of 2013 compared to 72 percent in the year-ago period.

Iridium ended the quarter with 621,000 total billable subscribers, compared to 544,000 for the year-ago period and is up from 611,000 for the quarter ended December 31, 2012. Total billable subscribers grew 14 percent year-over-year, driven by strength in machine-to-machine  and commercial voice customers.

Iridium CEO Matt Desch affirmed its 2013 financial outlook across the board today and expressed confidence in making strong progress in key strategic areas of its business.

"Our satellite network continues to perform well, and the Iridium NEXT build remains on budget and on schedule. Our global aviation monitoring venture, Aireon, has also taken a big step forward, recently announcing its first long-term commercial data service contract with NAV CANADA, the world's largest provider of air traffic services for oceanic flights,” Desch said.

He added the new business is beginning to take shape and Iridium is targeting nearly $500 million in revenue from the Aireon opportunity.

Analyst Raymond James & Associates, however, noted the company’s “weak subscriber growth” comparing it with its forecast of around 24,000 but Iridium got only 21,000. It noted that commercial voice subs (including OpenPort) were flat sequentially vs. the analyst’s forecast of a 4,000 unit pickup, while M2M subs grew by 10,000 vs. the forecast of 19,000.