Iridium Announces First-Quarter 2024 Results

McLean, Va. April 18, 2024 – Iridium Communications Inc. (Nasdaq: IRDM),  a leading provider of global voice and data satellite communications, today reported financial results for the first quarter of 2024 and reiterated its full-year 2024 outlook. Net income was US$ 19.7 million, or $0.16 per diluted share, for the first quarter of 2024, as compared to net income of US$ 9.8 million, or $0.08 per diluted share, for the first quarter of 2023. Operational EBITDA (“OEBITDA”)(1) for the first quarter was US$ 115.0 million, as compared to US$ 111.9 million for the prior-year period, representing a year-over-year increase of 3%. Net income benefitted from a year-over-year decrease in depreciation expense associated with the extension of the estimated useful lives of the Company’s satellites and continued growth in total commercial services revenue.

Iridium reported first-quarter total revenue of US$ 203.9 million, which consisted of US$ 148.6 million of service revenue and $55.3 million of revenue related to equipment sales and engineering and support projects. Service revenue, which represents primarily recurring revenue from Iridium’s growing subscriber base, grew 7% from the year-ago period and was 73% of total revenue for the first quarter of 2024. Total revenue decreased 1% versus the comparable period of 2023, largely due to lower equipment revenue.

The company ended the quarter with 2,333,000 total billable subscribers, which compares to 2,051,000 for the year-ago period and is up from 2,279,000 for the quarter ended December 31, 2023. Total billable subscribers grew 14% year-over-year, led by growth in commercial IoT.

“Continued strong service revenue growth fueled Iridium’s business results in the first quarter,” said Matt Desch, CEO, Iridium. Desch added, “Subscriber growth and demand for Iridium’s mission-critical applications are driving new service development and free cash flow.”

Commenting on Iridium’s recent acquisition, Desch said, “We’re excited to broaden our opportunities for growth with the closing of the Satelles acquisition in early April. This transaction makes Iridium a leading provider of satellite-based time and location services.” Desch added, “With the prevalence of GPS jamming and location spoofing on the rise, our new Satellite Time and Location service will allow us to protect critical infrastructure and expand resilient time-synchronization for enterprises and governments around the world.”

Iridium Business Highlights

Service – Commercial

Commercial service remained the largest part of Iridium’s business, representing 60% of the Company’s total revenue during the first quarter. The Company’s commercial customer base is diverse and includes markets such as maritime, aviation, oil and gas, mining, recreation, forestry, construction, transportation and emergency services. These customers rely on Iridium’s products and services as critical to their daily operations and integral to their communications and business infrastructure.

• Commercial service revenue was US$ 122.1 million, up 8% from last year’s comparable period due to broad-based growth.

• Commercial voice and data: Revenue was US$ 55.0 million, up 5% from the year-ago period. Subscribers grew 3% from the year-ago period to 405,000. Average revenue per user (“ARPU”) was $45 during the first quarter, compared to US$ 44 in the prior-year period, with the increase due primarily to higher access fees.

• Commercial IoT data: Revenue was US$ 39.4 million, up 23% from the year-ago period. Subscribers grew 18% from the year-ago period to 1,766,000 customers, driven by continued growth in consumer personal communications devices. ARPU was $7.57 in the first quarter, compared to $7.22 in last year’s comparable period. The increase in ARPU resulted primarily from a new contract with a large customer.

• Commercial broadband: Revenue was US$ 13.7 million, up 2% from $13.4 million in the year-ago period on subscriber growth. ARPU was $274 during the first quarter, compared to $294 in last year’s comparable period, reflecting the increased prevalence of Iridium’s use as a companion service rather than primary.

• Hosted payload and other data service: Revenue was US$ 14.0 million, down 7% from US$ 15.0 million in the year-ago period. As previously noted, there was a year-over-year decrease in hosted payload revenue related to the change in the estimated useful lives of Iridium’s satellites that went into effect in the fourth quarter of 2023.

• Iridium’s commercial business ended the quarter with 2,188,000 billable subscribers, which compares to 1,912,000 for the prior-year quarter and is up from 2,134,000 for the quarter ended December 31, 2023. IoT data subscribers represented 81% of billable commercial subscribers at the end of the quarter, an increase from 79% at the end of the corresponding prior-year period.

Service – U.S. Government

Iridium’s voice and data solutions improve situational awareness for military personnel and track critical assets in tough environments around the globe, providing a unique value proposition that is not easily duplicated.

Under Iridium’s Enhanced Mobile Satellite Services (EMSS) contract, a seven-year, US$ 738.5 million fixed-price airtime contract with the U.S. Space Force signed in September 2019, Iridium provides specified satellite airtime services, including unlimited global standard and secure voice, paging, fax, Short Burst Data®, Iridium Burst®, RUDICS and Distributed Tactical Communications System services for an unlimited number of Department of Defense and other federal government subscribers. Iridium also provides maintenance and support work for the U.S. government’s dedicated Iridium® gateway under two other contracts with the U.S. Space Force. Iridium Certus® airtime services are not included under these contracts and may be procured separately for an additional fee.

• Government service revenue remained flat at $US 26.5 million in the first quarter, reflecting the contractual rate in the EMSS Contract.

• Iridium’s U.S. government business ended the quarter with 145,000 subscribers, which compares to 139,000 for the prior-year quarter and remains unchanged from the quarter ended December 31, 2023. Government voice and data subscribers increased 3% from the year-ago period to 62,000 as of March 31, 2024. Government IoT data subscribers increased 5% year-over-year and represented 57% of government subscribers at quarter-end.

• Under the terms of the multi-year EMSS Contract, Iridium’s fixed-price rate will increase to $107 million for the contract year beginning September 15, 2024.

Equipment

• Equipment revenue was US$ 24.9 million in the first quarter, down 40% compared to US$ 41.7 million in the prior-year quarter.

• In 2024, the company expects equipment sales to be lower than 2023 and to be more in line with periods prior to 2022.

Engineering & Support

• Engineering and support revenue was US$ 30.4 million during the first quarter, compared to US$ 24.2 million in the prior-year quarter, primarily due to a rise in activity with the U.S. government.

• In 2024, the Company expects engineering and support revenue to increase from 2023 with ongoing work on the Space Development Agency contract.

Capital expenditures were US$ 14.6 million for the first quarter, including US$ 1.1 million in capitalized interest. The company ended the first quarter with gross debt of $1.6 billion and a cash and cash equivalents balance of $174.0 million. The company received cash of approximately US$ 125 million as a result of an increase in the Term Loan, which was used in April to fund the Satelles acquisition. The company ended the first quarter with a net debt balance of US$ 1.4 billion, representing net leverage of 3.1 times OEBITDA.

Iridium paid a dividend of $0.13 per common share on March 28, 2024, resulting in a total payment of US$ 16.1 million to stockholders. The Board of Directors plans to increase the quarterly dividend to $0.14 per share starting with the second quarter 2024 dividend, which would result in a full-year dividend increase of 5.8%.

During the quarter, the company repurchased approximately 1.9 million shares of its common stock under its previously announced share repurchase program at a total purchase price of US$ 56.6 million. As of March 31, 2024, US$ 277.4 million remained available and authorized for repurchase under this program through December 31, 2025. The company has retired 17.8 million shares, equivalent to US$ 722.6 million, since its share repurchase program commenced in February 2021.

2024 Outlook and Longer-Term Outlook

The Company reiterated its full-year 2024 outlook:

• Total service revenue growth between 4% and 6% for full-year 2024. Total service revenue for 2023 was US$ 584.5 million.

• Full-year 2024 OEBITDA between US$ 460 million and US$ 470 million. OEBITDA for 2023 was US$ 463.1 million.

• Cash taxes of less than $10 million per year from 2024 through 2026. We now expect that the longer-term cash tax rate will move closer to the statutory rate in 2028.

• Net leverage below 2.5 times OEBITDA as we exit 2026 and falling below 2.0 times OEBITDA by the end of the decade, assuming the completion of the Company’s share repurchase authorization and the payment of quarterly dividends. Net leverage was 3.1 times OEBITDA at December 31, 2023.

(1)  Represents direct costs incurred in connection with the negotiation, consummation and integration of acquisition transactions, whether or not actually completed. These costs generally include legal and advisory fees, severance and other related costs.

About Iridium Communications Inc.

Iridium® is the only mobile voice and data satellite communications network that spans the entire globe. Iridium enables connections between people, organizations, and assets to and from anywhere, in real time. Together with its ecosystem of partner companies, Iridium delivers an innovative and rich portfolio of reliable solutions for markets that require truly global communications. In 2024, Iridium acquired Satelles and announced the Iridium Satellite Time and Location service. Iridium Communications Inc. is headquartered in McLean, Va., U.S.A., and its common stock trades on the Nasdaq Global Select Market under the ticker symbol IRDM. 

(1) Service revenue consists of primarily subscription-based services which often generate a long-term recurring revenue stream from subscribers.

(2) IoT data service provides a two-way short burst data transmission between Iridium Communications Inc.’s network and a telemetry unit, which may be located, for example, on a container in transit or a buoy monitoring oceanographic conditions.

(3) Broadband is comprised of Iridium OpenPort® and Iridium Certus.

(4) Hosted payload and other services consist primarily of services that do not have traditional billable subscribers. Hosted payload services consist of hosting and data services to our payload customers, Aireon and Harris. Other services include primarily Iridium Communications Inc.’s one-way satellite timing, location, and authentication services (STL) which provides position, navigation and timing technology.

(5) Government service revenue consists of voice and IoT data subscription-based services provided to agencies of the U.S. government through prime contracts.

(6) Engineering and support includes maintenance services to the U.S. government’s dedicated gateway and engineering services to assist customers in developing new technologies for use on Iridium Communications Inc.’s satellite system.

(7) Capital expenditures based on cash spent in the respective period.

(8) Net debt is calculated by taking the sum of the gross Term Loan and gross drawn Revolving Facility, less cash, cash equivalents and marketable securities.

(1) Subscribers as of the end of the respective period.

(2) Billable subscriber and ARPU data is not applicable for Hosted payload and other data service revenue items and is excluded from presentation above.

(3) Broadband is comprised of Iridium OpenPort® and Iridium Certus.

(4) Average monthly revenue per unit, or ARPU, is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period.