Iridium Releases 2024 Results, Issues 2025 Outlook

 McLean, Va., Feb. 13, 2025 - Iridium Communications Inc. (Nasdaq:IRDM) today reported financial results for the fourth quarter and full-year 2024 and issued its full-year 2025 guidance. Net income was US$ 36.3 million, or US$ 0.32 per diluted share, for the fourth quarter of 2024, as compared to net income of US$ 38.0 million, or US$ 0.30 per diluted share, for the fourth quarter of 2023. Operational EBITDA (OEBITDA)(1) for the fourth quarter was US$ 117.1 million, as compared to US$ 114.1 million for the prior-year period, representing a year-over-year increase of 3%.

(All amounts below are in US$)

Iridium reported fourth-quarter total revenue of $213.0 million, which consisted of $154.0 million of service revenue and $59.0 million of revenue related to equipment sales and engineering and support projects. Total revenue increased 9% from last year's comparable period, in part due to a 4% increase in total service revenue. Service revenue, which represents primarily recurring revenue from Iridium's growing subscriber base, was 72% of total revenue for the fourth quarter of 2024.

The Company ended the quarter with 2,460,000 total billable subscribers, which is up from 2,279,000 for the year-ago period and compares to 2,482,000 for the quarter ended September 30, 2024. Total billable subscribers grew 8% year-over-year, driven by growth in commercial IoT. The sequential decline in billable subscribers from the third quarter primarily reflected changes to retail subscriber plans by a large IoT customer, with no impact on Iridium revenue.

Full-Year 2024 Iridium Business Highlights

For the full year, Iridium reported net income of $112.8 million, or $0.94 per diluted share, as compared to net income of $15.4 million, or $0.12 per diluted share, for 2023. The change primarily resulted from a decrease in depreciation expense associated with the extension of the estimated useful lives of the Company's satellites in the prior year and an increase in engineering and support revenue, offset in part by the change in income tax expense. The Company reported total revenue in 2024 of $830.7 million, which was up 5% from the year-ago period. Total revenue included $614.9 million of service revenue, $124.4 million of engineering and support services revenue and $91.4 million of equipment sales revenue. OEBITDA for 2024 was $470.6 million, a 2% increase from $463.1 million in the prior year. Capital expenditures were $69.9 million for the full-year 2024.

"Turning our eyes to 2025, Iridium will return to a more normalized OEBITDA growth profile," said Matt Desch, CEO, Iridium. Desch added, "Our continued strong cash flow supported return of capital to shareholders approaching a half billion dollars in 2024, including dividends and share repurchases."

Fourth-Quarter 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 fourth 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 $127.3 million, up 5% from last year's comparable period due to broad-based growth across all revenue lines.
    • Commercial voice and data: Revenue was $57.1 million, up 3% from the year-ago period. Subscribers grew 2% from the year-ago period to 415,000. Average revenue per user ("ARPU") was $45 during the fourth quarter, unchanged from last year's comparable period.
    • Commercial IoT data: Revenue was $41.4 million, up 15% from the year-ago period. Subscribers grew 10% from the year-ago period to 1,887,000 customers, driven by continued growth in consumer personal communications devices. ARPU was $7.29 in the fourth quarter, compared to $7.12 in last year's comparable period.
    • Commercial broadband: Revenue was $13.4 million, down 9% from $14.6 million in the year-ago period, and subscribers declined modestly from the year-ago period to 16,600. ARPU was $268 during the fourth quarter, compared to $294 in last year's comparable period, reflecting the increased prevalence of Iridium's use as a companion service and the conversion of customers to other plans.
    • Hosted payload and other data service: Revenue was $15.4 million, up 2% from $15.2 million in the year-ago period. The year-over-year change primarily reflected strong contributions from Iridium's growing PNT services, which more than offset a non-recurring benefit from a customer contract recognized in last year's comparable period.
  • Iridium's commercial business ended the quarter with 2,319,000 billable subscribers, which is up from 2,134,000 for the prior-year quarter and compares to 2,341,000 for the quarter ended September 30, 2024. The sequential decline in billable subscribers for the quarter was driven by the commencement of phasing out annual plans by a large IoT customer, resulting in higher subscriber seasonality, with no impact on Iridium revenue due to a fixed-price contract with this customer. IoT data subscribers represented 81% of billable commercial subscribers at the end of the quarter, an increase from 80% at the end of the 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 contract (the "EMSS Contract"), a seven-year, $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 grew 1% to $26.8 million in the fourth quarter reflecting a contractual rate increase in the EMSS Contract.
  • Iridium's U.S. government business ended the quarter with 141,000 subscribers, which compares to 145,000 for the prior-year quarter and 141,000 for the quarter ended September 30, 2024. Government voice and data subscribers remained flat as of December 31, 2024 at 62,000 compared to the year-ago period. Government IoT data subscribers decreased 5% year-over-year and represented 56% of government subscribers at year-end.

Equipment

  • Equipment revenue was $21.6 million in the fourth quarter compared to $15.7 million in the prior-year quarter.
  • Equipment revenue totaled $91.4 million in 2024, compared to $105.1 million in 2023. In 2025, the Company expects equipment sales to be in line with 2024.

Engineering & Support

  • Engineering and support revenue was $37.4 million during the fourth quarter, compared to $31.1 million in the prior-year quarter, primarily due to increasing activity with the U.S. government.
  • Engineering and support revenue totaled $124.4 million in 2024, compared to $101.1 million in 2023. In 2025, the Company expects engineering and support revenue to increase from 2024.

Capital expenditures were $24.3 million for the fourth quarter, including $1.3 million in capitalized interest. The Company ended the fourth quarter with gross debt of $1.8 billion and a cash and cash equivalents balance of $93.5 million, for a net debt balance of $1.7 billion.

Iridium paid its fourth quarter dividend of $0.14 per common share on December 31, 2024. Total dividends paid to stockholders during 2024 totaled $64.7 million.

During the quarter ended December 31, 2024, the Company repurchased approximately 4.1 million shares of its common stock under its previously announced share repurchase program at a total purchase price of $121.9 million. As of December 31, 2024, $430.3 million remained available and authorized for repurchase under this program through 2027.

2025 and Longer-Term Outlook

The Company issued its full-year 2025 outlook and reaffirmed its long-term guidance on cash taxes and net leverage:

  • Total service revenue growth between 5% and 7% for full-year 2025. Total service revenue for 2024 was $614.9 million.
  • Full-year 2025 OEBITDA between $490 million and $500 million. OEBITDA for 2024 was $470.6 million.
  • Cash taxes of less than $10 million per year through 2026. We expect that the longer-term cash tax rate will move closer to the statutory rate in 2028.
  • Net leverage below 4.0 times OEBITDA through 2026 and falling below 2.0 times OEBITDA by the end of the decade, assuming ongoing execution of the Company's share repurchase authorization and the payment of expected quarterly dividends. Net leverage was 3.6 times OEBITDA at December 31, 2024.