GI
Globalstar, Inc. (GSAT)·Q1 2025 Earnings Summary
Executive Summary
- Q1 2025 revenue was $60.0M (+6% YoY) with Adjusted EBITDA of $30.4M (51% margin), while GAAP diluted EPS was $(0.16); management reiterated FY25 guidance of $260–$285M revenue and ~50% Adjusted EBITDA margin .
- Versus Wall Street consensus (S&P Global), Q1 2025 missed on revenue ($60.0M vs $63.8M*) and Primary EPS (−$0.094 vs −$0.03*), driven by higher cost of services (XCOM RAN, network costs) and MG&A, plus non-cash interest; wholesale capacity remained the core revenue driver .
- Strategic catalysts: commercial two-way satellite IoT launch with mass production in Q2 2025, SOCC opening to enhance fleet operations, and leadership hires to scale terrestrial spectrum and wholesale capacity initiatives .
- Near-term stock narrative drivers: progress toward XCOM RAN commercialization “next quarter,” step-up in service fees when replacement satellites become operational, and sustained wholesale capacity revenue under updated agreements .
What Went Well and What Went Wrong
- What Went Well
- Wholesale capacity services drove 7% YoY service revenue growth; Adjusted EBITDA increased to $30.4M with a 51% margin .
- Two-way satellite IoT solution launched via Globalstar’s LEO constellation; management expects stronger activations following commercial sales in Q2 2025 .
- SOCC opened in Covington to enhance satellite fleet management and readiness for next-gen deployments; attended by senior U.S. officials, underscoring strategic importance .
- CEO: “We successfully launched our 2-way satellite IoT solution... addressing the rising global demand for reliable, low-power, low-latency command and control...” .
- What Went Wrong
- GAAP net loss widened to $(17.3)M due to higher cost of services (XCOM SSA, product development, network ops), MG&A, and loss on asset disposal; non-cash imputed interest also weighed on results .
- Subscriber churn in legacy Duplex and SPOT offset Commercial IoT growth (average subscribers +4%); SPOT and Duplex service revenue declined YoY .
- Relative to consensus, Q1 revenue and EPS missed; adjusted EBITDA faced a ~200 bp headwind from upfront XCOM RAN support costs net of revenue .
Financial Results
Segment revenue breakdown
KPIs
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- CFO: “Revenue increased 6% to $60.0 million… Adjusted EBITDA was $30.4 million… we are reiterating… revenue $260–$285 million and Adjusted EBITDA margin ~50%” .
- CEO: “We successfully launched our 2-way satellite IoT solution… This marks a significant expansion beyond our traditional one-way tracking capabilities…” .
- CFO on tariffs: “We expect a relatively immaterial impact in the near-term… reiterating our full year 2025 outlook” .
- CEO on Band 53 anchor: “Having a global band of spectrum… is a very differentiated position relative to other players” .
- CFO on service fee step-up: “Fees tied to CapEx for replacement satellites will start being funded once the first batch is operational” .
Q&A Highlights
- XCOM RAN economics and customer pipeline: Management emphasized a long sales cycle with a large retail lead customer, expanding direct sales, and initial government contracts; commercialization targeted for next quarter .
- Band 53 as anchor spectrum: CBRS has underwhelmed for mission-critical private networks; Globalstar’s n53 provides reliability and global applicability for industrial IoT use cases .
- Replacement satellites and revenue timing: Service fees step up when the first batch becomes operational; two launches expected for the 17 replacements, with timing updates forthcoming .
- Two-way IoT ramp: Beta underway; revenue impact gradual in ’25 with broader deployment anticipated in ’26 as partners integrate modules .
Estimates Context
- Q3 2024: Revenue and EPS beat. Q4 2024: Revenue beat but EPS missed. Q1 2025: Revenue and EPS missed.
- Values retrieved from S&P Global.*
Key Takeaways for Investors
- Wholesale capacity remains the growth engine; updated agreements provide visibility to sustained revenue, with fee step-ups as replacement satellites enter service .
- Two-way satellite IoT is now launched; mass production in Q2 ’25 should accelerate Commercial IoT activations, aiding subscriber growth despite SPOT/Duplex churn .
- XCOM RAN commercialization near-term is a key catalyst; expect mix shift toward terrestrial spectrum solutions with n53 differentiation and potential government deployments .
- Short-term margin pressure from strategic investments is planned; FY25 Adjusted EBITDA margin guided at ~50%, with long-term margin expansion targeted beyond the investment phase .
- Risk management around tariffs appears robust; direct exposure limited and multiple mitigation levers in place (supply chain diversification, re-shoring, pricing) .
- Operational readiness improved via SOCC; supports execution on next-gen constellations and network performance, a positive for reliability and future capacity .
- Near-term trading implications: watch for XCOM RAN commercialization updates, two-way IoT customer wins, and replacement satellite operational milestones that trigger fee step-ups; medium-term thesis anchored in scaling wholesale, IoT growth, and differentiated terrestrial spectrum assets .
Additional Data Points and Reconciliations
- Liquidity: Cash and equivalents $241.4M; operating cash flow $51.9M; CapEx $190.6M (extended MSS commitments); principal debt $408.8M (down from $417.5M) .
- Adjusted free cash flow: $47.6M, aided by $22.5M accelerated service payments under updated agreements .
- Non-GAAP impacts: Adjusted EBITDA excludes non-cash compensation, FX, asset reductions, and XCOM-related non-cash items; see reconciliation for details .
Relevant Q1 2025 Press Releases
- Earnings release: reiteration of FY25 guidance; operational highlights and detailed financial review .
- SOCC opening in Covington: enhanced fleet management and next-gen readiness .
- GCT partnership: development of two-way satellite/cellular Band 53 IoT modules; showcased at MWC Barcelona .