Iridium Communications Inc. (IRDM)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue was $214.9M (+5% YoY) and diluted EPS was $0.27; both beat Wall Street consensus. Revenue beat by ~$3.1M (~1.4%) and EPS beat by ~$0.06 (~27%) as service revenue grew 4% YoY and OEBITDA rose 6% YoY to $122.1M . Consensus values from S&P Global are marked with an asterisk and noted below.*
• Guidance reaffirmed: 2025 service revenue growth of 5%–7% and OEBITDA of $490M–$500M; cash taxes < $10M through 2026; deleveraging trajectory intact (below 4x through 2026; below 2x by decade-end) .
• Tariffs are the swing factor: management quantified ~$3M EBITDA headwind under a 10% Thailand tariff scenario (absorbed within guidance) and $6M–$7M total impact if 36% tariffs were reinstated—likely pushing OEBITDA outside guided range; mitigation plan underway (more EU 3PL shipments, no immediate surcharges) .
• Capital returns continued: $70.0M buybacks (2.4M shares) in Q1; dividend increase to $0.15 per share starting Q3 2025 planned, signaling confidence in cash generation .

What Went Well and What Went Wrong

What Went Well

• OEBITDA +6% YoY to $122.1M on recurring services and strong engineering & support; service revenue +4% YoY, engineering & support +23% YoY .
• Commercial IoT revenue +11% YoY to $43.8M; PNT contributions lifting “Hosted payload and other” +7% YoY, with growing engagements post-Satelles acquisition .
• Clear strategic positioning vs. Starlink/VSAT and D2D—Iridium as global, weather-resilient L-band safety/backup and complementary D2D; management highlighted differentiation, standards-based NTN Direct on Release 19, and mid/late-decade IoT revenue ramp .

Quote: “We remain confident about our growth outlook in the face of new market entrants like Starlink… our partners see us as complementary” — CEO Matt Desch .

What Went Wrong

• Commercial broadband revenue −6% YoY to $12.9M and ARPU down to $261 amid increased use as companion service and plan conversions; management expects ARPU headwinds to ease as GMDSS terminals proliferate in H2 2025–2026 .
• Government subscribers fell to 133k (−8% YoY), impacted by cleanup and positioning ahead of renewal; commercial voice/data saw minor deactivations tied to USAID program changes .
• Tariff uncertainty introduces cost risk: ~$3M EBITDA impact under current 10% scenario; $6M–$7M if higher rates reinstate, potentially outside OEBITDA guidance—a clear near-term overhang .

Financial Results

Margins (GAAP, calculated from reported figures):

Segment revenue breakdown:

Key KPIs:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We expect Iridium NTN Direct to fuel material revenue growth for our company through the end of the decade… complementary to other D2D efforts” — CEO Matt Desch .
• “Current U.S. trade policies… would result in approximately $3 million of incremental cost… absorbed within our guided OEBITDA range; a 36% tariff would be $6–$7 million” — CEO Matt Desch / CFO Vince O’Neill .
• “Our partners remain bullish… particularly around next-generation IoT, alternate PNT… and D2D” — CEO Matt Desch .
• Capital returns: “Retired ~2.4M shares at ~$29.48; $360.3M authorization remaining; dividend planned to rise to $0.15 in Q3” — CFO Vince O’Neill .

Q&A Highlights

• Tariff impact: ~$3M EBITDA headwind at 10%; $6M–$7M at 36% (total), with mitigation via EU 3PL and no immediate equipment surcharges; would push OEBITDA outside guidance at higher level .
• Government subs decline driven by “cleanup activity” ahead of renewal; USAID-related deactivations in commercial voice/data were small .
• Pricing actions: small legacy voice/data price increases to phase in starting July 2025, supporting H2 service revenue .
• D2D revenue path: IoT roaming first in 2026; consumer devices later; ramp through 2027–2029 .
• Aviation Certus safety services: flight trials in 2025; ATC comms certification targeted early 2026; long-term positive, not a major H2’25 driver .
• Engineering & support revenue cadence: around ~$37M per quarter with some variation as SDA shifts from build to operations .

Estimates Context

Values marked with an asterisk are retrieved from S&P Global and may reflect standard EBITDA, which is not directly comparable to Iridium’s reported Operational EBITDA (non-GAAP).*

Key Takeaways for Investors

• Solid beat-and-raise cadence without raising guidance: a modest top-line/EPS beat with reiterated FY outlook suggests near-term estimate stability; watch H2 service uplift from pricing .
• Tariffs are the key variable for OEBITDA: at 10% the ~$3M headwind is absorbed; a reversion to 36% risks a guidance miss; mitigation actions underway reduce exposure .
• IoT and PNT are secular growth drivers: IoT +11% YoY; PNT traction lifts “Hosted & Other”; D2D/NTN Direct unlocks standards-based roaming in 2026 with multi-year ramp .
• Broadband transition stabilizing by 2026: companion use and GMDSS terminal proliferation should offset ARPU pressure; current weakness is contained and strategic .
• Capital allocation supports equity: $70M buybacks in Q1 and planned dividend raise to $0.15 in Q3 underscore cash flow strength and deleveraging confidence .
• Government revenue stable with EMSS step-up to $110.5M in Sept 2025; subcount cleanup not indicative of revenue pressure .
• Near-term catalysts: tariff policy clarity; D2D summer 2025 tests; H2 price actions; aviation safety certification milestones; continued SDA contract execution .

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Additional Q1 2025 press releases of note:

• Heimdall Power adopts Iridium Certus 9704 for grid sensors, expanding industrial IoT use cases .
• Partnership with World Central Kitchen to support disaster relief communications, highlighting mission-critical reliability .

Footnote: Values marked with an asterisk were retrieved from S&P Global.