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Iridium Communications Inc. (IRDM)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue rose 7% YoY to $226.9M, with service revenue up 3% YoY to $165.2M; GAAP diluted EPS was $0.35 vs $0.21 a year ago and net income was $37.1M vs $24.4M YoY .
  • Results exceeded Wall Street consensus: revenue $226.9M vs $222.1M estimate* and EPS $0.35 vs $0.255*; the company’s non‑GAAP OEBITDA grew 10% YoY to $136.6M, while engineering & support revenue rose 31% YoY .
  • Guidance: service revenue growth cut to ~3% (from 3–5%), OEBITDA narrowed/raised to $495–$500M (from $490–$500M), cash taxes under $10M extended through 2027, leverage target tightened (below 3.5x in 2025; <2.0x by decade end) .
  • Strategic posture: paused buybacks to prioritize strategic investments and deleveraging; catalysts include NTN Direct on‑air testing, Deutsche Telekom integration, and DOT/T‑Mobile PNT deployment scaling to 90 5G sites .

What Went Well and What Went Wrong

What Went Well

  • Broad beat vs consensus: revenue $226.9M beat by ~$4.8M* and EPS $0.35 beat by ~$0.10*; OEBITDA +10% YoY to $136.6M on mix and E&S strength .
  • PNT traction: DOT award supports T‑Mobile live‑site activations (90 locations), positioning PNT as a resilience layer for U.S. 5G networks .
  • Pricing actions: Commercial voice/data ARPU increased to $48 (from $46) with CFO noting July price increase drove ARPU, supporting revenue despite slight sub declines .
  • CEO tone: “We will be proactive and pivot to strengthen our position… focus on regulated applications where demand for safety services are growing” .

What Went Wrong

  • Lowered 2025 service revenue growth to ~3% driven by timing delays in PNT deployments and faster maritime broadband conversion to companion service; broadband revenue fell 17% YoY .
  • Government subscriber headwinds: Gov’t subs down to 124k from 141k YoY; voice/data subs −29% YoY to 45k, though fixed‑price EMSS revenue stepped up .
  • IoT growth moderated: commercial IoT revenue +7% YoY to $46.7M (below 2024 pace), with management pointing to 2H step‑ups but acknowledging variability .

Financial Results

Headline P&L vs prior year and prior quarter

MetricQ3 2024Q2 2025Q3 2025
Revenue ($M)$212.8 $216.9 $226.9
Net Income ($M)$24.4 $22.0 $37.1
Diluted EPS ($)$0.21 $0.20 $0.35
Operating Income ($M)$54.9 $50.3 $70.1
Operational EBITDA (Non‑GAAP) ($M)$124.4 $121.3 $136.6

Margins (SPGI standardized; not comparable to company OEBITDA)

MetricQ1 2025Q2 2025Q3 2025
EBITDA Margin %52.15%*47.53%*54.23%*
Net Income Margin %14.15%*10.13%*16.36%*
Gross Profit Margin %71.31%*70.08%*72.05%*

Values marked with * retrieved from S&P Global.

Segment and revenue mix

Revenue Line ($M)Q3 2024Q2 2025Q3 2025
Commercial Voice & Data$57.7 $56.8 $59.9
Commercial IoT Data$43.7 $44.7 $46.7
Commercial Broadband$15.5 $12.7 $13.0
Hosted Payload & Other Data$16.4 $14.5 $18.7
Government Service$26.5 $26.8 $26.9
Subscriber Equipment$22.2 $19.5 $21.5
Engineering & Support (Total)$30.7 $41.9 $40.2
Total Revenue$212.8 $216.9 $226.9

KPIs and ARPUs

KPIQ3 2024Q2 2025Q3 2025
Total Billable Subscribers (000s)2,482 2,483 2,542
Commercial IoT Subscribers (000s)1,902 1,924 1,991
Government Subscribers (000s)141 128 124
ARPU – Commercial Voice & Data ($/mo)$46 $46 $48
ARPU – Commercial IoT ($/mo)$7.79 $7.83 $7.95
ARPU – Broadband ($/mo)$309 $260 $265
Net Adds (000s) – Total69 40 59

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Service Revenue GrowthFY20253–5% ~3% Lowered
OEBITDAFY2025$490–$500M $495–$500M Narrowed/raised midpoint
Cash TaxesThrough< $10M/yr through 2026; statutory by 2028 < $10M/yr through 2027; statutory by 2029 Extended savings 1 year
Net Leverage Target2025 / LT<4.0x through 2026; <2.0x by 2030 <3.5x in 2025; <2.0x by decade end Tightened near-term target
Equipment SalesFY2025“In line with 2024” “Modestly down vs 2024” Lowered
Engineering & Support RevenueFY2025Increase vs 2024 “Materially higher than 2024” Raised

Earnings Call Themes & Trends

TopicQ1 2025 (prior)Q2 2025 (prior)Q3 2025 (current)Trend
D2D/NTN strategyReiterated investment in 5G standards; reiterated 2025 OEBITDA guide Detailed NTN Direct path; Syniverse partnership for roaming; standards focus On‑air testing underway; DT roaming integration; commercialization in 2026 Execution advancing
PNT commercializationNoted tariffs headwind; modest PNT contributions PNT timing pushed; still large pipeline; $100M by 2030 target DOT/T‑Mobile award to 90 sites; ASIC announced; revenue timing still lumpy Stronger traction; timing shifted
Maritime broadband mixCompanion trend noted; ARPU pressure Conversion faster than planned; largest factor in lower service rev guide Q3 broadband −17% YoY; expect 8% YoY decline in Q4; GMDSS terminals to help Ongoing ARPU pressure
Government EMSSFixed price step‑ups noted EMSS step‑up; renewal process to start 2026 Rate now $110.5M for contract year begun Sep 15, 2025 Stable revenue floor
Capital allocationBuybacks and dividend growth Continued buybacks; higher capex in 2025 Pause buybacks to invest/deleverage; dividend +5% YoY Shift to flexibility
Competitive landscape—Acknowledged evolving D2D competition; still confident in cash flows Addressed Starlink/EchoStar; focus on regulated/specialized niches Competitive awareness, pivot

Management Commentary

  • Strategy and competition: “We will be proactive and pivot to strengthen our position amid ongoing changes to the satellite market... focus... on regulated applications where demand for safety services are growing” (CEO) .
  • NTN Direct progress: “We are making strong progress on this new service, and we're now in the process of on‑air testing from live satellites” (CEO) .
  • PNT opportunity: “We are also developing a unique quantum‑safe cybersecurity product using our PNT signal... tapping into the $20 billion identity verification industry” (CEO) .
  • Capital allocation pivot: “We are pausing our share buybacks... to emphasize strategic growth initiatives and continue our discipline in the deployment of capital” (CFO) .

Q&A Highlights

  • Strategic options and M&A: Management is open to acquisitions (leaning toward more “transformational” vs very small deals) and potential strategic partnerships if they maximize shareholder value; phone is “open,” but no specifics signaled .
  • IoT growth cadence: 2H expected to step up vs 1H; specific items in Q3/Q4 support double‑digit IoT for FY, though mix is evolving and scale makes sustained double‑digits harder absent NTN .
  • PNT revenue timing: Certain deployments shifted into future periods; DOT/T‑Mobile program and broader trials underpin confidence despite lumpiness .
  • Maritime broadband: Faster conversion from primary to companion service continues; ARPU pressure persists near term; new GMDSS terminals expected to stabilize mix into 2026 .
  • Tariffs: 2025 impact much smaller than initial worst‑case; mitigated and delayed; not a major driver near term .

Estimates Context

MetricQ3 2025 Consensus*Q3 2025 ActualSurpriseQ4 2025 Consensus*
Revenue ($M)$222.1*$226.9 +$4.8M (Beat)$219.1*
Primary EPS ($)$0.255*$0.35 +$0.095 (Beat)$0.240*

Values marked with * retrieved from S&P Global.

Commentary:

  • Beats on revenue and EPS vs consensus; company reported non‑GAAP OEBITDA of $136.6M (+10% YoY), while reiterating strong cash generation; 2025 OEBITDA guidance narrowed toward high end .
  • Estimate revisions likely: modest upward adjustments to EPS/FCF trajectory on operating leverage and E&S strength; service revenue estimates to reflect lower ~3% FY growth and broadband ARPU pressure .

Key Takeaways for Investors

  • Clean beat on revenue/EPS with OEBITDA +10% YoY; quality supported by E&S and pricing‑led ARPU gains, offset by broadband mix shift .
  • Guidance reset: service revenue growth lowered to ~3% on PNT timing/broadband trends, but OEBITDA narrowed/raised; near‑term top‑line slower, profitability resilient .
  • Strategic pivot and liquidity: buybacks paused to fund NTN/PNT and delever; added flexibility to navigate D2D competition and pursue selective M&A .
  • PNT is emerging catalyst: DOT/T‑Mobile deployments and new PNT ASIC broaden TAM; watch for larger commercial rollouts in 2026 and beyond .
  • NTN Direct progressing: live on‑air testing and DT integration signal execution toward 2026 commercial launch; standard‑based approach should expand IoT reach via roaming .
  • Government floor steady: EMSS fixed‑price now $110.5M/yr in current contract year; engineering contracts (SDA) support record E&S revenue in 2025 .
  • Trading setup: Near‑term narrative hinges on PNT deal timing and continued E&S strength; watch Q4 broadband ARPU trajectory (~8% YoY decline expected) and any additional MNO NTN announcements .

Notes:

  • All company figures and quotes from Iridium’s Q3 2025 8‑K/press release and earnings call .
  • Estimates marked with * retrieved from S&P Global.