IRDM - Earnings call transcript Q1 2018 | Iridium Communications Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Iridium First Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host Ken Levy, Vice President of Investor Relations. Sir, you may begin.

Kenneth Levy

Thanks, [Sandra]. to quarter welcome earnings and morning, Iridium's XXXX first call. Good

discussion CEO, on Relations call website. and a had quarter an today's morning's trust me Investor review release, Q&A. Matt followed will our by results, call with opportunity Today's Joining the you’ve Fitzpatrick. which Iridium's are Desch; is section I on first of Tom our begin this to of press CFO, available

participants that I of like all Before Reform things to forward-looking contain Matt, over the XXXX. Litigation meaning call would I our statements turn to Securities Act the may of today caution within Private

beliefs are statements expectations to subject which Such statements fully statements include Such and not could expectations, prospects. risks, results our to more and are cause our statements. future discussed current Exchange plans with forward-looking Forward-looking forward-looking in based historical differ filings and facts Commission. and Securities risks are from and are that are statements actual about our the upon

should do we statements our while represent in we any Our remarks only some forward-looking risks. update statements and views or today, to if at specifically be such of today change. future, forward-looking of obligation point as elect our so Any to may even the light in views disclaim considered expectations

over most these release in that, comparable With and to financial the earnings GAAP the we'll Investor today's Generally to Relations prepared During accordance the Principles. things website me reconciliation of section financial not directly refer also Matt. certain referring to turn let non-GAAP a our measures with non-GAAP to be for of measures. non-GAAP Accepted call, are financial measures. measures These Please Accounting

Matt Desch

morning, everyone. Ken. Good Thanks,

surpassed is a release million growth you X this start. press recently subscribers in and morning, our Subscriber As fact our on off we on network. to XXXX remains robust great saw

the XX Iridium thought industry constellation received for some broadband another the NEXT Iridium I during it stretch existing their entering start offering We of in commercial satellite distribution month. This and We're worried Lower are transition would and of and changes we’re our to completing new of are overall and morning, attract broadband a Certus provide landscape. are capital continue Overall to with I cost last lower impacting to ever corporate having high-yield closer our spending. definitely and offering of and investors lower. new of networks to about valuations home investment question interest new road-show our seeking in lower To launch relevance. newcomers competitive resurgence is is already partners slew getting interest launch This significant who Even there. the has attracted recent the have to believe deliver the context I coming the frequently pricing industry still sending enterprises. I environment. this potentially corporate now overcapacity a promise their in flood competitive satellite satellite consumers the [FSS] for adjusting providers strategies cost some

not and Iridium's [indiscernible] entrances [indiscernible] entrance use projects complementary and ourselves Some competitive we we themselves. insignificant Closer their challenges an with targeting in and must competitive launch which in on the are are supports services their still show we In reasonable regulated operates. reliable constellation than plans funding this spectrum services. for safety constellations looking satellite companies viability that their however broadband play band KU soon satellite fixed also by plans KA are L-band is communication not using the not existing many to rather scares lower as compete These to market in really I these connections improving find broadband actually constellations to consider environment. today new services satellite and them. focused specialty with to into broadband are introducing case, any or of a in spectrum, the completing we promised time These deploying commodity home,

Some find undervalue a without of their path or from competitors replace satellites for as trying to well as satellite to customers. the realize Iridium's mobile themselves can't aging in continuity EMSS their direct they sector traditional spectrum compete they

our is a services I premier to So coverage. think soon and with as of proposed a L-band our in opportunity light our we barriers final and we services near of NEXT, to that others. Iridium high enjoys features position L-band mobile growth have and entry stages mobile L-band a differentiate these global capabilities Iridium's of is strong bring of Iridium to positions the many from has awareness heightened safety network deploying IoT in unique view will in satellite portfolio. see the networks true and unique one-of-a-kind Iridium best-in-class great continued business. broadband add What the done offering to attention that and satellite industry our our spectrum particularly differentiated for

addressable distribution as L-band total $XXX not as addressable a about year our market the channel in for according While is Iridium go broadband incremental to about be to success. commodity opportunity this all the million top after excited choice is Rest of for per with and we're market that potential very able revenue service large industry market, of analyst. K-band the and an to market KU finally is excited offers positive

and our the two last first our the to operational Iridium since NEXT on has regard We connecting launch batch the of XX now fifth NEXT is of to way network and year XX program, and services, of upgrade last NEXT orbit is to satellites in and satellites. improved the Iridium our Iridium So core This we long quality performance expect a launch operational our our XX the XX traffic have now to working the have well. majority customers. early all the month come We've next satellites in weeks. of in discernible

existing orbital engineering stress on put They ecosystem science. customers. their I enough to which our our well has forth and they our look bodes progress The launch, Continued their to XX this of launch a today. six. unique growth. NEXT number Iridium it of we’re future the to NEXT rideshare release I the the total even the on in partner before our on with to more plane SpaceX is into rocket teams first moving for on scheduled sixth today effort five stuff success Iridium to weeks satellites the deploy mission also itself place it service as make NEXT the launch little over companies is herculean new attracting though flight congratulate satellites great three will tremendous This follow-up our five two without bringing have really satellites May cannot space our integrate GRACE total XX is from Iridium deployment for XX. easy a launching. new disrupting Saturday, satellites will want

our finish launches and CapEx year later at NEXT completing Iridium our remaining along to space starting well deserved this with expect We constellation holiday.

our Moving subscribers services. that momentum solutions continues strategy on than performance quality in develop a revenue provided with growth network growth satellite XX% position year. platform partners driving validate growth our year-over-year commercial oriented their customers strength strong of to of the markets. well source valuable new XXX,XXX offering, of in This as more growth who our to Iridium over particular as can aligning last to for the of XX%, ongoing for of unique end growth the our the IoT demonstrate our X%. occupies highlights of start XX%, revenue the quarter good subscriber a This result, and first the topline Iridium and industry in to really be business demand continues with operational EBITDA

potential of While commercial over investment relationship. than growth the This accelerate and cannot with service drove year importance was U.S. record users strength growing our partnership government government relationship. this the Iridium's customer within Subscriber quarter, the first first has quarter a I driven the voice revenue XX% overstate and technical XXXX. advances course growth from and more our and U.S. of continues XXX,XXX XX in to year IoT last subs of to the

As that collaboration days the EMSS lie know renewal Iridium government ahead. we the complete another contract, of DSRA we work best with of with to

the of since year Iridium our Turning moved providers sell to the will to finalize beginning who broadband service. selection the we've Certus, of quickly

partners more have with aviation announced soon. list impressive now mobile. an distribution It's announced across XX be already maritime, land to We and

to going of equipment and manufacturing satellite to launch summer. their The industry are towards well progress are availability. with [FC] of service Talus we're for close up this communication, to development broadband terminals still Certus leaders maritime commercial market mobile their trials and commercial new continues Iridium terminals and expecting [indiscernible] Certus and Iridium services. We land wrapping of to and

later in We this mid-XXXX. expect to testing aviation year to terminals this begin activations ramp start in expect sector and will

companies It's we year. certification that that be approved, recognizes testing good meet last our is for to the looking committee IMO. and feel GMDSS On just a GMDSS seeking need. good application. maritime me choice capabilities clear to and follows we provide feel it's year. market The will maritime when to certification very Iridium's about of To satisfying the GMDSS about plan next to maritime the approval This safety we're it's live forward successful which we front, our meeting services for whether this month assess not GMDSS with will about continue the and will that happen

working Iridium at to in Finally, launch customers Aireon there's service NEXT with additional right ready sign active to a Aireon. lot happening its close completes, commercial up financing. discussions and things constellation remains of as is good now new for

We months. in continue hosting to in believe to will the be first payments Iridium a position coming its remit company the to

XX the anticipated to coverage aircraft of and exceed aircraft and that traffic called tracking. radar of been the year distress. mandate this the to on minute airline better start have first air tracking and beta to system requirements already minute that every the the to is long FlightAware second Aireon outside enhance will aircraft. or position by has improve aircraft GlobalBeacon demonstrated by exceed tracking the by their to every It our The existing far basis a to effect X customers. outlined into be aviation able average their XXXX safety to and minutes Aireon KO flight initial goes requires equipment using requirement testing that in the of able on with several aircraft The be report partner with ability regulatory be civil rolls event service mandated reporting controllers all will move

want we comment offering I Tom, to last to over things on turn completed high-yield the month. I Before

we widespread new As we financial outlook. enthusiasm course story met our during our the and of for lot of a institutions with road-show, found

details confidently that as credit was we facility parties provides to model of focus. Iridium the be the allowed allows ensure to look who and in partners full investors in recap closing Iridium position us remains of was of liquidity While great surely NEXT of complete solid sales strong important a success build Realizing network are and helps constellation. will a debt Tom new a that wholesale this all was and pleased enjoy the the with our our This deal well promise transaction, coming and deployment refinance the to with new incentivized relationships drive oversubscribed aligned deal will I to subscribers. us our world-class the our grow deal years. and We

good of spending. NEXT capital our are our summer. the apparent We deployment and that start will be good reduce things financial and Certus We to this very of this Iridium a of months NEXT committed the harbinger our year growth about businesses should as is come. momentum launches in Iridium strength increasingly strong I and complete recent subscriber Iridium believe in underlying This with feel bring. it opportunity the to

I’ll over it Tom? to turn Tom. with So that,

Tom Fitzpatrick

that structure, we're X% debt million Matt, provide good increase month. this our $XX.X and quarter color major $XXX.X XXXX in the Thanks recap business seeing gain to for Then million total morning was $X.X quarter. of was quarter. prior agreement. on some get started I’ll close quarter financial by Operational year's the Iridium was our we last with last our which last million review Boeing I’ll offering of up up the completed capital affirmed key nonrecurring This metrics everyone. from was trends we first included and the a generated morning given guidance the a revenue quarter strong results and the lines. first summarizing which EBITDA first year's the particularly to in XX% year's insourcing comparable related and

growth we which revenue This higher of in quarter first side year's our of reflected million reported hosted well voice increases streams commercial business, and as in than $XX.X IoT service services. prior as and the was revenues, the period. payload location XX% the in revenue and newer time both satellite increase from On

from year entirely from commercial net represent the XX% up the Maritime from continue and meaningfully XX,XXX existing gain subscribers period. IoT, added data IoT strong In growth Caterpillar subscriber including business. also expanding quarter. strong to we relationship see coming and now available our and IoT in new quarter, that subscribers Garmin. the growth with During contributed ago we oil commercial growth are this partners sectors from XX% to subscriber with subscribers gas Commercial

revenue, NEXT earlier. prepaid As the strong cards, of came as payload ARPU quarter. well as location compared last from was operational The a activations year in first this service from of the to hosting satellite rose commercial $X.X about other a usage This period. subscriber on is million materially well a With time data through services. Voice to and in result higher period. first and million revenues Hosted $X.X revenue quarter, year data rose million from service reflects our Voice hosted payload usage $XX revenue XX,XXX service. quarter year result, contributed data $XX growth to satellites OpenPort as of this X%. higher from revenue Iridium as increase ago the data and year's results increase XX was from $X.X and up Iridium net in XX% our and and recording quarter rising a first ago

services quarter from did we Aireon. not Aireon recognize of hosting and but million recognize revenue $X.X This data received any revenue from

We Iridium first upon to hosting year We put the ADSP still of when NEXT which under being Iridium either debt financing until and revenue service. making remaining in in continue this XXXX. Aireon or of we Aireon services year. defer the space-based anticipate to financing the financing and the closing as second data their made will close this half to into a we decision of expects to the continue FAA positive Aireon's earlier ramp fees hosting quarter satellites from will late second expect the utilizing this recognition installment

service preparedness. of hurricanes outgrowth at revenue equipment remained the better-than-expected government last record handset from $XX year strength margin which $XX.X generated is in from Government sales growth a The EMSS the government of subscribers XXX,XXX DSRA. business, our sales the by XX% the customers this year driven IoT to had grew revenue quarter expect an given Turning a clip this XXXX revenue reflect XXXX. emergency first million reported which from driven ago period. in first fall our will XX%. period. U.S. Total line the equipment But the the of by sales. year from heightened part rapid rising year-over-year. million with of was a multiple in reached subscriber equipment ago Equipment XX% XXXX believe We to quarter quarter XXXX. with XX% we expected for increase the of we contractual terms equipment again strength the in now reported than sales contract full be quarter, lower We We be at

guidance support $X.X government episodic the work We impact Engineering this coming driven is to largely primarily $X.X in of million first revenue our was compared which on quarter EBITDA full-year and gateway million quarters. as by improved in quarter. the the will in year's on prior done performance the evaluate the and

as Moving This outlook. reaffirmed long-range our financial to our morning XXXX guidance outlook. financial our as full-year well on we

that in months. growth continue Iridium continue IoT the and new to in with satellites revenue We services and Our OpenPort reflect to broadening service first hosting are success in maritime. into climb quarter will placed anticipate coming NEXT as our data

EMSS terms to $XX Aireon. approximately from revenue use voice keeping Revenue For of to hosting million from million will and the We business contract. anticipate be data government's fiscal government which this remain from climb anticipate attributable continue growth the subscriber guidance the of our steady hosting fees with year the of from will government of previous airtime IOT services. and year, we $XX U.S. this services the Iridium with

Based amortization continue meaningful new in $XXX year and depreciation of anticipate as we $XXX and million growth and Iridium EBITDA Finally each service are XX% and amortization satellites into this these become between and will service. as depreciation We operational. million. placed forecast revenue ramp total upon XX% between NEXT inputs, will satellites incremental to quarter expense be XXXX

the NEXT year $XXX complete this we spending be million. capital program, Iridium approximately As will

completed balance Moving to improve of our sheet first capital bolster position, number activities to quarter and liquidity a Iridium in the capital efficiency. our

XX. which pay to facility we unpaid This our of payment during basis. action conversion declare first accumulated and dividends credit stock May exercise $X the in convert A preferred Series First, suspended Iridium XX, shares quarter, $XX.X payments a since the on our March and preferred options all Iridium's totaled XXXX. on results This dividends on forward dividend A preferred go million B it's that approved preferred Board to required our annual in million was on dividend by lenders the discontinuation Series

of short Of common the in diluted in shareholders of decline Series coincided been for These XX.X required At the share, had the announced also amended of impact their stock the Iridium's Series rate into the already to as conversion shares A of hedge for share convertible preferred by however We B a increasing by the fully interest. XX.X shares. by preferred shares Iridium A is preferred shares short. million share the It with facility. reflected each credit the count. positions common basic of shares common had Series Iridium's note, selling the conversion dividend count resuspension common

Iridium May with we conversion which for our as would position conversion available is of as B stock expect on As a the preferred result, impact early XXXX. short a Series similar

notes unsecured nearly the debt notes and [indiscernible] year $XXX facility pay to at net purposes principal of previously $XXX issued senior Talus The proceeds $XX conjunction cash million March bills and million principal BPI payments the called the our facility. our of on deferral. balance certain The of retire reschedule our $XX in were will $XX used under the reserve aggregate balance were are semiannually credit to payment as space linear in to million service In for to $XXX of of account rate offering, interest proceeds can in totaled be offering March years The milestone and a to notes subject credit its of reflected million replenished closed used and five two including Talus iridium of exchange million XX XX. XX.XX%. which million corporate that be lenders repayments. agreed high-yield of with general about Second,

quarter million XXXX ample liquidity complete from with we Iridium aggregate principal sure scheduled payments $XXX they these activities Specifically, of pleased liquidity the since portion beginning with will progress been down reliant XXXX will pay due required. the XXXX, were our that to we've are it in flexible those liquidity and agreement of is capital XXXX made is very provide without DSRA provides Iridium now our on which to the facility. the activities, a that in into Aireon. and BPI XXXX. net can received XXXX. first The Iridium I'm paid light In now launch We've not the payments When credit The of look of year. if expected in program very payments concerns. NEXT the to be access also in our in be with impact

launch on run aspiring core all to continues execution business and Our cylinders smoothly.

shape. we've the leverage. net all Our and raise increase existing pay-down our undertaken. of not I'm we that The the balance. impact glad offering, balance materially In able have flexible in proceeds Iridium's activities is to and very net capital were sheet been our lending cash debt partners closing, debt good with

optimistic the I financial our that Our things NEXT I'm for team as base. Iridium executing operational our back subscriber the operator turn drive I’ll well constellation access continue to broaden performance and that, and the to is trends on With the Q&A.

Operator

first Our Instructions] from Prentiss Raymond James. with Ric comes question [Operator

You may begin.

Ric Prentiss

if questions could. I A couple of

can further. the I come will with to mentioned lot them it what could update you quarter. and get FAA it the looking the And obviously and as that the associated, far FAA the signing on in getting maybe coming that What's Aireon privatization happening at the not going Aireon? funding, think of Congress, us step in delayed for there months you funded late in with means First, what and cause process the

Tom Fitzpatrick

As so do. conditions which we Aireon president been to and loan for the clearing has working they have it closing - they get Ric. said closing it's the of second is to - are some just this quarter the they is cost think president done placeholders late conditions substantially indication, so of before, financing in the actively Their due at the syndication need really the they documented which clear to

Matt Desch

you're or second whether our about really effect one, would not sell And on Aireon you of on terms asking to happen to - said FAA. as or privatization. the - oceanic in whatsoever far as specifically the stability space-based had happen no Privatization ADSP it

in fact, and short-term through ways confusion can it which the in few some evaluation connectivity. even their going more well be give to months In all visibility process and extent seem the that decision-making cause I concerned - all in might that was final next going in they're to of did stages if that you there final while little privatize there

was long-term of their funding today which go more most not. probably have reauthorization the thing, multiyear for sort and they're I to or to important I that’s what's good for what sort - of bringing budgets their is not terms funding clarity much for privatization that is through FA that budgets think think package this only would whether which important their and - clarity FAA are I a of than FAA in know or

Ric Prentiss

update then to we what assuming remaining eight had later this cadence six timing? launch and like year should And cadence a the seven look the weeks successful a and Any expect the on few what might satellites of you mentioned for year.

Matt Desch

avoid final say expectations pointing to next stages. it still in trying are case third it really because complete date available, for should eight else try just a in I've safe. to to couple meeting satellites struggled to around be date be But here of be that but months our in I’ve giving lining lunch specific avoid right specific to been moved the now here. of seems seven rockets Yes, I tentative the do a there's like dates in completed time and would to things quarter sort well - and is - up and everything looks available I'd pretty have

Ric Prentiss

one you And for you us venues process certifying the pretty IMO but sure and certification, that be a mentioned meeting feel of maritime confident what you right on the in the understand in coming final But and opportunity? May. kind us watch the me, watching process make the we’re Help XXXX. weather help when up dates the mentioned to also a significant right for could not

Matt Desch

really or the four met so been sort think. of years technical know maritime process this international to sanctioned We’ve of together I of and it’s in through reservation analysis subcommittee meetings cetera. last service. in technical which that don’t is of year's that sense demonstrated very meetings I operates organization now that with UN the many complicated the gone for stages subcommittee the asked the sort countries meetings we that coming five a et and the all body without We've Yes, requirements subcommittee a included regular

could towards There from maritime reason and if that expect for just involved. who pretty unique happen, main I'm some GMDSS in people a that slow is a do so is of important - to optimistic sort there of Now issues. positive provide it’s it’s to This following we the network body. is able because May. lot about reminder sort important some some because the be looking There's as that do everything we’re us we’ll through an a we’re that environments of constructive service another one of probably probably customers. of getting bring that you a meetings will in like it's able down politics vote May. issue but are our But a expecting working people unfortunately we choice involved other be GMDSS there's positive can but I'm doing wouldn't in result it completing those to everything to

are but I provide, itself that be And able opportunity it’s our function important an who mentioned - this increasingly their because nature sell customers a important as so shift it’s generating the trying either so it revenue have system trying that they’re before, to not I partners terms not into their competitive other in think to incumbent it's to of kind from products and in them separate themselves and selling our to on have. the of of

I'm it’s not our we it's but this year, confident completed said completely I So important optimistic this we'll that get control. this as within get completed.

Ric Prentiss

all opportunity sales the Maybe some other this up for purposes to for can get boat for on others as you then?

Matt Desch

to value we’re important to mean to it’s that like be exactly. customers. to do we to partners Yes I year our offerings look really function the a our going of their very able complete this and add we’ll

Operator

from question next comes Burns and Sidoti Greg Our with Company.

begin. may You

Greg Burns

going call the lot constellations launched in heard others of some out some about the to you focusing with the half of some and on Matt like a projected that aiming competitive not to new directly as stood changes with at what an talked be we be environment competitive the show, conferences launch offering. to But [indiscernible] of kind applications. LEO satellite you're in or IoT is recent L-band the constellation

to potentially what with more you're offering. directly seems that So competitive be

or anything competitive the years? directly the might pike constellations next you there more in you else see coming do So down to are coming be that other

Matt Desch

IoT competing for just when in word broadband and the really is say a they systems IoT when really confusion against fact say against I'm use that’s some what using market going But or typically is LEO they if loves it be, other everyone KA-band brought of because that if space there serve the the that you to they that KU - you confusing specially LEO because spectrum very that because a they’re really people we’re the what talking assume competitive word is times really addressing. So LEO valuable. lot up they they use then people when different they they're hot in word GEO, about glad IoT IoT But not GEO-based doing. must we’re because be be than to must and must

mobile directing I it’s mobile largest They’re IoT they talking then broadband can sort We’re or like think the about to. typically of provide typically service licensed the unlicensed systems of individual is individual very systems, talking IOT of devices. part market LoRa about and aggregation highly application, others highly on applications not what satellite they’re

other. serve that's can another of at of much going supply IoT part the market space. We’re to I terms satellite in least area to do IoT that the broadband too but market volume where will sort and call larger of complement devices They would able of probably each what be we’ll

as we’re I going to So for many is deploy that individual for today point devices and Garmin oil going some again surprised I container with doing focal customers pipeline consumer don't directly will They're us. be to caterpillar of gas the or device really that of their of things or be would the valuable really to their cetera. networks. I if Walmart is a that think providing even an see or that be competitive not they et

Greg Burns

the years facility to broader of a at be with being look callable BPI that? you Tom out of or is about looking refinancing maybe kind timeframe in take the two we'd And terms notes would new to thinking the maybe prior that

Tom Fitzpatrick

- point in the to we mean why and at I state that's noncall the focused depend markets of that focused credit the so optionality but were time, we wanted and were we on on the very on No, too. noncall

Greg Burns

same interest expect number D&A mentioned Could expense? year and be and be And going more you on to depreciation you’re launching the this then up lastly you you amortization put satellites. Thank you. with maybe a as will what

Tom Fitzpatrick

So its XXXX. in between it and depreciation it and way XX way call it XX amortization - makes make

from So to it’s just are now draw the a of line that we where kind steady-state.

Greg Burns

And the then year? cash here this does flow to more interest through were addition costs capitalizing I expense those know in some that new expenses P&L begin the of notes fully interest you to

Tom Fitzpatrick

It does.

interest P&L the XXX birds on So a the that the switch go once the interest all in. air make all capitalized as interest there's cash being in are expense will expensed. on the become billion $X.X the all is They thrown launched, BPI to way its will get interest onto facility will and literally then the be calculable it’s satellites XX.XX and from cash the a

Operator

Our question from Blair. with comes [indiscernible] next William

may You begin.

Unidentified Analyst

seems share and environment be on that L-band not Certus Inmarsat has competitive the it's for biggest secret a dominant to to market maritime market. opportunity Matt a maritime the - topic, of

versus So and terms Iridium Certus new in cost cost I unseat order broadband equipment wondering the service in have the of L-band certain in was to Inmarsat will services. Inmarsat advantages potentially throughput comparing Certus

Matt Desch

XXX terminal The In extremely kind today. is It range kbps know competitive Yes. the in SwiftBroadband, size of will quickly. advantages, some in we a have the speeds. to has We’ve be getting less. will L-band little so current are we’re airtime Certus the it out a FleetBroadband smaller physics going is of and we’re coverage. price The the But typically FleetBroadband very to of is where exceed obviously terminal there. speeds because to little very services it and of importantly will bit It established be range less XXXX the to into pricing better. price kbps be will other market. really an the XXX It bit designed faster best have to because LEO, is has, those it

have faster to and a about be Inmarsat's years. the I So and next for think advantages do version about service certainly improved eventually that talked really, of few can, back their and could I they're just coming welcomed I we'll category possibly every that. know envision delivering

of won't going into able I was really to the be easily think sort dynamic that what work. competitive is very be improved

channels, having I we’re looking channels said, them and really a Inmarsat's forward supplier are doesn't with the a compete non- and celebrated think the supported distribution them, to I that being superior distribution encouraged service. because As deliver

So money they know I then make think they rational on a the with that's have They know that competitive to and market future. going us. continue can they

that many by here think lined going and to were to have that up who in the Certus distributors market announce that up many are So I taking the and can they see future. us be, signed already to you enthusiastically

Unidentified Analyst

anything defense EMSS there recently makes negotiate can you renewal favorable confident the signed department that contract? budget was less there And U.S. of a in that you of

Matt Desch

is I a be what is but I of No, I anything positive - that for are would budget and more. referring looking everything to, the the getting it might say think sense DoD you know don’t they if in that sort

to So expand quite their we're and we and expand been Notwithstanding services the of past. in the particularly capabilities year better network have are believe quality our delivering constrained in as them. usage not to and the are adding they perhaps value they environment that that, we and better they every

environment last were a than we a the So probably when now - were are we think to we ago positive I negotiating frankly contract years right five complete more one.

Operator

question comes with next Penney Paul Our Northland from Securities.

You begin. may

Greg Gibas

thanks Paul, regarding on on questions. if new with was you could - commentary and on developments efforts, give Aireon wondering I the This appreciate other an taking is update but my Greg FAA, for ANSPs? the for any

Matt Desch

call last in here still out in be gets future. there. They I new in the see just think few thing seems customers, isn’t think get but think the a signing list customers. step I list the doesn't because I it that only strong in they of I their nothing a them like absolute - horizon like of interest the any nothing, to of going looks kind kind long I declining. they in list. here that out to forum it on that of have ANSPs see closed next mean for to global any of back, slowly that quarter. growing but longer to I ahead say will in way I announced know, be months. technology The to call really that not surveillance Aireon that’s looks terms can closing. are There they the one once up They have

up, a for bit be to I anything on don't little service. I the and ANSPs growing turned the of doing there but is to think service that enthusiasm after number initial complete be but the of who for awaiting commercial see signed network

positive still it's very think a So, I environment they’re working in.

Greg Gibas

more partners And in color Certus. to with guess on sales be channels your and particular your then retailers? secondly you can I - strategy with going added go-to-market value expanding are you give both

Matt Desch

of segments still established products market the have the XX over in maritime last been successful very - distribution mobile. each we the that the years taking generally land to are aviation, So three main using different L-band market channels and

in in the it to it’s We’re going become does plus sense are it months making that the of to And so people in the only announcements in ones partners ones make space. sell being other successful a broadband really one our we're and us you is requires the about that in distributor, services to and see the that investing see you'll some announced the successful the market. sell really every the talking far selective not we ones by some become the additional XXX coming going and can of we've effort larger in to broadband

this segments later are to in going this are they of So as their the fear adapting to they least land are aviation be they launched year. accommodate maritime take to our current weeks will kind system coming investing billing markets. for that going and summer they prepare at Certus, to to gateway, us provisioning on and connecting working the they’re are trial mobile They in their ones be and the

of services think lots I usually sophisticated see think, ramp its it XXXX kind a ships XXXX mean see in I and we’re offering, big part of and bigger take wrapped up product. prepared out going you'll set just the a getting the to but this ourselves takes time not market is this other goals to and is everybody I to numbers that a we and very XXXX. on in So with the of because It's us year

Operator

home comes question Chris next Our Quilty with Analytics. Quilty

begin. may You

Chris Quilty

the took couple safety process give and that expect you a Certus their with of got them certification to Inmarsat the you was product? recently for progress I you think sense how that of a Can the guess market years. process that aviation SwiftBroadband I us for

Matt Desch

more this - safety superior serve product is of there some Yes, early but after added would as We XXXX aircraft the established and and are introduced for products Iridium well. them coverage mid-XXXX, aviation speeds XXXX, because and get or as is we right environment demand certification fully space. capabilities lot be we’ve certified be we the have interest now expect time of and that pretty in they're we so would same really Certus for well. can and aviation and in in in them service again we been might broadly the products the really expect process to And an a later shortly in as player been say really

many haven't with So we been aviation but and are we maritime our safety certified where little offerings. than many, today before, is aircraft different a certified on narrow-band safety today safety

little So certified it’s getting safety for a service. different environment

Chris Quilty

both And of on and think the that first customers? Garmin, potential or market. other with Garmin applications, with there you’ve consumer you the commercial all IoT Can OEM doing talk going market, market that's either Caterpillar ramp Garmin, mentioned for how you’re I all about what

Matt Desch

really expanded They things there As some their happy I still base. that ahead I’ve their customers. successful to coming been but and future to And line successful won’t have their help offering. be is them that. Garmin looks other methodically very on in exciting that when of a they distribution are success expanding of offer they they the really we and and getting other many connectivity they expanded at integration be have Iridium do bring with in said that, and has their the believe get them skews of see they’ve Garmin seems to result the product product been they carefully I with They on really we’ll and connectivity seem they kind Garmin in lines as but successful think they it from very I effective products. they bring and as like, have and broad been space their -

the the their as products. to of sort I getting flagship be very, very have to connectivity think I years really with of going brand to be seem very as they with think consumer satellite the us been to they grow Garmin taking happy So coming couldn't out I and only they’re effective happier in they’re success market

Chris Quilty

the million of payload and constitutes the beyond with balance? bucket XX broke associated you out that there hosted portion for anything the balance that I think fees in the Is gave of Aireon. Talus Tom the question of you,

Tom Fitzpatrick

from No, then is recognize the the is so which Harris hosting, nothing XX hosting but of which there's remaining is X different. million we of Aireon the XX breaks and is quarter that's that out which and data. and through so is X Talus XX million data XX breakdown yet first hosting Aireon

Chris Quilty

give you a can sense Talus of of science the so the And that?

Tom Fitzpatrick

that this up think year. X.XX we with million was from did we last materially year X year three it's million last It the

Operator

Our with Deutsche question [Anthony Kleiman] from comes next Bank.

may begin. You

Unidentified Analyst

you you're on wanted on confirm the I place. guess what that at existing scope of just some your we’re my views Certus contract to government contract Just about I what on that thoughts And are trying an what's new contract. that back that new go represent the government. is put doesn't talking I to really opportunity your question in given contract guess a existing the U.S. point does to in I my is the assumption put And covered really, being into guess for just cover really incremental is today? the in

Matt Desch

scope the is correct. the of contract about assumption your think I so Yes,

expecting there the still things and to our be possibly maritime be [Comsat] sort aircraft broadband very and starting partner land terms same mobile segment, advantage U.S. in and to the already initially well. to to discussed. the well-established stream. now timeline market definitely of of still necessary we’re to as those think the government are able of the is equipment But probably in installing government with on Iridium/Certus the, same multiple eventually segments about Certus is aviation work but to in actively actually partner utilize take a I revenue structure new Excited

be going So government the Iridium/Certus. is for to great U.S. a think we customer

Unidentified Analyst

range that government there assume is longer guidance scope longer some your words what the assumes range the does is in anything the in of from contract does government the of the guidance the outside segment? product And penetration Certus of other

Tom Fitzpatrick

Yes does it Anthony.

So the included million $XX there $XXX government that the XXXX is we is size Certus it that existing as broadband numbers We’d million business in with sort of were exit our product business. OpenPort as out and sizing.

in that's So we in million today our expect included government, penetrate do we the that had XXX with no we XXXX broadband exit but them business and sizing rate. will

Unidentified Analyst

Can on payment milestones year. are then triggering payments assuming milestones some what remind Aireon you and successive Aireon? financing the other other that a from other the obviously later that us point is there And you hosted this at and are Tom - if trigger mentioned successful payload

Tom Fitzpatrick

the installment credit that’s So anticipates the arranged been facility Aireon three basically payments.

The the first of upon the of facility. is closing which

launch Iridium upon the occurs completion the campaign. second The of successful

in unexpected that because a So as they credit for a when later will operational is money sprung early the third in launch. launch XXXX. second completes, will operational is - stays facility of sprung result an hold become it unlikely the within is installment that as anomaly be Aireon back money installment think is event own But Aireon Aireon funded of and the the account of once campaign in the but their a launch

Unidentified Analyst

sort from of that other the I first you And launch guided wind to sometime together the could very if maybe summer with being almost each that trigger. of of actually timing two would first or completed financing the payments sort close that that perspective? XQ on plays complete being up of with described being Matt So campaign wind around up kind around the out the think Aireon substantially actually that's time to might the the top payments being

Tom Fitzpatrick

That’s right.

the our or not significant For revenue as is revenue model really that analysis the important to Aireon recognition visibility payment have recognition. second and into we

recognition because first the The flips to probable collection. it of we revenue have for is eyes being switch payment that on our the one

goes those lenders debt. the go the payment as payments to paydown the BPI as second of first will The does both a

terms of So impactful, liquidity with not it a important is just first so really that hump serve the debt gets payment a it because is assured. wise it’s paydown in collectability

Unidentified Analyst

or service that being fleet? triggered launches what by second actual successful the that trigger on payment of the payment, that terms triggered by complete for that is with and And is in satellites is

Tom Fitzpatrick

after satellite is its which think checkout I launch. shortly

Matt Desch

launches, it’s same to It’s after so days only final XX the about thing. really XX really the almost

Operator

comes with next Our Instructions] Fargo. Andrew question Spinola Wells [Operator from

You may begin.

Andrew Spinola

of data commercial has segment, and result? modeling why think of sort and there is And quarter strong expand is what on was was how the this growth well The one- time so QX some it anything going sort referenced of just and - as of prepaid for in could quarter if OpenPort. forward the two first in this maybe of sustainable data voice quarters off was we that been than I’m time those as stronger should about you you sort wondering voice voice

Matt Desch

voice been commercial and So kind data declining. the has of in trend in ARPU the

course before were headwind for to data we subset there our solutions, terms users it in As migrating and - because of said have beyond. installed which which creating that in and was and that we broadband was said heavy we’ve of going commercial thought data some XXXX a ARPU And run that indicated as there voice we its previously was sort went base time ARPU. we of trend has stability into been

that's We that into that under so terms new history card And so - causes the the we of of usage which standards the not comes in life foundation unused the the of year-over-year accounting be you the until expected of also minutes kind the expiration with we relative the got were based prepaid bonus prepaid new a a previous hurricane on that’s adopted if think of over card. sales. beneficiaries kind prepaid a stronger recognized on standard will of revenue the the could standard of under and the we in voucher in areas then related strength them two

of good of so look result we're the rate usage sales I on were benefited dissipate was what be, as data depend hurricane quarter mean in of firm us how of was much run developments. the and forward. is of how much ARPU that a the terms but eyes It’s in our hurricane on characterize is prepaid the are voice we So to sales the the just but going to and as related quite and just going we new keeping both OpenPort standards in them and combination of stronger Similarly right the adoption that quarter. stronger

Andrew Spinola

What accounting impact change was the QX? of sense. Make the in

Tom Fitzpatrick

X million.

Andrew Spinola

sort that solutions this lot Can to just broadband went about legacy on expand a customers to actually alternative X of you’re options spoken competitive. we these subs to that guys the voice migrating you from losing solution have what being But on these are about million, broadband call the talk not - okay. and solutions?

Matt Desch

what corporate that have ships kilobits in for used data aircraft the per into just But packaged across. on we the and some something a picture provided L-band data where payphone more is in a that a days than on and product think we're a wasn't transmission for and was which call kind or the a the for device solutions the put was wasn't circuit-switch voice there was optimal put put as a talking you data it of components for of for it we solution need about you a X.X transceiver on we sort It were of phones data ships early So sort which packet of specific low-speed but of it lot and needed airplane and a specific for was - the fax things connection. satellite a the [climatory] second, an that cost to voice send a people. kind also quick pricing applications of [SCADA] that on

and So them capability it of gave experience data our better including provide would of cost was customers a working well, that - there them solutions a pricing. was better those think terms I at saw OpenPort installed, it number like solutions were the people lower own a but a in

off high that not have so many And that most really really or is for move the to solutions. would part - in customers numbers now that transition. transition left they The were ARPU that to that category other

kbps cost service, have basis LBT it about low So talk of what Certus provides quality and of need connection a experience good broadband a we're whole of to developments that providing new are XX very that's of sort underway solutions next as OpenPort terms XXX high Certus mobile year. those but is at a for coming as but sub of and new one service the that the and sort that would not in highly thing much, of we’re just data call going lot are a very a applications don't think that XXX and we or are which be

technical of description. sort that So

Tom Fitzpatrick

and is I what Yes, this. would say

heavy we many have this transceiver I very the prudent had and of up as We I is need been have if for much What say this much is a data an equipment FleetBroadband is transceiver three customers years is of L-band need today ago. users changed look solution, men not pay because either L-band cost data and higher the the cost of the less. or the data kind OpenPort

transceiver And heavy have three $XX Today data ARPU. the that those top is back went $XX so in was users years on made versus right transceiver We the of that kind L-band of migration. probably $XX L-band ago the ARPU ARPU number. of

are trend abated. and last out have users years heavy which the has the self-selected now run created has headwind the So three course that and its for

Andrew Spinola

conclude very that than that? potentially least or the do it on it driven why quarter from you very kind this strong downplaying why comments Just revenue I feel question heavy like me. one is side my one just maybe for last you more you at results is handset Clearly that, sense is but your isn’t were probably why equipment it's saying time hurricane think - of

Tom Fitzpatrick

quarter. the that. for you that we quarters look look in and the called channel handsets said handset initial if strength prospects hurricane that's our of the in and as expect equipment fourth basically strength guidance third we third because the didn't refill was down in we we XXXX heavy What and in XXXX It’s first fourth we’re and of the going and not XXXX why sure revenue in was our quarter in hurricanes the predict saw to at so related will we

quarter that that not line the to have we next down from EBITDA was in we So in we don’t and quarter third with we with first the and tough so comps that XXXX eye XXXX guide see the been but in expectation not in third strong couple our we XXXX ourselves has in which up have them, in the quarters we - beating fourth think our quarters on and notwithstanding kind kind our see we that wind think mind. the of continue and of fourth fact

Operator

comes our from And with Analytics. final question Chris Quilty Quilty

You may begin.

Chris Quilty

strength that that buying for then a Actually was needed there there and new or into time mix? things was customers for that that sense QX a just sort Do any products they on the filter was you hardware QX follow-up of in real additional a realizing future that [oh in crap], question. equipment position on is we follow-on need

Matt Desch

Well there there think new - wasn’t per I don’t wasn’t products se too there. many

IoT there by hurricane quarter. I led fourth hurricane just for not to sort has the across to quarter go third the and - channels and but it not or first think beyond, but the all happens the we I’d so strong goes calling we two only have Tom fourth I all to think as handsets well. Probably of think beyond year. sort is was it is it went equipment it - of is and it - good how of in of business appropriate we’ve it but years - the based almost be flat and refilling that right, frankly sort the was goes years the a broad so been position of types into quarter that We’ll across today. obviously a really of think see on we're was can is as had hitting the in were last the thing and in quarter continued in and quarter half that stronger next where I lend up Please was that to flat say prudent I But quarter anything is for second the we comps tough couple call see overall it tracking in equipment sort special cylinders it the now. the in as board

Operator

back question-and-answer for Thank turn to session. final you. now This comments. like the management would I concludes to call over the

Matt Desch

rollouts I join for the and very I another for rocket to think watch it’s May interesting Yes, launch. on us well. online XX interesting given be a another you'll then Certus and It's hope as proven particularly flight thanks. rides-hare we'll launch

Thank So we will see you you. all in the soon. quarter second call

Operator

this day. wonderful participation. Ladies a today’s your and concludes Have gentlemen Thanks for conference.

Iridium Communications (IRDM) 26 Apr 182018 Q1 Earnings call transcript