IRDM - Earnings call transcript Q3 2018 | Iridium Communications Inc.

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Operator

Good day ladies and gentlemen, and welcome to the Iridium Third Quarter Earnings Conference Call. [Operator Instructions] Please note, that this event is being recorded. I would now like to turn the conference over to Ken Levy, VP of Investor Relations. Please go ahead, sir.

Kenneth Levy

Thank you. to quarter welcome earnings and morning, Iridium's XXXX third call. Good

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

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

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

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

Matt Desch

good and morning, Ken you, Thank everyone.

Iridium has our for driver terrific; as our business never has come. service, a serve years to our growth launching significant new and we'll financial been has XXXX soon service year-to-date, will broadband been be outstanding, which performance been better, of subscriber So growth

satellite to our and into our NEXT these balance the out complete December This of Of in-orbit week, constellation. as base remainder final of XX. again last XX As constellation, spares. X we is the orbit SpaceX be NEXT carry scheduled to launch satellites will final launch Iridium airforce announced the complete be Annaberg and will the the for X will used Iridium serve satellites, of

Our adept processing satellite new team operations has become at really these satellites.

expect this of within fully launch. be of batch should satellites weeks We final deployed

for our next-generation This great of CapEx a So we'll steady a to that company - XX% Iridium's will prospect. for soon a a This new new quality, aircraft our prepare given joint great truth we and also network. new following final be justify era to surrounding this to as and have investors. surging, to their confidence importantly, to execution introduce most upgrade, benefits we've tracking venture XX-year are IoT Today has begun a constellation NEXT our indeed because you've for for of constellation our it It's global a end growth or we But several satellite applications already Iridium including our is eagerly will already network now. questioned usher areas this way better seen and our Iridium's latency in deal is that products NEXT and is celebration, several and availability, while Iridium new by relationships business it take new little that satellites, in But my experience has quarters long and the and the our who the over day. of invest finalized growth existing in of on existing managed brand our excitement network may completing The new traffic completely NEXT for particularly voice the fact the provide working year. await have holiday quickly global especially equity They begin it and exciting mission completion performance the customers. and longer spurred to launch Iridium will pay new sparked to launch, has Aireon service. in towards been how dividend. partners previously grown for and a our Certus word partners like many giving this a services. Iridium subscriber not you're revenues Iridium's for develop broadband

we weeks from since Partner Nashville held world and Iridium record for Conference. one in time this the Iridium events think drew morning, strong I attendance. sales the NEXT partners As our was due This our might expect continue and in have these ago, partner A lot ecosystem. accelerating we momentum the press and it few release support you launching satellite; this you expanding hosted to first garnered saw we've we of around is began as a subscriber and of from growth, we to enthusiasm enjoy our

You could with that is how their we in Iridium from from because don't the support and to we excitement encourage and succeed from like working with really us partners different for heard satellite future. they other Iridium's the repeatedly attendees and compete way how I our them. feel both partners enthusiasm operators,

network. interest than I'm the more they confidence in Iridium proud XXX trust a relationships is and in individual our in place and lot have of There today partner We their of of in broadband from particular operation our Certus. new vehicle. a in well currently ground Iridium of number the as live on dozens We're of train, partners as service, launch ship, eminent

that practices, well. higher fine-tune and their provisioning the integration the The of real in use consistent evaluate are speeds, extremely services. building field in value-added feedback our has observe been partners to Our testing installation conditions is working their customers how network it

our we the and look Certus, of be which We exciting most are for the third will was forward the business. XXXX in are beyond. time strength and quarter. time to timing fourth beta revenues our growth This It's our coming year the quarter estimates which trials core this service consensus with to to us launch with underscore market have those topped of expected it completion broadband and numbers recent market serve conclude partner an to to the Iridium bring should in

that will and much and numbers base record XX subscriber larger company growth been that IoT Revenue While quarterly to post accelerating now don't our continues in business. another see grow double-digit from each a growth we've public our in we IoT year, pace and notable subscriber on segment cover XXXX last any detail, year business. we're soon on pace greater a at of the IoT a has commercial enjoyed is posted the Tom in experiencing it's growth of every slowdown to is quarters. I into what think commercial an accelerating time

Iridium's in the speaking time aviation, with business. nature we revenue IoT maritime a the While discount of our overlook expanding of particularly relevance our launch of nor this a growth spend shouldn't and investors lot in long-term service, opportunity commercial real about from broadband of recurring part

of Iridium Another near-term foreshadow XX% growth sales for nine been the revenue the service continued over with period. the network. also partners' year year equipment demand acceleration noteworthy of this expectations delivery on equipment harbinger These ago customer up from and has first our a growth months

for its officially Now within their extend U.S. six has into government to of our us expected, EMSS XXXX. government to months notified the option intent exercise as contract April the business, current

with that contract negotiations be for continuing multi-year period. them will our a over We new

and front on and the was the signed have previous of and contract conversations work length, new doubling with subscribers subscriber Our year, we services of want future productive them scope with past we our them pricing that of value in contract. support U.S. the government to to since been this the Accelerating continue to USG and finalize the growth. demonstrates work the growth to XXXX to

with every phases to XXXX continental to U.S. This path backup effect. it report provide rollout has in strategic proud is in implementation, improved ADS-B when Caribbean comes space-based ADS-B surveillance decision airspace into to I'm Subsequent recently the the that evaluation Aireon in footprint. technology, an their the regarding control FAA as will to start Aireon oceanic a a well for FAA's Aireon adopt planning on phased a phased informed aircraft a aircraft on capabilities the within before and and operational the of as mandate surveillance Finally, path deploy have airspace. made approach that

airlines important and We're nod part an great Now the as Aireon management that for air coming of for confidence becoming of a decision be as happy is this progress another looking the it forward the let the surveillance serves years. their their state about system Iridium for talk FAA, them and the traffic Aireon's comment Aireon's financing services global the sets news early continued FAA the to is of FAA's the starting in Aireon services standard table in Aireon's Tom of XXXX aircraft and NEXT. Aireon satellite-based with so but surveillance. of completion investors; core we're global in strength will good shape given I'll that contracts aircraft to the with

in will our streams network new and for So we financial and growth services. launch usher a very business our new bring that the satellite quite fruition to of our broadband in strong and era of our have I'm closing, our stakeholders completion new ahead that the of transformation revenue of remains the confident company envisioned.

for you're mark. be we pivotal this early peer in reach as interested high a XXXX as attending. XXXX to out year host invitation and Please for me, plan we year, people and an and Iridium should been into that's if Day lookout Ken As next believe exciting March. Investor to has in

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

Tom Fitzpatrick

quarter this Thanks, momentum, XX%. the and equipment year last Then on total year's provide sales from all This of our Today review comparable this XX% results. fantastic strong to our million, metrics XX% generated balance and revenue color quarter. million growth, and for sheet quarter which drove the discuss to additional some increased another highlight updates by was prior our strong third Matt, continue was full was period subscriber quarter operational quarter, to like to our year Iridium Operational commercial everyone. margin year's that EBITDA $XX.X key from up revenue EBITDA trends I'd $XXX.X performance. support good guidance. I'll morning, financial and and

$XX.X On business, quarter. revenue quarter another the IoT our XX% subscribers. and This NEXT revenue revenue earlier Commercial a increase in third and revenue service of accelerating reflects in the this quarter rose record Voice adopted of growth from data delivered and hosted double-digit price by increased changes driven commercial in million by we all lines. service, commercial year last driven year. across to this an XX% payload primarily Iridium growth increase side satellites

evolving $XX the voice premier satellite voice upgrades increased result, as quality continue phone satellite from the to ago in Iridium's from dynamics a in the in well position As year quarter third market. and to $XX data competitive period; ARPU improving support

subscribers Revenue contractual from million assuming payment December earlier customer this in will of quarter. versus Iridium Aireon with to this hosting data from year now commercials the time service place; million. During the XX% The quarter payload fees. fuel from the will and has Aireon Demand predominantly guidance to closing subscriber XXXX minimum driven other XXXX to hosting and expected the the commercial made we in the $X.X ago will expects excellent to quarter at XX in third the of financing asset minimum facility added tracking hosting $XX XX,XXX approximately quarter payment of Iridium fourth in $XX progress operational growth data billable Iridium $X represent quarter $XX hosting compared in of XX% Aireon contractual data Under it's facility new to on fees which Harris a XXXX X.X net through to services IoT cumulative XX, the from million leverage continue contributed year Aireon rose hosted Iridium's contractual year. for third times $X.X EBITDA it's minimum the and subscribers location the million Aireon are payment at IoT. the in satellite of fee year-end only this facility XX% revenue last to million assumes allow $XX million contracts net was and the up million activations in to due quarter an in NEXT new personal bring of comparable the make through by of terms million payment year. subscribers, period. net pay for Commercial versus quarter. of Iridium additional close fourth $X.X of

made FAA. the by work Aireon's above the in light ago quarter to across all hosting million, at we As of range paid $XXX payments a strong EMSS accrued subscriber and their Demand commercial was [ph]. hosting Iridium of subs position handsets In pace at be payments at and expanded expect our to range the go reduce will execution the particularly leading year at was contract. and be balance could recent in previously. from from strong a $XX.X the the equipment fees momentum, million with growth government facility from terms $XX our to our to will $XXX year particularly now up EBITDA All-in-all, the reflect IoT, contracts. sales expanded investors previous continues the XXX,XXX XX% a XX% the for guidance expects ago the million. in to additional episodic of of is recent quarter-end. can quarter facility Aireon continued approximately facility favorable of government strong it support approximately The $XXX of upon of Aireon to contractual driver a under period interest for service minimums board. this equipment, to million the million $X.X Iridium most fee in a hosting and the raise year sufficient be additional given full in the reminder, project. and grew revenue If of million third Engineering $XXX to BPI in have subscribers with robust, year. business the in operational outstanding has million customer XX% is Aireon in revenue remained developments Within equipment and subscriber XXXX. Aireon Revenue full quality at XXXX remained steady service from XXXX. our at satellite come In from up top continued to

the activities of of satellite we fiscal $XX now Iridium's of $XX for related expenditures final testing will late the than ship and to XXXX million scheduled XXXX. launch tied capital acceptance quarter December, being NEXT first about into million launch now With in rather expect incurred to

interest full anticipate As of a $XX $XXX to million. $XXX to approximately capitalized approximately we result, in expect million capital comprised $XX of million total in XXXX we previous approximately million Iridium $XX $XXX and CapEx now our versus million year million, in of maintenance excluding NEXT XXXX CapEx. of million estimate expenditures $XX Consequently, carryover

million and can see you with filings, a September equivalents totaling in as Iridium morning's of As this position cash XX-Q XX. cash enjoys strong $XXX.X liquidity

Iridium feel net approximately now X.Xx and EBITDA. that between delayed Iridium's X.XXx leverage closing, fourth the will NEXT Given good previous in we down in improved EBITDA and the Xx peak outlook EBITDA today. capital spending, the about I from very momentum expect quarter, of business guidance In

Our and the on partner and meaningful growth that, things the Iridium generate to that relationships to I'll back executing team turn many is the build enter products era. service we will new scales operator Q&A. well for continues With as

Operator

is from of Instructions] [Operator question Our first James. Ric Raymond Prentiss

Ric Prentiss

that sales expected to or you've that in was any we really to up that rate line your mentioned maybe you think schedule And is going think to outside launch over - revenue think I - see timeframe? the track have ramp $XXX to in 'XX And Along from lines, from and watch progress as the is to how the of XXXX. million to in that go or growth I final item exit launching us zero Certus? can to Certus it be are how reporting update well. that should million $XXX Nice is about help we Certus imminent in able hear the it financial there past in

Tom Fitzpatrick

just that of just so way, in not think business area the to that. million, say $XX broadband our it it's Ric, $XXX to right, about clarify me is million, Let zero existing

Ric Prentiss

sure, to because thought are the to wanted from I I million. wanted just to that's just $XXX like - Yes, I million, it why goes people some make it zero million to $XX $XXX was sure make

Matt Desch

breaking whether that Why don't Tom, Certus expectations the you address, about also as essentially to forward going of sort out. reporting

Tom Fitzpatrick

Yes, story to our with go of of be Certus it's growth quarters as I is recognize and that XXXX. transparent we'll how think doing the XXXX through part we're important, important we we

Matt Desch

that's next that because - high would it all certainly of the to though here big be half fleets we terms in 'XX, could grow it's you bring XXXX, even going into as demand, just see will be seen be. already at doing that transparent to how incremental revenues XXXX then the we're continue going launch what our accelerate. terminals be quite but developed, million in I others $XX happens XXXX the get as others because it And accelerate and platform; going takes takes probably on government in percentage NBA progress aviation that and just enough so go being and come you're really we're at not and it the year say take some the second much. always for excited tell and of I just $XXX of we're about for are on first a opportunity because And as the expectations we'll see just it we also XXXX. just another putting think 'XX $XX mean middle we're the put half, we it rollout about really aircraft in legs you government And well think continue our and said, about will will in even time in actually to that as that and are as a not into it month aircraft, pick-up month on million than kind parts there’s go for and to late SPCs current will won't high million Tom XXXX real won't land, bigger we're to about that launching times of time and because excited longer think the to for really that it but in so so and in till the introduced then in we we've half XXXX get here that to as growth to in particularly, or it and really not maritime are

Tom Fitzpatrick

but around the tell, but look, and as base underestimate, we installed - think - estimated our have competitors going sort and we than instance million be of that XX-year a in it's we're we competition don't to have is is expect it we better can the we've incumbent we said, highly fact best to the and competitive product, We flat don't underestimate the a opportunity, sort them. out, unseating where incumbent of we $XXX each

Matt Desch

one Probably thing million kind final $XXX the this and to of just that, - market opportunity. Ric on goes

move that think the our because an that I environment, little have may and where as kind of set certain broadband on-the-pause about are product the the product of it say where of space there current on land-based in right to get product point in land direction that kind really of particularly the are bit, the way kind areas a expand a set operation. works up in they the to increasingly opportunity the products fact excited is that our even you

on military vehicles like So I can trials, going just early the environment responder it's some move being too. I'm capability very operated that be cellular more the like this on on first and popular vehicles ground of - things lot interest it's so Thales dual-band from has trains, in too; put the just rapidly terminal, it be to in of in and on think like MissionLINK seeing item a it's a

Ric Prentiss

there. that watching all help Great. will ramp Yes, the transparency really

when like of but think bit, sheet a nice come from is maybe as it operational levels about peak leverage think in we a you Second are targets what What construction be in the you the down as able market? to refinance 'XX as about the might a out refinance launch company sales hit move up, and debt you slipped would you we before think see timing to should as far watching bit, little if business company balance the far might leverage question, and when obviously to you a or the be important CapEx financing? about a guys as other lender-vendor to sounded how the little EBITDA

Tom Fitzpatrick

would second entirely XXXX, than later first quarter half of no the Certainly, I of possible. and say 'XX is the

Matt Desch

encouraged market pricing earlier the the the optimal conditions think that would look we and positive things; fast will optimal we ability for do to so what refinancing. as the the our the and I possible be of we the best and can else to do shareholder because flexibility that to and we it, when be better for nature think friendly want obviously at everything would move obviously we'll but conditions as

Ric Prentiss

doing we - margin hardware also Final should really one in quite to seemed to for has up about the Obviously, stay those as Certus put the you've how world? the talked in be nicely. about I look place are me, you've new increases but think the coming guess margins price and into the you hardware sales margins, of the abilities kind

Tom Fitzpatrick

mean, So our equipment Ric. year this headline the - our of no affected I all that price handset. access is Ric, this increases have year service, that's equipment it's

when As plan this I sell or or our a - equipment - margin. service quarter's equipment and XX%, the business a as we lot you we've we very equipment blended about margin revenues was think - but should handset and highest live margins, handset recurring the expanding had accretive handset margins over our around XX% on handset to the we year, so you as so, particularly when and margins the so don't is say whatever know, equipment revenues that this we any it's year of have are margins strong margins

it about it strength additions we And year this very into look the for suggests the couple so think years. we as next of subscriber that's and of we're we're having because happy year kind

Matt Desch

we're has kind a board only a things across doing it's to subscribers the certainly not well of has but years side those Tom around is space said years, little - this us the the done increase or the dynamic economic of handset environment in the year, world, nice pretty growing And competitive would that's the than really a been of different the with and that had surprise we've bit a thing. Obviously, year the in few ago, mean as modeled of it's which EMSS of fact, and some a couple been think flat - I even price it's it's the sort we had hadn't we of the of improving on new that maybe declining in sounds our subscribers strength one I think a voice network telling just well great the and brand quality working. they system; us that are customers all getting how system I is mean satellite from how their keep the

So generally sustainable, we forward too. think that's going

Operator

is Khorsand Financial. The of BWS next Hamed question from

Hamed Khorsand

something for First clarify off, could you me.

that launched had mentioning satellites May another so you now. that release, XX be have XX it right in I would press and in gives thought been You've me you're XX, and XX because you XX then talking your you XX

Matt Desch

started So the numbers couple confusing. of

position. we launched carefully mean XX here; number XX satellite through old new in operational satellites operation, of drifting our in our those launched so positioned final their Of yes, we spares set the X or satellites we've that have I are have into up position, spares the is satellites XX them network, satellites in there - right Block-X into of still in go quickly, XX operation to so now, they're in that X me are Let network. aren't [ph] but

satellites, that final X to X satellites, X satellites X XX orbit spares use spares. these into use into and have launch spares, into will the in of those plane we we'll we'll bring XX replace Block-X which the so X as X other the X the those plus So X - when operational

works the numbers out. the So, sorry but that's for map all how

Hamed Khorsand

drove about thought increase was ARPU sequential And IoT and trend there a - this in the talk could quarter; you just it would past down? what in increase I

Matt Desch

in I flat there increase it correctly. remember I if IoT, think was wasn't No, an

Tom Fitzpatrick

seasonality, year-over-year. third quarter just Flat of usage. terms It in be the would is stronger seasonally sequentially

Hamed Khorsand

all see year impact sum-up And whether did does how the at is as a far much as you concerned, this with of usage - [ph]? seasonality during

Tom Fitzpatrick

you - If saw price the higher it if between about you look commercial at and the that some of was voice which look increase the is on we've seasonality And second on drivers. the at up as of increase. half current was usage stable - data, think of XX delta we said our price back the which average at the year-over-year for XX that kind XX, kind kind quarter, has of

Matt Desch

always ARPU slightly less the ice is general there and answer traffic two is a and outside, sort and more and we quarter, do been the more more usage less the second in and of hemisphere strongest more people trend. the do have quarters in northern there we than that's the hemisphere; is on summer, the the there is activity. then that's of given third We our fourth the quarter first quarters, ships And course, - seasonality answer, that slightly when in southern out are that and have so in

the - as I or bigger our just how think we that's works. about how get bigger and less maybe the but is same mean even trend I EMSS

Hamed Khorsand

year I really What beyond you just voice in it last not that. have trying it's was figure last this so drove overcoming so year's couldn't this further understand understand XXX,XXX number? had you I you grow QX subscribers, to year last level quarter trying year's QX; XXX,XXX, that out was what I'm that the No, to numbers

Matt Desch

Year-over-year are asking? you

Hamed Khorsand

subscribers. total And Yes.

Matt Desch

of of grower, pricing access back - guidance action. revenues and is mature is not market our increase on access on fees this a subscribers; the higher subscribers data Total voice see where in you the low single-digit

Hamed Khorsand

but I voice get right, that and with this XXX,XXX No, had year QX you subscribers ended XXX,XXX. last year you in

Matt Desch

higher net-net, are minuses, those largely includes includes - port on still speed open there line area is you some the those voice handset of that where particular, be that's another exactly side. and growth item some forecast are the side other in revenue little - places the it's of those will It it's know, to in will bit, that area, on but that base growth. subscriber future is LBT in of transition on break subscriber service devices expect area voice that also be increase and that about so inserted or show transceiver, that we - take a in subscribers drive L-band our that ARPU And a had be IoT there IoT remember much terms you PTT devices course, and of in it's area. We all how or really out we be. pluses had then, a going there of government devices includes The the transceivers which unshipped expected devices; All been they on course being to is you and on some higher area it's going L-band are and to aircraft. never in devices and the to when those and to and sort in depressed that that

Tom Fitzpatrick

drove amplify; single-digit increase we just guidance back pleased is increase me is we've have said year out. this and than been less some is, we've deactivations data the and and low a characterization historically, when Let the of in price that in the in and [ph] said; our settles do XXXX growers with on price every our time. so that attrition it our seen that of historically we're But I've what subscriber voice we've of get some anticipated increase we

slight see that So price there. the increase we historically step we put a subscribers, in when are we not by surprised back

Operator

Analytics. Chris next is of from Quilty The Quilty question

Chris Quilty

mean OEMs for Garmin in force or other process? I where quarters three for the can obviously the drivers driving And is business. and was four about volumes; fracking of you you've potential that I are now stated is terms the about lead I other expansion applications think talk the IoT in you the of personal lead or to there for one last wondering,

Matt Desch

I of category lot as don't tracking the optimized kind of for terms portable, as that new brand I pleased optimized just of but future. and Garmin big a I effort, think that a a around consumer than products mobile raw into unique environment. of category other it's really well also is space, in come. general develop space swapped some focused the ones more be personal is really other put will but But recently kind entisable consumer number closed a this Garmin are other come the But in still preeminent bodes a distribution into they small unique enterprise have a that who interesting of maybe with as in [ph] think be to And they're to in SKUs other an future the around on product to really a which in and think deal a I because there partner of enterprise expand in a world segments; and this I recognized products lot that not awful by product they've lot and products. business bit highly but really things think there of into the I'm this going plans and number to still of think sales to lot kind always highly do numbers any this of of including well is Garmin just really the as there are really going around one as

Chris Quilty

become designation, can't driver data I and does do unit those solutions remember solutions compatible available actual with higher for And the a incremental growth? when? become when the Because next rate - do hardware

Matt Desch

be factor. point Conference banner about devices big the they're as main them our was the coming what And talked to broadly have but of will Iridium will product that introduction go next XX and others broadband other to and from making and to turn-rolls a optimized XX we be connection size have going of as broad individual portable that up Certus will devices aviation to it the aviation cost new network. really year power, range it and and cost, IoT of the which the power, we not numbers that's was new name and of to to for broadband internal we that - kilobits it of this second call reduced looking units going in and probably as [indiscernible] are year, initial core speeds the attached will that's it late is will reduced have, applications per that called cost are it that small-form year, are products are Iridium and but antenna in sort the to our be the into that that for for for BCX the the discussion the next weight, [ph], stance optimize around at it Think the SFX, size think roughly Partner well products a from

partner's applications, be think sort higher Data wide able into so becomes think first can big than maritime year what growth next aviation say towards IoT the - in year expanded have offer. services start product So that - end we'll we year; XXXX speed year new really for Burdick growth developing to big of commercially in they are our for [ph] call the we distribution and services that so next in we available will in a of third and markets services we a Burst second - think hand, units current quarter those of number of land Short or applications of

Chris Quilty

the degree QX is that numbers, real fair? shouldn't sales see that to in second, but is impact back should that in chip increasing we of end-reach there; so post-Christmas; any am is it subscriber Iridium circling XXXX did current a hardware using successful, of device obviously, the for the a for [ph] correct probably a And we in you to from more the - product see I [ph] models end-reach but not more as expect that to sort previous Garmin

Matt Desch

area year their out technology ourselves of it advanced because as number will it get in as been I product to shift for chipsets which our device. that of become they it's to couple revenues prevalent. will on service I mean for of I Probably a remember gearing of Certus able be up are this a we but optimize with right, and And customer this us; strategy able taking it to and embed talk are I that's as you transceiver - much sort an going factor not see if to sure by of think outstanding I a season can't about that that's that a an what the IoT their regard, and applications and subscribers going there in we of cost missed way, the do more whole kind successful, we're think means mix I you're there embedded chipsets they long-term out which for device sort device will has variants - everything see into subscribers point will partner know the as means mean I in Iridium already have a our us that shift partners form will solution chipset are be more but small for that how - is happy number with the as of a I'm strategy in if forward but with partners capabilities want really breaking sales producing developed is into effectively, right, optimizes as they But think quarter exactly that of of increasing a end of we their it more high [ph] eventually be but and really to forward more many solution the of that to really products. their is well. come new whole much fourth going Christmas the you're starting partners a to really we is revenue so course and also that embeds some kind - I are as don't

Chris Quilty

which saw I contract what award them the question; April six you said the which think gives happen, to timeframe. you the final DOD month on And extension is expected

Matt Desch

That's right.

Chris Quilty

those existing service discussion. two handled that taking to in of discussions? do commercially kind a the is aside being an which see in the there not looking are the - given and separate just now Are you two you XXXX? you're impact So parallel Are for is discussion the trying and EMSS it question; is until around there you service is to fact or really of those discussion, separate service contract the putting

Matt Desch

[ph], government discussions to been and which discussion the announced along a megabyte putting contract our lot years fixed are the the Certus. gigabyte, and we're fixed Comsat independent exact the is completely and a by year No, are for and have with cannot sort trials trial for actually that. lot right of frankly and that broadband price it had will it services because part we is anticipate government is the all where - and now It traditional by service; going sold it's and independent the being partners know, underway. be number the contract the putting an the gateway still has to contract government in government, with be technology of price We of to byte independent have activity there price fact for and so not it had of not of award separate and - with it's products There and about government aside, an of there part excited set or underway put more and Certus evolve a into we've have intention so is for we and solutions Certus mechanism that building distributor a EMSS EMSS activity to here. is we've be right the an still momentum now contract, of it's scope a no evaluating for that's that that distribution to but really service you we - we're would together be the a and contracts

Operator

The William next of Blair. DiPalma question Louie is from

Louie DiPalma

context relative throughout multi-day years have Iridium attendance multitude conference, years and Certus to partners? this had how of a past past now does partners in of have was the how many how a you originally You now partner

Matt Desch

we're number important partners, not two but distribution for but channels, expanding think I We is to well; health more there the with a too. of exact specific number XXX been really sometimes or more I it's sort really growth for that the seems or one of pleased of - or We a how are looking are still certain that that. in but lot but ones for lot continues add so a the for I'm partner's active up many IoT it's base partners, it's expand. the can't don't of partnerships and month to which - we're Yes, number opportunities our where continue what more and or XXX of there have but so growing performing at health see times, a it be number areas, they're there's areas to exact I is new the as keep partners; of whether areas XXX exactly the mean looking particularly I we'll know and so quoting of I partners numbers keep north here of don't exact

so really come couple of the big really each open NavReno new represented, to the As hadn't there it in more now by out the group been Partner and licensed listen had our and well with partners to - past, for us that products each group. there partners other one, other they demonstrate of only have and Certus out, that work show, glad not with XX% are a actually those it's attendance of and lot really had a that to them still awful open trade [ph], past, to in was than and far like other's a a been but yet partners ones they each targeted there ones; with open, lot a existing we to really this by example, Certus new distribution and lot but at selling have senior necessarily for Speedcasts, than the more really total wasn't the to been partnerships I see was someone don't because of solutions we've that it's Conference ecosystem. the - to AVH, working all it a just our have healthy and - of for - channels whole are almost leave solutions that's was before had and those - probably number percentage like partners existing the port who've were But that's an for we ever the right, very big a other level this either Partner and licensing you're just that haven't was of usually or creates limited and existing one more of had anybody selling fact, grown Conference, as services, those is sell us, like in but to partners join we invitation-only we are Marlink, been ones want and done -

Louie DiPalma

table Garmin in mentioned Amazon; Amazon what the was several terms to you in your you I referenced wondering response the And questions, then also brings implicitly to IoT of service?

Matt Desch

of working the we topic that announced on been Conference Amazon accelerating that's because Yes, something relationship in for services Services. that We're timing was making our big during growth is that because Web growth too and with deploy. excited Partner as year IoT to about easier quite we've actually, the last the earnings IoT even and about the been at Partner I've mentioned the previous calls, Conference

them component. entry but I cases get AWS think had to in and that long we and office be develop faster systems partners that business effort. whole we our tie hard that sort developed to someone, of have uniquely threshold they they it a time where add toolset existing time component Iridium and tying in much flowing AWS the also they basically bag; of talk lower services the than cloud time into Iridium when we've lot into the to too that to because to their structure the means already the world add the kit and that the their their we of already sort and it that back to they they the because office service we then quickly around are to tool designed make if language that help barriers in these them into doesn't But their their system brought basically more a it Iridium helps revenue time revenue add and of could the more customers that could partners lower sign-up can an to is their takes had more embedded using better, tool takes can to it's partners barriers today, their And Iridium into back biggest company not that to not put can the take we've AWS device IoT already. Iridium new just might and from learned around to as their it starts - and much

attract they to and So or of for subscriber new beyond it's satellite to. access to currently be XX%, accelerate growth us have costly a and they so just to really XX% that a the thought expand revenue probably it footprint put to of their to the too but partners, number might wanted time to world component we going partners time

about a starting as good I it has enthusiasm, it's few the been mix a lot new partners to think thing, bring there So well. of already it's and excited partners a are into our

Louie DiPalma

involving maritime factor a to would And in land towards seem aerial transponders. and trials conducive be regarding the unmanned pretty right the it's prepared vehicles to has remarks form mentioned small verticals; shift Certus several and there you small form factor, Iridium this [indiscernible] been industry now and

future in I is if or drone? for So was Certus the terms deploying on even drones plans any in of military trials there wondering

Matt Desch

upto well how that as can down scale and in to small-sized for would year kind could SFX we've of that kilobits are discussions both, that Yes, the but of and talking there's capability because about been a they well. devices power of excitement video streaming command broadband say interesting the next into number redundancy, Certus really partners control been platform resiliency gives there use waves; smaller XXX and drone second new for which and of per lot as aspects, space drones a about some operate has sort

interest. there So lot yes, is a of

As be be or high and and systems in services more these of maintain aircraft; so it recent Ku-Band we technology, more and want Ku-Band of could well drone connection type want connection will some I FSS said the with manage on our everything, and to both vehicles will a remain be drones autonomous definition those for before, on types. kind pictures the command-to-control way to and increasingly way isn't but of goal that that and ship and that all they as an support in on a same sort

Operator

[Operator from Bank. of [ph] The next Deutsche Anthony question Instructions] is

Unidentified Analyst

contract? that. going you're when but given rate at if to then this ending you've you of under in have XXXX previously not three you outlook Maybe over introduced Most took And questions about so were high-end hit revenue ones. few wanted on the the service Tom, answered, range the of financial it to to service to but growth operating for service prior XX% XX% given the outlook run same higher I line, what new with at be unchanged remind us range the the respect the in outlook the left I contract like you to embedded XXX. upto government of to was long given that I'm you'll sure year seems the you a trying quarters revenue is XXXX guidance out that revenue tie than can on a that XX% a

Matt Desch

in to that renewal got we a we much say haven't that you've Anthony, - said affect to do you're haven't after it's a We step-up April. step-up we the do going we a the just expect renewal government, sub-period right how and right the expect of expect in but

XXXX something the we get As a like reiterate the long-term XXXX it far that raise we a to observe $XXX like years here of we long-term long-term in when the few introduced grow years as a interplay the was year this had of revenue the makes million guide which ago. would to short-term I ago back guide that confidently seem it when introduced so XXX, [indiscernible] of the and performance away that us affirm, guidance to just and would long way couple

- of explanation. So kind that's the

Unidentified Analyst

we as at us, Aireon, hoping as to remind your I contemplated I Aireon, that and to in to completion of remind that for the of the would And could financing the as you on then fact just maybe Aireon, payments it an obviously of just of closing talked I catalyst sequencing it's FAA financing been both us that's think was come completion you previously with - be on hoping going the well a the could future? had while. was relates about on point the to respect constellation, some their you important

Matt Desch

close case. financial just without me that Aireon of a FAA so that the the clarify; not and we've FAA, let So then financing would the contemplated is the the remains driver closing, that

is that always hosting revenue we been And of got so the establish cash now us. an recognition hosting by firm amendment is quarter $XX to that so it to establish and Aireon of to pay that million revenue We $XX million payment of then and hosting; in quarter equal you XXXX amended full contractual minimum do. which - a of data for thereafter, are as the agreement the at is piece million revenue recall, commitment exactly ramp and last contractual our agreement to of just the has last our like minimums Aireon data $XX sort

Aireon I prepared said essentially remarks. to as above would minimums my financing the So make the contractual payments enable over and in

your if don't that - I - know that that's Anthony? does answer so And question,

Unidentified Analyst

it Yes, does.

debt existing one base second is the pieces; its then completed two pays payments? or it's the that as is financing, you and of these triggers financing the essentially that So presumably gets stuff capital Aireon equity with set

Matt Desch

forward. set reminder doesn't just above we've that it's who it be quarter anything other but up going payments would that side and goes [ph] that straight Go-fast recognitions. that pay on we debt. the though kind contractual a facility so of too mean as PPI we minimums, or our said these [ph] those and say backed factors, very leverage affect And matter we'll our it what any guess happened down healthy no up on-time, revenue to here liquidity to get last got would improves affect then Yes even go really I doesn't to a I by basically signed investors that of

going and in consistency I we lot be really how Aireon and around gives really to our a of we're a with how going and report So forward, and position solid we're it financially clarity relationship and forward. think to us visibility going

Tom Fitzpatrick

tension Iridium; very characterize Aireon investors Aireon's right, whatever to - happy as bridge excluding the is Aireon are minimums the the to tension, equity in it's they operational is long happens there on above investors needs including of kind the a gets close they But as look a in - would available that not just are bridge contractual that be is expense it. there hosting. facility a this are expense part on I desperate and Aireon, is close Aireon there a need will contemplated of financing we is contractual payments is of in and of there being substitute healed in but because said, a of among acceptable that's at as that as financing, Iridium for that that fourth quarter [ph]. to minimum. currently way investors, additional that - they equity the that very There well for expected stays to the financing that our the as Aireon the financing over

Matt Desch

that's decisions additional us be to of really terms forward Aireon leverage kind to a of customers pay It strong great, run going I too; help both, like for which down for together I why about we relationships and have mean healthy relationship debt. able on will way, think what's the building hosting the fees, is a we're going home got really will here our I in these make to finance. looks long-term of say, that's and users, of a here to And provide that by great that's that sort team

Unidentified Analyst

launch were December, up think question; this obviously out. precipitously indicated that everything think call in and Tom, I final after that CapEx I constellation - the on previously checks you've one happens drops-off you last coming to

after that to get sort of payment happen still made interim payments other what that are things are to after Queen million the Can last the there you actually think you up? payments run some of level before either of have; remind [ph] I $XX goes or December launch you XX us rate. completion get

Tom Fitzpatrick

that XX of launch XX the To the we'll next payments now XXth we be estimate is payment final there year. clear, fill last for [indiscernible], into [ph] launch probably to and is the

Matt Desch

little sort the precipitous weird chart, a next CapEx just but looks it little and it's that in of you that a that year will doesn't little of cash. of same know, just fall a bit, the of amount anyway, year So for smoothens this increase the kind it smooth higher out - that high on amount less

Tom Fitzpatrick

we've and number about goes and X the company that's we painted mean right, if capital will $XXX I that's And our year. what what expect like is and approximately we $X that of what had average what you so So it said this we XXXX years - picture looks just that's million billion, of like. we've think as approximately XX, of said the what if a NEXT; expenditures about we profile to of that that's the finish look

Operator

have going very you I'm questions closing some hand Iridium no for queue, the management Gentlemen, so we to conference the to further Thank comments. in the back much.

Matt Desch

Well, obviously great quarter and great to talk to all you.

And really quarter December, fourth Take with seeing then, results Have our day. forward we're to you care. a for launch in happen. Looking the when good again looking to doing forward those here this final that.

Operator

that much. concludes Thank Ladies you gentlemen, call. and conference today's very

disconnect now lines. may You your

Iridium Communications (IRDM) 25 Oct 182018 Q3 Earnings call transcript