IRDM - Earnings call transcript Q2 2024 | Iridium Communications Inc.

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Operator

Good morning, and welcome to the Iridium Second Quarter 2024 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kenneth B. Levy, Vice President of Investor Relations. Please go ahead.

Kenneth Levy

Thanks, Drew. to Quarter welcome Earnings and morning, Iridium's XXXX Second Call. Good

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

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

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

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

financial a our over to me flow, measures. With accordance non-GAAP directly a the we'll These website flow to to non-GAAP cash During with free free EBITDA, free refer flow generally that, also most certain things referring let measures conversion. cash release Relations non-GAAP and be Matt. not comparable operational for yield to the accounting call, the explanation are today's forma financial measures, prepared accepted and earnings pro reconciliation including GAAP cash principles. of Investor measures and in turn financial further Please

Matthew Desch

Thanks, Ken. morning, everyone. Good

in our another and growth quarter guidance. you track full revenue remain for on release delivered this we good earnings morning, and year As saw our of subscriber

customers with offerings our new service our allowing in and market returning position attract partnerships shareholders. in broaden new to lines to keep and continue to service and forward. capital remain future us revenue, R&D drive and competitive and and our investing going network confident very unique Our device to service also We're

unique We continue flow cash time that of our and generation and an that standard-based our passage demonstrate opportunity, the service current accelerates of Iridium's The particularly strength growth business attractive more believe durability IoT to position free and market and industry, growth our the make validate appreciation Iridium's investment emerging gets the DXD revenue and more arena especially provide at shares in valuations. progress our as satellite investors attention. of in and will strategy

offering reach Our continue achieve to to to. investors performance not service and compare specialized to and that and very our global beyond. continue long-term XXXX is services Iridium's us differentiators that unique through commodity, years and we guidance the companies a us the Ka-band they in our to coming will demonstrate different be from safety allow will are

space quarter, the entry and going the expanded support alternative noted critical excited this into leader business completed call, that other This and offering other I world integration and in business understand in-building market investors our and potential deal, this market this signals there allow acquisition at to this our the their already second aren't wireless as data us we're acquisition Iridium the maritime, don't for distant of makes to customers we've new easily footprint of provides, which company to GPS with completely our more partners Satelles in Satelles we and the and quite given I threats in or service Asia areas. seem yet, the address and the our more time PNT, growing time PNT about GPS the PNT location consumers. to areas, Europe with and are satellite-based first may opportunities especially frequent As is threats real around data growing to conflict and opportunities infrastructure. Since secure with April to the with service coverage well. our many now centers, of parts the to our during competitors think very

cases than service navigation areas of solves as growing Our STL our jamming and a relevance has is secure beyond become position location offer prevalent. timing service stronger paging powerful uses signal lot a more GPS. use important This as to channel that conflict and spoofing it X,XXXx

We infrastructure number to of and Our critical networks. adds the minimal area supports wide users and resources. of offering broadcast fact STL is that unlimited building even using like while a in redundancy network especially an STL protection service Iridium's that

On should along constellation the we FDA's network. team, our LEO in the earnest expand into continue to support new our infrastructure this revenues Mission and later and Space General engineering That see with Development support start work front, U.S. ground the System year builds with the to Agency as launching and XXXX. Dynamics

the the to over Our plans. In Space a U.S. XXXX, of successor we expanded and end the great the project we to government government. On revenue inform multiyear past straddles second cutting-edge give term. conversations which also that new our we what current you and insight while in than relationship more starting continuing capability the all support secure many contract. and greater the for than current maintain million plan contract previous scope the X-year to new produce private EMSS LEO of Iridium that over revenue EMSS XX% those term work $XX the announced expect quarter, That's to be engineering on contract it help in more than to contract U.S. in into contract and partnership renewal of support to X continue revenue our Force team technologies to us the our is support year we we long-standing we has and program. operations expand this the satellite the drive with expands This them, of a expect front, with contract network with contract know favorable are to the with initial also a future will and years. This expect at record

Moving the we million term the with have interest annual capital on we business go-forward repricing of cash Many market our investors transaction a they our which view into which that credit The to and in $X saw last future. completed and save durability the our you about activities. the month, loan underscores from of support will Iridium expense basis. flows

optimism. cash to flow equity and how grow. our our will be our believe their business me clear, light is of continue share we We think Let undervalued we in

As result, activities. with aggressive been we've a more our buyback share

of our for in to outstanding and quality, the remains well, shortly. I we our our into to their per quarter, shares for X% to -- to confidence increase expect will see well increase our also and and You'll the on this this increased strong ability selling June to activity details partners dividend The want year. Overall, is $X.XX our highlight customers. our Iridium's continue. with to for next revolver grow year during full our on a we reflects X% and more Iridium's share. on drew free cash network performing more second This that quarterly activity flow help full in repurchase and we track we to Tom in remain share forecast. quarter points our payment will the decade, year resilience result dividend full reach business guidance the of our

in network our and global We XX full matches and deliver of more first resellers. the services this commercial continue XXXX's to devices to of partners certified just year, record year a partner total. half government add We've already new which new

ratings will network add our only shows I around pace which growth. this taking the place partners, investment think that's of to our by

their applications. which particularly program. Iridium's end are IoT narrowband Project services, devices on of They Our network XGPP prospects understand even differentiated developing how and business forward through looking reliability as coming as and standard cost new market the IoT partners it are excited well will to They about our Stardust based we services. technology to user lower expand service performance for our the are our

our good as opportunities While XXXX a bit They for are turn making. now the I'll feel brand position transition a unique the to our services and a is well and Tom financials. we with call industries that, very about I investments position extend of a Iridium, Tom? market well review utility growing differentiated over as for our broader our users. With to the set and of align of of year strong

Thomas Fitzpatrick

a which everyone. growth plan, as push-to-talk review well compensating signed revenue remained rose earlier for traditional more morning, the X-year providing IoT seeing contract quarter like revenue capital my was second the was to $XX.X the and to and the XXXX satellite by last services benefit key financial EBITDA Revenue partner. and growth million XX,XXX. with strength comparable business. morning our in net its in increase good million. as growth in prior large, I'd quarter reflecting the reflecting demand execute this was remarks service we rose business, liquidity this increase with Iridium's color Thanks, quarter position commercial part Voice from with and in strong Operational this The and close up to a industrial service commercial quarter from year on as for the to summarizing across year by healthy. continued X% support, recap revenue trends for from personal and normalized with we're demand guidance, levels. In second from million, continued growth on Commercial subscriber and quarter, start data annual subscriber million, largely equipment metrics fast-growing to we IoT. the services. affirmed service communications for to of I'll sales additions $XXX $XXX some our engineering X% returning with Then the driven new of continued year's Matt, second XX% structure. Iridium X% the quarter delivering $XX.X revenue generating to our

new compared for we and from period. from the in first the $XX.X commercial year our customer X% X% the a materially the tailwind discussed revenue from as contract increasing half April to which by XXXX ago as XXXX, this effect IoT to this I period broadband during Revenue As even quarter subs served the of ARPU has grew fell to the call, million, ago in of year year.

reduction to device. the As a communications we we're related forecasting used being have vessels noted, in this was broadband where ARPU Iridium previously primary as year

data the ago quarter. billable XX,XXX subscribers. new service quarter, subscribers from up X% commercial year was comparable $XX.X added quarter, IoT XX% of Hosting data the in period. from net represent other and XX% down this now revenue During subscribers, million year's Commercial we last commercial

of extension decline contracts. previously, the The the flow no extending the year-ago the cash life reflects life recognize price impacts from over quarter discussed has recognition useful on only our associated fixed we've we from of and revenue the revenues As from hosting bearing time lower which useful the satellites.

of normalized noted, the Matt a XXXX. Government business EMSS in to levels second the government during that constraints was Service buildup. revenue revenue of million Engineering we in the April also generate service, customer second and second increasing retail rise reflects started and our The closed navigation continues recognize equipment in million scope agency. as demand following $XX.X inventory year $XXX quarter terms Subscriber contract the alternative we it service revenue space of government. Satelles at the U.S. the see supply X. prior with revenue position, broadening years more We return was with in the compared to growing in the was million location timing U.S. believe quarter owed $XX.X from stable and and X quarter to will the the by in acquired chain over and Iridium's $XX.X annual the activity to million, the on heightened in period. and the quarter, availability Iridium time reflecting $XX.X transaction of and support development million work to with revenue As opportunity STL, tremendous

when context we on support maintenance our As also awarded support I was look government year as revenue trends that our this results, second engineering models provide and the work the year EBITDA. outlook. earlier XXXX, full are guidance To our light highlight second half contract XXXX. In of and of some noted, with service aid EMSS like to to to upsized contract through Matt would we an with and quarter Iridium affirming our your financial

XXXX full which this by rate points contractual expect the the million additive half to limited both in and between continue X% in Revenue driven our mid-September. be We revenue service will of but the a growth will growth government to government to to with acquisition, less in EMSS Full momentum basis step-up growth commercial revenue growth, we year the April, Satelles from mid-teens the the The business primarily than contract XXX an rise revenue increase forecast. the expected IoT. XXXX our our be and in U.S. XXXX. XXXX. IoT service completed year at compared represents in to with in X%, is impact will second year of be $XXX.X in year revenue in

discussed, equipment comparisons previously this saw begin XXXX, easier move second we to in moderation year-over-year As will second which XXXX. we half year. as this half sales the the moderate We of will of make

cash EBITDA We with narrowband expenses would full was reclassification is a originally not to originally our modeling This be in $X a less was in initially Iridium a we SG&A over close side by and taxes services guide, SG&A be which R&D up does up SG&A ago million be the the XXXX in DNA useful expects XX% than and had for of SG&A. This on our as to directed will the year Depreciation standards-based XXXX. of in through cost modeled support device. significantly progress gives increased lower to $XXX would We Satelles life. certain modeled. effect expect of of contemplated lower the as $XX initiatives reclassification XXXX acquisition, XXXX. year. On of million. satellite last year about than remain line about our from now as amortization cost the and expense original change offset that ledger, make the not year, the to will our We service than still will to this change million as result advise of IoT expected higher XXXX outlook our change

acquisition we would our outstanding for in on expense, the that interest revolving Iridium facility under the repriced we and term which on use also I highlight Satelles the increased Lastly, its debt loan, second repricing annual the in XXX quarter. second save [ interest which million spread term quarter, basis the ]. the facility in SOFR transaction credit to expense. XX loan will plus reduced paid $X by points on The drew

However, and for $XX million expect Based the interest term total outpace prevailing interest rate. new additional rate, we the XXXX, the the expense borrowings outstanding lower interest will XXXX. loan upon to about on facility current in

this revenue this million together, reiterate growth X% us operational forecast Taken to our X%, allows between and for between and service outlook EBITDA year. $XXX and $XXX million

Moving capital our to position.

and As cash of cash had June $XX.X Iridium balance equivalents XX, of a million.

quarter, second loan the acquisition Satelles, complete an utilized the X. on to During closed April which of cash from we upsized term

a today light current leverage repurchases recent levels. net for would earnings and $X.XX net stock in that we with undervalued June I guidance leverage loan Iridium As represents approximately was balance of is update of today, We of EBITDA. share capacity Iridium's term billion. XX, levels. interim the to quarter value compelling our With for trading X.Xx our We updated believe note additional ended at have that provide

during the on drew market million our quarter, to fact, facilitate open purchases. second additional $XX In revolver we

near EBITDA term. leverage share While raise X.Xx are rate, we to increasing below below our we This reflects net repurchases the Xx of net had leverage EBITDA as guidance debt in through increased to XXXX plans a guided update XXXX. facilitate to additional to of exit

the the of guide, leverage us end to expect comfortable continue naturally in at in We below long-term EBITDA Xx projected uptake of we notwithstanding makes forecast rate delever Iridium fall leverage with very which of will Iridium's net leaves The million this to by with of XXXX. Iridium an $XX.XX. through our authorization common of of XXXX, the balance December Board-approved an XXXX. retired under average at $XXX.X million stock activity near approximately quarter term. In This X.X outstanding shares XX, price Iridium the second

investment we As I've levels. compelling believe Iridium's that noted, at a equity offers opportunity current

deleveraging. We desire continue our for maximize to will program, long-term with execute buyback investment the objective balancing our on on to return

quarterly from to approximately on a dividend increase quarter, This shareholders. Capital full share returned commencement were a our program, has Iridium's dividend and and XX. repurchases, Iridium the second share more $XX.X of of we in in per $XXX will Between X% million annual up first from $X.XX million. in the expenditures already which $X.XX year XXXX the our was result the During to quarter in made June second of started XXXX. than payment paid quarter dividend

We expect development to in expenditures in $XX we capital reach XXXX million Project Stardust. close to invest product as like initiatives new

to million the below during million $XX Thereafter, of it annually decade latter $XX part the through trend from will the period XXXX average XXXX. in

inclusive questions. our XXXX decade. With billion We end revenue things turn flow. pro to billion and in we our guidance million forma the current and the $X million flow of pro available adjustment, of description back this would for our the execute of million year. for reconciliation cash of If flow EBITDA flow XX%. from well we're along comfortable structure, to Relations free the our to we interest to pro cash measures, in a in to $X this to a of and million Investor yield your $X by look is flow to and of in generation capital, the on of Turning service service $XX for revenue a debt XXXX presentation operator in XXXX with under website. Iridium in free these XXXX GAAP backlog million working I'll growth capacity forward XXXX. continues ahead the our with CapEx on Events paled taxes appropriate use $X our free of $XX through and midpoint rate XX% to that, approximately detailed cash hosted supplemental see forma support projecting free expansion. represent in forma to remain close return cash long-term guidance cash for cash These more conversion EBITDA year's to approximately metrics A $XXX and metrics, and net meaningful shareholders plan,

Operator

[Operator Instructions] The James. with first Raymond question comes from Rick Prentiss

Ric Prentiss

couple questions. of A

First, on X% the revenue it service guidance, year-over-year increase. X% to maintaining

end the you what far last be quarter though, thought range? service update think to that to as higher you of you thinking thinking you're in this guidance. quarter quarter, the what might I last were heading as revenue Any from

Thomas Fitzpatrick

Rick. was original not I'd Satelles What in say guide. our is No, not really, contemplated

at But as much as of it goodness points. original the So guide. basis that it acquisition, we kind than did represented sized XXX we to less

of were last for as similar very it's I XXXX. billion What we're we're we X% quarter. circumstance say the service guide importantly, to revenue So reiterating -- X% in guide more where comfortable to the a and $X kind in reiterating would . is of original

Ric Prentiss

Okay. sweeps goes there than taking leverage on but your little or or kind above that debt Is cash opportunity bit is up a to written XX-Q the leverage And through less happens that X% prepayments the on was in there. X.X%, the something of obviously, see price. stock when with what

Thomas Fitzpatrick

Not when X, between inside times ]. repurchases. and are a share over of you And get it when there. X.X X X, over we capacity And certain they're [ lot of X additional things keeping like just there you manageable, happened get for that provides

Ric Prentiss

one on for IoT, last that increase. did And have the Okay. you ARPU me is

trying bit to trend that should bit competitive other dynamics line out called You to little the on positioning out about on competitive adds? that and direct-to-device with operators Just that prepared there, ARPU versus of Talk in going and IoT upward it think item. what's a devices remarks. a of those particular net us little your

Matthew Desch

new of products. But higher send trending to of reasons in market is into compete day capabilities, time ARPU and consumer we're nonreal we we're either X. that, the typically help regional. it of don't over And of only space, the We mean things of to with mean, offer IoT. with that coverage ability it's pictures addition, world. have I devices cellular supplement other they like because think points But more those the example, only And everyone supplemental we introducing devices, adds global the We're that snippets advantage we covers in competitive of We service, driving IoT competitive it. terms expecting, support of that upwards have in really are speeds, activities some in will low teens I terms footprint. one really the voice strong that. a sort it. part IoT people mean, in even the a coming, that and Well, or from for I aspects, kind in the a are couple

kind So today and deeply that. And and into IoT of have on we've we're expecting of solutions years in all hundreds for that potentially that many, been kinds then service you partners global still to in many of have and top embedded add there industries for in more are that, important role industries. expanding thousands of out an of

our comfortable real position in with IoT. we're So

In strength results fact, going our what it's now particular right looking we're in even at forward. and a

Ric Prentiss

couple kind to getting that kind get curve as about the of should years far yourself, revenue and of how DXD into standards As we a think then effort? the still designed XGPP, of body, the the through cost of

Matthew Desch

of that sort waveform. narrowband has some unique of and vendors demonstrations consumer and Well, We've into the products. standards allow even we kind have to thing. We've again, continuing that across of our streams would IoT processes revenue already We've very of allow is us. The and go would of been with of dramatically devices and we're lower partners. which kind to use sold of seen into lower it Stardust then I well. in well selected as will cost cost add terrestrial I embedded to lot which have Development the places able plans support -- new seamlessly occur. add network, our already more chip mean, of environments, onto the development and it before would we're our then standard to to add products our think cases standards that all have well, growth to discussions roam sort going a continue

before it's It but will decline adds I and of considerably, to gotten the we've nothing think juice years great is So Stardust. think on couple I a meantime, be just a our in to growth. to added going it start off

Operator

with comes The from Flannery Morgan next Stanley. question Simon

Simon Flannery

significant all just but is could It's leverage the there guidance, anything this? is stock increase other Or go changes? say, CapEx did I essentially return you higher X, shareholders? And the understand that is decision I point. turns going you than, the keeping leverage with whatever? any into to that X.X this capital pretty else from X.X or was If come this to more to what attractive. come it a How to up X. One, to back keep And confirmed in X.X I the up think the to just, rather your balance that and ratio?

Thomas Fitzpatrick

Simon.

So our thorough repurchase is the facility. undervalued. we've that's additional revenue, implications of as to think competitively there's can service say an the commitment -- I just we $X to thinking and stock yes, taken done be the on it more the -- review no And inside to the is credit said, the a evaluation up and that would billion leverage shares. circumstance is think I There's done. Xx of in

Just interest. additional can... a bit And we little of

Simon Flannery

And you told Xx, over you [indiscernible]? won't think I go

Thomas Fitzpatrick

inside think but hard of up Xx we'd for than -- EBITDA to the that imagine going in that that be XXXX. $XXX It's to capacity share We're million in stay amount frees repurchases. of less about

appropriate share billion these at with cap, capacity market significant, repurchases about at [ levels. So ] for when billion a think and talking trading you're $X company X.X it's so we a $X.XX turns, it's

Simon Flannery

given sort of you this? we say of is we're expected, that inning about a on is down this of complementary. talked as XX. to the Great. of Are some going are what sort us think X more rate you Or of this quarters as sort couple broadband, before commercial some in of then Can easing seeing And primary help decline? of I the just ARPU on you there of near percentage we sort had to can bottom pressure?

Matthew Desch

you to I was guess or support baseball. Which -- do it want Baseball use?

like, well going as a is what days think think all it development of our the of is definitely don't dynamite adding or to GMDSS the as I companion to the where is on is so the a these like real terminal part as you the a we're really lot I of that well service sport use maybe through do us fourth aspects, We're very but and can and know product. in track which I that. feels we're the game broadband mostly companion quarter. latter kind predominant for third X think environment here, service, safety we getting

So positioned I sort there. continue our broadband think of business very we're really well to

Simon Flannery

And where should that kind mid-XXXs the of ARPU or... settle in out

Thomas Fitzpatrick

I think fair. that's

Matthew Desch

Yes, right. I about think that's

Simon Flannery

And last then one one. Yes. just

You over revenue the years government. in incremental the years? talked that next X the $XX through about the from million next several U.S. does How flow

Thomas Fitzpatrick

and in Simon. It's support, engineering

Matthew Desch

it's so. as was stepped and Yes, this lower or pretty flat. that, it said, contract, previous was each pretty The we XX% flat year, than roughly one obviously it up

to increase that. be that an over the years So X next will just

Simon Flannery

And step you get to up? first quarter when the is

Matthew Desch

year effect, positive in -- a is effect. and one huge and then a in think comes of year -- but and the all the I sort bit Not things. little of next this full a then many it's year it's positive next

Operator

Piecyk from Walter comes with question next The LightShed.

Unknown Analyst

is Walt. on for Joe This

other Maritime verticals anything of there describe impacted little -- that's impacting there what's terms risk? stated those the are going being -- by verticals the you in that in You broadband. area So can broadband or maybe on a Is in are market? any bit that's other at

Matthew Desch

trains sort the days, alternative positioned sort niche. us. a government. really that's and then coming main it's we're in That's Well, seeing we're where say cockpit but think and year as in that hasn't out well aviation anyway into We're right business more per in completing of broadband as helicopters It an that and us terminals we we're kind still for and emergency of the on ones think has there. Land/mobile is or impacted first model a this I guess, a years is and early work commercial alternative the will, and jets in again, that of and for contingency the be a the alternate I small X the emergency fit the been into in. for year final still later you been could we for there would land/mobile, pace bit accelerate primary has airliners, go aviation a of remote -- se, we'll corporate us overall we mean, next the X, airplanes. Government contingency well, come business now, in other their of that. certifications been of category. And or things assets, sort business always that's see we're That for like and small in safety safety

And where a position. so a sort that that, service a an we Ka/Ku-band X have can that's service of isn't that unique really do do. that can and There's area lower-cost

really been the really maritime just of we kind been So it's that seen. impact has much only pretty

Unknown Analyst

and some that And Tom then should mentioned there guide reclass then I know on was Okay. and the year-over-year be for SG&A, plus some there's step-up XX%. Satelles

guess, So will it in that a that and SG&A be in in QX I lower QX. was implies, little QX than

QX? one-timer $XX was in that some million there is in So that that's

Thomas Fitzpatrick

the the number second made was that quarter, quarter In higher. reclass there second the

modeled where ought third SG&A And the So the and second. year-to-date you're of a XXX good. second the see that the lot sequentially from observe you you reclass in it move that to down right fourth in in And will the be quarter. to occurred XXX, to it

Unknown Analyst

then And reclassed specifically what out of was Okay. SG&A?

Thomas Fitzpatrick

to SDA we be for our contract, appropriate as cost shown it reflection, them of of SG&A was more support where in service. on -- than costs Certain

will. is made no And EBITDA on as I said, impact just reclassification. bucketing, that we you if So just

Unknown Analyst

to half. Okay. CapEx. guess, each the get And one of, like Is into expected ramp this $XX kind been to to last the guidance? of then million-ish I the quarter end year light It's first in on that

Thomas Fitzpatrick

our that's expectation. Yes,

Operator

next comes Khorsand BWS. The Hamed question with from

Hamed Khorsand

already excuse and off, I the -- ARPU industrial? on So it it me the IoT on first what front, this, Was consumer? if drove but that Was side? going you answered the up on IoT

Thomas Fitzpatrick

contract of we to fast-growing on Consumer, the that and customer. with it's large a referred the back new

Hamed Khorsand

a then just And Got onetime is benefit, it. that to though? be going

Thomas Fitzpatrick

contract The years. is X

So...

Hamed Khorsand

like benefit and off. just Front load a increasing onetime tapers then

Thomas Fitzpatrick

Right.

in industrial personal if terms trend over communications fundamental of in subs. basis you multiyear faster growing is the at So than IoT, it a is look

a ARPU the $X is personal there'll move So range, in the communications, than which range. will a towards -- ARPU the of overall there $X lower be natural the is which natural in be

really the seeing case personal fundamental. comms you've to to what the grow been will that's and years, continues that fast. So as for be That's continue

Hamed Khorsand

my Okay. the question sold? are Or And increase promoting to same is they doing -- you? talking that includes we're they is, partner are then the partner your that last units anything their product about, more

Matthew Desch

and successful mean are Obviously, has that's introducing et the gone working point I their that market products. whole together ourselves. success been that and very and promoting new to to they've heavily them capabilities, the products make cetera, Yes. a new for revenue the for is with up and they're why to we're this

Operator

Chris question comes next from Quilty The Quilty from Space.

Christopher Quilty

margins Tom, of what's equipment? sort the for safe modeling for high year? just we And then range there quickly, XXs are sort of full

Thomas Fitzpatrick

I think yes. that's right, about

Christopher Quilty

Okay.

I previously. you mention on question, have program? hadn't hear heard the that you did specifically Tom, mentioned partners Second you Stardust I

Matthew Desch

support gateway, opposed did. way, to aren't as maybe equipment that work build to to together network, view that partners the of you But don't guess, capability standard as in the them I that all it we sort thing. into new doing I them our new the equipment into when we I know as in refer supply, I some well, ourselves. -- We to implement ways. Well,

the the software thing. seen have some hardware ground on and satellites and and So that's new infrastructure programming required of there sort that is

to. So that's I really what was referring

talking it about talk as announced companies those of support. things. to we're I really a the of lot we're things, and you're partnerships to getting encouragement talking to And sort think of obviously closer be some expect though, able going to we about and of I haven't get We kind yet, many about are

Christopher Quilty

Okay.

checking. Just

secure that. seen the are still doesn't looking military on So call warfare that around DoD you It what be pick as activity world And -- in in vehicle be large drone for your the would of contract you that I government. drone all programs kind and the sort of revolution subs, within of seem seem signals. up seeing they're at you would with I was look and of anything. what's going fluctuating in sort happening the to activities the affairs for currently, haven't p-LEO there the -- networks at The communication to the 'XXs sensor be they Ukraine with around. or devices would kind the that's market

p-LEO give seeing there? on what you And update the an out so could us both and you're

Matthew Desch

moves sub our yes, Well, -- a count it lot. very around is

There's the in we're think going I kind both of drive in that areas the the all There's coming a going years. working government trends of period a we're be cleanups and government of additions very kinds with we of right contracts believe, with of to now forward, number transition lot stuff. on a sort and But and subscribers. the positive. that new would is subscribers

the sure it's about given counts, we all government. exactly they focused we're activities so thing that a technology good in growth embedded on worried of the that area. fixed subscriber have price were kind but that in in with not important see most that we an continued services day-to-day are that making important right more the And contract, for the and That's long-term relationship

see the you're it count be the short you're right term, to positive, sub it I don't years. in going you able quite So I right, turn see will that coming in to in -- think the the in think, but not

Christopher Quilty

of still strategy as still that you plan? feel like from that do selling And contract? solid EMSS Certus separate look the the a Does

Matthew Desch

a bit that Yes, well I of think can't, mean, we're a service. and to do continuing think others so. niches it's I can we of I see that things niche

help the technologies see think service will too. there, I it at of to backup for continue sort to a sort finally going of been contingency gateway us other see soon, installed government which as we're

still applications. the think well on narrowband that in the then of Certus sort I well we're broadband as in what really mid-band technology with the and positioned side, side technology well positioned I call So of and

Christopher Quilty

Don't equipment question. you I OEM probably I activity deliveries? But aircraft getting right? all And is outlook aviation your it and $X market million, think, think And million of whenever, growing annual place. around think deliveries? the in think they Is looking billion need Final STCs certification I I for business ask you safety think report and Inmarsat were sizing, share. why I $XX $XXX a was pre-pandemic to that like still the I at and there you your getting it market? for activity the aircraft? Tom? And it the do managed? that Is about to that being get really how is what is Obviously, is

Matthew Desch

my positioned particularly that I the of vector we're a the is We certification the safety believe new having products that for well can't getting Yes. it you saw see partners top is the stuff FAA and and going that growth forecast with and to them the head don't certified how our the their them. I aviation speak from products given by us us, going way. off. mean I and on approved -- and market through

also can address certain of GEO can't example, market others. we others antennas address which had to because parts from that advantage always an We than know we've rotorcraft, things like, smaller our that that are for

sight of National think the to lot growth line but in few different the we're at of fit really beyond an awful heart visual So market, there's big stuff years of still as they drone that, the be drones do a the developed excited and technologies activity really to kind fit Airspace hasn't into yet, on of kind We're the and of coming one well. And which we will we're about this that think driver significantly of that System. aircraft.

nicely are we go it other the contributors and XXXX. than out think I than bigger, put can't on I bigger today, one So to as numbers it's where we of it's

Christopher Quilty

year? the next incremental contributor Do

Matthew Desch

Yes, I absolutely. Yes, so. think

Operator

comes next Mathieu Robilliard with The question from Barclays.

Mathieu Robilliard

first trajectory of My the margin gross question about the on revenues. service was

and the we've anything I come if margin services with on beyond the a I margin, revenues? trajectory by there lower that margin fact seen years down of of the of past explained else wondering the is gross government the impacting service Over go the but understand in was bit. was the quarters, the part revenues that that some mix

Thomas Fitzpatrick

related overall and support. No, is margin reduction decrease in EBITDA Matthew. gross the that in or exclusively any that or engineering margin, to

the contract large So business. lower-margin is FDA is and

out. will, what's in that's and year EBITDA well, in we'll continue alive The the is so you causing service if year and demonstrate margin. revenue decrease And to leverage margin, operating and

if -- that's So clear.

Mathieu Robilliard

I it sense isn't? may second for by customers, satellite little very underlying be and question your iPhone, I hoping guess commercial we it's could legacy a impacted question you I customers about enabled get I was cost of on A obviously, That's think kind what you their part. mean on of of or the little have initiatives could and the I some DXD your going get bit a more doesn't in where Because work of what would it's granularity is, they all be network, kind a there? [indiscernible] not risk could on that if be from That if satellite where bit want. But of usage if even of form clear. there was the super there to maybe helpful. business, clusters DXD? the understand it

Matthew Desch

is a that it's happen, now. I specific within handful the it's countries markets expect Starlink be ultimately where and issues to all been border really I've border. spectrum can get how from using really is any likely right DXD enhancer of of what space, couple I they it been called that's being perhaps it's resolved, Well, only where to right only people or terrestrial in and proposed, of over regulatory a the now think supplemental terrestrial now countries way, mean, issues will And they I most sort technical of proposed that time. used spectrum and kind the that and coverage It spectrum as think are -- assuming there FCC and some is right sort communication of and others road. that's a describing down

a brand. people Haiti DXD our on is make our services what matter And world. Wyoming, be use dispatched where that IoT into work people they people is been your or work -- IoT, your wasn't be world buying a the extent they are satellite the little not travel Africa that's into today. It that nor in often stuff and to many will said, first the or it offering buy will into assets number for of devices. they it where because our phones, really offered well, our some were place Europe really because It's will phone there in a the true anywhere isn't be and doesn't which better better a well. certain work are embedded on use use industries of when they're wasn't in might certain where they anytime markets, to there's a to have and services because that will there global that, a be or were many, really offered I've it Wyoming why -- soon applications about who very makes soon, us reliability anytime talked primary bit and in some a phones you going work us and in South and responder America phone or no beyond, buy or DXD our capability, So in it our been markets, has hurricane few within that we cell especially service, it but satellite there perfectly that to doesn't why using places, services buying other someone

said, -- believe we we stuff. I and growth margins, who we'll people what's when and included we coming and at think reading very we'll realize DXD. in can our that compatible that our that releases But forecast it's the believe we've really understand we're that as that. take between it's press and and with We expectations XXXX. it people and we it -- some appreciate happening we So our be still in is would -- really don't And be deal with time -- now will coexist

global kind a participate that put I provide able we'll be glue L-band will to be well on able allocations. in to dependent of we'll then services a can of, that market certain that global as our globally in level think, that as of products And because be

helps. that I hope So

Mathieu Robilliard

With have then you potentially. for It I not target in was to this X.X And at previous wondering move if new also go already leverage XXXX, linked questions. to try was the maybe Got I'll deals decision to new for a you last to looking And does. from some your why was the deciding to and that it. fact that had discussed in X these, year-end been one. flexibility? you're the that's regards end, and

Thomas Fitzpatrick

guide trading repurchase that's taking it given shares not leverage We're to exclusively current levels. No, up their at the all.

Mathieu Robilliard

Okay.

So it's were not not like happening? at looking and it's you stuff

Matthew Desch

thing I'm for No, opportunities mean can shareholder-friendly be be of that always in may was for No. interested in activities. that's at the itself, sort I independently looking if a on strictly and and focus things, looking pay something separate there future. we'll that aspect and But this at the

Thomas Fitzpatrick

interplay is given because leverage where we'll questions, doing the the between the up of but stock there had Right. was absolutely not, we gotten funding said we off was deals And take the only would Satelles, the and leverage back acquired when of of and share trading. repurchases, we Satelles, we

think We take this think there. the said move level, is leverage to at just consistent up what need a bit. with I this the we we shares that are So

Operator

comes The [ with Bryce Blair. ] from Sandberg William question next

Unknown Analyst

that at want positive you Matt, impact and about quarter, just to you're this if ] all? that to able from quantify any saw Soraya and outage the I if Tom Ken. [ ask impact outage

Matthew Desch

market for been in -- of out solutions the kind X here Asia have well. reliability looking between test be assuming Inmarsat's that of think they launch GEO positive going sort to years been to impact Pacific of is in that themselves that has the has are going sense customers as ] here. And solutions. and alternate really put I a successful are is not all of Asia There to Soraya for be thing the outages [ and

of a for that but certainly, kind to or getting customers looking takes the It are in handset, are reception. solutions. we some positive particularly that for time around So seeing in region of lot IoT cases, develop different

supportive. a too been Will needle call that see. certainly We it's so, So it's certainly early We'll to hope yet. the but little it substantially? move

Operator

follow-up question from our Quilty Quilty And from Space. is final a Chris

Christopher Quilty

and Aireon update if on not okay? to Anything

Matthew Desch

of month lot -- couple a of this our work talked They business. ADS-B. of VHF service with the be and add Don new take sort about a develop working as a sort part their They're are hearing it, mean to to with we they're services I computer term, the I they're a system a long a of around kind the around there's that products I like a opportunities next Board it made team expansion possible been meeting mean that, service on because want footprint of of haven't constellation. remember, successfully, any business, CDS ago, expanding -- I have customers terms to bullishness at the global of developing. their of engineering renewing. We've They're continued their long of data number them that would looking maybe to decisions something will that's about, but time in

now. right positivity only say I'd So

was refinance it that financing of in off that bit. little a of good sort way got kind they cut think a I took their their

positive now. And so there quite say there over -- I things there are right are

Operator

This to conference concludes management our question-and-answer closing session. like to I would remarks. the for over turn back any

Matthew Desch

see Well, your I'm thanks for individually. We'll again Thanks sure, in us. to talk joining for you you, time. and August

Operator

The conference has attending today's now concluded. presentation. Thank you for

disconnect. now may You

Iridium Communications (IRDM) 23 Jul 242024 Q2 Earnings call transcript