Globalstar, Inc. Q1 FY2025 earnings call

• Financial review: Total revenue up 6%, service revenue up 7% due to wholesale capacity services; adjusted EBITDA up 3% but impacted by cost increases for XCOM RAN. - Balance sheet: Ended with $241.4M cash on hand; net cash flows from operations $51.9M; adjusted free cash flow $47.6M. - Tariff situation: Team worked to identify exposure and has tools to manage trade environment impact, expecting near-term immaterial impact. - Business progress: Launched two-way satellite IoT solution; opened new satellite Operations Control Center; appointed Tamer Kadous and Daaman Hejmadi to key roles; participated in MWC, demonstrated XCOM RAN technology. - Confidence: Bullish on XCOM RAN being profitable, see growth opportunities in various business lines.

Total revenue increased 6% to $60 million compared to the prior year period of $56.5 million. Service revenue increased 7% driven primarily by wholesale capacity services. Adjusted EBITDA was up 3% to $30.4 million compared to the prior year's first quarter of $29.6 million. Ended the year with $241.4 million in cash on hand. Net cash flows generated from operations in the quarter were $51.9 million and adjusted free cash flow after excluding reimbursable CapEx for the replacement satellites and extended MSS network was $47.6 million compared to $19.9 million in the prior year's first quarter.

• Reiterated full year 2025 outlook: Revenue in the range of $260 million to $285 million and adjusted EBITDA margin of approximately 50%.

• Trade environment changes could impact, but company has tools like long-standing contract manufacturing relationships, international third party logistics partners, and ability to pass through costs to manage through it.

Q: I'm glad to hear you're looking to launch XCOM RAN commercially next quarter, and you remain bullish that's going to be profitable. Can you just walk us through any more of economics or assumptions regarding this business?

A: In terms of what? In terms of, I mean, we haven't made any announcements on forward looking revenues or so forth. I mean the issue with this is, as we've talked about, our primary initial customer is a very large retailer, and we're very engaged with them, but the sales cycle is long in these kinds of things. And I think we're very confident on moving forward but even in my Qualcomm days, like you never knew when a customer was going to push the button to launch it, often for factors that are completely outside of our control. So we are very engaged with them. Things are moving along. The system is working extremely well, and now we're, you know, kind of looking forward to that next step. We have expanded our direct sales capability in this area too. So we are looking for opportunities beyond the warehouse automation customer that we have right now, and we have gotten some initial contract on the government side as well, on this stuff too. So hopefully that turns into something larger as well.

Q: Maybe I know you've been working to bring more vendors into the ecosystem, like maybe some lower cost radios, maybe to reduce overall bill of materials, that could maybe be something that attracts more interest, including from the large retail customer or others. Is that the progress there?

A: Yeah. I mean, we absolutely so what we demoed at Mobile World Congress was on our new radios that we're working or that that we built and now we will be commercially deploying. And, yeah, so that not only is it lower cost, but it also gives us a lot of flexibility in terms of the bands that we can cover. So those the ones that we showed off at MWC were Band 53 and CBRS. But as I mentioned in my script, we're super interested in the unlicensed cellular opportunities as well, and the ability to use Band 53 as sort of an anchor channel for that as well. And now we're talking about much larger bandwidths that we could conceivably coordinate and use for customers. So all these, these things are, you know, there's both cost and performance benefits out of having our own radios.

Q: Just one last question for me is, well, it's really two parts one replenishment constellation. So it's great to hear that first anticipated launches later this year. When would you expect that to be completed, and thus triggering reimbursement of the CapEx that you've incurred to replenish your existing constellation? And then the second part would be when we might have these 50 or more satellites launched in the extended MSS network into operation?

A: Yeah, so we haven't announced when we're launching the launch in the 50, so stay tuned. Obviously, that has -- we have other partners that are involved in making that decision. And the first one was, when will the service fees -- Rebecca you want to just talk to the financial implications? Rebecca Clary: Sure. The service fees will step up the fees that are tied to the CapEx for those replacement satellites will start being funded once, though that first batch is operational, so once they're providing service.

Q: And that when 17 might be launched, I imagine that's going to be three or four launches to get them all up there?

A: We're expecting two, and the second launch has not been contracted yet, so more details to come on that.