Iridium Communications Inc. Q3 FY2024 earnings call

• Delivered strong Q3 revenue and subscriber growth, on track for full-year guidance. - Actively returning capital to shareholders, repurchased 4.7 million shares in Q3, returning $146 million. - Have over 500 global partners. - Announcements and progress on various initiatives: Iridium NTN Direct project progress, Garmin's new device leveraging Iridium Certus IoT service, Iridium service GMDSS for Mariners, Award of contract from Space Development Agency, progress with Iridium PNT after acquiring Satelus. - Tom Fitzpatrick to retire, Vince O'Neil to take over as CFO.

Iridium generated total revenue of $212.8 million in Q3 2024, up 8% from the prior year. Operational EBITDA hit a record $124.4 million. On the commercial side, service revenue was up 6% to $133.3 million. Commercial voice and data revenue rose 3% to $57.7 million. Commercial IoT revenue rose 14% to $43.7 million. Hosting and other data services revenue was $16.4 million, up 9%. Government service revenue was $26.5 million. Subscriber equipment was $22.2 million, up 9%. Engineering and support revenue was $30.7 million, up 22%.

• Update full-year service revenue guidance to growth of approximately 5%. - Expect operational EBITDA of between $465 million - $470 million for the full year. - Expect capital expenditures to be approximately $70 million in 2024. - Expect net leverage remain below 4 times of EBITDA through 2026 and fall below 2 times of EBITDA by the end of 2030.

• Leakage of satellite useful life extension affecting revenue recognition time but not cash flow. - Volatility of supply chain constraints. - Competition from other satellite service providers. - Impact of geopolitical conflicts on PNT services.

Q: Ric Prentiss with Raymond James asked about EBITDA guidance, IoT trends, and directed devices opportunity.

A: Tom Fitzpatrick said they continue to invest in directed devices, Matt Desch mentioned the directed device opportunity moved faster than expected and getting into release 19 was a big deal.

Q: Simon Flannery with Morgan Stanley asked about 2025 growth drivers, ARPU.

A: Matt Desch said it's not time for precise '25 guidance but directional guidance is positive, Tom Fitzpatrick characterized voice and data as firm.

Q: Edison Yu with Deutsche Bank asked about ARPU seasonality and aviation service product contribution.

A: Tom Fitzpatrick said ARPU sequential improvement was seasonality, Matt Desch talked about aviation service product in trials and expected to start on aircraft next year.

Q: Walter Piecyk with BWS asked about IoT customer and hosted payload.

A: Matt Desch said IoT business health is strong with some deactivations for specific reason but no economic consequence, Tom Fitzpatrick said Satelles contribution to hosted payload will grow from $5 million in 2023 to $100 million in 2030.

Q: Hamed Khorsand with BWS asked about GDMS contract and IoT terminal market.

A: Matt Desch talked about the GDMS contract details, Matt Desch said IoT terminal market is expanding with new products.

Q: Chris Quilty with Quilty Space asked about aviation product certification and market positioning.

A: Matt Desch said aviation product on track for certification in 2024 and will be a good ARPU customer, talked about Iridium's position as a companion service in maritime.

Q: Louis DiPalma with William Blair asked about broadband business and Satelles business development.

A: Matt Desch said broadband business unfolding as expected, Satelles business development is very active with expanded footprint due to recognized need for its services.