Iridium Communications Inc. Q1 FY2025 earnings call

• Tariffs and Supply Chain: Discussed impact of U.S. trade policies on equipment costs, with mitigation efforts via a third-party logistics partner in Europe. Estimated $3 million incremental cost if 10% tariff stays, $6-7 million if original 36% tariffs apply. - Partner Ecosystem: Partners remain bullish on IoT, Iridium PNT, and D2D, with a unique partner network covering multiple industries. - Competitive Landscape: Differentiates from Starlink by lacking L-band spectrum and global coverage for mission-critical apps; progress on Iridium NTN Direct and PNT. - Financials: Operational EBITDA up 6% to $122.1 million; affirmed full-year guidance for service revenue and OEBITDA; projected pro forma free cash flow of $302 million for 2025; dividend increase to $0.15 per share starting Q3 2025.

Commercial Voice and Data: Service revenue up 2% to $55.9 million, driven by subscriber growth in telephony services. Commercial IoT: Revenue totaled $43.8 million in the first quarter, up 11% from the year earlier, reflecting a step-up in a two-year contract with the largest IoT partner and ongoing demand for personal satellite communication services. Commercial Broadband: Revenue down 6% to $12.9 million, driven by increasing use of Iridium as a companion service and conversion of certain primary customers to lower usage plans. Hosting and Other Data Services: $14.9 million this quarter, up 7% from last year’s comparable quarter, driven by pickup in Iridium PNT. Government Service: Up modestly to $26.8 million, reflecting the step-up in the EMSS contract with the U.S. government. Subscriber Equipment Sales: $23.1 million in the first quarter, down from Q1 last year but tracking expected levels. Engineering and Support: $37.5 million in the first quarter, up from $30.4 million in the prior year period, driven by growing work with the USG including the Space Development Agency.

• Affirmed full-year guidance for service revenue and operational EBITDA. - Estimated $3 million incremental cost if 10% tariffs stay, $6-7 million if original 36% tariffs apply, with mitigation efforts. - Projected pro forma free cash flow of $302 million for 2025, with a conversion rate of OEBITDA to free cash flow of 61% and yield approaching 11%. - Dividend increase to $0.15 per share starting Q3 2025.

• Uncertainty around U.S. trade tariffs and their impact on equipment costs. - Geopolitical environment affecting government contracts and funding for international organizations. - Competition from new entrants like Starlink and regional direct-to-device services.

Q: Color on tariffs and its impact on subscriber growth?

A: Matt says it's too early to tell, but demand not significantly affected yet.

Q: Government subs down?

A: USAID and government cleanup, small impact, relatively deterministic.

Q: Tariff timing and impact?

A: $3 million impact if 10% tariffs stay, $6-7 million if original 36% apply, mitigated by European 3PL.

Q: Aviation Certus update?

A: Growing, with flight trials for certification, but full air traffic control certification likely early next year.

Q: D2D ramp?

A: IoT roaming revenues earliest, depending on chipset adoption, with positive interest but unclear ramp speed.