For Iridium Communications (NASDAQ: IRDM), the McLean, VA-based low earth orbit (LEO) satellite operator, business is looking up.
The company reported 3Q21 total revenue of $162 million, comprising $128 million of services and $34.4 million in related equipment sales, and engineering and support projects. Service revenue, which represents primarily recurring revenue from IRDM’s growing subscriber base, grew by 9 percent on a year-over-year basis and accounted for 79 percent of total revenue for the quarter.
Operational EBITDA was a record breaking $100.2 million, up 7 percent from $93.4 million YoY.
An improvement in net loss to $2.1 million for 3Q21 from a net loss of $4.0 million in 3Q20 was due to operating profit gains and lower net interest expenses.
The company serves both commercial and government entities. IRDM ended the quarter with 1,690,000 total billable subscribers, up 18 percent YoY, driven by growth in commercial IoT customers.
Commercial service accounted for 63 percent of IRDM’s total revenue for the quarter. IRDM serves commercial markets including maritime, aviation, oil and gas, mining, recreation, forestry, construction, transportation, and emergency services.
Commercial voice and data, broadband and IoT data service revenue tallied $101.9 million, up 11 percent on a YoY basis, due to growing IoT volumes. Broadband revenues reflect the ongoing adoption of Iridium Certus offerings especially on ships and aircraft. IRDM’s commercial business ended the quarter with 1,541,000 billable subscribers, including 1,156,000 IoT data connections or 75 percent of the total commercial subscribers.
IRDM’s government voice and data solutions improve situational awareness for military personnel and track critical assets in tough environments around the globe. The company signed in September 2019, the Enhanced Mobile Satellite Services (EMSS) agreement, a seven-year, $738.5 million fixed-price airtime contract with the U.S. Air Force Space Command.
Under EMSS, IRDM provides specified satellite airtime services. Government service revenue was $25.9 million in 3Q21 compared to $25.1 million in 3Q20, reflecting the EMSS annual price escalator. The company ended the quarter with 149,000 government subscribers including 84,000 IoT data connections.
For 3Q21, overall equipment sales including handheld and fixed devices, antennas, and modems available through IRDM’s 500 manufacturing and reseller partners were $26.9 million. Engineering and support revenues were $7.5 million. The company now expects 2021 equipment revenue to exceed 2020 levels although engineering and support revenues fluctuate each year due to the episodic nature of contract work.
On the strength of 3Q21 results, IRDM updated its full-year 2021 outlook. It now expects total service revenue growth of 5-6 percent versus prior guidance of 4-5 percent, and operational EBITDA of approximately $375 million.
Despite potential new entrants into the LEO business, the company distinguishes itself by leveraging its unique 66 satellite constellation network and spectrum position “to connect people, vehicles and assets on the move.”
Unlike IRDM, new LEO entrants are touting broadband services to smartphones and fixed customer premise equipment directly from space either using standard protocols or terrestrial spectrum because they lack dedicated spectrum.
IRDM CEO Matt Desch says, “I think those companies have a long way to go. Most of them don’t have the technology built or available yet, don’t sometimes have the financing. … I doubt that we’ll be partnering or working necessarily with any of those companies toward things unless there is some sort of future spectrum sharing. But we are keeping our eyes out for the IoT sector. There are lots and lots of companies trying to build networks to go after what I would call the low-end IoT sector.”
Commenting on the company’s growing prospects, Desch emphasized, “Iridium has more oars in the water than at any time in our history. New product launches are expanding our reach and allowing us to address the needs of a growing number of customers. With only a few months left in the year, we’re very excited about our business position and the growth opportunities that we see. Iridium has emerged from the global pandemic with strong momentum, a pipeline of new products and more demand than we can satisfy today. This positions us very well as we start planning for 2022.”
By John Celentano, Inside Towers Business Editor
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