Iridium's Q1 Earnings & Revenues Top, Increase Y/Y, Shares Tumble

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27-04-2025

Iridium Communications IRDM reported earnings per share (EPS) of 27 cents for the first quarter of 2025, beating the Zacks Consensus Estimate by 22.7%. The bottom line compared favorably with the prior-year quarter's figure of 16 cents. (See the Zacks Earnings Calendar to stay ahead of market-making news.)Quarterly revenues reached $214.9 million, representing a 5% increase from the previous year, driven by rising demand for Iridium's mission-critical services. Despite the potential for evolving U.S. trade policies and new tariffs to raise equipment costs in 2025, management remains confident in Iridium's growth potential and its ongoing commitment to delivering value to shareholders. The Zacks Consensus Estimate was pegged at $212.9 million.Total Service revenues rose 4% year over year to $154.3 million. Service revenues continued to grow over the past year, driven by the introduction of new offerings and an increase in subscribers. The segment contributed 72% to total revenues in the first quarter. Our estimate for the metric was $157.8 million. Commercial service revenues rose 4% to $127.5 million, driven by strong IoT and PNT performance. Voice and data revenues grew 2% to $55.9 million, mainly due to more telephony subscribers. Government service revenues inched up 0.9% to $26.8 million, led by the EMSS contract upgrade with the U.S. government in September 2024. Our estimate for commercial service and voice and data segments was pegged at $130.1 million and $27.8 million, respectively.
Iridium Communications Inc price-consensus-eps-surprise-chart | Iridium Communications Inc Quote
Subscriber Equipment revenues declined 7% year over year to $23.1 million. Tariffs and trade policy uncertainties could hurt margins going forward, although annual sales volumes are expected to remain stable. We projected the figure to be $21.7 million.Engineering and support revenues surged 23% to $37.5 million, driven primarily by rising U.S. government-related projects, and this trend is expected to continue through 2025. Our estimate was $32 million.Despite a strong start to the year, IRDM's shares plunged 6.9% in trading on April 22 and closed at $21.61. The downside could have resulted from unclear tariff levels and timing, creating uncertainty and challenges for partners in a shifting macroeconomic landscape. In the past year, shares have declined 26.2% against the Zacks Satellite and Communication industry's growth of 9.8%.
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Total operating expenses were $154.5 million compared with $154.1 million in the prior-year quarter, primarily due to higher depreciation and amortization costs.Operational EBITDA (OEBITDA) increased 6% year over year to $122.1 million. Operating income came in at $60.4 million compared with $49.7 million reported in the year-ago quarter.As of March 31, 2025, the company had 2,443,000 billable subscribers, up 5% from 2,333,000 at March 2024-end. The year-over-year rise was backed by strength in commercial IoT.
As of March 31, 2025, total cash and cash equivalents were $50.9 million, with $1.8 billion of net debt. Capital expenditures were $24.5 million in the quarter under review.IRDM repurchased 2.4 million shares in the first quarter for $70 million. Since the start of the program in 2021, Iridium has bought back $1.1 billion in stock, retiring 32.2 million shares. Under the current authorization, through 2027, $360.3 million remains available.
Amid global turbulence and steady business momentum, Iridium reaffirmed its full-year 2025 and long-term guidance. Service revenues are expected to grow between 5% and 7%. OEBITDA is forecasted at $490 million to $500 million, up from $470.6 million in 2024.
Iridium currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
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