Iridium Forecasts Growth in Service Revenue Despite Pandemic
Iridium released its First Quarter (Q1) 2020 revenue results on Tuesday, reporting $145.3 million in total revenue, a 9% increase from the same time period in 2019. The company’s Q1 net loss was $31.7 million, compared to net loss of $18.0 million for Q1 2019, attributing the increase in net loss primarily to the result of debt extinguishment costs. CEO Matt Desch said that despite the COVID-19 pandemic, Iridium still forecasts overall growth in service revenue for 2020.
Iridium reported a double-digit Year-Over-Year (YOY) increase in subscribers — ending the quarter with roughly 1.3 million subscribers, a YOY increase of 16%. The company has added 32,000 subscribers since the end of 2019. Iridium said the growth in subscribers was driven by commercial and government IoT customers.
Desch that Iridium saw a reduction in the pace of subscriber additions in March, and that trend accelerated in April as the pandemic grew in severity. He said the company’s partners are experiencing various levels of business impact.
“Iridium’s satellite services are used for mission-critical applications across the globe, and our revenue base has, historically, been more resilient than many businesses to exogenous shocks and economic cycles, though the current economic shutdown is unprecedented. The timing of the shutdown coincides with Iridium’s peak season and will impact us accordingly. Still, we remain confident in Iridium’s ongoing financial position and our capacity to generate significant free cash flow.”
Service revenue, which is primarily recurring revenue from the subscriber base, was $116 million, making up 80% of total revenue for the first quarter of 2020. Service revenue in Q1 grew 8% from the same time period in 2019. Most of the service revenue, $91 million was commercial, and $25 million was from government customers.
In other revenue, engineering and support revenue was $7 million in Q1, compared to $5.7 million in the prior year’s quarter, due to an increase in the volume of contracted work. And equipment revenue was $22.3 million in Q1, up 6% from Q1 of 2019. Iridium expects full-year equipment sales to be down from 2019 levels due to the combined effects of the current global shutdown, deterioration in the oil and gas market, and strength of the U.S. dollar.