Iridium Surprises Investors with Resilient Q3, Raises 2020 Guidance

Iridium’s Satellite Network Operating Center (SNOC). Photo: Iridium

Virginia-based satellite operator Iridium Communications is raising its full-year 2020 guidance after turning in a better-than-expected Third Quarter (Q3) result for investors. Despite facing headwinds from a pandemic-fueled recession, Iridium reported $151.5 million in Q3 revenue, an increase of 5% compared to the same period in 2019, and an increase of 67,000 billable subscribers – a 13% jump representing a single-quarter growth record for the company.

Iridium ends the quarter with 1,429,000 total billable subscribers and a sharp, Year-Over-Year (YOY) decrease in net loss from $18 million in Q3 2019 to $4 million in 2020 thanks to lower interest rates on its debt, lower operational expenses, and growth in service revenues, which totaled $116.9 million during the quarter.

The operator’s commercial business did slightly better than its government business, which saw a slight decline in revenue, but also gained 11,000 subscribers compared to the same period last year. Equipment revenues were $25.1 million during the third quarter, a bump up from the $21.4 million Iridium reported in the prior-year quarter.

Iridium CEO Matt Desch was especially impressed with the company’s commercial Internet of Things (IoT) customer growth. “Iridium’s business model has proven quite resilient given the importance of our services in the face of a global pandemic,” said Desch. “Iridium delivered a record 67,000 net subscriber additions during the quarter, which drove sequential growth in commercial services. Subscriber equipment sales also increased by 18% Year-Over-Year, driven by increased demand in the third quarter.”

Desch raised Iridium’s full-year 2020 guidance to approximately $355 million in expected operational EBITDA and a net leverage of approximately 4.0 times operational EBITDA. He was much more cautious in July during the previous quarter, when he adjusted the company’s forecast to reflect the potential impact that COVID-19 would have on his business. Though, Desch also remained optimistic after reporting steady subscriber growth. “Iridium is fortunate to provide mission-critical services across a broad array of industries, which has allowed our business to remain resilient in this environment,” Desch said in his Q2 remarks.