Iridium Releases Second-Quarter Financial Results
Tuesday, July 28, 2020 | Comments

Iridium Communications reported financial results for the second quarter of 2020 and updated its full-year 2020 outlook. Net loss was $12.4 million, or $0.09 per diluted share, for the second quarter of 2020, as compared to net loss of $18.1 million, or $0.16 per diluted share, for the second quarter of 2019.

This decrease in net loss was primarily the result of lower net interest expenses related to the refinancing of Iridium's credit facility and high-yield notes from the year ago period and a decline in in-orbit insurance costs and research and development expenses. Operational earnings before interest, taxes, depreciation and amortization (OEBITDA) for the second quarter was $85.3 million, as compared to $85.1 million for the prior-year period, representing an OEBITDA margin of 61%.

Iridium reported second-quarter total revenue of $140.2 million, which consisted of $113.4 million of service revenue and $26.8 million of revenue related to equipment sales and engineering and support projects. Total revenue decreased 2% versus the comparable period of 2019, while service revenue grew by 2%. Service revenue, which represents primarily recurring revenue from Iridium's growing subscriber base, was 81% of total revenue for the second quarter of 2020.

The company ended the quarter with 1,362,000 total billable subscribers, compared to 1,213,000 for the year-ago period and is up from 1,332,000 for the quarter ended March 31, 2020. Total billable subscribers grew 12% year-over-year, driven by growth in commercial and government IoT customers.

"Despite the headwinds caused by the global pandemic, Iridium continues to grow subscribers, service revenue and cash," said Matt Desch, CEO, Iridium. "As businesses around the world started to reopen in the second quarter, we've also seen some recovery in activity from our technology and distribution partners.

"With each passing month, we are getting increased visibility that allows us to refine our guidance for the year,” Desch added. “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. I think it's notable that despite the economic slowdown, Iridium increased its cash position by more than $50 million in the second quarter, all of which came from operating activities. We expect to continue to generate significant free cash flow in 2020 and beyond."

Commercial service remained the largest part of Iridium's business, representing 63% of the company's total revenue during the quarter. The company's commercial customer base is diverse and includes markets such as maritime, aviation, oil and gas, mining, recreation, forestry, construction, transportation and emergency services. These customers rely on Iridium's products and services as critical to their daily operations and integral to their communications and business infrastructure.

Commercial service revenue was $88.4 million, up 2% from last year's comparable period due to an increase in revenue from hosted payload and other data services and broadband services, partially offset by lower data service usage associated with the COVID-19 pandemic. Meanwhile, commercial voice and data subscribers were down 3% from the year-ago period to 349,000 subscribers. Commercial voice and data average revenue per user (ARPU) was $40 during the second quarter, compared to $41 in last year's comparable period.

Commercial internet of things (IoT) data subscribers grew 20% from the year-ago period to 863,000 customers, driven by consumer personal communications and tracking devices. Commercial IoT data ARPU was $8.91 in the second quarter, compared to $11.40 in last year's comparable period. The decrease in ARPU resulted from reduced usage, principally, associated with COVID-19 impacts, most notably in aviation, as well as the effect of the increased proportion of personal communications subscribers within IoT. These subscribers utilize lower ARPU plans.

Commercial broadband revenue was $8.5 million, up from $7.4 million in the year-ago period. This rise was primarily attributable to the growing Iridium Certus broadband service. Commercial broadband ARPU was $258 during the second quarter, compared to $245 in last year's comparable period.

Iridium's commercial business ended the quarter with 1,223,000 billable subscribers, which compares to 1,088,000 for the year-ago period and is up from 1,192,000 for the quarter ended March 31. IoT data subscribers represented 71% of billable commercial subscribers at the end of the quarter, an increase from 66% at the end of the prior-year period. Hosted payload and other data service revenue was $15.4 million in the second quarter compared to $12 million in the prior-year period, which was primarily due to increased Aireon data service fees related to a contractual step-up.

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