IRIDIUM ANNOUNCES FIRST-QUARTER 2022 RESULTS
Iridium Communications reported a significant turnaround in Q1 2022, achieving a net income of $2.8 million, compared to a net loss of $5.2 million a year earlier. Total revenue rose 15% to $168.2 million, with service revenue up 9% to $126.1 million, driven by a 17% increase in subscribers to 1.78 million. Operational EBITDA increased by 15% to $103.2 million, reflecting a 61% margin. Equipment sales surged 41% to $33.7 million. The company announced plans for up to $600 million in share buybacks, enhancing shareholder value. The full-year outlook expects 5% to 7% service revenue growth.
- Net income increased to $2.8 million from a $5.2 million loss year-over-year.
- Total revenue grew 15% to $168.2 million.
- Operational EBITDA rose 15% to $103.2 million with a 61% margin.
- Total subscribers increased by 17% year-over-year to 1.78 million.
- Equipment sales jumped 41% to $33.7 million.
- Plans for up to $600 million in share buybacks were reiterated.
- Government subscribers decreased by 4% year-over-year.
- IoT data subscribers within the government segment declined by 10%.
- Record Equipment Sales Driven by Strong Demand
MCLEAN, Va., April 19, 2022 /PRNewswire/ -- Iridium Communications Inc. (Nasdaq: IRDM) ("Iridium") today reported financial results for the first quarter of 2022 and reiterated its full-year 2022 outlook. Net income was
Iridium reported first-quarter total revenue of
The Company ended the quarter with 1,781,000 total billable subscribers, which compares to 1,518,000 for the year-ago period and is up from 1,723,000 for the quarter ended December 31, 2021. Total billable subscribers grew
"Iridium continued to see strong demand in the first quarter. I'm continually amazed at the innovative ways in which our technology and distribution partners utilize our unique satellite network to drive growth and serve their respective markets," said Matt Desch, CEO, Iridium.
Commenting on the Company's share repurchase program, Desch said, "Cash flow remains very strong, and we continue to execute on our long-standing promise to return capital to shareholders. Even as we expand our investments in new products and network capabilities, we've announced plans for up to
Service – Commercial
Commercial service remained the largest part of Iridium's business, representing
- Commercial service revenue was
$99.6 million , up10% from last year's comparable period due primarily to increased revenues from IoT, voice and data, and broadband services. - Commercial voice and data subscribers were up
8% from the year-ago period to 378,000. Commercial voice and data average revenue per user ("ARPU") rose to$40 during the first quarter, compared to$39 in the prior-year. - Commercial IoT data revenue was
$28.4 million , up15% from the year-ago period. Commercial IoT data subscribers grew24% from the year-ago period to 1,243,000 customers, driven by continued strength in consumer personal communications devices. Commercial IoT data ARPU was$7.78 in the first quarter, compared to$8.39 in last year's comparable period. The decrease in ARPU resulted from the effect of the growing proportion of personal communications subscribers within IoT, who typically utilize lower ARPU plans. - Commercial broadband revenue was
$11.5 million , up22% from$9.4 million in the year-ago period on increasing activations of Iridium Certus® broadband service. Commercial broadband ARPU was$288 during the first quarter, compared to$265 in last year's comparable period, reflecting an increasing mix of Iridium Certus broadband subscribers. - Iridium's commercial business ended the quarter with 1,635,000 billable subscribers, which compares to 1,365,000 for the year-ago period and is up from 1,576,000 for the quarter ended December 31, 2021. IoT data subscribers represented
76% of billable commercial subscribers at the end of the quarter, an increase from73% at the end of the prior-year period. - Hosted payload and other data service revenue was
$14.8 million in the first quarter, consistent with the prior-year period.
Service – Government
Iridium's voice and data solutions improve situational awareness for military personnel and track critical assets in tough environments around the globe, providing a unique value proposition that is not easily duplicated.
Under Iridium's Enhanced Mobile Satellite Services contract (the "EMSS Contract"), a seven-year,
- Government service revenue was
$26.5 million in the first quarter and reflected increased revenue from a contractual step up in the EMSS Contract on September 15, 2021. - Iridium's government business ended the quarter with 146,000 subscribers, which compares to 153,000 for the year-ago period and 147,000 for the quarter ended December 31, 2021. Government voice and data subscribers rose
3% from the year-ago period to 65,000 as of March 31, 2022. IoT data subscribers declined10% year-over-year and represented55% of government subscribers, down from59% at the end of the prior-year period.
Equipment
- Equipment revenue was
$33.7 million during the first quarter, up41% from the prior-year period. - In 2022, the Company expects considerably higher equipment sales than in 2021.
Engineering & Support
- Engineering and support revenue was
$8.4 million during the first quarter, up30% from the prior-year quarter, primarily due to the episodic nature of contract work for the U.S. government and a rise in commercial activity.
Capital expenditures were
During the quarter, the Company repurchased approximately 3.8 million shares of its common stock at a total purchase price of
The Company reiterated its full-year 2022 outlook:
- Total service revenue growth between
5% and7% for full-year 2022. Total service revenue for 2021 was$492.0 million . - Full-year 2022 OEBITDA between
$400 million and$410 million . OEBITDA for 2021 was$378.2 million . - Negligible cash taxes in 2022. Cash taxes are expected to be negligible through approximately 2024.
- Net leverage of between 2.5 and 3.5 times OEBITDA at the end of 2023, assuming the completion of the Company's total
$600 million in authorized share repurchases. Net leverage was 3.4 times OEBITDA at December 31, 2021.
In addition to disclosing financial results that are determined in accordance with U.S. GAAP, the Company provides Operational EBITDA and Operational EBITDA margin, which are non-GAAP financial measures, as supplemental measures to help investors evaluate the Company's fundamental operational performance. Operational EBITDA represents earnings before interest, income taxes, depreciation and amortization and share-based compensation expenses. The Company also presents Operational EBITDA expressed as a percentage of GAAP revenue, or Operational EBITDA margin. Operational EBITDA, along with its related measure, Operational EBITDA margin does not represent, and should not be considered, an alternative to U.S. GAAP measurements such as net income or loss. In addition, there is no standardized measurement of Operational EBITDA, and the Company's calculations thereof may not be comparable to similarly titled measures reported by other companies. The Company believes Operational EBITDA is a useful measure across time in evaluating the Company's fundamental core operating performance. Management also uses Operational EBITDA to manage the business, including in preparing its annual operating budget, debt covenant compliance, financial projections and compensation plans. The Company believes that Operational EBITDA is also useful to investors because similar measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies in similar industries. As indicated, Operational EBITDA does not include interest expense on borrowed money, the payment of income taxes, amortization of the Company's definite-lived intangible assets, or depreciation expense on the Company's capital assets, which are necessary elements of the Company's operations. Since Operational EBITDA does not account for these and other expenses, its utility as a measure of the Company's operating performance has material limitations. Due to these limitations, the Company's management does not view Operational EBITDA in isolation, but also uses other measurements, such as net income (loss), revenues, operating profit and cash flows from operating activities, to measure operating performance. Please refer to the schedule below for a reconciliation of consolidated GAAP net income (loss) to Operational EBITDA and Iridium's Investor Relations webpage at www.iridium.com for a discussion and reconciliation of these and other non-GAAP financial measures. We do not provide a forward-looking reconciliation of expected full-year 2022 Operational EBITDA guidance as the amount and significance of special items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts.
Iridium Communications Inc. | |||||
Supplemental Reconciliation of GAAP Net Income (Loss) to Operational EBITDA | |||||
(In thousands) | |||||
Three Months Ended March 31, | |||||
2022 | 2021 | ||||
GAAP net income (loss) | $ 2,824 | $ (5,183) | |||
Interest expense, net | 14,577 | 22,769 | |||
Income tax expense (benefit) | 1,824 | (8,598) | |||
Depreciation and amortization | 75,661 | 75,910 | |||
Share-based compensation | 8,320 | 4,906 | |||
Operational EBITDA | $ 103,206 | $ 89,804 | |||
As previously announced, the Company will host a conference call to discuss its results at 8:30 a.m. Eastern Time on Tuesday, April 19, 2022. Callers should dial 1-412-902-6740 to access the call. The conference call will also be simultaneously webcast on Iridium's Investor Relations webpage at www.iridium.com. An archive of the webcast will be available following the live conference call.
Iridium® is the only mobile voice and data satellite communications network that spans the entire globe. Iridium enables connections between people, organizations and assets to and from anywhere, in real time. Together with its ecosystem of partner companies, Iridium delivers an innovative and rich portfolio of reliable solutions for markets that require truly global communications. In 2019, the company completed a generational upgrade of its satellite network and launched its new specialty broadband service, Iridium Certus. Iridium Communications Inc. is headquartered in McLean, Va., U.S.A., and its common stock trades on the Nasdaq Global Select Market under the ticker symbol IRDM. For more information about Iridium products, services and partner solutions, visit www.iridium.com.
Statements in this press release that are not purely historical facts may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding Iridium's expectations with respect to total service revenue growth, OEBITDA, and cash taxes for 2022; net leverage and cash taxes over the longer-term; anticipated equipment sales for 2022; amount and timing of share repurchases, and expected revenues from its EMSS contract with the U.S. government. Forward-looking statements can be identified by the words "anticipates," "may," "can," "believes," "expects," "projects," "intends," "likely," "will," "to be" and other expressions that are predictions or indicate future events, trends or prospects. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Iridium to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, uncertainties regarding customer demand for Iridium's products and services, including demand from the U.S. government; Iridium's ability to maintain the health, capacity and content of its satellite constellation, the development of and market for Iridium's products and services, and Iridium's ability to complete its share repurchase programs, as well as general industry and economic conditions, and competitive, legal, governmental and technological factors. Other factors that could cause actual results to differ materially from those indicated by the forward-looking statements include those factors listed under the caption "Risk Factors" in the Company's Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission ("SEC") on February 17, 2022, and the Company's Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on April 19, 2022, as well as other filings Iridium makes with the SEC from time to time. There is no assurance that Iridium's expectations will be realized. If one or more of these risks or uncertainties materialize, or if Iridium's underlying assumptions prove incorrect, actual results may vary materially from those expected, estimated or projected. Iridium's forward-looking statements are based on information available to it as of the date of this press release and speak only as of the date of this press release, and Iridium undertakes no obligation to update forward-looking statements.
Investor Contact: | Press Contact: |
Kenneth Levy | Jordan Hassin |
Iridium Communications Inc. | Iridium Communications Inc. |
+1 (703) 287-7570 | +1 (703) 287-7421 |
Iridium Communications Inc. | |||
Condensed Consolidated Statements of Operations | |||
(In thousands) | |||
Three Months Ended March 31, | |||
2022 | 2021 | ||
Revenue: | |||
Service revenue | |||
Commercial | $ 99,609 | $ 90,402 | |
Government | 26,500 | 25,750 | |
Total service revenue | 126,109 | 116,152 | |
Subscriber equipment | 33,744 | 23,953 | |
Engineering and support service | 8,366 | 6,430 | |
Total revenue | 168,219 | 146,535 | |
Operating expenses: | |||
Cost of services (exclusive of depreciation and amortization) | 24,098 | 23,207 | |
Cost of subscriber equipment sales | 20,505 | 13,028 | |
Research and development | 2,619 | 2,717 | |
Selling, general and administrative | 26,103 | 22,657 | |
Depreciation and amortization | 75,661 | 75,910 | |
Total operating expenses | 148,986 | 137,519 | |
Operating income | 19,233 | 9,016 | |
Other expense, net: | |||
Interest expense, net | (14,577) | (22,769) | |
Other expense, net | (8) | (28) | |
Total other expense, net | (14,585) | (22,797) | |
Income (loss) before income taxes | 4,648 | (13,781) | |
Income tax benefit (expense) | (1,824) | 8,598 | |
Net income (loss) | $ 2,824 | $ (5,183) | |
Operational EBITDA | $ 103,206 | $ 89,804 | |
Iridium Communications Inc. | |||||
Subscriber Highlights | |||||
(In thousands, except ARPU) | |||||
As of March 31, | |||||
2022 | 2021 | % Change | |||
Billable Subscribers (1) (2) | |||||
Commercial | |||||
Voice and data, IoT data and Broadband service | |||||
Voice and data | 378 | 350 | |||
IoT data | 1,243 | 1,003 | |||
Broadband (4) | 13.5 | 12.0 | |||
Total commercial voice and data, IoT data and Broadband service | 1,635 | 1,365 | |||
Government | |||||
Voice and data and IoT data service | |||||
Voice and data | 65 | 63 | |||
IoT data | 81 | 90 | - | ||
Total government voice and data and IoT data service | 146 | 153 | - | ||
Total billable subscribers | 1,781 | 1,518 | |||
Three Months Ended March 31, | |||||
2022 | 2021 | % Change | |||
Net Billable Subscriber Additions | |||||
Commercial | |||||
Voice and data. IoT data and Broadband service | |||||
Voice and data | 8 | - | NM | ||
IoT data | 50 | 41 | |||
Broadband | 0.3 | 0.3 | |||
Total commercial voice and data, IoT data and Broadband service | 58 | 41 | |||
Government | |||||
Voice and data and IoT data service | |||||
Voice and data | - | 1 | - | ||
IoT data | (1) | - | NM | ||
Total government voice and data and IoT data service | (1) | 1 | - | ||
Total net billable subscriber additions | 57 | 42 | |||
Three Months Ended March 31, | |||||
2022 | 2021 | % Change | |||
ARPU (2) (3) | |||||
Commercial | |||||
Voice and data | $ 40 | $ 39 | |||
IoT data | $ 7.78 | $ 8.39 | - | ||
Broadband | $ 288 | $ 265 | |||
(1) Subscribers as of the end of the respective period. | ||||||
(2) Billable subscriber and ARPU data is not applicable for Hosted payload and other data service revenue items and is excluded from presentation above. | ||||||
(3) Average monthly revenue per unit, or ARPU, is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period. | ||||||
(4) Broadband is comprised of Iridium OpenPort® and Iridium Certus. |
Iridium Communications Inc. | |||||
Summary Revenue and OEBITDA Highlights | |||||
(In thousands) | |||||
Three Months Ended March 31, | |||||
2022 | 2021 | % Change | |||
Revenue | |||||
Service revenue(1) | |||||
Commercial service revenue | |||||
Voice and data | $ 44,883 | $ 41,424 | |||
IoT data(2) | 28,441 | 24,754 | |||
Broadband(3) | 11,514 | 9,434 | |||
Hosted payload and other data service(4) | 14,771 | 14,790 | |||
Total commercial service revenue | 99,609 | 90,402 | |||
Government service revenue(5) | 26,500 | 25,750 | |||
Total service revenue | 126,109 | 116,152 | |||
Subscriber equipment | 33,744 | 23,953 | |||
Engineering and support(6) | |||||
Commercial | 1,111 | 746 | |||
Government | 7,255 | 5,684 | |||
Total engineering and support | 8,366 | 6,430 | |||
Total revenue | $ 168,219 | $ 146,535 | |||
Operational EBITDA | |||||
Operational EBITDA | $ 103,206 | $ 89,804 | |||
Other | |||||
Capital expenditures(7) | $ 13,568 | $ 9,417 | |||
Net debt(8) | $ 1,384,985 | $ 1,411,183 | |||
Cash, cash equivalents and marketable securities | $ 232,015 | $ 222,317 | |||
Term Loan | $ 1,617,000 | $ 1,633,500 | |||
Deferred financing costs | (21,997) | (23,045) | |||
Term Loan, net | $ 1,595,003 | $ 1,610,455 | |||
(1) Service revenue consists of primarily subscription-based services which often generate a long-term recurring revenue stream from subscribers. | ||||||
(2) IoT data service provides a two-way short burst data transmission between Iridium Communications Inc.'s network and a telemetry unit, which may be located, for example, on a container in transit or a buoy monitoring oceanographic conditions. | ||||||
(3) Broadband is comprised of Iridium OpenPort® and Iridium Certus. | ||||||
(4) Hosted payload and other services consist primarily of services that do not have traditional billable subscribers. Hosted payload services consist of hosting and data services to our payload customers, Aireon and Harris. Other services include primarily Iridium Communications Inc.'s one-way satellite timing, location, and authentication services (STL) which provides position, navigation and timing technology. | ||||||
(5) Government service revenue consists of voice and IoT data subscription-based services provided to agencies of the U.S. government through prime contracts. | ||||||
(6) Engineering and support includes maintenance services to the U.S. government's dedicated gateway and engineering services to assist customers in developing new technologies for use on Iridium Communications Inc.'s satellite system. | ||||||
(7) Capital expenditures based on cash spent in the respective period. | ||||||
(8) Net debt is calculated by taking the sum of the gross Term Loan B and gross drawn Revolving Facility, less cash, cash equivalents and marketable securities. |
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SOURCE Iridium Communications Inc.
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