TAMPA, Fla. — Globalstar, the operator behind Apple’s satellite-enabled SOS app, posted a 50% year-on-year jump in quarterly sales Aug. 3 amid promising growth in its business for connecting remote Internet of Things (IoT) devices.
Nearly half the $55 million Globalstar made in the three months ended June 30 came from wholesale capacity service revenues driven by Apple, which has been using its satellites for iPhone emergency messaging since November.
However, $9 million — up 33% from the same period last year — came from a commercial IoT business that Globalstar hopes to expand with initial two-way services before the end of 2023.
The IoT business currently relies on one-way connectivity for tracking and monitoring services in places where terrestrial networks are poor or non-existent. Adding two-way functionality would give customers command and control capabilities.
Apple is helping Globalstar fund 17 satellites to replenish its low Earth orbit fleet, in return for taking 85% of their capacity for its emergency messaging needs.
The remaining 15% would be enough to support a fifty-fold increase in commercial IoT subscribers, according to B. Riley analyst Mike Crawford.
He said Globalstar should have no problem contracting a significant portion of this remnant capacity — particularly after introducing its two-way module.
Half the infrastructure Globalstar needs for this two-way IoT service has already been installed across its gateways, CEO David Kagan said, with beta services set to begin with key customers later this year.
The operator also said its next-generation satellites are on track for launches in 2025, as originally planned under contracts with MDA and Rocket Lab, and are about to enter critical design review.
Raising earnings guidance
Supply chain issues that had delayed production of Globalstar’s legacy Spot GPS and messaging devices have cleared up as of mid-April, Kagan said on the earnings call.
While he said refilling retail chains is a drawn-out process, the company has also started amassing a six-month “safety stock” for all its products.
Globalstar recorded a 4% year-on-year fall in Spot service revenues for the second quarter of 2023; however, Kagan expects subscriber numbers to accelerate this year.
Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was up 86% to $27 million.
The company now expects to record between $200 million and $230 million in revenue for 2023, which would be 35% and 55% more than 2022, respectively. It previously guided between $185 million and $230 million in total 2023 sales.
These forecasts do not include revenue Globalstar hopes to make from leasing some of its spectrum for terrestrial use.
Globalstar executive chair James Monroe said during the earnings call that he expects devices capable of using its Band 53 frequencies, part of S-band spectrum, to be in the hundreds of millions by this time next year as talks continue with terrestrial partners and regulators worldwide.
