Iridium Communications Inc. (Nasdaq:IRDM) (“Iridium”) today reported financial results for the second quarter of 2016 and affirmed its full-year 2016 outlook.  Net income was $26.9 million, or $0.22 per diluted share, for the second quarter of 2016, as compared to $26.0 million, or $0.21 per diluted share, for the second quarter of 2015.  Operational EBITDA (“OEBITDA”)(1) for the second quarter was $62.5 million, as compared to $61.0 million for the prior-year period, representing a year-over-year increase of 3% and an OEBITDA margin(1) of 57%. 

Iridium reported second-quarter total revenue of $109.2 million, which consisted of $83.5 million of service revenue and $25.7 million of revenue related to equipment sales and engineering and support projects.  Both total revenue and service revenue increased 7% versus the comparable period of 2015.  Service revenue, which represents primarily recurring revenue from Iridium’s growing subscriber base, was 76% of total revenue for the second quarter of 2016.

The Company ended the quarter with 823,000 total billable subscribers, which compares to 766,000 for the year-ago period and is up from 788,000 for the quarter ended March 31, 2016.  Total billable subscribers grew 7% year-over-year, driven by growth in government customers and machine-to-machine (“M2M”).

“We delivered a best ever performance in subscriber growth driven by our M2M and government businesses, which illustrates the unique appeal of our services and positions us well for long-term growth,” said Matt Desch, CEO, Iridium.

Commenting on Iridium NEXT, Desch said, “We look forward to commencing the launch campaign for Iridium NEXT.  This major upgrade to our global constellation will build upon our leading position in satellite communications by adding high-speed broadband through Iridium CertusSM as well as important new hosted payload services, and be a platform for continued growth and innovation well into the future.”

Desch continued, “Next week we will start shipping the first of our ten Iridium NEXT satellites to Vandenberg Air Force Base for first launch.  We now anticipate a first launch date with SpaceX of September 19th at 9:49pm PDT.  With a second launch planned for December, we expect all seven launches with SpaceX to be completed by the end of 2017.  This is a particularly exciting time for our employees, partners and investors as over seven years of planning and coordination usher in a new era of satellite services for Iridium and its global customers.”

Iridium Business Highlights

Service — Commercial

Commercial service remained the largest part of Iridium’s business, representing 56% of the Company’s total revenue during the second 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 $61.5 million, up 2% from last year’s comparable period. 
  • Commercial voice and data subscribers were unchanged from the year-ago period at 359,000 customers.  Commercial voice and data average revenue per user (“ARPU”) was unchanged from last year’s comparable period at $41.  Commercial M2M data subscribers grew 12% from the year-ago period to 384,000 customers.  Commercial M2M data ARPU was $15 during the second quarter, unchanged from last year’s comparable period.
  • Iridium’s commercial business ended the quarter with 743,000 billable subscribers, which compares to 701,000 for the year-ago period and is up from 713,000 for the quarter ended March 31, 2016.  M2M data subscribers represented 52% of billable commercial subscribers at the end of the quarter, an increase from 49% at the end of 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.  The Company operates through two Defense Information Systems Agency (“DISA”) contracts, which include a $400 million, five-year, fixed-price agreement for satellite communications services and a $38 million multi-year contract to support and maintain the Department of Defense’s (“DoD”) dedicated gateway.   

  • Government service revenue was $22 million, a 22% increase from the prior-year period, driven by the Company’s airtime services contract with DISA.
  • Iridium’s government business ended the quarter with 80,000 subscribers, which compares to 65,000 for the year-ago period and is up from 75,000 for the quarter ended March 31, 2016.  Government voice and data subscribers increased 16% from the year-ago period to 43,000 as of June 30, 2016.  M2M data subscribers increased 32% year-over-year and represented 46% of government subscribers, an increase from 43% at the end of the prior-year period.


  • Equipment revenue was $20.4 million during the second quarter, an 8% rise from the prior-year period.
  • The Company expects equipment revenue for full-year 2016 to be comparable to 2015 results.

Engineering & Support

  • Engineering and support revenue was $5.3 million during the second quarter, compared to $5.1 million in the prior-year’s quarter.

Capital expenditures were $81.0 million for the second quarter and primarily related to spending for the Company’s next-generation satellite constellation, Iridium NEXT.  The Company ended the second quarter with a cash and marketable securities balance of $443.1 million and gross debt of $1.7 billion.  Net debt was $1.1 billion, calculated as $1.7 billion of gross debt, less $0.4 billion of cash and marketable securities, as well as $0.1 billion in restricted cash.

2016 Outlook

The Company affirmed its full-year 2016 outlook for total service revenue growth and OEBITDA.  The Company continues to expect:

  • Total service revenue growth between 4% and 6% for the full-year 2016.
  • Full-year 2016 OEBITDA between $245 million and $255 million.  OEBITDA for 2015 was $234.0 million.
  • Read the full financial results.