Release Date: April 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Service revenue continued to expand with the rollout of new services and subscriber growth.
- Iridium's partner ecosystem remains strong, with partners bullish on new product offerings like Iridium PNT.
- The company has successfully mitigated supply chain risks by avoiding exposure to China and expanding logistics in Europe.
- Iridium's acquisition of Satelles has positioned it well in the PNT market, with growing interest from new customers.
- The company is confident in its ability to leverage its unique network for long-term growth, supported by a strong spectrum position and technology.
Negative Points
- New tariff levels have created uncertainty, potentially impacting equipment costs and operational EBITDA.
- Commercial broadband revenue declined by 6% due to increased use of Iridium as a companion service.
- There is ongoing uncertainty regarding U.S. trade policies, which could result in significant incremental costs.
- Government service revenue growth is modest, with some deactivations related to USAID funding changes.
- The geopolitical environment and potential funding challenges for foreign governments and NGOs could impact business.
Q & A Highlights
Q: How are tariffs expected to impact Iridium's costs and pricing strategy?
A: Matthew Desch, CEO, explained that the current 10% tariffs could result in approximately $3 million in incremental costs, which Iridium plans to absorb without raising prices. If tariffs increase to 36%, costs could rise to $6-7 million. However, Iridium aims to mitigate these impacts through supply chain adjustments and does not foresee significant demand changes due to tariffs.
Q: What is the impact of government efficiency efforts on Iridium's government contracts?
A: Matthew Desch, CEO, noted that the reduction in government subscribers was due to a cleanup activity unrelated to broader government efficiency efforts. CFO Vincent O'Neill added that some deactivations were linked to USAID funding changes, but these were minor and not expected to significantly impact Iridium's government business.
Q: Can you provide more details on the expected price increases for legacy voice and data services?
A: Matthew Desch, CEO, stated that instead of large price increases every five years, Iridium has shifted to smaller increases every 2.5 years to align with inflation. This strategy is expected to result in higher service revenues in the second half of the year.
Q: How will the direct-to-device (D2D) service impact Iridium's revenue, and when is it expected to launch?
A: Matthew Desch, CEO, indicated that D2D will primarily affect IoT revenues, with initial revenues expected from IoT roaming. The service is anticipated to launch in 2026, with a gradual ramp-up as Release 19 chipsets enter the market.
Q: What is the outlook for Iridium's aviation services, and when will they be certified for safety applications?
A: Matthew Desch, CEO, mentioned that aviation services are growing, with flight trials for safety certification underway. Certification for air traffic control communications is expected early next year, with non-safety applications already ramping up.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
