Iridium Communications Q4 Earnings Call Highlights

Iridium Communications (NASDAQ:IRDM) reported fourth-quarter and full-year 2025 results that met its guidance, highlighted by steady service revenue growth, higher operational EBITDA and nearly $300 million in pro forma free cash flow. Management also outlined a 2026 outlook that calls for slower top-line growth as the company invests in new products and navigates broadband pricing and mix headwinds, while emphasizing long-term growth themes in IoT, assured position/navigation/timing (PNT), national security, and aviation.

2025 results: guidance achieved, cash generation remains a focal point

CEO Matt Desch said Iridium achieved its 2025 guidance, with service revenue “on target” and full-year OIBDA up 5%. CFO Vince O’Neill reported that service revenue grew 3% in 2025, while full-year operational EBITDA totaled $495.3 million. OIBDA was impacted by a $3 million inventory charge in the fourth quarter.

Iridium’s conversion of OIBDA to cash flow remained strong, with O’Neill citing 60% conversion that produced pro forma free cash flow of $296 million in 2025. Desch described free cash flow as a differentiator that supports investment in new services and capital returns through a growing dividend.

Fourth-quarter performance: IoT growth offset by equipment and broadband pressures

In the fourth quarter, Iridium posted total revenue of $212.9 million and operational EBITDA of $115.3 million. O’Neill said year-over-year service revenue growth was offset by lower subscriber equipment sales.

Within commercial, service revenue rose 3% year over year, driven by a 4% increase in voice and data revenue that benefited from a price increase implemented over the summer. Commercial IoT revenue increased 11% in the quarter, and commercial subscribers grew 4%.

Broadband revenue was $12.2 million in the quarter, down 9% year over year, which management attributed to ongoing migration toward lower-priced companion plans. O’Neill said the pace of migration from primary to backup use is slowing, but the trend will continue to create an ARPU headwind in 2026. For the full year, broadband revenue declined 10%, which the company said was largely in line with expectations.

Hosted payload and other data services revenue was $13.4 million in Q4, down 13% year over year, due in part to a delay in a PNT deployment by an existing customer. O’Neill said inbound interest in assured PNT remains strong, and the company continues to see momentum for that business to reach $100 million in annual service revenue by the end of the decade.

Government revenue rose to $27.6 million in the quarter, reflecting the final step-up in EMSS contracts with the U.S. government. Subscriber equipment revenue was $17 million, which O’Neill characterized as consistent with Iridium’s expectation for normalized annual equipment sales of $80 million to $90 million. Engineering and support revenue was $37.1 million, and management said its U.S. government pipeline remains strong.

Strategy: new services, spectrum value, and four growth themes

Desch pointed to industry changes, including heightened interest in L- and S-band spectrum and the evolution of direct-to-device connectivity, while noting these developments could eventually pressure traditional mobile satellite services over time. He said Iridium is investing in new technology platforms and expects to introduce multiple new services and products, including Iridium Certus GMDSS companion terminals, a new ASIC for Iridium PNT, and Iridium NTN Direct, a standards-based offering intended to bring global narrowband IoT capabilities to terrestrial devices.

Desch also emphasized that Iridium’s spectrum assets have gained perceived value amid recent industry developments. He said the company will “continuously consider” its spectrum with a view to maximizing shareholder value and would not rule out future business alliances that leverage its spectrum position.

Management outlined four key areas it believes can expand Iridium’s addressable markets:

• Narrowband IoT expansion: Iridium plans to launch its “first truly global, standards-based service” with NTN Direct in the second half of 2026. Desch said development is progressing and end-to-end messages are being processed over the network.
• Assured PNT: Building on its Satelles acquisition, Iridium sees a multibillion-dollar market for PNT services and reiterated expectations for at least $100 million in annual revenue by the end of the decade. Management said a new ASIC should lower integration costs and accelerate adoption, with beta interest exceeding expectations.
• National security: Desch said Iridium has secured more than $1 billion of awards over the last five years, including work supporting the Space Development Agency. He also referenced Iridium’s involvement in the Missile Defense Agency’s Shield contract (“Golden Dome”), calling it a validation of the company’s role as a trusted provider, while cautioning on timing.
• Aviation: Iridium aims to expand its role in cockpit data communications and aviation safety, including leveraging its relationship with Aireon. Desch described aviation safety as a potentially significant opportunity, while noting competitive sensitivity around details.

2026 outlook: modest service revenue growth, OIBDA impact from comp change, higher free cash flow projected

For 2026, Iridium guided to service revenue growth of flat to up 2%. O’Neill said that absent a change in incentive compensation structure, OIBDA would have been expected to increase to $497 million to $507 million. With Iridium shifting annual incentive compensation to be paid fully in cash (rather than a mix of cash and equity), the company expects 2026 OIBDA of $480 million to $490 million, reflecting a $17 million year-over-year OIBDA headwind. Management said the change reduces equity issuance by about one percentage point and does not affect GAAP financials.

O’Neill provided additional business drivers embedded in the 2026 outlook, including low single-digit growth in voice and data for the full year, mid-single-digit IoT growth (including renewal of a fixed-price contract with a large IoT partner), continued broadband ARPU pressure that is expected to moderate versus 2025, and expectations that PNT growth could provide upside but remains difficult to time.

Iridium projected 2026 pro forma free cash flow of $318 million using the midpoint of OIBDA guidance, which would represent a 66% conversion rate and an estimated free cash flow yield of about 16%. Management reiterated its longer-term target of generating $1.5 billion to $1.8 billion of free cash flow through 2030.

On capital returns and balance sheet items, O’Neill said Iridium ended 2025 with $96.5 million in cash, no outstanding borrowings under its $100 million revolver, and net leverage of 3.4x OIBDA, with a goal of reducing leverage to about 3.0x by year-end 2026. The company paid $62.9 million in dividends in 2025 and ended the year with a dividend yield of 3.3%, with management expecting the board to again approve an increase in 2026.

About Iridium Communications (NASDAQ:IRDM)

Iridium Communications Inc operates a global satellite communications network that delivers voice and data services across land, sea and air. The company’s unique architecture relies on a constellation of 66 low-Earth orbit satellites, enabling real-time connectivity in regions beyond the reach of terrestrial wireless networks. Iridium’s core offerings include satellite voice and messaging services, broadband data terminals, push-to-talk (PTT) interoperability and machine-to-machine (M2M) solutions for the Internet of Things (IoT).

Iridium serves a diverse range of markets, including maritime shipping, aviation, government and defense, energy, and enterprise.