Globalstar(GSAT) - 2023 Q4 - Annual Results

Overall Performance & Outlook 2023 Performance Overview Globalstar achieved a record year in 2023 with total revenue exceeding $224 million, a 50%+ increase from 2022, driven by wholesale capacity services and Commercial IoT. Operating income and Adjusted EBITDA also significantly improved, enabling funding for growth initiatives and key operational achievements - Globalstar achieved a record year in 2023, with total revenue of $224 million, an increase of over 50% from 2022[3][6] - Revenue growth was primarily driven by increases in wholesale capacity services and Commercial IoT[3] - Operational achievements include receiving an order for multiple XCOM RAN systems, generating revenue from a Band 53 deployment, executing a new government services contract, and remaining on track for new satellite launches in 2025[6] 2024 Financial Outlook Globalstar projects continued revenue growth for 2024, with total revenue expected to be between $225 million and $250 million, and an Adjusted EBITDA margin of approximately 50% 2024 Financial Outlook | Metric | 2024 Guidance | | :------------------ | :------------------- | | Total revenue | $225 million - $250 million | | Adjusted EBITDA margin | Approximately 50% | Operational Highlights Terrestrial Spectrum Agreement In 2023, Globalstar supported a Band 53 spectrum deployment with Nokia, securing an annual reservation fee from an end-user prior to build-out, which is expected to convert into a long-term lease arrangement - Supported a Band 53 spectrum deployment opportunity with Nokia in 2023[4] - The end user is paying to reserve the spectrum prior to planned build-out, with the agreement expected to convert into a long-term lease[4] - $0.6 million recognized in Q4 2023 as an annual reservation fee associated with this spectrum manager lease agreement[10] Network Services Agreement Globalstar executed a five-year agreement with a government services company for mission-critical satellite network services, following a one-year $2.5 million proof of concept. The agreement includes escalating annual minimum revenue commitments up to $20 million by the fifth year, with potential for significant upside - Executed a five-year agreement with a government services company to utilize Globalstar's satellite network for a mission-critical service[5] - The agreement includes a one-year $2.5 million proof of concept phase, which commenced in February 2024[5] - If implemented, the agreement contains annual minimum revenue commitments escalating to $20 million during the fifth year, with potential for significant upside through a revenue share arrangement[5] XCOM RAN System Deployment Globalstar received its first commercial order for multiple XCOM RAN systems from a major U.S. retailer for warehouse automation, validating the technology's importance in demanding environments. This initial $1.5 million order has potential for material commercial scale - Received the first customer order for delivery of multiple XCOM RAN systems to support warehouse automation for a major U.S. retailer[6] - The initial customer order is valued at $1.5 million and has the potential for material commercial scale[6] - The XCOM technology, licensed by Globalstar in 2023, enhances wireless performance, including spectral efficiency, and expands the ability to develop commercial applications utilizing Band 53[7] Fourth Quarter 2023 Financial Review Total Revenue (Q4) Total revenue for Q4 2023 increased by $11.1 million, or 27%, to $52.4 million compared to Q4 2022, primarily driven by higher service revenue Q4 Total Revenue | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | Change ($) | Change (%) | | :----------- | :-------------------- | :-------------------- | :--------- | :--------- | | Total Revenue | $52.4 | $41.3 | +$11.1 | +27% | Service Revenue (Q4) Service revenue grew by $12.6 million, or 35%, in Q4 2023, mainly due to a significant increase in wholesale capacity service revenue, alongside growth in Commercial IoT, while legacy services declined Q4 Service Revenue Breakdown | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | Change ($) | Change (%) | | :---------------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Service Revenue | $49.0 | $36.4 | +$12.6 | +35% | | Wholesale capacity | $25.7 | $12.3 | +$13.4 | >100% | | Commercial IoT | $6.0 | $5.1 | +$0.9 | +17% | | Legacy services | N/A | N/A | N/A | -11% | - Commercial IoT service revenue increased 17% due to growth in both subscribers and ARPU, with gross subscriber activations up 8% over the last twelve months[11] - Service revenue associated with legacy services was down 11% due to fewer subscribers, although SPOT gross activations were up nearly 18% in Q4 2023[12] Subscriber Equipment Sales (Q4) Revenue from subscriber equipment sales decreased by 30% in Q4 2023 due to lower Commercial IoT equipment volume compared to a prior-year backlog fulfillment, though SPOT equipment sales volume saw a substantial increase Q4 Subscriber Equipment Sales | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :--------- | | Subscriber Equipment Sales | $3.5 | $4.9 | -30% | - Decrease was due to a lower volume of Commercial IoT equipment, as Q4 2022 included a large backlog of orders fulfilled[13] - SPOT equipment sales volume increased over 90% from Q4 2022[14] Loss from Operations (Q4) Loss from operations increased by 29%, or $2.7 million, in Q4 2023, primarily due to higher operating expenses, including stock-based compensation, cost of services, and MG&A, partially offset by increased revenue Q4 Loss from Operations | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | Change ($) | Change (%) | | :------------------ | :-------------------- | :-------------------- | :--------- | :--------- | | Loss from Operations | $(12.0) | $(9.3) | $(2.7) | +29% | - Higher operating expenses were driven by increased stock-based compensation (XCOM License Agreement), cost of services (gateway operating costs, non-cash SSA costs), and MG&A (SSA, legal/professional fees, XCOM executive hires)[15][16][17][18] Net Loss (Q4) Net loss for Q4 2023 was $15.1 million, an increase from $5.3 million in Q4 2022, influenced by higher operating losses, the absence of a prior-year debt extinguishment gain, and other non-operating factors Q4 Net Loss | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | | :------- | :-------------------- | :-------------------- | | Net Loss | $(15.1) | $(5.3) | - Impacted by increased operating losses, the absence of a prior-year gain on extinguishment of debt, higher income tax expense, unfavorable changes in exchange rates, and a loss on equity issuance, partially offset by lower interest expense[19] Adjusted EBITDA (Q4) Adjusted EBITDA increased by 37% to $25.1 million for Q4 2023, driven by higher revenue partially offset by an increase in operating expenses (excluding non-cash or non-recurring items) Q4 Adjusted EBITDA | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | Change ($) | Change (%) | | :-------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Adjusted EBITDA | $25.1 | $18.3 | +$6.8 | +37% | Full Year 2023 Financial Review Total Revenue (FY) Total revenue for FY 2023 increased by $75.3 million, or 51%, to $223.8 million, primarily driven by significant growth in service revenue and, to a lesser extent, subscriber equipment sales FY Total Revenue | Metric | FY 2023 (in millions) | FY 2022 (in millions) | Change ($) | Change (%) | | :----------- | :-------------------- | :-------------------- | :--------- | :--------- | | Total Revenue | $223.8 | $148.5 | +$75.3 | +51% | - The increase was driven by higher service revenue (+$72.1 million) and higher revenue from subscriber equipment sales (+$3.2 million)[21] Service Revenue (FY) Service revenue significantly improved in FY 2023, increasing by $74.2 million year-over-year, mainly due to the strong performance of wholesale capacity services and continued growth in Commercial IoT FY Service Revenue | Metric | FY 2023 (in millions) | FY 2022 (in millions) | Change ($) | | :-------------- | :-------------------- | :-------------------- | :--------- | | Service Revenue | $204.2 | $132.1 | +$72.1 | - Wholesale capacity services increased $74.2 million year over year, following the launch of services in November 2022, including $6.5 million in nonrecurring revenue[22] - Commercial IoT service revenue increased $3.4 million, or 17%, due to increases in average subscribers and ARPU[23] Subscriber Equipment Sales (FY) Revenue from subscriber equipment sales increased by 19% in FY 2023, driven by higher sales volumes of both Commercial IoT (17%) and SPOT products (77%) FY Subscriber Equipment Sales | Metric | FY 2023 (in millions) | FY 2022 (in millions) | Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :--------- | | Subscriber Equipment Sales | $19.6 | $16.4 | +19% | - Sales volume of Commercial IoT products increased 17% and SPOT products increased 77%[24] Loss from Operations (FY) Loss from operations substantially improved to $0.2 million in FY 2023 from $221.0 million in FY 2022, primarily due to the absence of large non-cash impairment charges recorded in the prior year FY Loss from Operations | Metric | FY 2023 (in millions) | FY 2022 (in millions) | | :------------------ | :-------------------- | :-------------------- | | Loss from Operations | $(0.2) | $(221.0) | - Improvement was due to non-cash impairment charges recorded in 2022 that did not recur in 2023 (e.g., $166.5 million reduction in value of long-lived assets in 2022)[25][41] - Excluding non-cash charges, loss from operations improved due to higher revenue partially offset by higher operating expenses (cost of services, stock-based compensation, MG&A, cost of subscriber equipment)[25][26] Net Loss (FY) Net loss significantly decreased to $24.7 million in FY 2023 from $256.9 million in FY 2022, mainly due to the improved operating loss, lower interest expense, and favorable foreign currency fluctuations FY Net Loss | Metric | FY 2023 (in millions) | FY 2022 (in millions) | | :------- | :-------------------- | :-------------------- | | Net Loss | $(24.7) | $(256.9) | - Variance primarily due to improvement in loss from operations, lower interest expense (payoff of 2019 Facility Agreement, higher capitalized interest), and favorable foreign currency fluctuations[27] - Offsetting factors included a loss on extinguishment of debt and a loss on equity issuance[27] Adjusted EBITDA (FY) Adjusted EBITDA more than doubled in FY 2023, increasing by $59.3 million, or 103%, to $116.7 million, primarily driven by the substantial increase in total revenue FY Adjusted EBITDA | Metric | FY 2023 (in millions) | FY 2022 (in millions) | Change ($) | Change (%) | | :-------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Adjusted EBITDA | $116.7 | $57.4 | +$59.3 | +103% | Liquidity and Capital Structure Liquidity Overview Globalstar's cash and cash equivalents increased to $56.7 million at year-end 2023, with operating and financing cash flows funding significant capital expenditures for network upgrades and new satellites Cash and Cash Equivalents | Metric | Dec 31, 2023 (in millions) | Dec 31, 2022 (in millions) | | :------------------------ | :------------------------- | :------------------------- | | Cash and cash equivalents | $56.7 | $32.1 | - Net cash flows generated from operations were $74.3 million in 2023, and net cash flows from financing activities were $125.8 million[29] - Capital expenditures totaled $175.6 million in 2023, primarily for network upgrades and new satellites[29][30] Debt Structure Total principal debt increased to $398.7 million at year-end 2023, reflecting strategic changes in capital structure including new funding agreements and note issuances, partially offset by debt payoffs Total Principal Debt | Metric | Dec 31, 2023 (in millions) | Dec 31, 2022 (in millions) | | :-------------------- | :------------------------- | :------------------------- | | Total principal debt | $398.7 | $202.8 | - Increase due to proceeds under the 2023 Funding Agreement, changes in the classification of the 2021 Funding Agreement, and issuance of 13% Notes[32] - Offset by the payoff of the 2019 Facility Agreement and vendor financing amounts[32] Company Information & Disclosures About Globalstar, Inc. Globalstar is an international telecom infrastructure provider offering reliable satellite and terrestrial connectivity services, leveraging its LEO satellite constellation, Band 53/n53 terrestrial spectrum, and XCOM RAN products for various applications including secure data transmission, private networks, and IoT solutions - Globalstar is an international telecom infrastructure provider offering reliable satellite and terrestrial connectivity services[35] - Key assets include its LEO satellite constellation for secure data transmission and its Band 53/n53 terrestrial spectrum for private networks[35] - Offers XCOM RAN products for significant capacity gains in dense wireless deployments and next-generation IoT hardware and software products[35] Conference Call Details Globalstar will host a conference call on February 28, 2024, at 9:00 a.m. ET to discuss its results, with webcast and teleconference options available via registration - Conference call to discuss results will be held on Wednesday, February 28, 2024, at 9:00 a.m. Eastern Time (ET)[34] - Available via webcast and teleconference, with registration required for live Q&A participation[34] Safe Harbor Statement The press release contains forward-looking statements subject to inherent risks and uncertainties that may cause actual results to differ materially, and Globalstar disclaims any obligation to update these statements, advising readers to consult SEC filings for additional risk factors - The press release contains "forward-looking statements" subject to risks and uncertainties that may cause actual results to differ materially[38] - Globalstar undertakes no obligation to update any such statements[38] - Additional information on factors that could influence financial results is included in SEC filings (Form 10-K, 10-Q, 8-K)[38] Consolidated Financial Statements & Metrics Consolidated Statements of Operations This section presents Globalstar's unaudited consolidated statements of operations for the three and twelve months ended December 31, 2023 and 2022, detailing key revenue, expense, and net loss figures - Unaudited consolidated statements of operations for the three and twelve months ended December 31, 2023 and 2022[40][41] Consolidated Statements of Operations (Key Figures) | Metric | Q4 2023 (in thousands) | Q4 2022 (in thousands) | FY 2023 (in thousands) | FY 2022 (in thousands) | | :------------------------------------------------ | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Service revenue | $48,951 | $36,375 | $204,196 | $132,068 | | Subscriber equipment sales | $3,458 | $4,931 | $19,612 | $16,436 | | Total revenue | $52,409 | $41,306 | $223,808 | $148,504 | | Loss from operations | $(11,993) | $(9,320) | $(165) | $(221,029) | | Net loss | $(15,078) | $(5,335) | $(24,718) | $(256,915) | | Loss per common share (Basic) | $(0.01) | $0.00 | $(0.02) | $(0.14) | Consolidated Balance Sheets This section provides Globalstar's unaudited consolidated balance sheets as of December 31, 2023 and 2022, outlining the company's assets, liabilities, and stockholders' equity - Unaudited consolidated balance sheets as of December 31, 2023 and 2022[42][43] Consolidated Balance Sheets (Key Figures) | Metric | Dec 31, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :------------------------------------------------ | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $56,744 | $32,082 | | Total current assets | $142,653 | $81,244 | | Property and equipment, net | $624,002 | $560,371 | | Total assets | $924,309 | $738,469 | | Total current liabilities | $175,908 | $197,076 | | Long-term debt | $325,700 | $132,115 | | Total stockholders' equity | $378,979 | $314,771 | | Total liabilities and stockholders' equity | $924,309 | $738,469 | Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA This section provides a reconciliation of GAAP net income (loss) to non-GAAP Adjusted EBITDA for the three and twelve months ended December 31, 2023 and 2022, along with definitions and management's rationale for using this supplemental performance measure - Unaudited reconciliation of GAAP net income (loss) to non-GAAP Adjusted EBITDA for the three and twelve months ended December 31, 2023 and 2022[45][46] - Adjusted EBITDA excludes non-cash compensation expense, reduction in the value of assets, foreign exchange (gains)/losses, and certain other non-cash or non-recurring charges[46] Adjusted EBITDA Reconciliation (Key Figures) | Metric | Q4 2023 (in thousands) | Q4 2022 (in thousands) | FY 2023 (in thousands) | FY 2022 (in thousands) | | :------------------------------------------------ | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net loss | $(15,078) | $(5,335) | $(24,718) | $(256,915) | | EBITDA | $10,580 | $22,027 | $77,617 | $(131,985) | | Adjusted EBITDA | $25,095 | $18,301 | $116,717 | $57,396 | Schedule of Selected Operating Metrics This section presents selected unaudited operating metrics, including revenue by service type, average subscribers, and average monthly revenue per user (ARPU) for Duplex, SPOT, and Commercial IoT services for the three and twelve months ended December 31, 2023 and 2022 - Unaudited schedule of selected operating metrics for the three and twelve months ended December 31, 2023 and 2022[49][50] Average Subscribers | Service | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :---------------- | :-------- | :-------- | :-------- | :-------- | | Duplex | 31,338 | 38,822 | 33,884 | 40,913 | | SPOT | 254,464 | 271,658 | 260,141 | 272,088 | | Commercial IoT | 492,143 | 454,805 | 481,859 | 442,060 | Average Monthly Revenue Per User (ARPU) | Service | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :---------------- | :------ | :------ | :------ | :------ | | Duplex | $62.16 | $61.13 | $63.78 | $59.52 | | SPOT | $13.73 | $13.65 | $14.15 | $13.99 | | Commercial IoT | $4.05 | $3.76 | $3.95 | $3.68 |