Iridium Communications (IRDM) Q2 2025 Earnings Call July 24, 2025 08:30 AM ET Speaker0Day, and welcome to the Iridium Communications Second Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one keypad. To draw your question, please press then 2.This event is being recorded. I would now like to turn the conference over to Ken Avey, vice pre ...

Financial Data and Key Metrics Changes - Operational EBITDA increased by 6% to $122.1 million, driven by recurring commercial services and engineering support revenue [38] - Service revenue rose by 4% to $127.5 million, led by growth in IoT and Iridium PNT [38] - Voice and data revenue grew by 2% to $55.9 million, reflecting subscriber growth in telephony services [39] - Commercial IoT revenue increased by 11% to $43.8 million, attributed to a two-year contract with the largest IoT partner [39] - Revenue from commercial broadband decreased by 6% to $12.9 million, due to the conversion of primary customers to lower usage plans [42] - Hosting and other data services revenue rose by 7% to $14.9 million, with optimism for P&T services following the acquisition of Satellis [43] Business Line Data and Key Metrics Changes - Engineering and support revenue reached $37.5 million, up from $30.4 million in the prior year, driven by contracts with the U.S. government [45] - Subscriber equipment sales totaled $23.1 million, down from the previous year's high but tracking expected levels [44] - Government service revenue modestly increased to $26.8 million, reflecting a step-up in EMSS contracts with the U.S. government [43] Market Data and Key Metrics Changes - The company anticipates double-digit growth in commercial IoT for 2025, driven by ongoing demand for personal satellite communications [48] - The government business is expected to generate full-year revenue of $108 million in 2025 due to the EMSS contract [49] Company Strategy and Development Direction - The company is focusing on expanding its partner ecosystem and leveraging its unique satellite capabilities to address market needs, particularly in IoT and PNT [21][30] - Iridium plans to mitigate tariff impacts through strategic partnerships and logistics adjustments, maintaining its market position without passing costs to customers [16][110] - The company is optimistic about growth in P&T services, especially with increasing vulnerabilities in GPS systems [30][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience during economic shocks, citing past performance during the 2008 recession and the 2020 pandemic [17][92] - The geopolitical environment is expected to remain volatile, but the company believes it is insulated from significant impacts [34][82] - Future growth is anticipated in the IoT market, with new services like Iridium NTN Direct expected to drive revenue growth through the end of the decade [27][35] Other Important Information - The company plans to increase its quarterly dividend to 15 cents per share starting in Q3 2025, reflecting confidence in business prospects [53] - Capital expenditures are expected to rise in 2025 to support work with 5G standards [54] Q&A Session Summary Question: Impact of tariffs on subscriber growth and service revenue - Management indicated it is too early to determine the long-term effects of tariffs on subscriber growth and service revenue, noting that demand remains stable [58][60] Question: Changes in government subscriber numbers - The decrease in government subscribers was attributed to a government cleanup activity rather than specific funding cuts [62][64] Question: Future pricing actions - Management confirmed plans for smaller, more frequent price increases rather than large increases every few years, which will take effect in the second half of the year [66][68] Question: Revenue from directed device plans - Initial revenues from directed device services are expected to come from IoT roaming, with a ramp-up anticipated towards the latter part of the decade [70][72] Question: Update on aviation services - Aviation services are growing, with ongoing flight trials for certification, but significant revenue growth is not expected until early next year [85][87] Question: Government exposure in the business - Management estimated that government-related revenue constitutes about 20% of the business, with a relatively small portion coming from civil applications [98] Question: Pricing mechanics for P&T services - Management highlighted the unique value of Iridium's P&T services in providing reliable global coverage, especially in environments with GPS vulnerabilities [100][104]