Iridium Communications Q2 Revenue Misses Estimates Despite Double-Digit Subscriber Growth

Iridium Communications Inc IRDM reported second-quarter FY23 revenue growth of 10.4% year-on-year to $193.11 million, missing the consensus of $198.42 million.

The company registered a quarterly EPS loss ($0.24) in Q2, missing the street view of $0.04. The net loss was primarily the result of the write-off of Iridium's remaining ground spare satellite following the successful launch of five of its six ground spare satellites in May. 

Total billable subscribers rose 14% Y/Y to 2.14 million, driven by growth in commercial IoT customers.

"We had another great quarter of double-digit growth in subscribers and commercial service revenue, which drove record operational EBITDA," said Iridium CEO Matt Desch.

Service revenue rose 9.2% Y/Y to $145.1 million. Revenue from equipment sales and engineering and support projects was $48 million.

Commercial service revenue was $118.6 million, up 12% from last year's comparable period due to broad-based growth across all revenue lines.

Government service revenue remained flat at $26.5 million in the second quarter, reflecting the contractual rate in the EMSS Contract.

The quarter's operational EBITDA (OEBITDA) was $115.81 million, up 9.3% Y/Y.

Net income (loss) was $30.74 million loss. 

Capital expenditures were $22.4 million in 2Q. The company ended the quarter with gross debt of $1.5 billion and a cash and equivalents balance of $103.5 million.

Desch added, "Iridium's strong cash flow continues to support ongoing business investment and the return of capital to our shareholders."

FY23 Outlook: Iridium reiterated its full-year 2023 outlook. The company expects total service revenue growth between 9% and 11%, with OEBITDA of $455 million - $465 million.

Cash taxes are expected to be negligible through approximately 2024.

Price Action: IRDM shares were down 13.15% to $52.08 at the time of publication Tuesday.

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