Why Iridium Communications Shares Are Trading Lower Today

Iridium Communications Inc IRDM shares are trading lower by around 6% after the company reported Q3 FY23 results.

IRDM reported revenue growth of 7% Y/Y to $197.6 million, missing the consensus of $200.09 million.

Commercial service revenue was up 12% Y/Y to $125.5 million, led by broad-based growth across all revenue lines.

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

Equipment revenue was down 27% Y/Y to $20.4 million, while Engineering and support revenue rose to $25.2 million from $17.1 million a year ago. 

Operational EBITDA (OEBITDA) grew 12% Y/Y to $121.3 million in the quarter.

The company registered a quarterly EPS loss of $(0.01) in Q3, missing the street view of EPS of $0.03. 

The net loss was primarily due to costs incurred related to the refinancing of Iridium's credit facility in Q3, which extends the maturity to September 2030 and reduces the interest rate.

Total billable subscribers rose 13% Y/Y to 2.24 million, driven by growth in commercial IoT customers.

The company ended the quarter with gross debt of $1.5 billion and cash and cash equivalents of $67.9 million. 

Repurchase: IRDM repurchased about 1.4 million shares of its common stock for $73.8 million. As of September 30, 2023, it had $385.7 million worth of shares available and authorized for repurchase under the program through December 31, 2025.

FY23 Outlook: Iridium revised its outlook for total service revenue growth to 10% (from 9% to 11%) and OEBITDA of $460 million-$465 million (from $455 million-$465 million). 

Cash taxes are expected to be negligible through approximately 2024.

Price Action: IRDM shares are down 6.66% at $40.85 on the last check Thursday.