Iridium Communications Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ric Prentiss - Raymond James - Analyst : A couple of questions. On the service revenue reduction guidance, you mentioned that the maritime was the biggest portion of going from 5% to 7% to 3% to 5% growth. Where do we -- and it's happening faster. Where do we think the ARPU for the maritime stabilizes out? And obviously, there's some seasonality to that. But where are we thinking it stabilizes at? And will this impact continue into '26 as well as you get into the companion mode?

Question: Ric Prentiss - Raymond James - Analyst : Okay. Obviously, PNT is a much stronger part of the growth story, but there was a little bit of timing in the '25. What -- can you size that for us? How much slipped out? Is it like $1 million or $2 million? And what caused the slip? And how are you doing -- I think you were trying to pay Satelles to like $100 million by 2030?

Question: Ric Prentiss - Raymond James - Analyst : Great. Last one for me. Obviously, the FAA has been having some issues as well. Update maybe a little bit on where Aireon and the FAA stand and where you think some big numbers being thrown about in Washington about finally helping the FAA?

Question: Walter Piecyk - LightShed Ventures - Analyst : Can you give a little bit more color on the IoT data line because you dipped below to 7.5%. I know you reiterated the guidance for the year at double digit, but that obviously would show a lot more growth. And then overall, if you just look at the annual growth, it's really been decelerating pretty consistently since Q1 of last year. So I guess, what's going on there? And -- or what happened in Q2 and why you're so confident that you'll see enough of an acceleration because you're basically going to -- Q3 and Q4 are going to have to be much faster than even what you did in Q1 to get to double digits? And then how do we think about that opportunity in 2026 and beyond?

Question: Walter Piecyk - LightShed Ventures - Analyst : But Matt, the revenue growth was 7.5%. Last year, your lowest growth was 13.6%. So you're basically half the growth rate of last year, and it's off pace for delivering on the guidance. So something is very different in Q2 than it was in all of 2024 and obviously, even into the first quarter where you had double-digit growth.

Question: Walter Piecyk - LightShed Ventures - Analyst : And is the second half onetime type events? Or is this a business that can deliver double-digit growth going forward?

Question: Walter Piecyk - LightShed Ventures - Analyst : And then just last question. On the 2030 target of $1 billion in service revenue because if I look at -- forget about our estimates, I look at consensus, I don't think it's anywhere near that. I just want to confirm that to get to $1 billion in 2030, that doesn't include any anticipated acquisitions that's organic from where you are today from the lines of businesses that you have today?

Question: Chris Quilty - Quilty Analytics LLC - Analyst : Matt, not to beat the IoT dead horse, but Certus mid-band and new products, I know you had talked about in the past. Is that perhaps something that's accretive in the back half?

Question: Chris Quilty - Quilty Analytics LLC - Analyst : And switching over to PNT. I know that's build on a monthly type service revenue. But do we expect that the customer acquisition, like the pipeline, are these large customers where you might, once you land them, see a step-wise increase and then growth from there? Or what does that pattern look like over time?

Question: Chris Quilty - Quilty Analytics LLC - Analyst : Matt, I don't -- you've alluded that most of your customers are commercial, but there's obviously a huge DoD military application of this technology. What do you expect that split will look like five years out or years out? And are there government contract vehicles that you are pursuing?

Question: Chris Quilty - Quilty Analytics LLC - Analyst : One other nuanced government question. Voice and data, the subs have been declining there and the government doesn't pay. I mean it's a fixed price contract, right? So trying to figure out what's the rationale for why they've downsized the number of handsets by like one-third over the past couple of years?

Question: Chris Quilty - Quilty Analytics LLC - Analyst : Where are you moving the headquarters to?

Question: Timothy Horan - Oppenheimer & Co Inc - Analyst : Can you give us a sense of the pace of revenue growth for the third quarter and fourth quarter and maybe into next year also, do you think you can do over 5% revenue growth next year? Or I guess, is this the bottom? And just a little bit more color what's going to drive revenue growth next year?

Question: Timothy Horan - Oppenheimer & Co Inc - Analyst : Got it. I guess I was getting at, should fourth quarter be stronger than third quarter growth? Or is it pretty linear for the year? And on the maritime and the companion service, can you talk about what percentage of customers are dropping the primary and taking companion, like if I drop primary, what percentage are keeping the companion?

Question: Timothy Horan - Oppenheimer & Co Inc - Analyst : Yes, that's helpful. And on the pace of revenue growth in the second half?

Question: Timothy Horan - Oppenheimer & Co Inc - Analyst : Got it. And then on the new constellation, if the demand is there and the services are there, could you build a tandem constellation that could leverage existing spectrum that they could work together? Or would it really be more about a replacement eventually no matter what happens?

Question: Timothy Horan - Oppenheimer & Co Inc - Analyst : Yes.

Question: Timothy Horan - Oppenheimer & Co Inc - Analyst : And lastly, T-Mobile launched a D2D service yesterday. Do you see that as competitive at all or the potential to be competitive over time with your services?

Question: Greg Mesniaeff - Kingswood Capital Partners LLC - Analyst : Matt, I just have one question for you. Can you hear me?

Question: Greg Mesniaeff - Kingswood Capital Partners LLC - Analyst : Good. You mentioned in your prepared remarks that you are focusing on attracting new partners for both consumer and commercial services. You mentioned 50 new business relationships so far in 2025. Can you give us a little more color as to how you plan to broaden your partner network, if you will, across different verticals? What goals you've set for that? And as you roll those initiatives out, what impact to SG&A that might have?

Question: Greg Mesniaeff - Kingswood Capital Partners LLC - Analyst : And just as a quick follow-up, can you expand a little bit on the Syniverse partnership that you mentioned?

Question: Colin Canfield - Cantor Fitzgerald LP - Analyst : Maybe asking the commercial question a little bit more directly. How do you think about tying Iridium commercial growth into the Amazon constellation? It sounds like just the messaging you've given here on big customers and consumer bases and obviously, the telco folks are probably less of a natural partner. But you've got a lot of opportunity ahead of you in terms of industrial and mobility. So maybe talk through how you think about that partnership as a driver for commercial growth and what the cadence might look like on either them or the other undisclosed big commercial partner?

Question: Colin Canfield - Cantor Fitzgerald LP - Analyst : I mean across all of your product lines, right? Like if we think about the use case of what they're going after, K-band is one element, right? But there's obviously a lot more in the transports and consumer market you could do with your IoT NTN data. So just maybe how we think about alleviating some of the pressures of them or if it's another large commercial tech-backed effort?

Question: Colin Canfield - Cantor Fitzgerald LP - Analyst : Sure. I think that's -- yes, that definitely helps. Maybe drilling into the government stuff, government budget outlook when you combine DoD and military intelligence, probably the best that it's been in 20 years, near peak-ish. But I think a lot of folks have difficulty drilling down into drone budgets, which are probably a lot to double. So as we think of that drone algorithm. Can you maybe talk us through the waterfall of growth that we should see through the all PNT business and specifically talking to like the Kratos's aeros, Andurils of the world and then folks who sit either on or adjacent to the alternative PNT board, just like the growth algorithm that we should consider there?

Question: Colin Canfield - Cantor Fitzgerald LP - Analyst : Okay. Okay. And then just one comment you made five years ahead of any other players. Maybe talk about how you think about the moats that Iridium has across spectrum, payload design and then maybe some like relevant metric of not cost per bit, but like cost per propagated bit or just like how you think about keeping that edge?

Question: Mathieu Robilliard - Barclays Services Corp - Analyst : I had a question about the SG&A. I may have missed some comments at the beginning of the call. But I think in the previous results, you talked about a sharp decline or an important decline in R&D expenses and a low single-digit growth in SG&A. So a slowdown from previous years. This is what you've been delivering in Q1, Q2. I was wondering if the guidance or the indication still stands on those two lines?

Question: Mathieu Robilliard - Barclays Services Corp - Analyst : Great. That's very helpful. And then one question on maritime. Matt, you talked about Certus and the GMDSS services. I just wanted to clarify, do you get revenues out of GMDSS? Or is it only if there is Certus attached to it? And if you do get revenues from GMDSS, can you give us a sense of the ARPUs for this service?

Question: Mathieu Robilliard - Barclays Services Corp - Analyst : Okay. And on the antenna, it's not only your services that can be provided, it's third party that can be put on or those would be two different antennas? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 12:30PM, IRDM.OQ - Q2 2025 Iridium Communications Inc Earnings Call

Question: Mathieu Robilliard - Barclays Services Corp - Analyst : Okay. Very clear. And lastly, just on the comments you were making about the D2D NTN future on the new constellation. You talked about having a constellation that operates on 5G or 6G standards and that can deliver a richer experience to cell phones, consumer products, et cetera. We're still only talking here basically about -- we're only talking about IoT/messaging, right? There was no suggestion that it could go beyond that in terms of the services you may be able to provide in the new constellation, and I realize it's five years down the line?

Question: Mathieu Robilliard - Barclays Services Corp - Analyst : Okay. So presumably, that could mean broadband services to mobile services to mobile customers if you have the spectrum and the capacity eventually. Am I going in the right direction?

Question: Justin Lang - Morgan Stanley - Analyst : Just maybe two quick ones. Matt, coming back to government opportunities, you mentioned Golden Dome at the top of the call. Obviously, a lot of focus and funding tied to the effort. It looks like the government wants to move pretty fast. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 12:30PM, IRDM.OQ - Q2 2025 Iridium Communications Inc Earnings Call Just want to get a sense of how you're thinking about addressability and impact here. Have discussions with partners or customers kicked off yet in any meaningful way?

Question: Justin Lang - Morgan Stanley - Analyst : Got it. Great. And then just last quick one on tariffs. Any updated expectations around impact there? And can you just remind us what's baked into the guide currently?