Iridium Communications Inc.

10/23/2025 | Press release | Distributed by Public on 10/23/2025 05:02

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
You should read the following discussion along with our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed on February 13, 2025 with the Securities and Exchange Commission, or the SEC, as well as our condensed consolidated financial statements included in this Form 10-Q.
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking statements include those that express plans, anticipation, intent, contingencies, strategies, goals, targets or future developments, market trends, expected competition or otherwise are not statements of historical fact. Without limiting the foregoing, the words "believe," "anticipate," "plan," "expect," "intend" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on our current expectations and projections about future events, and they are subject to risks and uncertainties, known and unknown, that could cause actual results and developments to differ materially from those expressed or implied in such statements. The important factors described under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed on February 13, 2025, as updated and supplemented by this Form 10-Q, could cause actual results to differ materially from those indicated by forward-looking statements made herein. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Overview of Our Business
We are engaged primarily in providing mobile voice and data communications services using a constellation of orbiting satellites. We are the only commercial provider of communications services offering true global coverage, connecting people, organizations and assets to and from anywhere, in real time. Our low-earth orbit, L-band satellite network provides reliable, weather-resilient communications services to regions of the world where terrestrial wireless or wireline networks do not exist or are limited, including remote land areas, open ocean, airways, the polar regions and regions where the telecommunications infrastructure has been affected by political conflicts or natural disasters.
We provide voice and data communications services to businesses, U.S. and foreign governments, non-governmental organizations and consumers via our satellite network, which has an architecture of 66 operational satellites with in-orbit spares and related ground infrastructure. We utilize an interlinked mesh architecture to route traffic across the satellite constellation using radio frequency crosslinks between satellites. This unique architecture minimizes the need for ground facilities to support the constellation, which facilitates the global reach of our services and allows us to offer services in countries and regions where we have no physical presence.
In the second quarter of 2024, we acquired Satelles, Inc., or Satelles, a provider of highly secure, satellite-based position, navigation and timing (PNT) services that complement and protect GPS and other Global Navigation Satellite System, or GNSS, reliant systems. Time synchronization and location data play an important role in the global economy, particularly for major industries supported by critical infrastructure, such as financial services, telecommunications, cyber-security and transportation. We believe the acquisition of Satelles's business could generate substantial growth in our service revenue, as well as incremental equipment and engineering services revenue over the coming years from both government and commercial customers.
We sell our products and services to commercial end-users through a wholesale distribution network, encompassing approximately 120 service providers, 310 value-added resellers (VARs), and 85 value-added manufacturers (VAMs), which either sell directly to the end user or indirectly through other service providers, VARs or dealers. These distributors often integrate our products and services with other complementary hardware and software and have developed a broad suite of applications using our products and services targeting specific lines of business.
At September 30, 2025, we had approximately 2,542,000 billable subscribers worldwide, an increase of 60,000, or 2%, from approximately 2,482,000 billable subscribers as of September 30, 2024. We have a diverse customer base, with end users in land mobile, Internet of Things, or IoT, maritime, aviation and government.
Recent Developments
As a result of expected increased competition, including from Space Exploration Technologies Corp.'s ("SpaceX") recently announced plans to develop a global direct-to-device satellite system enabled by its pending acquisition of 50MHz of S-band spectrum rights and licenses from EchoStar Corporation, we intend to build on our existing market strengths, with increased focus on areas of our business in which we can deliver specialized, differentiated services that are not easily duplicated. In addition to these specialized services, we will also evaluate potential acquisitions, including to expand or augment our service offerings to support new revenue streams that would not compete directly with new direct-to-device services.
Material Trends and Uncertainties
Our industry and customer base have historically grown as a result of:
•demand for remote and reliable mobile communications services;
•a growing number of new products and services and related applications;
•a broad wholesale distribution network with access to diverse and geographically dispersed niche markets;
•increased demand for communications services by disaster and relief agencies, and emergency first responders;
•improved data transmission speeds for mobile satellite service offerings;
•regulatory mandates requiring the use of mobile satellite services;
•a general reduction in prices of mobile satellite services and subscriber equipment; and
•geographic market expansion through the ability to offer our services in additional countries.
Nonetheless, we face a number of challenges and uncertainties in operating our business, including:
•our ability to maintain the health, capacity, control and level of service of our satellites;
•our ability to develop and launch new and innovative products and services;
•changes in general economic, business and industry conditions, including the effects of currency exchange rates;
•our reliance on a single primary commercial gateway and a primary satellite network operations center;
•increased competition or potential competition from other satellite service providers, including SpaceX following its recently announced plans to acquire a significant amount of spectrum enabling global direct-to-device services, and, to a lesser extent, from the expansion of terrestrial-based cellular phone systems and related pricing pressures;
•market acceptance of our products;
•regulatory requirements in existing and new geographic markets;
•challenges associated with global operations, including as a result of conflicts in or affecting markets in which we operate;
•rapid and significant technological changes in the telecommunications industry, including announced plans for global, satellite direct-to-device broadband services;
•our ability to generate sufficient internal cash flows to repay our debt;
•reliance on our wholesale distribution network to market and sell our products, services and applications effectively;
•reliance on a global supply chain, including single-source suppliers for the manufacture of most of our subscriber equipment and for some of the components required in the manufacture of our end-user subscriber equipment and our ability to purchase component parts that are periodically subject to shortages resulting from surges in demand, natural disasters or other events, including global pandemics and the imposition of tariffs; and
•reliance on a few significant customers, particularly agencies of the U.S. government, for a substantial portion of our revenue, as a result of which the loss or decline in business with any of these customers may negatively impact our revenue and collectability of related accounts receivable, including as a result of an extended government shutdown or the use of continuing resolutions.
Comparison of Our Results of Operations for the Three Months Ended September 30, 2025 and 2024
Three Months Ended September 30, Change
2025 % of Total Revenue 2024 % of Total Revenue
($ in thousands) Dollars Percent
Revenue:
Services $ 165,243 73 % $ 159,855 75 % $ 5,388 3 %
Subscriber equipment 21,507 9 % 22,169 10 % (662) (3) %
Engineering and support services 40,185 18 % 30,747 15 % 9,438 31 %
Total revenue 226,935 100 % 212,771 100 % 14,164 7 %
Operating expenses:
Cost of services (exclusive of depreciation
and amortization) 50,762 22 % 43,848 21 % 6,914 16 %
Cost of subscriber equipment 12,661 6 % 12,769 6 % (108) (1) %
Research and development 4,944 2 % 6,189 3 % (1,245) (20) %
Selling, general and administrative 35,508 16 % 43,953 21 % (8,445) (19) %
Depreciation and amortization 52,975 23 % 51,160 23 % 1,815 4 %
Total operating expenses 156,850 69 % 157,919 74 % (1,069) (1) %
Operating income
70,085 31 % 54,852 26 % 15,233 28 %
Other expense:
Interest expense, net (22,593) (10) % (24,246) (11) % 1,653 (7) %
Other income, net
372 - % 312 - % 60 19 %
Total other expense, net (22,221) (10) % (23,934) (11) % 1,713 (7) %
Income before income taxes and loss on equity method investments
47,864 21 % 30,918 15 % 16,946 55 %
Income tax expense
(10,003) (4) % (6,005) (3) % (3,998) 67 %
Loss on equity method investments
(734) - % (467) - % (267) 57 %
Net income
$ 37,127 17 % $ 24,446 12 % $ 12,681 52 %
Revenue
Commercial Service Revenue
Three Months Ended September 30,
2025 2024 Change
Revenue
Billable
Subscribers (1)
ARPU (2)
Revenue
Billable
Subscribers (1)
ARPU (2)
Revenue Billable
Subscribers 		ARPU
(Revenue in millions and subscribers in thousands)
Commercial services:
Voice and data $ 59.9 411 $ 48 $ 57.7 422 $ 46 $ 2.2 (11) $ 2
IoT data 46.7 1,991 7.95 43.7 1,902 7.79 3.0 89 0.16
Broadband (3)
13.0 16.3 265 15.5 16.7 309 (2.5) (0.4) (44)
Hosted payload and other data 18.7 N/A 16.4 N/A 2.3 N/A
Total commercial services $ 138.3 2,418 $ 133.3 2,341 $ 5.0 77
(1)Billable subscriber numbers shown are at the end of the respective period.
(2)Average monthly revenue per unit, or ARPU, is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period. Billable subscriber and ARPU data is not applicable for hosted payload and other data service revenue items.
(3)Commercial broadband service consists of Iridium OpenPort®and Iridium Certus®broadband services.
For the three months ended September 30, 2025, total commercial services revenue increased $5.0 million, or 4%, from the prior year period primarily as a result of increases in IoT data, voice and data and hosted payload and other data services. Commercial IoT revenue increased $3.0 million, or 7%, for the three months ended September 30, 2025, compared to the same period of the prior year, driven by a 5% increase in billable subscribers and an increase in a contract with a large customer that was executed in the first quarter of 2024. Hosted payload and other data service revenue increased $2.3 million, or 14%, compared to the prior year period, primarily due to increases in PNT revenue. Commercial voice and data revenue increased $2.2 million, or 4%, for the three months ended September 30, 2025, compared to the same period of the prior year, primarily due to increased ARPU from price increases implemented during the quarter. Voice and data revenue growth is expected to continue through the remainder of 2025 as a result of the implementation of previously announced price actions. The increases in commercial services were partially offset by a decrease in commercial broadband revenue of $2.5 million, or 17%, for the three months ended September 30, 2025, compared to the prior year period. The prior year period includes non-recurring revenue recognition of $1.4 million, representing 9% of the year-over-year revenue decline. ARPU was $265 in the third quarter of 2025, as compared to $309 in the prior year period, primarily as a result of the non-recurring revenue recognized in the prior year period, as well as the increased prevalence of usage of our service as a companion service in the current year period. We expect the shift to companion services to continue at the historical pace through at least the remainder of 2025.
Government Service Revenue
Three Months Ended September 30,
2025 2024 Change
Revenue
Billable
Subscribers (1)
Revenue
Billable
Subscribers (1)
Revenue Billable
Subscribers
(Revenue in millions and subscribers in thousands)
Government services $ 26.9 124 $ 26.5 141 $ 0.4 (17)
(1)Billable subscriber numbers shown are at the end of the respective period.
We provide airtime and airtime support to U.S. government and other authorized customers pursuant to our Enhanced Mobile Satellite Services (EMSS) contract. Under the terms of this agreement, which we entered into in September 2019, authorized customers utilize specified Iridium airtime services provided through the U.S. government's dedicated gateway. The fee is not based on subscribers or usage, allowing an unlimited number of users access to these services. For the three months ended September 30, 2025, revenue increased slightly, reflecting the annual rate increases in the EMSS contract from $106.0 million to $107.0 million on September 15, 2024 and from $107.0 million to $110.5 million on September 15, 2025.
Subscriber Equipment Revenue
Subscriber equipment revenue decreased by $0.7 million, or 3%, for the three months ended September 30, 2025, compared to the prior year period, primarily as a result of a decrease in volume of handset sales, offset in part by an increase in volume of Short Burst Data®device sales.
Engineering and Support Service Revenue
Three Months Ended September 30,
2025 2024 Change
(In millions)
Commercial engineering and support services $ 1.9 $ 1.7 $ 0.2
Government engineering and support services 38.3 29.0 9.3
Total engineering and support services $ 40.2 $ 30.7 $ 9.5
Engineering and support service revenue increased by $9.5 million, or 31%, for the three months ended September 30, 2025, compared to the prior year period, primarily due to increased work under certain government contracts, predominantly the contract with the Space Development Agency, or the SDA.
Operating Expenses
Cost of Services (exclusive of depreciation and amortization)
Cost of services (exclusive of depreciation and amortization) includes the cost of network engineering and operations staff, including contractors, software maintenance, product support services and cost of services for government and commercial engineering and support service revenue.
Cost of services (exclusive of depreciation and amortization) increased by $6.9 million, or 16%, for the three months ended September 30, 2025 from the prior year period, primarily as a result of the increase in work under certain government projects, including the SDA contract, as noted above.
Cost of Subscriber Equipment
Cost of subscriber equipment includes the direct costs of equipment sold, which consist of manufacturing costs, allocation of overhead, and warranty costs.
Cost of subscriber equipment decreased by $0.1 million, or 1%, for the three months ended September 30, 2025, compared to the prior year period, primarily due to the net decrease in volume of device sales, as noted above.
Research and Development
Research and development expenses decreased by $1.2 million, or 20%, for the three months ended September 30, 2025, compared to the prior year period based on decreased spending on device-related features for our network.
Selling, General and Administrative
Selling, general and administrative expenses that are not directly attributable to the sale of services or products include sales and marketing costs, as well as employee-related expenses (such as salaries, wages, and benefits), legal, finance, information technology, facilities, billing and customer care expenses.
Selling, general and administrative expenses decreased by $8.4 million, or 19%, for the three months ended September 30, 2025, compared to the prior year period, primarily due to decreases in equity compensation costs and a decrease professional fees, including stock appreciation rights in the current year resulting from a decrease in our stock valuation between the years.
Depreciation and Amortization
Depreciation and amortization expense increased by $1.8 million, or 4%, for the quarter ended September 30, 2025, compared to the prior year period, due to increased depreciation resulting from on-orbit spares launched in the second quarter of 2023 being subsequently placed into service and beginning to be depreciated.
Other Income (Expense), net
Interest Expense, Net
Interest expense, net decreased $1.7 million, or 7%, for the three months ended September 30, 2025, compared to the prior year quarter primarily reflecting the fees paid in the prior year that were incurred in connection with our increased Term Loan in the third quarter of 2024 that did not recur in 2025.
Other Expense, net
Other expense, net, was $0.4 million for the three months ended September 30, 2025, compared to $0.3 million for the prior year period, primarily as the result of changes in foreign currency exchange rates.
Income Tax Expense
For the three months ended September 30, 2025, our income tax expense was $10.0 million, compared to $6.0 million for the prior year period. The increase in income tax expense is primarily related to increased pre-tax book income in 2025 compared to 2024 and increased tax expense associated with stock compensation and nondeductible executive compensation.
Loss on Equity Method Investments
For the three months ended September 30, 2025, our loss on equity method investments was $0.7 million compared to a loss of $0.5 million in the prior year period.
Net Income
Net income was $37.1 million for the three months ended September 30, 2025, compared to $24.4 million for the prior year period. The $12.7 million improvement in net income was primarily the result of the increases in engineering and support services revenue and commercial services revenue and decreasing operating expenses, as described above.
Comparison of Our Results of Operations for the Nine Months Ended September 30, 2025 and 2024
Nine Months Ended September 30, Change
2025 % of Total Revenue 2024 % of Total Revenue
($ in thousands) Dollars Percent
Revenue:
Services $ 475,105 72 % $ 460,899 75 % $ 14,206 3 %
Subscriber equipment 64,083 10 % 69,819 11 % (5,736) (8) %
Engineering and support services 119,531 18 % 86,973 14 % 32,558 37 %
Total revenue 658,719 100 % 617,691 100 % 41,028 7 %
Operating expenses:
Cost of services (exclusive of depreciation
and amortization) 153,152 23 % 129,761 21 % 23,391 18 %
Cost of subscriber equipment 36,830 6 % 40,595 7 % (3,765) (9) %
Research and development 14,640 2 % 19,899 3 % (5,259) (26) %
Selling, general and administrative 115,887 18 % 127,487 21 % (11,600) (9) %
Depreciation and amortization 157,479 24 % 151,680 24 % 5,799 4 %
Total operating expenses 477,988 73 % 469,422 76 % 8,566 2 %
Operating income 180,731 27 % 148,269 24 % 32,462 22 %
Other expense:
Interest expense, net (67,169) (10) % (68,706) (11) % 1,537 (2) %
Other expense, net
(2,184) - % (291) - % (1,893) 651 %
Total other expense, net (69,353) (10) % (68,997) (11) % (356) 1 %
Income before income taxes and gain (loss) on equity method investments
111,378 17 % 79,272 13 % 32,106 41 %
Income tax expense
(19,629) (3) % (18,501) (3) % (1,128) 6 %
Gain (loss) on equity method investments (2,242) - % 15,664 3 % (17,906) (114) %
Net income
$ 89,507 14 % $ 76,435 13 % $ 13,072 17 %
Revenue
Commercial Service Revenue
Nine Months Ended September 30,
2025 2024 Change
Revenue
Billable
Subscribers (1)
ARPU (2)
Revenue
Billable
Subscribers (1)
ARPU (2)
Revenue Billable
Subscribers 		ARPU
(Revenue in millions and subscribers in thousands)
Commercial services:
Voice and data $ 172.7 411 $ 46 $ 169.1 422 $ 45 $ 3.6 (11) $ 1
IoT data 135.3 1,991 7.75 124.8 1,902 7.68 10.5 89 0.07
Broadband (3)
38.6 16.3 261 42.7 16.7 284 (4.1) (0.4) (23)
Hosted payload and other data 48.1 N/A 44.8 N/A 3.3 N/A
Total commercial services $ 394.7 2,418 $ 381.4 2,341 $ 13.3 77
(1)Billable subscriber numbers shown are at the end of the respective period.
(2)ARPU is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period. Billable subscriber and ARPU data is not applicable for hosted payload and other data service revenue items.
(3)Commercial broadband service consists of Iridium OpenPort and Iridium Certus broadband services.
For the nine months ended September 30, 2025, total commercial services revenue increased $13.3 million, or 3%, from the prior year period primarily driven by increases in IoT data, voice and data and hosted payload and other data services revenue. Commercial IoT revenue increased $10.5 million, or 8%, for the nine months ended September 30, 2025, compared to the prior year period, driven by a 5% increase in IoT billable subscribers and an increase in a contract with a large customer that was executed in the first quarter of 2024. Commercial voice and data revenue increased $3.6 million, or 2%, from the prior year period, primarily due to increased ARPU from price increases implemented during the year. Voice and data revenue growth is expected to continue through the remainder of 2025 as a result of the implementation of the previously announced price actions. Hosted payload and other data service revenue increased $3.3 million, or 7%, compared to the prior year period, primarily due to increases in PNT revenue, partially offset by other data service contracts. Commercial broadband revenue decreased $4.1 million, or 10%, for the nine months ended September 30, 2025, compared to the prior year period, primarily due to a decrease in ARPU reflecting the increased prevalence of usage of our service as a companion service in the current year period and non-recurring revenue recognition of $1.4 million in the prior year period. We expect the shift to companion services to continue at the historical pace through at least the remainder of 2025.
Government Service Revenue
Nine Months Ended September 30,
2025 2024 Change
Revenue
Billable
Subscribers (1)
Revenue
Billable
Subscribers (1)
Revenue Billable
Subscribers
(Revenue in millions and subscribers in thousands)
Government services $ 80.4 124 $ 79.5 141 $ 0.9 (17)
(1)Billable subscriber numbers shown are at the end of the respective period.
We provide airtime and airtime support to the U.S. government and other authorized customers pursuant to our EMSS contract. Under the terms of this agreement, which we entered into in September 2019, authorized customers utilize specified Iridium airtime services provided through the U.S. government's dedicated gateway. The fee is not based on subscribers or usage, allowing an unlimited number of users access to these services. For the nine months ended September 30, 2025, revenue increased slightly, reflecting contractual step ups in the EMSS contract in September 2024 and 2025, as described above.
Subscriber Equipment Revenue
Subscriber equipment revenue decreased $5.7 million, or 8%, for the nine months ended September 30, 2025, compared to the prior year period, primarily due to a decrease in volume of handset and Short Burst Data device sales.
Engineering and Support Service Revenue
Nine Months Ended September 30,
2025 2024 Change
(In millions)
Commercial engineering and support services $ 5.9 $ 4.4 $ 1.5
Government engineering and support services 113.6 82.6 31.0
Total engineering and support services $ 119.5 $ 87.0 $ 32.5
Engineering and support service revenue increased $32.5 million, or 37%, for the nine months ended September 30, 2025 compared to the prior year period primarily due to increased work under certain government projects, including the contract with the SDA.
Operating Expenses
Cost of Services (exclusive of depreciation and amortization)
Cost of services (exclusive of depreciation and amortization) increased by $23.4 million, or 18%, for the nine months ended September 30, 2025 from the prior year period, primarily as a result of an increase in work under certain government engineering contracts, including the SDA contract, as noted above.
Cost of Subscriber Equipment
Cost of subscriber equipment decreased $3.8 million, or 9%, for the nine months ended September 30, 2025, compared to the prior year period, which was in line with the change in equipment revenue for the same period, as noted above.
Research and Development
Research and development expenses decreased by $5.3 million, or 26%, for the nine months ended September 30, 2025 compared to the prior year period based on decreased spending on device-related features for our network.
Selling, General and Administrative
Selling, general and administrative expenses decreased by $11.6 million, or 9%, for the nine months ended September 30, 2025 compared to the prior year period, primarily due to lower equity compensation costs and in professional fees, offset in part by increased spend related to our channel partner conference held in March 2025.
Depreciation and Amortization
Depreciation and amortization expense increased by $5.8 million, or 4%, compared to the prior year period due to increased depreciation resulting from on-orbit spares launched in the second quarter of 2023 being placed into service in 2025 and beginning to be depreciated.
Other Expense
Interest Expense, Net
Interest expense, net decreased $1.5 million for the nine months ended September 30, 2025 compared to the prior year period. The decrease resulted primarily from a decrease in the average borrowing rate and the refinancing fees expensed in the prior year that did not recur in 2025, offset in part by the increase in the outstanding debt balance as compared to the prior year period.
Other Expense, net
Other expense, net, was $2.2 million for the nine months ended September 30, 2025, compared to $0.3 million for the prior year period, primarily as the result of changes in foreign currency exchange rates.
Income Tax Expense
For the nine months ended September 30, 2025, our income tax expense was $19.6 million, compared to $18.5 million for the prior year period. The increase in income tax expense is primarily related to increased pre-tax book income in 2025 compared to 2024, partially offset by decreased tax expense associated with stock compensation and nondeductible executive compensation.
Gain (Loss) on Equity Method Investments
For the nine months ended September 30, 2025, our loss on equity method investments was $2.2 million, compared to a gain of $15.7 million for the prior year period. The change is primarily the result of the acquisition of Satelles in 2024, upon which we recorded a $19.8 million gain on our previously held equity method investment, offset by the portion of losses recorded on other equity method investments.
Net Income
Net income was $89.5 million for the nine months ended September 30, 2025, compared to $76.4 million for the prior year period. The change primarily resulted from improved operating income in the current year, as a result of increases in engineering and support services revenue and commercial services revenue, as noted above, offset in part by the prior year gain on the Satelles acquisition.
Liquidity and Capital Resources
Our primary sources of liquidity are cash provided by operations, cash and cash equivalents and our Revolving Facility. These sources are expected to meet our short-term and long-term liquidity needs, including payments for (i) required principal and interest on the Term Loan, which we expect to be approximately $95.0 million in interest over the next 12 months, based on the current interest rate, (ii) capital expenditures of approximately $90.0 million in 2025, (iii) working capital, (iv) potential share repurchases, and (v) anticipated cash dividend payments to holders of our common stock.
As of September 30, 2025, our total cash and cash equivalents balance was $88.5 million, down from $93.5 million as of December 31, 2024. While we borrowed $50.0 million under the Revolving Facility during the nine months ended September 30, 2025, and generated cash flows from operations, we used cash of $186.5 million to repurchase shares of our common stock, $46.9 million to pay dividends, and $66.8 million for capital expenditures.
Term Loan and Revolving Facility
Pursuant to a credit agreement, as amended and restated to date, or the Credit Agreement, we previously entered into a term loan totaling $1,500.0 million, or the Term Loan, and an accompanying $100.0 million revolving loan, or the Revolving Facility. The maturity dates of the Term Loan and Revolving Facility are September 2030 and September 2028, respectively. We borrowed an additional $125.0 million under the Term Loan in March 2024 and $200.0 million in July 2024. The additional amounts borrowed are fungible with the original $1,500.0 million, and have the same maturity date, interest rate and other terms.
The March 2024 Term Loan borrowings were used to complete the acquisition of Satelles, Inc. on April 1, 2024. In April 2024, we drew $50.0 million under our Revolving Facility for general corporate purposes, including the funding of repurchases of our common stock. This amount was repaid with the expansion of the Term Loan in July 2024. The remaining proceeds of the Term Loan expansion in July 2024 were used for general corporate purposes, including share repurchases. In the first half of 2025, we drew $50.0 million under our Revolving Facility for general corporate purposes, which amount remained outstanding as of September 30, 2025.
The Term Loan has been repriced on several occasions, most recently in June 2024, and currently bears interest at an annual rate equal to the Secured Overnight Financing Rate, or SOFR, plus 2.25%, with a 0.75% SOFR floor. We typically select a one-month interest period, with the result that interest is calculated using one-month SOFR. Interest is paid monthly on the last business day of the month. Principal payments, payable quarterly, are equal to $18.3 million per annum (approximately one percent of the full principal amount of the Term Loan following the July 2024 increase), with the remaining principal due upon maturity.
As of September 30, 2025 and December 31, 2024, we reported an aggregate of $1,774.7 million and $1,807.7 million in borrowings under the Term Loan, respectively. These amounts do not include $14.9 million and $16.9 million of net unamortized deferred financing costs as of September 30, 2025 and December 31, 2024, respectively. The net principal balance in borrowings in the accompanying consolidated balance sheets as of September 30, 2025 and December 31, 2024 amounted to $1,759.8 million and $1,790.9 million, respectively. As of September 30, 2025 and December 31, 2024, the fair value of our borrowings under the Term Loan was $1,683.8 million and $1,802.1 million, respectively.
The Revolving Facility bears interest at an annual rate equal to SOFR plus 2.5% (but without a SOFR floor) if and as drawn, with no original issue discount, a commitment fee of 0.5% per year on the undrawn amount, which may be reduced to 0.375% if we have a consolidated first lien net leverage ratio (as defined in the Credit Agreement) of less than 3.5 to 1.
The Credit Agreement contains no financial maintenance covenants with respect to the Term Loan. With respect to the Revolving Facility, we are required to maintain a consolidated first lien net leverage ratio of no greater than 6.25 to 1 if more than 35% of the Revolving Facility has been drawn, or subject to letter of credit exposure. As of September 30, 2025, the aggregate exposure under the Revolving Facility was above 35% and we were in compliance with all covenants. The Credit Agreement contains other customary representations and warranties, affirmative and negative covenants, and events of default.
The Credit Agreement restricts our ability to incur liens, engage in mergers or asset sales, pay dividends, repay subordinated indebtedness, incur indebtedness, make investments and loans, and engage in other transactions as specified in the Credit Agreement. The Credit Agreement provides for specified exceptions, including baskets measured as a percentage of trailing twelve months of earnings before interest, taxes, depreciation and amortization, or EBITDA, and unlimited exceptions in the case of incurring indebtedness and liens and making investments, dividend payments, and payments of subordinated indebtedness, based on achievement and maintenance of specified leverage ratios. The Credit Agreement permits repayment, prepayment, and repricing transactions. The Credit Agreement also contains an annual mandatory prepayment sweep mechanism with respect to a portion of our excess cash flow (as defined in the Credit Agreement) in the event our net leverage ratio rises above 3.5 to 1. Our mandatory excess cash flow prepayment, as specified in the Credit Agreement, was $28.5 million as of December 31, 2024. This amount was paid in the second quarter of 2025 and applied to our required quarterly principal payments. As a result, no quarterly principal payment was required for the quarter ended September 30, 2025, and no quarterly principal payment will be required for the remainder of 2025 or the first three quarters of 2026. As such, we have no amounts classified as short-term secured debt on our condensed consolidated balance sheet as of September 30, 2025.
U.S. Government
A significant portion of our revenues and cash flow are derived from U.S. government contracts. During the quarter ended September 30, 2025, we did not experience delays in receiving payments from U.S. government agencies. However, the U.S. government began a shutdown on October 1, 2025. None of our contracts have been impacted as a result; however, an extended government shutdown could result in a delay or suspension of funding for our U.S. government contracts and disrupt our cash flows and delay new contract awards.
Contractual Obligations
As of September 30, 2025, we had non-cancelable purchase obligations of approximately $11.6 million for inventory purchases with Benchmark, our primary third-party equipment supplier. Our purchase obligations, all of which are due during the next twelve months, did not change materially from the end of 2024.
Our most significant contractual long-term cash requirement is the repayment of the remaining principal amount under the Term Loan upon its maturity in 2030, which is expected to be $1,702.8 million, and repayment of any outstanding Revolving Facility in 2028, which is currently $50.0 million. We expect to refinance the Term Loan at or prior to maturity.
Dividends
Total dividends paid during the nine months ended September 30, 2025 and September 30, 2024 were $46.9 million and $49.1 million, respectively. While we expect to continue paying regular cash dividends, any future dividends declared will be at the discretion of our Board of Directors and will depend, among other factors, upon our results of operations, financial condition and cash requirements, as well as such other factors that our Board of Directors deems relevant. Our Board of Directors increased the quarterly dividend to $0.15 per share in the third quarter of 2025.
Share Repurchases
During the quarter, we repurchased and subsequently retired 1.9 million shares of its common stock under our previously announced share repurchase program at a total purchase price of $50.0 million. As of September 30, 2025, $245.3 million remained available and authorized for repurchase under this program through December 31, 2027. We have paused share repurchases to increase financial flexibility and will continue to evaluate the amount and timing of share repurchases under our share repurchase program, considering, among other factors, general market conditions, capital allocation priorities, general business conditions and other investment opportunities. The repurchase program does not obligate us to repurchase any specific amount of common stock and may be modified, suspended, or discontinued at any time without notice at the discretion of our Board of Directors.
Cash Flows
The following table summarizes our cash flows:
Nine Months Ended September 30,
2025 2024 Change
(In thousands)
Cash provided by operating activities $ 291,478 $ 271,166 $ 20,312
Cash used in investing activities $ (66,791) $ (156,335) $ 89,544
Cash used in financing activities
$ (232,428) $ (26,155) $ (206,273)
Cash Flows Provided by Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2025 increased by $20.3 million from the prior year period. The changes in operating cash relate to increased net income and a decrease in non-cash income from equity method investments as the prior year included a gain on the acquisition of Satelles. These changes were offset by a working capital decrease of approximately $10.7 million, primarily due to recognition of deferred revenue and the change in employee-related accruals, offset by higher cash inflows associated with timing of customer and vendor payments.
Cash Flows Used in Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2025 decreased by $89.5 million as compared to the prior year period, primarily as a result of the Satelles acquisition during the prior year period, offset in part by an increase in capital expenditures compared to the prior year period.
Cash Flows Used in Financing Activities
Net cash used in financing activities for the nine months ended September 30, 2025 increased by $206.3 million compared to the prior year period. Expenditures in the current year are primarily related to share repurchases and the payment of dividends, while the prior year period included cash inflow related to the additional $325.0 million in borrowings under the Term Loan, offset in part by share repurchases and the payment of dividends.
U.S. Tax Regulation Update
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA permanently extends certain expiring provisions of the Tax Cuts and Jobs Act, modifies the international tax framework, and restores certain favorable business tax provisions, among other changes. The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. We have incorporated the impact of the new legislation into our year-to-date effective tax rate and continue to assess the impact on our consolidated financial statements.
Seasonality
Our results of operations have been subject to seasonal usage changes for commercial customers, and we expect that our results will be affected by similar seasonality going forward. March through October are typically the peak months for commercial voice services revenue and related subscriber equipment sales. In December 2024, a large IoT customer began to phase out its annual retail pricing plans and subsequently revised them in 2025. As a result, that customer's annual billable subscribers may move to monthly plans which has impacted the seasonality of subscribers and may further do so in the future. We expect revenue to remain unaffected due to the fixed-price nature of our contract with this customer for 2025. U.S. government revenue and commercial IoT revenue have been less subject to seasonal usage changes.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these financial statements requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, useful lives of property and equipment, long-lived assets and other intangible assets, deferred financing costs, income taxes, stock-based compensation, and other estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. There have been no changes to our critical accounting policies and estimates from those described in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 13, 2025.
Iridium Communications Inc. published this content on October 23, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 23, 2025 at 11:02 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]