Satellite communications provider reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 7.9% year on year to $216.9 million. Its GAAP profit of $0.20 per share was 15.7% below analysts’ consensus estimates.

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StockStory’s Take

Iridium’s second quarter was marked by a negative market reaction as investors responded to both a revenue beat and a shortfall in GAAP earnings per share versus Wall Street expectations. Management cited faster-than-anticipated subscriber migration from primary to backup usage in maritime broadband as a core reason for softer service revenue growth. CEO Matt Desch specifically pointed to "the ongoing maritime broadband transition to a companion service" and highlighted delays in timing for position, navigation, and timing (PNT) revenue as further headwinds. The company also noted continued reductions in commercial voice subscribers tied to the loss of government contract funding.

Looking ahead, Iridium’s forward guidance is driven by several new product rollouts and long-term bets on emerging market opportunities. Management emphasized investments in direct-to-device (D2D) satellite services and PNT applications as key to future revenue growth, with Desch stating that Iridium is “winding the spring for new subscriber and service revenue growth.” The company expects momentum from recent price actions in core services and sees expanding partnerships—including new mobile network operator agreements—as critical to reaching its 2030 growth targets. However, management cautioned that revenue acceleration will depend on successful adoption and scaling of these new technologies, as well as stabilization in legacy segments.

Key Insights from Management’s Remarks

Management attributed the mixed quarter to softness in legacy maritime and voice services, while highlighting growth in IoT and continued investment in next-generation offerings.

• Maritime subscription shift: Subscriber migration from using Iridium as a primary maritime broadband service to a backup or companion solution accelerated, leading to lower average revenue per user (ARPU) and putting pressure on near-term service revenue growth. Management noted this was a structural shift, not a temporary issue, and expects the trend to stabilize as more multi-function terminals are deployed in 2026.

• IoT segment resilience: Despite a deceleration in reported IoT revenue growth compared to prior periods, management highlighted robust demand for new IoT device certifications and anticipates stronger growth in the second half of the year due to new product launches and increased partner activity. The company’s new 9704 device, offering faster and more direct connectivity, was cited as a driver of recent partner interest.

• PNT (Position, Navigation, and Timing) progress: Iridium’s PNT services, which provide location and timing data as an alternative to GPS, are gaining traction with commercial and government customers. Delays in larger contract revenue recognition were characterized as driven by customer trial cycles, but management remains confident in the medium-term growth trajectory and unique competitive positioning.

• Expanding partnership ecosystem: The company added nearly 50 new business relationships during the first half of 2025, including mobile network operators and industry players in autonomous systems. Management sees this as crucial for expanding its reach in both established and emerging satellite applications.

• Investment in next-generation network: Iridium is investing in a new standards-based network expected to support future 5G (and potentially 6G) direct-to-device services. This is intended to enable broader adoption across consumer and industrial markets, with management positioning Iridium as an early mover in global standards-based satellite connectivity.

Drivers of Future Performance

Iridium’s outlook hinges on accelerating adoption of new technologies and stabilization in transitioning business lines, with continued investment in infrastructure and strategic partnerships.

• New product adoption: Success in launching and scaling Iridium Certus IoT and NTN Direct services, including direct-to-device satellite connectivity, is expected to drive subscriber growth, especially as more devices and industry partners integrate Iridium’s technology.

• PNT and government opportunities: Growth in PNT services is tied to increasing demand from both commercial and government clients concerned about GPS vulnerabilities, but the timing of revenue ramp is dependent on lengthy customer adoption cycles and regulatory decisions.

• Legacy segment stabilization: Management anticipates that the recent decline in maritime broadband ARPU and commercial voice subscriptions will slow as new multi-service terminals and pricing actions take effect, but acknowledges some remaining risk of further softness if adoption lags or market dynamics shift unexpectedly.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will closely monitor (1) the pace of new product adoption in IoT and PNT segments, (2) the rate at which maritime broadband subscription patterns stabilize, and (3) the successful rollout and partnership announcements for Iridium’s direct-to-device and NTN Direct services. Ongoing expansion of the partner ecosystem and execution against government contract opportunities will also be key measures of progress.

Iridium currently trades at $25.40, down from $32.44 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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