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TAMPA, Fla. — Iridium’s shares closed down more than 7% Oct. 23 after the satellite operator lowered its full-year service revenue outlook again, while withdrawing its $1 billion target for 2030 amid mounting competition from SpaceX.
The company now expects 3% service revenue growth for 2025, down from 3-5% previously and well below its earlier 5-7% range.
Service revenue for the three months to Sept. 30 grew 3% year-on-year to $165.2 million, representing 73% of total revenue, which climbed 7% to $226.9 million.
However, Iridium CEO Matt Desch said it will suspend its stock buyback program and pivot toward long-term strategic growth, citing SpaceX’s blockbuster spectrum acquisition from Echostar last month. That deal, worth more than $17 billion, is set to supercharge SpaceX’s Starlink direct-to-device (D2D) service, encroaching on parts of Iridium’s business.
“We acknowledge that more competition is coming to our corner of the satellite market,” Desch said during the company’s earnings call.
“We take this increased competition seriously, and believe that this development will affect us as early as the latter years of this decade, and most certainly into the 2030s.”
Changing the status quo
He said SpaceX’s deal “will likely be disruptive to the status quo and will hasten the introduction of a global service that, over time, will connect new smartphones configured to use this spectrum.”
It could also accelerate the adoption of Internet of Things (IoT) monitoring and tracking devices that better compete with Iridium’s global IoT service, he added.
But even still, Desch said Iridium will benefit from its long history of providing communications, and the company’s widespread partner network, as it proactively seeks ways to shore up its business.
He said the company remains committed to making its constellation of 66 low Earth orbit satellites compatible with 5G standards used by mass-market devices, enabling them to access messaging and alert services outside cellular coverage from next year.
While SpaceX’s mass-market ambitions could overlap with consumer IoT segments, Desch said the D2D market is “not a one-player wins all” competition.
Iridium is currently conducting in-orbit tests for its upcoming NTN Direct service as traction builds with telcos, he added, citing a recent roaming agreement with Germany’s Deustche Telekom.
The company also continues to expect to generate between $1.5 billion and $1.8 billion in free cashflow between 2026 and 2030, providing fuel for potential acquisitions.
Ready for deals
Desch said the company is open to a transformational deal, but is not looking to deviate from its current business, including the commercial IoT segment driving subscriber growth.
He also pointed to a potential role in the U.S. government’s multibillion-dollar Golden Dome missile defense program, and floated the possibility of Iridium’s next-generation constellation being a hosted payload on another operator’s network.
Responding to an analyst’s question, Desch said Iridium would be open to a sale to maximize shareholder value.
“[T]here’s only so many of us that do have spectrum,” he said.
“We obviously have an important position there, and so if someone really wanted to do it globally, we could obviously be part of that.”
Alongside about 10 MHz of global L-band frequencies, William Blair analyst Louie DiPalma noted Iridium has a major ownership position in flight-tracking service Aireon and last year took over Satelles, an alternate PNT capability in the early innings.
“We view these assets as strategic to others in the satellite communications ecosystem,” DiPalma said.
Analysts at Raymond James highlighted that Amazon’s upcoming Project Kuiper LEO broadband constellation has yet to make its D2D intentions known, while SpaceX is likely still hungry for more spectrum.
“We think the entire satellite industry, [Iridium] included, will lean even further into partnerships or M&A to strengthen against the competition,” the analysts said in a note to investors.
While competitive questions are getting bigger, the analysts underlined how not every Iridium business line is exposed, with most of the company’s revenue base coming from customers such as first responders who value the rugged devices it specializes in.
“Starlink does not get the spectrum for another two years,” they added, “and needs to build out a base of partnerships and customers,” meaning Iridium is “very insulated for around 3-4 years.”
Iridium reported $37.1 million in net income for the quarter, compared with $24.4 million for the corresponding period in 2024.
Operational EBITDA, or earnings before interest, taxes, depreciation, and amortization, increased to $136.6 million from $124.4 million.
Iridium’s shares dropped 7.48% to close at $18.19.
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