Satellite communications provider reported Q1 CY2025 results topping the market’s revenue expectations , with sales up 5.4% year on year to $214.9 million. Its GAAP profit of $0.27 per share was 27% above analysts’ consensus estimates.
Revenue: $214.9 million vs analyst estimates of $213.4 million (5.4% year-on-year growth, 0.7% beat)
EPS (GAAP): $0.27 vs analyst estimates of $0.21 (27% beat)
Adjusted EBITDA: $122.1 million vs analyst estimates of $119.2 million (56.8% margin, 2.4% beat)
EBITDA guidance for the full year is $495 million at the midpoint, in line with analyst expectations
Operating Margin: 28.1%, up from 24.4% in the same quarter last year
Subscribers: 1.89 million
Market Capitalization: $2.52 billion
"Demand for Iridium's mission-critical applications continued to drive revenue growth and support share buybacks," said Matt Desch, CEO, Iridium.
Company Overview
With a constellation of 66 low-earth orbit satellites providing coverage to every inch of the planet, Iridium Communications (NASDAQ:IRDM) operates a global satellite network that provides voice and data services to customers in remote areas where traditional telecommunications are unavailable.
Satellite Telecommunication Services
Satellite telecommunication is generally buoyed by rising global demand for connectivity in costly-to-connect and remote areas. IoT (Internet of Things) expansion and government-backed space and defense initiatives also help. As advancements in low Earth orbit (LEO) technology happen, companies in the space will have more favorable competitive positions, which could lead to further partnerships with mobile network operators to extend coverage. On the other hand, headwinds include high capital expenditures for satellite deployment as well as regulatory hurdles related to spectrum allocation. Competition from larger players like SpaceX’s Starlink and Amazon’s Kuiper could also intensify over time, especially if tech advancements lead to better unit economics and financial prospects.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $841.7 million in revenue over the past 12 months, Iridium is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand.
As you can see below, Iridium’s 8% annualized revenue growth over the last five years was solid. This is an encouraging starting point for our analysis because it shows Iridium’s demand was higher than many business services companies.
Iridium Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Iridium’s annualized revenue growth of 5.4% over the last two years is below its five-year trend, but we still think the results were respectable.
Iridium Year-On-Year Revenue Growth
This quarter, Iridium reported year-on-year revenue growth of 5.4%, and its $214.9 million of revenue exceeded Wall Street’s estimates by 0.7%.
Looking ahead, sell-side analysts expect revenue to grow 4.7% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and suggests its newer products and services will not lead to better top-line performance yet. At least the company is tracking well in other measures of financial health.
Iridium has managed its cost base well over the last five years. It demonstrated solid profitability for a business services business, producing an average operating margin of 13.5%.
Analyzing the trend in its profitability, Iridium’s operating margin rose by 19.5 percentage points over the last five years, as its sales growth gave it immense operating leverage.
Iridium Trailing 12-Month Operating Margin (GAAP)
This quarter, Iridium generated an operating profit margin of 28.1%, up 3.7 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Iridium’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.
Iridium Trailing 12-Month EPS (GAAP)
In Q1, Iridium reported EPS at $0.27, up from $0.16 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Iridium’s full-year EPS of $1.06 to stay about the same.
Key Takeaways from Iridium’s Q1 Results
We were impressed by how significantly Iridium blew past analysts’ EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Zooming out, we think this was a solid quarter. The stock remained flat at $23.45 immediately following the results.
Iridium had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
