Iridium Communications Inc.

Previous wording

We sell our products and services to commercial end-users through a wholesale distribution network, encompassing approximately 110 service providers, 300 value-added resellers, or VARs, and 85 value-added manufacturers, or VAMs, who 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.

Current wording

We sell our products and services to commercial end-users through a wholesale distribution network, encompassing approximately 120 service providers, 310 value-added resellers, or VARs, and 85 value-added manufacturers, or VAMs, who 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.

Previous wording

At March 31, 2025, we had approximately 2,443,000 billable subscribers worldwide, an increase of 110,000, or 5%, from approximately 2,333,000 billable subscribers as of March 31, 2024. We have a diverse customer base, with end users in land mobile, Internet of Things, or IoT, maritime, aviation and government.

Current wording

At June 30, 2025, we had approximately 2,483,000 billable subscribers worldwide, an increase of 70,000, or 3%, from approximately 2,413,000 billable subscribers as of June 30, 2024. We have a diverse customer base, with end users in land mobile, Internet of Things, or IoT, maritime, aviation and government.

Previous wording

For the three months ended March 31, 2025, total commercial services revenue increased $5.4 million, or 4%, from the prior year period primarily as a result of increases in IoT, voice and data service revenue and hosted payload and other data revenue. Commercial IoT revenue increased $4.4 million, or 11%, for the three months ended March 31, 2025, compared to the same period of the prior year, driven by a 7% increase in billable subscribers primarily in users of personal communications devices, and an increase in the contract with a large customer that was executed in the first quarter of 2024. Commercial voice and data revenue increased $0.9 million, or 2%, for the three months ended March 31, 2025, compared to the same period of the prior year, primarily due to an increase in billable subscribers. Hosted payload and other data service revenue increased $0.9 million, or 7%, compared to the prior year period, primarily due to increases in other data service revenue, including Satelles revenue, which increased as a result of the acquisition after the first quarter of 2024. Commercial broadband revenue decreased $0.8 million, or 6%, for the three months ended March 31, 2025, compared to the prior year period, primarily due to a decrease ARPU reflecting the increased prevalence of usage of our service as a companion service and the conversion of customers to other plans.

Current wording

For the three months ended June 30, 2025, total commercial services revenue increased $2.8 million, or 2%, from the prior year period primarily as a result of increases in IoT. Commercial IoT revenue increased $3.2 million, or 8%, for the three months ended June 30, 2025, compared to the same period of the prior year, driven by a 5% increase in billable subscribers and an increase in the contract with a large customer that was executed in the first quarter of 2024. Commercial voice and data revenue increased $0.3 million, or 1%, for the three months ended June 30, 2025, compared to the same period of the prior year, with consistent subscribers and ARPU. Voice and data revenue growth is expected to accelerate in the second half of 2025 as a result of the implementation of previously announced price actions. Hosted payload and other data service revenue increased $0.1 million, or 1%, compared to the prior year period, primarily due to increases in PNT revenue, partially offset by other data service contracts. Commercial broadband revenue decreased $0.8 million, or 6%, for the three months ended June 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. This previously identified trend has accelerated this quarter, and we expect it to continue at this higher pace through at least the remainder of 2025.

Previous wording

Cost of services (exclusive of depreciation and amortization) increased by $2.3 million, or 5%, for the three months ended March 31, 2025 from the prior year period, primarily as a result of the increase in work under certain government projects, as noted above.

Current wording

Cost of services (exclusive of depreciation and amortization) increased by $14.1 million, or 36%, for the three months ended June 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.

Previous wording

Cost of subscriber equipment decreased by $1.0 million, or 7%, for the three months ended March 31, 2025, compared to the prior year period primarily due to the decrease in volume of Short Burst Data device sales, as described above.

Current wording

Cost of subscriber equipment decreased by $2.6 million, or 19%, for the three months ended June 30, 2025, compared to the prior year period, primarily due to the decrease in volume of device sales, as noted above.

Previous wording

Research and development expenses decreased by $1.8 million, or 25%, for the three months ended March 31, 2025, compared to the prior year period based on lower spending on device-related features for our network, including our multi-year project to develop standards-based Narrowband-Internet of Things (NB-IoT) and Non-Terrestrial Network (NB-NTN) messaging and SOS capabilities for smartphones, tablets, cars and related consumer applications.

Current wording

Research and development expenses decreased by $2.2 million, or 34%, for the three months ended June 30, 2025, compared to the prior year period based on decreased spending on device-related features for our network.

Previous wording

Depreciation and amortization expense increased by $1.9 million, or 4%, for the quarter ended March 31, 2025, compared to the prior year period, as some of the on-orbit spares launched in the second quarter of 2023 were placed in to service in the first quarter of 2025, and increased amortization related to customer relationships acquired from Satelles.

Current wording

Depreciation and amortization expense increased by $2.1 million, or 4%, for the quarter ended June 30, 2025, compared to the prior year period, due to increased depreciation as some of the on-orbit spares launched in the second quarter of 2023 were placed into service in 2025.

Previous wording

Interest expense, net increased $1.2 million, or 6%, for the three months ended March 31, 2025, compared to the prior year quarter primarily reflecting the higher average outstanding debt balance, offset in part by the $1.6 million in fees expensed in connection with the additional Term Loan amounts borrowed in the first quarter of 2024.

Current wording

Interest expense, net decreased $1.0 million, or 4%, for the three months ended June 30, 2025, compared to the prior year quarter primarily reflecting the fees paid in the prior year to reprice the Term Loan that did not recur in 2025.

Previous wording

Other expense, net, was $1.7 million for the three months ended March 31, 2025, compared to immaterial other income, net, for the prior year period, primarily as the result of changes in foreign currency exchange rates.

Current wording

Other expense, net, was $0.9 million for the three months ended June 30, 2025, compared to $0.6 million for the prior year period, primarily as the result of changes in foreign currency exchange rates.

Previous wording

For the three months ended March 31, 2025, our income tax expense was $5.8 million, compared to $7.9 million for the prior year period. The decrease in income tax expense is primarily related to increased tax benefit from the deduction for foreign derived intangible income and U.S. tax credits, partially offset by decreased tax expense associated with stock compensation and nondeductible executive compensation.

Current wording

For the three months ended June 30, 2025, our income tax expense was $3.8 million, compared to $4.6 million for the prior year period. The decrease in income tax expense is primarily related to increased tax benefit from the deduction for foreign derived intangible income and U.S. tax credits, partially offset by increased pre-tax book income in 2025 compared to 2024 and increased tax expense associated with stock compensation and nondeductible executive compensation.

Previous wording

For the three months ended March 31, 2025, our loss on equity method investments was $0.6 million, compared to $1.6 million in the prior year period. These reflect the portion of losses recorded on our equity method investments, which included Satelles prior to the acquisition on April 1, 2024.

Current wording

For the three months ended June 30, 2025, our loss on equity method investments was $0.9 million, compared to a gain of $17.7 million in the prior year period. The prior year period amount includes a gain of $19.8 million, equal to the difference between the fair value and net book value of the equity method investment upon the acquisition of Satelles, while the current year reflects only the portion of losses recorded on our other equity method investments.

Previous wording

Net income was $30.4 million for the three months ended March 31, 2025, compared to $19.7 million for the prior year period. The $10.8 million improvement in net income was primarily the result of the increases in service and engineering and support services revenues, as described above.

Current wording

Net income was $22.0 million for the three months ended June 30, 2025, compared to $32.3 million for the prior year period. The $10.4 million decrease in net income was primarily the result of the $19.8 million gain related to the acquisition of Satelles in the prior year, offset in part by the improvements in operating income, noted above.

Previous wording

Subscriber equipment revenue decreased by $1.7 million, or 7%, for the three months ended March 31, 2025, compared to the prior year period, primarily due to a decrease in volume of Short Burst Data® devices.

Current wording

Subscriber equipment revenue decreased $5.1 million, or 11%, for the six months ended June 30, 2025, compared to the prior year period, primarily due to a decrease in volume of Short Burst Data device and handset sales.

Previous wording

Engineering and support service revenue increased by $7.0 million, or 23%, for the three months ended March 31, 2025, compared to the prior year period, primarily due to increased work under certain government contracts.

Current wording

Engineering and support service revenue increased $23.1 million, or 41%, for the six months ended June 30, 2025 compared to the prior year period primarily due to increased work under certain government projects, including the contract awarded by the SDA.

Previous wording

Selling, general and administrative expenses decreased by $1.1 million, or 3%, for the three months ended March 31, 2025, compared to the prior year period, primarily due to decreases in headcount costs, including equity compensation costs and in professional fees, including acquisition costs for Satelles in the prior year. These decreases were offset in part by the increased spend related to our channel partner conference held in March 2025 and an increase in stock appreciation rights expense in the current year resulting from changes in our stock valuation between the years.

Current wording

Selling, general and administrative expenses decreased by $3.2 million, or 4%, for the six months ended June 30, 2025 compared to the prior year period, primarily due to lower equity compensation costs, offset in part by increased spend related to our channel partner conference held in March 2025.

Previous wording

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 $28.6 million of principal, inclusive of the mandatory excess cash flow prepayment in 2025, and based on the current interest rate, approximately $95.0 million in interest, (ii) capital expenditures of approximately $90.0 million in 2025, which we expect to moderate through the end of the decade, (iii) working capital, (iv) potential share repurchases, and (v) anticipated cash dividend payments to holders of our common stock.

Current wording

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, which we expect to moderate through the end of the decade, (iii) working capital, (iv) potential share repurchases, and (v) anticipated cash dividend payments to holders of our common stock.

Previous wording

As of March 31, 2025, our total cash and cash equivalents balance was $50.9 million, down from $93.5 million as of December 31, 2024. While we borrowed $20.0 million under the Revolving Facility during the three months ended March 31, 2025, and generated cash flows from operations, we used cash of $70.5 million to repurchase shares of our common stock, $15.7 million to pay dividends, and $24.5 million for capital expenditures.

Current wording

As of June 30, 2025, our total cash and cash equivalents balance was $79.3 million, down from $93.5 million as of December 31, 2024. While we borrowed $50.0 million under the Revolving Facility during the six months ended June 30, 2025, and generated cash flows from operations, we used cash of $136.1 million to repurchase shares of our common stock, $30.8 million to pay dividends, and $45.3 million for capital expenditures.

Previous wording

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, issued at a price equal to 99.75%, and an accompanying $100.0 million revolving loan, or the Revolving Facility. The maturity date of the Term Loan is in September 2030. 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 additional $125.0 million was issued at a price equal to 99.875% of its face value, while the additional $200.0 million was issued at a price equal to 99.0% of its face value.

Current wording

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 date of the Term Loan is in September 2030. 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.

Previous wording

The March 2024 additional 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 2024 were used for general corporate purposes, including share repurchases. In March 2025, we drew $20.0 million under our Revolving Facility for general corporate purposes, which amount remained outstanding as of March 31, 2025.

Current wording

The March 2024 additional 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 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 June 30, 2025.

Previous wording

As of March 31, 2025 and December 31, 2024, we reported an aggregate of $1,803.2 million and $1,807.7 million in borrowings under the Term Loan, respectively. These amounts do not include $16.2 million and $16.9 million of net unamortized deferred financing costs as of March 31, 2025 and December 31, 2024, respectively. The net principal balance in borrowings in the accompanying consolidated balance sheets as of March 31, 2025 and December 31, 2024 amounted to $1,787.0 million and $1,790.9 million, respectively. As of March 31, 2025 and December 31, 2024, the fair value of our borrowings under the Term Loan was $1,779.5 million and $1,802.1 million, respectively.

Current wording

As of June 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 $15.6 million and $16.9 million of net unamortized deferred financing costs as of June 30, 2025 and December 31, 2024, respectively. The net principal balance in borrowings in the accompanying consolidated balance sheets as of June 30, 2025 and December 31, 2024 amounted to $1,759.2 million and $1,790.9 million, respectively. As of June 30, 2025 and December 31, 2024, the fair value of our borrowings under the Term Loan was $1,778.1 million and $1,802.1 million, respectively.

Previous wording

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 March 31, 2025, the aggregate exposure under the Revolving Facility was less than 35%. The Credit Agreement contains other customary representations and warranties, affirmative and negative covenants, and events of default. We were in compliance with all covenants under the Credit Agreement as of March 31, 2025.

Current wording

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 June 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.

Previous wording

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 $28.6 million as of December 31, 2024. This amount will be paid in the second quarter of 2025 and will be applied to our required quarterly principal payments. As such, it was classified as short-term secured debt on our condensed consolidated balance sheet as of March 31, 2025.

Current wording

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 June 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 June 30, 2025.

Previous wording

As of March 31, 2025, we had non-cancelable purchase obligations of approximately $12.0 million for inventory purchases with Benchmark, our primary third-party equipment supplier. Our purchase obligations, all of which are due during 2025, did not change materially from the end of 2024.

Current wording

As of June 30, 2025, we had non-cancelable purchase obligations of approximately $12.2 million for inventory purchases with Benchmark, our primary third-party equipment supplier. Our purchase obligations, all of which are due during 2025, did not change materially from the end of 2024.

Previous wording

Our only material 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. We expect to refinance this amount at or prior to maturity.

Current wording

Our only material 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.

Previous wording

Total dividends paid during the three months ended March 31, 2025 and March 31, 2024 were $15.7 million and $16.1 million, respectively. While we expect to continue 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 our Board of Directors deems relevant. The Board of Directors plans to increase the quarterly dividend to $0.15 per share starting with the third quarter 2025 dividend.

Current wording

Total dividends paid during the six months ended June 30, 2025 and June 30, 2024 were $30.8 million and $32.8 million, respectively. While we expect to continue 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 our Board of Directors deems relevant. The Board of Directors has increased the quarterly dividend to $0.15 per share starting with the third quarter 2025 dividend.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2025 decreased by $10.3 million from the prior year period. Working capital decreased by approximately $17.5 million, primarily due to higher cash outflows associated with cash incentive, offset in part by inventory and timing of cash receipts, including accounts receivable and recognition of deferred revenue for projects and Satelles. These changes were offset in part by increased net income.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2025 increased by $38.2 million from the prior year period. Working capital increased by approximately $21.9 million, primarily due to higher cash inflows associated with timing of customer and vendor payments, offset in part by recognition of deferred revenue. These changes were also due 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.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2025 increased by $10.0 million as compared to the prior year period, primarily as a result of increased capital expenditures, including costs associated with NB-IoT, which we expect to continue for the remainder of 2025.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025 decreased by $92.5 million as compared to the prior year period, primarily as a result of the Satelles acquisition during the prior year period.

Previous wording

Cash Flows Provided by (Used in) Financing Activities

Current wording

Cash Flows Used in Financing Activities

Previous wording

Net cash used in financing activities for the three months ended March 31, 2025 increased by $126.6 million compared to the prior year period primarily due to the additional borrowings under the Term Loan of $125.0 million in the prior year period compared to a draw of $20.0 million on the Revolving Credit Facility in 2025 and increased spend on share repurchases in the first quarter of 2025 as compared to 2024.

Current wording

Net cash used in financing activities for the six months ended June 30, 2025 increased by $139.8 million compared to the prior year period primarily due a decrease in borrowings in the current year. The prior year period included additional borrowings under the Term Loan of $125.0 million associated with the acquisition of Satelles, Inc.

Previous wording

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. As a result, that customer’s annual billable subscribers will move to monthly plans, which we expect to increase seasonality in billable subscribers. 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.

Current wording

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.