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Iridium Communications (IRDM)
:IRDM
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Iridium Communications
(NASDAQ:IRDM)72Outperform
Positive Factors
Capital Returns
Iridium's commitment to returning capital to shareholders is viewed favorably, supported by its free cash flow generation buoyed by a current capex holiday.
Earnings
Iridium Communications reported fourth quarter revenue of approximately $213.0 million compared to the estimate of $203.7 million.
Negative Factors
IoT Business Risks
There is concern around potential risk to Iridium Communications' IoT business due to the recent SpaceX momentum in Direct-to-Device, such as T-Mobile Starlink trials.
Iridium Communications (IRDM) vs. S&P 500 (SPY)
Market Cap
$3.30B
Dividend Yield1.81%
Average Volume (3M)1.37M
Price to Earnings (P/E)32.2
Beta (1Y)0.65
Revenue Growth5.05%
EPS Growth632.38%
CountryUS
Employees873
SectorCommunication Services
Sector Strength85
IndustryTelecommunications
Share Statistics
EPS (TTM)0.95
Shares Outstanding108,839,160
10 Day Avg. Volume1,238,779
30 Day Avg. Volume1,367,319
Financial Highlights & Ratios
PEG Ratio0.05
Price to Book (P/B)N/A
Price to Sales (P/S)3.97
Price to Cash Flow (P/CF)7.90
P/FCF Ratio8.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$37.00Price Target Upside20.72% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Iridium Communications Business Overview & Revenue Model
Company DescriptionIridium Communications Inc. (IRDM) is a global satellite communications company that provides reliable voice and data services to businesses, governments, and individuals worldwide. Operating in the telecommunications sector, Iridium offers a comprehensive range of products and services, including mobile satellite handsets, broadband terminals, and IoT devices. The company is renowned for its unique constellation of low Earth orbit (LEO) satellites, which ensures coverage over the entire globe, including oceans, airways, and polar regions.
How the Company Makes MoneyIridium Communications generates revenue primarily through the provision of satellite communication services, which are divided into several key streams. The company's primary source of income is service revenue, which includes fees from voice and data communications through its network. This includes subscription-based services for voice calls, messaging, and broadband data, catering to a diverse clientele ranging from maritime, aviation, and government sectors to individual consumers in remote areas. Additionally, Iridium earns revenue through equipment sales, including satellite phones, transceivers, and related accessories. Partnerships with government agencies, particularly the U.S. Department of Defense, also contribute significantly to its revenue, offering specialized services and equipment for tactical communication needs. Furthermore, Iridium has developed partnerships with various technology and service providers to expand its IoT offerings, enabling device connectivity across its global network.
Iridium Communications Financial Statement Overview
Summary
Iridium Communications displays strong financial performance with robust revenue growth, improved profitability, and effective cash flow management. However, a declining equity ratio suggests a need for bolstering equity to maintain flexibility.Income Statement
Iridium Communications has demonstrated strong revenue growth with a steady increase from $560 million in 2019 to $831 million in 2024, indicating effective expansion strategies. The gross profit margin remains high, showcasing efficient cost management. Net profit margin improved significantly from negative in earlier years to 13.6% in 2024, reflecting enhanced profitability. EBIT and EBITDA margins have also shown positive trends, suggesting robust operational performance.78
Positive
Balance Sheet
The company has improved its debt position considerably, with total debt reducing significantly by 2024. The debt-to-equity ratio stands low, indicating reduced financial leverage. However, the equity ratio has decreased over the years, reflecting a higher proportion of liabilities in the asset base. Return on equity has improved correlating with increased net income, though the equity base has been shrinking, which could be a concern.65
Positive
Cash Flow
The operating cash flow has shown a consistent upward trajectory, indicating strong cash generation capabilities. Free cash flow has also grown significantly, demonstrating efficient capital expenditure management. The ratio of operating cash flow to net income is healthy, further supporting the company’s ability to convert earnings into cash. Free cash flow growth rate is impressive, highlighting effective financial management.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 830.68M | 790.72M | 721.03M | 614.50M | 583.44M | Gross Profit |
| 652.54M | 565.60M | 519.88M | 464.10M | 440.75M | EBIT |
| 200.38M | 81.63M | 76.68M | 46.31M | 35.48M | EBITDA |
| 404.05M | 380.07M | 380.16M | 351.75M | 338.66M | Net Income Common Stockholders |
| 112.78M | 15.41M | 8.72M | -9.32M | -56.05M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 93.53M | 71.87M | 168.77M | 320.91M | 244.73M | Total Assets |
| 2.67B | 2.66B | 2.95B | 3.18B | 3.36B | Total Debt |
| 33.12M | 1.48B | 1.49B | 1.60B | 1.61B | Net Debt |
| -60.41M | 1.41B | 1.32B | 1.28B | 1.38B | Total Liabilities |
| 2.09B | 1.77B | 1.83B | 1.89B | 1.94B | Stockholders Equity |
| 576.64M | 888.10M | 1.13B | 1.29B | 1.42B |
| Cash Flow | Free Cash Flow | |||
| 306.06M | 241.43M | 273.46M | 260.73M | 211.08M | Operating Cash Flow |
| 375.95M | 314.91M | 344.73M | 302.87M | 249.77M | Investing Cash Flow |
| -180.60M | -83.49M | -121.27M | -36.38M | -46.47M | Financing Cash Flow |
| -170.48M | -327.05M | -374.98M | -182.47M | -188.19M |
Iridium Communications Technical Analysis
Positive
30.65
Price Trends
29.65
Positive
29.64
Positive
28.54
Positive
Market Momentum
0.34
Positive
51.28
Neutral
23.41
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IRDM, the sentiment is Positive. The current price of 30.65 is below the 20-day moving average (MA) of 30.74, above the 50-day MA of 29.65, and above the 200-day MA of 28.54, indicating a neutral trend. The MACD of 0.34 indicates Positive momentum. The RSI at 51.28 is Neutral, neither overbought nor oversold. The STOCH value of 23.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IRDM.
Iridium Communications Risk Analysis
Iridium Communications disclosed 47 risk factors in its most recent earnings report. Iridium Communications reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Iridium Communications Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $68.79B | 16.77 | 27.75% | 1.69% | 4.44% | 110.33% | |
72 Outperform | $3.30B | 32.19 | 15.40% | 1.81% | 5.05% | 632.38% | |
59 Neutral | $30.54B | 0.25 | -13.23% | 4.04% | 2.36% | -49.53% | |
57 Neutral | $281.96M | ― | -132.51% | ― | 24.15% | 35.73% | |
51 Neutral | $8.82B | ― | -0.60% | ― | -6.99% | 91.98% | |
51 Neutral | $1.24B | ― | -8.49% | ― | 19.02% | 76.67% | |
46 Neutral | $2.83B | ― | -17.12% | ― | 11.86% | -140.69% |
* Communication Services Sector Average
Performance Comparison
IRDM
Iridium Communications
30.65
2.31
8.15%
SATS
Echostar
28.14
12.89
84.52%
GSAT
Globalstar
23.09
1.64
7.65%
NOC
Northrop Grumman
486.52
35.04
7.76%
VSAT
ViaSat
9.73
-9.81
-50.20%
SPIR
Spire Global
10.46
-1.49
-12.47%
Iridium Communications Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: 10.57% | Next Earnings Date: Apr 17, 2025
Earnings Call Sentiment Positive
Iridium's earnings call reflected a generally positive outlook for the company, with strong free cash flow, strategic shareholder returns, and growth in service revenue and partnerships. However, challenges persist in the IoT subscriber base and broadband revenue segments. The company's ongoing investments and market expansions are expected to mitigate these issues moving forward.Highlights
Strong Free Cash Flow and Shareholder Returns
Iridium generated more than $300 million in pro forma free cash flow for 2024, exceeding projections. The company returned approximately $140 million to shareholders in Q4 alone through dividends and share repurchases, retiring close to 14 million shares in 2024.
Service Revenue and OEBITDA Growth
Service revenue grew by 5% in 2024, and operational EBITDA exceeded projections for the year, indicating a strong financial performance despite challenges.
Expansion in Global Partnerships and New Product Launches
Iridium onboarded over 30 new partners and certified more than 60 new partner applications in 2024. The company also introduced Iridium Certus IoT and other products, enhancing its market offerings.
Aireon's Growth and Market Expansion
Aireon, partially owned by Iridium, expanded its aviation surveillance leadership, covering over half the world’s airspace and signing agreements with major companies like Airbus and Boeing.
Lowlights
IoT Subscriber Base Decline
Iridium experienced a decline of 15,000 IoT subscribers in Q4 due to a major customer changing its retail plans, impacting active subscriber numbers and introducing more seasonality.
Challenges in Broadband Revenue
Iridium's broadband revenue decreased by 9% in Q4, attributed to the transition of customers to other plans and the increased use of Iridium as a companion service, impacting ARPU.
Company Guidance
In the fourth quarter of 2024, Iridium Communications exceeded expectations by generating over $300 million in pro forma free cash flow for the year, surpassing its operational EBITDA projections. The company returned approximately $140 million to shareholders through dividends and an expanded share repurchase program, retiring nearly 14 million shares for the year. Looking forward, Iridium anticipates service revenue growth of 5% to 7% in 2025 and projects operational EBITDA between $490 million and $500 million. The company plans to generate $302 million in pro forma free cash flow in 2025, with a conversion rate of OEBITDA to free cash flow at 61%. These financial metrics underscore Iridium's strong market position, robust cash flow, and commitment to returning capital to shareholders.Iridium Communications Corporate Events
Executive/Board Changes
Iridium Communications Approves 2025 Performance Bonus Plan
Neutral
Feb 7, 2025
On February 6, 2025, Iridium Communications’ Compensation Committee approved the 2025 Performance Bonus Plan. This plan involves a bonus system for employees, including key executives, based on achieving specific corporate and personal performance goals. The bonuses are calculated using a combination of a target bonus percentage and a performance factor, with potential payouts up to 200% of the target. The plan also includes provisions for restricted stock units and cash payouts, with vesting based on performance and continued service.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.