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Why Is Iridium (IRDM) Up 1.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Iridium Communications (IRDM - Free Report) . Shares have added about 1.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Iridium due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Iridium Q2 Earnings Beat Estimates
Iridium Communications reported earnings per share (EPS) of 27 cents for the second quarter of 2024, beating the consensus mark by 42.11%. The company incurred a loss of 24 cents per share in the prior-year quarter.
The primary driver behind the significant improvement in earnings was a reduction in depreciation expenses that stemmed from extended satellite lifespans and the prior year's write-off of ground spare assets.
Quarterly revenues were $201.1 million, up 4% from the year-ago level. The uptick was driven by robust performance in the Commercial service segment and Engineering and support service business. The Zacks Consensus Estimate was pegged at $201 million.
Total Service revenues rose 5% year over year to $152.5 million. Strong recurring revenues from an expanding subscriber base resulted in the upside. Service revenues contributed 76% to total revenues in the second quarter. Our estimate for the metric was $153.9 million.
Strength in voice and data and IoT amid soft results from commercial broadband and hosted payload and other data services contributed to the segment’s top-line performance.
Subscriber Equipment revenues fell 17% year over year to $22.8 million. Engineering and Support Service revenues rose 25% to $25.8 million from the prior-year level, driven by higher activity with the U.S. government.
Other Details
Total operating expenses were $157.4 million compared with $209.1 in the prior-year quarter, primarily due to lower depreciation and amortization costs.
Operational EBITDA (OEBITDA) declined 2% year over year to $114 million. Operating income came in at $43.6 million against an operating loss of $16 million reported in the year-ago quarter.
As of Jun 30, the company had 2,413,000 billable subscribers, up 13% from 2,140,000 at the end of the prior-year quarter. The year-over-year increase was backed by the rapid adoption of Iridium’s services in various sectors.
The commercial sector, in particular, saw significant growth, contributing to 2,271,000 billable subscribers, up from 1,999,000 in the previous quarter. Notably, IoT data subscribers represented 81% of billable commercial subscribers at the end of the quarter.
As of Jun 30, total cash, cash equivalents and marketable securities were $63.5 million, with $1.6 billion of net debt. Capital expenditures were $12.4 million in the quarter under review.
Iridium maintained a strong capital position, repurchasing nearly 3.3 million shares of common stock for $96.6 million during the quarter. Additionally, it increased its quarterly dividend to 14 cents per share, resulting in year-to-date dividend payments of $32.8 million.
2024 Guidance Reiterated
For 2024, management expects total Service revenue growth between 4% and 6%. OEBITDA is projected to be in the range of $460-$470 million.
The company expects cash taxes to remain below $10 million annually through 2026. It aims to reduce net leverage below 4.0 times OEBITDA through 2026 and eventually below 2.0 times by the end of the decade.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -9.7% due to these changes.
VGM Scores
Currently, Iridium has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Iridium has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Iridium (IRDM) Up 1.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Iridium Communications (IRDM - Free Report) . Shares have added about 1.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Iridium due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Iridium Q2 Earnings Beat Estimates
Iridium Communications reported earnings per share (EPS) of 27 cents for the second quarter of 2024, beating the consensus mark by 42.11%. The company incurred a loss of 24 cents per share in the prior-year quarter.
The primary driver behind the significant improvement in earnings was a reduction in depreciation expenses that stemmed from extended satellite lifespans and the prior year's write-off of ground spare assets.
Quarterly revenues were $201.1 million, up 4% from the year-ago level. The uptick was driven by robust performance in the Commercial service segment and Engineering and support service business. The Zacks Consensus Estimate was pegged at $201 million.
Total Service revenues rose 5% year over year to $152.5 million. Strong recurring revenues from an expanding subscriber base resulted in the upside. Service revenues contributed 76% to total revenues in the second quarter. Our estimate for the metric was $153.9 million.
Strength in voice and data and IoT amid soft results from commercial broadband and hosted payload and other data services contributed to the segment’s top-line performance.
Subscriber Equipment revenues fell 17% year over year to $22.8 million. Engineering and Support Service revenues rose 25% to $25.8 million from the prior-year level, driven by higher activity with the U.S. government.
Other Details
Total operating expenses were $157.4 million compared with $209.1 in the prior-year quarter, primarily due to lower depreciation and amortization costs.
Operational EBITDA (OEBITDA) declined 2% year over year to $114 million.
Operating income came in at $43.6 million against an operating loss of $16 million reported in the year-ago quarter.
As of Jun 30, the company had 2,413,000 billable subscribers, up 13% from 2,140,000 at the end of the prior-year quarter. The year-over-year increase was backed by the rapid adoption of Iridium’s services in various sectors.
The commercial sector, in particular, saw significant growth, contributing to 2,271,000 billable subscribers, up from 1,999,000 in the previous quarter. Notably, IoT data subscribers represented 81% of billable commercial subscribers at the end of the quarter.
As of Jun 30, total cash, cash equivalents and marketable securities were $63.5 million, with $1.6 billion of net debt. Capital expenditures were $12.4 million in the quarter under review.
Iridium maintained a strong capital position, repurchasing nearly 3.3 million shares of common stock for $96.6 million during the quarter. Additionally, it increased its quarterly dividend to 14 cents per share, resulting in year-to-date dividend payments of $32.8 million.
2024 Guidance Reiterated
For 2024, management expects total Service revenue growth between 4% and 6%. OEBITDA is projected to be in the range of $460-$470 million.
The company expects cash taxes to remain below $10 million annually through 2026. It aims to reduce net leverage below 4.0 times OEBITDA through 2026 and eventually below 2.0 times by the end of the decade.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -9.7% due to these changes.
VGM Scores
Currently, Iridium has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Iridium has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.