Iridium Accelerated Revenue Growth as Deal Costs Weighed on Profit
Second-quarter revenue reached $225.2 million, up 4% from a year earlier.
Satellite communications provider Iridium Communications (IRDM) accelerated its revenue growth in the second quarter as subscriber additions strengthened, while acquisition costs cut deeply into profit.
Revenue growth improved from 2% in the first quarter and revenue increased 2.8% sequentially. Service revenue, which remained 72% of the total, rose 4% to $161.3 million after growing 2% in the prior quarter.
Net income fell 56% to $9.7 million, or $0.09 a diluted share, from $22.0 million, or $0.20 a share, a year earlier. Operating income declined 32% to $34.0 million as selling, general and administrative expense jumped 50%, including $14.3 million of transaction-related costs.
Operational EBITDA declined 2% to $119.1 million, narrowing from a roughly 5% decline in the first quarter and rising 2.4% sequentially. Cash-incentive accruals reduced the second-quarter measure by $3.9 million.
Billable subscribers reached 2.627 million, up 6% from a year earlier, as Iridium added 72,000 accounts during the quarter compared with 18,000 in the first quarter. Commercial service revenue rose 4% to $133.7 million, helped by 5% growth in internet-of-things revenue and a 14% rebound in hosted-payload and other-data-service revenue. Broadband remained a drag, with revenue down 8%.
Iridium stopped providing financial guidance because of its pending sale to Rocket Lab, replacing the full-year outlook it had reiterated in the first quarter. Rocket Lab agreed to acquire Iridium for $54 a share in a cash-and-stock transaction valued at about $8.0 billion, with closing expected in mid-2027.
After the quarter ended, Iridium completed its roughly $366.7 million acquisition of Aireon, which the company expects to contribute at least $100 million in annualized service revenue and $30 million in annualized operational EBITDA. The financing added a $100 million revolver draw, a $183.4 million seller loan and $154.7 million of assumed debt to a balance sheet that carried $1.6 billion of net debt before closing.
The company also launched its tri-mode Iridium 9604 internet-of-things module in June and its standards-based Iridium NTN Direct service is scheduled to debut later in 2026, extending the product pipeline as Iridium moves toward the Rocket Lab combination.