Globalstar Swings to Loss as Costs Outrun Revenue
Second-quarter revenue fell 7.6% sequentially to $64.8 million.
Globalstar Inc. (GSAT), the satellite communications provider, swung to a $4.8 million operating loss as transaction fees and network-development spending pushed quarterly expenses higher.
The reversal from $6.1 million of operating income a year earlier marked a sharp change in trajectory. Operating expenses rose 14% to $69.5 million, while adjusted EBITDA fell 27.5% to $26.0 million and the margin narrowed to about 40.1% from 53.3%.
Revenue decreased 3.5% from a year earlier, with service revenue down 5% to $60.0 million and subscriber-equipment sales up 21% to $4.8 million. The comparison included a $6.6 million out-of-period wholesale-capacity item in the prior-year quarter. Excluding that item, service revenue would have increased $3.4 million.
Commercial IoT provided the clearest growth driver. Service revenue rose 6.5% to $7.5 million as average subscribers increased 8.6% to 580,427, while average revenue per user slipped to $4.31 from $4.40. Gross activations reached a quarterly record and increased more than 20% on a trailing-12-month basis, while higher device volumes drove the increase in equipment sales.
Declines in older subscriber services offset that growth. SPOT service revenue fell 6.7% to $8.6 million as average subscribers declined 7.7%, while Duplex revenue dropped 26.2% to $2.7 million as its subscriber base contracted 27.9%.
Marketing, general and administrative expense more than doubled to $23.0 million, primarily because of legal and professional fees tied to the pending Amazon transaction. Cost of services rose 21% to $23.6 million as Globalstar spent more on next-generation ground-network infrastructure and XCOM development. Those costs contributed to a $26.5 million net loss, compared with $19.2 million of income a year earlier, alongside higher interest expense and unfavorable currency movements.
Globalstar suspended financial guidance and future earnings calls while the Amazon transaction remained pending. The company also rescheduled its first replacement-satellite launch for later in August, leaving the timing of its network expansion as the next operational marker.