Iridium Communications Inc. (NASDAQ:IRDM) Q1 2026 Earnings Call Transcript

Iridium Communications Inc. (NASDAQ:IRDM) Q1 2026 Earnings Call Transcript April 23, 2026

Iridium Communications Inc. misses on earnings expectations. Reported EPS is $0.2 EPS, expectations were $0.27.

Operator: Good morning, and welcome to Iridium Communications First Quarter 2026 Earnings Call. [Operator Instructions]. I would now like to turn the conference over to Kenneth Levy, Vice President of Investor Relations. Please go ahead.

Kenneth Levy: Thanks, Dave. Good morning, and welcome to Iridium’s First Quarter 2026 Earnings Call. Joining me on the call this morning are our CEO, Matthew Desch; and our CFO, Vincent O’Neill. Today’s call will begin with a discussion of our first quarter results followed by Q&A. I trust you’ve had the opportunity to review this morning’s earnings release, which is available on the Investor Relations section of Iridium’s website. Before I turn things over to Matt, I’d like to caution all participants that our call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform act of 1995. Forward-looking statements are statements that are not historical fact and could include statements about our future expectations, plans and prospects.

Such forward-looking statements are based upon our current beliefs and expectations and are subject to risks, which could cause actual results to differ from forward-looking statements. Such risks are more fully discussed in our filings with the Securities and Exchange Commission. Our remarks today should be considered in light of such risks. Any forward-looking statements represent reviews only as of today, and while we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views or expectations change. During the call, we’ll also be referring to certain non-GAAP financial measures, including operational EBITDA pro forma free cash flow. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles.

Please refer to today’s earnings release and the Investor Relations section of our website for further explanation of these non-GAAP financial measures in a reconciliation to the most directly comparable GAAP measures. With that, let me turn things over to Matt.

Matthew Desch: Thanks, Ken. Good morning, everyone. We’ve had a good start to the year, and our results are right where we expected them to be. Total revenue grew 2% as in service revenue. We’re reiterating our guidance for the year, and Vince will give you the details in a minute. We continue to have some important new products under development for introduction this year, and they’re driving a lot of activity with our partner base. In the IoT area, our new tri-mode module, which we call the Iridium 9604 is on track for commercial availability in June, and our beta partners are now testing and preparing their first products using our next-gen platform. The 9604 combines our First Data IoT service, cellular IoT and GPS all in a very small and top-effective package and is generating a lot of excitement across our partner ecosystem.

We believe the module also has the horsepower consolidated a number of our other legacy services over time, and that can be helpful to our sustaining cost and to simplify our portfolio. In the P&C area, the announcement of our new ASIC rolling out in July is also generating a lot of inbound activity and attracting a number of new partners who are looking to integrate this technology into their products. NSS disruptions around the world are highlighting the need for new assured PNT solutions for drones and autonomous vehicles, shipping companies and their insurance providers, critical infrastructure in the U.S. and abroad, commercial allocation, the opportunities are expanding tests. Over 100 new companies have expressed interest in the ASIC and we expect the commercial loss to drive deployments once it’s in the market.

Of course, our new Iridium NTN Direct standards-based service has generated a lot of activity as well as it progresses closer to commercial loss later this year. We’ve been demonstrating live over-the-air to mobile network operators and partners and its performance has been impressing everyone, even as we make enhancements and further tune the service. We’ve been expanding agreements with more MNOs, having signed 7 to date with a number of others in the pipeline, there’s clear demand from MNOs to roam on to Iridium’s network when their customers find themselves out of coverage. We’re also in discussions with additional chip and module manufacturers to have their 3GPP Release 19 chips with Iridium capability available in 2027 and have gained support from the test up community as well.

It’s been a big job for Iridium to reprogram our satellites and build cloud-based processing and standards capabilities into our gateway and I’m very proud of my team for accomplishing so much so quickly. Indirect is positioned as complementary to the big B2B services that are emerging from StarLink, AST and now Amazon Leo. As these companies focus on connecting smartphones from the space, we will continue to focus on scalable specialty applications that support low-cost to IoT, particularly for industrial and government markets where reliability and coverage are critical. While, I talked about some of the new products we have underway this year to drive growth, our partners are also making progress on products and certifications that will resonate with their target markets.

They include launching some new term loans in the maritime GMDSS area and conducting flood trials for certification of our new Iridium service aviation safety service. More broadly, I want to remind you of the 4 growth factors I talked about on our fourth quarter call in February. These are areas where we’re prioritizing investments and it is a significant opportunity to expand our revenues even as more competition eventually comes to the satellite sector. First, in IoT, we are, by far, the leader in satellite IoT in terms of subscribers, revenues and technology partners. And we believe that as we reduce costs by adopting standard 3GPP protocols, we will see continued success and growth. We are already pursuing cost-sensitive use cases that were more difficult to address with proprietary services like automotive, smart meters, agriculture and expanded asset tracking.

Our network reliability, global coverage partner ecosystem and strong brand position will allow us to continue to expand our revenues particularly when we add our second growth vector, PNT, into the mix. I’ve already talked about how our new PNT ASIC is expanding our pipeline of opportunities. But it’s also attracting major chip makers earlier than we expected as these manufacturers eventually incorporate our PNT IP into their standard GNSS chips says, we think our business could really explore. We provided guidance on the revenue potential expected in this area over the next 4 years, and I’m as bullish about meeting those targets as I’ve ever been. Some early customers are starting slowly, but they are committed to the big rollout that we’ve been expecting.

We also believe that our engineering and development work on new identity management and trusted location products could open up some very big new markets. We remain in the early phases of business development for these important services, but the opportunities are exciting. Our third growth area is national security missions with the U.S. government and is building off our success with the EMSS contract with the Space Force and the competency we’ve demonstrated in developing and operating the FDA satellite operation centers. We see a growing need for commercial satcom providers to complement Starlink and other broadband networks that are becoming part of the government-based data network or SDN. We have a growing pipeline of work in this area.

Some of it will generate service revenue but also fast-growing engineering and support work. Requirements for Golden Dome are just now taking shape and we think Iridium is well positioned there. Finally, aviation safety is an area of distinction for us and of course factor for growth. We have a great position in this industry with our equity interest and strong relationship with Aireon as well as for our ability to be certified to connect pilots and aircraft controllers by satellite. Our efforts to develop some differentiated products that could bring more value to airlines is still in the early stages, but we are increasingly confident about our potential to disrupt the status quo in the market. I want to acknowledge all the attention that mobile satellite services has been getting of late, especially in light of Amazon’s plans to purchase Globalstar.

People have realized the importance and signifies of LSB spectrum as it relates to connecting consumer devices on a global basis from space when out of coverage from cell towers, which happens over 45 — excuse me, over more than 85% of the planned surface. We share this view of the value of this spectrum. Regardless, our priority today is to focus on expanding into these 4 growth areas while maintaining our revenue base and legacy services. We believe that this is the right direction for Iridium, and we’ll continue to stay focused on execution across the business. So we’re off to a good start in 2026. Partner activity remains strong, and we continue to generate a lot of cash that we plan to invest in our growth factors. I look forward to providing more updates on our progress in the coming quarters.

Now let me turn the call over to Vince for details on the quarter. Vince?

Vincent O’Neill: Thanks, Matt, and good morning, everyone. I’ll start my remarks today by reviewing Iridium’s financial results for the first quarter and some trends we’re seeing within our major business lines. I’ll also provide an update on Iridium’s leverage and capital position and discuss our outlook for the balance of the year. OEBITDA was $116.3 million in the first quarter, down 5% from the prior year period. The change largely reflected the impact of the shift to pay annual incentive compensation and cash which I previewed on our fourth quarter call. This resulted in a $4.2 million hit to OEBITDA and will have a full year impact of $17 million in 2026. This quarter’s OEBITDA also reflects the benefit of a 2% increase in service revenue and ongoing growth in engineering and support.

On the commercial side of our business, service revenues up 2% to $130.4 million. This was in line with our forecast and reflected growth in commercial IoT and voice and data during the quarter. Voice and data revenue rose 3% from a year earlier to $57.4 million, driven by the price actions we implemented last summer. This drove a 7% increase in ARPU from the year earlier. Net subscriber trends had improved from the year ago period when headwinds primarily associated with the [indiscernible] level of seasonal deactivations. Commercial IoT revenue was $46 million in the first quarter, up 5% from a year earlier. Net subscriber numbers this quarter have largely stabilized following last year’s volatility related to a modification to retail pricing plants by one of our large consumer-oriented partners.

As Matt noted, we are now in bigger trials of the new hybrid modem, the Iridium 9604, which combines cellular, satellite and GPS in one engineered solution. Early feedback has been great and we expect that the lower overall integration cost of incorporating this chip will help to accelerate subscriber growth. Commercial broadband was down 5% from the year ago period, and continues to reflect the ongoing impact from customer conversions to backup companion services, a trend we’ve discussed previously. Hosting and other data services revenue was $14.8 million this quarter, down about 1% from last year’s comparable quarter. The decline mostly reflects the timing of expected payments related to activities with an existing non-PNT customer. We continue to be encouraged by the ever-increasing interest we are seeing for Iridium’s assured PNT solution to address the vulnerabilities inherent to GPS and GNSS based systems.

The introduction of our TNC ASIC this July is expected to accelerate growth and expedite the pace of deployment of Iridium PNT solutions. We continue to have conviction that PNT will drive at least $100 million in annual revenue for Iridium by 2030. Government Service revenue was up modestly in the first quarter to $27.6 million reflecting the final step-up in our EMSS contract last September. Turning to subscriber equipment. Sales were $20.2 million in the first quarter, largely in line with our expectations. Engineering and support revenue was $40.8 million in Q1 as compared to $37.5 million in the prior year period. This rise in revenue continues to reflect Iridium’s growing scope of work with the Space Development Agency and supports our strategic focus on revenue growth tied to national security missions.

As noted in this morning’s earnings release, we are affirming our full year guidance for both and OEBITDA. I’d like to take a minute to review some of the drivers underlying this year’s forecast. Starting with our commercial business in voice and data, we expect revenue to grow in the first half of the year, benefiting from the price actions implemented last summer. As a result of these actions, we would expect our to remain about $48 for the remainder of the year, consistent with our first quarter ARPU. IFC revenue is expected to grow in the mid-single digits. As Matt noted, we are deep in testing of next generation IoT modem and our targeting new markets and use cases that are highly sensitive to cost, full factor design and integration time lines.

Based upon the positive feedback we were getting on the Iridium 9604, we believe it fills the gap in the satellite IoT market for utility at a value price. In our broadband business, we expect Maritime customers to continue to move to lower-cost backup plants. However, the introduction of new partner terminals combining Iridium service and GMDSS safety services will act as a tailwind for new subscriber growth. And over time, we believe, helped to offset current ARPU pressures. We continue to believe that really will remain an important player in the maritime sector. With regards to our government business, we have started discussions on our success contracts with the U.S. government and continue to expect they will exercise their option to extend the EMSS contracts for a period of 6 months at current rates.

Accordingly, we expect the EMSS revenue of $110.5 million this year, even as we expand our relationship with the U.S. government with incremental engineering work. As Matt discussed, we get a lot of inbound traffic on our PNT solution. We continue to believe that this strong interest, along with the availability of our PNT this summer may provide upside to our full year hosted payload and other data of revenue forecast. We also expect that the strong trend we saw in engineering and support in the first quarter to continue. This momentum is tied to our work with the FDA and should support another year of record engineering growth. As I noted earlier, a Iridium will introduce a number of new terminals and modems this year. Our focus on lower cost hardware should broaden our sales funnel and allow Iridium to extend its satellite solutions to customers that have not historically considered nonterrestrial services.

We can continue to expect full year recruitment sales will be in line with historical levels between $80 million to $90 million in 2026. SG&A growth in Q1 was more pronounced than more we expect for the balance of the year, largely due to timing benefit of program expenses in Q1 ’25, the nonrecurring nature of some expenses incurred this quarter and the increase in sales costs tied to stock price appreciation this year. Going forward, we expect the SG1 run rate to moderate to low double digits in 2026 though stock appreciation could result in additional sales expense. Taken together, this outlook post our forecast for flat to 2% growth in service revenue in ’26 and for operational EBITDA between $480 million and $490 million this year. I would again remind you that started in 2026, Iridium will pay annual incentive compensation entirely in cash rather than a mix of equity and cash as has been company’s prior practice.

This change is projected to have a $17 million impact to OEBITDA in ’26. Without this change, OEBITDA have been projected to be in the range of $497 million to $507 million in 2026. I hope this color is helpful as you chart our progress and update the financial models for our first quarter results. Moving to our capital position. As of March 31, Iridium had cash and cash equivalents balance of $111.6 million and ended the quarter with a net leverage of 3.4x OEBITDA. Our strong free cash flow provides significant flexibility to reduce net leverage quickly. We also have flexibility to utilize our strong liquidity position to invest in business growth opportunities through product investments or even the tackle acquisition. On March 31, Iridium made a quarterly dividend payment of $0.15 per share to shareholders.

We remain committed to an active and growing dividend program and expect the Board will continue to grow Iridium’s dividend, consistent with prior years. Capital expenditures in the first quarter were $30 million. As we’ve noted previously, we anticipate CapEx this year to be consistent with 25 to support our work on Iridium NTN Direct. Turning to our pro forma free cash flow. We present a detailed description of our cash flow metrics, along with the reconciliation to GAAP measures in a supplemental presentation under the Events tab on our Investor Relations website. In those materials, we project pro forma free cash flow of about $318 million for 2026. Based upon our expectations for Iridium’s growth, we expect to have the capacity to generate at least $1.5 billion to $1.8 billion of free cash flow over the balance of the decade.

Iridium occupies a unique position in satellite market, and we remain very excited about our prospects for incremental top line growth and shareholder value creation. With that, I’ll turn things back to the operator and look forward to your questions.

Q&A Session

Operator: [Operator Instructions] Our first question comes from Brent Penter with Raymond James.

Brent Penter: Matt, you touched on the Amazon acquisition of Globalstar. I’d like to hit on that a little bit more. First, could you expand on what you think that deal signals about the value of Iridium and the MSS spectrum that you own? And then second, how do you expect Amazon owning Globalstar may or may not change the competitive landscape of the markets you operate in?

Matthew Desch: Well, I think in general, it speaks to the value of the L&S spend that we occupied. More so, it speaks to the opportunity that I think the industry, certainly Amazon feels about the potential for global direct-to-advice services in the coming years. And I think it’s healthy for the industry to get another big competitor. I think it will create more opportunities and expand the potential for that market more greatly. I’m not sure what was the second part of your question, Brian?

Brent Penter: Yes, you started to hit on it.

Matthew Desch: I don’t think it changes really anything for us competitively that dramatically. I mean, as I said, we’re really positioned to be complementary. We started pivoting well over a year ago towards those areas that are — we believe we can create a differentiated advantage really whether it be aviation or national security missions or PNT, IoT, et cetera. And those areas, we feel really good about regardless of how many large operators there are in sort of the more straight to D2D space. So I don’t think the change that dramatically.

Brent Penter: Okay. Got it. And then last quarter, you all talked about the possibility of strategic alliances related to your spectrum. Can you update us on any early learnings in those discussions? And given the recent spectrum activity and valuations, has that moved up the stack to become higher priority?

Matthew Desch: I don’t know that I can really speak to that question. I mean, I think it’s probably, at this point, an area of a lot of interest and activity in the industry. And I just think we just need to not comment on that at this point.

Operator: And the next question comes from Chris Quilty with Quilty Space.

Christopher Quilty: Matt, maybe a little bit of a follow-up on that. Does Amazon’s acquisition of Globalstar in any way will effectively kill the potential for a big LEO processing round in your opinion?

Matthew Desch: Describe what a big LEO processing round would be.

Christopher Quilty: Well, Spacex had been looking to reopen up the big LEO band and now you’ve got Amazon that’s just committed to $11.5 billion to take a position there. Presumably, you wouldn’t get a new round to review that spectrum at a time when there’s an ongoing acquisition associated with it, [indiscernible] right?

Matthew Desch: So that’s kind of a fine detail overall there. I mean, look, our position is more spectrum for mobile satellite services and D2D would be a good thing. We continue to kind of lobby for looking for more spectrum for the industry in general, whether it be for directed device or for any of the other applications, which are kind of consumer-friendly, device friendly, the kinds of things that Iridium has been focused on. So I don’t know if it makes it more likely or not likely as I said, I think this is — I think in general is a good thing. It does create more competition in this area of what’s happening, a more better funded sort of competitor in the D2D area, but I don’t know what that will mean these days for the FCC or for spectrum at this point.

Christopher Quilty: Got you. And Vince affirm the $100 million for the PNT business in 2030, but you’ve gotten off to a slow start with customers. To hit that target, do you expect that as customers roll on, are there going to be sort of chunky step function pickups in revenue? Or does this grow on like a per subscriber basis where it starts slowly and then ramps up?

Matthew Desch: I think it’s going to be both. I think it’s going to be both chunky. I think you can see some large movements in sort of that area as some major kind of customers come on and take sort of global business opportunities. And I think you’ll also see sort of a broad-based subscriber by subscriber growth. I mean, that’s what we’re seeing. The number of companies that are integrating solutions right now are pretty — business at pretty extraordinary in my experience in Iridium, all the activity around the discussions we’re having around it. It just takes time for these devices to proliferate the market and to create the kind of growth we’re expecting. And I think a lot of that will be accelerated by the ASIC. That wasn’t completely required, but it is definitely an accelerator.

Christopher Quilty: Got you. And final question. You mentioned lower cost for the 9604 in terms of your partners implementation costs. Can you give us a sense of this that 10% cheaper or 50% cheaper. And can you also touch on basically supply constraints that you’ve historically had or not in ramping that up versus something that’s standards-based mean how fast do you think the product can be adopted and delivered?

Matthew Desch: Okay. Well, in terms of pricing, it all depends on volume and really high volumes, it could be significantly less expensive than our legacy portfolio, the 9602 and 9603, 9604 being built on a more global platform that’s utilized for many other applications means that the cost overall is quite a bit lower. And then, of course, the fact that it integrates multiple technologies into the same platform. So it’s not a one-for-one kind of thing. It includes both those who want cellular and GNSS had to put those technologies separately into it. So it’s really a fraction of the overall cost of the 3 solutions together. I don’t know whether that’s 20% or 10% or 30%, but it’s a significant reduction, especially for those customers and volume we’re utilizing all the power of the new product. And the terms of standard — sorry, go ahead, Chris

Christopher Quilty: No, I was going to say, so it’s lower cost hardware going into lower-cost applications. Typically, we’d expect the ARPU to go down. But if you’re bundling in additional capabilities like the old PNT, where does the ARPU go? Does it hold steady? Does it go up or down?

Matthew Desch: Well, I think, first of all, it can support low and high ARPU applications. As I’ve often said, ARPU is kind of irrelevant. It’s all incremental earnings to us is more a matter of what kind of resources of our network it utilizes and typically low ARPU applications, use almost no resources of our network and higher applications to use that more. So the more important part here is just how it sort of expands the use case of applications. So I mean we’re really talking about a lot more things that we hadn’t seen before. And when you add that together with our NTN Direct Service, which is a standard space, which would use standard ships, which are also low cost. In those cases, there’s almost no integration costs that people have to go through A lot of times, they already have applications, they’re just upgrading the chipsets and they can roll on to our network with almost no additional costs.

So that opens up not only lower cost applications, but it opens up applications with large industrial companies who are uncomfortable using proprietary standards. For example, I’m really surprised that all the discussions we’re having in the automotive industry right now. It does take a while to create revenue, but they’re high volume and could be really efficient users of a standards-based solution. So it’s really not a matter of kind of but ARPU will go down or up, maybe incremental ARPU in some of these applications will be lower, but the overall revenues that is what will grow versus what’s most important.

Christopher Quilty: Okay. I had to ask a lot of questions [indiscernible] since he wasn’t on the call.

Matthew Desch: Well, thanks for that .

Operator: The next question comes from Edison Yu with Deutsche Bank.

Xin Yu: I wanted to sort of come back to the Amazon Globalstar from a slightly different perspective. Is there any sort of, what you say, industrial logic to having that full L-band block that you currently share the 0.95 with Globalstar. Does that make any sense to kind of combine it? Would there be any sort of synergies that you could derive from just kind of technically speaking?

Matthew Desch: Yes. As that question or that thesis that you’re describing has been described very fully by both analysts and others in the industry. And I think I really need to leave it to that right now. Otherwise, it will sound like I’m promoting or trying to highlight something that I’m really not comfortable doing right now sort of in the current environment.

Xin Yu: Understood. Second topic, there was some news about a drone outage. I’m sure you’ve probably done and obviously you guys are doing work there. Have there been any updates on the regulatory front or any sort of recent discussions since the last quarter on drones?

Matthew Desch: You mentioned drone outage. Is that to some another company’s technology. Are you talking about and how is it — you’re not talking about Iridium outage, right?

Xin Yu: No. It was — I think it was reported in the media. It was not related to you, obviously, but I think it sort of highlighted potentially some opportunities for you.

Matthew Desch: I will say the drone environment for us is really hot. I mean, both in terms of integrating our communication technologies into drones as if not a primary or backup source, but also our PNT technologies makes a lot of sense as one of the technologies to maintain a location. And obviously, a lot of focus is on Middle East and other areas right now where drones are being operated. I’m equally excited about the commercial side of drones, which needs all those technologies as well with the new FAA Part 1 rules that are expected to come out later this year and finally, open up beyond visual line of sight commercial drones, where Iridium technology makes a lot of sense there. And there is a lot of activity around that. both in terms of our — whether it’s 9604 or 9704, which is the higher-speed IoT product or our Iridium NTN direct. And of course, a lot of discussion around PNT just to protect the integrity of the location.

Operator: And the next question comes from Hamed Khorsand with BWS.

Hamed Khorsand: Just want to understand what you’re seeing on the subscriber end on the commercial IoT? Is any of that coming from the consumer side? Or is this purely coming from industrial customers?

Matthew Desch: It’s actually coming from both. And it looks a lot more. I think this year, like it did much more so than last year when we got the commercial side of it was kind of going through a pricing change from a big customer that sort of I thought distorted sort of the supravenumbers, but we’re seeing a healthy subscriber growth is we did back in ’22, ’23, ’24 and more normal growth. But we’re getting growth from really across the board, industrial and consumer.

Hamed Khorsand: Okay. And then could you just talk about this EMSS contract that you’re saying that would require a 6-month extension. Is that just the same aspect that happened a few years ago when you were going through the renegotiation process?

Matthew Desch: Yes. I mean our current EMSS contract, which has been a 7-year contract is approaching it’s final seventh year, but there’s an automatic — there’s a opportunity really for the customer during negotiations if it isn’t completed on time to just extend it at the current year 7 price for an extra 6 months. That has happened in the last 3 contract renewals that I’ve been a part of. And so I’m expecting it to happen again this time as well, particularly if you could imagine if customer didn’t see sort of the value in getting the new contract right away, they might extend the current one a little bit further.

Operator: And the next question comes from Tim Horan with Oppenheimer.

Timothy Horan: It seems like if you can get your PNT better than every GPS chip out there, the market is orders of magnitude bigger, I would say the same thing for IoT team. Can you just describe a little bit more detail where you are in getting it adopted in the standards? And I guess related to that, I mean, could you become a standard GPS replacement globally? And how do you think about pricing in that environment? I mean, because the lower you price it, the more likely you are to become the standard replacement? I know this is a complex question, but any thoughts would be helpful.

Matthew Desch: Well, be careful about using the word standards, it does apply. But when I was referring in my comments to getting this to GNSS chipsets, I would say there’s a number of suppliers who supply the majority of chipsets that go into all our consumer products. And handheld units and golf carts and all those sort of things. And I was referring to the fact that we always we also wanted to get into those chips, but they probably didn’t see didn’t understand really the value of our PNT service. When the ASIC came out and has become very public and all being interested generated, we’re now seeing some of those companies who are now seeing exactly what’s involved and what the physical attributes and sort of technical attributes in our — and we’re in discussions with some about integrating that more powerful alternate PNT service directly into their chips.

You’re right, that would expand the market really dramatically. But now in addition, when you said the word standard, 6G is includes the idea of PNT, and we’re working to get our PNT technology embedded into the sixth generation standards that would — that are really talking about enhancements to PNT. I wouldn’t use the term we replace GPS. Our goal is always to be an alternative augmentation to GPS. Currently, we’re not as accurate as GPS, but we’re being so powerful, we’re really difficult to jam or spoof being encrypted, et cetera. I will say we have plans to make our system much more accurate. I’ll talk about that maybe more in the future that would require some additional payloads in space, and we’re kind of in the early stages of kind of working through that book.

We think we can do that pretty quickly and cost effectively. As far as what the value of that would be, yes, it would be extremely large and dramatic in terms of the potential for number of units and the impact that we could make across a wide variety of industries. It’s a little early stage to talk about that. That’s a 2030 kind of thing. I think we’ll reiterate, I’m happy both reiterating our guidance on PNT to 2030 as well as the upside we see from like identity management, trusted location products to that. But yes, we’re working right now on a much bigger strategy that could be a lot larger .

Timothy Horan: And can you give us some color of the same concept for your IoT communications here.

Matthew Desch: The same color on IOT in terms of…

Timothy Horan: I’m sorry, you’re becoming better in other chips like you described, like what would it need to take for that to get the really strong growth where they’re not just using your customized ASICs, but it’s something[indiscernible] .

Matthew Desch: Yes. Well, obviously, Iridium PNT direct is completely about being embedded into standard chipsets. And right now, several of them are already in process of developing including some of the largest and most prolific terrestrial IoT chip manufacturers. And as they include our technology into those chips and any time those chips get into products, those customers could basically roll them on to a satellite network. I mean it — it does expand the market tremendously for sort of IoT applications for us. Again, we’re expecting growth in this area. I can just sort of say general, we’re not giving exact guidance yet. There is some cannibalization of our sort of legacy services sort of embedded in that, but we believe that the overall market expansion greatly or significantly sort of goes beyond that so that our IoT services can continue to expand across that.

And by the way, it doesn’t replace all the sort of existing technology we have, like the 9604 because they provide tremendous value as well.

Timothy Horan: But lastly, on the spectrum, just some concern that maybe your spectrum has already been utilized and couldn’t be ported over to other constellations are used for other purposes. Can you kind of give any thoughts on that?

Matthew Desch: Well, I mean, yes, our spectrum is being utilized and it’s generating a lot of cash and revenue. I don’t apologize for that. But yes, we have a very efficient network architecture. Our satellites are regenerative, they can utilize spectrum on literally a message by message basis and can be highly configured and controlled and automated in a way that is extremely efficient, and we’ve only improved that over time. So I know the questions some of you are asking is could we make some of our spectrum available for lease or for obviously, sale or for could somebody else as they controlled us, take advantage of our spectrum, particularly for like 5G new radio. And the answer is yes, we believe it could. We believe we can whether we were doing it ourselves or we’re doing it with in conjunction with someone else that we could allocate some amount of spectrum to those other applications and continue to generate the revenues and cash flows and growth that we’re expecting by very effectively moving around within our spectrum band on literally a call-by-call basis to serve the traffic that we expect to see in the future.

So I know on some of the questions some of you asked, would we lease the spectrum to do that for someone else. I mean, theoretically, it’s possible or technically as possible to do that. I’m not really — I don’t think that’s the best way to add value from a rating perspective to our shareholders, et cetera. So I’m really not looking for those kind of opportunities right now. It would be some other kind of arrangement that would seem to make the most sense.

Operator: And the next question comes from James Ratzer with New Street Research.

Unknown Analyst: My question was really a direct follow-on from that last one to understand a bit more about the capacity utilization on your network. I mean, Matt, you are able to kind of quantify any further at the kind of peak hour of your network usage or in certain kind of global hotspots, what percentage of your capacity is currently being used? And in particular, going out towards the end of the decade as you roll out the new services you’re talking about, how do you see the capacity utilization on your network evolving over the next 4 to 5 years?

Matthew Desch: Yes, James. So it’s a complicated question to answer and to do it simply. Our network really reassigns itself every 90 milliseconds. And then you can imagine, its ability to kind of handle traffic varies moment by moment, literally position by position on the air surface. We don’t have any brownouts today, if you will, or peak. I’m always sensitive to talk about this because we — one of the most efficient users of spectrum on the planet. We would like more spectrum. We would — we believe we have enough spectrum to handle our growth plans going out into our next-generation system. And we have plans to sort of create capacity through capital expenditure and the next-generation constellation. That being said, we have areas where we’re much more fully utilized in certain places and places less utilized.

One thing I’ve talked about on previous earnings calls is one of the most inefficient users of our spectrum was our broadband service, which 5 to 10 years ago when we implemented or 7 to 8 years ago, I guess, when we promoted there was no Starlink or Amazon’s LEO services or other broadband traffic, and we were just competing really with Inmarsat sort of L-band broadband services. That service is in decline. And the good news is it’s kind of creating capacity for us because the most efficient user of our network is IoT and PNT services and things like safety services, whether it be aviation or maritime. So with that, we really believe we have to utilize a portion of our spectrum. We kind of repack our spectrum in a very effective way, create the ability to create new services within our existing band [indiscernible]

Unknown Analyst: I get it, I get it. Can you say just last one for me, as you upgrade your satellite constellation. What kind of multiplex do you think you can get on capacity increase? Is that a kind of 2x increase, 10x increase? What are you planning on that front?

Matthew Desch: Well, I challenged the team with a 10x increase. And the designs that we’re talking about with kind of smaller, but many more satellites. We currently have a design that really maybe requires maybe 4x more satellites than we’re currently operating, but it really does expand the capacity greatly with other antenna technologies and smaller beams on the ground, et cetera. So a lot of a lot of thinking about that. We’re not having to really develop that system even start to develop that system for a number of years from now. But we’re excited about some of the technologies we seek available and available to us that will kind of lower all the cost of that to provide whether it be launch or satellite bus capacity at a cost that certainly isn’t greater than the network costs we experienced last time and probably a bit lower. So yes, I mean, I think we can get quite a bit of capacity in the future.

Operator: Our final questions come from Justin Lang with Morgan Stanley.

Justin Lang: Matt, just staying on the topic of spectrum and any potential arrangement with a third party. Just curious how we should think about the fact that you have government users relying on the network? I’m not sure we’ve seen that dynamic, at least not to the same extent with other spectrum that’s recently transacted. So just curious how that factors into the considerations, if at all?

Unknown Executive: Factors great consideration and nothing I would do or anything I’d say it would hurt the ability for us to operate our network out in the future for one of our most important customers or will for any customers for that Matt.

Matthew Desch: I mean one of the reasons I would in terms of partnering in some way to sign additional services using our spectrum. One of the reasons why I want to be intimately involved in that is to be able to evolve services seamlessly and our customers and partner base, which is the most extensive in the industry after the future quite seamlessly for those customers. So there will be a lot of demand by our partners, whether they’re government or industrial to future standards-based services. And we think we could be extremely valuable in terms of managing that transition over the next 10 years. So it’s not an issue. We don’t think it’s an issue. We don’t think there should be any concern by anybody in terms of doing anything in the future in terms of anything we do with our network in any way particularly if we can help manage that transition into the future. .

Unknown Analyst: Great. That’s perfect color. And then maybe just maybe one for Vince actually. The larger PNT order you’ve anticipated that sort of moved around quarter-to-quarter. Any update on that front you can share in new timing expectations?

Vincent O’Neill: No. I think that’s pretty much the same. Justin, as we talked on our February call. As I highlighted in my scripted remarks, we do think that there’s the potential for upside there in terms of our ’26 guide. But we just feel it would be premature to include that in the outlook at this point. .

Unknown Analyst: Got it. So that order is not in the guide factored into the outlook today, right? .

Vincent O’Neill: That’s right. .

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Matthew Desch: Well, there’s certainly a lot of interest in our spectrum. We certainly agree it does have a lot of value . [indiscernible] has been are demonstrating that. But I want to reiterate, we’re really heads down and focused on organic growth, the kind of things we’re doing as well as the investments we’re making in our 4 growth pillars and new products we have coming out. So I’m really looking forward to continue talking about that in coming quarters with you as well as we demonstrate our continued ability to grow here. So thank you for being on the call and look forward to talking to all of you.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.