Iridium (IRDM) Swings to Loss in Q2, Revenues Miss Estimates
Iridium Communications IRDM reported loss of 24 cents per share for second-quarter 2023 against the Zacks Consensus Estimate of earnings of 3 cents. The company reported earnings of 4 cents in the prior-year quarter.
Management noted that the net loss was mainly due to write-off of the company’s remaining ground spare satellite after the earlier launch of five of its six ground spare satellites in May. IRDM recorded depreciation expense of $37.5 million in the second quarter pertaining to write-off of the spare satellite.
Quarterly revenues were $193.1 million, up 10% from the year-ago quarter’s levels. The upside can be attributed to momentum in commercial business lines and strength in the Engineering and Support segment’s sales. However, the top line missed the Zacks Consensus Estimate by 2.1%.
Total Service revenues rose 9% year over year to $145.1 million. Strong recurring revenues from a growing subscriber base resulted in the upside. Service revenues contributed 75% to total revenues in the second quarter. Our estimate for the metric was $145 million.
Solid performance in commercial broadband, voice and data, and IoT contributed to the segment’s top-line performance.
Subscriber Equipment revenues fell 19% year over year to $27.4 million. Engineering and Support Service revenues rose 148% to $20.6 million from the prior-year quarter’s levels, mainly due to increased commercial and government activity.
Iridium Communications Inc Price, Consensus and EPS Surprise
Iridium Communications Inc price-consensus-eps-surprise-chart | Iridium Communications Inc Quote
In response to the results, shares of IRDM were down 15.6% in trading on Jul 25 and closed the session at $50.58. In the past year, shares have gained 15.5% against the Zacks sub-industry’s decline of 14%.
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Other Details
Total operating expenses were $209.1 million, up 35.7% from the prior-year quarter, mainly due to higher cost of services, selling, general and administrative expenses, and research and development expenses.
Operational EBITDA (OEBITDA) rose 9% year over year to $115.8 million.
Operating loss came in at $16 million against operating income of $20.8 million reported in the year-ago quarter.
As of Jun 30, the company had 2,140,000 billable subscribers, up 14% compared with 1,875,000 at the end of the prior-year quarter. The year-over-year increase was backed by strength in commercial IoT.
As of Jun 30, total cash and cash equivalents were $103.5 million with $1.4 billion of net debt. Capital expenditures were $22.4 million in the quarter under review.
In the second quarter of 2023, IRDM repurchased 1.1 million shares worth $66.1 million. On Mar 7, 2022, Iridium’s board of directors approved a new share repurchase authorization of an additional $300 million through Dec 31, 2023. As of Jun 30, 2023, the company had shares worth $60.4 million under the repurchase program.
2023 Guidance Reiterated
For 2023, management expects total Service revenue growth to be between 9% and 11% while OEBITDA is projected in the range of $455-$465 million.
Iridium currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Woodward WWD, Salesforce CRM and Adobe ADBE. Woodward and Salesforce sport a Zacks Rank #1 (Strong Buy) while Adobe carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings has increased 0.8% in the past 60 days to $3.61 per share. WWD’s long-term earnings growth rate is anticipated to be 13.5%. Shares of WWD have risen 20.2% in the past year.
The consensus mark for Salesforce’s fiscal 2024 earnings is pegged at $7.44 per share, up 4.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.3%.
CRM’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 15.5%. Shares of CRM have increased 25.2% in the past year.
The consensus estimate for Adobe’s fiscal 2023 earnings is pegged at $15.70 per share, up 1.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 13.3%.
Adobe’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 3.1%. Shares of ADBE have improved 33.7% in the past year.
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