Iridium Communications has issued its Q2 results and updated its full-year 2020 outlook.
Although a net loss, the result is an improvement on 2019 and the company also reported growing subscribers, revenue and reserves. Net loss was $12.4m the second quarter of 2020, as compared to net loss of $18.1m in 2019. This decrease in net loss was primarily the result of lower net interest expenses related to the refinancing of Iridium’s credit facility and high-yield notes from the year ago period and a decline in in-orbit insurance costs and research and development expenses. Operational EBITDA for the second quarter was $85.3m as compared to $85.1m for the prior-year period.
Second-quarter total revenue was $140.2m which consisted of $113.4m of service revenue and $26.8m of revenue related to equipment sales and engineering and support projects. Total revenue decreased 2% versus the comparable period of 2019, while service revenue grew by 2%. Service revenue, which represents primarily recurring revenue from Iridium’s growing subscriber base, was 81% of total revenue for the second quarter of 2020.
The Company ended the quarter with 1,362,000 total billable subscribers, which compares to 1,213,000 for the year-ago period and is up from 1,332,000 for the quarter ended March 31, 2020. Total billable subscribers grew 12% year-over-year, driven by growth in commercial and government IoT customers.
“Despite the headwinds caused by the global pandemic, Iridium continues to grow subscribers, service revenue and cash,” said Matt Desch, CEO, Iridium. Desch continued, “As businesses around the world started to reopen in the second quarter, we’ve also seen some recovery in activity from our technology and distribution partners.”
Commenting on the full-year outlook, Desch added, “With each passing month, we are getting increased visibility that allows us to refine our guidance for the year. Iridium is fortunate to provide mission-critical services across a broad array of industries, which has allowed our business to remain resilient in this environment. I think it’s notable that despite the economic slowdown, Iridium increased its cash position by more than $50 million in the second quarter, all of which came from operating activities. We expect to continue to generate significant free cash flow in 2020 and beyond.”
In a Q&A session following the results Iridium said that within maritime, the slowdown in shipping activity persists with a reduction in routes and ongoing logistical challenge of getting installation crews on vessels. Abundance of caution not to expose ships into their crew to the coronavirus, many vessels have remained in lockdown, making it difficult for our partners to access vessels to install new equipment already purchased as well as meet with ship owners on the procurement of new services.
Even in the current environment, we’re not sitting idly by. We’ve been engaging with our partners and been proactive with promotions and messaging. Many of our partners are attracting attention with deal featuring Iridium Certus, a VSAT companion service. We also have been supporting mariners and ship owners with access to some free voice calling cards for their crew to allow them to connect with family and friends during a particularly stressful time away. We’ll also demonstrate in the enhanced voice quality of our new network. Even with the challenges in maritime, we were able to drive positive net installations of broadband terminals and a 15% increase in year-over-year broadband revenue. Overall, Iridium Certus remains an important vehicle for growth for us and we received great feedback on the product from those using that.
In the coming months, we’re expecting Iridium’s new GMDSS service will also launch. It’s entering final beta trial soon on a number of ships around the world, connecting them in an emergency to regional rescue coordination centers, as well as critical navigation weather information sources. Our partners are excited about this offering as it targets 65,000 SOLAS class vessels that are required to carry GMDSS but have traditionally only had one supplier. Iridium’s GMDSS is being offered as a standalone terminal initially, though we’ll start the integration with Iridium Certus in 2021, and when complete, should serve as an additional tailwind to the adoption of Iridium Certus broadband.
We’re also expecting a new high speed Certus broadband terminal from Korean manufacturing, Tealium, this quarter, which is a great maritime brand that many partners are looking forward to having access to. We’re also introducing some new IoT products soon. Our new Iridium Edge Pro and the Iridium Edge Solar will make developing IoT services using Iridium’s network easier and faster, as well as compliment the new Iridium cloud connect service powered by AWS, which is already in use by a number of our partners. With continued recovery from global lockdowns, we expect 2021 to start the recovery to more traditional IoT growth rates.