Iridium Communications Inc. Stock

Hi, and welcome to the Rocket Lab Investor Update. My name is Peter Beck. I'm the CEO of Rocket Lab. It's a very exciting time for us. We're going to talk today about Rocket Lab's acquisition of Iridium. The lawyers always make me say this stuff, so there's a whole bunch of legal stuff here. Please read that in your own time, and we'll get on with it.

First, I want to introduce you to the space application equation. Now look, we've talked a very long time about Rocket Lab entering applications and the things we might or we might not do. But a space application is particularly powerful when you have your own ability to launch and build your own spacecraft. But even when you have that, there's still some very specific challenges to building a really successful and large application.

The first thing, especially if you're talking about communications is you have to have spectrum. You need really global spectrum. The second thing is it takes a long time to design and build satellites and of course, then launch them and deploy them before you even generate your first $1 of revenue. And then finally, it's a long time to build and establish a business model, establish a customer base and actually get that sustained recurring revenue that everybody wants. But we think we found a little bit of a shortcut here. So I'm really excited today to announce that Rocket Lab is acquiring Iridium Communications. This will be one of the most transformative deals in the space industry. It combines Rocket Lab's launch capability and satellite manufacturing with Iridium's global satellite communications network and its rare spectrum.

Rocket Lab will become a fully integrated self-launching space superpower, delivering critical communications capability to millions of users worldwide. So for those of you who aren't familiar with the Iridium network, it's a truly unique global network. It delivers continuous pole-to-pole global communication coverage to every ocean, every mountain and every airway in the entire planet. Iridium is critical to the people and the systems that just can't lose signal. Pilots, mariners, first responders, governments, critical infrastructure and remote sensors operating at the ends of the earth. Enabled by L-band spectrum, rare, finite and valuable low-frequency signals that deliver reliable, always-on connectivity even in the most remote and harsh conditions. Its ability to work through all weather and in gaps where other bands don't reach makes it mission-critical for millions of people.

Now Iridium are the original space pioneers, which is great because that gives us an incredibly strong foundation to build upon. The Iridium constellation has 66 fully operational satellites with 14 on-orbit spares. Of course, we've talked about their extremely valuable L-band spectrum. They have over $800 million of annual revenue. Of course, extremely profitable. Over 2.5 million users, 1,000 team members. Last but not least, they are the trusted supplier and partner for mission-critical services on Earth today. So this is why we think this is the ultimate combination of all of us for growth. The equation that comes to mind is not 1+1=2 , it's 1+1=3. Firstly, on the Rocket Lab side, we have uncontested launch. We have spacecraft manufacturing. We're highly vertically integrated and we're trusted government partners. And we're a proven space disruptor.

And then on the Iridium side of the equation, obviously, they operate an incredibly important unique constellation today. They have highly valuable spectrum, which is very difficult to come by. They have millions of customers. And of course, they're a trusted government provider, too, and a very strong cash flow. This is not a cash-losing business. And then finally, the reason why this equals 3 is the result of this is it creates a self-launching company that can deliver new constellations and new services to the world. So I want to spend a little bit of time talking about spectrum because that word is used a lot, and I'm not sure everybody truly understands the importance. But if you want to do large-scale communications globally, you must have spectrum. And for us, this deal really enables us to accelerate our entry into this market. Spectrum is a very, very scarce resource that you can't just pick up on the corner one day.

And finally, not all spectrum is the same. And the reason why the Iridium spectrum is incredibly important to us is that it is global and it is L-band. And L-band is important because if you want to do safety critical comms, you need that band to penetrate through weather and harsh conditions. It is a band that ensures that you can always be connected. So following on to that, if you want to do big things in space, you need spectrum. And as you can see, the others on this list have arrived at the same conclusion as us.

One of the things that Rocket Lab is known for is really smart deals, and this is the quintessential Rocket Lab deal. We're not investing in hopes and dreams. We're not pushing all the chips into the center of the table. We are doing another really smart deal. We're buying capability that ensures that it is accretive to the bottom line. This is a highly profitable business. If you look at the customer base and what this business does, it's all about mission success, and that's what we're about to.

Now we're not just going to acquire this business. We are going to apply the Rocket Lab magic to it. We're going to absorb it and optimize it and scale it into something really truly fantastic. This represents an accelerated entry into a giant new TAM for Rocket Lab. Our future in space applications has just been unlocked and accelerated. This is our entrance into reoccurring application revenue from space, but it is not the finish line.

Rather than simply continuing Iridium's network, we will build upon it and scale it into untapped markets and pioneer new space-based services. So you've heard from me about why this is such a transformative deal for Rocket Lab. But I want to throw it over to Matt, the CEO of Iridium, to hear his words about why it's such a great deal for Iridium too. Thank you, Peter.

This is an exciting day in the long and productive history of Iridium, where over the years, we've built one of the most successful and important service platforms in space. As Pete said, millions of people every day around the world depend on our services to track, manage and communicate with assets in all kinds of industries, including aircraft, ships and to protect critical infrastructure.

We built a successful, growing, profitable platform in space and have attracted many hundreds of companies to take us to market in their most important applications. We're now focused on driving growth in unique and important areas like aviation safety, trusted time and location to protect and augment GPS, IoT, where we're the leader in evolving to the new era of direct-to-device standards as well as supporting the U.S. and other governments in their national security missions.

Combining Rocket Lab is the best way for us to take our experience and success into the future of the space business. Being part of an industry-leading launch and satellite provider will create a global space powerhouse, vertically integrated to innovate and succeed long term in this fast-growing industry. Together, we believe we can cost effectively launch, operate and sustain new services like the plans we envision for our next-generation PNT service or expand on our Aireon business by transforming the way pilots communicate with air traffic controllers. And we believe we can do it faster and make the business case work better as well.

We think our long experience complements Rocket Lab's well and makes the combination a real force to be reckoned with going forward. There are a lot of reasons to be excited about the future of the space industry. We think the most successful will be able to bring all the pieces together. That's what today represents, Iridium combining forces with Rocket Lab to create a fully integrated self-launching global space power. It's a great day, and we can't wait to be part of this. Now over to you, Adam.

Thanks, Matt. Now turning to the key transaction terms for this transformational acquisition. Under the terms of the definitive agreement, Rocket Lab will acquire Iridium for $54 per share in a combination of cash and stock, implying an enterprise value of approximately $8 billion. The consideration consists of $27 per share in cash and a number of shares in Rocket Lab common stock calculated using an exchange ratio that moves within a defined collar. The stock portion is sized around a reference price of $84.54, with a floor at $67.50 on the downside and a cap at $112 on the upside. This collar structure lets the share component adjust within this band if the stock moves before closing, keeping overall value balanced and the mix of cash and stock preserves our balance sheet integrity and capacity and maintains flexibility to optimize for cost of capital.

In conjunction with this transaction, we have secured commitments for a $3.6 billion, 364-day secured bridge facility from Deutsche Bank and Wells Fargo Bank. Unless replaced or reduced prior to closing, the bridge facility will be available to refinance approximately $2.1 billion of outstanding Iridium debt, which is adjusted for Iridium's recently announced Aireon transaction. The remaining $1.5 billion from the bridge, combined with approximately $1.6 billion from our own balance sheet will be available to pay the cash portion of the consideration and related fees. This financing strategy ensures we maintain financial flexibility to continue executing on our organic and inorganic growth initiatives across both our Launch and Space Systems segments.

The transaction has been unanimously approved by the Boards of Directors of both Iridium and Rocket Lab and is expected to close in 2027, subject to customary closing conditions, including approval by Iridium stockholders and regulatory approvals.

Now turning to the financial impact of this acquisition. In fiscal year 2025, Iridium generated $871 million in revenue and delivered 57% operating earnings before interest, taxes, depreciation and amortization margins. To that end, we believe this transaction will be significantly accretive to Rocket Lab's cash flow generation and profitability. These impressive and meaningful levels of revenue and profitability contribution are expected to materially transform Rocket Lab's financial profile.

This acquisition fundamentally enhances our business model by combining our strong satellite subsystems, satellite platforms and launch businesses with Iridium's proven cash-generating satellite services business. The result will be a high-growth, financially robust company with significant cash flow generation to fund future growth initiatives across the platform.

Now I'll hand it back to Pete to wrap things up.

Thanks, Adam. And finally, as you can see, our future in space has just been accelerated and unlocked. It's an exciting day for everybody, but now it's time to get to work.

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.

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.

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?

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.

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

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?

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?

Yes, you started to hit on it.

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.

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?

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.

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

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?

Describe what a big LEO processing round would be.

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?

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.

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?

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.

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?

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

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?

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.

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

Well, thanks for that .

The next question comes from Edison Yu with Deutsche Bank.

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?

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.

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?

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?

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.

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.

And the next question comes from Hamed Khorsand with BWS.

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?

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.

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?

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.

And the next question comes from Tim Horan with Oppenheimer.

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.

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 .

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

The same color on IOT in terms of...

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] .

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.

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?

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.

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

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?

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]

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?

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.

Our final questions come from Justin Lang with Morgan Stanley.

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?

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.

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. .

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?

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. .

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

That's right. .

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

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.

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

I'm Ric Prentiss, Head of TMT Research at Raymond James. As you all know, we referred to in my space, T for Towers, M for Media, T for Telecom Satellite Services. So on the 47th Annual Raymond James Institutional Investor Conference, my 30th Institutional Conference at Raymond James. We're pleased to have Vince O'Neill, CFO of Iridium, with us. Brent is going to run it from here. So Brent, Vince, you're on.

Thanks, Ric.

Thanks for the introduction, Ric.

Yes. Thanks to everyone for being here in Orlando for the Institutional Investor Conference. Thanks, Vince, for joining us. This is an all-cap, all sector conference. So there's a lot of generalists, international investors, a lot of PMs here.

So can you start us off just an introduction to Iridium, who you are and where you fit into -- obviously, there's a lot of excitement right now about space and satellite, where you fit into that equation?

Sure. Thanks, Brent. Good to be here. Yes, just high level for us, we operate in the mobile satellite spectrum space. We have a network that covers the globe. So just very quickly, our network architecture is 66 satellites, 6 planes of 11 satellites in each plane. And they're constantly circumferencing around the globe. The importance of that is that you always get a signal no matter where you are in the world. So you can think of coverage as being ubiquitous in the North Pole as in Upstate New York.

The other thing that's really important is that has in-built redundancy and resiliency into the network in that if you did happen to lose one of those 66 satellites, you've got another satellite coming quickly along at another look angle. So you're never going to be without service for a long period. And we also have -- with the 66 satellites, we also have 14 in-orbit spares. So there's a lot of inbuilt redundancy there.

And that's really important. Why do I go through that? Well, we operate in the L-band spectrum, which we have 8.5 megahertz of global rights to -- global landing rights to L-band spectrum. the L-band spectrum itself is very resilient by its nature. And it means that we're certified for critical safety services in both aviation and maritime. And there's only 2 companies in the world that have that certification. We're one. There is another satellite provider that has that, and that's because they have the L-band spectrum.

So we're big in critical safety services. And also think of us anywhere where you need to get a signal where a connection is absolutely necessary. If you're not moving big chunks of data, you're probably doing it on our satellite network if you're off the grid.

So a great example would be we have an IoT personal communications business. And you can take -- you can go in with a major retailer, take one of their devices, pair it with your cell phone and you have 2-way text messaging and SOS capability when you're off the grid. And as I said, you get a signal anywhere.

In terms of financially, the company is extremely sound. We have revenue of close to $900 million, service revenue of close to $650 million, which is basically think of that as airtime and access. We generate close to $500 million of OEBITDA a year. And for a satellite company, we're really unusual because we actually throw off cash, and we throw off about -- this year, we'll throw off over $300 million of pro forma free cash flow. So I think high level, I think that's it, Brent.

That's a great overview. And I heard a lot of safety, mission-critical, emergency, and that's all driven by the L-band spectrum you have kind of a unique resilient spectrum. And that's been your moat for a while.

And so often, when we talk about satellite, SpaceX, Starlink comes up, it's hard to talk about satellite without talking about Starlink. And this past summer, they bought some spectrum in the S-band. And so now they can more directly compete with you. What was you all's reaction at Iridium when you saw that announcement? And what does that mean for you? What are they going to be able to do in your markets?

Well, I think, first of all, when they bought the S-band spectrum, they obviously paid a lot of money to EchoStar for that spectrum. And they talked about the direct-to-sell space like connecting with cell phones down here on Planet Earth.

And for us, I think in the short term, it really doesn't change much, Brent. As we operate our business today, we don't see that much of Starlink. They've had a very acute impact on a very small piece of our maritime business, but that's very much ring-fenced.

We do think that we have moats around other areas of our business. A classic example I give people all the time is we've got about 2.5 million subscribers, about 400,000 of those are telephony, voice and data subscribers. And they're the kind of subscribers that they pay $48 of ARPU a month, and they really want our specialty service, and they're really paying for the fact that we've got that redundancy and that resiliency in our network.

So think of highly industrialized commercial use cases, governments, NGOs, disaster recovery type organizations. And the idea that they're going to trade that in for a consumer direct-to-device product, I think is -- I just don't agree with. I don't think that's right.

Having said all of that, I do think that Starlink will have -- Starlink will encroach on some limited areas of our business as we go forward. I do think -- the first thing I would say is I do think it's going to take them at least 3 to 4 years to build that network out. They've got a lot of wood to chop. They've obviously shown that they can chop wood. So I'm not doubting that they're going to chop it, but I think it's going to take them longer than the 2 years they've said. And there's a lot of regulatory barriers and hurdles that they will have to overcome, especially in Europe, maybe less so in the U.S., but especially in Europe.

So -- but I think for us as well, so we think we have -- we think in a lot of areas, we have moats around our business, like I talked to in the telephony business, I think IoT to a large extent. And then we obviously have a lot of -- which I know we've talked about on our prior quarterly calls, and I'm guessing you'll get to, Brent. We think we have a lot of incremental opportunities for revenue growth as we look forward here.

And one thing a lot of investors are trying to figure out is how many more casual users do you have because people who might not necessarily need the robust, resilient devices and connectivity Iridium can offer. Is there any way you can quantify for us your exposure to those customers?

So I think what I would say is that certainly, if you look at our telephony base, for example, I would say that they're mission-critical type applications. So I think of it either -- it's either regulatory mandated in terms of it's a safety backup and you have to have it or it's some mission-critical application.

And so I look at our telephony base, and I think it's definitely covered by the mission-critical aspect of that. I think where we get the question most often, Brent, is maybe in the IoT space where we have a big personal comms business that has grown at a very healthy clip over the last 4 or 5 years.

But typically, what I say to investors is that the users that we have or certainly the majority of the users that we have in that personal comm space are -- it's a lifestyle. It's -- they're call them professional hikers or whatever it is they're doing, where they know on a regular basis that they are going to be off the grid, and they want the bells and whistles that comes with those products and that functionality.

I've always said, and I still feel that direct-to-device itself or direct-to-sell, as we call it, is more of casual usage. And I think it's going to be more of a use case where people in this room, you might find yourself off the grid when you don't expect to be, or I have my own -- personal examples from my own life where I actually think I have terrestrial coverage, and I don't. And it's in those instances that I would actually pay a lot for a connection via my smartphone at that point. So that's typically how I think about it, Brent.

Yes. And you talked on the 3Q call, you acknowledged competition from Starlink. And on the most recent 4Q call, you all got more specific in terms of the 4 areas that you can invest that you think are much more insulated from that competition. PNT, NTN, IoT, a lot of acronyms national security, including Golden Dome and aviation safety. So I guess I'll kick it off to you to just start with why you identified those 4 areas?

Because we think that there are areas that play very much into the characteristics and the strength of our network, and I'll go through each of those 4 briefly.

And also that they are areas that I would classify as being adjacent to Starlink or having a moat from Starlink. So if you think of our -- if you think of PNT, which is the first one Brent mentioned, that's our position navigation timing solution. And that's basically -- think of that as a GPS backup.

So we have a product on our satellites. We acquired a company called Satelles about 18 months ago. And it's their technology that runs on our satellites. And basically, their signal is 1,000x stronger than GPS. And this honestly is one of the most products, if not the single most product I'm most excited about in our quiver at the moment because you can see over the last 2 or 3 years that there's a much higher awareness around GPS resilience or lack of resilience, I should say, and the fact that GPS isn't really that hard to jam.

And I think the Ukrainian war has brought some of that to the fore with some of the jamming of the weapon systems there that effectively rendered millions and millions of dollars of high-technology weapons worthless because they didn't have a GPS signal. Another interesting factoid, which gets thrown a lot -- around a lot by the PNT people is that there's actually more GPS receivers in the world than there are toothbrushes. So GPS is everywhere.

So there's a much higher awareness around the vulnerabilities of GPS. And this is something where we think like our Satelles PNT product comes in where it's got a lot of government and commercial application, where it can act as a backup to GPS. And it's -- as I said, it's much, much harder to jam or spoof it. The signal is 1,000x stronger. So it's almost like a failsafe or a backup for GPS.

The second area that Brent mentioned was NTN, our standards-based IoT solution. So we've gone down the standards-based path for our narrowband IoT solution. And while everybody talks about direct-to-sell, we're actually really excited about the opportunity for narrowband IoT, which is effectively taking cellular IoT today. And the challenge with cellular IoT today has been that once you go off the grid and you go into satellite, it gets very expensive. So the cost of equipment was a real inhibitor to actually growing that market.

And the fact that it's now part of the standards, it will be specced into manufacturers' chips. Nordic Semiconductor, for example, are currently rolling out a standards-based version of the chip. They're big chip manufacturer in the IoT space. But the fact that, that's now happening and that technology is on the chip. We believe which makes it very cost effective to roll out narrowband IoT beyond nonterrestrial coverage.

We have signed MOUs with some of the most prominent MNOs in the world, Vodafone, for example, Deutsche Telekom. Both have significant chops in the IoT space. And I think you can expect to see more of those announcements coming. But that's a greenfield opportunity for us where I wouldn't expect to see much revenue in '26, but certainly '27 and beyond, I would expect to start to see that ramp.

I think the third example was with the U.S. government. I know everybody talks about Golden Dome at the moment, but we have a unique relationship with the U.S. government. They were our first customer over 30 years ago. We have a fixed price service revenue contracts with them for access and air around satellite handsets and SBD.

The engineering part of our business has grown significantly over the last few years, which has primarily come from the U.S. government, and it has primarily been part of the Space Development Agency contract where we're heavily involved and integral to that activity.

And so we think going forward that we have a lot of incremental revenue opportunity, sorry, to grow revenue there. And I would just tell you anecdotally that over the last 6 to 12 months, I've been at Iridium for 11 years, and I've never seen as much activity with the USG as I've seen over the last 6 to 12 months. So we think that's significant for us.

And then the last piece is aviation safety services. And just very quickly, as I said, you'll find us in the cockpit of an airplane, you'll never find us in a cabin or in the cabin or at least I hope you don't. And -- but we do believe that with our position in the cockpit, we have an opportunity to take a significant share -- and Matt's talked about this, that we have an opportunity to take a much more significant share of that business, both from a critical safety information perspective, but also noncritical safety data for the airlines. And I think the airlines are keen and they're hungry for that.

So we would expect those 4 areas to contribute significantly to our revenue profile over the next 3 or 4 years.

And on the last one there, aviation safety, you've talked about the possibility of M&A in that area and maybe some other areas as well. But help us understand why that's an opportunity to you, how you get 1 plus 1 equals 3 with something in that space?

Well, I think some of that -- and I don't think it's just aviation. I think it's a little bit broader than that, Brent. But where we have the opportunity to accelerate opportunities, whether that's by acquiring technology in cases or in some cases, it could be just relationship-based and a way to get to market and go-to-market quicker, we will do that.

Okay. Okay. And a lot of what you just described your business, really almost all of it -- it's enabled by the spectrum that you own. And you all more openly have talked about the ability to monetize that spectrum. And I think ever since the EchoStar deal. They sold their spectrum. People have been looking for where else is their spectrum value. So can you expand on how you all might be able to monetize your spectrum beyond the businesses you have today?

Well, I think, first of all, we have always recognized the value of our L-band spectrum. We have built a business of that, that's $500 million of OEBITDA and throwing off $300 million of free cash flow a year across a number of diverse product portfolios, serving mission-critical applications across the globe.

I think some of the unique properties of our L-band spectrum is, one, it's global. It's truly global. Nobody else has truly global L-band spectrum. We have landing rights all over the world. As I said earlier, you can get a ubiquitous experience, whether you're in New York or -- sorry, Upstate New York or in the North Pole. So it's truly unique in that way.

L-band is certified for safety services. So we're certified for aviation and maritime. And it's been critical to us building out the business we've had. The perception of mobile, specifically dedicated mobile satellite spectrum, the perception of that value, I think, has changed probably over the last 12 months.

If you go back a couple of years ago, when everybody was talking about direct-to-sell, people were talking about how do they address that opportunity. There was the approach where you take the Starlink approach where you partner with T-Mobile and you parse some of the terrestrial spectrum and you use that or you could take more of an AST approach where you're rolling out these big satellites in the sky and you're just -- you're basically -- I know this isn't technically correct, but basically, you're blasting down and you're picking up the antenna on the cell phone.

Then you've seen what Apple did with Globalstar. Apple went and partnered with Globalstar, got access to 85% of their spectrum, which I think was Apple acknowledging you need MSS spectrum if you want to do this. And I think you can see that the market has moved to that over the last 12 months. You've had the deal between AST, Ligado and Inmarsat, I know that's subject to litigation at the moment, but that would give AST rights to most, if not all, of Inmarsat's L-band spectrum in North America. And you've seen the EchoStar deal that was just announced 6 months ago.

So we've always placed a lot of value on our L-band. We've got 8.5 megahertz, Brent. It's prime Beachfront property. And as we said on the last call, we will look at any future business alliances that maximizes shareholder value. I mean that's what we're here to do.

Yes. How open-minded are you on that? Is there anything that's off the table that is a nonstarter in terms of monetizing that spectrum?

I wouldn't say there's anything off or on the table. I think it's really a question of what's the best solution that maximizes shareholder value, and that's ultimately what we're going to do.

Okay. So you all are in a CapEx holiday right now. We thought it might stretch to 2030. Now it sounds like it might stretch to the mid-2030s. And then the question is becoming, do you all launch another satellite constellation? Do you maybe hitch hike on someone else's satellites? Can you update us in terms of -- it's still early, but what is your thinking in terms of what are your different options for that next-generation constellation?

So I think, first of all, as you think about the current constellation, which is currently throwing off over $300 million of free cash flow and growing. We had an initial useful life on that of 12.5 years. We extended it a couple of years ago, 17.5 years. So if you just follow the math on that, we launched this current constellation across 2017 to 2019. That would take you out to 2035, 2036.

We're very happy with how the network is performing. Network health is really good. And I think at this point of its life cycle, it's probably tracking. I think it's tracking ahead of virtually all metrics that we had laid out. So we're very happy with the health of the network. And my hope sitting here as a CFO would be that it could last longer. Obviously, I can't commit to that here today. But certainly, at a minimum, we expect to have it through the middle of the next decade.

In terms of the next generation, I mean, it is early. There's a lot of different variables there. Cost of manufacturing and cost of launch has come down significantly since we paid approximately $3 billion to put the current constellation up there. So if we were doing a like-for-like constellation today, I don't know what it would cost, but I would expect it to be significantly cheaper.

That being said, there are other potential variables to look at as well. If you wanted to get better spectrum reuse out of the constellation that we currently have, you put more satellites up there. So instead of a 66 satellite constellation, maybe the next one will be 132 satellite and you just have much tighter spectrum reuse and you're getting much more efficient use out of your spectrum.

Another option, which I think you alluded to, Brent, is to maybe run as a payload on somebody else's satellite system. And they're all options that are on the table. Some of that's going to come back to what are the types of markets that we're trying to serve, what's it going to take to serve those markets and what do the economics ultimately look like.

Okay. Great. And you talked about your strong relationship with the U.S. government. There are several contracts in place there. Can you expand upon what is your moat with the government as Starlink and others enter satellite space, what prevents them from being able to compete for -- or win some of that business? Just expand upon that.

So what we do for the U.S. government, I don't think anyone else can do. And again, I think it goes back to the characteristics of our network that I've been talking about.

But specific to the U.S. government, they have the capability with us to send a signal up. So you can imagine that somebody is in a bad place with bad actors. They want to send a signal up. That goes up to our satellite is encrypted across all of our satellites and lands in their proprietary gateway in the United States, the U.S. government's proprietary gateway. Nobody else sees that traffic.

That gateway is basically engineered for only Iridium traffic. It's not like they're landing other satellite traffic there. It's just Iridium traffic that gets landed there. And they have -- there are 2 other ancillary contracts tied to that. One is the gateway maintenance contract. So we help them maintain that gateway. And that contract was renewed. I think it was renewed in '24 through '29. Ken, keep me honest here, but something like that.

And then the gateway evolution contract, which is a separate contract to the maintenance contract, that was renewed last year, and that was renewed through '29 or 2030. Point being here that those run past the current renewal, which is in September '26.

Now we fully expect that as part of the EMSS contract, the government has the right to push out the contract 6 months, which we fully would expect them to take advantage of that. They've done that for prior renewals. For those of you who are new to the story, by the way, at least the last 3 or 4 contracts, which have been 7-year, or 5-year contracts, have been sole-sourced. But they will probably push that out 6 months, and we'll negotiate a renewal with them at that time, which will be March of next year -- this time next year.

And obviously, we're all watching closely what's going on in Iran. Can you talk about how that would affect your business?

I think right now, I don't know that it would have a huge impact per se, Brent. I mean, if things change there and it was -- it became an elongated exercise or activity that, that might change things. And certainly, if you're in a position where you would have troops on the ground or something like that, I think that would probably dramatically change things.

But as we stand here today, I don't think it's going to have a major impact. And that's -- for the government, that's one of the great things about the contract they have. They have -- they effectively have within reason all-you-can-eat airtime contract for both handset and SBD. They like that price certainty, and they want that surety of use as well when they need it.

Okay. So you all put out a guidance of $1.5 billion to $1.8 billion of free cash flow cumulatively between 2026 and 2030. Help us understand the variables that go into what would cause you to hit $1.5 billion versus $1.8 billion? And what's your level of confidence of being within that range?

So I would say high level of confidence of being within the range. If you think about it today, we're throwing off over -- just over $300 million of free cash flow. So if you just flatlined it for the next 4 years, whatever, you got 5 years, you're at the $1.5 billion. I think in terms of getting to the $1.8 billion, it's really -- it's about proving our competitive moat on the business and also growing some of those revenue streams that we talked about across the 4 growth pillars: PNT, narrowband IoT, national security missions and aviation cockpit services.

My hope, obviously, sitting here as CFO is that, that we're hugely successful growing that and that we're here in a couple of years' time, and you're giving me a hard time for under calling it, but high degree of confidence.

Never give you a hard time. We're in the last few seconds here. A lot of generalists here. Can you give us your one liner pitch on why people should dig more into Iridium?

My one liner pitch would be we're a very different satellite company. We're throwing off cash today. I don't think that the moats and the customized niche products that we offer around our business are fully understood. And I think if they were, I think investors would understand that there's a much longer tailwind on our revenue than they've given us credit for at the moment.

All right. Great. Thanks, Vince.

All right. Thanks, Brent.

Thanks, everyone.

Good morning, and welcome to the Iridium Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Ken Levy, Vice President of Investor Relations. Please go ahead.

Thanks, Cindy. Good morning, and welcome to Iridium's Fourth Quarter 2025 Earnings Call. Joining me on today's call are our CEO, Matt Desch; and our CFO, Vincent O'Neill. Today's call will begin with a discussion of our fourth 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 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 our views 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 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, free cash flow yield and free cash flow conversion. 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 as well as a reconciliation to the most directly comparable GAAP measures.

With that, let me turn things over to Matt.

Thanks, Ken. As you saw in our press release this morning, we achieved our 2025 guidance. Our service revenue came in on target, and we grew OEBITDA 5% for the full year. In addition, pro forma free cash flow was almost $300 million. Our business remains robust, and we feel confident in our ability to continue generating significant free cash flow as we transform our business and add new services. .

Free cash flow continues to differentiate us from others in the Satellite industry. It's allowing us to invest and find new ways to grow our capabilities while also making good on our commitment to return capital to shareholders through a growing dividend.

Our market leadership and growth are largely due to our highly reliable services, our valuable L-band spectrum and the extensive and growing ecosystem of technology and distribution partners who count on our network for their many unique applications.

In the third quarter, I shared my thoughts on the changes taking place in the Satellite sector and how recent spectrum deals are likely to hasten the pace of more global direct to sell services. These new consumer connections may eventually encroach on traditional MSS services. This will take time, but providers will likely be ready with service even if not truly global over the next few years.

These developments have spotlighted the importance and scarcity of L&S band spectrum, which is widely recognized as the optimal spectrum for connecting to mobile consumer devices of all types.

We know this firsthand because over the last 25 years, we've developed a strong mobile business, connecting over 2.5 million subscribers with more than 500 business partners in their applications. In 2026, we will add more partners, new services and additional ways of connecting them. Demand for our solutions remains strong, especially among enterprise and government customers.

Further, the pipeline of new partners looking to integrate Iridium's IoT, P&T and safety services continues to expand. We added about 40 new partners in 2025 and engagement with them remains robust as we move into 2026. Customers continue to seek out the highest quality and most efficient connections for their mobile needs, and our brand remains the gold standard for delivering these.

As we look forward, we're investing to further differentiate our offerings and have made strong progress over the last 18 months on new technology platforms that we can leverage to enter new markets and expand our business. This year, Iridium will introduce a number of new services and products that we believe represent more than $200 million worth of revenue opportunity by the end of the decade.

Among these, new Iridium Certus, GMDSS, companion terminals and Maritime that better complement Ka-band broadband terminals, a new ASIC Iridium P&T, which we expect to reduce cost and time to market for expanding assured position navigation and timing solutions and Iridium NTN Direct, which will bring our global narrowband IoT capabilities to standards-based terrestrial devices.

We will also be introducing an exciting new IoT device soon to our portfolio that sets new standards for size, cost and flexibility for our customers, and gives our partner a powerful new platform to build on for the future. All of these are the results of strong collaboration with new and longtime partners and exemplify the enduring utility of our global network.

Even as we execute on these new products to drive growth, it is clear that our spectrum in and of itself has great value. In light of industry developments in recent months and the excitement around the prospects of D2D, MSS spectrum, especially clean globally coordinated spectrum has increased in value. We will continuously consider our spectrum assets with a view of maximizing shareholder value.

Therefore, we will not rule out future business alliances that leverage our unique spectrum real estate, particularly if they offer incremental value to shareholders. Valuations in the Satellite industry are increasingly being driven by future narratives rather than by current operating results. As we focus on new growth areas, we recognize the need to broaden, and in some respects, more clearly articulate our growth narrative. So I wanted to elaborate on some of the business themes we are pursuing as we believe we are well positioned with the right partners and network resources to have great impact.

For competitive reasons, our discussion of some of these themes will be at high level for now, but I hope this commentary will give you an idea of where we're heading. In no particular order, there are 4 key areas that Iridium is pursuing to expand our addressable markets and drive faster growth for our company. These include narrowband IoT expansion, building on our unique P&T lead, greater national security work with the U.S. government and disrupting the status quo in the aviation industry. Let me speak to each of these.

First, there is no question that Iridium is already the undisputed leader in satellite IoT. We have the largest customer and partner base in the industry and the broadest array of solutions. In 2026, we'll be introducing the first truly global standards-based service with Iridium NTN Direct. Development is progressing well, and we're processing end-to-end messages over our network as we ready the service for commercial availability. We're experiencing strong demand from MNOs to include Iridium in their roaming plans, and we believe the industry is excited to utilize our new offering.

While we expect competing IoT services eventually be available from other satellite providers, Iridium will be able to maintain our leadership and see our subscriber count grow as the market for standards-based solutions expands and D2D satellite connectivity becomes more common to connect assets and people around the world.

Our industrial-grade reliability, efficiency and partner base are key differentiators of our service offering, and these should continue to expand its demand for IoT grows in the future. One key area we're particularly excited about and think Iridium is positioned to lead is in the autonomy sector. Delivery and Service UAVs, USVs and other autonomous systems enabled by AI and remote beyond line-of-sight operations are on track to become mainstream applications. This emerging industry segment aligns well with Iridium's capabilities and deep customer relationships.

Another opportunity we see for long-term growth is our satellite-based assured PNT, which is an outgrowth from our acquisition of Satelles in 2024. P&T services are a multibillion-dollar market and expect it to generate at least $100 million in annual revenue for Iridium by the end of the decade. We've successfully introduced the service in Europe and Asia to address the growing threat of spoofing and jamming in areas of geopolitical conflict. There is a compelling unity in navigation systems where Iridium P&T can provide a more assured connection for maritime vessels, autonomous systems and for protecting aviation. We're seeing a lot of traction from civil and commercial organizations that seek to fortify their GPS-dependent systems, which are vulnerable to attacks. These organizations often run high-value mission-critical applications like those employed by capital markets, communication networks, data centers, energy grids and other critical infrastructure.

Iridium's PNT signal is 1,000x stronger than GPS and can penetrate buildings to provide an accurate and building time source to protect vulnerable hardware and applications. We've already cultivated a number of large customer relationships and expect adoption of Iridium PNT will expand with the introduction of our new ASIC this year, for which request to participate in our beta program far exceeded our expectations.

With this chip, we believe we are at least 5 years ahead of any other viable global alternative PNT solution and this hardware will lower integration costs and help to standardize our solution in industry.

Ultimately, though, we are working towards our PNT services being directly embedded in smartphone and other consumer device processors expanding the impact of our service far beyond our current expectations. We now believe that our PNT service can also function as a unique platform to enhance cybersecurity and fortified data networks. We are currently developing a unique quantum-safe cybersecurity service using our PNT signal that can improve identity management and provide authentication for high-value transactions tapping into the $20 billion identity verification industry and creating a potentially significant new revenue stream for Iridium.

Even capturing a small portion of this growing market would be meaningful to a company of our size. The third theme for investment in growth is national security. As government programs shift from internally developed proprietary solutions to leverage a broader array of commercial solutions, we see an attractive opportunity for Iridium to increase the value we offer to the U.S. government, particularly as they invest in new space capabilities.

For more than 2 decades, we have collaborated with the U.S. government to set the standard for network reliability and interoperability and directly empower service members around the globe. We believe Iridium's constellation and experience presents opportunities to deepen our relationship with the USG. We have secured more than $1 billion of awards over the last 5 years, including building and operating the ground systems for the Space Development Agency's new network as part of the government's future space architecture.

Through this, Iridium has shown its ability to successfully manage mission-critical programs and deliver innovative commercial solutions in support of the government's national security priorities. You probably also saw the announcement last month that confirms Iridium's involvement with the Missile Defense Agency Shield contract, which most of you know is Golden Dome. Being selected for this initiative is a powerful validation that Iridium continues to serve as a trusted mission-critical service provider in the national security space.

We are excited to support this important long-term initiative and are already executing on elements of this program. Between the U.S. government's numerous satellite service contracts and its new Golden Dome initiative, the addressable market within the national security space represents a multibillion-dollar opportunity. We are excited about the attractive opportunities we see for Iridium to grow its involvement and business with the U.S. government.

A fourth growth team for us will be expanding our share of the aviation cockpit data connection market. Iridium touches aviation in a number of ways today. through our involvement in cockpit safety communications by providing controller to pilot data links and other cockpit communications on over 60,000 aircraft around the world. Our work in evolving standards for uncrewed aerial systems that will be a big market in the coming years, and our involvement in satellite ADS-B navigation and surveillance services through Aireon, our joint venture with a number of air navigation service providers, known as ANSPs.

We believe we can build on these platforms to expand our footprint in the aviation safety market, particularly as it evolves from sending safety and operational data over ground-based VHF towers with satellite at the backup to sending all data more cost effectively and efficiently over satellite.

With the expanding aircraft fleet and the airlines expanding needs for real-time information from those fleets, we believe we can offer a compelling value proposition using our network today and then expand in the future with space-based VHF in a follow-on network. Our long-term relationship with Aireon is a key piece of that strategy. They are a growth engine for us into the future, especially as they continue to expand their air traffic surveillance services to more ANSPs and market their unique and powerful data set to more industry data applications.

Together with some additional investment, we think our work with Aireon could serve a $1 billion-plus addressable market leveraging our unique fully global network. So Iridium continues to occupy a strong and defensible position in the satellite industry. Our competitive advantage comes from focusing on specialized products and services for which high reliability remains a key point of differentiation. The growth themes I share with you today representing incredible opportunities for our company, and I look forward to updating you as we invest and execute and capitalize on each in the months ahead.

We strongly believe the initiatives we are pursuing along with our core businesses will enable us to drive incremental growth and cash flow generation well into the future and unlock value for our shareholders. As Vince will explain, we will continue our growth trajectory in 2026, albeit at a slower pace than in the past as we position ourselves for additional revenue growth and long-term value creation. At the same time, we will continue to generate meaningful cash flows to invest, delever and return capital to shareholders through a growing dividend.

Due at all, we will not lose sight of the needs of our customers or the rapidly changing marketplace that we are uniquely well positioned to serve.

With that, I'll now turn the call over to Vince to discuss our quarterly results and outlook. Vince?

Thanks, Matt, and good morning, everyone. With my remarks today, I'd like to recap Iridium's full year results for 2025 and provide color on trends we saw in the fourth quarter, some of which continue into the new year. I'll also walk through the 2026 outlook we released this morning and review Iridium's liquidity and capital positions. .

Service revenue growth was in line with our recent guide, finishing up 3% in 2025. Full year operational EBITDA came in within our guidance range at $495.3 million, up 5% year-over-year. OEBITDA was impacted by a $3 million inventory charge taken in the fourth quarter. Our conversion of to cash flow remained strong at 60% and resulting in pro forma free cash flow of $296 million in 2025.

In the fourth quarter, total revenue was $212.9 million, -- this reflected year-over-year growth in service revenue, offset by lower subscriber equipment sales during the quarter. Operational EBITDA was $115.3 million in the quarter.

Within our commercial business, service revenue was up 3% from a year earlier. Contributing to this growth was a 4% rise in voice and data revenue, which benefited from the price increase that commenced over the summer. Commercial IoT revenue grew 11% in the fourth quarter. While Matt noted that Iridium added several new partners in 2025, we also certified more than 30 new IoT products during the year. The combination of new business relationships and new IoT applications coming to market is expected to broaden our sales funnel in the years ahead and will allow Iridium satellite technology to reach a growing number of industries and end users.

In broadband, we reported revenue of $12.2 million in the fourth quarter. This 9% decline from the prior year period continued to reflect the increasing prevalence of Iridium's use in lower-priced companion plants. While the pace of migration from primary to backup is slowing, this trend will continue to create an ARPU headwind in 2026.

For the full year, broadband revenue was down 10%, which was largely in line with our expectations. In all, commercial subscribers grew 4% in the fourth quarter. Hosted payload and other data services was $13.4 million for the quarter, off 13% from the year ago period. As I previewed on our third quarter call, a delay in PNT deployment by an existing customer weighed on Q4 growth.

Apart from this contract delay, we have continued to see strong inbound interest in Iridium's assured PNT services and continue to see momentum for this business to deliver $100 million in annual service revenue by the end of the decade.

Within our government business, revenue rose to $27.6 million in the fourth quarter, reflecting the final step-up in our EMSS contracts with the U.S. government. As I noted earlier, revenue from subscriber equipment, which tends to be episodic in nature, came in at $17 million in the fourth quarter.

While this was down year-over-year, this reflects our ongoing outlook for normalized equipment sales of $80 million to $90 million on an annual basis. Engineering and support revenue continues to be strong at $37.1 million. We achieved some significant milestones in 2025 related to our work with the SDA and our pipeline with the USG remains strong as we look ahead into 2026.

Before moving to our 2026 outlook, I want to highlight a change we've made in the new year related to our management incentive compensation. We've decided, starting in 2026, Iridium will play annual incentive compensation fully in cash rather than our prior practice of using part cash and part equity. The impact of this change reduces equity issuance by approximately 1 percentage point on a recurring go-forward basis and aligns more closely with our shareholders' interests. This does affect the calculation of OEBITDA and makes year-over-year comparisons difficult until they normalize in 2027.

While the change will have no impact on GAAP financials, it will have a negative impact of $17 million on 2026 OEBITDA as compared to 2025. So for our 2026 outlook, we are guiding service revenue growth to be flat to up 2% for the year. Absent the change to incentive compensation I noted, 26 OEBITDA would have been -- would have grown to a range of $497 million to $507 million. In light of our change to incentive compensation, we expect 2026 OEBITDA in a range between $480 million and $490 million.

Other items pertinent to our outlook include: our forecast for commercial voice and data to grow in the first half of 26% as a result of tailwinds provided by targeted price actions we implemented back in July. For the full year, we expect voice and data to be a low single-digit grower. In IoT, we are excited about a number of new products being released this year that continue to support our position as the premier satellite IoT provider. Over the last 2 years, we have operated under a fixed price contract with a large IoT partner.

With the renewal of that contract as well as continued subscriber growth in our other areas, Overall, we expect mid-single-digit growth in IoT this year. More broadly, we are encouraged by the addition of many new IoT partners to our ecosystem over the last 12 months, including many focused on Iridium NTN Direct. With our new standards-based offering set to launch in the second half of the year, we remain optimistic about NTN and the access to new industry sectors it will deliver over time, supporting IoT growth overall as we address new markets.

Within broadband, we continue to forecast ARPU pressure as primary companion conversion continues and Maritime customers select lower-cost backup plants. However, the availability of new Iridium Certus GMDSS safety terminals this year will help to mitigate some of this pressure, especially with these new terminals now being introduced in the APAC region.

We believe this service provides us with the market opportunity to replace legacy MSC terminals and will serve as a long-term mitigant to revenue pressure. Accordingly, while we anticipate a decline in broadband revenue this year, we expect it to moderate from 2025's rate.

PNT will again be a meaningful source of growth to hosted payload and other data services over time. As I mentioned earlier, we are supporting the implementation of a PNT program for a large customer. While the time of this deployment is not entirely within our control, we feel good about the customer's ability to make strong progress in 2026 and begin leveraging Iridium's PNT solutions. With the frequency of jamming and spoofing rising, additional traction from new and PNT customers may provide upside to our current forecast.

Finally, on the government business. We remain in early discussions with the USG on a successor contract to the EMSS program. We are modeling $110.5 million of EMSS revenue this year. This outlook includes our expectations that the government will exercise their 6-month option to extend the EMSS contract at current rates through March 2027.

Supporting our discussions of a favorable contract renewal was the U.S. Space Force's award of a 5-year ground contract, which we announced at the end of the year, and runs through 2030 to enhance security services and support ongoing EMSS capabilities.

We expect that revenue from equipment sales will largely be in line with 2025, even as the mix shifts somewhat from handsets to IoT products. In engineering and support, we expect revenue will continue to grow, reflecting our strong pipeline of business activities and expanding relationship with the U.S. government. As Matt mentioned, growth on national security initiatives, particularly as they continue to evolve their services to commercial operators and build Golden Dell. On the expense side of the equation, we will continue to support robust new product and service development. R&D and depreciation expense should both remain in line with 2025's level.

You will note that SG&A declined significantly in 2025, in large part due to decreases in equity compensation costs that we do not expect to recur in 2026. Accordingly, we expect to return to a more normalized equity level in '26, which will cause SG&A to be higher at a double-digit rate in '26. We expect capital expenditures will be consistent with 2025 as we support the rollout of NTN and investment in the new initiatives Matt referenced.

Based on forward curve projections, interest expense is expected to be down year-over-year. I would also note the expiration of our $1 billion interest hedge instrument at the end of November. It is our intention to have a new instrument in place before the termination of the existing hedge. As we noted in October, Iridium expects to pay cash taxes of less than $10 million this year and next.

The improvement relates to tax legislation passed in 2025. We anticipate being a taxpayer at the full statutory rate in 2029.

Finally, on leverage, we closed 2025 with net leverage of 3.4x OEBITDA and continue to expect to delever from here to about 3x by year-end. Our long-term goal is to delever below 2x, which we believe will naturally occur as we continue to grow OEBITDA and generate cash. I hope this additional color is helpful in allowing you to track our progress this year.

Moving on to our balance sheet. As of December 2025, Iridium had cash and cash equivalents balance of approximately $96.5 million. Iridium repaid all borrowings under its revolving facility in the fourth quarter and had no outstanding borrowings under the $100 million revolving facility as of December 2025.

In 2025, Iridium paid a total of $62.9 million through quarterly dividend payments to shareholders and ended the year with a dividend yield of 3.3%.

Looking to '26, we expect our Board to again approve an increase in the dividend, prior year increases have averaged 5% annually since the Board declared Iridium's first dividend in 2023. Continued growth in Iridium's dividend reflects management's confidence in the company's business opportunities and prospects for continued strong free cash flow. We remain committed to an active and growing dividend program as it augments long-term shareholder returns. With the pause in our share repurchase program, Iridium did not repurchase any shares during the fourth quarter. However, for full year '25, we retired approximately 6.8 million shares of common stock at an average price of $27.07. Capital expenditures in the fourth quarter were $33.5 million, for the full year, CapEx was $100.3 million, inclusive of $4.6 million in capitalized interest.

We expect '26 capital investment levels to be similar to '25, especially as we continue with the rollout of our NTN services. Turning to our pro forma free cash flow. If we use the midpoint of our 2026 OEBITDA guidance and back off $82 million in net interest pro forma for our current debt structure, approximately $90 million in CapEx for this year, $6 million in cash taxes and adjust for $11 million in working capital, inclusive of the appropriate hosted payload adjustment, we're projecting pro forma free cash flow of $318 million for 2026.

These metrics would represent a conversion rate of OEBITDA to free cash flow of 66% in '26 and a yield of about 16%. This continues to support our outlook for free cash flow generation of $1.5 billion to $1.8 billion through 2030.

We continue to believe that pro forma free cash flow is a good measure of our business strength. A more detailed description of each element of these calculations, along with a reconciliation to GAAP measures is available in a supplemental presentation under Events on our Investor Relations website.

Iridium continues to occupy a unique position in the satellite market. We have great assets, a valuable spectrum position and a growing ecosystem of partners, which will continue to support strong free cash flow and expand our business reach beyond traditional revenue streams.

As Matt noted, we believe that Iridium's differentiation is not just a function of our actionable real-time services and true global coverage, but also reflects the quality of our L-band spectrum and the growing opportunities that our partner ecosystem continues to deliver.

With that, I'd like to turn the call over to the operator for Q&A.

[Operator Instructions] The first question comes from Brent Penter of Raymond James.

I appreciate all the detail there. First, on the decision to make incentive compensation entirely in cash, can you just give us a little bit more detail on that? Walk us through that decision why you made the change? You mentioned you believe it's in the best interest of shareholders. And is this something that you expect to be pretty permanent? Or is it temporary?

Look, every company really pays their incentive yearly bonus and cash. I would say, we decided, I don't know how many years ago, 5?

5, 6 years ago.

5, 6 years ago, that at the time, we wanted to more broadly kind of align employees with shareholders. And so we would we would do a mix of cash and stock for yearly bonuses. But that really wasn't standard at the time. And now with our stock price the way it is and the use of equity really by putting that much equity into the bonus. It just didn't make sense.

So we were going to do it eventually decided to do it now. I know it looks unusual a little bit. So the year-over-year comparisons, as you described '25 to '26 numbers, it looks like somehow we're not growing as a result of that, but it's just a better use of our resources essentially, I think.

Yes. And I would add to that, Brett, to Matt's point, we think it aligns more closely with shareholder interest, especially as we've just recently paused the buyback program. I did note in my remarks that in terms of equity issuance, it relates close to a percentage point of equity. So I think it's meaningful for shareholders. And then the other part of it, to Matt's point is, we think it aligns our employee base as well with more industry norms, but I'd also highlight while it changes OEBITDA, it doesn't have an impact on GAAP financials. So it's purely a movement between GAAP and OEBITDA.

Okay. Okay. Got it. And then you mentioned $200 million of revenue by 2030 from these 4 growth areas. And so if I'm understanding correctly, $100 million of that you still expect to come from PNT, which I think would suggest $100 million from those other 3 areas, NTN IoT, national security and aviation. Yes.

You misunderstood me. I didn't say $200 million was the -- I mentioned that when I was talking about the new growth products that we're introducing this year. So we have that from Iridium NTN Direct, a new ASIC, a new IoT module. Those are just ongoing business-as-usual kind of stuff that I just wanted to give a number that sort of reflects our ongoing business and the investments we're making in R&D before we even talk about the growth themes, which could include additional investment, maybe acquisitions, maybe other areas here.

And our growth areas, there's a little bit of overlap in those 2 areas, but I just wanted to kind of put a number on even what we're doing today. So I'm sorry if that was misunderstood there. I do have -- I did want to really pull out these 4 major growth themes because I really do think it's really about rewriting our narrative, if you will. And it's important to kind of understand what those areas are that we think we have areas that we can differentiate versus others, more than stem the tide of any kind of competitive pressures and get back to even higher levels of growth than the current areas of the investment we're in that is still delivering a lot of revenue.

Okay. I appreciate the clarification. So then you think about those 4 growth areas, how do you rank all them in terms of the opportunity? And what role could M&A play in those areas you mentioned? What opportunities are out there in terms of M&A?

Yes. I mean I'm very careful about not pointing to specific areas for M&A. Those 4 areas kind of vary in terms of timing and impact. We're seeing a lot of potential right now in government national security missions because of Golden Dome and those kind of activities, probably not a big M&A kind of area. It's areas where our expertise, our network and other things can play. P&T could be, especially as we get into new areas around identity management and some other areas we're seeing as a platform IoT possibly could be an area of investment, though we have an awful lot going right now in terms of internal areas, but in the device area and in terms of the service area, in terms of cellular management, there's possibilities of partnerships, if not acquisition.

And then aviation safety, I would say, is maybe the highest potential opportunity there. That's an area where we can provide a lot more services to airlines and ASPs than we're doing today. I mentioned there's a big potential kind of ability to disrupt that market, we think. And certainly, our relationship with Aireon is a big piece of that.

Okay. Great. And then on business alliances, maybe related to spectrum, it sounds like, could you go more into what those could look like? What kind of partners those can evolve? And how any sort of alliance might work in conjunction with your current businesses that obviously operate on that spectrum?

Well, I mean, obviously, in my comments, I made it pretty clear that the mobile satellite services spectrum that I have historically never really talked about our spectrum position. because we were using it for internal services. That environment has changed a lot in the last 6 months. Given given the investment that at least Starlink has made in spectrum, we've seen an increase in lots of industry people talking to each other as they position themselves for this direct to sell or direct-to-device market. And we're seeing that activity.

We're seeing opportunities, people who value our existing business, our partners, our cash flow, et cetera, but also value our unique L-band spectrum position. So I don't know that I can go into any more detail other than there's just a lot of discussions, and they could go in a lot of different directions potentially. But I think it's noteworthy that sort of the industry is a buzz with discussion right now.

The next question comes from Eva Xin Yu of Deutsche Bank.

I wanted to take a step back. I know you mentioned just now, there's quite a bit going on in the industry, quite a lot of buzz. One of those topics recently has been space data centers. And I assume you don't intend to try to play a direct role in that. But just curious what are your views on kind of the viability of this kind of endeavor the impact of the industry and if you may play some sort of ancillary role in that?

Yes, it's a hot area right now discussion mainly because of Starlink's announcements and some others who kind of it looks like a problem that can be solved in space and solar power and power in general of data centers is a big issue. There is massive technical challenges to overcome. Data centers are complicated areas very difficult to protect assets in space.

It looks like to me, I'm maybe been -- I haven't been in the space industry forever, but I've been in long enough to understand that, that's a really, really long-term opportunity at best. And I wonder if all the discussion isn't for other reasons than maybe just solving an immediate problem because that is years away from being able to be successfully driven. But anyway, I could jump on that bandwagon to try to hitch our wagon to that for evaluation, but we're a really pragmatic company that focuses on really delivering results and cash and growth. So I'd rather kind of stick to the themes that I'm currently around and somehow address that directly.

Understood. I wanted to come back to DD. Can you just remind us what are sort of the next big milestones to look for, whether it's from operational deployment perspective, or from -- is it something we need to wait on one of the partners just setting up out of this year, maybe next year, what to look out for?

Yes. Well, obviously, we're in were the steps of introducing the product this year. We're in testing. We're starting to have actually partners come in and experience it or be able to demonstrate it from space so they can see how well it performs in their applications and how it's going to look. You could see more chipset suppliers jumping on our bandwagon to enable our services in their chips, you could see more mobile network operators, align with it readying themselves to introduce it to their customers. We I think that's going to be the primary kind of drivers right now throughout the year. Obviously, this is more of a '27, '28 kind of thing in terms of revenues, but we're still excited about the potential it brings. .

And if I could just sneak in, Vince, one thing on the financials. Can you give us any more maybe numbers or percentage points on sort of the PNT contribution expected for this year?

Yes, we -- well, for '26, we have built in a view of PNT Edison that's incorporated in our flat to 2% growth. As I noted in my remarks, we do think that that there may be potential upside to the guide there, we just think it's premature to include it in the outlook at this point.

That is an area we're trying to be appropriate about the pipeline is growing. The opportunities are potentially quite large. But when they hit, as you can tell, we expected one to hit in the fourth quarter that didn't and it's kind of moving into this year. And so, I think, it's appropriate where we're at right now in terms of that, and we'll just express the upside of it there when it happens. .

The next question comes from Colin Canfield of Cantor.

So maybe going back to the interested parties question, Matt, if you could just kind of talk about kind of the blend of people that you're talking to and how that's changed over the last 6 months. I think one of the headlines that we've kind of seen over the last few quarters of earnings, obviously, is the, let's say, private valuations and private efforts and probably an accelerated element of angst from the folks who aren't scaling, right? Think of the headline of like OpenAI shopping stoke space over winter break and -- this or the concept of blue trying to, I guess, redo Kiper or more Kiper satellites or kind of go around it. So essentially, it's like increased banks, increased valuation, and obviously a lot of different mix of people. So maybe just talking through kind of how you characterize the blend of interested parties over the last 6 months and how that's changed?

Well, I don't want to go into specifics about who I think those of us in the industry know the kind of the people -- the excitement seems to be around supplying service directed device on a more global basis. That started a couple of years ago on using terrestrial spectrum regionally, didn't really think that, that would move the needle. It hasn't really so far. But when Starlink bought EchoStar's assets and looked into buying MSS spectrum, the interest was on in terms of, if they're going to be a global player. AST really doesn't have global spectrum today. They aligned with Ligado to try to at least get North American spectrum, but their assets are regional otherwise. And then there's speculation about others being involved in this.

I know Equitus, the Viasat venture is sort of long term and nobody knows when that would happen, and that looks like more of a spectrum sort of condo situation. I don't know how serious that is. I mean, that's available to someone like us maybe down the road according to them, but that's many years away, and I don't think relevant. So there's not much other spectrum available. Obviously, a lot of people have speculated about Globalstar and where they might go into whom. Once you get past them, there's not many other people with LNS band spectrum. So I think you can kind of read between the lines about that and where that might be and who might be interested.

Got it. Got it. No, I appreciate the color. And then as we turn to kind of the thinking like the catalyst path way, right? Like the clear view of the management team is that the equity is undervalued given the change in the stock-based comp and while the pausing of the repo, right, the dividends and kind of signaling that you expect SG&A to pick up this year on the basis of stock rerating higher. And so I guess the construct that we think of is what are the milestones? Or what are the key catalysts split between services as well as the government side of things? And how do you expect those to kind of shape through the year.

Yes. Look, I think we've expressed this is a year of transition for us. It's -- obviously, we've had a 25-year history of a little higher growth in this. I don't really think it's all about competition because we're seeing some of that around the edges. That's a longer-term thing we're planning for. And I think we're appropriately positioning ourselves for right now. But I think the valuation that we'll attract is what people believe about our long-term potential.

Obviously, the initial sort of rerating of us was around a gut reaction that we couldn't compete against StarLink long term and that, that was going to come into traditional areas and that we were going to be a company in decline. I think we've proven we're not that. We're actually still growing, grew last year. We'll grow this year. and think we'll grow faster in the coming years. There'll be -- we are expecting some headwinds, maybe to increase over time, but we believe that we have the assets, the direction, the vision to be able to not just overcome those headwinds, but actually grow again at a higher rate than we are today.

So I think that's the bet. I think you're your notes, as you evaluate it, I think you can pick apart the fourth quarter or your expectations about what we said versus what you expected in the year, but it's really more about do you believe that Iridium is a bet for the future. And we think we are. We've overcome far worse than our history. And I think we're we have the assets and the ability to do that. That's, I think, our key message.

The next question comes from Tim Horan of Oppenheimer.

Just a couple of clarifications. So your reported stock comp number should be down kind of in line with the SG&A increasing just to check that. And can you give us what the P&T revenue was in 2025 at this point?

So I would say quickly on the stock comp, Tim, on your question there. That's right. You would see -- you'll see a roughly corresponding reduction in the stock comp and it will show up in the OIBDA reconciliation as we go through the year versus what you see in OEBITDA, because as I said, it's effectively neutral to GAAP. And then on PNT, that shows up in hosted payload and other, but we don't break that out.

We do still plan, Tim, to do that someday in the future. It just isn't big enough yet it may get there this year, we'll see. But I think that's something that we'll be looking to do so we can track the $100 million projection a little bit.

Well, we're just trying to get a sense, so it's still less than $10 million. I mean just trying to see incrementally, the $100 million would be pretty important.

Yes. No, it's more than that. But -- but again, we're not breaking it out specifically. .

Got it. And I guess just on P&T, it seems like the opportunity is massive there and the need is like right now. I mean are and especially with direct-to-device communications capabilities, are you starting to deploy on drones, I guess, specifically in war zones, I mean, it would seem to be perfect solution as opposed to have fiber running all over the land everywhere. But yes, are you deploying on currently in or zones?

Yes. I mean we do know that we have been deployed in UAVs, and that is an area where jamming and spoofing is a real problem. I think that could be a big growth area for us in the future. I think we do see that this ASIC coming this year, I think, will really expand our opportunity grade. It's really about how many -- there's really a lot of solutions that have been produced, but we're still seeing people deploy 50 or 100, and we're looking for the thousands and tens of thousands of kind of growth that would really, really drive, and that could happen this year, it could happen next year. We definitely see the pipeline and the potential for it in that regard. .

And when the new ASIC have enough bandwidth to navigate the drones in some form or another, not just PNT, I mean, can they use thermal imaging or video imaging to help navigate, would that be enough bandwidth?

So the chip is really not about bandwidth. It's about picking up very powerfully a location signal that can be relied upon and trusted versus maybe a GPS or Galileo or other kind of GNSS, which might still be in there, but we would easily be overwhelmed by interference and jamming. So it's really not about doing communication. It's really more about providing an assured or alternate PNT signal to the application and doing it really with very low power with very low real estate with very low cost. And then as I said, we're starting to have discussions with people about integrating really the the software in that chip even into other processors that may be in consumer devices or other applications, maybe even in phones some days so that you can get a pretty accurate position inside buildings where GPS doesn't operate, and you wouldn't have maybe other kind of augmentation signals or or you could get something to protect that signal in important applications. .

And there's -- but it -- I mean how hard would it be the block your signal or spoof it, like the technology is obviously there to do it, but how much harder is it than GPS?

Well, any signal can be jammed, but you'd have to have a giant power source very close by. And it makes it so it's more difficult. Nothing is completely protectable. You could block out every communication with enough power, but you need large trucks of stuff close by. And that's not -- we're looking to protect against.

And we say it's 1,000x more difficult basically to spoof.

Okay.

Very helpful. And then the spectrum, I mean, is there a way -- do you think it's easier to share with another company for 1 company control all of it to increase the utilization. And I guess the key question on the spectrum is what's the utilization now versus what it could be either through a partnership or let's say, a combined entity?

Yes. I mean there's a lot of different approaches there, and we would be interested in the ones that had most value to shareholders. Joe, that's about all I could say.

The next question comes from Hamed Khorsand of BWS.

Could you just elaborate on the IoT partner, you resigned the contract with and provide any details that you can?

I think we've been talking over the last couple of quarters about the part of the unusual nature and sort of the -- of our IoT results in '25 were due to a large IoT customer and the fact that they're changing approach with their customers kind of led to a lot of churn in subscribers, et cetera. That was a multiyear contract. We renewed that contract. There was growth in that contract, and that's reflected in our results this year. So I think that's at least tied together what we said in the past with where we are now.

Okay. And then as far as the terminal goes, you were talking about terminals had declined in the equipment sales. When does that pick up? And is that more to do with IoT sales? Or is that going to be terminals actually going into ships and airplanes that picks up in sales?

I'm not exactly sure what you were referring to. I think maybe actually from an equipment perspective, we see unit growth. There's a lot of mix changes. Our equipment overall is kind of consistent year-over-year right now in terms of expectations for this year versus last year. We might have been referring to some comments we made about Maritime terminals where we're actually expecting a number of new products this year that makes us even more competitive in the companion ability with Ka and Ku band, that's been an area where, as you can see, broadband has been declining a little bit for us. It's been a headwind. We think that, that's going to mitigate here pretty soon because of all the solutions we have and the opportunity ahead because Inmarsat. Their Inmarsat C is coming into life. A lot of shipowners have to change those terminals out. We really have the best solution that shares more needs more globally than anything, and with all these products in the market, we think that, that will provide an impetus for getting kind of growth in terminals there again. So maybe that's what you're referring to.

The next question comes from Chris Quilty of Quilty Space.

Matt, it's been here since they've reported the numbers publicly, but do you have any idea how many Inmarsat-C terminals might be out there?

It's over 100,000, but it's quite a quite a few. .

Yes, we estimate, Chris, about 130,000 to 140,000. That's our calc.

Switching gears, the discussion today about the ALT PNT chip, that's the same chip that you originally unveiled like back in October? Or is this a new iteration already?

No, no. That's the chip we're talking about. I think a lot of people, we unveiled it. It goes commercial here in, I think, 3 months or so. We got a big beta program with partners that's oversubscribed right now. We had too many people even asking us for it right now. So we're excited about the potential for it, but it's the same one we're talking about.

Got you. And what does -- is there does that flow into equipment revenue? Or is that designed as sort of a fee-type business? How do we look at the revenue on the chipset side and then how that actually drives the service revenue?

Yes, it does. It eventually will be equipment. He sits on cost a lot, but you could have, I said, tens or hundreds of thousands of them down the road as we get into more and more consumer-like devices. So -- but it's not really about the revenue. It's what it enables. It's the applications that, that could go into. And then that would enable PNT service revenues, which I think we've talked in the past, we're pricing in many different ways. On the commercial side, in some ways, we bundle that together multiyear service with every device perhaps, if someone made a consumer device, wanted to offer it and be able to say it will operate for 5 or 10 years, we could offer something that would not even require a monthly service subscription, for example, or we could do things as monthly, and in some cases, are already doing things with monthly service subscription. So that can be offered a lot of ways. It's more about the ASIC enabling applications and service revenue.

Got you. And what -- how long does it take for your end customers to integrate that chipset into devices that like a full product cycle, which could take a year or two? Or is it something that could be more easily dropped in? And do you have any customers? I know like in the past, you were working with ADTRAN the telecom side. Do you have any partners that are already looking to design in?

No. As I said, the beta program, we have a whole bunch of people who are designing into their products. So they are they have prototypes now. They have initial runs. They are working to put it in. It wouldn't be, I don't think, multiple years, but it certainly is months, if not up to a year in some cases. I could see the first products coming out using that maybe later this year, but they're probably more '27 kind of activities. But yes, I mean, it isn't that hard to integrate. It's really a very small device. It doesn't take up much real estate or power and has a very defined input and output that can be quickly put into sort of software and utilize with applications. So it's not a big integration.

And the identity management capability, I think it's something you've talked about in the past kind of geolocating the satellite with an IP address and there are elements of security. What sort of kicked up the new activity there? Is it just simply you've had enough time with Satelles under the hood to build that out? Or are there other compelling reasons why you're promoting that service now?

Well, the ASIC was an impetus to it. A lot of the applications we saw could -- if they required to trust the location, maybe the fact that you could implement this into a smartphone or into a dongle into a USB key into something quite small, implemented into a laptop or tablet or something that wasn't able to happen before but we saw a lot of the applications around identity management, needing some sort of way for the user, somebody making a wire transfer, somebody proving that the router is in a certain location.

And that the data passing through it can be trusted with something that required something really low cost to be embedded in quickly and easily. So I think that was the impetus, and yes, we've had enough time with us to realize that this is a potentially really big area. And for which this is a very unique service that wouldn't be able to be offered by others, would be an area of differentiate for us. And as we are able to exploit it and revenue growth is part of our narrative for the future. So that's why we're talking about it now.

Got you. And finally, on the -- I mean, increased focus on Aviation. I know last year, you had a bunch of terminals that were coming to market, can you kind of give us an update on where you sit there competitively? And is there anything that can sort of accelerate the upgrade replacement cycle? I don't think there's an equivalent of an Inmarsat C end-of-life date in aviation, but perhaps.

Yes. So I alluded to it and you'd probably have to -- we have to go into a little bit more detail about exactly how we think that market could play out. But yes, we're right now in flight testing. So we have a number of aircraft. There needs to be a certain number of hours with those new Certus terminals and that's happening now. It was going to take months, quite a few months to do that. But now the avionic suppliers who have built those solutions can start talking to the Boeings and Airbus is about getting those installed certainly in '27 and '28 into a lot of vehicles. How to accelerate that well, if we could provide more data, more data through those terminals at lesser expense.

We could maybe take traffic back from the terrestrial network. There's a number of things we have ideas to do. I alluded those too in the growth area. We think that we're only getting a very small part of a much bigger market, and we think that we could go after a bigger part of the market. But I'll leave that for now. I don't want to get too much more detail into that because well, just for competitive reasons.

The next question comes from Walter Piecyk of LightShed.

Vince, the PNT order that dropped out of Q4, should that fall into Q1? Or are you still working out to try and get that thing closed? .

We're still working through that. well, our expectation is at some point in '26, but timing still remains up in the air.

Is that generally going to be a pretty lumpy line from quarter-to-quarter as this thing progresses, I know you're optimistic about it overall, but is it just going to be a lot of variability quarter-to-quarter. .

I think you should expect to see some of that will, as we go forward here over the next 12 to 18 months, especially as we're building out the business. Obviously, we'll get to a point of scale where that will be smoother, but it probably will be lumpy on a quarter-to-quarter basis as we go forward.

And it's hard to estimate, well. I mean it's -- especially when you get larger opportunities in the pipeline. I hope it's lumpy, positive, but I'd rather not project things out as a sure things until we have an idea where they're going to hit. .

Will there be an element of deferred revenue on these things if they're lumpy, meaning that while you know what deferred revenue is?

Yes. I mean it could be multiyear opportunities, a lot of these. So we'll build a backlog along with that.

No, I didn't mean deferred revenue in terms of like a multiyear contract, I mean like you take payment upfront and then you booked revenue is noncash from an accounting standpoint. .

There might be an element of that, Walt. But at this point, I wouldn't expect much.

I mean some of the opportunities we're seeing. As I said, if we if we sell something into a consumer device, then we give it a 10-year life cycle and we take all the cash upfront or just roll it into the ASIC purchase. Yes, we would do that over time in terms of accounting.

Got it. And then there's a lot of discussion of spectrum on here. I mean, some of the things that were mentioned were transactions for spectrum that's not in use and is obviously a lot deeper, 40 megahertz. In the case of Ligado and 50 megahertz in the case of EchoStar, so I guess, the way I'll ask the question this way. I mean, I know you pushed -- I know that the longevity of your existing constellation has been much longer and hopefully, it just you can squeeze out as much cash of that as possible. But at some point, if I'm remembering correctly, you do have to start to spend on a new constellation. So at what point do you get to the -- you have to make a decision 1 way or another, monetize or start to invest in that constellation.

And then secondly, I mean, these other things, again, unencumbered. You can't just sell spectrum if you have existing users on it, right? So and how do you communicate that to your customers? Now that you basically have this conference call, your competitors can use to say, "Hey, Iridium is looking to potentially have a strategic transaction with their spectrum, are you sure you want to buy services on them?" That are being utilized for your services right now?

Well, I mean, they may be interested in the future services that would be provided with that spectrum and would evolve to those new services. We have a very flexible system that can move people around within the spectrum and can make available a certain amount for other applications wouldn't have to do all of it. But the same situation could you just described could be said to ViaSat right now, which is announced along with Space 42 that they plan to build a network to put spectrum into it to do other services. So if you were existing ViaSat or Space 42 customer, you would say, I guess they're going to build a network that will utilize spectrum for other applications. I think we can do both. We have 9 megahertz of spectrum. It's valuable. It's global. It's coordinated all over the world, and there can be opportunities to do multiple things with that. Okay, so I covered that for you, Walt. Okay, anybody else?

No, sorry. Sorry, I was on mute. Sorry about that. Yes. That was good. So when does the new Constellation spend starts or any type of asset?

Yes. I mean, if we're building a constellation ourselves, we don't need to even start until 2031. Maybe we'd put a little bit of money in 2031 and '32. I'd say the spending would ramp up to the '34, '35 time frame. We don't necessarily probably need it until the latter half of the decade, if all I'm doing is existing services and these new themes that I'm talking about here, all those things could be certainly employed all the way until that time, if not beyond.

Got it. So bottom line is, do you think it is something that can be discuss now without any impact to existing customers and be part of someone, whether it's jointly separately your own a constellation that's planned over the next couple of years without disruption to your existing customers? .

Yes.

Our next question comes from Greg Mesniaeff of Kingswood Capital Partners.

Just a very quick question on PNT. As you position it market wise with your customers, are you finding that most of the customers are augmenting GPS, or is it the GNSS customers that are deciding to augment, particularly with the Galileo ones.

So commercial customers can get timing, free timing from a number of GNSS sources. It's the customers who are worried about those signals being degraded because they're so fit, if you will, and can easily be overwhelmed and their applications are so important or in some cases, are inside buildings and it's expensive to get a timing source for their digital source. But most of them are critical infrastructure, protecting critical infrastructure and utilizing it alongside other GNSS sources.

Well, I guess if I rephrase the question, is GNSS more robust than GPS?

GNSS is the generic term for all the different types of -- whether it be Galileo. GPS is sort of the North American version, Baidu blocking on glass. Those are all GNSS systems. And so when I use the term GNSS, I'm just generically saying they could protect any of those. .

Got it. Okay. All right. So there's really no distinction that GPS is less robust than some of the other ones you mentioned.

No, they're all use very, very same kind of power structure to send information from far away MEO kind of satellites to devices on the ground that have to kind of pick these multiple signals out. And it works very well until it doesn't until it's overwhelmed.

Next question comes from Louie DiPalma of William Blair.

for the new -- the PNT chip that's in development, what is the next milestone that investors should be watching for?

Well, it's prototypes are available. It's in larger -- we're going to make it commercially available. I think it's June or July. I think it's the right time frame. I don't know about milestones there. I think the real milestone would be our partners or customers who announced that they're implementing products on that. And the applications and the successes they're having deploying that. I think those are the milestones. And those good to hear those announcements this year and certainly next.

Sounds good. And related to Tim Horan and Walter's questions, for your NTN Direct service, what is the maximum amount of your 9 megahertz of spectrum that you could use for NTN Direct, given how you use your spectrum for your existing network currently?

Yes. I mean NTN Direct is a narrowband service. It uses 100 kilohertz, 200 kilohertz at most. So -- and it could be positioned within our network any place. I mean, over time, we can evolve that service to be able to utilize all our spectrum if that was the only spectrum we have, but it's so incredibly efficient the way it operates. We can operate millions of customers even with a single or dual channel. So I don't know that, that's really -- I think a lot of the direction in the future is really about about 5G new radio. That's really what other people are looking to deploy that uses 3 to 5 megahertz channels. We're not going to implement that service. We're going to augment that service and the only way that would kind of happen within our spectrum was in an alliance or partnership.

Safety services for maritime as it relates to GMDSS and the aviation sector. Could those types of services shift to NTN direct? Or will those services need to stay on like the existing network?

Well, look, it takes a long, long time for either of those services to be applied and approved. It took us 10 years to get GMDSS through the bodies. And even when we moved to GMDS over Certus, it was an extensive time to do that. So I'm not sure what the value would be to move them to NTN. And if anyone tried to do that, it would take years to do it. So I know it wouldn't create any advantages for us to do it necessarily to put it on our Iridium NTN direct because that's not really what the service say, for example, on a ship protecting Ka-band networks is doing. So -- but I mean, theoretically, but it's not practical and it would take many, many years to do.

Yes, that was my question in terms of like of the 9 megahertz of spectrum since certain services would seem to need the existing network than like some portion of those megahertz couldn't shift, right? -- at least in the near term?

We really don't use much of our spectrum for GMDSS. I mean it's used as a backup and it's used in emergencies. It is required to be on the ship and there are other functions of sort of IoT functions that those terminals can do, but they're extremely efficient, as is our IoT services and other.

Actually, the service that takes the most spectrum is our original broadband connections when service. And that's the area that we're seeing evolve to Starlink and other terminals, and we've had a little headwind associated with that, but it's actually been good in terms of spectrum utilization and makes the rest of our spectrum more flexible.

That makes sense. So it seems that like nearly all of the 9 megahertz could be used for NTN direct. .

Would be theoretically. No. From a long-term perspective, yes.

And congrats on the development of the new PNT chip. .

Thanks.

The next question comes from Justin Lang of Morgan Stanley.

Matt, I just want to pick back up on your MDA Shield comments earlier. Just curious if you could just touch on how you think the Goldman Dome opportunity matures this year for you. I mean do you expect contracts to materialize in '26 here that could present upside to the guide? Or is this more of a '27 and beyond opportunity for you?

It's probably more of a '27 and beyond, though there could be engineering service revenue upside this year. I mean that's 1 of the things we certainly see. There are if you will, and other areas in which we think our expertise could be applied to both directly to kind of Golden Dome shield kind of announcements and things around it that relate to the government, and their use of our expertise and even connecting into our existing network. So I'm being a little bit of touch about that because we don't want to point exactly where we think there is. But when we look at really the opportunities that are addressable to us, it's in the billions of dollars. We're only expecting to get a fraction of that, but it would we think it could be meaningful in terms of growth to us.

Okay. Great. That's helpful. And then maybe, Vince, one for you. Just coming back to the PNT contribution this year. And I appreciate it's a longer-term opportunity, so it could be sort of lumpy in the near term. But for '26, maybe I'll ask it another way. I mean, is it fair to assume that the growth in the PNT business outpaces the overall portfolio growth this year?

Yes, that's probably a fair assumption, Justin, at this point. Yes.

Our final question comes from [indiscernible] Henry of [indiscernible] Space.

Just 1 question from me, and it's on the Shield IDIQ. I think there's something like $15 million companies that were awarded access to the IDIQ. If you could share some about what makes Iridium well positioned to win kind of where you see that as an opportunity, knowing that not all 100 to 51 of those are probably going to get an award or at least a meaningful one.

Yes, that's right. I mean we announced that we are part of it. You noticed, didn't play that up or anything because it's all up to how much business is one. Maybe some others have been a bit more aggressive about announcing the potential for it for themselves. But no, I think, look, our experience, we've had a long history of delivering high-quality services to the government. We have almost been considered mill net, if you will, or whatever you want to call the latest version of it, I guess it's called the space data network in the latest term.

We've been kind of connected in that front, providing a unique service for more than 25 years. And that's respected and understood. In fact, have 130,000 endpoints out there around the world that could connect into and be relevant to golden dome or other kinds of related networks that relate to national security. We're looking at a number of things right now where other networks being built as well that may or may not even be part of Shield are things that we think we could address and provide value. And really, the -- the work we are doing with FDA has been highly regarded. I think others have come to us and said, based upon what we're doing, building out the ground infrastructure, the operation centers, the operation software, the actually manning and flying satellites.

The success we're having here, maybe we could be working on some other networks that the government has, both that are directly related or ancillary to shield. So anyway, I know that's a broad statement. I wish I could get into more details about sort of the opportunities in pipeline. We're specifically looking at but think that's kind of premature right now.

end of question and answer session. I would like to turn the conference back over to management for any closing remarks.

Yes. I appreciate you hanging in this long. I appreciate all the interest and questions. Clearly, we're writing a new story here in some ways. So I hope my comments about the avenues of growth we see kind of are helpful to you, and we'll certainly talk a lot more about those in the future. So look forward to continuing our dialogue with the industry. So thank you.

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

All right. Thank you. Thanks, everyone, for being with us today. I'm Brent Penter, on the Raymond James TMT research team working with Ric Prentiss covering satellite, media and towers and digital infrastructure. Some very busy spaces right now with a lot of news going on. So a lot to talk about.

I'm joined by Vince O'Neill, the CFO of Iridium. Vince, thanks for being with us today.

Thank you, Ric, for having us. Brent, sorry.

So you all announced a lot on your recent quarterly call, several changes, I think a change in tone as well. Obviously, there are significant industry developments going on that kind of kicked off by the SpaceX, EchoStar Spectrum deal. And you all announced you paused buybacks, you lowered your leverage target from sub-4 to sub-3x by year-end and delevering thereafter. You withdrew your 2030 guidance. But you also gave free cash flow guidance of $1.5 billion to $1.8 billion from 2026 to 2030. So obviously, some seismic changes in the industry going on right now. And I think a welcome acknowledgment of the current situation. What discussions happened at Iridium that led to those changes that you made?

So I think for us, the first thing was the S-band spectrum had been held by EchoStar and obviously been held by them for a number of years. And so our working assumption always was that at some point, EchoStar would build out a 5G radio network. In terms of timing, I think most market consensus, which we would have agreed with was early to mid-next decade before maybe that became a reality.

So the big change for us with the Starlink announcement was obviously the acceleration. Starlink talked about having a network up there within the next 2 years. We know Starlink move at a fast pace, but that still seems somewhat aggressive to me, Brent. But like we know that they're going to have something up there in the next 3 to 4 years. So as we look out on our time line towards the end of the decade, that changes things in terms of the competitive landscape.

So the discussions we had internally were that we still believe we have a runway. We have a very resilient and cash flowing business, currently throwing off $300 million a year. But we also wanted to acknowledge and start planning for the fact that there are elements of our market that will come under -- come under competitive pressure from Starlink as they roll out this network.

So with that in mind, we really had 2 objectives. The first one was that we wanted to build cash and build financial flexibility on the balance sheet. So we decided to pause the buyback and I think what you'll see from us over the next -- certainly over the next 2 or 3 quarters where it's a priority, you'll see us building that cash position on the balance sheet and with a view to providing us financial flexibility around M&A.

And secondly, we looked at our leverage target and leverage is currently 3.5x at the end of Q3. And I think you'll see us naturally delever here over the next, call it, 3 or 4 quarters as we build cash on the balance sheet. We do have a long-term leverage target in 2030 of net leverage at or less than 2x. And given the fact that we still believe we're going to throw off significant cash flow over that period, as you quoted, $1.5 billion to $1.8 billion. And if you think about that, we're at $300 million today. So it's really maintaining the run rate. But given that we are going to throw that level of cash off through the business, we feel very comfortable with that leverage target in 2030.

Okay. And building a net cash position, bringing leverage down, you mentioned flexibility for M&A. What could that look like?

I think it could take a couple of forms. I mean, if you look at what we've done historically, we own 30% of Aireon, for example. We helped stand up Aireon all those years ago. We own 30% of that today. 70% is owned by some of the major air navigation service providers around the world, but that was very strategic to us and runs on our network.

Recently, and about 18 months ago, we acquired Satelles, which is a position navigation timing company. And they have technology that's 1,000x stronger than GPS. And obviously, we think that, that has huge port today given the whole discussion around jamming and spoofing and how strategically important GPS is to critical infrastructure. And that was a bolt-on acquisition.

So certainly, going forward, we could look at things that would be bolt-ons, that would be strategic to us. But we're also very, very open and considering transformative M&A. And an example or illustrative example of a form that could take is certainly, you look at us today, we're in the cockpit. We provide mission-critical aviation services in the cockpit of commercial airlines. We have this joint venture with Aireon, where they have close relationships with a lot of the major ANSPs around the world. They're great relationships. And we think that we can potentially take a bigger share and play a bigger part in the aviation safety platform space that may require acquisition, and that would probably look more transformative in nature if that was to happen.

Okay. So it sounds like maybe something in the aviation space is interesting. I mean what kind of synergies could there be in a combination like that?

Well, I think it would build on -- like in the aviation space, I would characterize as just an illustrative example. But that is a good example where, as I said earlier, you could build on the unique capabilities that we have in the cockpit. We already provide mission-critical safety communications there. So it would really be building out that offering and taking more of the value chain than we do today.

Another one we mentioned, which runs adjacent to position navigation and timing is we are looking at an opportunity around Identity Access Management. That's still in its very early stages. But if we had to do an acquisition there, which would accelerate go-to-market, accelerate revenue opportunity, I mean, that's something that we would obviously seriously consider and look at. There are others as well, but they're 2 good illustrative examples of where we think acquisition might be more transformative.

Okay. And since we're on the topic of M&A, when we look back at the GEO satellite industry over the past few years, the SpaceX, Starlink disruption really, I think, hit that industry first, and they responded in many ways with a lot of M&A. Do you think as Starlink now enters into the narrowband space that you operate in as well as others like Amazon Project Kuiper or Amazon Leo, as it's now called, do you foresee a similar kind of industry restructuring within your space?

It's always hard to predict what will happen. I think for us, it's -- we have a very strong, resilient business today. We know the competitive environment around that is, as I said, is going to change over the next 4 or 5 years as we go through the decade. But we think we have a lot of opportunity for future incremental revenue growth as well. And as we sit here today, that's what we're focused on executing against and trying to drive value for.

Okay. And I guess last question on this M&A topic. But there's a lot of 800-pound gorillas playing now. The ones that I just mentioned, SpaceX, Amazon, Apple is not directly in the space, but they have a relationship with Globalstar. What is the importance do you think of being attached in some way to an 800-pound gorilla versus obviously, you all are kind of your independent company, much smaller market cap than some of those other names out there?

Well, I think -- and we talked about this on our recent call, our strategy is, Brent, we want to like as much as possible, be adjacent to Starlink or move into areas and markets where it's harder for them to compete with us. It might be due to regulation. It might be due to other factors. But they are the kind of markets and the kind of opportunities that we are trying to prosecute against.

And again, as I said earlier, on the illustrative example of the aviation safety platform, I think that's a perfect example from a regulatory perspective that we feel would be protected and would be market share that we could legitimately capture.

Okay. And one area that's driving a lot of the discussion around the consolidation is thinking about spectrum. And there's clearly a lot of value in spectrum. EchoStar's recent transactions have highlighted that to a lot of investors, I think, and now that's being reflected in other companies' stock prices. Can you frame for us how much you think your spectrum is worth?

So what I would say on our spectrum is that a couple of things. One, the first thing is that we have 8.5 megahertz of L-band spectrum. What I say to investors all the time is we've got prime beachfront property. We don't have a huge amount of it with 8.5 megahertz, but it's prime beachfront property. People should know that it's global. So you have ubiquitous service. If you're in the North Pole, China, upstate New York, you have ubiquitous service on our network, and we have global landing rights. So we provide signal across the globe, which no other satellite company, including SpaceX can do that. So I think that's a big selling point, first of all.

The second thing is that we haven't sat on our spectrum or our spectrum hasn't lie fallow since it was granted to us. And we've been pretty successful at building a $0.5 billion [ user ] company and a company that's throwing off $300 million of free cash flow per year. So anybody looking at the value of our spectrum would obviously have to contemplate that and the present value of the future opportunities that we can execute that we think will drive even further value through that spectrum.

Right, right. And there's a couple comps out there recently that people look at on, let's say, opposite ends of the spectrum, no pun intended, in terms of SpaceX's deal for EchoStar Spectrum, a really high valuation terrestrial kind of valuation. And then AST SpaceMobile, their deal with Ligado and Viasat Inmarsat. How do you think about your spectrum relative to those comps?

Well, I think if you look at the SpaceX deal, I agree with you. It was -- I think the general consensus was that it was a big number. But even the EchoStar spectrum that SpaceX acquired isn't global. So it's obviously North America. I think most of the major markets in Europe. But I think that's the major concentration with that S-band spectrum.

When you think about AST, that's -- I think that's almost exclusively a North American play in terms of spectrum. I don't think there's any spectrum outside of North America. So from that perspective, it's relatively limited geographically. And I go back to the point I made earlier, our spectrum is global, and we carry a signal everywhere in the world.

Right. Right. And so a lot of the conversation recently has been about competition and what is Starlink doing, what is Amazon doing? But you all are going after the direct-to-device market as well, and you all are playing offense. Can you update us the latest developments there? What are the next catalyst events people should look forward to that show that you all are making progress?

Sure. So I think for us, in the direct-to-device, and I would say direct-to-device narrowband IoT space because we're very excited about the narrowband IoT opportunity. But for us, we've always viewed this opportunity as something that's on top and provides an incremental TAM and incremental profit basically for Iridium. As I said earlier, we have a base business of about $500 billion of OEBITDA. We invested approximately $3 billion to get the network up there. And so for a little further incremental investment and our CapEx this year is going to be about approximately $90 million and will probably be something similar in '26 as we look to execute that D2D opportunity.

So we think that, that's a relatively small investment for the TAM that it opens up to us. Some of the proof points that I think we can point to in our strategy as we've gone down that standard space path are Nordic Semiconductor, who are a big chip player in the IoT space. They've been in the process of manufacturing a standard space chip, if you like, pre-standard. We were obviously accepted into Release 19 this time last year, which was a big milestone for us in terms of offering standards-based solutions. We've signed recent agreements with both Deutsche Telekom and Vodafone, MOUs with them that I think are big proof points of our offering and our solution. And both of those carriers, by the way, have heavy IoT-centric concentration as well. I know that was part of the attraction for them.

And finally, we signed an MOU, I believe it was with Syniverse, which is kind of the back office that holds a lot of this stuff together around roaming and just the general plumbing and engineering, if you like, of some of that. I think what you should expect to see going forward there, Brent, is that we will continue to sign agreements. We'll continue to sign up MNO and carriers as we go forward. And certainly, we're very encouraged by the discussions that we've been having with them. And we're talking to all the names that you would expect or anticipate that we would be talking to.

Okay. Great. So signing up agreements, have released 19. Can you update us on when should we start to see revenues and cash flows from these efforts? And when might those become more material?

So I think, as I said, we were accepted into the standard this time last year. We're in the process of having those standards codified, I think, is the technical term. And that will be this month or first quarter.

I think in the second half of '26, you should start to see chips coming -- being manufactured and coming forward. So maybe some revenue in '26 as we look to roll the service out. But I think more meaningful revenue impacts will be 2027 and beyond.

Okay. And you're talking a lot about narrowband IoT. And when people think of this direct-to-device market, a lot of the headlines and attention is around smartphones. How do you size the TAM, I guess, industry TAM and Iridium's TAM between IoT relative to the smartphone opportunity?

Well, we've always said that we think for us, the narrowband IoT opportunity might be bigger than the actual device opportunity and the smartphone opportunity. Our background as a company and our network is very much suited to IoT and critical communications when you have to get a signal or you have to get data through.

So as you think about cellular IoT today, one of the big stumbling blocks for expanding the footprint of cellular IoT is the cost of the chip and basically what it does to the cost of the device. And you're dealing with a population there that is very price sensitive. And the neat thing about the standards is the standard removes the cost friction. It makes it obviously easier for the chip manufacturer to put that technology or take that technology and implement it on a chip in a very cost-effective manner, have it integrate into a device with very little impact on the BOM or the actual enterprise for the user. And so that's always been a big friction point for trying to roll out IoT beyond that cellular footprint.

So we think that's -- that will be a very seamless process going forward. And we think that, that gives us the opportunity for a big TAM that we're just not addressing today.

Right, right. And what are your biggest advantages and maybe disadvantages as well going after this market as there's a lot of companies, a lot of capital chasing D2D?

There is -- you're 100% right. There is a lot of capital chasing D2D. I think the first advantage we have is we don't have much capital chasing it. As I said, we've increased our investment incrementally. You've seen us bring up our CapEx in '25. It will be a similar level in '26, but it really is peanuts compared to what the rest of the industry is spending around the D2D opportunity. So I think that's the first thing there.

As you think about other advantages in terms of prosecuting the opportunity for both direct-to-device and the narrowband IoT, it comes back to the global nature, the global coverage of our network and the reliability of that network. Most of these D2D offerings won't be -- I think apart from ours won't be global in nature, certainly regional, certainly covered a lot of significant areas like we've talked about like North America and Europe. But there's a lot of other markets to which they won't be accessible. You think about China, you think about Russia, you think about Brazil. So we think we have a lot of opportunity with relatively small capital cost and investment upfront to increase our revenues and increase profit.

Okay. And a lot of the fears around Iridium have been how do these D2D offerings, how do they compete with your base business? So can you just talk to us about that? And your satellite phones, there's Garmin inReach and other personal communications devices. How does the -- your customer base maybe differ, maybe where is it similar to someone who might be a customer of these D2D offerings?

So as we talked about the increased competitive threat that's going to come towards the end of the decade, we still look at large areas of our revenue base and do believe that we have a moat around that business. There are certainly areas where it will come under increased pressure. So if I go through our major verticals, I would say if you take telephony, the most prominent use case in telephony is typically NGOs, first responders, disaster recovery, that type of use case, Brent. They really value the ruggedized nature of the handset and the device and the battery life. You've got long-lasting batteries. So you don't need -- obviously, with your iPhone, like you got to plug that in every night to get a charge to it. So we think those use cases still play very well and still have a lot of application even in the D2D world.

Certainly, there are more leisure users maybe on the handset side where that part of the business may come under a little more threat. And you could certainly see that maybe having an impact on handsets that we would sell moving forward or going forward as that D2D solution is rolled out.

I think if you look at our IoT business, I roughly split that in 2 between IoT industrial solutions. and personal comms. On the IoT industrial side, we go to market through a 500 reseller partner community. That's been built up over 20 years, 20, 30 years, really, with very direct relationships there. Our IoT solutions in those spaces tend to be highly engineered, highly customized, deeply embedded in those solutions within those solutions. Like if you think about the handset, the handset is a finished product. For those IoT solutions, they're typically part of a bigger solution or a bigger application that the partner is rolling out with the customer. So we think that's very embedded and sticky.

Certainly, on the personal comm side, you do have people who use the device on the personal comm side, where it's a lifestyle choice where they know they're going to be off the grid. They get things like maps and breadcrumb trails and weather. I don't know that those type of users are going to give it up for the iPhone. But certainly, if you have more occasional users or as we look to grow that market going forward from that point, I could certainly see it having an impact there in terms of the competitive environment just being tougher.

Is there any way you can size for us as a portion of your customer base or revenue base? You call them occasional users, leisure users, how large that base might be?

Well, I think we've said like if you look at telephony, I think, is a good example, a good illustrative example. We have experienced some churn this year. That churn has come from government DOGE actions. I think we mentioned earlier in the year that we've seen some impact from USAID. We've seen some impact with NGOs from some of those programs like the UN, for example, where they had phones. And so most of those, they're industrial use cases. So where we hear these stories coming back to us and where we're seeing churn in the telephony base, it's typically those industrial type use cases where we're seeing it.

Okay. And the U.S. government, your largest customer, how do you think about that customer in terms of your relationship with them as these competitive offerings come? And you all announced recently an $86 million 5-year IDIQ contract related to the infrastructure on your EMSS business. So can you just first talk about that contract and then just more broadly, your relationship with the government?

Well, and our relationship with the government is they were effectively our first customer. So we have a highly strategic relationship with the U.S. government and the DoD. That contract is a sole-source contract, comes up for renewal in September of '26. The government have at their BS, they can extend the contract 6 months, which we probably would expect them to do. So that would take it out to March of '27.

But as you just alluded to, we just recently signed a Gateway Evolution Contract with the government, which is basically -- they have a proprietary gateway. And what that contract does is it ensures that from a technological perspective that, that proprietary gateway is kept in sync with our commercial gateways.

Another data point I would offer there is the other contract that's tied to that gateway is the maintenance contract, which came up for renewal last year and was renewed for 5 years through '29. So both of those contracts were renewed through over the -- straddles over the time period of the renewal of the current EMSS contract. And what we've said publicly is that we expect a favorable outcome on that contract, and that view hasn't changed.

Okay. Great. So what I'm hearing from you is, obviously, there's these fears out there. You all have -- you made some changes in terms of your buybacks and leverage. You're aware of everything that's going on in the industry. You're watching it closely. But you still sound confident certainly for the next 3 to 4 years in a lot of areas where you have a larger moat.

I guess in the last minute or 2 here, what gives you -- what's giving you all confidence right now in terms of what Iridium's stock price should be worth and that investors should be buying Iridium?

Yes. I mean I feel very confident, Brent, as I look out here over the next 3 to 5 years. I think, first of all, core, we've proved in the past that we have a very resilient business. We provide mission-critical safety comms, which are very -- obviously very sticky and highly valued by our customer base. We throw off $300 million of free cash flow a year, as I said. What that does for us is it does give us flexibility as we look at this runway here out over the next 4 years or so to execute and prosecute on opportunities that I think will drive even further value for us.

And I would highlight there, we feel very bullish about the PNT opportunity. We've talked about that being $100 million by the end of the decade. Certainly, as I look at the application for that across government and commercial customers, I haven't seen anything that would change my view on that. As I said earlier, you should continue to look for announcements around our end-to-end standards-based solution, both from a direct-to-device and a narrowband IoT perspective.

So I think we've got plenty of future growth opportunities as we look out there. And so we feel pretty good about the future. Understanding that competitive environment has changed and is getting tougher. And just to highlight, as I said earlier, and does mean that we're more focused on looking at some of these acquisitions that we talked about and also making sure that we move into more adjacent markets or away from Starlink and away from some of those 800-pound gorillas that you were talking about.

Yes, yes. The competitive environment has changed, but you all are adapting.

Yes. Yes, absolutely.

Great. Thanks Vince.

All right. Thank you, Brent.

2025 Leveraged Finance Conference. I'm Ana Goshko. I cover telecom and technology on the credit side, and we're thrilled to have Iridium Communications with us today and Vincent O'Neill, the company's Chief Financial Officer. I think you go by Vince.

Vince.

Yes, Vince. Yes. Thank you so much for being with us and making the journey here. So without further ado, I thought maybe you could start by just in case we have anyone in the audience that's new to the Iridium story, just start with a few minute kind of brief summary of the company's history, the nature and scale of your network and then where you participate in the market.

Sure. So I assumed the CFO role at Iridium on the 1st of January. I've been at Iridium for 11 years. So I've obviously seen a lot of things during my time there. Spent a lot of time in the corporate planning and development group. But for those of you who are not familiar with Iridium, Iridium is a company today that throws off 300 -- over $300 million in free cash flow. And we have a network of satellites that operate in LEO in low earth orbit. And so we have a constellation of 66 satellites that constantly circumference the globe in 6 planes of 11 satellites each. our network is global in nature. We're the only truly global satellite provider out there. And we operate in the L-band spectrum.

And the L-band is important because as a spectrum, it's more resilient and it lends itself to certain types of use cases. So we do -- we provide a lot of services, critical, mission-critical safety communications, especially in aviation and maritime, but across the board. With the 66 satellites in orbit, we also have 14 spares. And that's really important because there is in-built redundancy and resiliency into the network. So if you think about our network and those 66 satellites, -- it's a mesh architecture. So the satellites are connected to each other. So a satellite is connected to -- if you think of it this way, it's connected to the satellite in front of it, the satellite behind it and the satellite is the left and the right. And I'm sure if an engineer was here, they might cringe at that description, but that's basically what it does.

And the importance of that is when you originate a call on our network, it goes up and it terminates either in our gateway or the U.S. government who are 20% of our service revenue. It terminates in a proprietary U.S. government gateway. So nobody else can see that traffic. Between the L-band and the network, as I said, it lends itself to safety type of communications or communications where you have to get through. So if you think about our use cases, we have different use cases across land mobile, across maritime, across aviation, as I just mentioned, work with the U.S. DoD. But the one consistent theme across all of those different lines of business is that it's communication that has to get through.

And it's critical communication that you have to have the confidence that your signal, your voice call, your data is going to go through. A great example of that is the, again, using the U.S. government as an example, is they'll send a call up, they'll terminate it in their proprietary gateway. And that traffic is encrypted as it travels across our network. So -- that's the nature of our network. Typically, what differentiates us from other satellite providers like Starlink and all the VSAT providers is they typically operate in spectrum bands or certainly have to this point where they're bigger pipes.

They carry more data. So for example, you would find those kind of providers in the cabin of an airplane. And I'm sure you've seen some of the recent announcements around Starlink where they've won some of that business from some of the other geos. But where you'll find us is in the cockpit providing those critical communications. So it's shorts of voice and data with communication that's absolutely critical to get through.

Okay. Great. That's a great introduction. So the company's roots are from way back now are in voice, but you've really been leaning into IoT. So can you talk about the dynamic in the commercial voice and data business, which I think is still the largest product subsegment and then the commercial IoT data segment, which I think is catching up.

Yes. So our oldest product, Ana, is the handset. So -- and when you say Iridium to most people, that's what traditionally they would think about. They would think of the traditional handset. And today, I'm not sure I should know, but I don't know how many products we have, but obviously, way beyond what the initial handset was. But that telephony business, that handset business, we have over 2.5 million subscribers. of those 450,000 are those handset type subscribers. And again, they don't use the phone that much. But when -- again, it's this always on, always available. So you think of NGOs, you think of first responders, you think of reactions to disaster recovery type situations, hurricanes, et cetera. That's typically where you'll find the Iridium handset. And that business with 450,000 subscribers, it's been relatively slow growing over the last, call it, 10 years roughly in terms of subscribers. But it's been a very lucrative business for us. And we've introduced price increases there. I think we've introduced 3, call it, over the last 10 or 11 years with very little impact from a churn perspective. We have pricing power in that area. And again, it goes back to the characteristics of the network. IoT is lower ARPU-type subs, but certainly faster growing. The fastest-growing business segment for us has been IoT over the last 5 years. And that's -- you think about our IoT business, you should roughly think of it in 2 parts. One, there's the personal communications aspect to it, which is Garmin have an in-reach device, for example, and that runs in our technology. So you compare that with your smartphone. So you can be off the grid, you compare it with your smartphone. And so with this in-reach device, -- you've got great form factor, great antenna, and you've got a 2- to 3-day battery life. And you've got 2-way text and messaging capability. So obviously, if you have to get a message through to somebody or you can now send pictures on the inReach Messenger Plus, where if you've climbed some mountain, you can send a picture home to your spouse and say, "Hey, look, I'm here." -- so that's been half of the IoT story, and that's certainly been the fastest growing. But then the other aspect to it is industrial IoT. So -- and these are a lot of the things that you think about typically transportation, fleet management, oil and gas pipeline monitoring. there's not yet heavy equipment. So all the top 10 heavy equipment manufacturers, Caterpillar, John Deere, et cetera, they're all customers of ours. So again, you think of devices, you think of people or you think even more of devices and machines that are off the grid where you need to get messages or you want to get information to and from, our network is ideal for that.

Okay. And then so I have my numbers correct, I hope you have about 2 million IoT devices currently.

That's about right.

And so what's the growth outlook for that?

Well, so we've seen very strong growth across IoT for the last 5 years. And we think that, that will continue as we go forward. Again, as I said, it splits in 2 halves, the personal comms and the industrial. The personal comms has certainly been the main fuel for growth there, but not -- certainly not the only one. But going forward, I just mentioned it with Garmin have new products coming out that we think will help generate more revenue and drive ARPU. I just referenced the InReach Messenger Plus. But the other area that the new TAM really for us in IoT is the standard space narrowband IoT area. And this is where -- so the solutions we offer today are proprietary solutions, and they're proprietary to the Iridium network. and proprietary to our technology. And we sell through a wholesaler partner network of over 500 partners. And those partners vary greatly in terms of size and degree and the markets that they reach. And so that's how we go to market with those proprietary solutions. But recently, we've also launched an initiative where we'll provide standards-based solutions. And that's basically we were accepted into Release 19 of 3GPP, which was -- for us was a big deal. That happened this time last year. Those standards will be codified this quarter, early next quarter. And so we would expect chips with our technology to be in the marketplace, call it, in the second half of '26. And so what that does is, today, you've got cellular IoT chips that once they wander out of cellular coverage or terrestrial coverage, they're of no use. You lose the signal. Well, because it will be part of the standard, it will allow for our technology to be incorporated into that chip. And effectively, that chip will now effectively roam onto our network in much the same way you own between networks today when you travel to Europe or wherever you travel in the world, on terrestrial networks. And the big part about the standard or the importance of the standard is it makes it easier for chip manufacturers to integrate that technology onto the chip. It makes it easier for the MNOs to then purchase that, buy that through the device and sell. And it kind of takes the cost friction out of the equation because a big barrier to entry for us in the narrowband IoT space historically has been cost. A chip or a device might cost $25 or $30. So we're effectively moving -- removing that cost friction by going down this path. And we think in the process, opening up a big new TAM to us going forward.

So what are the most impactful applications that you foresee for this? .

Well, for narrowband IoT, I think it's some of the things you already talked about. It's like it has application across transportation, we talked about fleet management. It has application in agricultural products, which historically have been incredibly price sensitive, but it removes that barrier. So again, anything where you think you're off the grid and you might want to track an asset or track something. But we laugh about this example, Ana, at work sometimes where we talk about tracking cows or tracking sheep, which is -- in 1 instance is humorous, but it's also true. You can do that and all of a sudden, it becomes cost effective on a mass scale.

Okay. What is this going to do to ARPU, like sort of ARPU per device? .

So I think for us, ARPU is very different across our lines of business. Our highest generating ARPU is in our broadband maritime business, but that's also the smallest part of our business. we have very steady ARPUs in voice and data. Our voice and data ARPUs are $47, $48 a month, and you can track that over the last 10 or 15 years, how that has increased when we've taken pricing actions. IoT tends to be lower ARPU -- on the industrial side, it depends there can be a big variation in terms of solutions there that are provided, but on average, call it, maybe $10 to $15. there are outliers to that, but just as an average, call it, $10 to $15.

And then on the personal comp side, where we're talking about Garmins and the other providers, they're as low as $4 to $5. But their subs I love, they pay $4 to $5 every month, and they don't use any resources on our network. So they're incredibly efficient from a network perspective. In terms of IoT ARPUs, I think there are areas where it will increase like the garmenting reach messenger that I just referenced. I think we've added functionality to that product. that will potentially drive incremental ARPUs with things like pictures and other type of functionality.

But in the NB-IoT space, I would expect the ARPUs to be lower, but just that scale on a much bigger scale.

Okay. Okay. So we -- on your most recent earnings call, the company addressed the question of Starling competition, and this was after the announcement of the planned EchoStar spectrum acquisition or the agreement there. So indirected device, right? And I think the company acknowledged that there's going to be likely increased competitive intensity, both in smartphones and in but cited the impact is several years out. So could you just overall recap your view on this? And I know it's early days, and it was only maybe about a month ago, but have there been any subsequent refinements to how you're thinking about the impact?

No. I would say that what we outlined on the call is pretty consistent with how we're still thinking about it. And so what Starlink did was they purchased a span spectrum from EchoStar, which does give them the opportunity for increased functionality around the services they offer and direct-to-device has talked about a lot in relation to that. And starting themselves have said that they will offer broadband services around D2D. They haven't really expanded on what that means, but they have said that they will offer broadband services around D2D.

I think for us, what we see is that it's definitely a changing competitive environment, and Starlink's purchase of that S-Band spectrum is going to be disruptive to the whole industry. We do think that there are certain parts of our revenue base that will come under increased competition as we move towards the end of the decade. So I would say you think of our telephony business that I just talked about. But again, we think -- when we look at most of that and the use cases for that base today are mostly industrial use cases where it's the ruggedized nature of the handset, it's the battery life of the handset that is really valued. And so we don't really see that changing.

Are there some subs in the base that are more leisure-based from a smaller subset of the base? Yes. And could there be some pressure there? Yes, potentially. Similar story in IoT, where people who use our personal communications devices. Typically, it's a lifestyle choice. They know they're going to be off the grid. And that's a choice they've made in terms of how they live their life versus occasional users. So where we have more occasional users in that subset, could we see some increased pressure there. Again, we acknowledged on the call, that's possible.

But if you look across both of those areas, there's a lot of industrial use cases where we don't think that impacts or impacts in a very minor way. I would say, in general, about direct-to-device 2 things. One, there's a lot of speculation about how big the market size is out there and how big the TAM is. And there's a wide variation on the TAMs. I will hold my hand up and say, I'm still skeptical that the TAM is as big as some people are claiming. But obviously, that will play out.

But what I will say about directed devices, I think it's going to be more occasional type usage. I think it's going to be where you find yourself off the grid unexpectedly or maybe you know you're going off the grid, but you're not going off the grid that often. And your iPhone or your Android, it's okay. But for guys who are hiking and it's a lifestyle, and they want the break chrome trails and they want the Masane, I don't think that's going to change. So I think there will be some impact there, but nothing like what some people are projecting.

Okay. So you have a government services business. if you can talk about what the scale of that business and the outlook. And then I think it's come up in some of your meetings. There's a contract up for renewal with the DoD in '26, it's about 110 million annual contract. Any color you can provide on what that process will be? .

Yes. So we have a -- we currently have a 7-year fixed price contracts with the government for $738 million. And as Ana said, I think it's about $110 million. There's step function increases in that, but I think it's $110 million for, I think, $25 million going through '26. The contract runs through September of '26. The U.S. DoD have the option or the government have the option to extend that for 6 months, which they have taken up on the last 2 renewals.

So our expectation is that they would extend that through March of '27. The last definitely the last 3 renewals. I want to say the last 4, but I wasn't there for that. But the last 4 renewals have been sole sourced awards because -- and it goes back to what I talked about at the start of the conversation because of the nature of our network and the way it carries traffic and the government can terminate that traffic in their own gateway, nobody else can do for the DoD, what we do for them.

We this morning announced that we had signed the renewal of the Gateway Evolution contract, so for that gateway, there are 2 contracts tied to that government gateway. One is the Gateway Evolution contract, which we extended for 5 years this morning, which just make sure that the gate -- the evolution of the gateway continues that from a technological perspective, it's keeping up to date with everything that's going on. It's in line with our commercial gateway, so it can still carry traffic.

And last year, they renewed for 5 years through '29, the gateway maintenance contract, which is just a maintenance contract for that same gateway. So we look at those 2 data points as clear indication of how the government are thinking about that renewal between September '26 and March '27.

Okay. That's good. So I'm going to switch over to some of the financial questions now. And we can double back and some -- a few other topics that we have time. But for 2025, the service revenue growth guidance is 3% to 5%, but I think you said you're now expecting towards the lower end of that. But the higher end of the original EBITDA guidance $490 million to $500 million. So what's the dynamic where you're still able to hit the high end of the margin.

Sure. So just very quickly on the service revenue. We tightened the service revenue guide from 3% to 5% to 3% on the Q3 call. And that was primarily tied back to our P&T business. So that's our position navigation timing business. And just very quickly, we bought a company called Stelis in Q2 of 2024. We were already a 20% owner in it. We purchased a whole last year. And that technology runs on our network. And basically, what that technology does is it's 1,000x stronger than GPS, the signal. And there's much more increased awareness around GPS and vulnerabilities around GPS, I would say, in the last 3 or 4 years, than there has been at any time prior.

And Stelis or our P&T solution is basically a backup for GPS because it's harder to spool for jam the signal. As you can imagine, that technology has a lot of application with both the government and commercial enterprises. And obviously, we're working with all of those players today. But we ended up taking our guide down in Q3 because revenues that we thought would accrue to P&T in '25 with a customer and pushed out to a future period. So we just reflected that in our service revenue guide.

At the same time, to Anna's point, we took the OIBDA guide up from -- we tightened that to the higher end of the range, $495 million to $500 million. And really, that was a combination of 2 things. It's a combination of -- our engineering business has really been performing exceptionally well. We're working on the space development agency contracts with the government. That's provided a big uptick in revenues for us. And so across our engineering programs as a whole, which are lower margin and tend to be more strategic in nature for us. But margins there have really held OIBDA in 2025.

And then the other aspect that played into it was just from an operating expense and scale perspective, we got some scale in our expense lines. And so those 2 things combined together meant we could hold the higher end of the OIBDA guide while tightening the service revenue guide.

Okay. Company has very solid EBITDA margins close to 60% within telecom industry very strong. Second only to towers, more complicated than a tower business. But so how should we think about incremental margins and future revenue growth?

So traditionally, we've been in and around 60% margins certainly, from a service revenue perspective, higher incremental margin generated from service revenue. So if you think about the network, we launched the network in -- we launched the second-generation network. Sky launching it in '17, completed in January of 2019. And that cost us approximately $3 billion. We have, what I would call, fixed cost tied to obviously running the satellites, maintaining the satellites. I don't want to say that we have no variable costs in the business, but we have low variable costs in our business. So every incremental dollar of service revenue we generate flows to the bottom line at a higher incremental level. but we also have engineering and equipment revenues.

So engineering revenue tends to be lower margin, and that tends to be around about 20%.

As I said, those programs tend to be more strategic in nature and support the airtime contracts with the DoD. And then we also have equipment revenue. We sell equipment, and we actually generate 40% margins on our equipment. So sometimes the OIBDA margin can fluctuate a little bit just depending on if you've got faster growth in engineering, while you're generating more dollars, it will dilute the margin. But in terms of thinking margin going forward, 60% I think is -- 60% is probably a good number.

Okay. And then on free cash flow. So the 2025 free cash flow outlook is $300 million, and then you've got 2026 to $30 million cumulative free cash flow outlook of $1.5 billion to $1.8 billion. So given this, why did you recently paused the share repurchases?

So we paused the share buybacks for a couple of reasons. One was we've been pretty aggressive on our buybacks over the last 2 or 3 years. So the first thing I would say is, I don't know that we've been rewarded in the marketplace, at least not yet for those buybacks. But more specifically, once Starlink purchased the S-band spectrum, we decided that it was probably better to pause the buybacks and focus on 2 things. And the first 1 is just more from an M&A perspective, like build cash and build financial flexibility on our balance sheet.

And with that, as we have potential opportunities to acquire businesses that would maybe be more adjacent to Starlink or maybe extend our reach in areas where we have a competitive mode or a competitive advantage, we would look to do that, and that's certainly going to be part of our strategy here. over the next 12 to 24 months. But the second aspect to that, Ana, was we're also looking at our leverage. Our current net leverage is 3.5x and so you're going to see us actually delever here over the next 2 to 4 quarters, basically.

We do have a long-term leverage guide out there of at or less than 2x net leverage by 2030. And certainly, with the cash we expect to throw off like we're throwing off $300 million of pro forma free cash flow right now. if we just replicate that for the next 5 years, that's your $1.5 billion. So we think we very naturally and very comfortably deleverage to that aspect over the next 5 years.

Are you planning to pay down debt or just to build the cash balance so you -- so is the net improves, but you still have the cash on the balance sheet flexibility.

Yes. I think in the short term, it's very much built the cash for the flexibility. I certainly wouldn't rule out at some point that we might look at buying down debt, especially if it's economical. But for right now, priority #1 is to build cash and financial flexibility on the balance sheet.

Okay. Great. So just a little bit of time left. So I welcome you to any closing comments or anything important that we didn't touch on or...

What I would say and what I leave people with is that we throw $300 million of free cash flow per year. We have an extremely resilient business. We've been doing this for -- obviously, been doing this for a long time. And we also think that despite all the noise around Starling, that we have unique opportunities as we look out over the next, call it, 2 to 5 years to really grow and expand our revenue base into areas that we're not in today. like I talked about, standard-spaced direct-to device, especially the narrowband IoT opportunity.

You think about position navigation and timing with the Catalys technology and especially with how important GPS is to all our network infrastructure and aspects of that nature. So what I would leave people with is we're still going to throw off plenty of cash, and we still think, as we look out over the next 2 to 5 years that we have significant runway to grow revenue.

Okay. Vince, thanks so much for being with us. We really appreciate it. Thank you.

Good day, and welcome to Iridium's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Ken Levy, Vice President of Investor Relations. Please go ahead.

Thanks, Clowey. Good morning, and welcome to Iridium's Third Quarter 2025 Earnings Call. Joining me on today's call are our CEO, Matt Desch; and our CFO, Vince O'Neill. Today's call will begin with a discussion of our third 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 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 our views 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, free cash flow yield and free cash flow conversion. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. Please refer to today's earnings release in the Investor Relations section of our website for further explanation of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measures.

With that, I'd like to turn the call over to Matt.

Good morning, everyone. We just finished another solid quarter, which puts us on track to meet our OEBITDA growth expectations for the year. I'd like to use my time today to share some broader thoughts about the satellite space and our plans to address and capitalize on the changing landscape. Vince will then recap Iridium's quarterly performance in greater detail and highlight the trends we have seen since our last earnings call.

As you are well aware, the recent proposed acquisition of EchoStar Spectrum by Starling to build a global D2D capability is a significant event for the satellite industry. We believe this acquisition will likely be disruptive to the status quo and will hasten the introduction of a global service that over time will connect new smartphones configured to use this spectrum. It could also accelerate the adoption of IoT devices that better compete with our global IoT services, at least better than the current D2D efforts using cellular spectrum on a regional basis in a few countries around the world.

We acknowledge that more competition is coming to our corner of the satellite market. We take this increased competition seriously and believe that this development will affect us as early as the latter years of this decade and most certainly into the 2030s. Now that being said, we do have exciting prospects as well as an enviable position in established growing markets because of the quality and durability of our partnerships and satellite solutions. We have tremendous experience developing thousands of Iridium-connected solutions that are already in the market. This knowledge and our knowledge and our network will serve us well in responding to the changes taking place in the industry today.

To be clear, we will be proactive and pivot to strengthen our position, amid ongoing changes to the satellite market landscape. We have a long history of doing this and I'm confident we will be successful and can continue to grow revenues as the market for satellite services evolve.

Iridium has focused on providing unique specialized services in the satellite industry. While we have some areas of overlap with other satellite providers, we have never sought to participate in price-driven commodity markets and we don't plan to now. Our current development of Iridium NTN Direct is a great entry point into providing a new standards-based D2D service that will expose us to a new and potentially larger market opportunity. However, broadband D2D is still a nascent unproven market. And absent a partner with spectrum and committed capital to support this type of build-out, we have no plans to go it alone.

As we think about our long-term future and think about the services we'd include in a follow-on constellation, we will look to opportunities that provide us with the greatest return on capital. And for now, and doesn't fit that profile for us. Instead, we plan to build on our market strengths and focus even more deeply on the areas we are uniquely qualified to deliver. This includes continuing to prudently invest in new growth areas around our unique industrial-grade IoT and PNT services and exploring acquisitions in adjacent areas that are complementary. We will focus on regulated applications where demand for safety services are growing, and our unique global satellite capability can provide a critical solution such as maritime and aviation cockpit safety services.

In addition, we believe Iridium has a strong and defensible position in the growing autonomous systems market as a failsafe connection for drones, crudeless vessels and other autonomous vehicles. These vehicles will need multiple redundant connections for safety and reliability, and we'll also appreciate our PNT technology to protect their location and navigation.

As I said before, we will continue with our investment in Iridium NTN Direct. Our development work with standards-based IoT continues to provide an exciting opportunity and is complementary to other D2D efforts in the industry. We are making strong progress on this new service, and we're now in the process of on-air testing from live satellites. We are getting good traction from mobile network operators. You likely saw our announcements with Deutsche Telekom and Carrier One, and there are more announcements to come.

We're finding demand from MNOs for a global Iridium service onto which their IoT customers can roam and we believe Iridium NTN Direct will augment our already successful and growing IoT portfolio and expand our addressable market into the broader terrestrial IoT space.

We will also seek to build or acquire intellectual property and assets that provide Iridium other outlets for growing new revenue streams that won't compete directly with these new D2D services coming in a few years. For example, Iridium has a very unique platform with our powerful new PNT service which has the ability to reshape security applications and fortify terrestrial networks. We're seeing a lot of traction in a number of commercial and government industries that need an alternative to GPS for critical infrastructure, protection for their navigation systems and accurate in-building time sources in addition to other security uses.

We are also developing a unique quantum-safe cybersecurity product using our PNT signal that can improve identity access management and provide authentication for high-value transactions, tapping into the $20 billion identity verification industry and creating a new revenue stream. Even capturing a small portion of this growing market would be meaningful to a company of our size.

We are also continuing our focus on U.S. national security missions, building on our collaboration with the U.S. government over the last 25 years. Iridium's network is relied upon for primary and backup communications, secured transmissions, specialized IoT services, tactical radios and much more. Many government agencies depend on Iridium service for critical data transfer, asset management and situational awareness to name a few. And of course, our technology is embedded into so many applications and missions. So it is not easily replaced by other satellite systems or evolving D2D services. We continue to discuss our EMSS contract renewal with the U.S. government and expect a positive and productive outcome in the next year as the government continues to rely more heavily on commercial satellite services like ours.

Similarly, our contract with the Space Force Space Development Agency is another important touch point with the U.S. government. We see the work we're doing on building the ground entry points and operation centers for SBA's new network has given us great visibility into the government's Golden Dome initiative and credibility to support its future needs. We are well positioned to expand the scope of our work with the government going forward as they invest heavily in Golden Dome. These are just a few areas for which we believe disciplined capital deployment can provide continued strong revenue and bottom line growth and we look forward to being able to share additional details as we execute on our vision.

Beyond our valuable global L-band satellite spectrum and the growing number of partners and solutions we've developed over our 3 decades of operations, Iridium is unique in the satellite industry and that we generate strong cash flows with reasonable capital cycles. With a healthy, flexible and still young satellite constellation, we won't need to spend on a new network until well into the 2030s with bus and launch costs significantly less than we experienced with our second-generation system, we feel good about our options for lower cost construction and launch when the time comes, including potentially as hosted payloads on another constellation system.

Further, we have confidence that our strong cash flow should continue over the next 5 years and into the 2030s when a replacement system may be needed. Even with the increased uncertainty provided by a new satellite entrants, we still expect to generate at least $1.5 billion to $1.8 billion in total cash flows from 2026 through 2030, giving us a lot of flexibility as we enhance our business and focus on new growth opportunities. Given the increased focus on solidifying our competitive position, we have decided that we will pause our share repurchase program to emphasize strategic growth initiatives and continue our discipline in the deployment of capital as we remain committed to deleveraging the balance sheet. We believe this is a prudent course for now, even as we continue with our quarterly dividend program.

As you can see by our earnings report today, we continue to grow revenue in subscribers, and we expect to grow well into the future. Since the beginning of the year, we've signed up more than 70 new technology and distribution partners to the Iridium ecosystem to either build new solutions or license our technology for new Iridium-based products. These are indicative of the continuing value of our network and demonstrate the strong pipeline we have for continued growth.

We are confident that Iridium's many product lines will continue to be relevant, and we are excited to begin to invest in related technologies and businesses where we see meaningful growth potential. While the EchoStar Spectrum sale is a major development, it does not come as a complete surprise to us. More D2D competition is coming, but we have time to respond as market reaction will be slow. We've seen this with a limited market reaction to Apple's D2D offerings and the response to the new T-Mobile satellite services which have been underwhelming as well.

We agree that the communications market is changing and new industries, which hadn't previously seriously considered using satellite solutions are now beginning to explore or build applications that offer real value to their customers. This is an attractive environment for us, and we expect Iridium's opportunities will expand. As we invest in new technologies and adjust our market focus, we know that our competitive advantage comes from focusing on specialized products and services for which high reliability and customized solutions remain key points of differentiation.

With that, I'll now turn the call over to Vince to discuss our quarterly results and outlook. Vince?

Thanks, Matt. Good morning, everyone. As Matt noted, I'll review Iridium's financial results for the third quarter. I'll also highlight some of the trends we're seeing across the industry and share details on Iridium's leverage and capital position.

Operational EBITDA was up 10% in the third quarter to $136.6 million, driven by a combination of revenue from recurring services and engineering and support. On the commercial side of our business, service revenue was up 4% to $138.3 million, largely due to growth in commercial IoT, PNT and voice and data. Voice and data revenue rose 4% from a year earlier to $59.9 million, largely reflecting price increases implemented in the beginning of July, which drove a 4% increase in ARPU.

Commercial IoT revenue totaled $46.7 million in the third quarter, up 7% from a year earlier. This increase continues to reflect broad-based growth of our IoT services for both consumer and commercial applications.

Commercial Broadband was down 17% from the year ago period, though largely in line with our internal forecast. We anticipated the decline in broadband this quarter, which was largely attributable to a nonmaritime contract from the prior year period that was not renewed. Excluding this $1.4 million take-or-pay contract, the decline in broadband this quarter was consistent with the trend we saw in the first half of the year.

Hosting and other data services revenue was $18.7 million this quarter, up 14% from last year's comparable quarter, reflecting an increase in PNT accentuated by a discrete event associated with the customer contract. We are in the early days of PNT business development and see robust opportunity ahead for meaningful revenue growth. We are encouraged by the level of market interest in the service that spans sectors and solutions.

There is an increasing need for resilient position and timing solutions, especially for civil and commercial applications, to address jamming and spoofing and protect critical infrastructure.

Government Service revenue was up modestly in the third quarter to $26.9 million, reflecting the step-up in our EMSS contract with the U.S. government in mid-September. This is the last price step-up to our contract, which will yield $110.5 million during the final year of the 7-year term. I should note that the government has the option to extend the contract for a period of 6 months at the current rate, which they traditionally exercise. Our formal negotiations on the new EMSS contract with the government will commence in 2026 in earnest. We entered this process with a strong relationship built over 25 years and understand well their priorities, needs and expectations. A good example of this is the integration of Iridium's technology in Colcom's new Snapdragon Mission Tactical Radio for U.S. government and Allied users.

Turning to subscriber equipment. Sales were $21.5 million in the third quarter, down marginally from the prior year's quarter. We now forecast full year sales will modestly under on last year's level.

Engineering and support revenue was $40.2 million in the third quarter as compared to $30.7 million in the prior year period. The strong increase from the prior year quarter continues to reflect Iridium's growing work with the Space Development Agency as well as new R&D and study contracts awarded in the prior year.

For 2025, we are tightening our full year forecast for service revenue growth to approximately 3% and are narrowing our OEBITDA guidance between $495 million and $500 million, the higher end of our previously guided range. The primary driver of our adjustment to service revenue relates to the timing of PNT revenue. As previewed during our second quarter call, PNT revenue that had initially been expected to come in 2025, will now be delayed and pushed into future periods. And existing large customers working on a major deployment of PNT. Their investment is significant. However, the timing of implementation rests on factors outside of our control. We continue to work closely with this customer to support their rollout. This will result in hosted payload and other data services growth below trend in the fourth quarter and full year service revenue trending to the bottom end of our previously guided range.

PNT remains a very attractive market for Iridium and will drive incremental revenue growth. We especially like the fact that it is a wide area of broadcast service that supports an unlimited number of users, while using minimal network resources. We've been happy to see Iridium PNT expand into a number of new applications like 5G networks. For example, you may have seen this week's announcement that T-Mobile is increasing their deployment of Iridium P&T for network resilience.

Beyond this item, I would offer a couple of comments on trends we are seeing in our commercial lines of business as well as our ongoing work with the U.S. government. As I noted earlier, we initiated a price increase in our commercial voice and data business in July. Coincident with this rise in ARPU, we have seen a modest amount of subscriber deactivations tied to this pricing action. Going forward, we expect ARPU for our voice and data business to average $48 for the foreseeable future.

Revenue in subscribers in IoT continue to grow. While we expect fourth quarter growth to increase from the 7% posted in Q3 due to contracted revenue with a large customer, we believe IoT revenue growth will now come in just below 10% for the full year. Our IoT business is running well. And as Matt noted, we have a number of new partners that have joined Iridium's ecosystem that are building new applications and will help drive future growth.

As I mentioned earlier, the decline in our broadband revenue growth rate in the third quarter was abnormally high due to the impact of a nonmaritime contract from the prior year period that was not renewed. We anticipate that the year-over-year decline in broadband revenue will continue into the fourth quarter and trend closer to 8%. A faster conversion of maritime vessels from primary to companion service this year is hastening a mix shift in our Maritime business and will continue to be visible in our ARPU through the end of the year.

Over time, we believe subscriber gains from the adoption of new Iridium Certus GMDSS plans will help to offset these ARPU pressures and that Iridium will remain an important player in the maritime sector.

Iridium's government business will generate $108 million in EMSS revenue from the DoD this year. We also expect that the strong trends we've seen in engineering and support, primarily tied to our work with the FDA, will continue into the fourth quarter and support another year of record engineering revenue.

Finally, with the tax legislation passed this summer, we expect an additional year of tax savings. We now expect Iridium to pay cash taxes of less than $10 million per year through 2027 and don't anticipate being a taxpayer at the full statutory rate until 2029. This updated tax profile will add further support to incremental cash generation. We hope this color is helpful as we enter the final quarter of the year.

During the third quarter, Iridium retired approximately 1.9 million shares of common stock at an average price of $26.22. While Iridium stock trades at an attractive valuation, we believe it is prudent to enhance our incremental financial flexibility in the face of future changes to the competitive landscape. As Matt has already noted, we are pausing our share buybacks. Over the normal course, pausing our repurchase program will add approximately $50 million to our cash position by the end of the year and drive our net leverage slightly lower.

Given the free cash flow Iridium will continue to generate, we have the ability to delever and quickly reduce net leverage from today's 3.5x. This increased financial flexibility allows us to consider options such as potentially buying back some of our debt, which reduces ongoing carrying costs. Absent an acquisition, Iridium could quickly delever below 2x net leverage well in advance of our targeted time line of 2030.

Further, financial flexibility supports our ability to pursue strategic initiatives, including bolt-on M&A that bolsters our position in certain target markets.

Moving to our capital position as of September 30, Iridium had a cash and cash equivalents balance of $88.5 million and ended the quarter with net leverage of 3.5x OEBITDA. On September 30, Iridium made a quarterly dividend payment of $0.15 per share to shareholders. This increase to the dividend rate results in full year growth rate of approximately 5% over 2024. We are committed to an active and growing dividend program as it augments long-term shareholder returns.

Capital expenditures in the third quarter were $21.5 million. As we have noted previously, we anticipate higher capital expenditures in 2025 to support our work on Iridium NTN Direct and 5G standards.

Turning to our pro forma free cash flow. We present a 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 $304 million for 2025, with a conversion rate of OEBITDA to free cash flow of 61% in '25 and a yield approaching 18%.

As Matt has previously noted, we expect that the Spectrum deals announced this year will bring more competition to the MSS industry over time. To ensure we are providing the most relevant guidance, we continue to guide service revenue on a year-by-year basis, but our withdrawing our 2030 service revenue outlook.

Iridium has a durable and resilient business that will continue to generate significant cash flow over the long term. That strength is driven in part by Iridium-connected solutions that are not easily displaced and drive our recurring revenue quarter after quarter and year after year. We anticipate that even in the evolving competitive environment, Iridium has the capacity to generate at least $1.5 billion to $1.8 billion of free cash flow over the balance of this decade. I'd remind investors that Iridium is currently generating about $300 million per year of pro forma free cash flow. Just maintaining this run rate generates $1.5 billion through the end of the decade.

Iridium occupies a unique position in the satellite market today. We have great assets, strong cash flow and many opportunities for incremental growth. While we acknowledge that the competitive dynamics in the satellite industry are likely to move at a faster pace, we remain very excited about our prospects and the durability of our existing business.

With that, I'll turn things back to the operator and look forward to your questions.

[Operator Instructions] The first question comes from Edison Yu with Deutsche Bank.

I want to follow up on the strategic options that the team has mentioned and maybe take it from 2 angles. First, you mentioned M&A several times I'm wondering what the time line maybe is for some of these actions and that's in the context stuff, is this a case where you had a bunch of M&A in the pipeline already and you're speeding it up? Or are you now looking for different types of targets post all the events that have occurred in the last couple of months?

Yes. we haven't been a big acquisition company. Obviously, we did [ Satellus ] a few years ago, but hadn't done any sense. We have been looking at some areas that are complementary to what we're doing. We're looking at some now. I can't really comment on any specific timing because it's not completely within our control. But I did want to signal to you that, that will be a bigger focus for us going forward for obvious reasons. I mean there are things we can do to accelerate revenues and growth that are complementary to the specific areas we've targeted, and we're going to focus on those a bit more heavily. But there's not lots of targets. We're obviously not going to do many, many at the time, but we will focus on that more.

Understood. And then when I take a look at the M&A angle from, I guess, the opposite side, does it make sense to you for Iridium to be part whether directly or indirectly of some type of other solution, whether it's another big tech company trying to get into DDD in some way? Do you think that is a sensible thing after what's happened in transpired in the last couple of months?

Well, it's only sensible based upon the value that, that would create for shareholders, which is our job to maximize. So clearly, we'd be open to those who have that desire. But I don't know for sure, but I wouldn't say that the recent news of spectrum purchase of that size and given the still uncertainty of the market will attract more to the market. I mean it might be less. But there's only so many of us that do have spectrum. We obviously have an important position there. And so if someone really wanted to do it globally, we could obviously be part of that. But that's not really for us to decide. That's not really something we can plan and execute on. That's for others to decide, but we'll do what's in the best interest in the long term value that we can create.

The next question comes from Brent Penter with Raymond James.

Appreciate the commentary on the competitive environment. So at a high level, which of your business lines do you think are totally insulated from the competitive risk where you don't think about it at all really? Which business lines are maybe mostly insulated and which business lines do you think are most potentially exposed?

Well, that's a very detailed question here. No business is completely insulated. We've largely been extremely competitive in the areas that we serve because of our global network because of our L-band spectrum because we're able to be a regulated provider when others can't. There's a lot of hurdles people have to overcome to compete say and the cockpit safety services or maritime safety services. Others have tried to do that, and it's taken years and years. So those kind of areas are always going to be pretty insulated from services.

Some things like PNT, for example, given a 15-year head start we have on that given the fact that would be really very difficult to kind of recreate a service like that. Those are going to be pretty well protected services. Industrial IoT, really -- in many ways, that's protected by just a massive ecosystem and solutions that we provided, but we do have a wide variety of both proprietary and soon to be standards-based services, which also make that an attractive service that's in a business -- in an area of which there's going to be multiple suppliers. It's not going to always be direct head on the head competition, it's going to be actually multiple solutions in many things. For example, in the autonomous areas, we're finding ourselves being put on with terrestrial and even kind of broadband capabilities into autonomous solutions.

So I think that covers a lot of area. The government is another area that after 25 years and being embedded into so many areas, having such high credibility in terms of what we can do and what our experience has led, which FDA is a good example of as we're lining up around Golden Dome, which potentially could be $175 billion, we find there's an awful lot of business that we can address. And we're mature enough as an organization to now go after that business where we couldn't have before.

So I would say we feel like, first of all, we have a lot of sustaining strength in the existing businesses, a lot of momentum for -- in the coming years. Long term, as you look over 10 years, I think our business will evolve a bit, and that's why we're going to be more aggressive about evolving it ourselves into it. But I think that there's -- that's why we feel very strongly about the cash flows we're going to be generating over the next 5 years and can really kind of reiterate those.

Okay. Great. I appreciate all that detail. And so to take a big broad question and make it a little more specific. If we look at the Voice and Data segment, what -- can you give us a rough breakdown of what percent of your base there are more leisure or casual users versus what portion are maybe more industrial types or users that really need that more robust device and service that might be at less risk?

Well, when you talk about voice and data, I mean, you're mostly talking about satellite phones and PTT devices and the like. And I don't think there's a whole lot of leisure in there. Almost everything that we supply is I would call for kind of a security, industrial kind of use, NGOs, first responders, militaries, and the like. I don't see a lot of people who are talking about the fact that they have a satellite phone for fund or use a push-to-talk device for roaming with family. So I think very little of that is really, I would call, consumer-grade kind of things. So it's another reason why I -- by the way, there's a little bit in terms of like subscribers. You can see we're seeing a difference in subscribers.

As I was looking through and talking to the team about where that kind of year-over-year sort of subscriber, it's still small, but where is it coming from? It's all in kind of industrial areas. For example, the DOGE funding with USAID. There were some -- we're talking -- all these are, by the way, a pretty small effect. So there was USAID, the UN, for example, as some funding issues. So kind of NGOs in general. Of course, the -- we did have a small price increase this year, and I see some small impact, it seems like with some people who may be looking -- I'd say, again, maybe these are governmental agencies that decide they can use a few less given the price.

I would say, tariffs have had a small impact. Really stretching a little bit, like the drawback -- the troop drawdown in Gaza, hurricanes. This has been one of the quietest hurricane seasons, but all these things have a small impact you could say is D2D an impact. The fact that you can do it with a smartphone, and it must be a small impact, but it really is, given all those other kind of issues, I can't see a real big impact really right now from D2D on that business. And I would say kind of the implication of your question is those are kind of consumer users and not industrial NGO, first responder, safety and security kind of application. So I hope that helps answer kind of where we see that business.

Yes. Yes. Very helpful color. And so my last question would just be kind of take a similar question with the IoT business. Can you all update us on what portion of that base is personal communication kind of or consumer users?

It's about -- Brent, there is about 900,000 -- of the IoT subscriber base, roughly about 900,000 are personal subscriber users.

And those are low ARPU users for the most part. As you can see, that business continues to grow and still expand in terms of number of devices and users, most of that business though is still -- as we can tell, not just everyday users who use this occasionally now and then, which is where a lot of, I think, D2Dis going. These are users that need a rugged purpose-built device for tracking or these again are a lot of first responders and those sort of people as well. So I think over half, which is our higher margin business is the broader industrial IoT area and that's the area that kind of continues to grow at pretty traditional rates right now.

The next question comes from Mathieu Robilliard with Barclays.

If I could dive in some of the verticals a bit more. In terms of the broadband, one, you mentioned that there was a one-off kind of a contract that was not renewed. But I was wondering if you were still seeing an impact from the loss of core connectivity services that you had in the past, but I thought would be down by the end of last year or beginning of this year. So I just wanted to make sure what was the exposure still to connectivity service on the maritime.

And then on the IoT and clearly, I think from what you've said, this is potentially the area where D2D could become the biggest competitor. At the same time, you are developing your home, D2D IoT or NTN IoT solution. And I think you signed the deal with Deutsche Telekom recently, and I wanted to clarify what exactly it is? Because my understanding is that your services are not yet commercially available. And so if you could clarify exactly the nature of what you signed with Deutsche Telekom.

And also, which is another way to look at the threat of D2D or the opportunity. Clearly, when we look at pure mobile terrestrial IoT ARPUs, we're talking about less than $1 or low single-digit dollar per month per user, which is not the case in your IoT business, and I understand there's lots of different price points. But is your D2D initiative, is that something that could protect you to some extent, but also just bring lower ARPU for the same amount of subscribers?

Okay. you have a couple there, Mathieu. I think you started with broadband. I want to make sure you understand that onetime which sort of distorts this quarter was actually revenue we had to recognize a year ago in the contract. So the contract was terminated. That wasn't the maritime contract happened to be kind of a little bit larger onetime kind of event that when you normalize that, we continue to sort of change the mix, if you will, in the maritime industry. I'm expecting that, that will eventually turn around. You can see the new products that are coming out. We've had some announced even in the last month. Intellian, which is a really important supplier in the maritime space, got approval for their combined backup GMDSS terminal that I think will be very attractive, and we have some more in the market coming. So I think broadband will eventually kind of flatten out, and we're not seeing any new trends in that area.

In terms of IoT, yes, the contract -- the announcement of DT and the others that I think you'll soon be seeing are really kind of roaming arrangements. Those are MOUs. These are that relate to their agreements to allow their customers to roam onto our network, they're terrestrial customers. As I said before, we're getting a lot of interest, in fact, even growing interest there. The D2D market is not a 1 player wins all. What we're hearing from the mobile network operators is that they want multiple partners. They -- even the ones that have invested in people, I think you're going to see are going to roam on to our network as well. They appreciate the robustness of our network and the availability of it. I mean it won't be long before we deliver that service and the revenues.

You're right, I think we'll be probably lower ARPU overall, but there will be an expansion of the market as opposed to necessarily -- they'll be going after applications that we wouldn't be able to address today with our proprietary solution. So for example, we can't address the smart meter market. There's many agricultural sensor markets we can address today. But our network is will be perfectly suited for those applications. And when we deliver a service, there'll be a lot of mobile network operator applications in this space, which they would find attractive to allow a Roman to our network. So we see that as a net positive and an important growth area for us. So I think I covered all of them, but let me know if I didn't, Mathieu.

No, that's very clear. I guess what I understand in terms of the agreement you signed with Deutsche is not -- this is based on your existing satellite IoT solutions. You're just signing a new partner, which is great in itself, but it has nothing to do with you...

That's not true, Mathieu. The with DT was for Iridium NTN Direct. Whenever you hear the term Iridium NTN Direct, that's our service name for our new narrowband IoT standards-based solution based upon 3GPP Release 19 standards and the new chipsets and all that sort of thing. So that's what we're testing right now. It's actually starting to really do initial testing on live satellites. It's going to evolve into a service that we think will be ready next year, and we'll generate new solutions in devices that can both handle terrestrial and satellite communications.

The Next question comes from Colin Canfield with Cantor.

Following up to [indiscernible] maybe just asking it a little bit more directly, but as we think about kind of take on value on Iridium and maybe the process, typically, if we think about it maybe starting today and the cost starting now, is it fair to assume that like 9 to 12 months could be a kind of potential time line to realizing that the full value of Iridium? And as you think about kind of the key value within Iridium's kind of constellation RF network downstream devices, where do you think kind of are the key things that other partners might want to take out of the business or kind of integrate it into their wholesale back? I mean like there's a lot of, obviously, big dollars that are flowing around and like, yes, you can make the argument that the space equity market probably continues to drift higher from here. But it's just one of those things where it's tough to get public market credit for such an enduring and valuable asset.

Yes. That's a good question and a difficult one to answer. I mean, I think our value is in the breadth of and experience and the ecosystem that we've had and all the solutions and growing market segments. We have -- I mentioned a couple -- a number of really, I think, important and enduring assets that we have, whether it's the U.S. government business, our PNT technology, which is quite unique, the breadth. I mean we've been the winner in IoT satellite services for a while now, and that isn't slowing down what we can do in other markets.

I look at others right now. Yes, with a little else jealousy if people do have no revenues and only long-term kind of growth prospects. And obviously, the market isn't appreciating that about us right now. And that's why I think this sort of announcement of a bit of pivot and more investment into longer-term growth areas, which is clearly what people are appreciating now as opposed to return of capital and that sort of thing. I think it's prudent right now.

So not sure if that completely answered your question, but hopefully I do think that there is some underappreciated assets of value. Perhaps we've been more underappreciated than some right now. And I think a lot of that has to do with people who have not really sustained the business as much, but they do have larger spectrum assets than perhaps we have and perhaps that's of interest to some.

Ours are valuable spectrum assets, but we haven't chosen to market them to others. And clearly, people believe that maybe there's been a rerating of the value of satellite spectrum in the mobile satellite services banner, and we haven't promoted that. We still have value regardless. It's just we're not out there pumping that as being what the future of our company is. I believe that we can still create excess large growth going long term, and I think that will be proven.

Got it. Got it. Definitely agree. But as we think about rank order of partners, right? Like the EchoStar SpaceX deal, I think you're talking a pretty clear indication that this basically plans to go after a handset, right? And so within that construct, kind of the big competitors that are read have substantial ecosystems are probably 1 in 1 alone and as a third company, right? So as we think of kind of that construct, is there a rank order of folks that you probably have a great relationship, someone like Paul Jacobs a global star or kind of some of the Amazon folks? Like how do you rank order the potential teammates that you would probably want to work with in the future?

Yes, that's a tricky question to answer. I mean that sort of is leading to possible partnerships and aspects that I don't really want to signal. I've said in the past, especially having been here almost 19 years now. I do know everybody. I have talked to everybody. And I will say this is a very active time in the industry where there are a lot of discussions going on, but not necessarily -- I don't want to try to indicate that there are imminent deals are things underway. I think that would be inappropriate even if there were to talk about that right now.

There are larger players in our industry that weren't there 5, 10 certainly when I joined the industry, and you mentioned people like Amazon Kiper and Apple and certainly, there wasn't a SpaceX, Starlink in those days. And those are kind of people with the assets and strategic ability to go kind of anywhere they want to go, which is a new thing for our industry, and I think that will be an interesting development. But I think we can exist within that environment very well and possibly even take advantage of that.

Got it. I definitely agree. Appreciate the color as always now.

Yes. Thanks.

The next question comes from Tim Horan with Oppenheimer.

Matt, just following up on that question. On the spectrum front, do you have a sense of what percentage of the world EchoStar Spectrum covers at this point? And I believe you and Globalstar are the only ones with really global spectrum coverage. If you can just elaborate on that, that would be great.

Yes. It's a complicated question. The way spectrum works is that the ITU provides -- think of it almost there's a directory at the ITU on a country-by-country basis of who has priority. And we do have like the #1 priority with our network in many countries developed over 30 years. And so we're -- a lot of places probably that Starlink will never be today because those countries can make decisions now as EchoStar spectrum is kind of applied for it to decide whether they want them to be there or not. So it's hard to say they are a certain place or not. They're certainly can support the oceans now that they couldn't before. They could do markets that really don't have a strong regulatory environment. But there's probably some markets that are going to say no to them. And that is not an easily describable position. It's going to take some time.

First of all, that spectrum is geostationary spectrum. So that requires it to be reallocated and reapproved. There will be other people that will try to move ahead of them in line. It might even be us in some cases. And so it will take some time for that to kind of be reallocated and reapproved. But I mean, I want to say I wanted to make it clear, I didn't want to spend all the time of how hard it will be for them to create a system. I wanted to be sure that investors understood that in no way are we in kind of denial of the potential of that solution. Certainly, their ability to create a much more global system, for example, than EchoStar could have done that on their own. Frankly, they have rockets and satellites and other things that others don't have. So it's going to be faster than we were anticipating in a network would have been deployed, but we were always expecting a network would be deployed that could do this over the long term. Just thought it would probably be 2035 instead of 2029 or whatever it turns out to be.

So I hope that's clear. And even when it is, I really think that as you kind of imply there will be lots of holes, they won't be probably still as global as we will. But I wanted to make it clear. Our goal isn't go straight at them and compete. It's to be complementary to them, doing things like Iridium NTN Direct, which we think has enduring value regardless of really what happens here.

That's really helpful. So on PNT, it seems like the opportunity now is much larger than it even was 2 or 3 years ago. I guess do you still think you can hit those revenue targets on PNT. And what does it kind of take to do that?

Yes, we do. I'm as bullish about actually more bullish about PNT than I've ever been. I will say it's a little lumpy as the business gets off the ground. There are some really big opportunities that we see ahead of us. It's just the timing of those aren't clear. I think you're going to see a number of announcements in the future, which will give you a bit more clear understanding of why we're as confident as we are about that. But a lot of trials going on.

We really do see we have a significant competitive advantage. I think we saw the Department of Transportation announcement this week with T-Mobile. I mean that's just a small fraction of the potential even in that market. And we're really seeing that the technology is very complementary to our IoT business. There's a lot of business, for example, in autonomous vehicles of all types that really need a really reliable timing and location signal to make sure that what they're depending on in GPS or any other GNSS system can be relied on.

So yes, I think we have a tremendous head start and a great opportunity. And I did tease out an opportunity that we're building on top of that. I don't really want to go too much more into the cybersecurity applications. But again, it's things that we can do on that platform that others can't do and that we think could create interesting new revenue streams, potentially even above and above the projections we provided before.

So the next few years, you're not going to really see any increased competition. You give us a sense of the revenue growth. Will it be better than this year? Are there any just some of the tailwinds or headwinds? I mean are we thinking mid-single-digit revenue growth? Any kind of color given you pull some of the longer-term guidance would be really helpful.

Yes. I mean I'd really like to focus more on providing that in February. I agree with you. I don't think that there is sort of a near-term direct competitive change. But I don't think we're getting any benefits from providing really long-term guidance that in a changing competitive environment. And so I'd really like to get back at least for some of the guidance. We'll always be probably a much longer-term guider than anybody else. I just think everyone should be providing as much long-term guidance as they can. And we're not going to completely pull off of that. But I just would rather not kind of try to lead you to some specific number over the next 2 or 3 years. But as you can tell, we're still pretty bullish on our cash flow projection. So I think you can back into it that we're not really coming off any kind of general trends here.

The next question comes from Gregory Mesniaeff with Kingswood Capital Partners.

Matt, you mentioned that you guys picked up about 70 new distribution partners have been signed. Can you talk about any changes in the terms with these third-party resellers in terms of revenue split or economics? And how is that trending as you pick up new distribution partners?

Yes. I mean when we pick up a new partner, and we describe someone who say, wants to integrate us into their drone systems or put us on a new ocean sensor or whatever it might be, I mean, there's a lot of new potential companies. Those are typically kind of -- we license their ability to deploy our technology. They're allowed to integrate us into maybe their chipset, maybe their end-to-end system and they can provision and turn on and there is typically a pricing schedule with that, but that really varies. That hasn't really changed in the 25 years. Each one taps into a fairly consistent, but flexible pricing system that allows them to provide a service to their customers at competitive rates.

So really, the terms aren't changing. I mean I do think that there are some big new opportunities, particularly as we get into the PNT area, where pricing is evolving for example. Some people would like to build in 5 to 10 years of PNT protection into a service in a sort of a capital model. We're open to doing that. Someone kind of pay as a user or by region. We're open to that. So those get built into the specific pricing contracts with the new partner, but I don't think that's any different now than it would have been in years past.

Next question comes from Chris Quilty with Quilty Analytics.

I want to follow up on the T-Mobile DOT announcement. You mentioned a fraction of the sites. I think it was 90% for the announcement. Can you give us a sense, I mean, of the sort of volume of units, just if you look at specifically the cellular market or took it out to the data center market, what sort of penetration do they need? Do they need in every site or a portion of the sites based upon the operations? And I'm just trying to get a scale for how big that might be?

Yes. I mean it's a global market to protect the cellular infrastructure from jamming. It's still starting to be recognized. I mean this specific contract, just to be more clear, the Department of Transportation is the agency within the U.S. government that is tasked with protecting critical infrastructure like GPS. And they look at the issue in the U.S. market and the potential for terrorism and other activities and are trying to find what are the solutions that are out there that can. And so they provided money to a number of different organizations, but we were kind of told and indicated that our -- with T-Mobile, we were one of the most ready and available today and the only really global solution that could kind of attack this problem on overall.

Specifically with T-Mobile, we had already been doing some work with them on some of their in-building systems, but this was a goal to demonstrate the value of our technology to protect macro base station sites. And so it's kind of doubled the number of applications, but really, as it's successful and demonstrated here and if there's any kind of issues, I could see this being deployed much more widely to thousands and thousands of cell sites. And I think you also see other cell phone companies that aren't protected today realize that this is a very cost-effective way to add a layer of protection to what is critical infrastructure. Our cell phones, our ability to operate terrestrially are really critical. So it's a big market.

And real quickly, I mean, in your core business, you're wholly focused on the wholesale market. Obviously, having acquired Catellus, they had a direct and indirect approach to the market. What's your go-to-market approach long term there?

In PNT directly or in that specific market?

No, in PNT Direct generally.

Yes, lots of new partner discussions, a lot of new areas. We're not necessarily going to go direct as well. I don't think there'll be many opportunities for that. We have developing new technology. I think you'll hear about that shortly that I think will expand the market tremendously. We've had some talk about putting our algorithms into their systems directly, but it will really it'll be similar to the way we go to market in a 2-way communication solution, but will be a much larger expanded base of of companies that will want to embed us into their solutions. So it will not be direct Still, it will be companies who like the ones today who are experts in the timing market or in the PNT market, there will be a lot of new companies as well that will want to integrate us into their solutions.

And to be clear, the ripe opportunity is that all the service and license revenue? Or is there a hardware component? And what does that mix look like over time?

There's a hardware component to it potentially, and we make margins on. But as anything else, where if there's high volume, which this is something that could become a high-volume business that will be high volume of kind of low-margin hardware equipment. But we really want to service revenue, global service revenue and whether that's baked into our partners' product or it's something we offer on a regional basis or something that's really developing right now.

Got you. And on the UAV market, you talked about it before, but ostensibly, you've got 2 opportunities, TT&C capability with like a Certus device but also a PNT or all PNT, why is that market not doing given the 100 to thousands of all PGA lying around Europe and the Middle East nowadays?

Well, I mean, in our IoT business, primarily, there's a number of partners who have put us into all kinds of drones. And I think that's expanding as the drone world. I mean that's obviously more of the defense space. And I think we are being used in that space. I think -- I do think PNT is still fairly new to that and will become an important part of that.

Things where that market really expands, whether it's delivery drones or the urban air mobility market or just a lot of other drone applications, I think, have other issues with beyond visual line of sight regulations, which are just now coming to 4, which we've been part of, and we're starting to see those getting clearer. We will be a big part of that as the BV LOS standard to merge. And I think that will make the market expand quite more broadly. But everything today is almost being done on waiver or on trials or prototypes and that sort of thing. And I think that's going to change in the coming years.

Got you. And if I can, one final ViaSat and SPACE 42 came out with their Equitus, whatever announcement for the joint venture company, still no Iridium mentioned in any of these announcements. But can you talk about how you view that effort? Is it something that you view as competitive or something you could contribute to? Can you contribute your spectrum to a pool there without causing interference or other issues with your network? What's your current thinking?

It's hard to tell what that really is yet. I mean it's an interesting idea. I've talked to Mark Dankberg, the CEO of ViaSat about it. I mean he tried to explain sort of the vision that they have for that. It's a very complicated vision. It requires a lot of new technology and new development and a lot of investment. I'm not really interested in investing in the opportunity and perhaps they're not even looking for that. But this concept has certainly not only not been tried, but it's going to be a very complicated business model to implement. And you're going to be competing with potentially some other well-funded and deep-pocketed company.

So again, as I said in my remarks, it's not really clear how big the broadband D2D market is. I mean I'm sure that there will be a market for the service, but how well the service will work, what people will pay for it, what the assets in space that you really have to cover to provide a long-term value, it isn't going to replace threshold communication. So it's going to really be an augmented field kind of application. And I know that there's really high valuations with some people that are still projected to even be in that business. But until we see how global those services are, what the value propositions are, I'm not interested in kind of necessarily jumping into that. But could we be part of that long term? I've been given the opportunity. That certainly -- if that does develop, it's going to be many years for it to develop into something that we could even think to participate in. So I'll just keep an eye on it and see what the market thinks about it.

Right now, I think you would probably agree with me that the investment world isn't going to throw money at new players right now. And I think that was really more demonstrated with Lincoln omni space getting together this week as well.

The next question comes from Hamed Khorsand with BWS.

Just one, on the consumer IoT side, are you able to differentiate the gains in the quarter coming from your partners that are not on a fixed contract with you?

You mean some smaller partners like Zolio and Bivy and everywhere and somewhere and a number of others that provide consumer IoT services?

Yes, versus your large customer that's on a fixed contract.

I mean, yes. I mean we know how many subscribers they are. It's a small part of sort of our overall IoT business. And they also are continuing to -- we're not seeing any real impact. I mean if the implication is what are they seeing, say, from D2D, and I'd say they're not really seeing much at all either at this point.

So they grew in the quarter?

I don't have that information at my -- there's different things going on with each of those. And so I'd really -- you'd have to ask each of them where they're at. I mean, we don't usually speak to any specific partners.

The next question comes from Louie DiPalma with William Blair.

I missed the earlier part of the call, but caught some of the Q&A. Given the rapidly changing industry dynamics, Matt, did you indicate that you plan on exploring strategic options? Or is the message just that your phone line is open?

I think what I said was is that we recognize the competition long term is in our business and that we will be pivoting to do more using our growing cash flow to acquire and make additional investments in areas which are unique and for which we can protect and for which we can provide value, and that gives us confidence in our ability to continue to grow and compete long term. That's a brief summary, but you probably should go through my comments in more detail because I think I was very specific about addressing the overall changing global marketplace and what our intentions were.

Sounds good. And has there been any discussion on Aireon being part of the FAA's air traffic control modernization?

Yes. I've talked to Don and, of course, we're on the board, and so we get a lot of visibility to that. The big new air track control system for which they're funding how small -- there is some discussion in there about things that Aireon would be particularly capable at. Things like in Alaska, the Caribbean and some areas. There's no discussions about Oceanic right now in terms of the -- which is really where I think Aireon would excel and for which there's a lot of airspace they could provide service. But there have been discussions, I think -- continuing discussions with the FA and Aireon about serving those areas long term. So I mean Aireon is pretty confident that, that long term, they'll be supplying that service as well. So yes, I think there's opportunities there for Aireon definitely.

A final one for your narrowband nonterrestrial network solution, will the chipsets be available next year? And what's the general timing of the -- like the Deutsche Telecom roaming partnership going live?

Yes, the chipsets will be available next year. In fact, we have prototype chipsets today. We're in discussions for more chipsets, and you'll see that over time with other manufacturers making those available as well. Not a lot of changes that they have to make to accommodate us, but the those will be available in '26 time frame. And we do plan on having the service available in '26 at some point in lot of testing to go, probably more the latter half instead of the former half, but there will be chipsets available to support that.

And will those chipsets be different from like mass market smartphone chipsets? And is there a timing on when like your spectrum band would be included in like mass market chipsets?

No, those are mass-market chipsets. These are the chipset that these suppliers that we'll be talking about the first that we've announced is Nordic. That is a standard Nordic chipset that will have our capability in it along with all the many others that they have in that same chipset, the terrestrial spectrum as well as satellite spectrum that would be in there. So if someone implements that, they can roam under our network.

The last question comes from Justin Lang with Morgan Stanley.

I'll just stick to one here. Matt, just coming back to the acquisition pipeline, my apologies if I missed this, but curious if you could just generally size some of the opportunities you're looking at or just give us some general parameters. Is this more about a series of smaller deals that give you to hold in new markets? Or are you really weighing something transformational, and that's the message we should take away?

Yes, I don't want to guide to either one of those necessarily. There are companies in both those categories. I would say I would lean towards more transformational deals as opposed to given the effort involved with very small things. We're not looking to radically change our business model, though. So I think I'm not going to be that different in terms of what we're looking at is that what I've told you in the past.

Our goal isn't to go retail, for example. I mean we're probably likely stay wholesale. But there are some there are some business areas that are complementary for which we can take a bigger part of the value chain and for which would lead us into using our network in new ways. Some of those are big and some of those are small. But we'll let you know when we get a bit more specific about those things.

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

Yes, I know it is a bit longer. I just wanted to -- there were a lot of questions, and I wanted to give everybody a chance to talk about it, given the changing nature of the industry and some of the things we talked about today. I hope you since our continued enthusiasm and confidence, I mean, it was a big announcement recently, and I know the market reacted to it, but I really think we have a strong potential and a strong future ahead of us and a lot of opportunity ahead. And we're looking forward to talking to you, I guess in the meantime and certainly at our next quarterly call. Thanks for joining us.

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