Iridium Q2 Earnings Lag, Sales Up Y/Y, Rocket Lab Acquisition in Focus

The most compelling aspect of the quarter is Iridium's progress across four major growth initiatives, which is likely to open new market avenues. Iridium introduced the Iridium 9604 tri-mode communication module, combining satellite connectivity, LTE-M cellular and GNSS positioning. This integrated approach simplifies hardware development while lowering deployment costs for enterprise customers. Later this year, IRDM also plans to launch Iridium NTN Direct, enabling standards-based direct-to-device satellite connectivity.

The recent commercial launch of Iridium's PNT ASIC significantly expands opportunities beyond communications. If adoption accelerates, Assured PNT could evolve into an entirely new recurring revenue platform. Iridium continues to strengthen its role within the U.S. defense infrastructure. Its work supporting the Space Development Agency's Proliferated Warfighter Space Architecture demonstrates that Iridium is becoming an increasingly strategic technology partner rather than simply a communications provider. As defense spending shifts toward space-based infrastructure, this business could generate substantial long-term opportunities.

The major strategic move was completing the acquisition of Aireon LLC, operator of the world's only space-based ADS-B aircraft surveillance network. Management expects the acquisition to contribute approximately $100 million in annual service revenue and $30 million in annual OEBITDA.

Segmental Details

Total Service revenues rose 4% year over year to $161.3 million. Service revenues contributed 72% to total revenues in the second quarter. Our estimate for the metric was $159.9 million. Commercial services generated $133.7 million, representing 59% of total company revenue. Several business verticals contributed. Commercial IoT revenue increased 5%, hosted payload and data services rose 14% and voice and traditional data services grew 3%. Government services continue providing stability.

Revenue from U.S. government customers increased 3% to $27.6 million, primarily due to contractual pricing increases under the Enhanced Mobile Satellite Services (EMSS) contract. The U.S. government remains Iridium's largest customer and represents nearly all engineering and support services revenue. Importantly, management expects renewal of the EMSS contract by March 2027. Given the increasing geopolitical tensions and growing military reliance on resilient satellite communications, this business should remain a dependable source of recurring revenue.

Subscriber Equipment sales increased 7% to $20.8 million. We projected the figure to be $18.2 million.

Engineering and support revenues jumped 3% to $43.1 million, led by Iridium’s expanding work with the Space Development Agency, reinforcing its emphasis on growth driven by national security programs. Our estimate was $42 million.

Other Details

Total operating expenses were $191.2 million compared with $166.6 million in the prior-year quarter, primarily due to higher depreciation and amortization costs and selling, general and administrative expenses.

OEBITDA remained relatively stable at $119.1 million, only slightly below last-year quarter’s $121.3 million. The decline was largely due to a change in compensation structure, shifting to fully cash-based incentives. This added about $3.9 million in expenses for the quarter. 

Operating income came in at $34 million compared with $50.3 million reported in the year-ago quarter.

The company ended the quarter with 2,627,000 billable subscribers, a 6% increase from the previous-year quarter. Commercial IoT remained the primary growth engine as enterprises continue deploying connected sensors and remote monitoring systems across industries such as logistics, agriculture, energy and environmental monitoring. The continued growth of commercial IoT subscribers, which increased 9%, is encouraging.

Capital Structure Remains Manageable

Iridium continues investing aggressively. Capital expenditures totaled $21.8 million during the quarter. Following the Aireon acquisition, debt increased as expected, with gross debt reaching approximately $1.8 billion and cash balance of $184.2 million.

As part of its capital return program, Iridium paid a second-quarter dividend of 15 cents per share on June 30, 2026, distributing $16.2 million to shareholders.

IRDM’s Zacks Rank

Iridium currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performances

America Movil, S.A.B. de C.V. AMX reported net income per ADR of 47 cents for the second quarter of 2026, up from 38 cents in the prior-year quarter. The earnings figure missed the Zacks Consensus Estimate of 52 cents. Total quarterly revenues rose 3.1% to Mex$241,071 million, driven by rapid momentum across the Service and Equipment segments.

BlackBerry Limited BB reported first-quarter fiscal 2027 non-GAAP earnings per share (EPS) of 4 cents. The figure beat the company’s estimate of 2-3 cents. In the year-ago quarter, it reported a non-GAAP EPS of 2 cents. The Zacks Consensus Estimate was pegged at 3 cents per share. BlackBerry generated $152.9 million in fiscal first-quarter revenue, representing 26% year-over-year growth.

Ericsson ERIC reported second-quarter 2026 results, wherein earnings met the Zacks Consensus Estimate, while revenues missed the same. Adjusted earnings were SEK 1.22 (13 cents) per share, in line with the consensus estimate. Revenues were SEK 52.7 billion ($5.62 billion), down 6% year over year and 2.56% below the Zacks Consensus Estimate of $5.77 billion. Organic sales declined 1% year over year primarily due to lower IPR licensing revenues following a non-recurring benefit in the prior-year quarter.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research