IRDM Q1 Earnings Call: Revenue Beats, Tariff Uncertainty and IoT Momentum Shape Outlook

Satellite communications provider beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 5.4% year on year to $214.9 million. Its non-GAAP profit of $0.27 per share was 3.6% below analysts’ consensus estimates.

Is now the time to buy IRDM? Find out in our full research report (it’s free).

StockStory’s Take

Iridium’s first quarter results were influenced by ongoing growth in its recurring service revenues, notably from IoT and new position, navigation, and timing (PNT) offerings, while equipment sales tracked within expected ranges. CEO Matt Desch cited strong partner engagement and a growing product ecosystem as contributors to overall service expansion, offset by some softness in commercial broadband and equipment, partly due to regulatory and funding changes impacting certain customers.

Looking ahead, management emphasized navigating evolving U.S. trade tariffs and supply chain adjustments, highlighting efforts to mitigate cost impacts through logistics changes and inventory management. While reaffirming full-year operational EBITDA guidance, CFO Vince O’Neill acknowledged continued tariff uncertainty and indicated that the company’s ability to absorb additional costs would depend on the final regulatory landscape and implementation timing. Desch stated, “We’re responding to this in a fairly deterministic way,” but flagged the potential for cost increases if tariff scenarios worsen.

Key Insights from Management’s Remarks

Iridium’s management detailed how partner momentum, product mix, and regulatory changes shaped first quarter performance. Management also discussed adaptation to evolving trade policy and competition in satellite communications.

• Recurring service revenue expansion: Growth was led by Iridium’s IoT business and new PNT (positioning, navigation, and timing) services, with partners showing high interest in integrating satellite-based timing and location solutions.
• Equipment cost headwinds from tariffs: Management outlined how recently implemented and fluctuating U.S. tariffs on equipment imports could impact costs, but noted that supply chain changes—such as expanding third-party logistics in Europe—are expected to minimize exposure for most non-U.S. shipments.
• IoT contract and subscriber trends: While structural deactivations are underway due to a partner’s shift in retail plans, management confirmed these have no revenue impact under the current contract and expect subscriber growth to resume once the transition is complete.
• Competitive differentiation: Iridium emphasized its unique global L-band spectrum and resilient network, positioning its services as complementary to emerging players like Starlink, particularly for mission-critical and safety applications where global coverage is required.
• Engineering and government business: Growth in engineering and support revenue was driven by U.S. government projects, such as Space Development Agency contracts, with expectations that this line will remain stable at current elevated levels for the remainder of the year.

Drivers of Future Performance

Management’s outlook for the next quarter and remainder of the year centers on service revenue growth, cost management amid tariff uncertainty, and expanding new offerings in IoT and PNT.

• Tariff and regulatory risk: The company’s ability to maintain margins will depend on the final structure and timing of U.S. tariffs, with mitigation efforts underway but possible incremental cost pressures if higher rates are enforced.
• IoT and D2D expansion: Launches of Iridium NTN Direct and expansion into standards-based IoT chipsets are expected to drive new market penetration and incremental revenue, with material impact projected from 2026 onward.
• Government and safety services: Continued execution on U.S. government contracts and broadening adoption of Certus GMDSS terminals in maritime and aviation safety applications could provide stable, recurring revenue streams and offset commercial broadband headwinds.

Top Analyst Questions

• Ric Prentiss (Raymond James): Asked if longer-term tariffs could affect subscriber growth or service revenue; management said demand is stable, with no current indication of market softening due to tariffs.
• Edison Yu (Deutsche Bank): Sought clarification on timing and magnitude of tariff impacts; management detailed cost assumptions and emphasized ongoing mitigation efforts and the unpredictability of future trade policy.
• Colin Canfield (Cantor): Inquired about government exposure and historical resilience during economic downturns; management explained that government-related revenue is a small portion and that past shocks had limited impact on growth.
• Chris Quilty (Quilty Space): Asked if the transition from hardware to standards-based IoT/D2D devices will reduce equipment revenue; management confirmed hardware is a service driver and expects less focus on equipment margins as the model evolves.
• Mathieu Robillard (Barclays): Queried about the timeline for broadband stabilization; management expects normalization as more Certus GMDSS terminals come to market, with meaningful improvement anticipated in 2026.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will be monitoring (1) Iridium’s ability to offset or absorb evolving tariff-related costs through supply chain and pricing actions, (2) the ramp-up and customer adoption of Iridium NTN Direct and PNT solutions, and (3) stabilization or growth in commercial broadband and IoT subscriber metrics after the current contract transition. Progress in these areas will help clarify the company’s growth trajectory and margin resilience.

Iridium currently trades at a forward P/E ratio of 18×. Is the company at an inflection point that warrants a buy or sell? See for yourself in our free research report.

Stocks That Trumped Tariffs in 2018

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.