Well, that was not what we were expecting. “Beat and affirm” doesn’t typically warrant a 16% selloff unless a stock is priced to perfection.  Oddly, however, IRDM’s short interest was only 2%.
So, what was Iridium’s principal offense in the quarter (other than failing to raise guidance)? Equipment revenues unexpectedly declined 34% sequentially while finished good inventories swelled to a record high. But everyone knows that equipment revenues are lumpy, so the likely source of investors’ ire was…subscriber growth. Net additions have now declined in four of the past five quarters. Can a new product tsunami targeted at aviation, consumer and maritime drive a y/y increase in net adds in 2024?  If management’s September Investor Day can’t convince investors that the growth story is intact, then perhaps a new $400 million buyback program can?
Service revenues grew at a double-digit rate for the 9th consecutive quarter (up 13.5%), with all three segments growing double-digit.
Equipment sales unexpectedly declined 19% y/y. Mgmt still forecasting flat equipment revenues in 2023.
IoT revenues up ~13%. Net adds declined 3,000 y/y to 77,000 (our forecast 95,000).
Voice & Data revenues up ~13% due primarily to price increase (ARPU up 9.5%). Net adds totaled 10k vs. 16k in the year-ago quarter.
Broadband revenues up 16%. Subscribers up 14% y/y.
Engineering & Support revenues up ~2.5x, driven by the SDA ground contract and DTD development efforts with Qualcomm.