Iridium Communications Prepares for Q3 Earnings Announcement on October 17

Iridium Communications IRDM will unveil its third-quarter 2024 earnings report on October 17, prior to the market opening.

A Look at the Revenue and Earnings Expectations

The Zacks Consensus estimate anticipates revenues of $205.7 million, marking a 4.1% increase from the previous year’s figure. Earnings per share (EPS) are expected to be 20 cents, consistent with estimates from the past two months. This time last year, the company reported a loss of 1 cent per share.

In the last four quarters, IRDM has surpassed the Zacks Consensus Estimate twice, fell short once, and matched expectations in another; overall, the average surprise has been a substantial 202.2%. Over the past year, Iridium’s shares have experienced a decline of 31.2%, contrasting with a small gain of 1.3% within its sub-industry.

Image Source: Zacks Investment Research

Factors Influencing Q3 Performance

Iridium appears poised for growth, primarily driven by the Service segment’s rising revenues and a growing subscriber base. Revenues for this segment are projected to reach $155.5 million, reflecting a 2.3% bump from the same period last year.

A significant contributor to growth is the increase in commercial service revenues, which are expected to total about $129 million—a 2.8% increase compared to the previous year. This rise is largely due to high demand for services such as voice and data transmission, IoT data, and broadband services.

Particularly, the demand for Iridium’s push-to-talk services has strengthened the voice and data revenue segment. Additionally, the commercial IoT revenues have likely benefited from ongoing demand for personal satellite communication and traditional industrial services.

The introduction of the new Iridium Satellite Time and Location offering is anticipated to enhance revenues from hosted payloads and other data services, further boosting overall performance.

Total revenues from Engineering and Support are also expected to rise due to heightened activity with the U.S. government, specifically related to the Space Development Agency contract. IRDM anticipates a revenue increase from the EMSS contract in the latter half of 2024 following a contractual adjustment in mid-September, with an estimated $27.3 million for the quarter—a rise of 8.1% from last year.

Additionally, Subscriber Equipment revenues should stabilize, projected at $21.2 million for the quarter, up 4% year-over-year. This normalization is expected amid supply-chain issues and customer inventory adjustments.

However, risks loom on the horizon. Ongoing global economic challenges, rising inflation, stiff competition within satellite communications, and increased operational costs present potential hurdles for the company.

Recent Key Announcements

On September 25, 2024, Iridium revealed that the 3rd Generation Partnership Project (3GPP) approved its proposal to enhance the Narrowband Internet of Things (NB-IoT) capabilities for Non-Terrestrial Networks as part of the official Work Plan for 3GPP Release 19, scheduled to finish in Q4 2025. This move is aimed at extending global connectivity through Iridium NTN Direct, expected to be the first global 5G NB-IoT service.

On September 19, 2024, the company authorized its largest stock repurchase ever—$500 million—bringing the total buyback allowance to $1.5 billion, valid through December 31, 2027.

Additionally, on September 3, 2024, Iridium launched the Iridium Certus GMDSS, enhancing maritime safety and communication standards with a more efficient network system for ships.

What the Model Predicts for Q3

The current model does not convincingly suggest an earnings beat for Iridium in this reporting period. A positive Earnings ESP combined with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold) would typically suggest better earnings prospects. However, this situation is different.

Earnings ESP: Iridium holds an Earnings ESP of 0.00%.

Zacks Rank: Presently, Iridium is rated #2.

Potential Stocks to Watch

Other companies to keep an eye on this earnings season include:

Equifax EFX, with an Earnings ESP of +1.56% and a Zacks Rank #2. Its earnings and revenue estimates for Q3 2024 stand at $1.84 per share and $1.44 billion, respectively. Shares of EFX have surged 58.5% over the past year.

Netflix NFLX currently shows an Earnings ESP of +1.37% and holds a Zacks Rank #2. Expected results for Q3 2024 are $5.07 per share in earnings and $9.77 billion in revenues, with shares appreciating 100.3% year-over-year.

Abbott Laboratories also has an Earnings ESP of +0.18% and a Zacks Rank #2. Its Q3 earnings projection is set at $1.20 per share and $10.56 billion in revenues. Shares of ABT have risen 25.9% in the past year.

To read this article on Zacks.com click here.