IRDM earnings analysis
What we found in IRDM's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Iridium delivered 4% Q2 revenue growth to $225.2 million, led by IoT, voice/data and hosted-data services, while the subscriber base rose 6% year over year. However, operating income declined 32% and net income fell 56% to $9.7 million as merger and Aireon-related expenses drove SG&A 50% higher; operating margin contracted from 23.2% to 15.1%. Liquidity improved to $184.2 million of cash and $185.8 million of first-half operating cash flow, but the pending Rocket Lab merger, the Aireon acquisition and EMSS renewal introduce substantial execution, financing and contract risks.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue grows 4% and tops $225 million
- Q2 revenue rose $8.3 million, or 4%, year over year to $225.2 million, accelerating from $219 million in Q1 2026. Services revenue increased $5.8 million (4%) to $161.3 million, while equipment revenue increased $1.3 million (7%) to $20.8 million.
- IoT and hosted-data services drive growth
- Commercial services rose $4.9 million, or 4%, to $133.7 million. IoT data grew $2.3 million (5%) to $47.1 million on 167,000 additional subscribers, and hosted payload/other data grew $2.0 million (14%) to $16.5 million.
- Subscriber base expands 6% year over year
- Total billable subscribers reached approximately 2,627,000 at June 30, 2026, up 144,000, or 6%, from approximately 2,483,000 a year earlier. Commercial IoT subscribers increased 167,000 to 2,091,000.
- Gross margin improves year over year
- Gross margin was approximately 71.2%, versus 70.1% in Q2 2025 and 71.4% in Q1 2026. Cost of services fell $2.3 million, or 4%, to $51.3 million, partly offsetting a $2.2 million, or 19%, increase in equipment costs.
- Operating cash flow and cash balance remain solid
- First-half operating cash flow remained strong at $185.8 million, only $4.9 million below the prior-year $190.7 million. Cash and equivalents increased to $184.2 million at June 30, 2026 from $96.5 million at December 31, 2025.
- Aireon acquisition expands aviation platform
- Iridium closed the acquisition of the remaining 60.5% of Aireon on July 2 for approximately $366.7 million, including $183.4 million of deferred, zero-interest seller financing. Management describes the asset as a step toward a global aviation-safety platform.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Transaction expenses drive sharp margin decline
- Operating income fell $16.3 million, or 32%, to $34.0 million and operating margin compressed to 15.1% from 23.2% a year earlier. SG&A increased $22.4 million, or 50%, to $67.0 million, including $14.3 million of Rocket Lab/Aireon transaction costs.
- Merger timing, execution and termination-fee risk
- The proposed Rocket Lab merger is not expected to close until mid-2027 and is subject to stockholder, FCC, antitrust, and foreign regulatory approvals. Iridium may owe Rocket Lab a $223.6 million termination fee under specified circumstances, while it has already incurred $15.0 million of transaction costs in the first half.
- Aireon integration and added leverage risk
- Aireon introduces aviation surveillance, operational, regulatory and liability risks following the $366.7 million acquisition. Post-closing obligations include a $183.4 million seller term loan due one year after closing and Aireon term loans with a $154.7 million principal balance as of the filing date.
- Broadband and IoT ARPU pressure
- Commercial broadband revenue declined $1.0 million, or 8%, to $11.7 million as ARPU fell to $243 from $260, reflecting increased use of lower-priced companion plans. Commercial IoT ARPU also fell to $7.64 from $7.83 despite 167,000 subscriber additions.
- Government contract renewal risk
- The $110.5 million annual EMSS government-services contract expires in September 2026, though the government can extend it for six months at the same rate. Management expects a replacement contract by March 2027, leaving renewal and timing risk.
- High debt load and floating-rate exposure
- Debt was approximately $1.8 billion at June 30, including $1.8 billion of term-loan borrowings before financing costs; the company also drew its full $100.0 million revolver on July 1. Every 25-basis-point SOFR increase above the cap adds an expected $1.9 million of annual interest expense on the unhedged term loan portion.
What they reported.
What the company itself reported, taken out of the document.
- Gross margin
- 71.23%
- Operating margin
- 15.1%
- Segment
- Services revenue: $161.3 million, up $5.8 million (4%) year over year.
- Segment
- Subscriber equipment revenue: $20.8 million, up $1.3 million (7%) year over year.
- Segment
- Engineering and support services revenue: $43.1 million, up $1.3 million (3%) year over year.
- Segment
- Commercial services revenue: $133.7 million, up $4.9 million (4%) year over year; government services: $27.6 million, up $0.8 million.
- Segment
- Commercial IoT data: $47.1 million, up $2.3 million (5%); voice and data: $58.4 million, up $1.6 million (3%); hosted payload/other data: $16.5 million, up $2.0 million (14%); broadband: $11.7 million, down $1.0 million (8%).
What they said about what is next.
No quantitative revenue or EPS outlook was provided in the 10-Q. Management expects 2026 equipment revenue to be in line with 2025, engineering and support-services revenue to be higher than 2025, and SG&A to increase because of professional/advisory fees during the Rocket Lab transaction and Aireon integration. The company expects to enter a new EMSS contract by March 2027, ahead of the current contract's September 2026 expiration.
The filing reads worse than the one before it.
What came before.
- 10-Q · April 23, 2026
- Iridium reported Q1 2026 revenue of $219.057 million, up $4.179 million (+2%) versus Q1 2025, driven by commercial IoT and voice growth and higher engineering and support services. Despite revenue growth, operating…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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