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2023 ReportPeers and competitors of Iridium Communications:
Telkonet Inc.IRIDIUM COMMUNICATIONS INC.
2023 ANNUAL REPORT
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Company Profile
Company Profile
The world’s only truly global mobile satellite communications company
The world’s only truly global mobile satellite communications company
Iridium Communications Inc. is the only commercial provider of voice and data satellite communications
Iridium Communications Inc. is the only commercial provider of voice and data satellite communications
offering true global coverage. Iridium’s L-band satellite network provides reliable service to mobile assets
offering true global coverage. Iridium’s L-band satellite network provides reliable service to mobile assets
where terrestrial wireless and wireline networks are limited or do not exist. As a technology innovator
where terrestrial wireless and wireline networks are limited or do not exist. As a technology innovator
and market leader, Iridium enables connections between people, organizations and assets to and from
and market leader, Iridium enables connections between people, organizations and assets to and from
anywhere, in real time.
anywhere, in real time.
Iridium’s architecture of 66 low-earth orbiting (LEO) satellites operates as a fully meshed, cross-linked
Iridium’s architecture of 66 low-earth orbiting (LEO) satellites operates as a fully meshed, cross-linked
network. This network’s one-of-a-kind architecture minimizes the need for local ground infrastructure and
network. This network’s one-of-a-kind architecture minimizes the need for local ground infrastructure and
facilitates the global reach of our services to allow connectivity in regions where we have no physical
facilitates the global reach of our services to allow connectivity in regions where we have no physical
presence. The company continues to launch new, innovative products and services supported by its second
presence. The company continues to launch new, innovative products and services supported by its second
generation of satellites, which support more capacity and higher data speeds.
generation of satellites, which support more capacity and higher data speeds.
®
Reaching over oceans, through airways and across the polar regions, Iridium(cid:31)(cid:31) solutions are ideally suited
Reaching over oceans, through airways and across the polar regions, Iridium(cid:31)(cid:31) solutions are ideally suited
for industries such as maritime, aviation, emergency services, mining, forestry, oil and gas, heavy equipment,
for industries such as maritime, aviation, emergency services, mining, forestry, oil and gas, heavy equipment,
transportation and utilities. Iridium also provides service to subscribers from the U.S. government, as well as
transportation and utilities. Iridium also provides service to subscribers from the U.S. government, as well as
other civil and government agencies around the world.
other civil and government agencies around the world.
Together with its ecosystem of about 500 partner companies, Iridium delivers an innovative and rich
portfolio of reliable solutions for markets that require truly global communications.
Together with its ecosystem of about 500 partner companies, Iridium delivers an innovative and rich
portfolio of reliable solutions for markets that require truly global communications.
®
Focused on Growth
Focused on Growth
• We compete in attractive and growing markets with favorable competitive dynamics.
• We compete in attractive and growing markets with favorable competitive dynamics.
• We benefit from a large, highly profitable recurring service revenue base and enjoy significant operating
• We benefit from a large, highly profitable recurring service revenue base and enjoy significant operating
leverage created by a largely fixed-cost infrastructure.
leverage created by a largely fixed-cost infrastructure.
• We anticipate significant new revenue and subscriber growth emanating from the innovative new
• We anticipate significant new revenue and subscriber growth emanating from the innovative new
products and services supported by our upgraded satellite constellation.
products and services supported by our upgraded satellite constellation.
• We believe that increasing mobile penetration creates additional demand for the mobile satellite services
• We believe that increasing mobile penetration creates additional demand for the mobile satellite services
industry. A 2023 study by the GSM Association projects unique mobile subscribers, excluding cellular IoT,
industry. A 2023 study by the GSM Association projects unique mobile subscribers, excluding cellular IoT,
will reach 6.3 billion by 2030.
will reach 6.3 billion by 2030.
2023 Operating Highlights
2023 Operating Highlights
• Generated record total revenue of $790.7 million in 2023.
• Generated record total revenue of $790.7 million in 2023.
• Surpassed 2,279,000 worldwide subscribers, a five-year compound annual growth rate of 15%.
• Surpassed 2,279,000 worldwide subscribers, a five-year compound annual growth rate of 15%.
• IoT data subscribers have grown at a 21% compound annual growth rate over the last five years,
• IoT data subscribers have grown at a 21% compound annual growth rate over the last five years,
and now represent about 80% of Iridium’s commercial customer base.
and now represent about 80% of Iridium’s commercial customer base.
Forward-Looking Statements: Our shareholder letter and other portions of this annual report include “forward-looking statements” as defined in the
Private Securities Litigation Reform Act of 1995 regarding the results, performance or achievements of Iridium. Words such as “will,” “expect,” “believe” and
similar expressions are used to identify these forward-looking statements. Such statements involve risks, uncertainties and other factors that may cause
the actual results, performance or achievements of Iridium to differ materially from those expressed in such forward-looking statements. These risks and
uncertainties include, but are not limited to, those factors listed in the “Risk Factors” sections of our Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q (available through the Investor Relations section of our website at iridium.com). Our forward-looking statements speak only as of the date of
the letter or as of the date they are made, and we undertake no obligation to update them.
Forward-Looking Statements: Our shareholder letter and other portions of this annual report include “forward-looking statements” as defined in the
Private Securities Litigation Reform Act of 1995 regarding the results, performance or achievements of Iridium. Words such as “will,” “expect,” “believe” and
similar expressions are used to identify these forward-looking statements. Such statements involve risks, uncertainties and other factors that may cause
the actual results, performance or achievements of Iridium to differ materially from those expressed in such forward-looking statements. These risks and
uncertainties include, but are not limited to, those factors listed in the “Risk Factors” sections of our Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q (available through the Investor Relations section of our website at iridium.com). Our forward-looking statements speak only as of the date of
the letter or as of the date they are made, and we undertake no obligation to update them.
Cover: Dramatization of Iridium use case.
Cover: Dramatization of Iridium use case.
Financial Highlights
(in millions, except for subscriber data)
2019
2020
2021
2022
2023
Iridium Communications Inc.
Total Revenue
Total Service
Subscriber Equipment
Engineering and Support Service
Net Income (Loss)
Operational EBITDA (OEBITDA)*
Subscribers
Capital Expenditures
Net Debt
$0,560.4 $0,583.4 $0,614.5 $0,721.0 $0,790.7
$0,447.2 $0,463.1 $0,492.0 $0,534.7 $0,584.5
$00,82.9 $00,86.1 $0,092.1 $0,134.7 $0,105.1
$00,30.4 $00,34.2 $0,030.4 $0,051.6 $0,101.1
$ (162.0) $ 0 (56.1) $0,0(9.3) $0,008.7 $,0015.4
$0,331.7 $0,355.6 $0,378.2 $0,424.0 $0,463.1
1,300,000 1,476,000 1,723,000 1,999,000 2,279,000
$0,117.8 $00,38.7 $0,042.1 $0,071.3 $,0073.5
$1,586.4 $1,392.9 $1,300.2 $1,335.9 $1,428.1
Commercial
$0,350.0 $0,362.2 $0,388.1 $0,428.7 $0,478.5
Service Revenue
$0,173.1 $0,168.6 $0,175.6 $0,193.1 $0,219.2
Voice and Data
$00,96.4 $00,97.0 $0,110.9 $0,125.0 $0,141.0
IoT Data
$00,30.5 $00,36.0 $0,043.0 $0,051.1 $0,057.9
Broadband
Hosted Payload and Other Data Services $00,50.0 $00,60.6 $0,058.6 $0,059.5 $0,060.3
1,165,000 1,324,000 1,576,000 1,860,000 2,134,000
Subscribers
352,000 350,000 370,000 397,000 408,000
Voice and Data
802,000 962,000 1,193,000 1,448,000 1,709,000
IoT Data
15,000 16,700
13,200
Broadband
10,800
11,700
Government
Service Revenue
Subscribers
Voice and Data
IoT Data
$00,97.1 $0,100.9 $0,103.9 $0,106.0 $,0106.0
135,000 152,000 147,000 139,000 145,000
60,000 62,000
65,000
79,000 83,000
82,000
57,000 62,000
78,000 90,000
Note: Totals may differ from the sum of the individual items due to rounding.
* See inside back cover and Investor Relations webpage at www.iridium.com for a discussion and reconciliation of this and other non-GAAP financial measures.
Global Subscribers
(subscribers in thousands)
Total Service Revenue
(dollars in millions)
Operational EBITDA
(dollars in millions)
2,500
2,000
1,500
1,000
500
0
5 %
R : 1
G
A
r C
a
e
5 - Y
2019 2020 2021 2022 2023
$
700
600
500
400
300
200
100
0
5 - Y e a r C A G R : 8 %
2019 2020 2021 2022 2023
$
500
400
300
200
100
0
- Y e a r C A G R : 9 %
5
2019 2020 2021 2022 2023
Commercial IoT Data
Commercial Voice and Data
Government IoT Data
Government Voice and Data
Broadband
Commercial
Government
OEBITDA*
1
Dear Fellow Shareholders:
2023 marked our network’s 25th year of operational service. This
milestone event has a special significance to the “Iridium Family,” which
includes our employees, business and technology partners and network
users. Many of these constituents have dedicated their entire work lives
to Iridium’s technology and its success. Young engineers launched their
careers with the original Iridium constellation; service resellers and
developers saw their businesses flourish with Iridium’s brand recognition
and evolving services; and customers – many of whom are wholly reliant
on Iridium technology – were able to confidently execute on their
priorities given the enhanced capabilities that the Iridium NEXT program
delivered. This anniversary offers a time for reflection, but also serves as
a mark of distinction for the “Iridium Family” and our enduring network.
As I enter my 17th year as CEO at Iridium, I too have much to reflect
on. Over the years, Iridium has met the capital challenges of a startup
company, acclimated to an ever-changing competitive landscape,
modernized technology to evolve with customer needs, and, most
recently, reinvented itself through the replacement of our entire satellite
constellation. Through it all, Iridium has served its constituents well and
emerged a venerable leader in the satellite industry.
During this time, I was fortunate to be surrounded by strong
leadership that shared my vision and optimism, as well as a skilled team
of professionals who remain passionate about Iridium’s technology and
mission. This has allowed us to grow Iridium’s family of service resellers,
value-added developers and manufacturers to address the changing
needs of our users and truly leverage the capabilities of Iridium’s
one-of-a-kind network.
Today, Iridium is among the largest satellite service companies in
the telecommunications industry, based on subscriber count, market
capitalization and free cash flow, and we are a heralded story in low-earth
orbit. We have eclipsed two million subscribers, generated approximately
$1 billion in free cash flow over the past four years and are now returning
capital to our shareholders through quarterly dividend payments and
share repurchases. This progress is appreciated by investors who value
the high quality and consistency of our financial performance.
In recent years, I have used this letter to highlight the significant
changes impacting the satellite industry, including fresh business ideas,
new capital inflows, and excitement for new consumer applications that
expand overall demand. These dynamics have been good for the satellite
industry and for Iridium’s growth. However, the old axiom that “space is
hard” endures. A proliferation of space startups seeking capital, as well
as investor excitement over some real strides in the industry, led to
overinvestment, which looks like it may have now run its course.
2 Iridium Commu n icat ions In c.
Matthew J. Desch
Chief Executive Officer
“Over the years, Iridium
has met the capital
challenges of a startup
company, acclimated
to an ever-changing
competitive landscape,
modernized technology
to evolve with customer
needs, and, most
recently, reinvented
itself through
the replacement
of our entire satellite
constellation.”
Many startups were adept at attracting capital, but
few have the combination of leadership, execution,
sustained demand and cash flow needed to survive.
I regret that there is a consistency in investment cycles
touching the satellite industry, and it is more common
for startups to fade before they deliver on their visions.
A ROUGH START
At the other end of this spectrum sits Iridium: An idea
that was met with great excitement – and some
skepticism as well – when conceived in the late 1980s.
Dreamt up by engineers using unproven technology
and low-earth orbits in hopes of making global
communications more reliable, the technology was
ahead of its time, and the application of services so
narrow that it would take another ten years of collaboration
with partners and commercial operations before the
value and financial expectations of the service would
be broadly appreciated.
From this rough start, the Iridium network has become
the foundation of a large, diversified company that now
sits as one of the most valuable publicly traded satellite
service providers in the world. Iridium is not without
competition, but we have always distinguished ourselves
by the unique capabilities of our network architecture,
and our reliable technology is widely recognized by
business partners and their customers who select Iridium
because it is, in its lane, without equal.
We remain singularly focused on global connectivity
and devoted to network reliability. This has supported
our network’s use and adoption across many industries.
While Iridium’s services are highly resilient and ideal
for standalone applications, we often sit side-by-side
with other satellite or terrestrial technologies as a
companion or failsafe. This utility has allowed Iridium
to flourish as the benchmark for mobile satellite
communications on maritime vessels and aviation
assets, where mission-critical applications and safety
services are paramount.
Our path to growth and financial stability has also
been tied to our highly focused wholesale business
strategy, which differentiates Iridium from other service
providers. As a wholesaler, we enjoy collaborative
relationships with partners that sell our service and
develop their own solutions around our global network.
Satellite technology facilitates monitoring and control of remote
assets. Iridium Messaging Transport®, a native IP protocol for cloud
computing, can efficiently relay performance and sensory data to
controllers for real-time analysis, exception reporting and archive.
This functionality is enhanced by Iridium CloudConnect, which
helps to reduce engineering work, lower operating costs, and
reduce time to develop new products and services.
“ The Iridium network has
become the foundation of a large,
diversified company that now sits
as one of the most valuable publicly
traded satellite service providers
in the world.”
Large industrial equipment manufacturers rely on Iridium’s IoT
data services to monitor assets operating across the globe.
In industries like agriculture, construction, forestry and mining,
Iridium’s low-earth, polar-orbiting satellites help to minimize
transmission blind spots and maintain connectivity to enhance
operational efficiency and safety.
2023 Annual Repor t 3
These business partners know their customers better than
anyone else and leverage their deep understanding of
industry dynamics and client needs to fashion solutions
that use Iridium technology. This symbiotic relationship
has allowed Iridium to expand from our roots in voice
services to new applications in sensory data, location,
command-and-control, and IoT, where small sips of data
are critical to operational performance and success.
LISTENING FOR OPPORTUNITIES
Iridium is committed to long-term relationships and
customer satisfaction – both have become marks of
distinction for our service quality and allowed us to
attract new business partners and subscribers.
By understanding how our business partners and their
customers use our network, we have been able to make
informed decisions about where to invest, choosing
network capabilities that favor compact product designs
and energy efficiency. Our partners have told us these
attributes will propel their business growth and that
Iridium filled these requirements better than other
service providers. This feedback loop also spurred our
movement beyond satellite phones into push-to-talk (PTT)
and led to our de facto leadership in satellite IoT, as we
continued to invest in mobile technology and applications,
like power-efficient small form factor modems with
improved throughput.
By listening, we learned where the greatest
opportunities lie for our business. This aptitude for
collaboration continues to guide our technological
investment and has led to larger stakes in novel
technologies that leverage our L-band network –
companies like Aireon and Satelles – two well-placed
investments with commercial and government utility
that have expanded our service portfolio.
EMERGING OPPORTUNITIES IN IOT
Among the strongest trends we’ve observed in the
satellite industry is the increased popularity of personal
communications devices. The desire to remain connected,
even while “off the grid,” is driving demand for new
services and devices.
Demand for IoT applications has accelerated in recent
years to represent 80% of Iridium’s 2.1 million commercial
subscribers. The fastest-growing segment among these,
Iridium’s small antennas and system designs support a wide range
of applications to command and control unmanned aircraft and
uncrewed maritime vehicles. Our reliable beyond-line-of-sight
communications allow piloted vessels to conduct critical survey
work, enforce regulations, and ferry medical supplies and packages
for humanitarian relief.
“By listening, we learned where
the greatest opportunities lie
for our business.”
Iridium’s rugged equipment is employed by event organizers and
participants to enhance safety and two-way communications during
extreme sporting events, like the IMOCA series. Weather-resilient,
real-time connections support navigation and location services and
have proved invaluable under the most inhospitable conditions.
4 Iridium Commu nicat ion s I nc.
25 Years of Satellite Operations
Iridium’s Expertise is a Differentiator
• 2023 marked the 25th anniversary of
commercial service launching on the
Iridium network. Our revolutionary
communications system was dreamt up
by engineers Bary Bertiger, Ray Leopold,
and Ken Peterson in 1987. At the time,
cellular phones were still a novelty product—
handsets were big and coverage was spotty.
• These engineers, however, envisioned a
reliable system with global coverage
supported by cellular towers in the sky,
rather than a terrestrial ground network.
While their proposal was met with
skepticism, the group persisted, dedicating
hundreds of hours outside of work to build a plausible architecture. Their innovative
thinking was aided by research at that time on the U.S. Strategic Defense Initiative
(dubbed “Star Wars”), which envisioned satellites in low earth orbit. Eventually, the
Iridium program received backing from Motorola, and work commenced in research
labs in Arizona.
• The constellation was originally expected to need 77 satellites for global coverage,
making Iridium—the element with an atomic number of 77—the ideal name. Engineers
later discovered only 66 satellites were necessary to cover the Earth, but the element
Dysprosium didn’t have quite the same ring, so the name Iridium endured.
• Over the next decade, engineers built ground systems and produced and tested more
than 90 cross-linked satellites. The satellites launched in less than two years on 22 vehicles
from three different countries and commercial satellite service began in 1998.
The inaugural call was a symbolic moment, with U.S. Vice President Al Gore dialing
Gilbert Grosvenor, Chairman of the National Geographic Society and great-grandson
of Alexander Graham Bell, best known for his invention of the telephone.
• At completion, the Iridium satellite constellation was the largest commercial constellation
to be put into space and the most complex engineering project in history. The enduring
technology has revolutionized safety and mission-critical communications, ringing in a
new era in global connectivity. Many of the engineers who worked on this project remain
with Iridium today.
2023 Annual Repor t 5
Iridium’s broad suite of voice and data services support situational
awareness and flight deck safety communications for commercial
pilots, business jets, and general aviation. Fixed-wing and rotary
aircraft using Iridium Certus® broadband and midband terminals
also enjoy the fastest L-band transmissions in the aviation industry.
“ We want Iridium’s real-time, global
services to become commonplace
in smartphone applications and
eventually migrate to other
mainstream consumer devices...”
however, remains personal satellite communications,
fueled in part by the availability of small, portable satellite
communicators at affordable price points. More than
900,000 of these highly mobile – and affordable – devices
use our network, a subscriber base that has grown at a
37% compound annualized rate over the last five years.
Last year, Iridium announced a partnership to integrate
Last year, Iridium announced a partnership
its technology into premium smartphones. The evolution
to integrate its technology into premium
of our vision for two-way messaging and emergency
smartphones. The evolution of our vision for two-way
services is still on track, but has evolved over the past
messaging and emergency services is still on track,
year with feedback from the industry. The preference
but has evolved over the past year with feedback from
is for standards-based technology that can be broadly
the industry. The preference is for standards-based
leveraged across a range of industrial and consumer
technology that can be broadly leveraged across a range
devices. We believe broadening our aperture to include
of industrial and consumer devices. We believe broadening
standards-based solutions will attract new business
our aperture to include standards-based solutions will
partners to Iridium’s ecosystem and encourage the
attract new business partners to Iridium’s ecosystem and
development of services and use cases that leverage
encourage the development of services and use cases
Iridium’s global technology.
that leverage Iridium’s global technology.
This path to support standards will lengthen
development timelines but ultimately allow Iridium’s
technology to be adopted into a more diverse set of
consumer devices. We want Iridium’s real-time, global
services to become commonplace in smartphone app-
lications and eventually migrate to other mainstream
consumer devices, like watches, tablets, laptops and vehicles.
To support Iridium’s work with standards bodies and
new opportunities in IoT, we announced a plan we call
Project Stardust earlier this year. This initiative is focused
on a very specific set of use cases, where we believe that
Iridium’s existing L-band spectrum and network can
complement terrestrial narrowband IoT and support
smartphone messaging. We believe that Project Stardust
strikes the right balance for a high-quality user experience
and will be the kind of service that smartphone makers
and mobile network operators will be proud to offer to
their customers. Iridium’s strong position in IoT and use
in small-form-factors and mobile devices position us
well for this work. The consumer segment is an attractive,
growing market and we are excited to be a part of it.
The freight industry benefits from Iridium’s IoT solutions, which
enhance operations management and support dual-mode
transmissions for vehicles moving between urban and rural
environments. Critical data and diagnostics, such as engine
performance, signaling information and brake times, are relayed
over Iridium’s network to help vehicles operate safely and keep
critical transportation infrastructure operating efficiently.
2023 FINANCIAL REVIEW
Iridium performed well in 2023 – new contract wins and
favorable pricing supported top-line growth. We delivered
strong commercial service revenue growth and had
another good year of subscriber additions, led by IoT.
6 Iridium Commu n icat ions In c.
Most importantly, we continued to generate strong
cash flow and reduce net leverage.
Within our commercial business lines, growth was
broad based and reflected ongoing demand for our
L-band services. The legacy voice and data business on
which Iridium was founded continued to see subscriber
additions and benefitted from early year price action
which supported ARPU expansion. In IoT, momentum
from personal satellite communications drove another
year of double-digit growth in revenue and subscribers.
Broadband, where Iridium’s Iridium Certus terminals
have become the de facto companion to VSAT service
in maritime, also supported revenue growth with its
own “double-double.”
Our business with the U.S. government continued to
grow, in part due to ongoing work with the U.S. Space
Force’s new Space Development Agency (SDA). Our
7-year contract to build, staff and operate their new
network remains highly strategic to us and aligns Iridium
closely with the government’s long-term space priorities.
We are proud of our affiliation with the SDA and know
their trust in Iridium reflects our demonstrated success
in LEO and our performance providing mobile
communications services through our longstanding
Enhanced Mobile Satellite Service (EMSS) contract.
SATELLITE HEALTH
In May, Iridium added five more spare satellites to our
network. These were existing ground spares that were
built as part of the original Iridium NEXT mission, and
we launched them on a cost-effective rideshare to both
enhance redundancy and increase our network’s resilience.
We’ve been fortunate that the performance of
Iridium’s satellite constellation continues to exceed our
initial expectations. In fact, an assessment of the satellites’
performance was completed in late 2023 that supported
an increase in the estimated useful lives of our satellites
by an additional five years. The updated useful life affirms
our confidence in the health of our constellation and the
duration of our “capex holiday” through 2030.
The implications of this update are many. Beyond the
favorable outlook for the constellation’s performance
and network’s life, the latest assessment also extends
the timeline over which Iridium realizes fixed revenue
from contracts and recognizes depreciation expenses
Scientists and educators are particularly familiar with the reliability
and global reach of Iridium’s LEO network. Conservation and
resource management groups rely on Iridium and its partners to
monitor natural resources, track endangered animals, and collect
data. Iridium is proud to support organizations like the Smithsonian
Institute, the National Zoo, and National Geographic, to extend
their technical capabilities and respective missions.
“Most importantly, we continued
to generate strong cash flow and
reduce net leverage.”
Iridium’s constellation of 66 interlinked satellites helps first
responders organize in the face of natural disasters or when
terrestrial connections are unavailable. Reliable coverage
regardless of geographic deployment has served as the
backbone of Iridium’s enduring relationship with government
users and humanitarian organizations.
2023 Annual Repor t 7
associated with the construction and launch of our
satellite network. In reality, there will be no impact on
Iridium’s operations or cash flow, but the accounting for
this change in useful life will push our GAAP earnings
firmly into positive territory.
Iridium’s broadband technology is commonplace in the maritime
industry and often employed as a companion service on maritime
vessels to support mission-critical applications and crew welfare.
Iridium’s truly global coverage and reliability, however, are the
characteristics that have allowed it to receive certifications for
Global Maritime Distress & Safety System service - as an alert
and rescue service for vessels in danger.
“ This return of capital to investors
reflects our confidence in Iridium’s
business prospects and growth
opportunities.”
ALLOCATING CAPITAL
Strong cash flow remains a key storyline for Iridium and
continued to support our investment in new projects and
return of capital to shareholders. Through a combination
of share repurchases and a new dividend program,
Iridium returned more than $310 million to shareholders
in 2023 – approximately $65 million through quarterly
dividends and $245 million through share buybacks.
This return of capital to investors reflects our
confidence in Iridium’s business prospects and growth
opportunities. Since turning cash flow positive in 2019
(following the completion of our second-generation
constellation), Iridium has generated approximately
$1 billion in free cash flow, and we expect to have the
capacity for approximately $3 billion in shareholder
returns between 2023 and 2030.
In 2023, we also completed another successful
refinancing of our credit facility. The action lowered the
interest rate of our Term Loan and extended its maturity
by about four years, near 2030. Iridium continues to enjoy
a favorable hedge position on its Term Loan, which we
believe will allow us to weather the current interest
rate environment and extend our interest rate hedge as market opportunities
present themselves.
Iridium continues to execute well and deliver strong cash flow growth.
We have stayed true to our unique strengths and mission and feel good about
our competitive position. The year ahead will provide opportunities for investment
to augment our capabilities, especially in narrowband IoT and direct-to-device.
Iridium is committed to evolving its business, but we will not stray from our
well-defined lane to achieve this growth. Discipline has allowed us to innovate
and grow, and I don’t expect this to change.
We will continue to focus on what we do best and follow the great
opportunities we see to serve a critical role in safety services and mobile
communications. I look forward to keeping you abreast of our progress and
delivering on our vision for the future.
Matthew J. Desch
Chief Executive Officer
April 2024
8 Iridium Co mmu nica tion s I nc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________________________________
FORM 10-K
_____________________________________________________________________________________________
(Mark One)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
For the transition period from to
Commission File Number 001-33963
_____________________________________________________________________________________________
Iridium Communications Inc.
(Exact name of registrant as specified in its charter)
_____________________________________________________________________________________________
DE
(State or other jurisdiction of
incorporation or organization)
26-1344998
(I.R.S. Employer
Identification No.)
1750 Tysons Boulevard, Suite 1400, McLean, VA 22102
(Address of principal executive offices, including zip code)
703-287-7400
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, $0.001 par value
Trading Symbol
IRDM
Name of Each Exchange on Which Registered
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Securities Registered Pursuant to Section 12(g) of the Act: None
_________________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer
Non-Accelerated Filer
☒
☐
Accelerated Filer
Smaller Reporting Company
Emerging Growth Company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an
error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of June 30,
2023, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $5,078.9 million.
The number of shares of the registrant’s common stock, par value $0.001 per share, outstanding as of February 9, 2024 was 122,446,386.
Portions of the registrant’s definitive proxy statement for its 2024 annual meeting of stockholders to be filed pursuant to Regulation 14A with the Securities and Exchange Commission not
later than 120 days after the registrant’s fiscal year end of December 31, 2023, are incorporated by reference into Part III of this Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
IRIDIUM COMMUNICATIONS INC.
ANNUAL REPORT ON FORM 10-K
Year Ended December 31, 2023
TABLE OF CONTENTS
PART I
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
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Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Party Transactions, and Director Independence . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
24
38
38
41
41
41
42
44
44
54
55
89
89
92
92
93
93
93
93
93
94
97
98
Forward-Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-
looking statements. Such forward-looking statements include those that express plans, anticipation, intent, contingencies, goals,
targets or future developments or otherwise are not statements of historical fact. Without limiting the foregoing, the words
“believes,” “anticipates,” “plans,” “expects,” “intends” and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are based on our current expectations and projections about future events, and
they are subject to risks and uncertainties, known and unknown, that could cause actual results and developments to differ
materially from those expressed or implied in such statements. The important factors discussed under the caption “Risk
Factors” in this Form 10-K could cause actual results to differ materially from those indicated by forward-looking statements
made herein. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
1
Item 1. Business
Corporate Background
PART I
Iridium Communications Inc. (“we,” “us,” or “Iridium”) was formed as GHL Acquisition Corp., a special purpose acquisition
company, in November 2007, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or other similar business combination. On February 21, 2008, we consummated our initial public offering. On
September 29, 2009, we acquired, directly and indirectly, all the outstanding equity of Iridium Holdings LLC, or Iridium
Holdings, and changed our name from GHL Acquisition Corp. to Iridium Communications Inc.
Iridium Holdings was formed under the laws of Delaware in 2000, and on December 11, 2000, Iridium Holdings, through its
wholly owned subsidiary Iridium Satellite LLC, or Iridium Satellite, acquired certain satellite assets from Iridium LLC, a non-
affiliated debtor in possession, pursuant to an asset purchase agreement.
Business Overview
We are the only commercial provider of communications services offering true global coverage, connecting people,
organizations and assets to and from anywhere, in real time. Our low-earth orbit (LEO), L-band network provides reliable,
weather-resilient communications services to regions of the world where terrestrial wireless or wireline networks do not exist or
are limited, including remote land areas, open ocean, airways, the polar regions, and regions where the telecommunications
infrastructure has been affected by political conflicts or natural disasters.
We provide voice and data communications services to businesses, the U.S. and foreign governments, non-governmental
organizations, and consumers via our satellite network, which has an architecture of 66 operational satellites with in-orbit spares
and related ground infrastructure. We utilize an interlinked mesh architecture to route traffic across our satellite constellation
using radio frequency crosslinks between satellites. This unique architecture minimizes the need for local ground facilities to
support the constellation, which facilitates the global reach of our services and allows us to offer services in countries and
regions where we have no physical presence.
The current Iridium® constellation was completed in 2019, fully replacing our first-generation system. In addition to supporting
new products with higher data speeds, it also hosts the Aireon® system, which provides a global air traffic surveillance service
through a series of automatic dependent surveillance-broadcast, or ADS-B, receivers on our satellites. We formed Aireon LLC
in 2011, with subsequent investments from several air navigation service providers, or ANSPs, to develop and market this
service. Aireon has contracted to provide surveillance and other services to ANSPs and other customers around the world.
Aireon has also contracted to pay us a fee to host the ADS-B receivers on our satellites, as well as data service fees for the
delivery of the air traffic surveillance data over the Iridium system. In addition, we have entered into an agreement with
L3Harris Technologies, Inc., or L3Harris, the manufacturer of the Aireon hosted payload, pursuant to which L3Harris pays us
fees to allocate the remaining hosted payload capacity to its customers and data service fees on behalf of these customers.
Our commercial business, which we view as our primary source of long-term growth, is diverse and serves markets such as
emergency services, maritime, aviation, government, utilities, oil and gas, mining, recreation, forestry, heavy equipment,
construction, railways and other transportation. Many of our end users view our products and services as critical to their daily
operations and integral to their communications and business infrastructure. For example, multinational corporations in various
sectors use our services for business telephony, email and data transfer, including telematics and personal location tracking, and
to provide mobile communications services for employees in areas inadequately served by other telecommunications networks.
Commercial enterprises use our services to track assets in remote areas and provide telematics information such as location and
engine diagnostics. Ship crews and passengers use our services for ship-to-shore calling, as well as to send and receive email
and data files, and to receive electronic media, weather reports, emergency bulletins and electronic charts. Shipping operators
use our services to manage operations on board ships and to transmit data, such as course, speed, fuel, weather and other
navigation service data. Aviation end users use our services for air-to-ground telephony and data communications for position
reporting, flight following, emergency tracking, weather information, electronic flight bag updates, and airline operational
communications. Recreational users rely on our services as a safety and critical personal communications lifeline to remain in
contact with friends and family, as well as for emergency distress signals. We have also seen growing adoption of our services
to support autonomous systems, for which Iridium is used for command and control, image transmission and environmental
data gathering via unmanned aerial, underwater and surface vehicles. Iridium Certus® provides a platform for our partners to
develop specialized broadband and midband (a term we use to describe services between our legacy 2.4 Kbps narrowband and
2
our 128 Kbps and higher broadband offerings) applications on our network. With broadband services provided for the maritime
and land-mobile industries and a midband service designed for maximum mobility, Iridium Certus offers the flexibility to scale
device speeds, sizes and power requirements both up and down based on the needs of the end-user. We expect that these and
future Iridium Certus service offerings will continue to drive growth opportunities in our commercial business.
The U.S. government, directly and indirectly, has been and continues to be our largest single customer, generating
$196.1 million in service and engineering and support service revenue, or 25% of our total revenue, for the year ended
December 31, 2023. This does not include revenue from the sale of equipment that may be ultimately purchased by U.S. or
non-U.S. government agencies through third-party distributors, or airtime services purchased by U.S. or non-U.S. government
agencies that are provided through our commercial gateway, as we lack specific visibility into these activities and the related
revenue. We operate under a multi-year, fixed-price contract with the U.S. government, which we refer to as our Enhanced
Mobile Satellite Services, or EMSS, contract to provide specified satellite airtime services for an unlimited number of U.S.
Department of Defense, or DoD, and other federal government subscribers. The EMSS contract, entered into in September
2019, has a total value of $738.5 million over its seven-year term, through September 2026, with annual revenues between $100
million and $110.5 million over the term. We may provide other services, such as Iridium Certus, to the U.S. government under
separate arrangements for an additional fee.
The U.S. government owns and operates a dedicated gateway that is only compatible with our satellite network. The U.S. armed
services, State Department, Department of Homeland Security, Federal Emergency Management Agency, or FEMA, Customs
and Border Protection, and other U.S. government agencies, as well as other nations’ governmental agencies, use our voice and
data services for a wide variety of applications. Our voice and data products are used for numerous primary and backup
communications solutions, including logistical, administrative, morale and welfare, tactical, and emergency communications. In
addition, our products are installed in ground vehicles, ships, and rotary- and fixed-wing aircraft and are used for command-
and-control and situational awareness purposes. Our satellite network provides increased network security to the U.S.
government because traffic is routed across our satellite constellation before being brought down to earth through the dedicated,
secure U.S. government gateway. The U.S. government has made, and continues to make, significant investments to upgrade its
dedicated gateway, to purchase our voice and data devices, and to invest directly and indirectly in research and development
and implementation support for additional services on our network, such as Distributed Tactical Communications Services, or
DTCS, and Iridium Certus.
We also provide engineering and support services to the U.S. government under a contract awarded by the Space Development
Agency in May 2022 to General Dynamics Mission Systems, with Iridium as a subcontractor, which we refer to as the SDA
contract. Under this contract, General Dynamics Mission Systems and Iridium will build ground entry points and operations
centers for the Proliferated Warfighter Space Architecture (PWSA), as well as provide network operations and systems
integration services for the SDA’s next tranche of proliferated low-earth orbit satellites.
We sell our products and services to commercial end users through a wholesale distribution network, encompassing
approximately 100 service providers, approximately 300 value-added resellers, or VARs, and approximately 85 value-added
manufacturers, or VAMs, which create and sell technology that uses the Iridium network either directly to the end user or
indirectly through other service providers, VARs or dealers. These distributors often integrate our products and services with
other complementary hardware and software and have developed a broad suite of applications using our products and services
to target specific lines of business. We expect that demand for our services will increase as more applications are developed and
deployed that utilize our technology.
At December 31, 2023, we had approximately 2,279,000 billable subscribers worldwide, representing a 14% increase compared
to December 31, 2022. Total revenue increased from $721.0 million in 2022 to $790.7 million in 2023, representing a 10%
increase.
Industry
We compete primarily in the mobile satellite services sector of the global communications industry. Mobile satellite services
operators provide voice and data services to people and machines using a network of satellites and ground facilities. Mobile
satellite services are intended to meet users’ needs for connectivity in all locations where terrestrial wireless and wireline
communications networks do not exist, do not provide sufficient coverage, or are impaired, including rural and developing
areas that lack adequate wireless or wireline networks, airways, ocean and polar regions where few alternatives exist, and
regions where the telecommunications infrastructure has been affected by political conflicts or natural disasters.
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Government organizations, including military and disaster response agencies, non-governmental organizations, and industrial
operations and support teams depend on mobile and fixed voice and data satellite communications services on a regular basis.
Businesses with global operations require reliable communications services when operating in remote locations around the
world. Mobile satellite services users span many sectors, including emergency services, maritime, aviation, government,
utilities, oil and gas, mining, recreation, forestry, heavy equipment, construction, railways and other transportation, among
others. Many of our customers view satellite communications services as critical to their daily operations.
We believe that increasing mobile penetration creates additional demand for mobile satellite services. According to a 2023
study by the GSM Association, unique mobile subscribers, excluding cellular Internet of Things, or IoT, reached 5.4 billion
throughout the world as of the end of 2022 and are projected to reach 6.3 billion by 2030.
We believe that growth in the terrestrial wireless industry has increased awareness of the need for reliable mobile voice and
data communications services. In addition, despite significant penetration and competition, terrestrial wireless systems do not
cover a large majority of the earth’s surface and are focused mainly in those areas where people live, excluding oceans and
other remote regions where ships, airplanes and other remote assets may be. By offering mobile communications services with
global voice and data coverage, mobile satellite service providers address the demand from businesses, governments and
individuals for connectivity and reliability in locations not consistently served by wireline and wireless terrestrial networks.
The mobile satellite services sector of the global telecommunications industry also benefits from the continued development of
innovative, lower-cost technology and applications integrating mobile satellite products and services, including the continued
advancement of IoT. We believe that growth in demand for mobile satellite services is driven in large part by the declining cost
of these services, the diminishing size and lower costs of voice, data and IoT devices, the rollout of new applications tailored to
the specific needs of customers across a variety of markets, and expansion into new international markets.
Communications industry sectors include:
• mobile satellite services, which provide customers with voice and data connectivity to mobile and fixed devices using
ground facilities and networks of geostationary, or GEO, satellites, which are located approximately 22,300 miles
above the equator, medium earth orbit satellites, which orbit between approximately 6,400 and 10,000 miles above the
earth’s surface, or low earth orbit, or LEO, satellites, such as those in our constellation, which orbit between
approximately 300 and 1,000 miles above the earth’s surface;
•
•
fixed satellite services, which typically use GEO satellites to provide customers with broadband communications links
between fixed points on the earth’s surface; and
terrestrial services, which use a network of land-based equipment, including switching centers and radio base stations,
to provide wireless or wireline connectivity and are complementary to satellite services.
Within the two major satellite sectors, fixed satellite services and mobile satellite services, the products that operators offer
differ significantly from each other with respect to size of antenna and types of services that the products can offer. Fixed
satellite services providers, such as Intelsat S.A., Eutelsat Communications S.A. and SES S.A., are characterized by large, often
stationary or fixed ground terminals that send and receive high-bandwidth signals to and from the satellite network for video
and high-speed data customers and international telephone markets. By contrast, mobile satellite services providers, such as us,
focus more on voice and data services, where mobility and small-sized terminals are essential. Other mobile satellite service
providers include Globalstar, Inc., ORBCOMM Inc., and in some portions of their businesses, Viasat Inc. (following its
acquisition of Inmarsat Global Limited) and new entrants such as Space Exploration Technology Corp.’s (SpaceX) Starlink and
OneWeb Holdings Limited.
LEO systems, such as the one we operate, generally have lower transmission delays, or latency, than GEO systems, due to the
shorter distance signals have to travel, which also enables the use of smaller antennas on mobile devices. Our L-band spectrum
is also more resistant to weather interference than the K-band spectrum used by new entrants such as Starlink and OneWeb. We
believe the unique interlinked mesh architecture of our constellation, combined with the global footprint of our satellites,
distinguishes us from regional LEO satellite operators such as Globalstar and ORBCOMM, by allowing us to route voice and
data transmissions to and from anywhere on the earth’s surface without the need for local ground infrastructure. As a result, we
are the only mobile satellite services operator offering real-time, weather-resilient, low-latency services with true global
coverage, including full coverage of the polar regions.
Our Competitive Strengths
•
Our Constellation. Our unique satellite constellation provides true global and weather-resilient coverage, which
enables our Iridium Certus platform offerings and empowers the development of a range of new global products and
services, as well as supporting Aireon’s aircraft tracking service and other hosted payload missions. Our network
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design of 66 operational satellites uses an interlinked mesh architecture to transmit signals from satellite to satellite,
which reduces the need for multiple local ground stations around the world and facilitates the global reach of our
services. Many of our competitors use GEO satellites, which orbit above the earth’s equator, limiting their visibility to
far northern or southern latitudes and polar regions. Some LEO satellites without crosslink architecture from operators
like Globalstar and ORBCOMM use an architecture commonly referred to as “bent pipe,” which requires voice and
data transmissions to be immediately routed to ground stations in the same region as the satellite and can only provide
real-time service when they are within view of a ground station, limiting coverage to areas near where they have been
able to license and locate ground infrastructure. The LEO design of our satellite constellation produces minimal voice
and data transmission delays compared to GEO systems due to the shorter distance our signals have to travel, and LEO
systems typically have smaller antenna and power requirements. Our L-band spectrum is also more resistant to weather
interference than the K-band spectrum used by many of our competitors.
Attractive and growing markets. We believe that mobile satellite services will continue to experience growth driven by
the increasing awareness of the need for reliable mobile voice and data communications services, the lack of coverage
of most of the earth’s surface by terrestrial wireless systems, the continued development of the IoT, and the continued
development of other innovative, lower-cost technology, such as applications integrating mobile satellite products and
services into other devices, including embedding standards-based satellite technology in smartphones and IoT devices.
Only satellite providers can offer global coverage, and developing a satellite network requires significant financial
investment, as well as technological and regulatory challenges. We believe that we are well-positioned to capitalize on
the growth in our industry from end users who require reliable, easy-to-use mobile communications services in all
locations.
Strategic relationship with the U.S. government. The U.S. government is our largest single customer, and we have
provided airtime services to the U.S. government (particularly the DoD) since our inception. We believe the U.S.
government views our encrypted handset, IoT devices, DTCS and other products as mission-critical services and
equipment. The U.S. government continues to make significant investments in a dedicated gateway on a U.S.
government site to provide operational security and allow U.S. government handset and IoT users to communicate
securely with other U.S. government communications equipment. This gateway is only compatible with our satellite
network. In September 2019, we entered into the EMSS contract and continue to see usage of our network under this
contract. With ongoing investments by the DoD, we expect to see growth in adoption as enhancements are
implemented and new services are launched. We also view the SDA contract as a confirmation and expansion of our
strategic relationship with the U.S. government.
•
•
• Wholesale distribution network. The specialized needs of our global end users span many markets, including
emergency services, maritime, aviation, government, utilities, oil and gas, mining, recreation, forestry, heavy
equipment, construction, railways and other transportation. We sell our products and services to commercial end users
through a wholesale distribution network of service providers, VARs and VAMs, which often specialize in a particular
line of business. Our distributors use our products and services to develop innovative and integrated communications
solutions for their target markets, embedding our technology in their products or combining our products with other
technologies, such as GPS and terrestrial wireless technology. In addition to promoting innovation, our wholesale
distribution model allows us to capitalize on the research and development expenditures of our distribution partners,
while lowering overall customer acquisition costs and mitigating some risks, such as consumer relationship risks. By
supporting these distributors as they develop new products, services and applications, we believe we create additional
demand for our products and services and expand our target markets at a lower cost than would a more direct
marketing model. We believe our distribution network can continue to grow with us and increase our market
penetration. For example, our network, spectrum and architecture are ideally suited to small, handheld devices used for
personal communications, and we have leveraged our wholesale distribution approach to provide a wide array of such
personal communications services using both Iridium and partner devices.
Our Business and Growth Strategies
•
Leverage our largely fixed-cost infrastructure to grow our service revenue. Our business model is characterized by
high capital costs, primarily incurred every 10 to 15 years, in connection with designing, building and launching new
generations of our satellite constellation, and a low incremental cost of providing service to additional end users. We
believe that service revenue will continue to be our largest source of future growth and profits, and we intend to focus
on growing both our commercial and government service revenue in order to leverage our largely fixed-cost
infrastructure. In particular, we believe that competitive broadband, midband and narrowband data services through
Iridium Certus and satellite IoT services, where we are engaging large, global enterprises as long-term customers for
data and telematics solutions, represent our greatest opportunities for service revenue growth.
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•
•
•
•
•
Expand our target markets through the development of new products and services. We believe that we can expand our
target markets by developing and offering a broader range of products and services, including a wider array of cost-
effective and competitive broadband, midband, safety services, and IoT data services using our proprietary Iridium
Certus technology to complement and expand on our legacy narrowband services. Iridium Certus is a multi-service
technology platform that can deliver a range of services, from voice to a high-throughput L-band data connection, at a
range of competitive price points, data speeds, and terminal dimensions to meet an expanding set of customer
requirements. Beyond Iridium Certus technology, we also plan to expand our target markets by adding in a standards-
based IoT solution. For example, during 2024, we announced Project Stardust, which is what we call our new, multi-
year project to develop standards-based Narrowband-Internet of Things (NB-IoT) and Non-Terrestrial Network (NB-
NTN) messaging and SOS capabilities for smartphones, tablets, cars and related consumer applications.
Accelerate the development of personal communications capabilities. Part of our strategy for the development of
personal mobile satellite communications is to allow individuals to connect to our network in more ways, including
from devices such as smartphones, tablets and laptops through our Iridium GO!® and Iridium GO! exec® devices or a
variety of personal communication devices from VAMs and VARs like Garmin. We are making our technology more
accessible and cost-effective for our distribution partners to integrate by licensing our core technologies; by adding
functionality, such as push-to-talk, or PTT, capability, which allows multiple users to participate in talk groups
worldwide; by providing rugged, dependable devices and services; and by developing new services that take advantage
of the capabilities of our global constellation.
Continued growth in services provided to the U.S. government. Under our EMSS contract, we provide Iridium airtime
services, including unlimited global standard and secure voice, paging, fax, Short Burst Data®, or SBD®, Iridium
Burst®, Router-Based Unrestricted Digital Interworking Connectivity Solutions (or RUDICs) and DTCS services for
an unlimited number of DoD and other federal government subscribers. The fixed-price annual rate of the EMSS
contract through September 2024 is $106 million, with increases thereafter up to $110.5 million for the final contract
year ending in September 2026. Other services such as Iridium Certus and Satellite Time and Location provide us with
opportunities to offer new products and services to the U.S. government for an additional fee.
Continue to expand our distribution network. We believe our wholesale distribution network lowers our costs and
risks, and we plan to continue to selectively expand our network of service providers, VAMs and VARs, to expand our
sales and distribution efforts geographically, and to add additional industries or lines of business. We expect that our
current and future value-added partners will continue to develop customized products, services and applications
targeted to the land mobile, IoT, maritime, aviation and government markets. We believe these markets and the new
service providers, VAMs and VARs who join our network as a result of new product offerings represent an attractive
opportunity for continued subscriber and revenue growth.
Continue to support Aireon in the execution of its business plan. Aireon, which we formed in 2011, with subsequent
investments from five ANSPs, is our primary hosted payload customer. Aireon developed an ADS-B receiver payload
that is hosted on our satellites and gathers ADS-B position information from aircraft to provide a global air traffic
surveillance service. Aireon has contracted to offer its service to ANSPs and other commercial customers worldwide.
Aireon has also contracted to pay us a fee to host their payloads on our satellites and pays us data service fees for the
delivery of the air traffic surveillance data from those payloads over the Iridium system. We also continue to hold a
meaningful equity stake in Aireon.
Distribution Channels
We sell our products and services to customers through a wholesale distribution network of approximately 100 service
providers, approximately 300 VARs and approximately 85 VAMs. These distributors sell our products and services to end
users, either directly or indirectly through service providers, VARs or dealers. Of these distributors, over 53 sell primarily to
U.S. and international government customers. Our distributors often integrate our products and services with other
complementary hardware and software and have developed individual solutions targeting specific lines of business. We also
sell airtime services directly to the U.S. government, including the DoD, for resale to other government agencies. The U.S.
government and international government agencies may purchase additional services as well as our products and related
applications through our network of distributors.
We provide our distributors with support services, including assistance with coordinating end user sales and marketing,
strategic planning and training, and second-tier customer support, as well as helping them market our products and services and
respond to new business opportunities. We have representatives covering three regions around the world to better manage our
distributor relationships: the Americas, which includes North, South and Central America; Asia Pacific, which includes
Australia and Asia; and Europe, the Middle East, Africa and Russia. We have also established a global service program to
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provide portside service for our maritime customers at major ports worldwide. In addition, we maintain various online
management tools that allow us to communicate efficiently with our distributors and allow them to manage their customers’
Iridium devices from anywhere in the world. By relying on our distributors to manage end user sales, we believe that we reduce
some of the risks and costs related to our business, such as consumer relationship risks and sales and marketing costs, while
providing a broad and expanding distribution network for our products and services with access to diverse and geographically
dispersed niche markets. We are also able to benefit from the specialized expertise of our distributors, who continue to develop
innovative and improved solutions and applications integrating our product and service offerings, providing us with an
attractive platform to support our growth.
Commercial Markets
We view our commercial business as our primary source of long-term growth. Service providers and VARs serve as our main
distribution channel by purchasing our products and services and marketing them directly to their customers or indirectly
through independent dealers. They are each responsible for customer billing, end user customer care, managing credit risk and
maintaining all customer account information. If our service providers or VARs provide our services through dealers, these
dealers will often provide such services directly to the end user. Service providers typically purchase our most basic products
and services, such as mobile voice services and related satellite handsets, and offer additional services such as voicemail.
Unlike service providers, our VARs typically focus more on data applications and provide a broader array of value-added
services specifically targeted to the niche markets they serve, such as IoT, maritime, aviation and government markets, where
high-use customers with specialized needs are concentrated. These VARs integrate our handsets, transceivers, high-speed data
devices and SBD modems with other hardware and software to create packaged solutions for end users. Examples of these
applications include cockpit voice and data solutions for use by the aviation sector and voice, data and tracking applications for
industrial customers, such as Caterpillar Inc., the DoD, and other U.S. and foreign government agencies. Our service providers
include satellite service providers such as Marlink AS, Applied Satellite Technology Limited and Network Innovations, as well
as some of the largest telecommunications companies in the world, including Telstra Limited, KDDI Corporation and
Singapore Telecommunications Limited (Singtel). Our VARs include ARINC Incorporated, Beam Communications Pty Ltd.,
Blue Sky Network, LLC, Garmin Services Inc., Garmin International Inc., Gogo Business Aviation LLC, Komatsu Ltd, Kore
Telematics Inc., MetOcean Telematics Limited, NAL Research Corporation, and Zunibal S.A.
We also sell our products to VAMs, who integrate our transceivers or chipsets into their proprietary hardware. These VAMs
produce specialized end-user equipment, including integrated ship, vehicular and aviation communications systems, and global
asset tracking devices, which they offer to end users in IoT, maritime, aviation and government markets. As with our service
providers and VARs, VAMs sell their products either directly or through other distributors, including some of our service
providers and VARs. Our VAMs include Calamp Wireless Networks Corporation, Garmin Services Inc., Jacobs Technology,
Inc., and Lars Thrane A/S.
In addition to VARs and VAMs, we maintain relationships with approximately 95 value-added developers, or VADs. We
typically provide technical information to these companies on our products and services, which they then use to develop
software and hardware that complements our products and services in line with the specifications of our VARs and VAMs.
These products include handset docking stations, airline tracking and flight management applications and crew e-mail
applications for the maritime industry. We believe that working with VADs allows us to create new platforms for our products
and services and increases our market opportunity while reducing our overall research and development, marketing, and support
expenses. Our VADs include AeroAntenna Technology, Inc., AnsuR Technologies AS, ASIQ Pty Ltd. Crib Gogh Ltd, Ocean
and Coastal Environment Sensing Inc., Rockwell Collins Inc. and two10degrees Limited.
We use a wholesale rate structure for our commercial products and services. Under our distribution agreements, we charge our
distributors wholesale rates for commercial products and services, subject to discount and promotional arrangements and
geographic pricing. We also charge fixed monthly access fees per subscriber for some of our services. Our distributors are in
turn responsible for setting their own pricing to end users. Our agreements with distributors typically have terms of one year
and are automatically renewable for additional one-year terms, subject to termination rights. We believe this business model
reduces back-office complexities and costs and allows distributors to remain focused on revenue generation, while also
providing incentives for distributors to focus on selling our commercial product and service portfolio and developing additional
applications.
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Government Markets
We provide mission-critical mobile satellite products and services to all military branches of the DoD as well as to other U.S.
government departments and agencies. These users require voice and two-way data capability with global coverage, low
latency, mobility and security and often operate in areas where no other terrestrial or wireless means of communications are
available. We believe we are well positioned to satisfy demand from these users. Our 9575A handset is the only commercial,
mobile handheld satellite phone capable of Type I encryption accredited by the U.S. National Security Agency for Top Secret
voice communications. In addition, the U.S. government continues to make significant investments in a dedicated gateway that
provides operational security and allows users of encrypted Iridium handsets to communicate securely with other U.S.
government communications equipment. These investments include upgrading the gateway to take advantage of the enhanced
capabilities of our network, including Iridium Certus and other enhanced services. This U.S. government gateway is only
compatible with our satellite network.
We provide airtime and airtime support to U.S. government and other authorized customers pursuant to our seven-year EMSS
contract managed by the U.S. Space Force, which we entered into in September 2019. Under the terms of this agreement,
authorized customers utilize our airtime services through the U.S. government’s dedicated gateway. These services include
unlimited global standard and secure voice, broadcast, netted, or DTCS, and select other services for an unlimited number of
U.S. government subscribers. Other services may be purchased at an additional cost. The fixed-price rate for the current year of
the EMSS contract is $106 million, with increases in annual value resulting in a total contract value of $738.5 million over the
seven-year term. While we sell airtime directly to the U.S. government for resale to end users, our hardware products are sold to
U.S. government customers through our network of distributors, who typically integrate them with other products and
technologies. We may provide other services, such as Iridium Certus, to the U.S. government under separate arrangements for
an additional fee.
We also provide maintenance services for the U.S. government gateway pursuant to our Gateway Maintenance and Support
Services, or GMSS, contract managed by the U.S. Space Force. This agreement, which became effective in April 2019, has a
total contract value to us of approximately $60.4 million. The GMSS contract has been extended through March 31, 2024, as
we negotiate a renewal of the agreement.
In September 2019, we were also awarded a five-year indefinite-delivery/indefinite-quantity gateway evolution contract
managed by the U.S. Space Force to enable ongoing innovation and enhancements for the U.S. government gateway. This
contract has a total contract value to us of $76 million. We expect to renew this agreement prior to its expiration in September
2024.
In May 2022, the SDA awarded General Dynamics Mission Systems, with Iridium as a subcontractor, the SDA contract, to
establish the ground Operations and Integration (O&I) segment for Tranche 1 of the PWSA. The SDA contract has an estimated
value of $324.5 million, which includes a $163 million base amount and $161.5 million in options. We expect to receive $202
million in revenue over the course of the contract’s seven-year term. Revenues from the SDA contract contributed to our higher
engineering and support service revenue in 2023, as well as associated expenses, compared to the prior year, and we expect that
higher level of revenues and expenses to continue throughout the life of the SDA contract.
U.S. government services, including engineering services, accounted for approximately 25% of our total revenue for the year
ended December 31, 2023. Our reported U.S. government revenue includes airtime revenue derived from the EMSS contract
and services provided through the GMSS contract, the gateway evolution contract, and other engineering and support contracts
with the U.S. government, primarily the SDA contract. Pursuant to federal acquisition regulations, the U.S. government may
terminate the EMSS, GMSS, gateway evolution, or SDA contracts, in whole or in part, at any time.
Our government revenue does not include airtime services purchased by U.S. or non-U.S. government agencies that are
provided through our commercial gateway, which we report as commercial service revenue, or equipment purchased by
government customers from third-party distributors. We are unable to determine the specific amount of U.S. government
revenue derived from these commercial sources.
Lines of Business
The specialized needs of our global customers span many markets. Our system is able to offer our customers cost-effective
communications solutions with true global coverage in areas unserved or underserved by existing telecommunications
infrastructure. Our mission-critical communications solutions have become an integral part of the communications and business
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infrastructure of many of our end users. In many cases, our service is the only connectivity for these critical applications or is
used to complement terrestrial communications solutions.
Our current principal vertical lines of business include land mobile, maritime, aviation, IoT, hosted payloads and other data
services, and U.S. government. We report commercial voice and data service, IoT data service, commercial broadband, hosted
payload and other data service, and government service revenue separately. Land mobile and aviation are the principal
contributors to the revenue we report as commercial voice and data, while maritime is primarily reported in commercial
broadband revenue.
Commercial Voice and Data and Commercial Broadband
We offer commercial voice and data and commercial broadband services primarily in the land mobile, maritime, and aviation
sectors. We separately report commercial Iridium Certus broadband revenue with Iridium OpenPort® service revenue as
commercial broadband revenue. Because there is considerable overlap in these services, we have combined our discussion of
these revenue lines in this report, noting within the discussion where our broadband services contribute, particularly in
maritime.
Land Mobile
We are the leading provider of mobile satellite communications services to the land mobile sector, providing handset services to
areas not served or inconsistently served by existing terrestrial communications networks. Mining, forestry, construction, oil
and gas, utilities, heavy industry and transport companies as well as the military, public safety and disaster relief agencies are
significant users of our land mobile services. Sales of Iridium GO! and Iridium PTT services also contribute to the land mobile
sector. We believe that demand for mobile communications devices operating outside the coverage of terrestrial networks,
combined with our small, lightweight, durable handsets with truly global coverage, will allow us to capitalize on growth
opportunities among these users.
In addition, we believe Iridium Certus broadband land mobile units are attractive in this market, as the combination of price,
speeds, equipment, reliability in various weather conditions, and durability of equipment addresses a distinct market need. We
also expect Iridium Certus midband products and services, such as our new Iridium GO! exec device, to be a source of revenue
growth in the coming years.
Our land mobile end users utilize our satellite communications services for:
•
Voice and data: Multinational corporations in various sectors use our services for business telephony, email and data
transfer services, location-based services, and broadband for employees in areas inadequately served by terrestrial
networks. Oil and gas and mining companies, for example, provide their personnel with our equipment solutions while
surveying new drilling and mining opportunities and while conducting routine operations in remote areas that are not
served by terrestrial wireless communications networks. In addition, a number of recreational, scientific and other
outdoor users rely on our mobile handheld satellite phones and services for use when beyond terrestrial wireless
coverage. Iridium PTT offers non-governmental organizations (NGOs), military, first responder, oil and gas, civil
government and other users the ability to hold group calls using the Iridium Extreme® PTT handset or other devices
developed by our VAMs and VARs using the Iridium 9523 PTT core transceiver. The Thales MissionLINK terminal,
the first Iridium Certus offering in the land mobile area, allows rapid deployment and on-the-move communications,
location tracking and telemetry. In 2022 and 2023, several VAMs introduced products supporting midband capabilities
for land-based applications including remote monitoring, business continuity, and fleet management.
• Mobile and remote office connectivity: A variety of enterprises use our services to make and receive voice calls and to
establish data, email, internet and corporate network connections.
•
Public safety and disaster relief: Relief agencies, such as FEMA, and other agencies, such as the Department of
Homeland Security, use our products and services in their emergency response plans, particularly in the aftermath of
natural disasters such as the California and Maui wildfires in 2023, the volcanic eruption in Tonga in 2022, Hurricanes
Ian and Nicole in 2022, and earthquakes in Haiti in 2021 and the Mexico City area in 2017. These agencies generate
significant demand for both our voice and data products, especially in advance of the hurricane season in North
America. Further, many enterprises and governments include mobile satellite services such as ours as part of their
PACE (Primary/Alternate/Contingency/Emergency) plan, to maintain communications continuity in case of terrestrial
communication network outages.
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•
Public telephone infrastructure: Telecommunications service providers use our services to satisfy regulatory mandates
and government expectations regarding the availability of communications services for rural populations currently not
served by terrestrial infrastructure. Telstra Corporation, for example, uses our services to provide communications
services in some of Australia’s most remote locations.
Maritime
We serve the commercial maritime market with a variety of products, including broadband terminals, embedded devices and
handsets. This market includes merchant shipping, fishing, leisure and research vessels, and specialized watercraft. Since we
introduced Iridium Certus broadband in January 2019, Iridium Certus services have accounted for an increasing portion of our
revenue from this market, and we expect that trend to continue, although we still support our legacy broadband offering,
Iridium OpenPort service. Our products and services targeting the maritime market typically have high average revenue per
subscriber. Once one of our maritime systems is installed on a vessel, it often generates a multi-year recurring revenue stream
from the customer. To take advantage of this, from time to time, we may offer promotions or rebates to accelerate new
customer acquisitions and solidify this expected long-term revenue stream.
We believe Iridium Certus, which offers data speeds of up to 704 Kbps, presents a compelling communication solution for L-
band users in the maritime market. Iridium Certus has been increasingly installed on oceangoing vessels as a companion to Ku-
band Very Small Aperture Terminal, or VSAT, and new Non-Geostationary Orbit, or NGSO, providers, and we have seen
lower usage levels of those other providers on some vessels where we had previously been used as the primary communications
service. We expect additional offerings, such as the Iridium Certus 200 service, to increase the addressable market for our
maritime services.
Maritime end users utilize our satellite communications services for the following:
•
•
•
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Business critical data applications: Ship operators use our services to exchange email and data files and to receive
other information such as meteorological reports, emergency bulletins, cargo and voyage data and electronic chart
updates. We believe the breadth of our Iridium Certus offerings provides attractively priced options for shipping
operators and fishing fleets seeking increased functionality, as well as for yachts, work boats and other vessels for
which traditional marine satellite systems have typically been costly and underperforming. In conjunction with our
distributors, we also offer services that permit service providers and VARs to offer complete integrated solutions for
prepaid calling, email and IP-based data communications. For example, one of our distribution partners, Marlink Inc.,
has been integrating Iridium Certus with its miniature Very Small Aperture Terminal, or mini-VSATSM, broadband
service to provide companion connectivity when the mini-VSAT terminal is out of its coverage area or non-
operational.
Voice services: Maritime global voice services are used for both vessel operations and communications for crew
welfare. Merchant shipping companies use phone cards for crew use at preferential around-the-clock flat rates.
Vessel management and asset tracking: Shipping operators use our services to manage operations on ships and to
transmit data, such as course, speed and fuel stock. Our services are commonly integrated with GPS to provide a real-
time position reporting capability. Many fishing vessels are required by law to carry terminals using approved mobile
satellite services for tracking purposes as well as to monitor catches and to ensure compliance with geographic fishing
restrictions. European Union (EU) regulations, for example, require EU-registered fishing vessels of over 15 meters to
carry terminals for the purpose of positional reporting of those vessels. Furthermore, new environmental regulations in
some jurisdictions are expected to require monitoring of merchant vessels in territorial waters, which would provide an
additional growth opportunity for us.
Safety and Security applications: Ships in distress, including as a result of potential piracy, hijack or terrorist activity,
rely on mobile satellite voice and data services. The Ship Security and Alert Systems, or SSAS, and Long Range
Identification Tracking, or LRIT, regulations were adopted by the International Maritime Organization, or IMO, to
enhance maritime security in response to the threat from terrorism and piracy. Most deep-sea passenger and cargo
ships must be fitted with a device that can send an alert message containing the ship’s ID and position whenever the
ship is under threat or has been compromised. In addition, the IMO and a NATO advisory group have recommended
the installation of a safe room or citadel equipped with a standalone secure communication link the crew can use from
inside the room to communicate with rescuing forces. Our distribution partners have developed several product
solutions using our network to meet these requirements for merchant and fishing vessels.
In addition, we have been recognized by the IMO as a provider for the GMDSS. The GMDSS is a maritime service built to alert
a maritime rescue coordination center of each vessel’s situation and position, information that can then be used to coordinate
search and rescue efforts among ships in the area. As part of the GMDSS service, navigational and meteorological information
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is distributed to vessels. The IMO requires all vessels flagged by signatories to the International Convention for the Safety of
Life at Sea, or SOLAS, over 300 gross tons and certain passenger vessels, irrespective of size, that travel in international waters
to carry distress and safety terminals that provide GMDSS services. GMDSS service using our network became available in
2020, and our partners offer maritime terminals that include GMDSS service capabilities to vessel operators.
Aviation
We are one of the leading providers of mobile satellite communications services to the aviation sector, and we continue to see
aviation as an area of potential revenue growth. Our services are increasingly used in commercial and government aviation
applications, principally by business jets, corporate and government helicopter fleets, specialized general aviation fleets, such as
medevac companies and fire suppression fleets, and high-end personal aircraft. Our services are also employed by commercial
airline operators for flight deck voice and data link services for aircraft operational and safety communications. As a result of
authorizations by the U.S. Federal Aviation Administration, or FAA, and U.S. Federal Communications Commission, or FCC,
for us to provide air traffic datalink communications, commercial operators are installing avionics that use the Iridium network
on the flight deck to comply with international air navigation communications requirements to operate in oceanic and remote
airspace, including polar regions. Voice and data avionics platforms from our VAMs have been adopted as standard equipment
and as factory options for a range of airframes in business aviation and air transport, such as Gulfstream Aerospace
Corporation, Bombardier Inc., Cessna Aircraft Company, Boeing and Airbus. Avionics platforms that utilize our network are
also retrofitted on thousands of corporate and commercial aircraft already in operation.
Aviation end users utilize our satellite communications services for:
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Air traffic control communications and safety applications: The International Civil Aviation Organization, or ICAO,
has approved standards and recommended practices allowing us to provide Aeronautical Mobile Satellite (Route)
Service, or AMS(R)S, to commercial aircraft on long-haul routes. This allows member states to evaluate and approve
our services for safety communications on flights in oceanic and remote airspace. The FAA has approved Iridium for
use in the Future Air Navigation Services, or FANS, including Automatic Dependent Surveillance - Contract, or ADS-
C, datalink communications and Controller-Pilot Data Link Communications, or CPDLC, with air traffic control.
Aircraft crew and air traffic controllers use our services for data and voice communications between the aircraft flight
deck and ground-based air traffic control facilities. We are the only satellite provider capable of offering these critical
flight safety applications around the entire globe, including the polar regions. We believe this particular sector of the
market provides us with significant growth opportunities, as our services and applications can serve as a cost-effective
alternative to systems currently in operation.
Aviation operational communications: Aircraft crew and ground operations use our services for air-to-ground
telephony and data communications. This includes the ADS-C automatic reporting of an aircraft’s position and
mission-critical condition data to the ground and CPDLC for clearance and information services. We provide critical
communications applications for numerous airlines and air transport customers, including Hawaiian Airlines, United
Airlines, UPS, Fedex, Cathay Pacific Airways, Delta Airlines, Southwest Airlines, American Airlines, Iceland
Airlines, and El Al Airlines. These operators rely on our services because other forms of communication may be
unaffordable or unreliable in areas such as the polar regions. Collins Aerospace (ARINC) and SITA, the two leading
providers of voice and data link communications services and applications to the commercial airline industry, integrate
our products and services into their offerings.
Aviation passenger communications: Corporate and private fleet aircraft passengers use our services for air-to-ground
telephony and data communications. We believe our distributors’ small, lightweight, cost-effective solutions offer an
attractive option for aircraft operators, particularly small fleet operators; for example, some operators use our services
to enable small-cabin passengers to email using their own Wi-Fi-enabled mobile devices, including smartphones,
without causing interference with aircraft operation. We expect that users in the corporate aviation market, and original
equipment manufacturers, or OEMs, for business jets, will increase adoption of our services for in-flight passenger
data communications using our network. We believe this presents a significant opportunity to increase market
penetration and revenues in this market.
Rotary and general aviation applications: The Iridium network is uniquely suited to these sectors, as we have small
antenna designs that work under rotor blades and enable installation on smaller general aviation platforms. We are also
a major supplier for rotary aviation applications to end users in a number of markets, including medevac, law
enforcement, oil and gas, and corporate work fleets. Companies such as Air Logistics, EagleMed and Air Evac
Lifeteam rely on applications from our distributors for traditional voice communications, fleet tracking and
management, and real-time flight diagnostics. VARs and VAMs such as Flightcell International Limited, Garmin
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Services Inc., Honeywell International, Inc., SkyTrac Systems Limited, and Spider Tracks Limited incorporate Iridium
products and services into their applications for these markets.
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Unmanned Aerial Vehicles (UAVs): Our small antennas and system designs support a wide range of UAV platforms.
In addition, our global footprint enables reliable, beyond-line-of-sight communications for these UAV platforms
regardless of their operational range. We operate as the communication link for remote-piloted aircraft for uses such as
package delivery, medical supply, power-line inspection, law enforcement, corporate surveying and even military
applications.
We believe the benefits of Iridium Certus enhance our ability to address aviation market needs across these sectors.
Commercial IoT Data
We are one of the leading providers of satellite-based IoT services. We believe this market continues to experience increasing
penetration and presents opportunities for future growth. As with land mobile, our largest IoT users include mining,
construction, oil and gas, utilities, heavy industry, maritime, forestry and transport companies, as well as the military, public
safety and disaster relief agencies. We believe increasing demand for automated data collection processes from mobile and
remote assets operating outside the coverage of terrestrial wireline and wireless networks, as well as the continued need to
integrate the operation of such assets into enterprise management and information technology systems, will likewise increase
demand for our IoT applications.
Our IoT services are used for:
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Personal tracking devices and location-based services: Several of our VARs, such as Garmin Services Inc., ACR
Electronics, and Zoleo, Inc., market small, portable devices that provide personal tracking and data communications
services to consumers and commercial end users. In addition, Iridium GO! and the Iridium Extreme handsets offer
personal tracking and location-based services. These devices use IoT data services to send location information and
other data to web-based portals for tracking.
Heavy equipment telematics: Large, global heavy equipment original equipment manufacturers, such as Caterpillar
Inc., Komatsu Ltd, Hitachi Construction Machinery Co. Ltd., Hyundai Doosan Infracore Co. LTD and Appareo
Systems LLC, use our global IoT services to monitor their off-road heavy equipment in markets such as construction,
mining, agriculture and forestry.
Fleet management: Our global coverage permits our products and services to be used to monitor the location of vehicle
fleets, hours of service and engine telemetry data, as well as to conduct two-way communications with drivers around
the world. Fleet management companies, such as I.D. Systems, Mix Telematics International (Pty) Ltd, and Omnilink
Tecnologia S/A, use our service to provide distance drivers with reliable communications to their dispatchers and their
destinations to coordinate changing business needs, and our satellite network provides continuous communications
coverage while they are in transit. We expect that the need for more efficient, cost-effective and safer fleet operations,
as well as the imposition of regulatory mandates related to driver safety, such as drive-time monitoring, will increase
demand for our services in this area.
Fixed-asset monitoring: Multinational corporations, such as oil-field service companies like Schlumberger Limited and
ConocoPhillips Company, use our services through one of our service providers to run applications that allow remote
monitoring and operation of equipment and facilities around the globe, such as oil pipelines and offshore drilling
platforms.
Asset tracking: Leveraging IoT applications developed by several of our distributors, companies use our services and
related devices to track assets, including personnel, for logistics, theft-prevention and safety purposes. Companies and
organizations that have fleets of vehicles use IoT solutions from Iridium distributors to improve the efficiency of their
operations. For example, customers use Trimble Transportation’s solution to provide global communication to
transportation assets, and the Department of Homeland Security’s Office of Enforcement and Removal uses Fleet
Management Solutions’ IoT solution to transmit position, direction, speed and other data for management of its vehicle
fleet.
Resource management: Our global coverage and data throughput capabilities support natural resource management
applications, such as fisheries management systems. Three of our VARs—Collecte Localisation Satellites (CLS),
MetOcean Telematics Limited and Ground Control Technologies UK Ltd —have developed applications for the
fishing industry that enable regulatory compliance of fishing practices in a number of countries around the world.
Scientific data monitoring: The global coverage of our network supports many scientific data collection applications,
including the Argo float program of the National Oceanographic and Atmospheric Administration, or NOAA, the
Global Ocean Observation project Challenger, operated by Rutgers University, and anti-poaching programs run by the
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Smithsonian National Zoo & Conservation Institute, the Zoological Society of London, and Veterans Empowered to
Protect African Wildlife, or VETPAW. These programs rely on our IoT services to collect scientific data from buoys
and ocean gliders located throughout the world’s oceans and from wildlife habitats for monitoring and analysis. We
believe the increased need for monitoring climate and environmental data associated with global climate change and
human impact on the planet will increase demand for these services.
In the future, we expect our value-added partners to develop new IoT solutions with increased capabilities based on our Iridium
CertusTM 9770 transceiver and other future midband devices we plan to provide across all of our key IoT vertical markets.
Hosted Payload and Other Data Services
Our Iridium satellites also host customer payloads. We generate revenue from these customers both from the hosted payload
capacity and from data service fees. Because the hosted payload revenues are based on a contractual commitment for the life of
the Iridium constellation, we recognize revenue from these customers over the expected life of the system. As described
elsewhere in this report, in the fourth quarter of 2023 we updated our estimate of the useful life of our satellites, which resulted
in an extension of that useful life from 12.5 years to 17.5 years.
In addition to access and usage fees in the vertical lines of business described above, we generate revenue from several ancillary
services related to our core service offerings. In conjunction with Satelles, Inc., we offer Satellite Time and Location services,
which helps augment GPS and provides reliable location, timing and positioning data. We provide inbound connections from
the public switched telephone network, or PSTN, short message services, or SMS, subscriber identity module, or SIM,
activation, customer reactivation, and other peripheral services. We also provide research and development services to assist
customers in developing new technologies compatible with our system, which we may leverage for use in service and product
offerings in the future. We charge our distributors fees for these services.
U.S. Government
We are one of the leading providers of mobile satellite communications services to the U.S. government, principally the DoD.
We provide mobile satellite products and services to all branches of the U.S. armed forces. Our voice products are used for a
variety of primary and backup communications solutions, including tactical operations, logistical, administrative, morale and
welfare, and emergency communications. In addition, our products and related applications are installed on ground vehicles,
ships, rotary- and fixed-wing aircraft, embedded in unattended sensors and used for command and control and situational
awareness purposes. Global security concerns are among the factors driving demand for our products and services in this sector.
See “U.S. Government Services” below for more information.
Seasonality
Our business is subject to seasonal usage changes for commercial customers, and we expect it to be affected by similar
seasonality going forward. March through October are typically the peak months for commercial voice traffic and related
subscriber equipment sales, given the predominance of population and outdoor activity in the northern hemisphere. U.S.
government usage and commercial IoT usage have been less subject to seasonal changes.
Services and Products
At December 31, 2023, we had approximately 2,279,000 billable subscribers worldwide. Our principal services are mobile
satellite services, including mobile voice and data services, IoT services, hosted payload and other data services and
engineering services. Sales of our commercial services collectively accounted for approximately 62% of our total revenue for
the year ended December 31, 2023. We also sell related voice and data equipment to our customers, which accounted for
approximately 13% of our total revenue for the year ended December 31, 2023. In addition, we offer services to
U.S. government customers, including the DoD. U.S. government services, including engineering services, accounted for
approximately 25% of our total revenue for the year ended December 31, 2023.
Commercial Services
Postpaid Mobile Voice and Data Satellite Communications Services
We sell our mobile voice and data services to service providers and VARs who in turn offer such services to end users, either
directly or indirectly through dealers, using various packaged solutions such as seasonal or annual plans with differing price
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levels that vary depending upon expected usage. In exchange for these services, we typically charge service providers and
VARs a monthly access fee per subscriber, as well as usage fees for airtime resources consumed by their respective subscribers.
Prepaid Mobile Voice Satellite Communications Services
We also offer mobile voice services to service providers and VARs through prepaid plans. Service providers and VARs pay us
in advance for defined blocks of airtime minutes with expiration periods in various configurations, generally ranging from 30
days to two years, but which can be extended by the purchase of additional e-vouchers up to a maximum of three or four years.
These services are then generally sold to subscribers in the form of prepaid e-vouchers and scratch cards that enable subscribers
to use our services on a per-minute basis. We believe service providers and VARs are drawn to these services because they
enable greater cost control by eliminating the need for monthly billings and reducing collection costs, and can be sold in
countries where credit may not be readily available for end users. Our distributors often offer our prepaid voice services through
fixed devices to subscribers in rural villages, at remote industrial, commercial and residential sites, and on ships at sea, among
other places. Fixed voice services are in many cases an attractive alternative to handheld mobile satellite communications
services in situations where multiple users will access the service within a defined geographic area and terrestrial wireline or
wireless service is not available. Fixed phones, for example, can be configured as pay phones that accept prepaid scratch cards
and can be installed at a central location, for example in a rural village or on a maritime vessel.
Iridium PTT Service
Building on the foundation of DTCS technology, which provides regional tactical radio service to U.S. government users, our
Iridium PTT service enables regional or global PTT calls among users on the same talkgroup in up to 10 customer-defined,
geographically disparate locations around the world, providing a fast and robust communication experience. Iridium PTT can
be used via the Iridium Extreme PTT satellite phone or the Iridium 9523 PTT core transceiver, which gives our VAMs the
ability to build Iridium PTT into existing land mobile, maritime and aviation communications platforms. For example, Icom
Inc. of Japan offers a purpose-built satellite PTT radio handheld unit for use on the Iridium network. We and our partners are
also developing interoperability solutions for existing terrestrial land mobile radio systems, which will further extend the utility
of the service.
Internet of Things Services
Our IoT services are designed to address the market need for a small and cost-effective solution for sending and receiving data,
such as location, from fixed and mobile assets in remote locations to a central monitoring station. Most of our IoT services
operate through a two-way SBD transmission or circuit-switched data, between our network and a transceiver, which may be
located, for example, on a container in transit or a buoy monitoring oceanographic conditions. The small size of our devices and
their low-cost, omnidirectional antennas make them attractive for use in applications such as tracking asset shipments and
monitoring unattended remote assets, including oil and gas assets, as well as vehicle tracking and mobile security. We sell our
IoT services to our distributors, who incorporate them and in turn provide a solution package to commercial and government
customers. Increasingly, our IoT transceivers are being built into products for consumer markets, such as personal location
devices that provide two-way messaging. In the future, we expect our IoT partners to develop new offerings with increased
capabilities based on our Iridium Certus 9770 transceiver and other future midband devices we plan to create that have
optimized size, speed, power, and antenna characteristics for various applications. As with our mobile voice and data offerings,
we typically charge service providers and VARs a monthly access fee per subscriber as well as usage fees for data used by their
respective subscribers.
Broadband Data Services
Our broadband data offering, Iridium Certus, was launched in January 2019. Iridium Certus is a suite of products and services
enabled by our upgraded satellite constellation. Iridium Certus is a multi-service platform capable of offering higher quality
voice, enterprise-grade broadband functionality, and safety and security services on a global basis. Iridium Certus is designed to
support a variety of cost points, antenna types and data speeds ranging from midband to broadband speeds, currently available
up to 704 Kbps. We have licensed the Iridium Certus technology to VAMs who have introduced products for the maritime and
land mobile markets and are developing additional products for those markets and the aviation and government markets, as well
as distribution partners for the Iridium Certus service in each of these vertical markets. We believe Iridium Certus provides a
competitive, cost-effective and reliable range of services to the market, in standalone applications or as a complement to other
wireless technologies for critical applications and safety services.
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We also continue to offer our legacy Iridium OpenPort service, which provides maritime, aviation and terrestrial users speeds of
up to 134 Kbps and three independent voice lines. For this service, we typically charge service providers monthly access fees
and usage fees for airtime consumed by the respective subscribers for voice and data communications. We have discontinued
the manufacture of the Iridium Pilot platform that supports Iridium OpenPort services, with those customers often upgrading to
Iridium Certus technology.
U.S. Government Services
We provide U.S. government customers bulk access to our services, including voice, netted voice, data, messaging and paging
services, as well as maintenance services for the U.S. government’s dedicated gateway. We provide airtime to U.S. government
subscribers through the U.S. government’s gateway under the EMSS contract, which is a fixed-price contract covering voice,
low-speed data, paging, broadcast and DTCS services. Additional services, such as broadband capabilities utilizing Iridium
Certus technology, may be provided at an additional fee. To comply with U.S. government requirements, we ensure handsets
sold for use by the U.S. government are manufactured in the United States. U.S. government customers procure our voice and
data devices through specific, approved distributors from our network of service providers and VARs. Our VARs and VAMs
typically integrate our products with other products, which they then offer to U.S. government customers as customized
products, typically provisioned by the U.S. Space Force. Our voice and data solutions for the U.S. government include:
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personnel tracking devices;
asset tracking devices for equipment, vehicles and aircraft;
beyond-line-of-sight aircraft communications applications;
• maritime communications applications;
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specialized communications solutions for high-value individuals; and
specialized, secure, mobile communications and data devices for the military and other government agencies, such as
secure satellite handsets with U.S. National Security Agency Type I encryption capability.
With funding support from the U.S. government, we continue to invest in research and development to develop new products
and applications for use by all branches of the U.S. armed forces. For example, in conjunction with the U.S. Space Force, we
and select distribution partners offer DTCS, which provides critical, secure, PTT, netted communications using lightweight,
handheld tactical radios, or add-ons to existing government tactical radios. In addition, we offer a secure satellite phone based
on the Iridium Extreme, which we also developed with funding support from the U.S. government and which has been
accredited by the National Security Agency, or NSA, to provide Type-1 encryption, enabling communications up to Top Secret
from anywhere in the world.
Our Products
We offer a broad array of voice and data products that work worldwide. In most cases, our devices or an antenna must be
located outside and within view of a satellite to be able to access our network.
Satellite Handsets and Iridium GO!
Our principal handset offerings are the Iridium 9555 and Iridium Extreme satellite phones. We believe the industrial-strength
design of these products is critical for customers, many of whom are located in the most inhospitable spots on the planet and
require rugged and reliable communications equipment.
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Iridium 9555. The Iridium 9555 provides voice, SMS and narrowband data connectivity. This model features a
grayscale screen, SMS capability, an integrated antenna and a speakerphone. The Iridium 9555 weighs 9.4 ounces and
offers up to 3.1 hours of talk time. The Iridium 9555 has an industrial feel with a rugged housing to protect its
sophisticated satellite transceiver.
Iridium Extreme. The Iridium Extreme adds to the Iridium 9555’s capabilities by providing a rugged exterior that
meets Military Standard 810F for durability, a dedicated, two-way emergency SOS button, and fully integrated GPS
and location-based services. These extra features are provided in a handset that is even smaller than the Iridium 9555,
weighing 8.7 ounces and offering up to four hours of talk time. An emergency response service provided by GEOS
Travel Safety Group, or GEOS, is included with the purchase of the phone and airtime usage. The two-way emergency
SOS button initiates a voice call and an emergency text message via SMS to GEOS, which then coordinates with local
emergency responders.
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Iridium Extreme PTT. The Iridium Extreme PTT enhances the Iridium Extreme with an intelligently designed push-to-
talk mode, expanded speakerphone, reinforced PTT button, and extended capacity battery. The user interface provides
access to multiple communication services, including voice calling, SMS and SOS, allowing users to connect to a
talkgroup located in up to 10 customer-defined geographic regions worldwide. The Iridium Extreme PTT weighs 9.5
ounces and offers up to 6.5 hours of talk time for voice calls and five hours of talk time while using PTT.
Iridium GO! Iridium GO! is a small, rugged, personal connectivity device that connects to the Iridium network to
create a Wi-Fi hotspot, enabling the use of smartphones and tablets for voice calls, text messages and emails, posts to
social networking sites, and limited use of optimized mobile websites. Iridium GO! also has an emergency SOS button
and GPS and location-based services. Smartphone or tablet access is provided through special applications
downloaded for free from the Apple App Store or through Google Play for Android smartphones or tablets. A software
development kit is available to enable the creation of additional applications or integrate Iridium GO! connectivity into
existing applications.
Iridium GO! exec. Iridium GO! exec, a premium version of the Iridium GO!, is powered by our Iridium Certus 100
service and provides IP connectivity to the Internet and up to two high-quality voice lines. Data speeds are up to 40
times faster for downloads and 10 times faster for uploads compared to the Iridium GO!. The Iridium GO! exec has a
sleek design with built-in color touch screen and speakerphone for mobile office connectivity and Wi-Fi for access
from smartphones or laptops within a range of up to 100 feet. The built-in battery provides up to 24 hours of standby
and up to 6 hours of use.
We expect these devices to help us maintain our competitive position as premium offerings in the market due to their
capabilities, mobility, reliability and global coverage. In addition to these devices, we offer variants of the Iridium 9555 satellite
phone and the Iridium Extreme satellite phone that are qualified for sale to U.S. government customers.
Broadband Data Devices
Iridium Certus terminals are specifically designed for the maritime, aviation, land mobile or government markets and offer a
variety of enhanced data speeds and antenna types. Iridium Certus terminals provide enterprise-grade broadband data and high-
quality voice capabilities that can be used on a global basis. Iridium Certus is designed to support a variety of cost points,
antenna types and data speeds ranging from midband to broadband up to 704 Kbps. We have licensed the Iridium Certus
technology to a group of VAMs who have introduced products for the maritime and land mobile markets and are developing
additional products for those markets as well as the aviation and government markets.
Iridium Certus is designed for maritime operational and safety services, combining the benefits of L-band with broadband and
truly global coverage. Iridium Certus terminals offer reliable connectivity for maritime customers whether used as a standalone
service or as a companion to VSAT services. Our principal end users for Iridium Certus in the maritime market are merchant
shipping, commercial fishing, large leisure vessels, and work boats. The initial terminals in this market were the Cobham Sailor
4300 and Thales VesseLINK. In addition, Intellian, a Korean maritime terminal manufacturer, introduced an Iridium Certus
terminal to the market in 2020, and Thales introduced its VesseLINK 200 terminal, which uses our Iridium Certus 200 service,
in 2021. Additional Iridium Certus 200 terminals were launched in 2023, including the Lars Thrane LT-4200, and our partners
continue to develop additional products.
In aviation, Iridium Certus delivers critical safety services and in-flight communications. Our principal targeted end users for
Iridium Certus in the aviation market include commercial, corporate and government users, general aviation, rotorcraft and
unmanned aircraft. Terminals certified in this sector include the Blue Sky Networks SkyLink 7100, Guardian Mobility G6,
Atmosphere Planet 9770, Honeywell Aspire 350, Collins IRT NX, and Skytrac SDL-350. A number of other VAMs have been
licensed to create aviation terminals using Iridium Certus services, and we expect that additional Iridium Certus aviation
products will become commercially available in 2024.
In the land mobile market, enterprises, governments, and individuals that want to maintain mobile IP and telephony
connectivity utilize Iridium Certus for their operations while in remote areas without having to deploy ground-based
infrastructure or expensive terminals. Iridium Certus devices may be integrated with internet, cellular, land mobile radio, and
location-based applications to keep users connected, offering global push-to-talk, situational awareness, email, messaging and
voice-over-IP. Our principal end users for Iridium Certus in the land mobile market are military users, rail, first responders,
non-governmental organizations, oil and gas users, and remote fleets. Iridium offers Iridium Certus 100, Iridium Certus 200 and
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Iridium Certus 700 services, supporting a portfolio of broadband and midband terminals through our partners to provide a range
of capabilities at various price points. Terminals that are approved for the land mobile market include the Thales MissionLINK
700 and 200, BSN SkyLink 5100, NAL Research Quicksilver, and McQ CONNECT.
In the government market, Iridium Certus terminals provide beyond-line-of-sight communications critical to mission
success. The initial terminal in this market is the Thales MissionLINK, with additional terminals expected in the future.
Our legacy broadband terminal, the Iridium Pilot, provides up to three independent voice lines and an internet connection for
data communications of up to 134 Kbps, using our Iridium OpenPort service. We have discontinued the manufacture of the
Iridium Pilot terminal but still provide the Iridium OpenPort service. With the introduction of the more powerful Iridium Certus
terminals, we expect our distributors to focus on selling Iridium Certus and to eventually upgrade ships with Iridium Pilot to
Iridium Certus technology.
Voice and Data Modems
We also offer a combined voice transceiver and data modem, which our VAMs integrate into a variety of communications
solutions that are deployed in different applications around the world. Our offering in this category is the Iridium Core 9523 L-
band transceiver, which utilizes the transceiver core of our Iridium Extreme satellite handset. The Iridium Core 9523 is a small
voice and data module that can be integrated with other components and allows our VAMs to design and build products, such
as a dual-mode terrestrial radio and satellite phone or IoT applications that require more efficient data throughput via circuit-
switched data transmission. The Iridium 9523 PTT adds PTT capability, allowing development partners to design and build
land mobile, fixed, aviation and maritime devices with Iridium PTT service. We also offer the Iridium Certus 9770 transceiver,
which provides Iridium Certus 100 service to our Iridium GO! exec device and several devices offered by our value-added
partners. We expect our partners to continue to develop new products based on our Iridium Certus 9770 transceiver and other
optimized midband devices. Our principal customers for our L-band transceivers are VAMs and VARs, who integrate them into
specialized devices that access our network.
Internet of Things Data Devices
Our principal IoT devices are the Iridium 9602 and 9603 full-duplex SBD transceivers. The Iridium 9602 is a small data device
with two-way transmission, capable of sending packet data to and from any point in the world with low latency. The principal
customers for our Iridium 9602 data modems are VARs and VAMs, who embed the device into their tracking, sensor, and data
applications and systems, such as asset tracking systems. Our partners often combine the Iridium 9602 with a GPS receiver to
provide location information to customer applications. We also offer the Iridium 9603, an even smaller transceiver that is
functionally identical to the Iridium 9602. In addition, a number of VARs and VAMs include a cellular modem as part of their
Iridium applications to provide low-cost cellular data transmission when available. These types of multimode applications are
adopted by end users who require the ability to regularly transfer data but operate in areas with inconsistent cellular coverage.
We provide gap-filler coverage for these applications, allowing users to operate anywhere on the globe. In addition, several
partners now offer products with Iridium Certus 9770 transceivers supporting Iridium Certus 100 service for IoT, including the
SkyLink product from Blue Sky Networks and the RockREMOTE from Ground Control.
Iridium also offers a suite of Iridium Edge® finished IoT products designed to lower the barrier to adoption and speed time to
market for customer applications. The Iridium Edge device is an off-the-shelf, environmentally sealed, rugged device that
complements existing cellular solutions to create dual-mode connectivity for the most remote and inaccessible areas of the
world, reducing the cost and complications associated with hardware development, manufacture and certification of satellite-
specific terminals. We also offer Iridium Edge Pro, a standalone IoT device that offers real-time GPS tracking capabilities, with
a flexible programming platform that allows partners to create and run their own custom-made applications, and Iridium Edge
Solar, a standalone, programmable, solar-powered device that offers real-time GPS tracking in a self-charging, low-
maintenance unit with over-the-air configuration that allows partners to create distinct tracking applications.
We also offer Iridium Burst, our one-to-many global data broadcast service, which enables enterprises to send data to an
unlimited number of devices anywhere in the world, even inside buildings, vehicles or aircraft.
Device Development and Manufacturing
We contract with Cambridge Consulting Ltd. and other suppliers to develop our devices, with Benchmark Electronics Inc., or
Benchmark, to manufacture most of our devices in a facility in Thailand, and with Verigon to manufacture a portion of our
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devices in the United States. We also utilize other suppliers, some of which are the sole source, to manufacture some of the
component parts of our devices. Pursuant to our contracts with Benchmark and Verigon, we may be required to purchase excess
materials at cost plus a contractual markup if the materials are not used in production within the periods specified in the
respective agreements. Benchmark and Verigon generally repurchase the materials from us at the price we paid, as required for
the production of the devices. Our agreements with Benchmark and Verigon are automatically renewable for additional one-
year terms unless terminated by either party.
We generally provide our distributors with a warranty on subscriber equipment for a period ranging from one year to 18 months
from the date of activation, depending on the product.
In addition to our principal products, we also offer a selection of accessories for our devices, including extended-life batteries,
holsters, earbud headphones, portable auxiliary antennas, antenna adaptors, USB data cables and charging units. We purchase
these products from several third-party suppliers either pursuant to contractual agreements or off the shelf at market prices.
Domestic and Foreign Revenue
We supply services and products to customers in a number of foreign countries. We allocate revenue geographically based on
where we invoice our distributors, whom we bill for mobile satellite services and related equipment sales, and not according to
the location of the end user. These distributors sell services directly or indirectly to end users, who may be located elsewhere. It
is not feasible for us to determine the geographical distribution of revenue from each end user, as we do not contract directly
with them. Substantially all of our revenue is invoiced in U.S. dollars. The table below sets forth the percentage of our revenue
from the United States and outside of the United States for the last three years. No single country outside the United States
represented more than 10% of our revenue for any of the periods indicated.
United States
Other Countries
Year Ended December 31,
2023
2022
2021
55 %
45 %
52 %
48 %
54 %
46 %
For more information about our revenue from sales to foreign and domestic customers, see Note 15 to our consolidated
financial statements included in this annual report.
Traffic Originating Outside the United States
Most of our voice and data traffic originates outside the United States. The table below sets forth the percentage of our
commercial voice and data traffic originating outside the United States for the last three years.
Commercial voice traffic (minutes)
Commercial data traffic (kilobytes)
Our Network
Year Ended December 31,
2023
2022
2021
91 %
96 %
90 %
95 %
90 %
97 %
Our satellite network has an architecture of 66 operational LEO satellites in six orbital planes of eleven vehicles, each in nearly
circular polar orbits, in addition to in-orbit spares and related ground infrastructure. Our operational satellites orbit at an altitude
of approximately 483 miles (778 kilometers) above the earth and travel at approximately 16,689 miles per hour, resulting in a
complete orbit of the earth approximately every 100 minutes. The design of our constellation ensures that generally at least one
satellite is visible to subscribers from any point on the earth’s surface at any given time. While our constellation offers true
global coverage, most of our devices and antennas must have a direct line of sight to a satellite to transmit or receive a signal,
and services on those devices are not available in locations where a satellite signal cannot be transmitted or received, which for
some devices includes inside a building.
Our constellation uses radio frequency crosslinks between our satellites, which eliminates the need for local ground
infrastructure. These crosslinks enable each satellite to communicate with up to four other satellites in space, two in the same
orbital plane and two in adjacent planes. Our traffic is routed on a preplanned route between satellites to a predetermined
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satellite that is in contact with one of the Iridium teleport network, or TPN, locations. The TPN sites then transmit and receive
the traffic to and from the gateways, which in turn provide the interface to terrestrial-based networks such as the PSTN, a public
land mobile network, or PLMN, and the internet. The use of a TPN allows grounding traffic at multiple locations within our
ground network infrastructure. This and other design elements provide flexibility that allows for rapid reconfiguration of
grounding traffic from the satellites in the event of a space, antenna or ground routing anomaly and results in greater reliability
of our network. The design of our space and ground control system also facilitates the real-time monitoring and management of
the satellite constellation and facilitates service upgrades via software enhancements.
We believe our interlinked satellite infrastructure provides several advantages over low-earth-orbiting “bent-pipe” satellite
networks that rely on multiple terrestrial gateways, such as Globalstar’s and ORBCOMM’s networks. We have the only
satellite network with true global coverage using weather-resilient L-band spectrum, and our constellation is less vulnerable to
single points of failure, as traffic can be routed around any one satellite problem to complete the communications path to the
ground. In addition, the small number of ground stations increases the security of our constellation, a factor that makes our
network particularly attractive to government institutions and large enterprises. The low orbit of our constellation also allows
our network to operate with low latency and with smaller antennas due to the proximity of our satellites to the earth.
Our constellation is designed to provide significant coverage overlap for mitigation of service gaps from individual satellite
outages, particularly at higher northern and southern latitudes. Each satellite in our constellation was designed with a high
degree of on-board subsystem robustness, an on-board fault detection system, and isolation and recovery capabilities for safe
and quick risk mitigation. Our ability to reposition our satellites provides us with operating flexibility and enhances our ability
to maintain a commercially acceptable level of service. If a satellite should fail or become unusable, in most cases we will be
able to reposition one of our in-orbit spare satellites to take over its functions within days, with minimal impact on our services.
We do not currently hold any active in-orbit insurance policies covering losses from satellite failures, and we do not expect to
obtain in-orbit insurance covering losses from satellite failures or other operational problems affecting our constellation.
Our primary commercial gateway is located in Tempe, Arizona, with a second dedicated commercial gateway located in Russia.
A gateway processes and terminates calls and data and generates and controls user information pertaining to registered users,
such as geo-location and call detail records. The U.S. government owns and operates a dedicated gateway for U.S. government
users, which provides an interface between voice and data devices and the Defense Information Systems Network and other
terrestrial infrastructure, providing U.S. government users with secure communications capabilities. Our network has multiple
antennas located at the TPN facilities, including the Tempe gateway, that communicate with our satellites and pass calls and
data between the gateway and the satellites as the satellites pass above our antennas, thereby connecting signals from the
terminals of end users to our gateways. This system, together with our satellite crosslinks, enables communications that are not
dependent on a ground station in the region where the end user is using our services.
We operate our satellite constellation from our satellite network operations center, or SNOC, in Leesburg, Virginia. This facility
manages the performance and status of each of our satellites, directing traffic routing through the network and controlling the
formation of coverage areas by the satellites’ main mission antennas. We also operate TPN facilities in Fairbanks, Alaska and
Tempe, Arizona in the United States, in Svalbard, Norway, and in Punta Arenas, Chile that perform telemetry, tracking and
control functions and route commercial services.
From time to time, individual satellites in our constellation experience operating problems that may result in a satellite outage,
but due to the overlapping coverage within our constellation and the dynamic nature of our LEO system, the individual satellite
outages typically do not negatively affect our customers’ use of our system for a prolonged period. In addition, most system
processing related to our service is performed using software on board each satellite instead of on the ground. We believe this
provides us with significant flexibility and contributes to the longevity of the constellation by enabling engineers to develop
additional functionality and software-based solutions to occasional faults and anomalies in the system.
We continually monitor and upgrade our gateway and TPN facilities as necessary and also maintain an inventory of spare parts.
When we do not have necessary spares in inventory or our spares become obsolete, we may rely on third parties to develop
necessary parts.
We hold a space station license for the launch and operation of our constellation, which expires February 23, 2032. Our U.S.
gateway earth station and the U.S. government customer and commercial subscriber earth station licenses expire between
February 2036 and March 2037. We must file renewal applications for earth station licenses between 30 and 90 days prior to
expiration.
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The Iridium constellation also hosts the Aireon system. The Aireon system was developed by Aireon LLC, which we formed in
2011 and which received subsequent investments from several ANSPs, to provide a global air traffic surveillance service
through a series of ADS-B receivers on our satellites. Aireon has contracted to offer this service to ANSPs, which use the
service to provide improved air traffic control services over the oceans, as well as polar and remote regions. Aireon also
markets its data and services to airlines and other commercial users.
Under our agreements with Aireon, Aireon will pay us fees of $200.0 million to host the ADS-B receivers on our satellites, of
which they have paid us $94.5 million as of December 31, 2023. These fees are recognized over the estimated useful life of the
satellites. Additionally, Aireon pays power and data services fees of approximately $23.5 million per year in the aggregate for
the delivery of the air traffic surveillance data over the Iridium system.
While the Aireon ADS-B receivers are the primary hosted payload on our satellites, L3Harris utilizes a portion of the remaining
space for its customers’ payloads. This agreement resulted in an additional $74.1 million in hosting and data service fees to us,
all of which has been paid.
Regulatory Matters
Our Spectrum
We hold licenses to use 8.725 MHz of contiguous spectrum in the L-band, which operates at 1.6 GHz, and allows for two-way
communication between our devices and our satellites. In addition, we are authorized to use 200 MHz of K-Band (23 GHz)
spectrum for satellite-to-satellite communications, known as inter-satellite links, and 400 MHz of Ka-Band spectrum (19.4 GHz
to 19.6 GHz and 29.1 GHz to 29.3 GHz) for two-way communication between our satellites and our ground stations, known as
feeder links. We are also authorized to use the 156.0125-162.0375 MHz spectrum for reception of Automatic Identification
System transmissions from maritime vessels and the 1087.7-1092.3 MHz spectrum for reception of Automatic Dependent
Surveillance-Broadcast transmissions from aircraft. Access to this spectrum enables us to design satellites, network and
terrestrial infrastructure enhancements cost effectively because each product and service can be deployed and sold worldwide.
Our products and services are offered in over 100 countries, and we and our distributors continue to seek authorizations in
additional countries.
Our use of spectrum is globally coordinated and recorded by, and subject to the frequency rules and regulations of, the
International Telecommunication Union, or ITU. The ITU is the United Nations organization responsible for worldwide co-
operation in the telecommunications sector. In order to protect satellite systems from harmful radio frequency interference from
other satellite systems, the ITU maintains a Master International Frequency Register of radio frequency assignments. Each ITU
administration is required to give notice of, coordinate and record its proposed use of radio frequency assignments with the
ITU’s Radiocommunication Bureau. The coordination negotiations are conducted by the national administrations with the
assistance of satellite operators. When the coordination process is completed, the ITU formally notifies all proposed users of
frequencies and orbital locations in order to protect the recorded assignments from subsequent nonconforming or interfering
uses by member states of the ITU. Only member states have full standing within this inter-governmental organization. Filings to
the ITU were made on our behalf by the United States.
The ITU also controls the assignment of country codes used for placing telephone calls between different countries. Our
network has been assigned the 8816 and 8817 country codes and uses these numbers for calling and communications between
terminals.
Constellation De-Orbiting Obligations
We have certain de-orbit obligations under our FCC licenses. All of our second-generation satellites are subject to a 25-year de-
orbit standard under the FCC authorization of our current constellation.
Aireon LLC and Aireon Holdings LLC Agreement
We hold our ownership in Aireon LLC through the Amended and Restated Aireon Holdings LLC Agreement, along with
subsidiaries of our ANSP co-investors. Aireon Holdings holds 100% of the membership interests in Aireon LLC, which is the
operating entity for the Aireon system.
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In June 2022, we entered into a subscription agreement with Aireon Holdings and invested $50 million in exchange for an
approximate 6% preferred membership interest. We also hold a common membership interest. The other investors hold the
remaining preferred membership interests resulting from their investments in Aireon for an aggregate purchase price of
approximately $339 million. At each of December 31, 2023 and 2022, our fully diluted ownership stake in Aireon Holdings
was approximately 39.5%. If and when funds are available, Aireon Holdings is required to redeem a portion of our common
ownership interest for a payment to us of $120 million, following which we would retain a 27% interest. Based on Aireon’s
business plan and restrictions under Aireon’s debt facility, we do not expect this redemption of our ownership interest to occur
for several years.
The Aireon Holdings LLC Agreement provides for Aireon Holdings to be managed by a board of directors consisting of 11
members, of which we have the right to nominate two directors. The Aireon Holdings LLC Agreement also provides the
minority holders, including us, with several protective provisions. We account for our investment in Aireon Holdings in our
consolidated financial statements as an equity method investment.
We and the other Aireon investors have agreed to participate pro rata, based on our respective fully diluted current ownership
stakes, in funding an investor bridge loan to Aireon as needed. Our maximum commitment under the investor bridge loan is
$11.9 million, although no amount was outstanding at December 31, 2023.
Competition
The mobile satellite services industry is highly competitive, and we currently face substantial competition from other service
providers that offer a range of mobile and fixed communications options. Currently, our principal mobile satellite services
competitors are Viasat, Globalstar, ORBCOMM, and Thuraya Telecommunications Co., or Thuraya. We compete primarily on
the basis of coverage, quality, mobility and pricing of services and products.
Viasat, following its acquisition of Inmarsat, owns and operates a fleet of GEO satellites. Unlike LEO satellites, GEO satellites
orbit the earth at approximately 22,300 miles above the equator. GEO systems require substantially larger and more expensive
antennas, and typically have higher transmission delays than LEO systems. Due to its GEO system, Viasat’s coverage area
covers most bodies of water except for a majority of the polar regions. Viasat is the leading provider of satellite
communications services to the maritime sector. Viasat also offers land-based and aviation communications services.
Globalstar owns and operates a fleet of LEO satellites. Globalstar’s service is available only on a multi-regional basis as a result
of its “bent pipe” architecture, which requires that voice and data transmissions be routed from satellites immediately to nearby
ground stations. This design requires the use of multiple ground stations, which are impractical in extreme latitudes or over
oceans.
ORBCOMM also provides commercial services using a fleet of LEO satellites. Like Globalstar, ORBCOMM’s network also
has a “bent pipe” architecture, which constrains its real-time coverage area. ORBCOMM’s principal focus is low-cost data and
IoT services, where it directly competes with our IoT offerings. Because a ground station may not be within view of a satellite,
ORBCOMM’s services may have a significant amount of latency, which may limit their use in some mission-critical
applications. ORBCOMM does not offer voice service or high-speed data services.
We also compete with regional mobile satellite communications services in several geographic markets. In these cases, the
majority of our competitors’ customers only require regional, not global, mobile voice and data services, so our competitors
may present a viable alternative to our services. All of these regional competitors operate or plan to operate GEO satellites. Our
regional mobile satellite services competitors currently include Thuraya, principally in Europe, the Middle East, Africa,
Australia and several countries in Asia.
In addition, there are a number of more recent entrants to the mobile satellite services industry, including Starlink and OneWeb,
with varying constellation designs and business models. These newer entrants are primarily focused on commodity broadband
services, where Iridium often operates as a companion service. We also see some of these companies investing in direct-to-
device services that in the future may increase competition for products Iridium is offering or plans to offer.
While we view our services as largely complementary to terrestrial wireline and wireless communications networks, we also
compete with them indirectly. We provide service in areas that are inadequately covered by these ground systems. To the extent
that terrestrial communications companies invest in underdeveloped areas, we will face increased competition in those areas.
We believe that local telephone companies currently are reluctant to invest in new switches, landlines and cellular towers to
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expand their networks in rural and remote areas due to high costs and limited usage. Many of the underdeveloped areas are
sparsely populated, making it difficult to generate the necessary returns on the capital expenditures required to build terrestrial
wireless networks in those areas. We believe that our solutions offer a cost-effective and reliable alternative to terrestrial-based
wireline and wireless systems in these remote regions.
Research and Development
Our research and development efforts have focused on the development, design and testing of our new constellation and new
products, such as Iridium Certus, Iridium Messaging Transport, Iridium Edge, Iridium PTT, Iridium Burst, Iridium GO!,
Iridium GO! exec, transceiver modules and chipsets. We also develop network and product enhancements and new applications
for our existing products. Our research and development expenses were $20.3 million, $16.2 million and $11.9 million for the
years ended December 31, 2023, 2022, and 2021, respectively.
Employees and Human Capital Resources
Employees
As of December 31, 2023, we had 760 full-time employees and six part-time employees, none of whom are subject to any
collective bargaining agreement. We consider our employee relations to be good.
Human Capital Resources
Our company is made up of varied and creative teams, and we are committed to creating an innovative and inclusive
environment where our employees are proud to work. We foster this goal by focusing on development, employee wellness and
social responsibility. This starts with an onboarding process that introduces our core mission and values, policies and
procedures, performance review process and background about our company. We support our employees in their career
development by providing on-the-job training and education reimbursement to help employees maintain or enhance skills in
their current position or help with acquiring new skills to prepare for future opportunities. To measure employee engagement,
we conduct an annual survey to assess and track retention and satisfaction. We take responses from our employees seriously
and use them to inform specific strategies every year tailored to both the entire company as well as specific teams. In addition to
performing benchmarking, we also conduct an annual survey to understand what benefits are important to our employees and
ensure that we are offering a competitive total rewards package.
We offer various ways for our employees to stay engaged, including participation in Employee Resource Groups, or ERGs,
volunteer activities through the Iridium Cares Program, and other outreach efforts that cover a range of topics and interests.
In 2023, we launched our first cohort of the Iridium Orbit Program. Participants in this program embed with three engineering
teams over 18 months, completing six-month rotations in operations, engineering, and customer care across our company in
Arizona and Virginia. This program aims to increase cross-functional knowledge and ensure new hires feel engaged and
supported in their new roles.
We formed our Diversity and Inclusion Advisory Council in 2020, and it has identified four objectives to make our Iridium
community, and the world, a more diverse and inclusive place:
•
•
•
•
Helping to recruit and retain team members with diverse backgrounds and experiences;
Fostering participation in activities supporting diversity and inclusion within our communities;
Training, educating, and communicating with team members on the importance of diversity and inclusion to our
culture and viability; and
Periodically assessing our continual growth toward greater diversity and inclusion.
In 2022, we introduced the Uplinks program, which aims to embrace new ideas and the diversity of thinking across our teams.
This popular program pairs employees from different generations to encourage intra-company conversations and promote
collaboration. We currently have four working groups to put these objectives into practice. Each working group has its own
goals, stakeholder relationships, strategy and executive sponsorship.
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Intellectual Property
At December 31, 2023, we held 38 U.S. patents and one foreign patent. These patents relate to several aspects of satellite
systems, global networks, communications services, and communications devices.
In addition to our owned intellectual property, we also license critical intellectual property from Motorola Solutions to operate
and maintain aspects of our network and related ground infrastructure and services as well as to design and manufacture certain
of our devices. This intellectual property is essential to our ability to continue to operate aspects of our constellation and sell
certain of our services and devices. We maintain our licenses with Motorola Solutions pursuant to several agreements, any of
which can be terminated by Motorola Solutions upon the commencement by or against us of any bankruptcy proceeding or
other specified liquidation proceedings or upon our material failure to perform or comply with any provision of the agreements.
If Motorola Solutions were to terminate any such agreement, it may be difficult or, under certain circumstances, impossible to
obtain the technology from alternative vendors.
We license additional intellectual property and technology from other third parties and expect to do so in the future in
connection with our network and related ground infrastructure and services as well as our devices. If any such third party were
to terminate its agreement with us or cease to support and service such intellectual property or technology, or if we are unable to
renew such licenses on commercially reasonable terms or at all, it may be difficult, more expensive or impossible to obtain
substitute intellectual property or technology from alternative vendors. Any substitute intellectual property or technology may
also have lower quality or performance standards, which would adversely affect the quality of our devices and services. For
more information, see “Risk Factors—We depend on intellectual property licensed from third parties to operate our
constellation and sell our devices and for the enhancement of our existing devices and services.”
Available Information
Copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments, if
any, to those reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available
free of charge through our website at www.iridium.com and on the website of the Securities and Exchange Commission, or
SEC, at www.sec.gov. A request for any of these reports may also be submitted to us by writing: Investor Relations, Iridium
Communications Inc., 1750 Tysons Boulevard, Suite 1400, McLean, VA 22102, or by calling our Investor Relations line at
703-287-7570.
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Item 1A. Risk Factors
Risks related to our satellites and network
Our satellites may experience operational problems, which could affect our ability to provide an acceptable level of service to
our customers.
From time to time, we experience temporary intermittent losses of signal cutting off calls in progress, preventing completions of
calls when made, or disrupting the transmission of data. If the magnitude or frequency of such problems increases and we are
no longer able to provide a commercially acceptable level of service, our business and financial results and our reputation
would be hurt, and our ability to pursue our business plan would be compromised.
We may be required in the future to make changes to our constellation to maintain or improve its performance. Any such
changes may require prior FCC approval, and the FCC may subject the approval to other conditions that could be unfavorable
to our business. In addition, from time to time we may reposition our satellites within the constellation in order to optimize our
service, which could result in degraded service during the repositioning period. Although we have some ability to remedy some
types of problems affecting the performance of our satellites remotely from the ground, the physical repair of our satellites in
space is not feasible.
Our products could fail to perform or could perform at reduced levels of service because of technological malfunctions or
deficiencies, regulatory compliance issues, or events outside of our control, which would seriously harm our business and
reputation.
Our products and services are subject to the risks inherent in a large-scale, complex telecommunications system employing
advanced technology and heavily regulated by, among others, the FCC and similar authorities internationally. Any disruption to
our satellites, services, information systems or telecommunications infrastructure, or regulatory compliance issues, could result
in the inability or reduced ability of our customers to receive our services for an indeterminate period of time. These customers
include government agencies conducting mission-critical work throughout the world, as well as consumers and businesses
located in remote areas of the world and operating under harsh environmental conditions where traditional telecommunications
services may not be readily available. Any disruption to our services or extended periods of reduced levels of service could
cause us to lose customers or revenue, result in delays or cancellations of future implementations of our products and services,
result in failure to attract customers, or result in litigation, customer service or repair work that would involve substantial costs
and distract management from operating our business. The failure of any of the diverse elements of our system, including our
satellites, our commercial gateway, our satellite teleport network facilities or our satellite network operations center, to function
as required could render our system unable to perform at the quality and capacity levels required for success. Any system
failures, repeated product failures or shortened product life, or extended reduced levels of service could reduce our sales,
increase costs, or result in warranty or liability claims or litigation, cause us to extend our warranty period, and seriously harm
our business.
Our satellites have a limited life and may fail prematurely, which could cause our network to be compromised and materially
and adversely affect our business, prospects and profitability, or cause us to incur additional expense to launch replacement
satellites.
We have in the past and may in the future experience in-orbit malfunctions of our satellites, which could adversely affect the
reliability of their service or result in total failure of the satellite. In-orbit failure of a satellite may result from various causes,
including component failure, loss of power or fuel, inability to control positioning of the satellite, solar or other astronomical
events, including solar radiation and flares, and space debris. Other factors that could affect the useful lives of our satellites
include the quality of construction, gradual degradation of solar panels and the durability of components. We do not have and
have no plans to obtain in-orbit insurance. As a result, a failure of one or more of our satellites, the occurrence of equipment
failures and other related problems would constitute an uninsured loss. Although we do not incur any direct cash costs related to
the failure of a single satellite, if a satellite fails, we record an impairment charge in our statement of operations to reduce the
remaining net book value of that satellite to zero, and any such impairment charges could depress our net income for the period
in which the failure occurs. Further, a large number of such failures could shorten the expected life of our constellation, which
would increase our depreciation expense, or require us to replace our constellation sooner than currently planned, either of
which would increase our projected capital expenditures.
If operations at our commercial gateways or operations center were to be disrupted, we may experience interruptions in our
ability to provide service to our customers.
Our commercial satellite network traffic is supported by a gateway in Tempe, Arizona, as well as a gateway in Izhevsk, Russia,
for traffic within Russian boundaries, and we operate our satellite constellation from our satellite network operations center in
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Leesburg, Virginia. If we are unable to use our primary commercial gateway in Tempe, it could take us from one to eight hours
to switch operations to our backup facility for most services, and potentially longer for some services. During this time, our
customers would be unable to use those services, and we could suffer a loss of revenue and harm to our reputation. When
operating on our backup facility, any further failure could leave us unable to offer services for an extended period. Our
gateways and operations center may also experience service shutdowns or periods of reduced service in the future as a result of
equipment failures, delays in deliveries, or regulatory issues. Any such failure would impede our ability to provide service to
our customers.
Our customized hardware and software may be difficult and expensive to service, upgrade or replace.
Some of the hardware and software we use in operating our gateways is significantly customized and tailored to meet our
requirements and specifications and could be difficult and expensive to service, upgrade or replace. Although we maintain
inventories of some spare parts, it nonetheless may be difficult, expensive or impossible to obtain replacement parts for the
hardware due to a limited number of those parts being manufactured to our requirements and specifications. In addition, our
business plan contemplates updating or replacing some of the hardware and software in our network as technology advances,
but the complexity of our requirements and specifications may present us with technical and operational challenges that
complicate or otherwise make it expensive or infeasible to carry out such upgrades and replacements. If we are not able to
suitably service, upgrade or replace our equipment, our ability to provide our services and therefore to generate revenue could
be harmed.
Rapid and significant technological changes in the satellite communications industry may impair our competitive position
and require us to make significant additional capital expenditures.
The satellite communications industry is subject to rapid advances and innovations in technology. We may face competition in
the future from companies using new technologies and new satellite systems, including a significant number of new entrants
who are developing or have announced a wide array of technologies, some of which would compete directly with one or more
of our existing or planned products and services. New technology could render our system obsolete or less competitive by
satisfying customer demand in more attractive ways or through the introduction of incompatible standards. Particular
technological developments that could adversely affect us include the deployment by our competitors of new satellites with
greater power, flexibility, efficiency or capabilities than ours, as well as continuing improvements in terrestrial wireless
technologies. For us to keep up with technological changes and remain competitive, we may need to make significant capital
expenditures, including capital to design and launch new products and services over the short to medium term, and, over the
longer term, the acquisition of additional spectrum, satellites, launch vehicles and other network resources to support continued
growth. Customer acceptance of the products and services that we offer will continually be affected by technology-based
differences in our product and service offerings compared to those of our competitors. New technologies may also be protected
by patents or other intellectual property laws and therefore may not be available to us. Any failure on our part to implement
new technology within our system may compromise our ability to compete.
Our networks and those of our third-party service providers may be vulnerable to cybersecurity risks.
We expect the secure transmission of confidential information over public networks to continue to be a critical element of our
ability to compete for business, manage our risks, and protect our customers and our reputation. Our network and those of our
third-party service providers and our customers may be vulnerable to unauthorized access, computer attacks, viruses and other
security problems. Persons who circumvent security measures could wrongfully access and obtain or use information on our
network or cause service interruptions, delays or malfunctions in our devices, services or operations, any of which could harm
our reputation, cause demand for our products and services to fall, and compromise our ability to pursue our business plans.
Recently, there have been reported several significant, widespread security attacks and breaches that have compromised
network integrity for many companies and governmental agencies, in some cases reportedly originating from outside the United
States. In addition, there are reportedly private products available in the market today that may attempt to unlawfully intercept
communications made using our network. We may be required to expend significant resources to respond to, contain,
remediate, and protect against these attacks and threats, including compliance with applicable data breach and security laws and
regulations, and to alleviate problems, including reputational harm and litigation, caused by these security incidents. In addition,
in the event of such a security incident, our customer contracts may not adequately protect us against liability to third parties
with whom our customers conduct business. Although we have implemented and intend to continue to implement security
measures, these measures may prove to be inadequate. These security incidents could have a significant effect on our systems,
devices and services, including system failures and delays that could limit network availability, which could harm our business
and our reputation and result in substantial liability.
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Our satellites may collide with space debris or another spacecraft, which could adversely affect the performance of our
constellation.
In February 2009, we lost an operational satellite as a result of a collision with a non-operational Russian satellite. Although we
have some ability to actively maneuver our satellites to avoid potential collisions with space debris or other spacecraft, this
ability is limited by, among other factors, uncertainties and inaccuracies in the projected orbit location of and predicted
conjunctions with debris objects tracked and cataloged by the U.S. government. Additionally, some space debris is too small to
be tracked, and therefore its orbital location is completely unknown; nevertheless, this debris is still large enough to potentially
cause severe damage or a failure of our satellites should a collision occur. If our constellation experiences additional satellite
collisions with space debris or other spacecraft, our service could be impaired.
The space debris created by the February 2009 satellite collision may cause damage to other spacecraft positioned in a
similar orbital altitude.
The 2009 collision of one of our satellites with a non-operational Russian satellite created a space debris field concentrated in
the orbital altitude where the collision occurred, and thus increased the risk of space debris damaging or interfering with the
operation of our satellites, which travel in this orbital altitude, as well as satellites owned by third parties, such as U.S. or
foreign governments or agencies and other satellite operators. Although there are tools used by us and providers of tracking
services, such as the U.S. Combined Space Operations Center, to detect, track and identify space debris, we or third parties may
not be able to maneuver the satellites away from such debris in a timely manner. Any such collision could potentially expose us
to significant losses and liability if we were found to be at fault.
Risks related to our business operations
Our business plan depends on increased demand for mobile satellite services, among other factors.
Our business plan is predicated on growth in demand for mobile satellite services. Demand for mobile satellite services may not
grow, or may even contract, either generally or in particular geographic markets, for particular types of services or during
particular time periods. A lack of demand could impair our ability to sell products and services, develop and successfully
market new products and services and could exert downward pressure on prices. Any decline in prices would decrease our
revenue and profitability and negatively affect our ability to generate cash to pay down our debt or for capital expenditures,
investments and other working capital needs.
Our ability to successfully implement our business plan will also depend on a number of other factors, including:
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our ability to maintain the health, capacity and control of our satellite constellation;
the level of market acceptance and demand for our products and services;
our ability to introduce innovative new products and services that satisfy market demand;
our ability to expand our business using our existing spectrum resources both in the United States and internationally;
our ability to sell our products and services in additional countries;
our ability to comply with applicable regulatory requirements, both in the United States and internationally;
our ability to maintain our relationship with U.S. government customers, particularly the DoD;
the ability of our distributors to market and distribute our products, services and applications effectively and their
continued development of innovative and improved solutions and applications for our products and services;
the effectiveness of our competitors in developing and offering similar services and products; and
our ability to maintain competitive prices for our products and services and to control our costs.
Our agreements with U.S. government customers, particularly the DoD, which represent a significant portion of our
revenue, are subject to termination and renewal.
The U.S. government, through a dedicated gateway owned and operated by the DoD, has been and continues to be, directly and
indirectly, our largest customer, representing 25% and 21% of our revenue for the years ended December 31, 2023 and 2022,
respectively. We provide the majority of our services to the U.S. government pursuant to our GMSS, EMSS, and SDA
contracts. We entered into these contracts in April 2019, September 2019, and June 2022, respectively. The GMSS contract had
an initial term through September 2023 and has been extended through March 31, 2024, as we negotiate renewal of the
agreement. The EMSS contract continues through September 2026, and the SDA contract has a base term until January 2025
and up to five one-year options exercisable at the election of the U.S. government. The U.S. government may terminate these
agreements, in whole or in part, at any time for its convenience. Our relationship with the U.S. government is also subject to the
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overall U.S. government budget and appropriation decisions and processes. U.S. government budget decisions, including with
respect to defense spending, are based on changing government priorities and objectives, which are driven by numerous factors,
including geopolitical events and macroeconomic conditions, and are beyond our control. If the U.S. government terminates
any or all of these agreements, we would lose a significant portion of our revenue.
Further, operational control of our contracts has been moved from the Defense Information Systems Agency to the U.S. Space
Force. In connection with this operational shift, changes in internal pricing and cost recovery have resulted in reduced
subscribers under the EMSS contract. Lower subscriber use may negatively affect our ability to negotiate a renewal of the
EMSS contract on favorable terms in 2026.
If we fail to comply with the terms of our U.S. government contracts, including applicable federal acquisition regulations,
we may be subject to contract price adjustments, civil or criminal penalties, or debarment from future U.S. government
contracts.
As a U.S. government contractor or subcontractor, we are subject to federal acquisition regulations, which govern, among other
things, the allowability of costs incurred by us in the performance of U.S. government contracts. The pricing of some contracts,
including the SDA contract, is based on estimated direct and indirect costs. The U.S. government is entitled to examine our cost
records with respect to such contracts and to seek a downward adjustment to the price of the contract if it determines that we
failed to furnish complete, accurate and current cost or pricing data in connection with the negotiation of the price of the
contract. We may also be subject to government audits and to review and approval of our policies, procedures and internal
controls for compliance with procurement regulations and other applicable laws. If we do not comply with the terms of a
contract or with regulations or statutes, we could be subject to downward contract price adjustments or refund obligations or
could be assessed civil and criminal penalties or be debarred or suspended from obtaining future contracts for a specified
period. Any such suspension or debarment or other sanction could have an adverse effect on our business. In addition, if we are
unable to comply with security clearance requirements, we may be unable to perform these contracts or compete for other
projects of this nature, which could adversely affect our revenue.
Aireon, our primary hosted payload customer, may not successfully grow its business, which could reduce or eliminate the
value of our agreements with, and ownership interest in, Aireon.
Aireon is our primary hosted payload customer, and we expect annual revenue to us from Aireon hosting, data services and
power fees to be approximately $32.6 million. In addition, we currently hold a substantial ownership interest in Aireon’s parent
company, Aireon Holdings, and, if and when funds are available following a planned refinancing of its credit facility, Aireon’s
parent company, Aireon Holdings is required to redeem a portion of our ownership interest for a payment of $120.0 million.
Based on Aireon’s business plan and restrictions under Aireon’s debt facility, we do not expect this redemption of our
ownership interest to occur for several years.
Aireon’s business model requires expansion of its customer base to achieve its projected financial results, which may not occur
when projected or at all. While our fee arrangements with Aireon are fixed, if Aireon does not achieve its projected results, they
may not be able to pay us the contractually required hosting, data services and power fees in a timely manner or at all. Further,
Aireon may need to seek additional financing. Any sale of equity securities by Aireon would dilute our ownership if and to the
extent that we do not invest additional funds to maintain our proportional ownership interest. If additional funding is not
available, Aireon may default on its credit facility, which could result in the loss or reduction in value of our investment in
Aireon, or be forced out of business, in which case we would not receive any further hosting, data or power fees, or the
expected $120.0 million redemption payment, and we would lose the fair value of our retained investment in Aireon Holdings.
We depend on intellectual property licensed from third parties to operate our constellation and sell our devices and for the
enhancement of our existing devices and services.
We license critical intellectual property and technology to operate and maintain our network and related ground infrastructure
and services as well as to design, manufacture, and sell our devices. This intellectual property and technology is essential to our
ability to continue to operate our constellation and sell our services and devices. In addition, we depend on third parties to
develop enhancements to our current products and services even in circumstances where we own the intellectual property. If
any third-party owner of such intellectual property or technology were to terminate any license agreement with us or cease to
support and service such intellectual property or technology or perform development on our behalf, or if we are unable to renew
such licenses on commercially reasonable terms or at all, it may be difficult, more expensive or impossible to obtain such
intellectual property, technology, or services from alternative vendors. Any substitute intellectual property or technology may
also be costly to develop and integrate, or could have lower quality or performance standards, which would adversely affect the
quality of our devices and services. In connection with the development of new devices and services, we may be required to
obtain additional intellectual property rights from third parties. We can offer no assurance that we will be able to obtain such
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intellectual property rights on commercially reasonable terms or at all. If we are unable to obtain such intellectual property
rights on commercially reasonable terms, we may not be able to develop some new devices and services.
Our failure to effectively manage the expansion of our portfolio of products and services could impede our ability to execute
our business plan, and we may experience increased costs or disruption in our operations.
In order to achieve the substantial future revenue growth we have projected, we must develop and market new products and
services. We currently face a variety of challenges, including maintaining the infrastructure and systems necessary for us to
manage the growth of our business. As our product and service portfolio continues to expand, the responsibilities of our
management team and demands on other company resources also increase. Consequently, we may further strain our
management and other company resources with the increased complexities and administrative burdens associated with a larger,
more complex portfolio of products and services. For example, we have in the past experienced quality issues and incorrect
market assessments in connection with the introduction of new products and services, and we may experience such issues in the
future. Our failure to meet these challenges as a result of insufficient management or other resources could significantly impede
our ability to execute our business plan, which relies in part on our ability to leverage our largely fixed-cost infrastructure. To
properly manage our growth, we may need to hire and retain additional personnel, upgrade our existing operational
management and financial and reporting systems, and improve our business processes and controls. Failure to effectively
manage the expansion of our portfolio of products and services in a cost-effective manner could result in declines in product
and service quality and customer satisfaction, disruption of our operations, or increased costs, any of which would reduce our
ability to increase our profitability.
We could lose market share and revenue as a result of increasing competition from companies in the wireless
communications industry, including cellular and other satellite operators, and from the extension of land-based
communications services.
We face intense competition in all of our markets, which could result in a loss of customers and lower revenue and make it
more difficult for us to enter new markets. We compete primarily on the basis of coverage, quality, portability, and pricing of
services and products.
The provision of satellite-based services and products is subject to downward price pressure when capacity exceeds demand or
as a result of aggressive discounting by some operators under financial pressure to expand their respective market share. In
addition, we may face competition from new competitors, new technologies or new equipment, including new and proposed
LEO constellations. For example, we may face competition for our services in the United States from service providers with
ancillary terrestrial component, or ATC, authorities who are designing a satellite operating business and a terrestrial component
around their spectrum holdings, or from service providers developing satellite direct to terrestrial phone capabilities. In
addition, some of our competitors have announced plans for the launch of additional satellites. As a result of competition, we
may not be able to successfully retain our existing customers and attract new customers.
In addition to our satellite-based competitors, terrestrial voice and data service providers, both wireline and wireless, could
further expand into rural and remote areas and provide the same general types of services and products that we provide through
our satellite-based system. Although satellite communications services and terrestrial communications services are not perfect
substitutes, the two compete in some markets and for some services. Consumers generally perceive terrestrial wireless voice
communication products and services as cheaper and more convenient than those that are satellite-based. Many of our terrestrial
competitors have greater resources, wider name recognition and newer technologies than we do. In addition, industry
consolidation could hurt us by increasing the scale or scope of our competitors, thereby making it more difficult for us to
compete.
We depend on third parties to market and sell our products and services, and their inability to do so effectively could impair
our revenue and our reputation.
We select third-party distributors, in some cases on an exclusive basis, and rely on them to market and sell our products and
services to end users and to determine the prices end users pay. We also depend on our distributors to develop innovative and
improved solutions and applications integrating our product and service offerings. As a result of these arrangements, we are
dependent on the performance of our distributors to generate most of our revenue. Our distributors operate independently of us,
and we have limited control over their operations, which exposes us to significant risks. Distributors may not commit the same
level of resources to market and sell our products and services that we would, and these distributors may also market and sell
competitive products and services. In addition, our distributors may not comply with the laws and regulatory requirements in
their local jurisdictions, which could limit their ability to market or sell our products and services. If our distributors develop
faulty or poorly performing products using our technology or services, we may be subject to claims, and our reputation could be
harmed. If current or future distributors do not perform adequately, or if we are unable to locate competent distributors in
particular countries and secure their services on favorable terms, we may be unable to increase or maintain our revenue in these
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markets or enter new markets, we may not realize our expected growth, and our brand image and reputation could be hurt. For
example, in 2023, we announced an arrangement with Qualcomm Technologies, Inc., or Qualcomm, to include our services on
a processor for use in smartphones and act as our VAM and service provider with smartphone manufacturers. Although
Qualcomm successfully developed and demonstrated the service, they were unable to market the processor successfully to
smartphone manufacturers. As a result, Qualcomm elected to terminate our arrangement with them. This arrangement included
large penalties had we marketed a similar technology with another partner; as a result, we expect a substantial delay in our
ability to develop a similar service with a different third party.
In addition, we may lose distributors due to competition, industry consolidation, regulatory developments, business
developments affecting our distributors or their customers, or for other reasons. In 2009, one of our largest competitors,
Inmarsat (now Viasat), acquired our then largest distributor, Stratos Global Wireless, Inc., and in 2014, Inmarsat acquired
Globe Wireless, one of our service providers. Following each acquisition, Inmarsat essentially stopped promoting sales of our
products and services, and they and other competitors could further reduce their distribution efforts with respect to our products
and services in the future. Any future consolidation of our distributors would further increase our reliance on a few key
distributors of our services and the amount of volume discounts that we may have to give those distributors. Our two largest
distributors, Marlink Group and Garmin, together represented approximately 10% of our revenue for the year ended
December 31, 2023, and our ten largest distributors represented, in the aggregate, 27% of our revenue for the year ended
December 31, 2023. The loss or consolidation of any of these distributors, or a decrease in the level of effort expended by any
of them to promote our products and services, could reduce the distribution of our products and services as well as the
development of new products and applications, which would negatively affect our revenue.
Our business was negatively affected by the COVID-19 pandemic, actions taken to mitigate the pandemic, and the economic
disruptions that resulted, and a resurgence or similar pandemic in the future could harm our business.
The COVID-19 pandemic, the steps taken to respond, and the resulting substantial domestic and global economic disruption led
to reduced sales and limited our distributors’ ability to install or service our products. The aviation industry was particularly
hard hit, which had an adverse effect on our primary hosted payload customer, Aireon, in which we have also made substantial
investments.
The pandemic also negatively affected the payment of accounts receivable and collections. For example, one of our distributors
sought protection in bankruptcy, reducing the amount we received from them for past services. Finally, factors related to the
pandemic, including changing work environments, concerns over safety, reluctance to obtain vaccines, and changing economic
conditions, caused an increase in employee resignations across many industries and companies, including ours.
Any resurgence of the COVID-19 pandemic, or another future pandemic, that causes similar disruption could further adversely
affect our business, results of operations and financial condition.
We rely on a limited number of key vendors for supply of equipment, components and services; the loss of any such supplier,
or shortages experienced by such suppliers, could cause us to incur additional costs and delays in the production and
delivery of our products, which could reduce the sales of those products and use of the related services.
We currently rely on a limited number of manufacturers of our devices, including our mobile handsets, L-band transceivers and
SBD devices. We also utilize sole source suppliers for some of the component parts of our devices. If any of our suppliers were
to terminate its relationship with us, we may not be able to find a replacement supplier in a timely manner, at an acceptable
price or at all.
Further, our manufacturers and suppliers may cease production of our components or products or become capacity-constrained,
or could face financial difficulties as a result of a surge in demand, a natural disaster or other event. For example, several of our
suppliers experienced production delays as a result of the recent global silicon chip shortage. As a result, we experienced delays
in fulfilling some product orders and are evaluating replacement components and product changes. These delays increased our
costs and reduced our sales of those products and use of the related services.
Any future delay in production or delivery of our products or components by our suppliers could similarly adversely affect our
business. Even if we are able to replace or supplement sole source or other component suppliers, there could be a substantial
period of time in which our products would not be available; any new relationship may involve higher costs and delays in
development and delivery, and we may encounter technical challenges in successfully replicating the manufacturing processes.
If our manufacturers or suppliers terminate their relationships with us, fail to provide equipment or services to us on a timely
basis, or fail to meet our performance expectations, we may be unable to provide products or services to our customers in a
competitive manner, which could in turn negatively affect our financial results and our reputation.
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Our Russian operations have been and may continue to be affected by Russia’s invasion of Ukraine and related sanctions
imposed in response, and we may in the future choose or be required to further limit or shut down those operations entirely.
We provide satellite communications services in Russia through two local subsidiaries employing 36 people and authorized
Russian service providers, using a dedicated gateway in Russia. In 2023, revenue from our operations in Russia represented
approximately 1.8% of our total revenue, all of which was service revenue. As a result of Russia’s invasion of Ukraine in
February 2022, we ceased shipments of equipment to Russia and made other adjustments to our operations in light of U.S. and
international sanctions. Further, our sales in Russia are conducted in rubles and then translated to U.S. dollars in our financial
results. The value of the ruble has fluctuated substantially since the invasion, which may affect our reported revenues. As a
result of these factors, we expect revenue from our operations in Russia to be variable and difficult to predict.
In addition, we may in the future choose or be required to further limit or cease operations in Russia entirely, in which case we
will no longer receive any revenue from those operations. We could also incur significant expenses as a result of the process of
shutting down operations in Russia.
Conducting and expanding our operations outside the United States creates numerous risks, which may harm our
operations and compromise our ability to expand our international operations.
We have significant operations outside the United States. We estimate that commercial data traffic originating outside the
United States accounted for 96% and 95% of total commercial data traffic for the years ended December 31, 2023 and 2022,
respectively, while commercial voice traffic originating outside the United States accounted for 91% and 90% of total
commercial voice traffic for the years ended December 31, 2023 and 2022. We cannot provide the precise geographical
distribution of revenue from end users because we do not contract directly with them. Instead, we determine the country in
which we earn our revenue based on where we invoice our distributors. These distributors sell services directly or indirectly to
end users, who may be located or use our products and services elsewhere. We and our distributors are also seeking
authorization to sell our services in additional countries.
Conducting operations outside the United States involves numerous risks and, while expanding our international operations
would advance our growth, it would also increase our exposure to these risks.
Risks associated with the potential expansion of our international operations include:
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difficulties in penetrating new markets due to established and entrenched competitors;
difficulties in developing products and services that are tailored to the needs of local customers;
lack of local acceptance or knowledge of our products and services;
lack of recognition of our products and services;
unavailability of, or difficulties in establishing, relationships with distributors;
significant investments, including the development and deployment of dedicated gateways, as some countries require
physical gateways within their jurisdiction to connect the traffic coming to and from their territory;
instability of international economies and governments;
effects of a global pandemic, such as COVID-19, including on international economies, supply chains and travel;
changes in laws and policies affecting trade and investment in other jurisdictions;
exposure to varying legal standards, including data privacy, security and intellectual property protection in other
jurisdictions;
difficulties in obtaining required regulatory authorizations;
difficulties in enforcing legal rights in other jurisdictions;
local domestic ownership requirements;
requirements that operational activities be performed in-country;
changing and conflicting national and local regulatory requirements;
foreign currency exchange rates and exchange controls; and
ongoing compliance with the U.S. Foreign Corrupt Practices Act, U.S. export controls, anti-money laundering and
trade sanction laws, and similar international anti-corruption and trade laws in other countries.
If any of these risks were to materialize, it could affect our ability to successfully compete and expand internationally.
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Government organizations, foreign military and intelligence agencies, natural disaster aid associations, and event-driven
response agencies use our commercial voice and data satellite communications services. Accordingly, we may experience
reductions in usage due to changing global circumstances.
The prices for our products and services are typically denominated in U.S. dollars. Any appreciation of the U.S. dollar against
other currencies will increase the cost of our products and services to our international customers and, as a result, may reduce
the competitiveness of our international offerings and make it more difficult for us to grow internationally.
Pursuing strategic transactions may cause us to incur additional risks.
We may pursue acquisitions, joint ventures or other strategic transactions from time to time. We may face costs and risks
arising from any such transactions, including integrating a new business into our business or managing a joint venture. These
risks may include adverse legal, organizational and financial consequences, loss of key customers and distributors, and
diversion of management’s time.
In addition, any major business combination or similar strategic transaction may require significant additional financing, and
our ability to obtain such financing may be restricted by the credit agreement governing our currently outstanding term loan
with various lenders administered by Deutsche Bank AG, or the Term Loan. Further, depending on market conditions, investor
perceptions of our company and other factors, we might not be able to obtain financing on acceptable terms, in acceptable
amounts, or at appropriate times to implement any such transaction. Any such financing, if obtained, may dilute existing
stockholders.
Spectrum values historically have been volatile, which could cause the value of our business to fluctuate.
Our business plan is evolving, and it may in the future include forming strategic partnerships to maximize value for our
spectrum, network assets and combined service offerings in the United States and internationally. Values that we may be able to
realize from such partnerships will depend in part on the value placed on our spectrum authorizations. Valuations of spectrum
in other frequency bands historically have been volatile, and we cannot predict at what amount a future partner may be willing
to value our spectrum and other assets. In addition, to the extent that the FCC takes action that makes additional spectrum
available or promotes the more flexible use or greater availability of existing satellite or terrestrial spectrum allocations, for
example by means of spectrum leasing or new spectrum sales, the availability of such additional spectrum could reduce the
value of our spectrum authorizations and, as a result, the value of our business.
We may be negatively affected by global economic conditions.
Our operations and performance depend significantly on worldwide economic conditions. Uncertainty about global economic
conditions poses a risk as individual consumers, businesses and governments may postpone spending in response to tighter
credit, negative financial news, declines in income or asset values, or budgetary constraints. Reduced demand would cause a
decline in our revenue and make it more difficult for us to operate profitably, potentially compromising our ability to pursue our
business plan. We expect our future growth rate will be affected by the condition of the global economy, increased competition,
maturation of the satellite communications industry, and the difficulty in sustaining high growth rates as we increase in size.
Any substantial appreciation of the U.S. dollar may also negatively affect our growth by increasing the cost of our products and
services in foreign countries.
Our ability to operate our company effectively could be impaired if we lose members of our senior management team or key
technical personnel.
We depend on the continued service of key managerial and technical personnel and personnel with security clearances, as well
as our ability to continue to attract and retain highly qualified personnel. We compete for such personnel with other companies,
government entities, academic institutions and other organizations. The unexpected loss or interruption of the services of such
personnel could compromise our ability to effectively manage our operations, execute our business plan and meet our strategic
objectives.
Risks related to our capital structure
We have a considerable amount of debt, which may limit our ability to fulfill our obligations and/or to obtain additional
financing.
As of December 31, 2023, we had $1,500.0 million of consolidated gross indebtedness. Our capital structure and reliance on
indebtedness can have several important consequences, including, but not limited to, the following:
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If future cash flows are insufficient, we may not be able to make principal or interest payments on our debt obligations,
which could result in the occurrence of an event of default under one or more of those debt instruments.
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Our leverage level could increase our vulnerability to adverse economic and industry conditions.
Our indebtedness requires us to dedicate a substantial portion of our cash flow from operations to payments on our
debt, thereby reducing the availability of our cash flow for operations and other purposes.
Our leverage level could make it more difficult for us to satisfy our obligations to our lenders, resulting in possible
defaults on and acceleration of such indebtedness.
Our leverage level could place us at a competitive disadvantage compared to any competitors that have less debt or
comparable debt at more favorable interest rates and that, as a result, may be better positioned to withstand economic
downturns.
Our consolidated indebtedness has the general effect of reducing our flexibility to react to changing business and
economic conditions insofar as they affect our financial condition. The interest rates at which we might secure
additional financings may be higher than our currently outstanding debt instruments or higher than forecasted at any
point in time, which could adversely affect our business, financial condition, results of operations and cash flows.
• Market conditions could affect our access to capital markets, restrict our ability to secure financing to make planned
capital expenditures and investments and pay other expenses, which could adversely affect our business, financial
condition, cash flows and results of operations.
Further, despite our substantial levels of indebtedness, we and our subsidiaries have the ability to incur substantially more
indebtedness, which could further intensify the risks described above.
If we do not generate sufficient cash flows, we may be unable to repay our Term Loan when it matures.
We will need to repay our Term Loan in full at maturity in September 2030. If our cash flows and capital resources are
insufficient to repay the Term Loan when it matures, we may have to undertake alternative financing plans, such as refinancing
or restructuring our debt, selling assets or operations, reducing or delaying capital investments, or seeking to raise additional
capital. We may not be able to refinance our debt, or any refinancing of our debt could be at higher interest rates and may
require us to comply with more restrictive covenants that could further restrict our business operations. Our ability to
implement successfully any such alternative financing plans will depend on a range of factors, including our financial
condition, general economic conditions and the level of activity in capital markets generally. Failure to repay or refinance the
Term Loan at or prior to maturity would result in an event of default under the Term Loan.
The credit agreement governing our Term Loan contains cross-default or cross-acceleration provisions that may cause all of
the debt issued under that instrument to become immediately due and payable because of a default under an unrelated debt
instrument.
Our failure to comply with the obligations contained in the credit agreement governing our Term Loan or other future
instruments of indebtedness could result in an event of default under the applicable instrument, which could result in the related
debt and the debt issued under other instruments (together with accrued and unpaid interest and other fees) becoming
immediately due and payable. In such event, we would need to raise funds from alternative sources, which funds may not be
available to us on favorable terms, on a timely basis, or at all. Alternatively, such a default could require us to sell our assets
and otherwise curtail our operations in order to pay our creditors. These alternative measures could have a material adverse
effect on our business, financial position, results of operations and/or cash flows, which could cause us to become bankrupt or
insolvent or otherwise impair our ability to make payments in respect of our indebtedness.
If we default under the Term Loan, the lenders may require immediate repayment in full of amounts borrowed or foreclose
on our assets.
The credit agreement governing our Term Loan contains events of default, including cross-default with other indebtedness,
bankruptcy, and a change in control (as defined in the credit agreement). If we experience an event of default, the lenders may
require repayment in full of all principal and interest outstanding under the Term Loan. If we fail to repay such amounts, the
lenders may foreclose on the assets we have pledged under the Term Loan, which includes substantially all of the assets of our
domestic subsidiaries, including our principal operating subsidiary, Iridium Satellite LLC.
Certain provisions in the credit agreement governing our Term Loan limit our financial and operating flexibility.
The credit agreement governing our Term Loan contains covenants that place restrictions on, among other things, our ability to:
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incur liens,
engage in mergers or asset sales,
pay dividends,
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repay subordinated indebtedness,
incur indebtedness,
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engage in other specified transactions.
These restrictions are typically structured with dollar limits based on a percentage of our trailing twelve month earnings before
interest, taxes, depreciation and amortization and vary depending on our leverage level (in each case as calculated under the
credit agreement). Complying with these restrictions may make it more difficult for us to successfully execute our business plan
and compete against companies who are not subject to such restrictions.
Our Board of Directors may reduce, suspend or terminate our planned dividends.
In December 2022, our Board of Directors initiated a quarterly dividend and declared a cash dividend on our common stock.
Decisions regarding future dividends are within the discretion of the Board of Directors and may be influenced by a number of
factors, including the price of our common stock, general business and economic conditions, our financial condition and
operating results, the emergence of alternative investment or acquisition opportunities, changes in our business strategy and
other factors. These or other factors could cause our Board of Directors to reduce, suspend or terminate our planned quarterly
dividends, which could reduce the value of our common stock. For more information on our dividends, see “Management’s
Discussion and Analysis of Financial Conditions and Results of Operations.”
Adverse changes in our credit ratings or withdrawal of the ratings assigned to our debt securities by rating agencies may
negatively affect us.
Our ability to access capital markets is important to our ability to operate our business. Increased scrutiny of the satellite
industry and the impact of regulation, as well as changes in our financial performance and unfavorable conditions in the capital
markets could result in credit agencies reexamining our credit ratings. A downgrade in our credit ratings could restrict or
discontinue our ability to access capital markets at attractive rates and increase our borrowing costs. Furthermore, any rating
assigned could be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, future circumstances
relating to the basis of the rating, such as adverse changes, so warrant. Any future lowering of our ratings likely would make it
more difficult or more expensive for us to obtain additional debt financing.
The market price of our common stock may be volatile.
The trading price of our common stock may be subject to substantial fluctuations. Factors affecting the trading price of our
common stock may include:
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•
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failure in the performance of our satellites;
actual or anticipated variations in our operating results, including termination or expiration of one or more of our key
contracts, or a change in sales levels under one or more of our key contracts;
failure of Aireon to successfully carry out its business plan or obtain expected financing;
failure to comply with the terms of the credit agreement governing our Term Loan;
sales of a large number of shares of our common stock or the perception that such sales may occur;
the dilutive effect of outstanding stock options and other equity awards;
changes in financial estimates by industry analysts, or our failure to meet or exceed any such estimates, or changes in
the recommendations of any industry analysts that elect to follow our common stock or the common stock of our
competitors;
impairment of intangible assets;
actual or anticipated changes in economic, political or market conditions, such as recessions or international currency
fluctuations;
actual or anticipated changes in the regulatory environment affecting our industry;
changes in the market valuations of our competitors;
low trading volume; and
announcements by our competitors regarding significant new products or services or significant acquisitions, strategic
partnerships, divestitures, joint ventures or other strategic initiatives.
33
The trading price of our common stock might also decline in reaction to events that affect other companies in our industry even
if these events do not directly affect us. If our stock, the market for other stocks in our industry, or the stock market in general
experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our
business, financial condition or results of operations.
Risks related to legal and regulatory matters
Our business is subject to extensive government regulation, which mandates how we may operate our business and may
increase our cost of providing services and slow our expansion into new markets.
Our ownership and operation of a satellite communications system and the sale of products that operate on that system are
subject to significant regulation in the United States, including by the FCC, the U.S. Department of Commerce and others, and
in foreign jurisdictions by similar local authorities. The rules and regulations of these U.S. and foreign authorities may change,
and such authorities may adopt regulations that limit or restrict our operations as presently conducted or currently contemplated,
including our de-orbit obligations. Such authorities may also make changes in the licenses of our competitors that affect our
spectrum. Such changes may significantly affect our business. Further, because regulations in each country are different, we
may not be aware if some of our distribution partners or persons with whom we or they do business do not hold the requisite
licenses and approvals. Our failure to provide services in accordance with the terms of our licenses or our failure to operate our
satellites or ground stations as required by our licenses and applicable laws and government regulations could result in the
imposition of government sanctions on us, including the suspension or cancellation of our licenses. Our failure or delay in
obtaining the approvals required to operate in other countries would limit or delay our ability to expand our operations into
those countries. Our failure to obtain industry-standard or government-required certifications for our products could
compromise our ability to generate revenue and conduct our business in other countries. Any imposition of sanctions, loss of
license or failure to obtain the authorizations necessary to use our assigned radio frequency spectrum and to distribute our
products in the United States or foreign jurisdictions could cause us to lose sales, hurt our reputation and impair our ability to
pursue our business plan.
In addition, one of our subsidiaries, Iridium Carrier Services LLC, holds a common carrier radio license and is thus subject to
regulation as a common carrier, including limitations and prior approval requirements with respect to direct or indirect foreign
ownership. A change in the manner in which we provide service, or a failure to comply with any common carrier regulations
that apply to us or to pay required fees, could result in sanctions including fines, loss of authorizations, or the denial of
applications for new authorizations or the renewal of existing authorizations.
Repurposing of satellite spectrum by adjacent operators of L-band spectrum for terrestrial services could interfere with our
services.
In February 2003, the FCC adopted ATC rules that permit satellite service providers to establish terrestrial wireless networks in
previously satellite-only bands, subject to certain requirements intended to ensure that terrestrial services remain ancillary to
primary satellite operations and do not interfere with existing operators. In 2011, the FCC granted Ligado Networks (then
known as Lightsquared), or Ligado, a waiver to convert its L-band satellite spectrum to terrestrial use, including a 10 MHz band
close to the spectrum that we use for all of our services. That waiver was subsequently suspended in 2012 due to concerns about
potential interference to GPS operations. Ligado sought another waiver in 2015 to modify the ATC of its L-band mobile
satellite service network with a terrestrial-only proposal designed to address GPS industry concerns. In April 2020, the FCC
announced that it had approved Ligado’s waiver request. We, along with a variety of other private parties and the National
Telecommunications and Information Administration on behalf of federal government users, filed petitions for reconsideration
opposing this waiver out of concern for the interference that we believe Ligado’s proposed operations would cause. These
petitions remain pending. In October 2023, Ligado brought suit against the U.S. government in the Federal Court of Claims
alleging that the Department of Defense, the Department of Commerce, and Congress unlawfully prevented Ligado from using
its exclusively licensed services and seeking damages based on their inability to deploy ATC services in the band.
Ligado’s implementation of these services would result in terrestrial use of L-band spectrum in the 1.6 GHz band, which we use
to provide our services, and such implementation may affect the performance of our system for customers of our existing and
future services. While the FCC’s decision to approve these services included conditions designed to protect other satellite
services that use L-band spectrum from harmful interference, these conditions may prove insufficient, or the level of services
provided may exceed those estimated by the FCC, in which case these or future terrestrial services permitted by the FCC could
substantially interfere with our satellites and devices, which would adversely affect our services. If other countries permit
similar terrestrial use of L-band spectrum in the 1.6 GHz band, the performance of our system may be subject to interference
there as well.
34
If the FCC revokes, modifies or fails to renew our licenses, or fails to grant a new license or modification, our ability to
operate will be harmed or eliminated.
We hold FCC licenses, specifically a license for our satellite constellation, licenses for our U.S. gateway and other ground
facilities, and blanket earth station licenses for U.S. government customers and commercial subscribers, that are subject to
revocation if we fail to satisfy specified conditions. The FCC licenses are also subject to modification by the FCC. Our satellite
constellation license expires on February 23, 2032. Our U.S. gateway earth station and the U.S. government customer and
commercial subscriber earth station licenses expire between February 2036 and March 2037. There can be no assurance that the
FCC will renew the FCC licenses we hold or grant new ones or modifications. If the FCC revokes, modifies or fails to renew
the FCC licenses we hold, or fails to grant a new license or modification, or if we fail to satisfy any of the conditions of our
respective FCC licenses, we may not be able to continue to provide mobile satellite communications services.
As we and our distributors expand our offerings to include more consumer-oriented devices, we are more likely to be subject
to product liability claims, recalls or litigation, which could adversely affect our business and financial performance.
Through our distributors, we offer several services and devices aimed at individual consumers, and we and our distributors
continue to introduce additional services and devices for use with our services. For example, we are working to enable satellite
messaging and emergency services directly in smartphones and other devices using our services, which may dramatically
increase the number of devices that use our services. These services and devices aimed at individual consumers, such as
location-based services, emergency services, satellite handsets, smartphones, and personal locator devices, may contain design
and manufacturing defects. Defects may also occur in components and devices that we purchase from third parties or that our
distributors offer. There can be no assurance we or our distributors will be able to detect and fix all defects in the services,
hardware and software that we or our distributors sell. These services and devices could be used in isolated and dangerous
locations, including emergency response situations, and users who suffer property damage, personal injury or death while using
such services or devices may seek to assert claims or bring lawsuits against us. Further, it is possible that our distributors’
devices could become the subject of consumer protection investigations, enforcement actions or litigation, including class
actions. We seek to limit our exposure to all of these claims by maintaining a consumer protection compliance program, and
through appropriate notices, disclosures, indemnification provisions and disclaimers, but these steps may not be effective or
available in all cases. We also maintain product liability insurance, but this insurance may not cover any particular claim or
litigation, or the amount of insurance may be inadequate to cover the claims brought against us. Product liability insurance
could become more expensive and difficult to maintain and might not be available on acceptable terms or at all. In addition, it is
possible that our or our distributors’ devices could become the subject of a product recall as a result of a device defect. We do
not maintain recall insurance, nor do we have control over our distributors’ devices, and any recall could have a significant
effect on our financial results. In addition to the direct expenses of and potential liability for product liability claims,
investigations, recalls and litigation, a claim, investigation, recall or litigation might cause us adverse publicity, which could
harm our reputation and compromise our ability to sell our services or devices in the future.
The collection, storage, transmission, use and disclosure of user data and personal information could give rise to liabilities
or additional costs as a result of laws, governmental regulations, and evolving views of personal privacy rights and
information security standards.
We transmit, process, and in some cases store in the normal course of our business, personal information. Many jurisdictions
around the world have adopted laws and regulations regarding the collection, storage, transmission, use and disclosure of
personal information. The legal standards for processing, storing and using this personal information continue to evolve, impose
additional obligations and risk on our business, and have the potential to make some of our business processes more costly or
less feasible. For example, numerous U.S. states have adopted consumer privacy laws that gives residents expanded rights to
access and delete their personal information, opt out of certain personal information sharing and receive detailed information
about how their personal information is used by requiring companies to provide new disclosures to consumers and provide such
consumers new ways to opt out of certain sales of personal information. In Europe, the European Commission enacted the
General Data Protection Regulation, or GDPR, which since 2018 has imposed more stringent EU data protection requirements
and provided for greater penalties for noncompliance.
In addition, the interpretation of privacy and data protection laws and regulations regarding the collection, storage,
transmission, use and disclosure of such information in some jurisdictions remains unclear. These laws may be interpreted,
applied and enforced in conflicting ways from state to state and country to country and in a manner that is not consistent with
our current business practices. Complying with these varying privacy and data security legal requirements could cause us to
incur additional costs and change our business practices. Further, our services are accessible in many foreign jurisdictions, and
some of these jurisdictions may claim that we are required to comply with their laws, even where we have no operating entity,
employees or infrastructure located in that jurisdiction. We could face direct expenses related to a variety of enforcement
actions, government investigations, or litigation, and an interruption to our business and adverse publicity because of such
35
enforcement actions, government investigations, or litigation. Such enforcement actions, government investigations, or
litigation could also cause us to incur significant expenses if we were required to modify our products, our services, our
infrastructure, or our existing security and privacy procedures in order to comply with new or expanded privacy and security
regulations.
In addition, if end users allege that their personal information is not collected, stored, transmitted, used or disclosed by us or our
business partners appropriately or in accordance with our policies or applicable laws, or that our failure to adequately secure
their personal information compromised its security, we could have liability to them or to consumer protection agencies,
including claims, investigations and litigation related to such allegations. Any failure on our part to protect end users’ personal
information could result in a loss of user confidence, harm our reputation, result in the loss of users, and cause us to incur
significant expenses.
We have been and may in the future become subject to claims that our devices or services violate the patent or intellectual
property rights of others, which could be costly and disruptive to us.
We operate in an industry that is susceptible to significant intellectual property litigation. As a result, we or our devices or
services from time to time have been and may in the future be subject to intellectual property infringement claims or litigation.
The defense of intellectual property suits is both costly and time-consuming, even if ultimately successful, and may divert
management’s attention from other business concerns. An adverse determination in litigation to which we may become a party
could, among other things:
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subject us to significant liabilities to third parties, including treble damages;
require disputed rights to be licensed from a third party for royalties that may be substantial;
require us to cease using technology that is important to our business; or
prohibit us from selling some or all of our devices or offering some or all of our services.
We may be unable to offer one or more services in important regions of the world due to regulatory requirements, which
could limit our growth.
While our constellation is capable of providing service globally, our ability to sell one or more types of service in some regions
may be limited by local regulations. Some countries have specific regulatory requirements such as local domestic ownership
requirements or requirements for physical gateways within their jurisdiction to connect traffic coming to and from their
territory. In some countries, we may not be able to find an acceptable local partner or reach an agreement to develop additional
gateways, or the cost of developing and deploying such gateways may be prohibitive, which could impair our ability to expand
our product and service offerings in such areas and undermine our value for potential users who require service in these areas.
Also, other countries where we already provide service may impose similar requirements in the future, which could restrict our
ability to continue to sell service in those countries. The inability to offer to sell our products and services in all major
international markets could impair our international growth. In addition, the construction of such gateways in foreign countries
may trigger and require us to comply with various U.S. regulatory requirements that could conflict with or contravene the laws
or regulations of the local jurisdiction. Any of these developments could limit, delay or otherwise interfere with our ability to
construct gateways or other infrastructure or network solutions around the world.
Security and emergency services regulations in the United States and other countries may affect our ability to operate our
system and to expand into new markets.
Our operations are subject to regulations of the U.S. Department of Commerce’s Bureau of Industry and Security relating to the
export of satellites and related technical data as well as our subscriber equipment, the U.S. Treasury Department’s Office of
Foreign Assets Control relating to transactions involving entities sanctioned by the United States, and the U.S. State
Department’s Office of Defense Trade Controls relating to satellite launch. We are also required to provide U.S. and some
foreign government law enforcement and security agencies with call interception services and related government assistance, in
respect of which we face legal obligations and restrictions in various jurisdictions. Given our global operations and unique
network architecture, these requirements and restrictions are not always easy to comply with or harmonize. In addition, some
countries require providers of telecommunications services to connect specified emergency numbers to local emergency
services. We have discussed and continue to discuss with authorities in various countries the procedures used to satisfy our
obligations, and have had to, and may in the future need to, obtain amendments or waivers to licenses or obligations in various
countries. Countries are not obligated to grant requested amendments or waivers, and there can be no assurance that relevant
authorities will not suspend or revoke our licenses or take other legal actions to attempt to enforce the requirements of their
respective jurisdictions.
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These U.S. and foreign obligations and regulations may limit or delay our ability to offer products and services in a particular
country. As new laws and regulations are issued, we may be required to modify our business plans or operations. In addition,
changing and conflicting national and local regulatory requirements may cause us to be in compliance with local requirements
in one country, while not being in compliance with the laws and regulations of another. If we fail to comply with regulations in
the United States or any other country, we could be subject to substantial fines or sanctions that could make it difficult or
impossible for us to operate in the United States or such other country, or we may need to make substantial additional
expenditures to bring our systems, products and services into compliance with the requirements.
We may be unable to obtain and maintain contractually required liability insurance, and the insurance we obtain may not
cover all liabilities to which we may become subject.
Under our agreements with Motorola Solutions and the U.S. government, we are required to maintain an in-orbit liability
insurance policy with a de-orbiting endorsement. The current policy, together with the de-orbiting endorsement, covers amounts
that we and other specified parties may become liable to pay for bodily injury and property damages to third parties related to
processing, maintaining, and de-orbiting our first-generation satellites. Our current policy has a one-year term, which expires on
December 8, 2024, and excludes coverage for all third-party damages relating to the 2009 collision of our satellite with a non-
operational Russian satellite. The price, terms and availability of insurance have fluctuated significantly since we began
offering commercial satellite services. The cost of obtaining insurance can vary as a result of either satellite failures or general
conditions in the insurance industry. Higher premiums on insurance policies would increase our cost. In-orbit liability insurance
policies on satellites may not continue to be available on commercially reasonable terms or at all. In addition to higher
premiums, insurance policies may provide for higher deductibles, shorter coverage periods and additional policy exclusions.
For example, our current de-orbit insurance covers only twelve months from attachment and therefore would not cover losses
arising outside that timeframe. In addition, even if we continue to maintain an in-orbit liability insurance policy, the coverage
may not protect us against all third-party losses, which could be material.
Our current in-orbit liability insurance policy contains, and we expect any future policies would likewise contain, specified
exclusions and material change limitations customary in the industry. These exclusions may relate to, among other things,
losses resulting from in-orbit collisions such as the one we experienced in 2009, acts of war, insurrection, terrorism or military
action, government confiscation, strikes, riots, civil commotions, labor disturbances, sabotage, unauthorized use of the
satellites, and nuclear or radioactive contamination, as well as claims directly or indirectly occasioned as a result of noise,
pollution, electrical and electromagnetic interference, and interference with the use of property.
In addition to our in-orbit liability insurance policy, we are required to maintain insurance to cover the potential liability of
Motorola Solutions, the successor to the manufacturer of our first-generation satellites. We may not in the future be able to
renew this coverage on reasonable terms and conditions, or at all. Our failure to maintain this insurance could increase our
exposure to liability arising in relation to our first-generation satellites.
Wireless devices’ radio frequency emissions are the subject of regulation and litigation concerning their environmental
effects, which includes alleged health and safety risks. As a result, we may be subject to new regulations, demand for our
services may decrease, and we could face liability based on alleged health risks.
There has been adverse publicity concerning alleged health risks associated with radio frequency transmissions from portable
hand-held telephones that have transmitting antennas. Lawsuits have been filed against participants in the wireless industry
alleging a number of adverse health consequences, including cancer, as a result of wireless phone usage. Other claims allege
consumer harm from failures to disclose information about radio frequency emissions or aspects of the regulatory regimes
governing those emissions. Although we have not been party to any such lawsuits, we may be exposed to such litigation in the
future. While we believe we comply with applicable standards for radio frequency emissions and power and do not believe that
there is valid scientific evidence that use of our devices poses a health risk, courts or governmental agencies could determine
otherwise. Any such finding could reduce our revenue and profitability and expose us and other communications service
providers or device sellers to litigation, which, even if frivolous or unsuccessful, could be costly to defend.
If consumers’ health concerns over radio frequency emissions increase, they may be discouraged from using wireless handsets
or other wireless consumer devices. Further, government authorities might increase regulation of wireless handsets and other
wireless consumer devices as a result of these health concerns. Any actual or perceived risk from radio frequency emissions
could reduce the number of our subscribers and demand for our products and services.
Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.
Our ability to utilize U.S. net operating loss carryforwards and other tax attributes may be limited if we experience an
“ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, which generally occurs
if one or more stockholders or groups of stockholders who own at least 5% of our common stock increase their ownership in the
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aggregate by more than 50% over their lowest ownership percentage within a rolling period that begins on the later of three
years prior to the testing date and the date of the last ownership change. Similar rules may apply under state tax laws. If such an
ownership change were to occur, Section 382 of the Code would impose an annual limit on the amount of pre-ownership
change net operating loss carryforwards and other tax attributes we could use to reduce our taxable income. It is possible that
such an ownership change could materially reduce our ability to use our net operating loss carryforwards or other tax attributes
to offset taxable income, which could impact our profitability.
We could be subject to adverse determinations by taxing authorities.
We are subject to regular review and audit by both domestic and foreign tax authorities. As a result, we have received, and may
in the future receive, assessments in multiple jurisdictions on various tax-related assertions, including transfer pricing
adjustments or permanent establishment. Any adverse outcome of such a review or audit could have a negative effect on our
operating results and financial condition. In addition, the determination of our provision for income taxes and other tax
liabilities requires significant judgment, including transactions and calculations where the ultimate tax determination is
uncertain. Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in
our consolidated financial statements and may materially affect our financial results in the period or periods for which such
determination is made.
Changes in tax laws could increase our worldwide tax rate and materially affect our financial position and results of
operations.
Tax policies, laws or rates in various jurisdictions may be subject to significant change, which could materially and adversely
affect our financial position and results of operations. Further, organizations such as the Organization for Economic
Cooperation and Development have published action plans that, if adopted by countries where we do business, could increase
our tax obligations in these countries. Due to our U.S. and international business activities, certain of these enacted and
proposed changes to the taxation of our activities could increase our worldwide effective tax rate, which in turn could harm our
financial position and results of operations.
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely
basis could be impaired.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the rules and regulations of the SEC and The
Nasdaq Global Select Market. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure
controls and procedures and internal controls over financial reporting. We perform system and process evaluation and testing of
our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over
financial reporting in our Annual Reports on Form 10-K, as required by Section 404 of the Sarbanes-Oxley Act. If we are not
able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to
maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements, and we
may conclude that our internal controls over financial reporting are not effective. If that were to happen, the market price of our
stock could decline, and we could be subject to sanctions or investigations by the Nasdaq Global Select Market, the SEC or
other regulatory authorities.
Maintaining effective internal controls over financial reporting is necessary for us to produce reliable financial statements. If we
fail to maintain such controls, it could result in a material misstatement of our financial statements that would not be prevented
or detected on a timely basis, which could cause investors and other users to lose confidence in our financial statements.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk management and strategy
We have implemented and maintain information security processes designed to identify, assess and manage material risks from
cybersecurity threats to our information systems and critical data, including intellectual property and confidential information
that is proprietary, strategic or competitive in nature. Our most important information system is our satellite network and related
ground systems that carry our customers’ traffic on our network. We also maintain critical internal computer networks, as well
as third-party hosted services, communications systems, hardware and software.
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Our management, led by our chief information officer, in conjunction with our internal management security committee and
third-party service providers, helps to identify, assess and manage our cybersecurity threats and risks by monitoring and
evaluating our threat environment and risk profile. These teams use a number of methods to do this, including manual and
automated tools, internal and external threat assessments, and internal and external vulnerability assessments. The third parties
we engage in this effort generally consist of threat intelligence service providers; cybersecurity consultants and software
providers; penetration testing firms; monitoring services; forensic investigators; and other professional services firms, including
legal counsel.
Depending on the environment and system, we implement and maintain several technical, physical, and organizational
measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our
systems and data. These include, for example, IT policies and procedures; a network security policy; an information and asset
management policy; an information security policy; incident planning, detection and response plans, including backup systems;
vulnerability management, including of third parties; risk assessments; establishment of network security controls, including
physical security; annual employee training; systems monitoring; and penetration testing.
We integrate our assessment and management of material risks from cybersecurity threats into our overall risk management
processes. For example, our management security committee generally meets on a monthly basis and evaluates material risks
from cybersecurity threats against our overall business objectives. Our management generally provides reports and status
updates to our board of directors on a quarterly basis, as the board monitors our overall enterprise risk.
In addition to our internal resources, we also use third-party service providers, including application providers and hosting
companies, distributors, and supply chain resources. We have an IT vendor management program designed to identify and
manage cybersecurity risks associated with our use of these providers. As part of this program, we typically conduct risk
assessments for certain IT vendors on an annual basis, including, for example, using security assessment measures such as a
security questionnaire, perform a review of the vendor’s own security program, audits, and vulnerability scans. Depending on
the nature of the services provided, the sensitivity of the information systems and data at issue, and the identity of the provider,
our vendor management process may involve different levels of assessment designed to help identify cybersecurity risks
associated with a provider and may impose contractual obligations related to cybersecurity on the provider.
Despite these measures, we may not be successful in preventing, mitigating or recovering from a cybersecurity incident, which
could have a material adverse effect on our operations or financial results or reputation. While we maintain cybersecurity
insurance, it may not be adequate to cover the costs related to cybersecurity incidents we experience. For a description of the
primary risks from cybersecurity threats that may materially affect our business and how they may do so, see Part I, Item 1A.
Risk Factors in this Annual Report on Form 10-K, including “— Our networks and those of our third-party service providers
may be vulnerable to cybersecurity risks.”
Governance
Our board of directors addresses cybersecurity risk management as part of its general oversight function. The board oversees
our cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats.
Our cybersecurity risk assessment and management processes are implemented and maintained by members of our management
team, led by our chief information officer, who has 15 years of experience in information technology roles and supported by our
director of information security, who holds several certifications in the field of information security and technology. In addition
to our chief information officer, our internal management security committee includes our chief executive officer, chief
financial officer, chief operations officer and chief legal officer, as well as others within our organization in information
technology roles.
Our chief information officer is responsible for hiring appropriate personnel and helping to integrate cybersecurity risk
considerations into our overall risk management strategy and communicating key priorities to relevant personnel. Our chief
information officer is also responsible for approving budgets, helping prepare for cybersecurity incidents, approving
cybersecurity processes and reviewing security assessments and other security-related reports.
Our cybersecurity incident response and vulnerability management processes are designed to escalate certain cybersecurity
incidents to members of management depending on the circumstances. Information regarding cyber incidents is reported at the
monthly meeting of the management security committee or sooner if warranted. Members of this committee work with our
incident response team to help mitigate and remediate cybersecurity incidents of which they are notified. Our incident response
and vulnerability management processes include reporting by management to the board of directors for certain cybersecurity
incidents.
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The board generally receives quarterly reports from our chief operations officer, chief information officer or other members of
management, as well as periodic presentations from outside advisors concerning our significant cybersecurity threats and risk
and the processes we have implemented to address them. The board also has access to various reports, summaries or
presentations related to cybersecurity threats, risk and mitigation.
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Item 2. Properties
The following table describes the facilities we own or lease:
Location
McLean, Virginia
Chandler, Arizona
Leesburg, Virginia
Tempe, Arizona
Chandler, Arizona
Fairbanks, Alaska
Svalbard
Izhevsk, Udmurtia
Moscow
Punta Arenas
Bishop’s Stortford
Country
USA
USA
USA
USA
USA
USA
Norway
Russia
Russia
Chile
United
Kingdom
Approximate
Square Feet
30,600
197,000
Facilities
Corporate Headquarters
Technical Support Center, Distribution Center, Warehouse
and Satellite Teleport Network Facility
40,000
Satellite Network Operations Center
31,000
System Gateway and Satellite Teleport Network Facility
24,000
4,000
Operations Office Space
Satellite Teleport Network Facility
1,800
8,785
2,158
3,200
Satellite Teleport Network Facility
System Gateway and Satellite Teleport Network Facility
Sales and Administration Offices
Satellite Teleport Network Facility
2,400
Sales Offices
Owned/Leased
Leased
Leased
Owned
Owned Building on
Leased Land
Leased
Owned
Owned Building on
Leased Land
Leased
Leased
Owned Building on
Leased Land
Leased
Item 3. Legal Proceedings
Neither we nor any of our subsidiaries are currently subject to any material legal proceeding, nor, to our knowledge, is any
material legal proceeding threatened against us or any of our subsidiaries.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Our common stock is currently listed on the Nasdaq Global Select Market under the symbol “IRDM.” As of February 9, 2024,
there were 135 holders of record of our common stock.
Dividends
Stockholders are entitled to receive, when and if declared by the Company’s Board of Directors from time to time, dividends
and other distributions in cash, stock or property from the Company’s assets or funds legally and contractually available for
such purposes. In each of December 2022, May 2023, September 2023, and December 2023, the Company’s Board of Directors
approved a dividend of $0.13 per share of common stock. The dividends, which were paid on March 30, 2023, June 30, 2023,
September 29, 2023, and December 29, 2023, to stockholders of record as of March 15, 2023, June 15, 2023, September 15,
2023, and December 15, 2023, respectively, resulted in total payments of $64.8 million for the twelve months ended December
31, 2023. The liability related to dividends on common shares underlying unvested RSUs was $1.3 million as of December 31,
2023.
We currently expect that comparable cash dividends will continue to be paid in the future, although future dividends will
depend on our earnings, capital requirements, financial conditions and other factors considered relevant by the Board. On
February 2, 2024, the Board of Directors approved a dividend of $0.13 per share, payable on March 29, 2024 to holders of
record as of March 15, 2024. The Board of Directors plans to increase the quarterly dividend to $0.14 per share starting with the
second quarter 2024 dividend.
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Stock Price Performance Graph
The graph below compares the cumulative total return of our common stock from December 31, 2018 through December 31,
2023, with the comparable cumulative return of three indices, the S&P 500 Index, the Dow Jones Industrial Average Index and
the Nasdaq Telecommunications Index. The graph plots the growth in value of an initial investment of $100 in each of our
common stock, the S&P 500 Index, the Dow Jones Industrial Average Index and the Nasdaq Telecommunications Index over
the indicated time periods. The stock price performance shown on the graph is not necessarily indicative of future price
performance. The following stock price performance graph shall not be deemed to be “filed” for purposes of Section 18 of the
Exchange Act, nor shall this information be incorporated by reference into any future filing under the Securities Act or the
Exchange Act or any other document, except to the extent that we specifically incorporate it by reference into such filing or
document.
43
Iridium Communications Inc.S&P 500 IndexDow Jones Industrial Average IndexNasdaq Telecommunications Index12/31/1812/31/1912/31/2012/31/2112/31/2212/31/23$100$150$200$250$300
Issuer Purchases of Equity Securities
The following table presents our monthly share repurchases for the quarter ended December 31, 2023:
(a)
Total number of
shares purchased
(b)
Average price paid
per share
(c)
Total number of shares
purchased as part of
publicly announced
plans or programs
(d)
Maximum dollar value
of shares that may yet be
purchased under the
plans or programs
255,843
844,963
(1)
261,264
$41.23
$37.37
$40.37
255,843
$375.1 million
816,963
$344.6 million
261,264
$334.0 million
Period
October 1-31
November 1-30
December 1-31
—
Total
(1) Includes 28,000 shares purchased on November 20, 2023 at an average price of $37.01 per share by Matthew J. Desch, our
1,334,070
1,362,070
$38.67
chief executive officer, who may be deemed an affiliated purchaser.
To date, our board of directors has authorized the repurchase of up to $1,000.0 million of our common stock through December
31, 2025. Except for the shares purchased by Mr. Desch, all shares listed above were purchased under these authorizations in
open market transactions.
Item 6. [Reserved].
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
A discussion regarding our financial condition and results of operations for the year ended December 31, 2022 compared to
the year ended December 31, 2021 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” of our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with
the SEC on February 16, 2023.
Background
We were initially formed in 2007 as GHL Acquisition Corp., a special purpose acquisition company. In 2009, we acquired all
the outstanding equity in Iridium Holdings LLC and changed our name to Iridium Communications Inc.
Overview of Our Business
We are engaged primarily in providing mobile voice and data communications services using a constellation of orbiting
satellites. We are the only commercial provider of communications services offering true global coverage, connecting people,
organizations and assets to and from anywhere, in real time. Our low-earth orbit, L-band satellite network provides reliable,
weather-resilient communications services to regions of the world where terrestrial wireless or wireline networks do not exist or
are limited, including remote land areas, open ocean, airways, the polar regions and regions where the telecommunications
infrastructure has been affected by political conflicts or natural disasters.
We provide voice and data communications services to businesses, the U.S. and foreign governments, non-governmental
organizations and consumers via our satellite network, which has an architecture of 66 operational satellites with in-orbit spares
and related ground infrastructure. We utilize an interlinked mesh architecture to route traffic across the satellite constellation
using radio frequency crosslinks between satellites. This unique architecture minimizes the need for ground facilities to support
the constellation, which facilitates the global reach of our services and allows us to offer services in countries and regions where
we have no physical presence.
We sell our products and services to commercial end users through a wholesale distribution network, encompassing
approximately 100 service providers, 300 value-added resellers, or VARs, and 85 value-added manufacturers, or VAMs, who
either sell directly to the end user or indirectly through other service providers, VARs or dealers. These distributors often
integrate our products and services with other complementary hardware and software and have developed a broad suite of
applications for our products and services targeting specific lines of business.
44
At December 31, 2023, we had approximately 2,279,000 billable subscribers worldwide, an increase of 280,000, or 14%, from
approximately 1,999,000 billable subscribers at December 31, 2022. We have a diverse customer base, including end users in
land-mobile, Internet of Things, or IoT, maritime, aviation and government.
We recognize revenue primarily from the provision of services and the sale of equipment. Service revenue represented 74% of
total revenue for each of the years ended December 31, 2023 and 2022. Voice and data, IoT data and broadband service
revenues have historically generated higher margins than subscriber equipment revenue, and we expect this trend to continue.
We also recognize revenue from our hosted payloads, principally from Aireon, including fees for hosting the payloads and fees
for transmitting data from the payloads over our network, as well as revenue from other services, such as satellite time and
location services.
Launch Services Agreements
During 2022, we entered into agreements with Space Exploration Technology Corp. and Thales Alenia Space France for launch
and related services, to launch up to five of our ground spare satellites. The contract price under these agreements was
approximately $40.0 million in the aggregate. In May 2023, we launched five of our remaining ground spare satellites, bringing
our total number of in-orbit spares to 14. Following completion of successful on-orbit testing of the five launched satellites, we
had no plans to use, develop or launch the remaining ground spare and wrote off the full amount remaining in construction-in-
progress for that satellite by recording accelerated depreciation expense of $37.5 million during the second quarter of 2023.
Term Loan
On September 20, 2023, pursuant to an amended and restated credit agreement, or the Credit Agreement, we refinanced our
previously existing term loan resulting in total borrowing of $1,500.0 million, which as amended and restated we refer to as the
Term Loan. We also have an accompanying $100.0 million revolving loan, or the Revolving Facility. The Term Loan now
bears interest at an annual rate equal to the Secured Overnight Financing Rate, or SOFR, plus 2.50%, with a 0.75% SOFR floor.
We typically select a one-month interest period, with the result that interest is calculated using one-month SOFR. Interest is
paid monthly on the last business day of the month. The maturity date of the Term Loan is in September 2030. Principal
payments, payable quarterly beginning with the quarter ending March 31, 2024, equal $15.0 million per annum, which is one
percent of the full principal amount of the Term Loan, with the remaining principal due upon maturity.
The Revolving Facility bears interest at an annual rate of SOFR plus 2.50% (but without a SOFR floor) if and as drawn, with no
original issue discount, a commitment fee of 0.5% per year on the undrawn amount, which will be reduced to 0.375% if we
have a consolidated first lien net leverage ratio, as defined in the Credit Agreement, of less than 3.5 to 1, and a maturity date in
September 2028. See Note 7 to the consolidated financial statements included in this annual report for further discussion of our
Term Loan and Revolving Facility.
In the fourth quarter of 2022, we elected to prepay $100.0 million of principal on the previously existing term loan. As of
December 31, 2023, we reported an aggregate balance of $1,500.0 million in borrowings under the Term Loan, before $17.5
million of net deferred financing costs, for a net principal balance of $1,482.5 million outstanding in our consolidated balance
sheet. We have not drawn on our Revolving Facility.
Our Term Loan contains no financial maintenance covenants. With respect to the Revolving Facility, we are required to
maintain a consolidated first lien net leverage ratio of no greater than 6.25 to 1 if more than 35% of the Revolving Facility has
been drawn. The Credit Agreement contains other customary representations and warranties, affirmative and negative
covenants, and events of default. We were in compliance with all covenants under the Credit Agreement as of December 31,
2023.
The Credit Agreement restricts our ability to incur liens, engage in mergers or asset sales, pay dividends, repay subordinated
indebtedness, incur indebtedness, make investments and loans, and engage in other transactions as specified in the Credit
Agreement. The Credit Agreement provides for specified exceptions, including baskets measured as a percentage of trailing
twelve months of earnings before interest, taxes, depreciation and amortization, or EBITDA, and unlimited exceptions in the
case of incurring indebtedness and liens and making investments, dividend payments, and payments of subordinated
indebtedness, based on achievement and maintenance of specified leverage ratios. The Credit Agreement permits repayment,
prepayment, and repricing transactions, subject, in the case of the Term Loan, to a 1% penalty in the event the Term Loan is
prepaid or repriced within the first six months from the refinancing date. The Credit Agreement also contains a mandatory
prepayment sweep mechanism with respect to a portion of our excess cash flow (as defined in the Credit Agreement) in the
45
event our net leverage ratio rises above 3.5 to 1. As of December 31, 2023, our leverage ratio was below the specified level, and
we were not required to make a mandatory prepayment with respect to 2023 cash flows.
Derivative Financial Instruments
We previously entered into a long-term interest rate swap, or the Swap, to mitigate variability in forecasted interest payments on
a portion of our borrowings under the Term Loan. The Swap expired in November 2021. Under the Swap, on the last business
day of each month, we received variable interest payments based on one-month LIBOR from the counterparty. We paid a fixed
rate of 1.565% per annum on the Swap.
In July 2021, we entered into an interest rate cap agreement, or the Cap, that began in December 2021. The Cap manages our
exposure to interest rate movements on a portion of the Term Loan through November 2026. The Cap, which was not affected
by the refinancing of the Term Loan in September 2023, is designed to mirror the terms of the Term Loan and to offset the cash
flows being hedged. We designated the Cap as a cash flow hedge of the variability of the SOFR-based interest payments on the
Term Loan. The effective portion of the Cap’s change in fair value is recorded in accumulated other comprehensive income
(loss) and reclassified into earnings during the period in which the hedged transaction affects earnings.
In December 2022, we modified the Cap to replace the previous LIBOR base rate with SOFR and received a credit risk
adjustment from the counterparty of 0.064%. The modified Cap now provides us the right to receive payment from the
counterparty if one-month SOFR exceeds 1.436% (1.5% less 0.064%). Prior to the amendment, we received payment under the
terms of the Cap if one-month LIBOR exceeded 1.5%. We began paying a fixed monthly premium based on an annual rate of
0.31% for the Cap in December 2021. The Cap carried a notional amount of $1.0 billion as of December 31, 2023 and 2022.
We also entered into an interest rate swaption agreement, or the Swaption, for which we paid a fixed annual rate of 0.50%. We
sold the Swaption in May 2021 for $0.7 million but continued to pay the fixed rate through the expiration of the Swaption in
November 2021.
At inception, the Swap and Swaption were designated as cash flow hedges for hedge accounting. The unrealized changes in
market value were recorded in accumulated other comprehensive income (loss), and any remaining balance was reclassified
into earnings during the period in which the hedged transaction affected earnings. Due to the changes made to the Term Loan as
a result of the July 2021 repricing, at that time, we elected to de-designate the Swap as a cash flow hedge. Accordingly, as the
related interest payments were still probable, the accumulated balance within other comprehensive income (loss) as of the de-
designation date was amortized into earnings through the November 2021 expiration date.
See Note 8 to our consolidated financial statements included in this report for further discussion of our derivative financial
instruments.
Total Interest on Debt and Loss on Extinguishment
Total interest incurred includes amortization of deferred financing fees and capitalized interest. Due to the refinancing of the
Term Loan in 2023, we incurred third-party financing costs of $15.9 million, of which $14.7 million was expensed. Due to the
prepayments on the Term Loan in the fourth quarter of 2022, we incurred a $1.2 million loss on extinguishment of debt for the
write-off of the related unamortized debt issuance costs for the portion of the Term Loan that was prepaid. To reprice the Term
Loan in 2021, we incurred third-party financing costs of $4.9 million. These costs were expensed and are included within
interest expense on the consolidated statements of operations and comprehensive income (loss) for the years ended December
31, 2023, 2022 and 2021. The repricings of the Term Loan in 2021 resulted in a $0.9 million loss on extinguishment of debt, as
we wrote off the unamortized debt issuance costs related to the lenders who were fully repaid in an exchange of principal.
Total interest incurred during the years ended December 31, 2023, 2022 and 2021 was $102.3 million, $72.1 million and $72.8
million, respectively. Interest incurred includes amortization of deferred financing fees of $4.0 million, $4.8 million and $4.3
million for the years ended December 31, 2023, 2022 and 2021, respectively. Interest capitalized during the years ended
December 31, 2023, 2022 and 2021 was $5.1 million, $2.6 million and $2.1 million, respectively. As of December 31, 2023 and
2022, accrued interest on the Term Loan was $1.0 million and $0.3 million, respectively.
46
Material Trends and Uncertainties
Our industry and customer base have historically grown as a result of:
•
•
•
•
•
•
•
•
demand for remote and reliable mobile communications services;
a growing number of new products and services and related applications;
a broad wholesale distribution network with access to diverse and geographically dispersed niche markets;
increased demand for communications services by disaster and relief agencies and emergency first responders;
improved data transmission speeds for mobile satellite service offerings;
regulatory mandates requiring the use of mobile satellite services;
a general reduction in prices of mobile satellite services and subscriber equipment; and
geographic market expansion through the ability to offer our services in additional countries.
Nonetheless, we face a number of challenges and uncertainties in operating our business, including:
•
•
•
•
•
our ability to maintain the health, capacity, control and level of service of our satellites;
our ability to develop and launch new and innovative products and services;
changes in general economic, business and industry conditions, including the effects of currency exchange rates;
our reliance on a single primary commercial gateway and a primary satellite network operations center;
competition from other mobile satellite service providers and, to a lesser extent, from the expansion of terrestrial-based
cellular phone systems and related pricing pressures;
• market acceptance of our products;
•
•
•
•
•
•
•
regulatory requirements in existing and new geographic markets;
challenges associated with global operations, including as a result of conflicts in or affecting markets in which we
operate;
rapid and significant technological changes in the telecommunications industry;
our ability to generate sufficient internal cash flows to repay our debt;
reliance on our wholesale distribution network to market and sell our products, services and applications effectively;
reliance on a global supply chain, including single-source suppliers for the manufacture of most of our subscriber
equipment and for some of the components required in the manufacture of our end-user subscriber equipment and our
ability to purchase component parts that are periodically subject to shortages resulting from surges in demand, natural
disasters or other events, including a global pandemic, such as COVID-19; and
reliance on a few significant customers, particularly agencies of the U.S. government, for a substantial portion of our
revenue, as a result of which the loss or decline in business with any of these customers may negatively impact our
revenue and collectability of related accounts receivable.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S.
GAAP. The preparation of these financial statements requires the use of estimates and judgments that affect the reported
amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing
basis, we evaluate our estimates, including those related to revenue recognition, income taxes, useful lives of property and
equipment, loss contingencies, and other estimates. We base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under
different assumptions or conditions.
The accounting policies we believe to be most critical to understanding our financial results and condition and that require
complex and subjective management judgments are discussed below. Our accounting policies are more fully described in
Note 2 to the consolidated financial statements included in this report.
47
Income Taxes
We account for income taxes using the asset and liability approach. This approach requires that we recognize deferred tax assets
and liabilities based on differences between the financial statement bases and tax bases of our assets and liabilities. Deferred tax
assets and liabilities are recorded based upon enacted tax rates for the period in which the deferred tax items are expected to
reverse. Changes in tax laws or tax rates in various jurisdictions are reflected in the period of change. Significant judgment is
required in the calculation of our tax provision and the resulting tax liabilities as well as our ability to realize our deferred tax
assets. Our estimates of future taxable income and any changes to such estimates can significantly impact our tax provision in a
given period. Significant judgment is required in determining our ability to realize our deferred tax assets related to federal,
state and foreign tax attributes within their carryforward periods including estimating the amount and timing of the future
reversal of deferred tax items in our projections of future taxable income. A valuation allowance is established to reduce
deferred tax assets to the amounts we expect to realize in the future. We also recognize tax benefits related to uncertain tax
positions only when we estimate that it is “more likely than not” that the position will be sustainable based on its technical
merits. If actual results are not consistent with our estimates and assumptions, this may result in material changes to our income
tax provision.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation and amortization. Property and equipment are
depreciated or amortized over their estimated useful lives. We apply judgment in determining the useful lives based on factors
such as engineering data, our long-term strategy for using the assets, the manufacturer’s estimated design life for the assets,
laws and regulations that could impact the useful lives of the assets and other economic factors. In evaluating the useful lives of
our satellites, we assess the current estimated operational life of the satellites, including the potential impact of environmental
factors on the satellites, ongoing operational enhancements and software upgrades. Additionally, we review engineering data
relating to the operation and performance of our satellite network.
We depreciate our satellites over the shorter of their potential operational life or the period of their expected use. The
appropriateness of the useful lives is evaluated on a quarterly basis or as events occur that require additional assessment. The
upgraded satellites that have been placed into service are depreciated using the straight-line method over their respective
estimated useful lives. If the estimated useful lives of our upgraded satellites change, it could have a material impact on the
timing of the recognition of depreciation expense and hosted payload revenue.
In the fourth quarter of 2023, we updated our estimate of the satellites’ remaining useful lives based on the health of the
constellation, resulting in an extension from 12.5 years to 17.5 years. If our actual operational results are not consistent with our
estimates and assumptions, however, we may experience further changes in depreciation and amortization expense that could be
material to our results of operations. See Note 2 to the consolidated financial statements included in this report for further detail
on the impact of this change.
48
Comparison of Our Results of Operations for the Years Ended December 31, 2023 and 2022
($ In thousands)
Revenue:
Service revenue
Commercial
Government
Total service revenue
Subscriber equipment
Engineering and support services
Total revenue
Operating expenses:
Cost of services (exclusive of depreciation
Year Ended December 31,
2023
% of Total
Revenue
2022
% of Total
Revenue
Change
Dollars
Percent
$ 478,454
106,000
584,454
105,136
101,133
790,723
61 % $ 428,721
59 % $ 49,733
13 % 106,000
15 %
—
74 % 534,721
74 %
49,733
13 % 134,714
19 %
(29,578)
13 %
51,599
7 %
49,534
100 % 721,034
100 %
69,689
and amortization)
158,710
20 % 115,137
16 %
43,573
Cost of subscriber equipment
66,410
8 %
86,012
12 %
(19,602)
12 %
0 %
9 %
(22) %
96 %
10 %
38 %
(23) %
25 %
16 %
5 %
10 %
6 %
2 %
17 %
43 %
90 %
10 %
4,051
20,202
16,516
64,740
4,949
(9) %
0 %
0 %
(9) %
(25,298)
1,187
3,905
(20,206)
1 %
0 %
0 %
1 % $
(15,257)
26,543
(4,593)
6,693
39 %
(100) %
3,650 %
31 %
(145) %
(9,090) %
307 %
77 %
Research and development
Selling, general and administrative
Depreciation and amortization
Total operating expenses
Operating income
Other expense:
Interest expense, net
Loss on extinguishment of debt
Other income, net
Total other expense
20,269
143,706
320,000
709,095
81,628
(90,387)
—
4,012
(86,375)
Income (loss) before income taxes and equity
in net earnings of affiliates
Income tax benefit (expense)
Loss on equity method investments
Net income
(4,747)
26,251
(6,089)
$ 15,415
3 %
16,218
18 % 123,504
41 % 303,484
90 % 644,355
76,679
10 %
(11) %
0 %
1 %
(10) %
(65,089)
(1,187)
107
(66,169)
0 %
3 %
(1) %
2 % $
10,510
(292)
(1,496)
8,722
49
Commercial Service Revenue
Year Ended December 31,
2023
Revenue
Billable
Subscribers (1)
2022
ARPU (2)
Billable
Subscribers (1)
(Revenue in millions and subscribers in thousands)
ARPU (2)
Revenue
Revenue
Change
Billable
Subscribers
ARPU
Commercial services:
Voice and data
IoT data
Broadband (3)
Hosted payload and other
data
Total commercial
services
$ 219.2
141.0
57.9
60.3
408 $ 45 $ 193.1
397 $ 42 $ 26.1
11 $
3
1,709 $ 7.45
125.0
1,448 $ 7.89
16.7 $ 305
51.1
15.0 $ 302
N/A
59.5
N/A
16.0
6.8
0.8
261 $ (0.44)
1.7 $
3
N/A
274
$ 478.4
2,134
$ 428.7
1,860
$ 49.7
(1) Billable subscriber numbers are shown as of the end of the respective period.
(2) Average monthly revenue per unit, or ARPU, is calculated by dividing revenue in the respective period by the average of
the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the
period and then dividing the result by the number of months in the period. Billable subscriber and ARPU data is not
applicable for hosted payload and other data service revenue items.
(3) Commercial broadband consists of Iridium OpenPort and Iridium Certus broadband services.
For the year ended December 31, 2023, total commercial service revenue increased $49.7 million, or 12%, primarily as a result
of increases in voice and data, IoT, and broadband revenue mainly driven by increases in billable subscribers. Commercial
voice and data revenue increased $26.1 million, or 14%, from the prior year primarily due to an increase in ARPU resulting
from certain price increases in access fees and an increase in volume across voice and data services. Commercial IoT revenue
increased $16.0 million, or 13%, compared to the prior year, driven by an 18% increase in IoT billable subscribers including
continued strength in personal communications devices. The subscriber increase effect on revenue was partially offset by a 6%
reduction in IoT ARPU, primarily due to the shifting mix of subscribers using lower ARPU plans, including the increased
proportion of personal communication subscribers. Commercial broadband revenue increased $6.8 million, or 13%, compared
to the prior year, due to the increase in broadband billable subscribers. Hosted payload and other service revenue increased $0.8
million, or 1%, which is relatively consistent year over year. There were two offsetting items in the current year, primarily the
one-time recognition of approximately $2.0 million of revenue related to an updated estimate on a customer contract, offset by a
$2.3 million decrease in hosted payload revenue related to the change in the estimated useful lives of our satellites. As a result
of this change in estimate, we expect that hosted payload revenue will decrease by approximately $9.1 million per year for the
remainder of the estimated useful lives.
Government Service Revenue
Year Ended December 31,
2023
2022
Change
Revenue
Billable
Subscribers (1)
Revenue
Billable
Subscribers (1)
Revenue
Billable
Subscribers
(Revenue in millions and subscribers in thousands)
Government service revenue
$
106.0
145 $
106.0
139 $
—
6
(1) Billable subscriber numbers shown are at the end of the respective period.
We provide airtime and airtime support to U.S. government and other authorized customers pursuant to our Enhanced Mobile
Satellite Services, or EMSS, contract. Under the terms of this agreement, which we entered into in September 2019, authorized
customers utilize specified Iridium airtime services provided through the U.S. government’s dedicated gateway. The fee is not
based on subscribers or usage, allowing an unlimited number of users access to these services. Revenue for the year ended
December 31, 2023 was unchanged from the prior year, in accordance with the contract.
50
Subscriber Equipment Revenue
Subscriber equipment revenue decreased $29.6 million, or 22%, to $105.1 million for the year ended December 31, 2023
compared to the prior year, primarily due to the expected decrease in sales volume of Short Burst Data devices, L-Band
transceivers and handsets. In 2024, we expect equipment sales to be lower than 2023 and more in line with periods prior to
2022, before we and our competitors began to experience supply chain disruptions due to the pandemic.
Engineering and Support Service Revenue
Commercial
Government
Total
Year Ended December 31,
2023
2022
(In millions)
Change
$
$
11.0 $
90.1
101.1 $
7.8 $
43.8
51.6 $
3.2
46.3
49.5
Engineering and support service revenue increased by $49.5 million, or 96%, for the year ended December 31, 2023 compared
to the prior year primarily due to the increased work under certain government projects, predominantly the contract awarded by
the Space Development Agency, or the SDA. Based on the SDA contract, we expect engineering and support service revenue,
as well as associated expenses, to be generally higher than in prior years throughout the life of the SDA contract.
Operating Expenses
Cost of Services (exclusive of depreciation and amortization)
Cost of services (exclusive of depreciation and amortization) includes the cost of network engineering and operations staff,
including contractors, software maintenance, product support services, and cost of services for government and commercial
engineering and support service revenue.
Cost of services (exclusive of depreciation and amortization) increased by $43.6 million, or 38%, for the year ended
December 31, 2023 compared to the prior year, primarily as a result of increased work under certain government projects,
including the SDA contract, as noted above.
Cost of Subscriber Equipment
Cost of subscriber equipment includes the direct costs of equipment sold, which consist of manufacturing costs, allocation of
overhead, and warranty costs.
Cost of subscriber equipment decreased $19.6 million, or 23%, for the year ended December 31, 2023 compared to the prior
year period primarily due to the decrease in volume of device sales, as described above.
Research and Development
Research and development expenses increased by $4.1 million, or 25%, for the year ended December 31, 2023 compared to the
prior year period based on increased spending on device-related features for our network.
Selling, General and Administrative
Selling, general and administrative expenses that are not directly attributable to the sale of services or products include sales
and marketing costs as well as employee-related expenses (such as salaries, wages, and benefits), legal, finance, information
technology, facilities, billing and customer care expenses.
Selling, general and administrative expenses increased by $20.2 million, or 16%, for the year ended December 31, 2023,
primarily due to personnel costs from increased headcount and higher employee stock-based compensation expense, increased
marketing expenses and increased professional fees, offset in part by a decrease in stock appreciation rights expense in the
current year resulting from a decrease in our stock valuation between the years.
51
Depreciation and Amortization
Depreciation and amortization expense increased by $16.5 million, or 5%, for the year ended December 31, 2023, compared to
the prior year. As described above, we recorded accelerated depreciation expense of $37.5 million for our remaining ground
spare satellite in the second quarter of 2023, following completion of on-orbit testing of our five newly launched spare
satellites. This increase was offset in part by a decrease in depreciation expense of $25.5 million for the year ended December
31, 2023 due to the change in estimated useful lives of our satellites. As a result of this change in estimate, we expect that
depreciation expense will decrease by approximately $111.0 million per year for the remainder of the estimated useful lives.
Other Expense
Interest Expense, net
Interest expense, net, for the year ended December 31, 2023 was $90.4 million, compared to $65.1 million for the prior year.
The increase in interest expense, net resulted primarily from the $14.7 million in fees expensed in connection with the
refinancing of our Term Loan in September 2023 and an increase in the base rate of our Term Loan compared to the prior year
period.
Loss on Extinguishment of Debt
Loss on extinguishment of debt was $1.2 million for the year ended December 31, 2022 as a result of our election to prepay a
total of $100.0 million, and the write-off the related unamortized debt issuance costs. There were no losses for the year ended
December 31, 2023 in connection with the refinancing of our Term Loan.
Other Income, net
Other income, net, was $4.0 million for the year ended December 31, 2023, compared to other expense, net, of $0.1 million for
the prior year primarily as a result of a one-time customer contractual settlement which resulted in recognition of $3.5 million
of other income in the fourth quarter of 2023.
Income Tax Benefit (Expense)
For the year ended December 31, 2023, our income tax benefit was $26.3 million, compared to income tax expense of
$0.3 million for the prior year. Our effective tax rate was approximately 553.0% for the year ended December 31, 2023
compared to 2.8% for the prior year. The increase in income tax benefit is primarily related to the net impact of (i) pre-tax book
loss in the current year compared to pre-tax book income in the prior year, (ii) an increase in estimated R&D credits, and (iii) an
increased stock compensation tax benefit. If our current estimates change in future periods, the impact on the deferred tax assets
and liabilities may change correspondingly. See Note 12 to our consolidated financial statements for more detail on the
individual items impacting our effective tax rate for the years.
Loss on Equity Method Investments
For the year ended December 31, 2023, our loss on equity method investments was $6.1 million, compared to a loss
$1.5 million in the prior year. The increase in loss primarily reflects the increased duration the equity method investments were
outstanding and the related portion of losses recorded on our those investments during each period.
Net Income
Net income was $15.4 million for the year ended December 31, 2023, compared to $8.7 million during the prior year. The
change primarily resulted from the increase in income tax benefit, as noted above, offset in part by an increase in interest
expense related to the fees paid for the refinancing of our Term Loan and the increased base rate.
Liquidity and Capital Resources
Our primary sources of liquidity are cash provided by operations, cash and cash equivalents and our Revolving Facility. At
December 31, 2023, we had $1.5 billion of indebtedness, consisting exclusively of amounts outstanding under the Term Loan,
the terms of which are described above under the section captioned “Term Loan.” We have additional borrowing available to us
under our Revolving Facility of $100.0 million at December 31, 2023. These sources are expected to meet our short-term and
long-term liquidity needs, including annual payments for (i) required principal and interest on the Term Loan, which we expect
52
to be $15.0 million and, based on the current interest rate, approximately $80.0 million, respectively, (ii) capital expenditures of
approximately $60.0 million, (iii) working capital, (iv) potential share repurchases, and (v) anticipated cash dividend payments
to holders of our common stock.
As of December 31, 2023, our total cash and cash equivalents balance was $71.9 million, down from $168.8 million as of
December 31, 2022. The decrease was principally the result of $247.0 million in repurchases of our common stock, $73.5
million in capital expenditures and $64.8 million in dividends paid, offset by internally generated cash flows from operations.
Contractual Obligations
As of December 31, 2023, we held non-cancelable purchase obligations of approximately $21.5 million for inventory purchases
with Benchmark, our primary third-party equipment supplier. Our purchase obligations, all of which are due during 2024,
decreased $35.4 million from the end of 2022 primarily due to recovery from supply-chain constraints.
Our material long-term cash requirement is the repayment of the remaining principal amount under the Term Loan upon its
maturity in 2030, which is expected to be $1,402.5 million, at that time. We expect to refinance this amount at or prior to
maturity.
Dividends
On December 8, 2022, our Board of Directors initiated a quarterly dividend. In each of December 2022, May 2023,
September 2023 and December 2023, our Board of Directors declared a quarterly cash dividend in the amount of $0.13 per
share of common stock, which were paid in March, June, September and December 2023. Total dividends paid in 2023 were
$64.8 million. While we expect to continue the regular cash dividend program, any future dividends declared will be at the
discretion of our Board of Directors and will depend, among other factors, upon our results of operations, financial condition
and cash requirements, as well as such other factors our Board of Directors deems relevant.
Cash Flows - Comparison of the Years Ended December 31, 2023 and 2022
The following table shows our consolidated cash flows:
Statement of Cash Flows
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Cash Flows from Operating Activities
Year Ended December 31,
2023
2022
Change
(in thousands)
$
$
$
314,913 $
(83,487) $
(327,052) $
344,729 $
(121,267) $
(374,980) $
(29,816)
37,780
47,928
Net cash provided by operating activities for the year ended December 31, 2023 decreased $29.8 million from the prior year.
Cash flows related to changes in working capital decreased by approximately $38.7 million, primarily as a result of an increase
in cash outflows for replenished finished goods and component inventory, including last-time buys, as well as lower cash
inflows related to deferred revenue. These changes in working capital were offset by cash inflows for accounts receivable
related to lower equipment sales. These changes were also partially offset by net income, as adjusted for non-cash activities,
which increased by $8.9 million over the prior year. Net income was adjusted for non-cash, positive adjustments, including
depreciation expense associated with the write-off of the remaining spare satellite in the third quarter, and stock-based
compensation expense, partially offset by non-cash deferred taxes.
Cash Flows from Investing Activities
Net cash used in investing activities for the year ended December 31, 2023 decreased $37.8 million from the prior year period
primarily as a result of our $50.0 million investment in Aireon Holdings in 2022, compared to our $10.0 million investment in
Satelles in 2023, offset in part by increased capital expenditures of $2.2 million, primarily related to payments for the launched
ground spares. Going forward, we expect our capital expenditures to average approximately $60.0 million per year through
2030.
53
Cash Flows from Financing Activities
Net cash used in financing activities for the year ended December 31, 2023 decreased $47.9 million compared to the prior year
period primarily due to the $108.1 million decrease in net principal payments associated with the terms under the refinancing of
our Term Loan, offset in part by the $64.8 million of common stock dividends paid in 2023, as described above.
Seasonality
Our results of operations have been subject to seasonal usage changes for commercial customers, and we expect that our results
will be affected by similar seasonality going forward. March through October are typically the peak months for commercial
voice services revenue and related subscriber equipment sales. U.S. government revenue and commercial IoT revenue have
been less subject to seasonal usage changes.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We had an outstanding aggregate balance of $1,500.0 million under the Term Loan as of December 31, 2023. Under our Term
Loan, we pay interest at an annual rate equal to SOFR plus 2.50%, with a 0.75% SOFR floor. Accordingly, we have been and
continue to be subject to interest rate fluctuations. Our Cap began in December 2021, which manages our exposure to interest
rate movements on a portion of our Term Loan. In 2023, the Cap provided the right for us to receive payment from the
counterparty if one-month SOFR exceeded 1.436%. (See Note 8 for further details on the changes to the Cap.) As a result of the
interest rate rising from the floor to the level of the Cap, we expect our annual interest expense to increase by approximately
$12.0 million, or approximately $3.0 million per quarter. For every SOFR increase of 25 basis points above the level of the
Cap, we expect our annual interest expense to increase by an additional $1.25 million related to the unhedged portion of the
Term Loan.
We have not borrowed under our Revolving Facility. Accordingly, although the Revolving Facility bears interest at SOFR plus
2.5%, without a SOFR floor, if and as drawn, we are not currently exposed to fluctuations in interest rates with respect to our
Revolving Facility.
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents,
as well as accounts receivable. We maintain our cash and cash equivalents with financial institutions with high credit ratings
and at times maintain the balance of our deposits in excess of federally insured limits. The majority of our cash is swept nightly
into a money market fund invested in U.S. treasuries, agency mortgage backed securities and/or U.S. government guaranteed
debt. Accounts receivable are due from both domestic and international customers. We perform credit evaluations of our
customers’ financial condition and record reserves to provide for estimated credit losses. Accounts payable are owed to both
domestic and international vendors.
54
Item 8. Financial Statements and Supplementary Data
Iridium Communications Inc.:
Report of KPMG LLP, Independent Registered Public Accounting Firm (PCAOB ID: 185) . . . . . . . . . .
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID: 42) . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations and Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
56
58
59
60
61
62
64
55
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors
Iridium Communications Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Iridium Communications Inc. and subsidiaries (the Company)
as of December 31, 2023 and December 31, 2022, the related consolidated statements of operations and comprehensive income
(loss), changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the
consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects,
the financial position of the Company as of December 31, 2023 and December 31, 2022, and the results of its operations and its
cash flows for each of the years then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provides a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Changes in estimated useful lives of satellites
As discussed in Note 2 to the consolidated financial statements, the Company’s satellites are depreciated using the straight-
line method over their respective estimated useful lives, which was extended from 12.5 years to 17.5 years during the
fourth quarter of 2023. The Company applied judgment in determining the useful lives based on factors such as
engineering data relating to the operation and performance of its satellite network, the Company’s long-term strategy for
using the assets, and the manufacturer’s estimated design life for the assets. As discussed in Note 4, as of December 31,
2023, the Company had recorded $1,926,487 thousand in total depreciable property and equipment, net of accumulated
depreciation, which included its satellites.
We identified the evaluation of the determination of changes in estimated useful lives of satellites as a critical audit matter.
A high degree of subjective auditor judgment was required to evaluate the Company’s estimated useful lives of the
satellites. Specifically, assessing the factors used to determine the estimated useful lives required subjective auditor
judgment due to the degree of uncertainty associated with the outcome of uncertain future events which required forward
looking assumptions. Changes to the estimated useful lives of satellites could have a significant impact on the timing of
recognition of depreciation expense and hosted payload revenue.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and
tested the operating effectiveness of an internal control related to the Company’s process to determine changes in the
56
estimated useful lives of its satellites. We involved valuation professionals with specialized skills and knowledge, who
assisted in evaluating the estimated useful lives of the satellites by:
• comparing the Company’s useful life estimates to the manufacturer’s estimated design life, and the lives of its first-
generation satellite constellation
• reading publicly available information on the estimated useful lives of similar assets
• inquiring of operations and engineering management personnel regarding satellite operation and performance
• evaluating the Company’s longevity assessment for the satellites
• evaluating the effect of changes, if any, in the Company’s long-term strategy for use of the assets on the useful life
estimates.
/s/ KPMG LLP
We have served as the Company’s auditor since 2022.
McLean, Virginia
February 15, 2024
57
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Iridium Communications Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of operations and comprehensive income (loss), changes in
stockholders’ equity, and cash flows for the year ended December 31, 2021 and the related notes (collectively referred to as the
“consolidated financial statements”) of Iridium Communications Inc. (the Company). In our opinion, the consolidated financial
statements present fairly, in all material respects, the results of the Company’s operations and its cash flows for the year ended
December 31, 2021, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We served as the Company’s auditor from 2001 to 2022.
Tysons, Virginia
February 17, 2022
58
December 31,
2023
December 31,
2022
$
71,870 $
168,770
91,715
91,135
16,364
82,273
39,776
15,385
271,084
306,204
2,195,758
2,433,305
67,130
86,708
41,095
49,853
122,072
42,577
$
2,661,775 $
2,954,011
15,000
28,671
54,826
33,057
131,554
1,467,490
114,642
43,965
16,025
1,773,676
16,500
21,372
67,963
35,742
141,577
1,470,685
151,569
45,265
16,360
1,825,456
123
1,089,466
(235,397)
33,907
888,099
126
1,124,610
(47,744)
51,563
1,128,555
$
2,661,775 $
2,954,011
Iridium Communications Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net
Inventory
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Equity method investments
Other assets
Intangible assets, net
Total assets
Liabilities and stockholders’ equity
Current liabilities:
Short-term secured debt
Accounts payable
Accrued expenses and other current liabilities
Deferred revenue
Total current liabilities
Long-term secured debt, net
Deferred income tax liabilities, net
Deferred revenue, net of current portion
Other long-term liabilities
Total liabilities
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value, 300,000 shares authorized, 122,776 and 125,902 shares
issued and outstanding at December 31, 2023 and 2022, respectively
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income, net of tax
Total stockholders’ equity
Total liabilities and stockholders’ equity
See notes to consolidated financial statements
59
Iridium Communications Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share amounts)
Year Ended December 31,
2023
2022
2021
Revenue:
Services
Subscriber equipment
Engineering and support services
Total revenue
Operating expenses:
Cost of services (exclusive of depreciation and amortization)
Cost of subscriber equipment
Research and development
Selling, general and administrative
Depreciation and amortization
Total operating expenses
Operating income
Other income (expense):
Interest expense, net
Loss on extinguishment of debt
Other income (expense), net
Total other expense
$ 584,454 $ 534,721 $ 491,991
92,071
30,438
614,500
134,714
51,599
721,034
105,136
101,133
790,723
158,710
66,410
20,269
143,706
320,000
709,095
81,628
115,137
86,012
16,218
123,504
303,484
644,355
76,679
(90,387)
—
4,012
(86,375)
(4,747)
26,251
(6,089)
15,415
125,598
127,215
(65,089)
(1,187)
107
(66,169)
10,510
(292)
(1,496)
8,722
128,255
130,134
0.12 $
0.07 $
97,020
53,376
11,885
100,474
305,431
568,186
46,314
(73,906)
(879)
(417)
(75,202)
(28,888)
19,569
—
(9,319)
133,530
133,530
(0.07)
Income (loss) before income taxes and equity in net earnings of affiliates
Income tax benefit (expense)
Loss on equity method investments
Net income (loss)
Weighted average shares outstanding - basic
Weighted average shares outstanding - diluted
Net income (loss) attributable to common stockholders per share - basic and diluted $
Comprehensive income (loss):
Net income (loss)
Foreign currency translation adjustments
Unrealized gain (loss) on cash flow hedges, net of tax (see Note 8)
Comprehensive income (loss)
$
$
15,415 $
(58)
(17,598)
(2,241) $
8,722 $
(53)
58,668
67,337 $
(9,319)
(280)
10,408
809
See notes to consolidated financial statements
60
Iridium Communications Inc.
Consolidated Statements of Changes in Stockholders’ Equity
(In thousands)
Common Stock
Shares
Amount
Additional Paid-
In Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
(Accumulated
Deficit)
Total
Stockholders’
Equity
134,056 $
134 $
1,160,570 $
(17,180) $
275,915 $
1,419,439
Balance at December 31, 2020
Stock-based compensation
Stock options exercised and awards vested
Stock withheld to cover employee taxes
Repurchases and retirements of common stock
Net loss
Cumulative translation adjustments
Unrealized gain on cash flow hedges, net of tax
Balance at December 31, 2021
Stock-based compensation
Stock options exercised and awards vested
Stock withheld to cover employee taxes
Repurchases and retirements of common stock
Net income
Dividends declared
Cumulative translation adjustments
Unrealized gain on cash flow hedges, net of tax
Balance at December 31, 2022
Stock-based compensation
Stock options exercised and awards vested
Stock withheld to cover employee taxes
Repurchases and retirements of common stock
Net income
Dividends declared
Cumulative translation adjustments
Unrealized loss on cash flow hedges, net of tax
Balance at December 31, 2023
—
1,769
(144)
(4,339)
—
—
—
—
1
—
(4)
—
—
—
29,616
7,442
(5,918)
(37,652)
—
—
—
131,342
131
1,154,058
—
1,484
(130)
(6,794)
—
—
—
—
—
2
—
(7)
—
—
—
—
48,367
3,870
(5,293)
(59,776)
—
(16,616)
—
—
125,902
126
1,124,610
—
1,788
(162)
(4,752)
—
—
—
—
—
2
—
(5)
—
—
—
—
64,139
3,956
(9,680)
(43,946)
—
(49,613)
—
—
—
—
—
—
—
(280)
10,408
(7,052)
—
—
—
—
—
—
(53)
58,668
51,563
—
—
—
—
—
—
(58)
(17,598)
—
—
—
(125,786)
(9,319)
—
—
29,616
7,443
(5,918)
(163,442)
(9,319)
(280)
10,408
140,810
1,287,947
—
—
—
(197,276)
8,722
—
—
—
48,367
3,872
(5,293)
(257,059)
8,722
(16,616)
(53)
58,668
(47,744)
1,128,555
—
—
—
(203,068)
15,415
—
—
—
64,139
3,958
(9,680)
(247,019)
15,415
(49,613)
(58)
(17,598)
888,099
122,776 $
123 $
1,089,466 $
33,907 $
(235,397) $
See notes to consolidated financial statements
61
Iridium Communications Inc.
Consolidated Statements of Cash Flows
(In thousands)
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
$ 15,415 $
8,722 $
(9,319)
Year Ended December 31,
2022
2021
2023
Deferred income taxes
Depreciation and amortization
Loss on extinguishment of debt
Stock-based compensation (net of amounts capitalized)
Amortization of deferred financing fees
Loss on equity method investments
All other items, net
Changes in operating assets and liabilities:
Accounts receivable
Inventory
Prepaid expenses and other current assets
Other assets
Accounts payable
Accrued expenses and other current liabilities
Deferred revenue
Other long-term liabilities
(31,828)
(1,189)
320,000
—
57,455
3,739
6,089
732
303,484
1,187
43,732
4,602
1,496
638
(21,314)
305,431
879
26,782
4,201
—
(160)
(9,538)
(50,958)
(1,153)
3,019
2,759
4,899
(2,961)
(2,756)
(18,712)
(10,183)
(4,227)
3,441
4,730
5,929
4,871
(3,792)
(1,823)
3,592
(1,696)
3,911
(2,166)
7,170
(7,531)
(5,083)
302,874
Net cash provided by operating activities
314,913
344,729
Cash flows from investing activities:
Capital expenditures
Investment in related parties
Purchases of other investments
Sales and maturities of marketable securities
Net cash used in investing activities
Cash flows from financing activities:
Borrowings under the Term Loan
Payments on the Term Loan
Repurchases of common stock
Payment of deferred financing fees
Proceeds from exercise of stock options
Tax payments upon settlement of stock awards
Payment of common stock dividends
Net cash used in financing activities
(73,487)
(10,000)
(71,267)
(50,000)
—
—
—
—
(83,487) (121,267)
(42,147)
—
(1,635)
7,400
(36,382)
—
63,940
179,285
(72,315) (116,500) (195,785)
(247,019) (257,059) (163,442)
(4,052)
7,443
(5,918)
—
(327,052) (374,980) (182,469)
(1,162)
3,958
(9,680)
(64,774)
—
3,872
(5,293)
—
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of period
Cash, cash equivalents and restricted cash, end of period
(1,274)
(625)
(96,900) (152,143)
(288)
83,735
168,770
237,178
320,913
$ 71,870 $ 168,770 $ 320,913
See notes to consolidated financial statements
62
Iridium Communications Inc.
Consolidated Statements of Cash Flows, continued
(In thousands)
Year Ended December 31,
2022
2021
2023
Supplemental cash flow information:
Interest paid, net of amounts capitalized
Income taxes paid, net
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment received but not paid for yet
Capitalized stock-based compensation
Dividends accrued on common stock
$
$
$
$
$
91,936 $
4,225 $
63,880 $
2,224 $
72,195
1,784
7,070 $
6,684 $
1,315 $
5,697 $
4,635 $
16,616 $
8,225
2,834
—
See notes to consolidated financial statements
63
Iridium Communications Inc.
Notes to Consolidated Financial Statements
December 31, 2023
1. Organization and Business
Iridium Communications Inc. (the “Company”), a Delaware corporation, offers voice and data communications services and
products to businesses, U.S. and international government agencies and other customers on a global basis. The Company is a
provider of mobile voice and data communications services via a constellation of low earth orbiting satellites. The Company
holds various licenses and authorizations from the U.S. Federal Communications Commission (the “FCC”) and from foreign
regulatory bodies that permit the Company to conduct its business, including the operation of its satellite constellation.
The Company’s operations are conducted through, and its operating assets are owned by, its principal operating subsidiary,
Iridium Satellite LLC (“Iridium Satellite”), Iridium Satellite’s immediate parent, Iridium Holdings LLC, and their subsidiaries.
As a result, there are no material differences between the information presented in these consolidated financial statements of the
Company and the financial information of Iridium Holdings, Iridium Satellite and their subsidiaries, on a consolidated basis,
other than as a result of tax provisions as a result of Iridium Holdings, Iridium Satellite and their subsidiaries being classified as
flow-through entities for U.S. federal income tax purposes.
2. Significant Accounting Policies and Basis of Presentation
Principles of Consolidation and Basis of Presentation
The Company has prepared the consolidated financial statements in accordance with accounting principles generally accepted
in the United States (“U.S. GAAP”). The accompanying consolidated financial statements include the accounts of (i) the
Company, (ii) its wholly owned subsidiaries, and (iii) all less than wholly owned subsidiaries that the Company controls. All
material intercompany transactions and balances have been eliminated. The Company has reclassified certain items in the
consolidated financial statements for the prior periods to be comparable with the classification for the year ended December 31,
2023. These reclassifications had no effect on previously reported net income (loss).
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of income and expenses during the reporting period. On an ongoing
basis, the Company evaluates its estimates and assumptions, including those related to revenue recognition, the useful lives and
recoverability of long-lived and intangible assets, income taxes, stock-based compensation, the incremental borrowing rate for
its leases, and contingencies, among others. The Company bases these estimates on historical and anticipated results, trends,
and various other assumptions that it believes are reasonable, including assumptions as to future events. These estimates form
the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses. Actual
results could differ materially from those estimates.
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Segment Reporting (Topic
280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). This guidance improves reportable segment
disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The Company intends to
apply the new guidance effective for the year ending December 31, 2024, as required. The Company is assessing the potential
effects of the standard but has not yet completed its review of the impact of this guidance.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
(“ASU 2023-09”). The amendments in ASU 2023-09 address investor requests for more transparency about income tax
information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid
information. The Company intends to apply the new guidance effective for the year ending December 31, 2025, as required.
The Company is currently evaluating the effect ASU 2023-09 may have on its consolidated financial statements and related
disclosures.
64
Fair Value Measurements
The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to
determine the appropriate level to classify them for each reporting period. Fair value is the price that would be received from
the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the
measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of
observability of inputs used in measuring fair value.
The fair value hierarchy consists of the following tiers:
• Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities;
• Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or liabilities; and
• Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to
develop its own assumptions.
The fair value estimates are based upon certain market assumptions and information available to the Company. The carrying
values of the following financial instruments approximated their fair values as of December 31, 2023 and 2022: cash and cash
equivalents, prepaid expenses and other current assets, accounts receivable, accounts payable, and accrued expenses and other
current liabilities. Fair values approximate their carrying values because of their short-term nature. The Level 2 cash equivalents
include money market funds, commercial paper and short-term U.S. agency securities. The Company also classifies its
derivative financial instruments as Level 2. In determining fair value of Level 2 assets, the Company uses a market approach
utilizing valuation models that incorporate observable inputs such as interest rates, bond yields and quoted prices for similar
assets.
Leases
For new leases, the Company determines if an arrangement is or contains a lease at inception. Leases are included as right-of-
use (“ROU”) assets within other assets and ROU liabilities within accrued expenses and other liabilities and within other long-
term liabilities on the Company’s consolidated balance sheets.
ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease
term. Certain leases contain variable contractual obligations as a result of future base rate escalations which are estimated based
on observed trends and included within the measurement of present value. The Company’s leases do not provide an implicit
rate. The Company uses its incremental borrowing rate based on the information available at commencement date in
determining the present value of lease payments. The ROU asset also includes any lease payments made and excludes lease
incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For
certain leases, such as teleport network facilities, the Company elected the practical expedient to combine lease and non-lease
components as a single lease component. Taxes assessed on leases in which the Company is either a lessor or lessee are
excluded from contract consideration and variable payments when measuring new lease contracts or remeasuring existing lease
contracts.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash
equivalents and receivables. The majority of cash is invested into a money market fund with U.S. treasuries, agency mortgage
backed securities and/or U.S. government guaranteed debt. While the Company maintains its cash and cash equivalents with
financial institutions with high credit ratings, it often maintains those deposits in federally insured financial institutions in
excess of federally insured limits. The Company performs credit evaluations of its customers’ financial condition and records
reserves to provide for estimated credit losses. Accounts receivable are due from both domestic and international customers.
65
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of ninety days or less to be cash equivalents.
These investments, along with cash deposited in institutional money market funds, regular interest bearing depository accounts
and non-interest bearing depository accounts, are classified as cash and cash equivalents on the accompanying consolidated
balance sheets.
Investments
Investments where the Company has the ability to exercise significant influence, but does not control, are accounted for under
the equity method of accounting and are included in Equity Method Investments on the Company’s consolidated balance sheets.
Significant influence typically exists if the Company’s has a 20% to 50% ownership interest in the investee. Under this method
of accounting, the Company’s share of the net earnings (losses) of the investee is included in loss on equity method investments
on the consolidated statement of operations and comprehensive income (loss).
Investments where the Company has less than 20% ownership interest in the investee and lacks the ability to exercise
significant influence are accounted for under ASC 321-10-35, Investments - Equity Securities. Under this topic, the Company’s
investment equals its cost, less impairment, if any. For investments without a readily determinable fair value, the Company
performs a qualitative assessment to determine if any impairment indicator is present. If an indicator is present, the Company
determines whether fair value was less than the investment’s carrying value. If the fair value is less than its carrying value or if
there is an observable price change through a similar security from the same issuer, the Company would record an impairment
charge.
Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount and are subject to late fee penalties. Management develops its
estimate of an allowance for uncollectible receivables based on the Company’s experience with specific customers, aging of
outstanding invoices, its understanding of customers’ current economic circumstances and its own judgment as to the likelihood
that the Company will ultimately receive payment. The Company writes off its accounts receivable when balances ultimately
are deemed uncollectible. The allowance for doubtful accounts was not material as of December 31, 2023 and 2022.
Foreign Currencies
Generally, the functional currency of the Company’s foreign consolidated subsidiaries is the local currency. Assets and
liabilities of its foreign subsidiaries are translated to U.S. dollars based on exchange rates at the end of the reporting
period. Income and expense items are translated at the weighted-average exchange rates prevailing during the reporting
period. Translation adjustments are accumulated in a separate component of stockholders’ equity. Transaction gains or losses
are classified as other income (expense), net in the accompanying consolidated statements of operations and comprehensive
income (loss). In instances where the financial statements of a foreign entity in a highly inflationary economy are material, they
are remeasured as if the functional currency were the reporting currency. In these instances, the financial statements of those
entities are remeasured into the reporting currency. A highly inflationary economy is one that has cumulative inflation of
approximately 100% or more over a three-year period.
Deferred Financing Costs
Direct and incremental costs incurred in connection with securing debt financing are deferred and are amortized as additional
interest expense using the effective interest method over the term of the related debt.
Capitalized Interest
During the development and construction periods of a project, such as the financing of the Company’s current satellite
constellation, the Company capitalizes interest. Capitalization ceases when the asset is ready for its intended use or when these
activities are substantially suspended. If some portions of a project are substantially complete and ready for use and other
portions have not yet reached that stage, the Company ceases capitalizing costs on the completed portion of the project but
continues to capitalize for the incomplete portion of the project.
Inventory
Inventory consists primarily of finished goods, although the Company also maintains an inventory of raw materials from third-
party manufacturers. The Company outsources manufacturing of subscriber equipment to a third-party manufacturer and
66
purchases accessories from third-party suppliers. The Company’s cost of inventory includes an allocation of overhead,
including payroll and payroll-related costs of employees directly involved in bringing inventory to its existing condition, and
freight. Inventories are valued using the average cost method and are carried at the lower of cost or net realizable value.
The Company’s expense for excess and obsolete inventory was not material during the years ended December 31, 2023, 2022
or 2021.
The Company has a manufacturing agreement with Benchmark Electronics Inc. (“Benchmark”) to manufacture most of its
subscriber equipment. Pursuant to the agreement, the Company may be required to purchase excess materials at cost plus a
contractual markup if the materials are not used in production within the periods specified in the agreement. Benchmark will
then repurchase such materials from the Company at the same price paid by the Company, as required for the production of the
subscriber equipment.
The following table summarizes the Company’s inventory balance:
Finished goods
Raw materials
Inventory valuation reserve
Total
December 31,
2023
2022
(In thousands)
$
48,698 $
43,599
(1,162)
91,135 $
$
17,964
23,014
(1,202)
39,776
The Company’s raw materials balance includes $32.2 million and $9.0 million at December 31, 2023 and December 31, 2022,
respectively, of inventory held on consignment at third-party manufacturers.
Stock-Based Compensation
The Company accounts for stock-based compensation at estimated fair value. The fair value of stock options is determined at
the grant date using the Black-Scholes-Merton option pricing model. The fair value of restricted stock units (“RSUs”) is equal
to the closing price of the underlying common stock on the grant date. The fair value of an award that is ultimately expected to
vest is recognized on a straight-line basis over the requisite service or performance period and is classified in the consolidated
statements of operations and comprehensive income (loss) in a manner consistent with the classification of the recipient’s
compensation. The expected vesting of the Company’s performance-based RSUs is based upon the probability that the
Company achieves the defined performance goals. The level of achievement of performance goals, if any, is determined by the
Compensation Committee. Stock-based awards to non-employee consultants are expensed at their grant-date fair value as
services are provided according to the terms of their agreements and are classified in selling, general and administrative
expenses in the accompanying consolidated statements of operations and comprehensive income (loss). The following table
presents the classification of stock-based compensation by line item on the balance sheet and statement of operations:
Property and equipment, net
Inventory
Cost of subscriber equipment
Cost of services (exclusive of depreciation and amortization)
Research and development
Selling, general and administrative
Total stock-based compensation
As of and For Year Ended December 31,
2023
2022
(In thousands)
$
$
5,963 $
721
60
16,128
1,282
39,985
64,139 $
4,018
617
69
12,337
648
30,678
48,367
67
Property and Equipment
Property and equipment is carried at cost less accumulated depreciation. The Company calculates depreciation expense using
the straight-line method over the useful lives of each asset. The Company applies judgment in determining the useful lives
based on factors such as engineering data, long-term strategy for using the assets, the manufacturer’s estimated design life for
the assets, laws and regulations that could impact the useful lives of the assets and other economic factors. The Company
assesses the current estimated operational life of the satellites, including the potential impact of environmental factors on the
satellites, ongoing operational enhancements and software upgrades when evaluating the useful lives of its satellites.
Additionally, the Company reviews engineering data relating to the operation and performance of its satellite network.
During the fourth quarter of 2023, the Company updated its estimate of the satellites’ remaining useful lives based on the health
of the constellation and related engineering data. As a result, the estimated useful lives of the satellites were extended by five
years, from 12.5 years to 17.5 years. The impact of this change for the year ended December 31, 2023 was a decrease in
depreciation expense of approximately $27.8 million and a decrease in hosted payload and other service revenue of
approximately $2.3 million. For the year ended December 31, 2023, the impact of the change in useful lives of the satellites
resulted in an increase in basic and diluted net income per share of $0.21 and $0.20, respectively.
During the quarter ended June 30, 2023, the Company launched five of its remaining six ground spare satellites. Following
completion of successful on-orbit testing of the five launched satellites, the Company has no plans to use, develop or launch the
remaining ground spare. As the Company believed the construction-in-progress associated with the remaining ground spare
satellite would no longer be used, the Company wrote off the full amount remaining in construction-in-progress for that satellite
by recording accelerated depreciation expense of $37.5 million, which more than offset the decrease in depreciation expense
related to the increase in estimated useful lives of the satellites described above.
Repairs and maintenance costs are expensed as incurred.
Derivative Financial Instruments
The Company uses derivatives (interest rate swap, swaption, cap) to manage its exposure to fluctuating interest rate risk on
variable rate debt. Its derivatives are measured at fair value and are recorded on the consolidated balance sheets within assets
and other current liabilities. When the Company’s derivatives are designated as cash flow hedges, the effective portion of the
changes in fair value of the derivatives are recorded in accumulated other comprehensive income (loss) within the Company’s
consolidated balance sheets and subsequently recognized in earnings when the hedged items impact earnings. Any ineffective
portion of a derivative’s change in fair value will be recognized in earnings in the same period in which the hedged interest
payments affect earnings. Within the consolidated statements of operations and comprehensive income (loss), the gains and
losses related to cash flow hedges are recognized within interest income (expense), net, as this is the same financial statement
line item associated with the hedged items. Cash flows from hedging activities are included in operating activities within the
Company’s consolidated statements of cash flows, which is the same category as the item being hedged. See Note 8 for further
information.
Long-Lived Assets
The Company assesses its long-lived assets for impairment when indicators of impairment exist. Recoverability of assets is
measured by comparing the carrying amounts of the assets to the future undiscounted cash flows expected to be generated by
the assets. Any impairment loss would be measured as the excess of the assets’ carrying amount over their fair value.
Intangible Assets
The Company’s intangible assets with finite lives are amortized over their useful lives and reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If any indicators were
present, the Company would test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash
flows expected to be generated from the asset. If those net undiscounted cash flows do not exceed the carrying amount (i.e., the
asset is not recoverable), the Company would perform the next step, which is to determine the fair value of the asset and record
an impairment loss, if any. The Company evaluates the useful lives for these intangible assets each reporting period to
determine whether events and circumstances warrant a revision in their remaining useful lives.
The Company’s intangible assets with indefinite lives are not amortized but are tested for impairment annually, or more
frequently if events or changes in circumstances indicate the asset may be impaired. The Company’s trade names, spectrum and
licenses are expected to generate cash flows indefinitely.
68
Revenue Recognition
The Company derives its revenue primarily as a wholesaler of satellite communications products and services. The primary
types of revenue include (i) service revenue (access and usage-based airtime fees), (ii) subscriber equipment revenue, and (iii)
revenue generated by providing engineering and support services to commercial and government customers. In addition to the
discussion immediately below, see Note 11 for further discussion of the Company’s revenue recognition.
Wholesaler of satellite communications products and services
Pursuant to wholesale agreements, the Company sells its products and services to service providers and recognizes revenue as it
fulfills its performance obligations to the service providers, based an amount that reflects the consideration to which it expects
to be entitled to in exchange for those products and services. The service providers, in turn, sell the products and services to
other distributors or directly to the end users. The Company recognizes revenue when an arrangement exists, services or
equipment are transferred, the transaction price is determined, the arrangement has commercial substance, and collection of
consideration is probable.
Contracts with multiple performance obligations
At times, the Company sells services and equipment through arrangements that bundle equipment, airtime and other services.
For these revenue arrangements, when the Company sells services and equipment in bundled arrangements and determines that
it has separate distinct performance obligations, the Company allocates the bundled contract price among the various
performance obligations based on each deliverable’s stand-alone selling price. If the stand-alone selling price is not directly
observable, the Company estimates the amount to be allocated for each performance obligation based on observable market
transactions or the residual approach. When the Company determines the performance obligations are not distinct, the Company
recognizes revenue on a combined basis. To the extent the Company’s contracts include variable consideration, the transaction
price includes both fixed and variable consideration. The variable consideration contained within the Company’s contracts with
customers may include discounts, credits and other similar items. When a contract includes variable consideration, the
Company evaluates the estimate of the variable consideration to determine whether the estimate needs to be constrained;
therefore, the Company includes the variable consideration in the transaction price only to the extent that it is probable that a
significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the
variable consideration is subsequently resolved. Variable consideration estimates are updated at the end of each quarter.
Service revenue sold on a stand-alone basis
Service revenue is generated from the Company’s service providers through usage of its satellite system and through fixed
monthly access fees per user charged to service providers. Revenue for usage is recognized when usage occurs and is billed in
arrears with payments generally submitted within 30 days. Revenue for fixed-per-user access fees is billed monthly in advance
and generally recognized over the month, or related usage period, in which the services are provided to the end user. The
Company sells prepaid services in the form of e-vouchers and prepaid cards. A liability is established equal to the cash paid
upon purchase for the e-voucher or prepaid card. The Company recognizes revenue from (i) the prepaid services upon the use
of the e-voucher or prepaid card by the customer and (ii) the estimated pattern of use. The Company does not offer refunds for
unused prepaid services.
Services sold to the U.S. government
The Company provides airtime and airtime support to U.S. government and other authorized customers pursuant to the
Enhanced Mobile Satellite Services (“EMSS”) contract managed by the U.S. Space Force. Under the terms of this agreement,
authorized customers continue to utilize airtime services, provided through the U.S. government’s dedicated gateway. These
services include unlimited global standard and secure voice, low and high-speed data, paging, broadcast and Distributed
Tactical Communications Services (“DTCS”) services for an unlimited number of Department of Defense (“DoD”) and other
federal subscribers. Under this contract, revenue is based on the annual fee for the fixed-price contract with unlimited
subscribers and is recognized on a straight-line basis over each contractual year, with equal payments submitted monthly. The
U.S. government purchases its subscriber equipment from third-party distributors and not directly from the Company.
69
Subscriber equipment sold on a stand-alone basis
The Company recognizes subscriber equipment sales and the related costs when title to the equipment (and the risks and
rewards of ownership) passes to the customer, typically upon shipment. Customers are billed when inventory is shipped, and
payment is generally due within 30 days. Customers do not have rights of return without prior consent from the Company.
Government engineering and support services
The Company provides maintenance services to the U.S. government’s dedicated gateway. This revenue is recognized ratably
over the periods in which the services are provided; the related costs are expensed as incurred.
Other government and commercial engineering and support services
The Company also provides engineering services to assist customers in developing new technologies for use on the Company’s
satellite system. Fees to customers under these agreements are generally based on milestones, and payments are submitted as
milestones are achieved. The revenue associated with fixed-fee contracts is recognized over time using costs incurred to date
relative to total estimated costs at completion to measure progress toward satisfying its performance obligation. The Company
does not include purchases of goods from a third party in its evaluation of costs incurred. Incurred costs represent work
performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. The revenue associated
with cost-plus-fixed-fee contracts is recognized to the extent of estimated costs incurred plus the applicable fees earned. The
Company considers fixed fees under cost-plus-fixed-fee contracts to be earned in proportion to the allowable costs incurred in
performance of the contract.
Research and Development
Research and development costs are charged to expense in the period in which they are incurred.
Advertising Costs
Costs associated with advertising and promotions are expensed as incurred. Advertising expenses were $1.4 million, $1.7
million and $1.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Income Taxes
The Company accounts for income taxes using the asset and liability approach, which requires the recognition of tax benefits or
expenses for temporary differences between the financial reporting and tax bases of assets and liabilities. A valuation allowance
is established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company also
recognizes a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on
its technical merits. The Company’s policy is to recognize interest and penalties on uncertain tax positions as a component of
income tax expense.
Net Income (Loss) Per Share
The Company calculates basic net income (loss) per share by dividing net income (loss) attributable to common stockholders by
the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share
takes into account the effect of potentially dilutive common shares when the effect is dilutive. The effect of potentially dilutive
common shares, including common stock issuable upon exercise of outstanding stock options, is computed using the treasury
stock method. The effect of potentially dilutive common shares from the conversion of outstanding convertible preferred
securities was computed using the as-if converted method at the stated conversion rate. The Company’s unvested RSUs
awarded to the board of directors contain non-forfeitable rights to dividends and therefore are considered to be participating
securities in periods of net income. The calculation of basic and diluted net income (loss) per share excludes net income
attributable to these unvested RSUs from the numerator and excludes the impact of these unvested RSUs from the denominator.
70
3. Cash and Cash Equivalents
Cash and Cash Equivalents
The following table summarizes the Company’s cash and cash equivalents:
Cash and cash equivalents:
Cash
Money market funds
Total cash and cash equivalents
4. Property and Equipment
The following table presents the composition of property and equipment:
Satellite system
Ground system
Equipment
Internally developed software and purchased software
Building and leasehold improvements
Total depreciable property and equipment
Less: accumulated depreciation
Total depreciable property and equipment, net of accumulated
depreciation
Land
Construction-in-process:
Spare satellites
Other construction-in-process
Total property and equipment, net of accumulated depreciation
December 31,
2023
2022
(In thousands)
Recurring Fair
Value
Measurement
$
$
32,526 $
39,344
71,870 $
16,247
152,523
168,770
Level 2
Useful Life
2023
2022
December 31,
$
17.5 years
5-7 years
3-5 years
3-7 years
5-39 years
(In thousands)
3,242,829 $
70,497
51,788
332,824
33,433
3,731,371
(1,804,884)
3,197,460
73,890
49,423
297,538
32,695
3,651,006
(1,538,535)
1,926,487
2,112,471
8,037
8,037
181,557
79,677
2,195,758 $
225,254
87,543
2,433,305
$
Depreciation expense was $318.5 million, $301.9 million and $303.8 million for the years ended December 31, 2023, 2022 and
2021, respectively. See “Property and Equipment” in Note 2 above for more information with respect to depreciation expense
incurred in the year ended December 31, 2023.
71
5. Intangible Assets
The following table presents identifiable intangible assets:
December 31, 2023
Useful
Life
Gross
Carrying Value
Accumulated
Amortization
Net
Carrying Value
(In thousands)
Indefinite life intangible assets:
Trade names
Spectrum and licenses
Total
Definite life intangible assets:
Intellectual property
Assembled workforce
Patents
Total
Indefinite
Indefinite
20 years
7 years
14 - 20 years
$
21,195 $
— $
14,030
35,225
16,439
5,678
587
22,704
—
—
(10,987)
(5,678)
(169)
(16,834)
Total intangible assets
$
57,929 $
(16,834) $
21,195
14,030
35,225
5,452
—
418
5,870
41,095
December 31, 2022
Useful
Life
Gross
Carrying Value
Accumulated
Amortization
Net
Carrying Value
Indefinite life intangible assets:
Trade names
Spectrum and licenses
Total
Definite life intangible assets:
Intellectual property
Assembled workforce
Patents
Total
Indefinite
Indefinite
$
20 years
7 years
14 - 20 years
Total intangible assets
$
(In thousands)
21,195 $
14,030
35,225
16,439
5,678
576
22,693
57,918 $
— $
—
—
(10,347)
(4,867)
(127)
(15,341)
(15,341) $
21,195
14,030
35,225
6,092
811
449
7,352
42,577
Amortization expense was $1.5 million, $1.6 million and $1.6 million for the years ended December 31, 2023, 2022 and 2021,
respectively.
The following table presents future amortization expense with respect to intangible assets existing at December 31, 2023, by
year and in the aggregate:
Year ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total estimated future amortization expense
72
Amount
(In thousands)
$
$
473
473
473
473
473
3,505
5,870
6. Leases
The Company has operating leases for land, office space, satellite network operations center (“SNOC”) facilities, system
gateway facilities, a warehouse and a distribution center. The Company also has operations and maintenance (“O&M”)
agreements that include leases associated with two teleport network facilities. Some of the Company’s leases include options to
extend the leases for up to 10 years. The Company does not include term extension options as part of its present value
calculation of lease liabilities unless it is reasonably certain to exercise those options. As of December 31, 2023, the Company’s
weighted-average remaining lease term relating to its operating leases was 4.7 years, and the weighted-average discount rate
used to calculate the operating lease liability payment was 6.7%.
The following table summarizes the Company’s lease-related assets and liabilities:
Leases
Classification
December 31, 2023
December 31, 2022
Operating lease assets
Noncurrent
Total lease assets
Operating lease liabilities
Current
Noncurrent
Total lease liabilities
Other assets
Accrued expenses and other current
liabilities
Other long-term liabilities
(In thousands)
16,133
16,133
$
$
16,925
16,925
4,327
14,087
18,414
$
$
3,784
15,801
19,585
$
$
$
$
$
During the years ended December 31, 2023, 2022 and 2021, the Company incurred lease expense of $5.2 million, $5.2 million
and $5.6 million, respectively. A portion of lease expense during these comparable periods was derived from leases that were
not included within the ROU asset and liability balances shown above as they had terms shorter than twelve months and were
therefore excluded from balance sheet recognition under ASU 2016-02.
The following table presents future payment obligations with respect to the Company’s operating leases in which it was the
lessee at December 31, 2023, by year and in the aggregate:
Year Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Lessor Arrangements
Amount
(In thousands)
$
5,548
5,646
3,792
2,226
1,982
2,592
$
21,786
Operating leases in which the Company is a lessor consist primarily of hosting agreements with Aireon LLC (“Aireon”) (see
Note 14) and L3Harris Technologies, Inc. (“L3Harris”) for space on the Company’s satellites. These agreements provide for a
fee that will be recognized over the estimated useful lives of the satellites, which is now approximately 17.5 years,
prospectively from the change in estimated useful lives of the satellites that occurred in the fourth quarter of 2023. Lease
income related to these agreements was $19.2 million for the year ended December 31, 2023 and $21.4 million for each of the
years ended December 31, 2022 and 2021. The decrease for 2023 as compared to 2022 was solely the result of the change in
estimated useful life of the satellites. Lease income is recorded as hosted payload and other data service revenue within service
revenue on the Company’s consolidated statements of operations and comprehensive income (loss).
73
The following table presents future income, after giving effect to the extension of estimated useful lives of the satellites, with
respect to the Company’s operating leases in which it was the lessor at December 31, 2023, by year and in the aggregate:
Year Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total lease income
7. Debt
Term Loan and Revolving Facility
Amount
(In thousands)
$
12,391
12,391
12,391
12,391
12,391
82,106
$
144,061
In September 2023, pursuant to an amended and restated credit agreement (the “Credit Agreement”), the Company refinanced
its previously existing term loan resulting in total borrowing of $1,500.0 million (as so amended and restated, the “Term Loan”)
in aggregate principal amount with various lenders administered by Deutsche Bank AG and an accompanying $100.0 million
revolving loan (the “Revolving Facility”). The Term Loan was issued at a price equal to 99.75% of its face value and bears
interest at an annual rate equal to the Secured Overnight Financing Rate (“SOFR”) plus 2.50%, with a 0.75% SOFR floor. The
maturity of the Term Loan is in September 2030. The Company typically selects a one-month interest period, with the result
that interest is calculated using one-month SOFR. Interest is paid monthly on the last business day of the month. Principal
payments, payable quarterly beginning with the quarter ending March 31, 2024, equal $15.0 million per annum (one percent of
the full principal amount of the Term Loan), with the remaining principal due upon maturity.
The Revolving Facility bears interest at the same rate (but without a SOFR floor) if and as drawn, with no original issue
discount, a commitment fee of 0.5% per year on the undrawn amount, which will be reduced to 0.375% if the Company has a
consolidated first lien net leverage ratio (as defined in the Credit Agreement) of less than 3.5 to 1, and a maturity date in
September 2028.
The Company paid $3.8 million of issuance costs to refinance the Term Loan in September 2023, which were deferred and will
be amortized through the term of the loan. Lenders making up approximately $16.8 million of the Term Loan did not participate
in the refinancing. Those portions of the Term Loan were replaced by new or existing lenders. This resulted in an immaterial
loss on extinguishment of debt, as the Company wrote off the unamortized debt issuance costs related to the lenders who were
fully repaid in an exchange of principal. The Company deferred an additional $1.2 million of third-party fees associated with
the refinancing of the Term Loan and the Revolving Facility.
In the fourth quarter of 2022, the Company elected to prepay $100.0 million of principal on the Term Loan. This resulted in a
$1.2 million loss on extinguishment of debt, as the Company wrote off the unamortized debt issuance costs related to this
prepayment.
In the third quarter of 2021, the Company repriced the Term Loan and incurred a $0.9 million loss on extinguishment of debt,
as the Company wrote off the unamortized debt issuance costs related to the lenders who were fully repaid in an exchange of
principal.
As of December 31, 2023 and 2022, the Company reported an aggregate of $1,500.0 million and $1,504.6 million in
borrowings under the Term Loan, respectively. These amounts do not include $17.5 million and $17.4 million of net
unamortized deferred financing costs as of December 31, 2023 and 2022, respectively. The net principal balance in borrowings
in the accompanying consolidated balance sheets as of December 31, 2023 and 2022 amounted to $1,482.5 million and
$1,487.2 million, respectively. As of December 31, 2023 and 2022, based upon over-the-counter bid levels (Level 2 - market
approach), the fair value of the borrowings under the Term Loan was $1,506.6 million and $1,494.3 million, respectively. The
Company had not borrowed under the Revolving Facility as of December 31, 2023 or 2022.
The Credit Agreement restricts the Company’s ability to incur liens, engage in mergers or asset sales, pay dividends, repay
subordinated indebtedness, incur indebtedness, make investments and loans, and engage in other transactions as specified in the
Credit Agreement. The Credit Agreement provides for specified exceptions, including baskets measured as a percentage of
74
trailing twelve months of earnings before interest, taxes, depreciation and amortization (“EBITDA”) and unlimited exceptions
in the case of incurring indebtedness and liens and making investments, dividend payments, and payments of subordinated
indebtedness, based on achievement and maintenance of specified leverage ratios. The Credit Agreement also contains an
annual mandatory prepayment sweep mechanism with respect to a portion of the Company’s excess cash flow (as defined in the
Credit Agreement) in the event the Company’s net leverage ratio rises above 3.5 to 1. As of December 31, 2023, the Company
was below the specified leverage ratio and therefore no mandatory prepayment sweep was not required. The Credit Agreement
permits repayment, prepayment and repricing transactions, subject, in the case of the Term Loan, to a 1% penalty in the event
the Term Loan is prepaid or repriced within the first six months from the refinancing date.
The Credit Agreement contains no financial maintenance covenants with respect to the Term Loan. With respect to the
Revolving Facility, the Credit Agreement requires the Company to maintain a consolidated first lien net leverage ratio (as
defined in the Credit Agreement) of no greater than 6.25 to 1 if more than 35% of the Revolving Facility has been drawn. The
Credit Agreement contains other customary representations and warranties, affirmative and negative covenants, and events of
default. The Company was in compliance with all covenants as of December 31, 2023.
Interest on Debt
Total interest incurred includes amortization of deferred financing fees and capitalized interest. The Company incurred third-
party financing costs of $15.9 million in connection with the refinancing of the Term Loan in September 2023, of which
$14.7 million was expensed. All third-party financing costs incurred during the years ended December 31, 2022 and 2021 were
expensed. All amounts expensed are included within interest expense on the consolidated statements of operations and
comprehensive income (loss).
The following table presents the interest and amortization of deferred financing fees related to the Term Loan:
Year Ended December 31,
2023
2022
(In thousands)
2021
Total interest incurred
Amortization of deferred financing fees
Capitalized interest
$
$
$
102,321 $
3,958 $
5,086 $
72,090 $
4,760 $
2,590 $
72,816
4,316
2,146
As of December 31, 2023 and 2022, accrued interest under the Term Loan was $1.0 million and $0.3 million, respectively.
Total Debt
The following table presents future minimum principal repayments with respect to the Term Loan existing at December 31,
2023, by year and in the aggregate:
Year ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total debt commitments
Less: Original issuance discount
Less: Total short-term debt
Total long-term debt, net
75
Amount
(In thousands)
15,000
$
15,000
15,000
15,000
15,000
1,425,000
1,500,000
17,510
15,000
$ 1,467,490
The repayment schedule above excludes future amounts that may be required to be prepaid pursuant to the excess cash flow
sweep provision of the Credit Agreement, as those amounts are not determinable in advance.
8. Derivative Financial Instruments
The Company is exposed to interest rate fluctuations related to its Term Loan. The Company has reduced its exposure to
fluctuations in the cash flows associated with changes in the variable interest rate by entering into offsetting positions through
the use of interest rate hedges. This will reduce the negative impact of increases in the variable rate over the term of the
derivative contracts. These contracts are not used for trading or other speculative purposes. Historically, the Company has not
incurred, and does not expect to incur in the future, any losses as a result of counterparty default.
Hedge effectiveness of the current interest rate cap agreement (the “Cap”) is based on a long-haul hypothetical derivative
methodology and includes all changes in value. The Company formally assesses, both at the hedge’s inception and on an
ongoing quarterly basis, whether the designated derivative instruments are highly effective in offsetting changes in the cash
flows of the hedged items. When the hedging instrument is sold, expires, is terminated, is exercised, no longer qualifies for
hedge accounting, is designated, or is no longer probable, hedge accounting is discontinued prospectively.
Interest Rate Cap
In July 2021, the Company entered into the Cap, which had an effective date of December 2021 upon the expiration of the
Company’s long-term interest rate swap (the “Swap”). The Cap manages the Company’s exposure to interest rate movements
on a portion of the Term Loan through November 2026. In December 2022, the Company modified the Cap to replace the
previous LIBOR base rate with SOFR and received a credit risk adjustment of 0.064%. The modified Cap provides the
Company the right to receive payment from the counterparty if one-month SOFR exceeds 1.436%. Prior to the modification,
the Company received payment under the terms of the Cap if one-month LIBOR exceeded 1.5%. The Company pays a fixed
monthly premium based on an annual rate of 0.31% for the Cap. The Cap carried a notional amount of $1.0 billion as of
December 31, 2023 and 2022.
The Cap, which was not affected by the refinancing of the Term Loan in September 2023, is designed to mirror the terms of the
Term Loan and to offset the cash flows being hedged. The Company designated the Cap as a cash flow hedge of the variability
of the SOFR-based rate interest payments on the Term Loan. The effective portion of the Cap’s change in fair value will be
recorded in accumulated other comprehensive income (loss). Any ineffective portion of the Cap’s change in fair value will be
recorded in current earnings as interest expense.
Interest Rate Swaps
In November 2019, the Company entered into the Swap which had a term through November 2021 and was intended to
mitigate variability in forecasted interest payments on a portion of the Term Loan. On the last business day of each month, the
Company received variable interest payments based on one-month LIBOR from the counterparty. The Company paid a fixed
rate of 1.565% per annum on the notional amount of $1.0 billion on the Swap until its expiration in November 2021. The
Company also entered into an interest rate swaption agreement (“Swaption”), for which the Company paid a fixed annual rate
of 0.50% of the notional amount. At inception, the Swap and Swaption (collectively, the “swap contracts”) were designated as
cash flow hedges for hedge accounting. The unrealized changes in market value were recorded in accumulated other
comprehensive income (loss) and any remaining balance was reclassified into earnings during the period in which the hedged
transaction affected earnings. Due to the changes made to the Term Loan as a result of the July 2021 repricing, at that time the
Company elected to de-designate the Swap as a cash flow hedge. Accordingly, as the related interest payments were still
probable, the accumulated balance within other comprehensive income (loss) as of the de-designation date was amortized into
earnings through the November 2021 expiration date.
Fair Value of Derivative Instruments
As of December 31, 2023 and 2022, the Company had an asset balance of $66.5 million and $92.3 million, respectively, for the
fair value of the Cap, and a liability balance of $8.4 million and $11.0 million, respectively, for the fair value of the Cap
premium. Both the Cap and the Cap premium are recorded within other assets on the consolidated balance sheet.
76
During the years ended December 31, 2023, 2022, and 2021 the Company collectively incurred $3.3 million, $3.3 million, and
$8.5 million, respectively, in net interest expense for the Cap and Swap contracts. Interest expense was reduced by
$36.2 million and $7.2 million for the years ended December 31, 2023 and 2022, respectively, for payments received related to
the Cap. There were no such interest payments received for the year ended December 31, 2021. Gains and losses resulting from
fair value adjustments to the Cap are recorded within accumulated other comprehensive income within the Company’s
consolidated balance sheet and reclassified to interest expense on the dates that interest payments become due. Cash flows
related to the derivative contracts are included in cash flows from operating activities on the consolidated statements of cash
flows. Over the next 12 months, the Company expects any gains or losses for cash flow hedges amortized from accumulated
other comprehensive income (loss) into earnings to have an immaterial impact on the Company’s consolidated financial
statements.
The following table presents the amount of unrealized gain or loss and related tax impact associated with the derivative
instruments that the Company recorded in its consolidated statements of operations and comprehensive income (loss):
Unrealized gain (loss), net of tax
Tax benefit (expense)
9. Stock-Based Compensation
Year Ended December 31,
2023
2022
(In thousands)
2021
$
$
(17,598) $
5,379 $
58,668 $
(17,834) $
10,408
(3,316)
In May 2023, the Company’s stockholders approved the amendment and restatement of the Company’s 2015 Equity Incentive
Plan (as so amended and restated, the “Amended 2015 Plan”). As of December 31, 2023, the remaining aggregate number of
shares of the Company’s common stock available for future grants under the Amended 2015 Plan was 12,917,165. The
Amended 2015 Plan provides for the grant of stock-based awards, including nonqualified stock options, incentive stock options,
restricted stock, restricted stock units (“RSUs”), stock appreciation rights and other equity securities to employees, consultants
and non-employee directors of the Company and its affiliated entities. The number of shares of common stock available for
issuance under the Amended 2015 Plan is reduced by (i) one share for each share of common stock issued pursuant to an
appreciation award, such as a stock option or stock appreciation right with an exercise or strike price of at least 100% of the fair
market value of the underlying common stock on the date of grant, and (ii) 1.8 shares for each share of common stock issued
pursuant to any stock award that is not an appreciation award, also referred to as a “full value award.” The Amended 2015 Plan
allows the Company to utilize a broad array of equity incentives and performance cash incentives in order to secure and retain
the services of its employees, directors and consultants, and to provide long-term incentives that align the interests of its
employees, directors and consultants with the interests of the Company’s stockholders. The Company accounts for stock-based
compensation at estimated fair value.
Restricted Stock Units
Each RSU represents the right to receive one share of common stock at a future date. Historically, RSUs granted to employees
for service generally vested over four years, with 25% vesting on the first anniversary of the grant date and the remainder
vesting ratably on a quarterly basis thereafter, subject to continued employment. Beginning with grants made in 2024, RSUs
granted to employees for service will generally vest over three years, with 34% vesting on the first anniversary of the grant date
and the remainder vesting ratably on a quarterly basis thereafter, subject to continued employment. Some RSUs granted to
employees for performance vest upon the completion of defined performance goals, subject to continued employment. The
RSUs granted to non-employee directors generally vest in full on the first anniversary of the grant date. The RSUs granted to
non-employee consultants generally vest 50% on the first anniversary of the grant date, with the remaining 50% vesting
quarterly thereafter through the second anniversary of the grant date. The Company’s RSUs are classified as equity awards
because the RSUs will be settled in the Company’s common stock upon vesting. The fair value of RSUs is determined at the
grant date based on the closing price of the Company’s common stock on the date of grant. The related compensation expense
is recognized over the service period, or shorter periods based on the retirement eligibility of certain grantees, and is based on
the grant date fair value of the Company’s common stock and the number of shares expected to vest. The fair value of the
awards is not remeasured at the end of each reporting period. RSUs do not carry voting rights until the RSUs are vested, but
certain unvested RSUs are entitled to accrue dividends, and shares are issued upon settlement in accordance with the terms of
the award.
77
RSU Summary
The following table summarizes the Company’s RSU activity:
Outstanding at December 31, 2020
Granted
Forfeited
Released
Outstanding at December 31, 2021
Granted
Forfeited
Released
Outstanding at December 31, 2022
Granted
Forfeited
Released
Outstanding at December 31, 2023
Vested and unreleased at December 31, 2023 (1)
Weighted-
Average
Grant Date
Fair Value
Per RSU
RSUs
(In thousands)
2,664 $
913 $
(115) $
(912) $
2,550 $
1,562 $
(152) $
(990) $
2,970 $
1,184 $
(76) $
(1,283) $
2,795 $
713
18.96
41.55
29.49
21.12
25.80
40.21
32.80
30.05
31.60
57.85
46.02
36.02
40.24
(1) These RSUs were granted to the Company’s board of directors as a part of their compensation for board and committee
service and had vested but had not yet settled, meaning that the underlying shares of common stock had not been issued
and released.
As of December 31, 2023, the total unrecognized cost related to non-vested RSUs was approximately $42.6 million. This cost is
expected to be recognized over a weighted-average period of 1.4 years. The Company recognized $57.5 million, $43.2 million
and $26.0 million of stock-based compensation expense related to RSUs in the years ended December 31, 2023, 2022 and 2021,
respectively.
Service-Based RSU Awards
The majority of the annual compensation the Company provides to non-employee members of its board of directors is paid in
the form of RSUs. In addition, some members of the Company’s board of directors elect to receive their cash retainers, or a
portion thereof, in the form of RSUs. An aggregate amount of approximately 55,000, 57,000 and 39,000 service-based RSUs
were granted to the Company’s non-employee directors as a result of these payments and elections during the years ended
December 31, 2023, 2022 and 2021, respectively, with an estimated grant date fair value of $2.9 million, $2.2 million and $1.6
million, respectively.
During the years ended December 31, 2023, 2022 and 2021, the Company granted approximately 746,000, 1,082,000 and
531,000 service-based RSUs, respectively, to its employees, with an estimated aggregate grant date fair value of $43.0 million,
$44.2 million and $22.0 million, respectively.
During the years ended December 31, 2023, 2022 and 2021, the Company granted approximately 1,000, 7,000 and 2,000
service-based RSUs, respectively, to non-employee consultants, with an estimated grant date fair value of $0.1 million, $0.3
million and $0.1 million, respectively.
Performance-Based RSU Awards
In March 2023, 2022 and 2021, the Company awarded approximately 193,000, 248,000 and 228,000 performance-based RSUs,
respectively, to the Company’s executives and employees (the “Bonus RSUs”), with an estimated grant date fair value of $11.9
million, $9.7 million and $9.5 million, respectively. Vesting of the Bonus RSUs is and was dependent upon the Company’s
achievement of defined performance goals for the respective fiscal year in which the Bonus RSUs were granted. The Company
78
records stock-based compensation expense related to performance-based RSUs when it is considered probable that the
performance conditions will be met. Management believes it is probable that substantially all of the 2023 Bonus RSUs will
vest. The level of achievement, if any, of performance goals will be determined by the compensation committee of the
Company’s board of directors and, if such goals are achieved, the 2023 Bonus RSUs will vest, subject to continued
employment, in March 2024. Substantially all of the Bonus RSUs awarded in 2022 and 2021 vested in March 2023 and March
2022, respectively, upon the determination of the level of achievement of the respective performance goals.
Additionally, during 2023, 2022 and 2021, the Company awarded approximately 134,000, 167,000 and 110,000 performance-
based RSUs, respectively, to the Company’s executives (the “Executive RSUs”). The estimated aggregate grant date fair value
of the Executive RSUs for the 2023, 2022 and 2021 grants was $8.2 million, $6.5 million and $4.6 million, respectively.
Vesting of the Executive RSUs is and was dependent upon the Company’s achievement of defined performance goals over a
two-year period (the year of grant and the following year). The vesting of Executive RSUs will ultimately range from 0% to
150% of the number of shares underlying the Executive RSUs granted based on the level of achievement of the performance
goals.
If the Company achieves the performance goals for the Executive RSUs at the end of the two-year performance period, 50% of
the number of Executive RSUs earned based on performance will then vest on the second anniversary of the grant date, and the
remaining 50% will then vest on the third anniversary of the grant date, in each case subject to the executive’s continued service
as of the vesting date. In March 2023, the Company awarded approximately 55,000 additional shares related to performance-
based RSUs granted to the Company’s executives for over-achievement of performance targets for the Executive RSUs with a
performance period that ended December 31, 2022. In March 2022, the Company cancelled approximately 50,000 shares
related to performance-based RSUs granted to the Company’s executives in 2020 for under-achievement of performance targets
for the performance period that ended December 31, 2021. In March 2021, the Company awarded approximately 3,000
additional shares related to performance-based RSUs granted to the Company’s executives in 2019 for over-achievement of
performance targets for the performance period that ended December 31, 2020.
Stock Option Awards
The Company last granted stock options in 2019. The stock option awards granted to employees generally (i) have a term of ten
years, (ii) vest over four years with 25% vesting after the first year of service and the remainder vesting ratably on a quarterly
basis thereafter, (iii) are contingent upon employment on the vesting date, and (iv) have an exercise price equal to the fair
market value of the underlying shares at the date of grant. The fair value of stock options was determined at the grant date using
the Black-Scholes-Merton option pricing model.
The following table summarizes the Company’s stock option award activity:
Weighted-
Average
Exercise Price
Per Share
Weighted-
Average
Remaining
Contractual
Term (Years)
Aggregate
Intrinsic
Value
Shares
(In thousands, except years and per share data)
2,554 $
(3)
(857)
(13)
1,681 $
(1)
(494)
(1)
1,185 $
(4)
(505)
676 $
9.10
10.67
8.51
16.07
9.35
8.28
7.83
18.35
9.97
10.25
7.84
11.55
3.94 $
77,182
$
31,544
3.28 $
53,698
$
18,992
2.64 $
49,094
$
2.39 $
26,928
20,036
Options outstanding at December 31, 2020
Cancelled or expired
Exercised
Forfeited
Options outstanding at December 31, 2021
Cancelled or expired
Exercised
Forfeited
Options outstanding at December 31, 2022
Cancelled or expired
Exercised
Options outstanding and exercisable at December 31, 2023
79
The total fair value of the shares underlying stock options that vested during the years ended December 31, 2022 and 2021 was
$0.6 million and $2.3 million, respectively. The total fair value of the shares underlying stock options that vested during the
year ended December 31, 2023 was immaterial.
10. Equity Transactions
Preferred Stock
The Company is authorized to issue 2.0 million shares of preferred stock with a par value of $0.0001 per share. The Company
previously issued 1.5 million shares of preferred stock. The remaining 0.5 million authorized shares of preferred stock remain
undesignated and unissued as of December 31, 2023 and 2022. As of December 31, 2023 and 2022, there were no outstanding
shares of preferred stock, as all previously designated and issued preferred stock was converted into common stock in prior
periods.
Dividends
Stockholders are entitled to receive, when and if declared by the Company’s Board of Directors from time to time, such
dividends and other distributions in cash, stock or property from the Company’s assets or funds legally and contractually
available for such purposes. In each of December 2022, May 2023, September 2023 and December 2023, the Company’s Board
of Directors approved a dividend of $0.13 per share of common stock. The dividends, which were paid on March 30, June 30,
September 29 and December 29, 2023 to stockholders of record as of March 15, June 15, September 15 and December 15,
2023, respectively, resulted in total payments of $64.8 million during 2023. The Company’s liability related to dividends on
common stock was $1.3 million and $16.6 million as of December 31, 2023 and 2022, respectively.
Share Repurchase Program
Since February 2021, the Company’s Board of Directors has authorized the repurchase of up to $1,000.0 million of the
Company’s common stock through December 31, 2025. This time frame can be extended or shortened by the Board of
Directors. Repurchases may be made from time to time on the open market at prevailing prices or in negotiated transactions off
the market. The Company records share repurchases at cost, which includes broker commissions and related excise taxes. All
shares are immediately retired upon repurchase in accordance with the board-approved policy. When treasury shares are retired,
the Company’s policy is to allocate the excess of the repurchase price over the par value of shares acquired first, to additional
paid-in capital, and then to retained earnings/accumulated deficit. The portion to be allocated to additional paid-in capital is
calculated by applying a percentage, determined by dividing the number of shares to be retired by the number of shares
outstanding, to the balance of additional paid-in capital as of the date of retirement.
The Company repurchased and subsequently retired 4.8 million, 6.8 million and 4.3 million shares of its common stock during
the years ended December 31, 2023, 2022 and 2021, respectively, for a total purchase price of $244.6 million, $257.0 million
and $163.4 million, respectively, exclusive of $1.4 million of excise taxes incurred in the year ended December 31, 2023, with
no such taxes incurred in the years ended December 31, 2022 and 2021, respectively. In addition, in December 2023, the
Company purchased 26,000 shares for $1.0 million, which were settled and retired in January 2024. As such, these shares are
recorded as treasury stock as of December 31, 2023. As of December 31, 2023, $334.0 million remained available and
authorized for repurchase under this program.
80
11. Revenue
The following table summarizes the Company’s services revenue:
Commercial services:
Voice and data
IoT data
Broadband
Hosted payload and other data
Total commercial services
Government services
Total services
The following table summarizes the Company’s engineering and support services revenue:
Commercial
Government
Total
Year Ended December 31,
2023
2022
(In thousands)
2021
$ 219,242 $ 193,112 $ 175,584
110,919
125,015
141,036
42,990
51,143
57,878
58,611
59,451
60,298
388,104
428,721
478,454
106,000
103,887
106,000
$ 584,454 $ 534,721 $ 491,991
Year Ended December 31,
2023
2021
2022
(In thousands)
$ 11,050 $ 7,833 $ 4,613
25,825
43,766
90,083
$ 101,133 $ 51,599 $ 30,438
The Company’s contracts with customers generally do not contain performance obligations with terms in excess of one year. As
such, the Company does not disclose details related to the value of performance obligations that are unsatisfied as of the end of
the reporting period. The total value of any performance obligations that extend beyond a year is immaterial to the financial
statements. The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled
receivables (contract assets), and deferred revenue (contract liabilities) on the consolidated balance sheets. The Company bills
amounts under its agreed-upon contractual terms at periodic intervals (for services), upon shipment (for equipment), or upon
achievement of contractual milestones or as work progresses (for engineering and support services). Billing may occur
subsequent to revenue recognition, resulting in unbilled accounts receivable (contract assets). The Company may also receive
payments from customers before revenue is recognized, resulting in deferred revenue (contract liabilities). The Company
recognized revenue that was previously recorded as deferred revenue in the amounts of $31.4 million, $26.3 million and
$43.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. The Company has also recorded costs of
obtaining contracts expected to be recovered in prepaid expenses and other current assets (contract assets or commissions), that
are not separately disclosed on the consolidated balance sheets. The commissions are recognized over the estimated usage
period. The following table presents contract assets not separately disclosed:
Contract Assets:
Commissions
Other contract costs
Year Ended December 31,
2023
2022
(In thousands)
$
$
1,114 $
1,970 $
1,258
2,255
81
12. Income Taxes
The following table presents U.S. and foreign components of income (loss) before income taxes:
U.S. income (loss)
Foreign income
Total income (loss) before income taxes
Year Ended December 31,
2023
2022
2021
(In thousands)
$
$
(10,596) $
10,179 $
(31,352)
5,849
331
2,464
(4,747) $
10,510 $
(28,888)
The following table summarizes the components of the Company’s income tax provision:
Year Ended December 31,
2023
2022
2021
(In thousands)
Current taxes:
Federal tax benefit
State tax expense
Foreign tax expense
Total current tax (benefit) expense
Deferred taxes:
Federal tax benefit
State tax expense (benefit)
Foreign tax expense (benefit)
Total deferred tax benefit
$
— $
1,032
4,545
5,577
(31,311)
(226)
(291)
(31,828)
(26,251) $
— $
272
1,209
1,481
(3,354)
1,794
371
(1,189)
292 $
(537)
42
2,240
1,745
(14,109)
(6,686)
(519)
(21,314)
(19,569)
Total income tax expense (benefit)
$
The following table presents a reconciliation of the U.S. federal statutory income tax expense to the Company’s effective
income tax provision. Any amounts that do not have a meaningful impact on this reconciliation are not separately disclosed.
Year Ended December 31,
2023
2022
2021
(In thousands)
Expected tax expense (benefit) at U.S. federal statutory tax rate
State taxes, net of federal benefit
State tax valuation allowance
Deferred impact of state tax law changes and elections
Equity-based compensation
Limitation on executive compensation deduction
Other nondeductible items
Tax credits
Foreign taxes
Other adjustments
$
(997) $
927
(338)
—
1,893 $
1,260
748
—
(10,234)
(6,184)
(6,067)
(9,094)
711
1,200
(9,597)
3,140
65
4,011
114
(21,817)
3,570
(1,487)
2,905
33
(949)
(1,278)
386
200
1,100
251
Total income tax expense (benefit)
$
(26,251) $
292 $
(19,569)
82
The following table presents the components of deferred tax assets and liabilities:
Deferred tax assets
Long-term contracts
Federal, state and foreign net operating losses, other carryforwards and tax credits
Other
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities
Fixed assets, intangibles and research and development expenditures
Investment in joint venture
Other
Total deferred tax liabilities
Net deferred income tax liabilities
December 31,
2023
2022
(In thousands)
$
51,226 $
351,094
26,676
428,996
(33,420)
395,576
52,553
374,767
24,553
451,873
(34,643)
417,230
(425,980)
(490,384)
(63,108)
(19,336)
(48,754)
(27,976)
(508,424)
(567,114)
$
(112,848) $
(149,884)
Pursuant to ASC 740, the Company nets deferred tax assets and liabilities within the same jurisdiction. As of December 31,
2023, the Company had a net deferred tax asset of $1.8 million that is included in other assets on the balance sheet and a net
deferred tax liability of $114.6 million.
The Company recognizes valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be
realized. In assessing the likelihood of realization, management considers: (i) future reversals of existing taxable temporary
differences; (ii) future taxable income exclusive of reversing temporary differences and carryforwards; (iii) taxable income in
prior carryback year(s) if carryback is permitted under applicable tax law; and (iv) tax planning strategies.
The Company had deferred tax assets related to cumulative U.S. federal net operating loss carryforwards and interest expense
carryforwards of approximately $257.4 million and $296.4 million as of December 31, 2023 and 2022, respectively. The 2017
U.S. federal net operating loss carryforward, if not utilized, will expire in 2037. The Company believes that the 2017 U.S.
federal net operating losses will be utilized before the expiration date and, as such, no valuation allowance has been established
for this deferred tax asset. U.S. federal net operating loss carryforwards for 2018 and thereafter and interest expense
carryforwards do not expire. The Company had deferred tax assets related to the state net operating loss carryforwards of
approximately $59.2 million and $60.0 million as of December 31, 2023 and 2022, respectively, some of which expire as early
as 2025. The Company does not expect to fully utilize all of its state net operating losses within the respective carryforward
periods and as such reflects a partial valuation allowance of $33.0 million and $33.3 million as of December 31, 2023 and 2022,
respectively, against these deferred tax assets on its consolidated balance sheets. The Company had deferred tax assets related
to the foreign net operating loss carryforwards of approximately $0.5 million and $0.7 million, as of December 31, 2023 and
2022, respectively, that do not expire. The Company does not expect to fully utilize all of its foreign net operating losses within
the carryforward periods. As such, the Company had recorded a partial valuation allowance of $0.2 million and $0.4 million as
of December 31, 2023 and 2022, respectively, against these deferred tax assets on its consolidated balance sheets. The timing
and manner in which the Company will utilize the net operating loss carryforwards in any year, or in total, may be limited in the
future as a result of changes in the Company’s ownership and any limitations imposed by the jurisdictions in which the
Company operates.
The Company had approximately $32.3 million and $12.1 million of deferred tax assets related to research and development tax
credits as of December 31, 2023 and 2022, respectively, that expire in various amounts from 2029 through 2043. As of
December 31, 2023, the Company established a reserve of approximately $2.4 million on its estimate of R&D credits. The
Company had approximately $8.7 million and $5.2 million of deferred tax assets related to foreign tax credits as of
December 31, 2023 and 2022, respectively, that expire in various amounts through 2033. Previously, the Company did not
expect to utilize all of its foreign tax credits, resulting in the Company recording a partial valuation allowance of $0.5 million as
of December 31, 2022. There is no valuation allowance on foreign tax credits as of December 31, 2023.
83
The Company has provided for U.S. income taxes on all undistributed earnings of its significant foreign subsidiaries since the
Company does not indefinitely reinvest these undistributed earnings. The Company measures deferred tax assets and liabilities
using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The Company recognizes the effect on deferred tax assets and liabilities of a change in tax rates in income
in the period that includes the enactment date.
Uncertain Income Tax Positions
The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. Significant judgment is required
in evaluating tax positions and determining the provision for income taxes. The Company establishes liabilities for tax-related
uncertainties based on estimates of whether, and the extent to which, additional taxes may be due. These liabilities are
established when the Company believes that certain positions might be challenged despite its belief that its tax return positions
are fully supportable. The Company adjusts these liabilities in light of changing facts and circumstances, such as the outcome of
a tax audit. The provision for income taxes includes the impact of changes to these liabilities.
The Company had unrecognized tax benefits of approximately $2.4 million as of December 31, 2023 primarily due to
additional U.S. tax credits from prior periods. There were no unrecognized tax benefits as of December 31, 2022. Any changes
in the next twelve months are not anticipated to have a significant impact on the results of operations, financial position or cash
flows of the Company. The Company has elected an accounting policy to classify interest and penalties related to unrecognized
tax benefits as a component of income tax expense. As of December 31, 2023 and 2022, there were no interest and penalties on
unrecognized tax benefits. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits which
includes related interest and penalties:
Balance at January 1,
Change attributable to tax positions taken in a prior period
Change attributable to tax positions taken in the current period
Balance at December 31,
Year Ended December 31,
2023
2022
(In thousands)
— $
2,162
236
2,398 $
$
$
—
—
—
—
The Company is subject to tax audits in all jurisdictions for which it files tax returns. Tax audits by their very nature are often
complex and can require several years to complete. Currently, there are no U.S. federal, state or foreign jurisdiction tax audits
pending. The Company’s corporate U.S. federal and state tax returns from 2011 to 2022 remain subject to examination by tax
authorities and the Company’s foreign tax returns from 2017 to 2022 remain subject to examination by tax authorities.
84
13. Net Income (Loss) Per Share
The Company calculates basic net income (loss) per common share by dividing net income (loss) attributable to common
stockholders by the weighted-average number of shares of common stock outstanding during the period. In periods of net
income, diluted net income per share takes into account the effect of potentially dilutive common shares when the effect is
dilutive. Potentially dilutive common shares include (i) shares of common stock issuable upon exercise of outstanding stock
options and (ii) shares underlying RSUs that are contingently issuable upon achievement of certain service and performance
requirements. The effect of potentially dilutive common shares is computed using the treasury stock method.
The following table summarizes the computations of basic and diluted net loss per common share:
Year Ended December 31,
2023
2022
2021
(In thousands, except per share data)
Numerator:
Net income (loss) attributable to common stockholders - basic and diluted
$
15,415 $
8,722 $
(9,319)
Denominator:
Weighted average common shares - basic
Weighted average common shares - diluted
125,598
127,215
128,255
130,134
133,530
133,530
Net income (loss) attributable to common stockholders per share - basic and diluted $
0.12 $
0.07 $
(0.07)
For the year ended December 31, 2022, 0.2 million unvested service-based RSUs were excluded from the computation of basic
net income per share and not included in the computation of diluted net income per share, as the effect would be anti-dilutive,
and 0.2 million unvested performance-based RSUs were not included in the computation of basic and diluted net income per
share, as certain performance criteria have not been satisfied. There were no such shares for the year ended December 31, 2023.
Due to the Company’s net loss position for the year ended December 31, 2021 all potential common stock equivalents were
anti-dilutive and therefore excluded from the calculation of diluted net loss per share.
The following table presents the incremental number of shares underlying stock options and RSUs outstanding with anti-
dilutive effects:
Performance-based RSUs
Service-based RSUs
Stock options
Year Ended December 31,
2023
2022
2021
(In thousands)
—
—
—
210
—
—
183
536
1,189
85
14. Related Party Transactions
Aireon LLC and Aireon Holdings LLC
The Company’s satellite constellation hosts the Aireon® system. The Aireon system was developed by Aireon LLC, which the
Company formed in 2011 and which received subsequent investments from several air navigation service providers (“ANSPs”)
to provide a global air traffic surveillance service through a series of automatic dependent surveillance-broadcast (“ADS-B”)
receivers on the Company’s satellites. Aireon has contracted to offer this service to ANSPs, which use the service to provide
improved air traffic control services over the oceans, as well as polar and remote regions. Aireon also markets its data and
services to airlines and other commercial users. The Company and the other Aireon investors hold their interests in Aireon
Holdings LLC (“Aireon Holdings”) through an amended and restated LLC agreement (the “Aireon Holdings LLC
Agreement”). Aireon Holdings holds 100% of the membership interests in Aireon, which is the operating entity.
In June 2022, the Company entered into a subscription agreement with Aireon Holdings and invested $50.0 million in exchange
for an approximate 6% preferred membership interest. The Company’s investment in Aireon Holdings is accounted for as an
equity method investment. The carrying value of the Company’s investment in Aireon Holdings was $44.6 million and
$48.8 million as of December 31, 2023 and 2022, respectively. The investments by the Company prior to June 2022 had
previously been written down to a carrying value of zero.
At each of December 31, 2023 and 2022, the Company’s fully diluted ownership stake in Aireon Holdings was approximately
39.5%, which is subject to partial future redemption under provisions contained in the Aireon Holdings LLC Agreement.
Under the agreements with Aireon, Aireon will pay the Company fees of $200.0 million to host the ADS-B receivers, of which
$94.5 million had been paid as of December 31, 2023. These fees are recognized over the estimated useful lives of the satellites,
which is expected to result in revenue of approximately $9.3 million, following the change in estimate of the useful lives of the
satellites that occurred in the fourth quarter of 2023. The Company recognized $14.4 million of hosting fee revenue under the
Hosting Agreement for the year ended December 31, 2023 and $16.1 million of hosting fee revenue for the years ended
December 31, 2022 and 2021. There were no receivables due under the Hosting Agreement as of December 31, 2023 and 2022.
Additionally, Aireon pays power and data services fees of approximately $23.5 million per year, in the aggregate for the
delivery of the air traffic surveillance data over the Iridium system. The Company recorded $23.5 million of power and data
service fee revenue from Aireon for each of the years ended December 31, 2023, 2022 and 2021.
During the year ended December 31, 2023, the Company recorded other income of $3.5 million related to a contractual
settlement with Aireon. This is a one-time payment that is not expected to recur.
Under two services agreements, the Company also provides Aireon with administrative services and support services, the fees
for which are paid monthly. Aireon receivables due to the Company under these two agreements totaled $2.2 million at each of
December 31, 2023 and 2022.
The Company and the other Aireon investors have agreed to participate pro rata, based on their respective fully diluted
ownership stakes, in funding an investor bridge loan to Aireon. The Company’s maximum commitment under the investor
bridge loan is $11.9 million. No bridge loan amounts were outstanding as of December 31, 2023 or 2022.
Satelles
In the first quarter of 2023, the Company entered into a stock purchase agreement with Satelles, Inc. (“Satelles”) and invested
$10.0 million, in addition to its previous equity investment in Satelles. The Company’s fully diluted ownership stake in Satelles
was approximately 19.5% as of December 31, 2023, and the investment in Satelles is now accounted for as an equity method
investment. The carrying value of the Company’s investment in Satelles was approximately $21.8 million as of December 31,
2023.
86
15. Segments, Significant Customers, Supplier and Service Providers and Geographic Information
The Company operates in one business segment, providing global satellite communications services and products.
The Company derived approximately 25%, 21% and 21% of its total revenue in the years ended December 31, 2023, 2022 and
2021, respectively, from prime contracts or subcontracts with agencies of the U.S. government. For the years ended
December 31, 2023, 2022 and 2021, no single commercial customer accounted for more than 10% of the Company’s total
revenue.
Approximately 46% and 25% of the Company’s accounts receivable balance at December 31, 2023 and 2022, respectively, was
due from prime contracts or subcontracts with agencies of the U.S. government. As of December 31, 2023 and 2022, no single
commercial customer accounted for more than 10% of the Company’s total accounts receivable balance.
The Company contracts for the manufacture of its subscriber equipment primarily from a limited number of manufacturers and
utilizes other sole source suppliers for certain component parts of its devices. Should events or circumstances prevent the
manufacturer or the suppliers from producing the equipment or component parts, the Company’s business could be adversely
affected until the Company is able to move production to other facilities of the manufacturer or secure a replacement
manufacturer or an alternative supplier for such component parts.
The following table summarizes net property and equipment by geographic area:
United States
Satellites in orbit
All others
Total
The following table summarizes revenue by geographic area:
United States
Other countries (1)
Total
December 31,
2023
2022
(In thousands)
$
412,002 $
1,782,000
1,756
2,195,758 $
$
461,820
1,968,999
2,486
2,433,305
Year Ended December 31,
2023
2022
(In thousands)
2021
$
$
431,476 $
359,247
790,723 $
374,687 $
346,347
721,034 $
330,948
283,552
614,500
(1) No single country in this group represented more than 10% of revenue.
Revenue is attributed to geographic area based on the billing address of the distributor. Service location and the billing address
are often not the same. The Company’s distributors sell services directly or indirectly to end users, who may be located or use
the Company’s products and services elsewhere. The Company does not know the geographical distribution of end users
because it does not contract directly with them.
The Company is exposed to foreign currency exchange fluctuations from sales made and costs incurred in foreign currencies.
16. Employee Benefit Plan
The Company sponsors a defined-contribution 401(k) retirement plan (the “Plan”) that covers all employees. Employees are
eligible to participate in the Plan on the first day of the month following the date of hire, and participants are 100% vested from
the date of eligibility. The Company matches employees’ contributions equal to 100% of the salary deferral contributions up to
5% of the employees’ eligible compensation each pay period. The Company’s matching contributions to the Plan were $4.3
million, $3.5 million and $3.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.
87
17. Subsequent Event
On February 2, 2024, the Company’s Board of Directors approved a dividend of $0.13 per share payable on March 29, 2024, to
stockholders of record as of March 15, 2024.
88
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our chief executive officer, who is our principal
executive officer, and our chief financial officer, who is our principal financial officer, we conducted an evaluation of our
disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934, as amended, or the Exchange Act, as of the end of the period covered by this report. In evaluating the disclosure
controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated,
can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls
and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in
evaluating the benefits of possible controls and procedures relative to their costs. In addition, the design of any system of
controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that
any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become
inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because
of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.
Based on this evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and
procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or
submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S.
Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including
our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required
disclosures.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal
control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process
designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of
directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Such internal control includes those policies and procedures that:
•
•
•
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of our company;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of our company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of our company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making
this assessment, our management used the criteria set forth in Internal Control-Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on its assessment, our management has
determined that, as of December 31, 2023, our internal control over financial reporting was effective based on those criteria.
89
Our independent registered public accounting firm, KPMG LLP, has audited our 2023 financial statements. KPMG LLP was
given unrestricted access to all financial records and related data, including minutes of all meetings of stockholders, the Board
of Directors and committees of the Board. KPMG LLP has issued an unqualified report on our 2023 financial statements as a
result of the audit and also has issued an unqualified report on our internal controls over financial reporting which is attached
hereto.
Changes in Internal Control Over Financial Reporting
During the quarter ended December 31, 2023, there were no changes in our internal control over financial reporting, as such
term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
90
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors
Iridium Communications Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Iridium Communications Inc. and subsidiaries’ (the Company) internal control over financial reporting as of
December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheet of the Company as of December 31, 2023 and December 31, 2022, the related
consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for
each of the years then ended, and the related notes (collectively, the consolidated financial statements), and our report dated
February 15, 2024 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
McLean, Virginia
February 15, 2024
/s/ KPMG LLP
91
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
92
PART III
We will file a definitive Proxy Statement for our 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”) with the
SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information
required by Part III has been omitted as permitted by General Instruction G (3) to Form 10-K. Only those sections of the 2024
Proxy Statement that specifically address the items set forth herein are incorporated by reference.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item is incorporated by reference to the sections of our 2024 Proxy Statement entitled “Board
of Directors and Committees,” “Election of Directors,” “Management” and “Delinquent Section 16(a) Reports.”
Item 11. Executive Compensation
The information required by this Item is incorporated by reference to the sections of our 2024 Proxy Statement entitled
“Compensation Discussion and Analysis,” “Executive Compensation” and “Director Compensation.”
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item is incorporated by reference to the sections of our 2024 Proxy Statement entitled
“Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance under Equity
Compensation Plans.”
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated by reference to the sections of our 2024 Proxy Statement entitled
“Transactions with Related Parties” and “Director Independence.”
Item 14. Principal Accountant Fees and Services
The information required by this Item is incorporated by reference to the section of our 2024 Proxy Statement entitled
“Independent Registered Public Accounting Firm Fees.”
93
Item 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this Form 10-K:
PART IV
(1) Financial Statements
Iridium Communications Inc.:
Report of KPMG LLP, Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations and Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
58
59
60
61
62
64
(2) Financial Statement Schedules
The financial statement schedules are not included here because required information is included in the consolidated financial
statements.
(3) Exhibits
The following list of exhibits includes exhibits submitted with this Form 10-K as filed with the Securities and Exchange
Commission.
Exhibit No.
3.1
3.2
3.3
4.1
4.2
10.1#
10.2
10.3
10.4
Document
Amended and Restated Certificate of Incorporation dated September 29, 2009, incorporated by reference to
Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 29, 2009.
Certificate of Amendment to Amended and Restated Certificate of Incorporation dated May 12, 2015,
incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC
on May 15, 2015.
Amended and Restated Bylaws, incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on
Form 8-K filed with the SEC on May 15, 2015.
Specimen Common Stock Certificate, incorporated by reference to Exhibit 4.2 of the Registrant’s Registration
Statement on Form S-1 (Registration No. 333-147722) filed with the SEC on February 4, 2008.
Description of the Registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended, incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K
filed with the SEC on February 25, 2020.
Amendment and Restatement Agreement, dated September 20, 2023, among Iridium Holdings LLC, Iridium
Communications Inc., Iridium Satellite LLC, Various Lenders, and Deutsche Bank AG New York Branch, as
Administrative Agent and Collateral Agent, incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K filed with the SEC on September 20, 2023.
Security Agreement dated November 4, 2019 among Iridium Carrier Holdings LLC, Iridium Carrier Services
LLC, Iridium Constellation LLC, Iridium Government Services LLC, Iridium Holdings LLC, Iridium Satellite
LLC, and Deutsche Bank AG New York Branch, as Collateral Agent, incorporated by reference to Exhibit
10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 4, 2019.
Guaranty Agreement dated November 4, 2019 among Iridium Holdings LLC, Iridium Satellite LLC, Iridium
Carrier Holdings LLC, Iridium Carrier Services LLC, Iridium Constellation LLC, Iridium Government
Services LLC, and Deutsche Bank AG New York Branch, as Administrative Agent, incorporated by reference
to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 4, 2019.
Amended and Restated Transition Services, Products and Asset Agreement, between Iridium Satellite LLC,
Iridium Holdings LLC and Motorola, Inc., dated as of September 30, 2010, incorporated by reference to
Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
94
Exhibit No.
10.5
10.6†
10.7
10.8†
10.9
10.10
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
Document
Amendment No. 1 to Amended and Restated Transition Services, Products and Asset Agreement, between
Iridium Satellite LLC, Iridium Holdings LLC and Motorola, Inc., dated as of December 30, 2010,
incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K filed with the
SEC on March 7, 2011.
System Intellectual Property Rights Amendment and Agreement, between Iridium Satellite LLC and
Motorola, Inc., dated as of September 30, 2010, incorporated by reference to Exhibit 10.9 of the Registrant's
Annual Report on Form 10-K filed with the SEC on February 17, 2022.
Supplemental Subscriber Equipment Technology Amendment and Agreement, between Iridium Satellite LLC
and Motorola, Inc., dated as of September 30, 2010, incorporated by reference to Exhibit 10.12 to the
Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011.
Contract for Enhanced Satellite Services between Iridium Government Services LLC and Air Force Space
Command, effective September 15, 2019, incorporated by reference to Exhibit 10.1 to the Registrant’s
Quarterly Report on Form 10-Q filed with the SEC on October 29, 2019.
Form of Registration Rights Agreement, incorporated by reference to Annex D of the Registrant’s Proxy
Statement filed with the SEC on August 28, 2009.
Amendment No. 1 to Registration Rights Agreement, dated as of March 29, 2011, by and among Iridium
Communications Inc. and the parties listed on the signature pages thereto, incorporated by reference to
Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed with the SEC on March 30, 2011.
Amended and Restated Employment Agreement, dated as of March 30, 2011, by and between the Registrant
and Matthew J. Desch, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K, filed with the SEC on April 5, 2011.
Employment Agreement, dated as of March 31, 2010, by and between the Registrant and Thomas J.
Fitzpatrick, incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed
with the SEC on May 10, 2010.
Amendment to Employment Agreement by and between the Registrant and Thomas J. Fitzpatrick, dated as of
December 31, 2010, incorporated by reference to Exhibit 10.34 to the Registrant’s Annual Report on Form
10-K filed with the SEC on March 7, 2011.
Executive Employment Agreement between the Registrant and Suzanne E. McBride, dated as of February 11,
2019, incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed with
the SEC on April 23, 2019.
Employment Agreement between the Registrant and Bryan J. Hartin, dated as of December 10, 2012,
incorporated by reference to Exhibit 10.69 to the Registrant’s Annual Report on Form 10-K filed with the
SEC on March 4, 2014.
Employment Agreement between the Registrant and Scott T. Scheimreif, dated as of December 11, 2012,
incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the
SEC on April 28, 2020.
Form of Indemnity Agreement between the Registrant and each of its directors and officers, incorporated by
reference to Exhibit 10.5 to the Registrant’s Form S-1/A filed with the SEC on February 4, 2008.
Amended and Restated Performance Share Program established under the Iridium Communications Inc.
Amended and Restated 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the
Registrant’s Quarterly Report on Form 10-Q filed with the SEC on April 19, 2022.
Form of Performance Share Award Grant Notice and Performance Share Award Agreement for use in
connection with the Performance Share Program established under the Iridium Communications Inc. 2015
Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form
10-Q filed with the SEC on April 20, 2023.
Iridium Communications Inc. 2012 Equity Incentive Plan, incorporated by reference to Appendix A to the
Registrant’s Proxy Statement filed with the SEC on April 10, 2012.
Forms of Stock Option Grant Notice and Stock Option Agreement for use in connection with the Iridium
Communications Inc. 2012 Equity Incentive Plan, incorporated by reference to Exhibit 99.2 to the
Registrant’s Current Report on Form 8-K filed with the SEC on May 23, 2012.
Forms of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement for use in connection with
the Iridium Communications Inc. 2012 Equity Incentive Plan, incorporated by reference to Exhibit 99.3 to the
Registrant’s Current Report on Form 8-K filed with the SEC on May 23, 2012.
Non-Employee Director Compensation Plan dated December 13, 2023.
Iridium Communications Inc. 2023 Performance Bonus Plan, incorporated herein by reference to Exhibit 10.3
of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on April 20, 2023.
Iridium Communications Inc. Amended and Restated 2015 Equity Incentive Plan, incorporated herein by
reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 5, 2023.
95
Exhibit No.
10.26*
10.27*
10.28*
10.29*
10.30*
10.31*
10.32*
10.33*
10.34*
16.1
21.1
23.1
23.2
31.1
31.2
32.1**
97.1
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Document
Forms of Option Grant Notice and Option Agreement for use in connection with the Iridium Communications
Inc. Amended and Restated 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.2 of the
Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2015.
Forms of Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement for use in
connection with the Iridium Communications Inc. Amended and Restated 2015 Equity Incentive Plan.
Forms of Non-Employee Director Option Grant Notice and Non-Employee Director Option Agreement for
use in connection with the Iridium Communications Inc. Amended and Restated 2015 Equity Incentive Plan,
incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed with the SEC
on May 15, 2015.
Restricted Stock Unit Award Agreement for use in connection with the Iridium Communications Inc. 2015
Equity Incentive Plan, incorporated by reference to Exhibit 10.5 of the Registrant’s Current Report on Form
8-K filed with the SEC on May 15, 2015.
UK Sub-Plan of the Iridium Communications Inc. 2015 Equity Incentive Plan, incorporated by reference to
Exhibit 10.40 of the Registrant’s Annual Report on Form 10-K filed with the SEC on February 11, 2021.
Forms of UK Option Grant Notice and UK Option Agreement for use in connection with the Iridium
Communications Inc. Amended and Restated 2015 Equity Incentive Plan, incorporated by reference to
Exhibit 10.7 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2015.
Forms of UK Restricted Stock Unit Award Grant Notice and UK Restricted Stock Unit Award Agreement for
use in connection with the Iridium Communications Inc. Amended and Restated 2015 Equity Incentive Plan,
incorporated by reference to Exhibit 10.42 of the Registrant's Annual Report on Form 10-K filed with the SEC
on February 11, 2021.
Forms of UK Non-Employee Director Option Grant Notice and UK Non-Employee Director Option
Agreement for use in connection with the Iridium Communications Inc. Amended and Restated 2015 Equity
Incentive Plan, incorporated by reference to Exhibit 10.9 of the Registrant’s Current Report on Form 8-K filed
with the SEC on May 15, 2015.
Forms of UK Non-Employee Director Restricted Stock Unit Award Grant Notice and UK Non-Employee
Director Restricted Stock Unit Award Agreement for use in connection with the Iridium Communications Inc.
Amended and Restated 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.10 of the
Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2015.
Letter from Ernst & Young LLP dated March 4, 2022 to the Securities and Exchange Commission regarding
change in certifying accountant, incorporated by reference to Exhibit 16.1 of the Registrant’s Current Report
on Form 8-K filed with the SEC on March 4, 2022.
List of Subsidiaries.
Consent of KPMG LLP, independent registered public accounting firm.
Consent of Ernst & Young LLP, independent registered public accounting firm.
Certification of Chief Executive Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of The Sarbanes-
Oxley Act of 2002.
Iridium Communications Inc. Incentive Compensation Recoupment Policy.
XBRL Instance Document
XBRL Taxonomy Extension Schema
XBRL Taxonomy Extension Calculation Linkbase
XBRL Taxonomy Extension Definition Linkbase
XBRL Taxonomy Extension Label Linkbase
XBRL Taxonomy Extension Presentation Linkbase
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
96
#
†
*
**
Exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K and will be furnished on a
supplemental basis to the Securities and Exchange Commission upon request.
Certain confidential portions of this exhibit, marked by asterisks, were omitted because the identified confidential
portions are (i) not material and (ii) the type that the registrant treats as private or confidential.
Denotes management contract or compensatory plan or arrangement.
These certifications are being furnished solely to accompany this Annual Report pursuant to 18 U.S.C. Section 1350,
and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to
be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless
of any general incorporation language in such filing.
Item 16. Form 10-K Summary
Not applicable.
97
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
IRIDIUM COMMUNICATIONS INC.
Date: February 15, 2024
By:
/s/ Thomas J. Fitzpatrick
Thomas J. Fitzpatrick
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated:
Name
Title
/s/ Matthew J. Desch
Matthew J. Desch
Chief Executive Officer and Director
(Principal Executive Officer)
Date
February 15, 2024
/s/ Thomas J. Fitzpatrick
Thomas J. Fitzpatrick
/s/ Timothy P. Kapalka
Timothy P. Kapalka
/s/ Robert H. Niehaus
Robert H. Niehaus
/s/ Thomas C. Canfield
Thomas C. Canfield
/s/ L. Anthony Frazier
L. Anthony Frazier
/s/ Jane L. Harman
Jane L. Harman
/s/ Alvin B. Krongard
Alvin B. Krongard
/s/ Suzanne E. McBride
Suzanne E. McBride
/s/ Eric T. Olson
Eric T. Olson
/s/ Kay N. Sears
Kay N. Sears
/s/ Jacqueline E. Yeaney
Jacqueline E. Yeaney
Chief Financial Officer, Chief Administrative Officer and Director
February 15, 2024
(Principal Financial Officer)
Chief Accounting Officer, Iridium Satellite LLC
February 15, 2024
(Principal Accounting Officer)
Director and Chairman of the Board
February 15, 2024
Director
Director
Director
Director
February 15, 2024
February 15, 2024
February 15, 2024
February 15, 2024
Chief Operations Officer and Director
February 15, 2024
Director
Director
Director
February 15, 2024
February 15, 2024
February 15, 2024
98
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