10q10k10q10k.net

What changed in Iridium Communications Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Iridium Communications Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+342 added−335 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-15)

Top changes in Iridium Communications Inc.'s 2024 10-K

342 paragraphs added · 335 removed · 278 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

128 edited+24 added−17 removed209 unchanged
Biggest changeWe 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.
Biggest changeWe also seek to attract and retain a skilled workforce, including through programs such as our internship program, our Iridium Orbit Program (an 18 month rotational program in operations, engineering and customer care), or Uplinks program (a program pairing employees from different generations to promote collaboration and diversity of thinking), our Employee Resource Groups and other outreach efforts that cover a range of topics and interests.
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.
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 our 128 Kbps and higher broadband offerings) applications on our network.
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.
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 (RUDICs) and DTCS services for an unlimited number of DoD and other federal government subscribers.
VARs and VAMs such as Flightcell International Limited, Garmin 11 Services Inc., Honeywell International, Inc., SkyTrac Systems Limited, and Spider Tracks Limited incorporate Iridium products and services into their applications for these markets. • Unmanned Aerial Vehicles (UAVs) : Our small antennas and system designs support a wide range of UAV platforms.
VARs and VAMs such as Flightcell International Limited, Garmin Services Inc., Honeywell International, Inc., SkyTrac Systems Limited, and Spider Tracks Limited incorporate Iridium products and services into their applications for these markets. 11 • Unmanned Aerial Vehicles (UAVs) : Our small antennas and system designs support a wide range of UAV platforms.
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. 15 • 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 two-way emergency 15 SOS button initiates a voice call and an emergency text message via SMS to GEOS, which then coordinates with local emergency responders. • 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.
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.
LEO satellites without a 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.
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. 9 • 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.
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. • 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.
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 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 provide other services, such as Iridium Certus, to the U.S. government under separate arrangements for an additional fee.
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 13 levels that vary depending upon expected usage.
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 levels that vary depending upon expected usage.
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.
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, ORBCOMM’s and OneWeb’s networks.
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.
Telstra Corporation, for example, uses our services to provide communications services in some of Australia’s most remote locations. 9 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.
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.
We operate primarily 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.
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 12 Smithsonian National Zoo & Conservation Institute, the Zoological Society of London, and Veterans Empowered to Protect African Wildlife, or VETPAW.
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 Oceanic and Atmospheric Administration, or NOAA, the Global Ocean Observation project Challenger, operated by Rutgers University, and anti-poaching programs run by the 12 Smithsonian National Zoo & Conservation Institute, the Zoological Society of London, and Veterans Empowered to Protect African Wildlife, or VETPAW.
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.
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- 5 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.
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.
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. 13 Prepaid Mobile Voice Satellite Communications Services We also offer mobile voice services to service providers and VARs through prepaid plans.
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.
With broadband services provided for the maritime, land-mobile and aviation 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.
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 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, or Singtel.
We believe that local telephone companies currently are reluctant to invest in new switches, landlines and cellular towers to 21 expand their networks in rural and remote areas due to high costs and limited usage.
We believe that local telephone companies currently are reluctant to invest in new switches, landlines and cellular towers to expand their networks in rural and remote areas due to high costs and limited usage.
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.
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 a significant provider of satellite communications services to the maritime sector. Viasat also offers land-based and aviation communications services.
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.
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 or Iridium PNT, to the U.S. government under separate arrangements for an additional fee.
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.
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, 2024.
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.
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 globally. Our products and services are offered in over 100 countries, and we and our distributors continue to seek authorizations in additional countries.
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%.
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, 2024, and 2023, our fully diluted ownership stake in Aireon Holdings was approximately 39.5%.
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.
Only member states have full standing within this inter-governmental organization. Filings to the ITU are 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.
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.
In addition, we have 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 network 4 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.
Our network 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, facilitates the global reach of our services, and increases 4 network redundancy.
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.
Our VARs include ARINC Incorporated, Beam Communications Pty Ltd., 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.
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.
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.
As part of the GMDSS service, navigational and meteorological information 10 is distributed to vessels.
As part of the GMDSS service, navigational and meteorological information is distributed to vessels.
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.
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 licensors or suppliers.
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.
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, which includes PNT, and U.S. government.
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.
We believe that mobile satellite services will continue to experience growth driven by the increasing public expectations 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.
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.
Ltd., HD Hyundai 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.
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.
VSAT services providers, such as Intelsat S.A., Eutelsat Communications S.A. and SES S.A., are characterized by large, often stationary 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.
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.
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 and L-band frequencies also allows our network to operate with low latency and with smaller antennas due to the proximity of our satellites to the earth.
Aireon Holdings holds 100% of the membership interests in Aireon LLC, which is the operating entity for the Aireon system. 20 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.
Aireon Holdings holds 100% of the membership interests in Aireon LLC, which is the operating entity for the Aireon system. In June 2022, we entered into a subscription agreement with Aireon Holdings and invested $50 million in exchange for an approximately 6% preferred membership interest. We also hold a common membership interest.
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 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.
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.
Pursuant to federal acquisition regulations, the U.S. government may terminate the EMSS, ECS3, gateway evolution, or SDA contracts, in whole or in part, at any time.
Year Ended December 31, 2023 2022 2021 Commercial voice traffic (minutes) 91 % 90 % 90 % Commercial data traffic (kilobytes) 96 % 95 % 97 % Our Network 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.
Year Ended December 31, 2024 2023 2022 Commercial voice traffic (minutes) 91 % 91 % 90 % Commercial data traffic (kilobytes) 94 % 96 % 95 % Our Network 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.
We believe that growth in the terrestrial wireless industry has increased awareness of the need for reliable mobile voice and data communications services.
We believe that growth in the terrestrial wireless industry has increased awareness of the need and higher expectations for reliable mobile voice and data communications services.
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. 5 • Expand our target markets through the development of new products and services.
In particular, we believe that broadband, midband and narrowband data services through Iridium Certus, resilient PNT services, 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. • Expand our target markets through the development of new products and services.
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 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, tactical radio services and other products as mission-critical services and equipment.
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.
We sell our products and services to commercial end users through a wholesale distribution network, encompassing approximately 110 service providers, approximately 310 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.
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.
Revenues from the SDA contract contributed to our higher engineering and support service revenue in 2023 and 2024, as well as associated expenses, compared to the prior years, and we expect that higher level of revenues and expenses to continue throughout the life of the SDA contract.
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.
U.S. government usage and commercial IoT usage have been less subject to seasonal changes. Services and Products At December 31, 2024, we had approximately 2,460,000 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.
Sales of our commercial services collectively accounted for approximately 62% of our total revenue for the year ended December 31, 2024. We also sell related voice and data equipment to our customers, which accounted for approximately 11% of our total revenue for the year ended December 31, 2024. In addition, we offer services to U.S. government customers, including the DoD.
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 take responses from our employees seriously and use them to inform specific strategies tailored to both the entire company as well as specific teams. In addition to performing benchmarking for employee benefits, we conduct an annual survey to understand what benefits are important to our employees and ensure that we are offering a competitive total rewards package.
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.
Within the two major satellite sectors, VSAT services and mobile satellite services, the products that operators offer differ from each other with respect to size of antenna and types of services that the products can offer.
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.
In addition, we have been recognized by the IMO as one of only two providers 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.
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.
Our VAMs include Intellian, Thales, 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 90 value-added developers, or VADs.
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.
In addition to our owned intellectual property, we also license certain legacy intellectual property from Motorola Solutions that we use 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.
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 .
Other services such as Iridium Certus and PNT 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 .
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.
The table below sets forth the percentage of our revenue from the United States, Canada and all other countries for the last three years. No single country outside the United States and Canada represented more than 10% of our revenue for any of the periods indicated.
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 unique satellite constellation provides true global and weather-resilient coverage, which enables our wide range of service offerings and empowers the development of new global products and services, as well as supporting Aireon’s aircraft tracking service and other hosted payload missions.
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.
Under our agreements with Aireon, Aireon agreed to pay us fees of $200.0 million to host the ADS-B receivers on our satellites, of which they have paid us $110.5 million as of December 31, 2024. These fees are recognized over the estimated useful life of the satellites.
These operators rely on our services because other forms of communication may be unaffordable or unreliable in areas such as the polar regions.
These operators rely on our services because other forms of communication may be unaffordable or unreliable in areas such as oceanic, remote and polar regions.
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.
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 commercial gateway located in Russia for traffic within Russian boundaries only.
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.
Our L-band spectrum is also more resistant to weather interference than the K-band spectrum used by VSAT providers such as Starlink and OneWeb.
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.
Distribution Channels We sell our products and services to customers through a wholesale distribution network of approximately 110 service providers, approximately 310 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, approximately 56 sell primarily to U.S. and international government customers.
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.
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 operating in licensed L-band or S-band frequencies, 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; • very small aperture terminal, or VSAT, satellite services (previously referred to as fixed satellite services), which typically use GEO or LEO satellites operating in licensed Ka-band or Ku-band frequencies to provide customers with broadband communications links between fixed or moving points on or above 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.
U.S. government services, including engineering services, accounted for approximately 25% of our total revenue for the year ended December 31, 2023.
U.S. government services, including engineering services, accounted for approximately 27% of our total revenue for the year ended December 31, 2024.
We expect additional offerings, such as the Iridium Certus 200 service, to increase the addressable market for our maritime services.
We expect additional offerings, such as Iridium Certus GMDSS services, to continue to increase the addressable market for our maritime services.
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.
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 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.
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 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.
Our research and development expenses were $28.4 million, $20.3 million and $16.2 million for the years ended December 31, 2024, 2023, and 2022, respectively. Employees and Human Capital Resources Employees As of December 31, 2024, we had approximately 873 full-time employees and eight part-time employees, none of whom are subject to any collective bargaining agreement.
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.
The fixed-price annual rate of the EMSS contract through September 2025 is $107 million, with one increase thereafter up to $110.5 million for the final contract year ending in September 2026.
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.
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. 18 Our constellation uses radio frequency crosslinks between our satellites, which eliminates the need for local ground infrastructure.
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.
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 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.
We expect to renew this agreement prior to its expiration in March 2025. 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, or O&I, segment for Tranche 1 of the U.S DoD’s Proliferated Warfighter Space Architecture or PWSA.
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.
Collins Aerospace (ARINC) and SITA, the two leading providers of voice and data link communications services and applications to the commercial airline industry rely on our products and services to deliver safe, reliable services to global operators. • Aviation passenger communications : Corporate and private fleet aircraft passengers use our services for air-to-ground telephony and data communications.
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.
At December 31, 2024, we had approximately 2,460,000 billable subscribers worldwide, representing an 8% increase compared to December 31, 2023. Total revenue increased from $790.7 million in 2023 to $830.7 million in 2024, representing a 5% increase. Industry We compete primarily in the mobile satellite services sector of the global communications industry.
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.
In the future, we expect our IoT partners to develop new offerings with increased capabilities for various applications based on our Iridium Certus 9770 transceiver and the new Iridium Certus 9704 transceiver, with improved size, speed, power, and antenna characteristics.
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.
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.
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.
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.
In the future, we expect our value-added partners to develop new IoT solutions with increased capabilities based on our Iridium Certus TM 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.
In the future, we expect our value-added partners to develop new IoT solutions with increased capabilities based on our Iridium Certus 9770 and Iridium Certus 9704 transceivers and other IoT services we plan to provide in the future. Hosted Payload and Other Data Services Our Iridium satellites also host customer payloads.
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 Service 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.
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.
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, which was subsequently extended through March 2025. This contract had a total contract value to us of up to $76 million.
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.
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 22 bankruptcy proceeding or other specified liquidation proceedings or upon our material failure to perform or comply with any provision of the agreement that remains uncured for a specified period of time following written notice from Motorola Solutions.
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.
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 a standards-based IoT solution.
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.
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 to be a source of revenue growth in the coming years.

… 89 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

76 edited+19 added−9 removed164 unchanged
Biggest changeOur capital structure and reliance on indebtedness can have several important consequences, including, but not limited to, the following: • 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. 31 • 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 .
Biggest changeOur capital structure and reliance on indebtedness can have several important consequences, including, but not limited to, the following: • 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. • 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. • The interest on our debt is floating, and increases in the rate could increase our interest payments significantly for the portion we do not hedge (see “Item 7A.
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.
Our business was negatively affected by the COVID-19 pandemic, actions taken to mitigate the pandemic, and the economic disruptions that resulted. A resurgence or similar pandemic in the future could harm our business.
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 37 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.
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 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.
Risks associated with the potential expansion of our international operations include: • 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.
Risks associated with the potential expansion of our international operations include: • 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, including tariffs; • 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 30 • ongoing compliance with the U.S.
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.
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. 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.
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.
In the EU, 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.
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 28 markets or enter new markets, we may not realize our expected growth, and our brand image and reputation could be hurt.
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 markets or enter new markets, we may not realize our expected growth, and our brand image and reputation could be hurt.
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.
Any substitute intellectual property or technology may 27 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.
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.
The unexpected loss or interruption of the services of such 31 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.
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.
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. 38 Item 1B. Unresolved Staff Comments None.
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.
Based on Aireon’s current 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.
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.
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 28 faulty or poorly performing products using our technology or services, we may be subject to claims, and our reputation could be harmed.
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.
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 global silicon chip shortage.
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.
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 Aireon’s credit facility, Aireon Holdings is required to redeem a portion of our ownership interest for a payment of $120.0 million.
The credit agreement governing our Term Loan contains covenants that place restrictions on, among other things, our ability to: • incur liens, • engage in mergers or asset sales, • pay dividends, 32 • repay subordinated indebtedness, • incur indebtedness, • make investments and loans, and • engage in other specified transactions.
The credit agreement governing our Term Loan contains covenants that place restrictions on, among other things, 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 specified transactions.
We can offer no assurance that we will be able to obtain such 27 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.
We can offer no assurance that we will be able to obtain such 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.
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.
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 enforcement actions, government investigations, or litigation.
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.
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 $32.7 million.
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.
For example, numerous U.S. states have adopted consumer privacy laws that give residents expanded rights to 35 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.
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.
Some countries have specific regulatory requirements such as lawful intercept and local domestic ownership requirements or requirements for physical gateways within their jurisdiction to connect traffic coming to and from their territory.
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.
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.
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.
In-orbit failure of a satellite or temporary outage of a service or 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.
An adverse determination in litigation to which we may become a party could, among other things: • 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.
The resolution of an intellectual property claim or an adverse determination in litigation to which we may become a party could, among other things: • require disputed rights to be licensed from a third party for royalties that may be substantial; • subject us to significant liabilities to third parties, including treble damages; • 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.
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.
As a result, we experienced delays in fulfilling some product orders. 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.
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 rely on a limited number of key vendors for supply of equipment, components and services and the loss of any such supplier, shortages experienced by such suppliers, or changes in trade policy such as tariffs, 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.
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.
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 27% and 25% of our revenue for the years ended December 31, 2024 and 2023, respectively.
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.
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.
Factors affecting the trading price of our common stock may include: • 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.
Factors affecting the trading price of our common stock may include: • 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; 33 • 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.
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.
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 do not have plans to obtain, in-orbit insurance to protect against losses.
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.
For us to keep up with technological changes and remain competitive, we have made and may continue to make significant research and development and 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.
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.
If we fail to comply with the terms of our U.S. government contracts, including applicable federal acquisition regulations and executive orders, we may be subject to contract price adjustments, contract terminations, civil or criminal penalties, or suspension or debarment from future U.S. government contracts.
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.
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 de-orbiting coverage for Block 1 satellites.
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.
Our two largest commercial distributors, Marlink Group and Garmin, together represented approximately 10% of our revenue for the year ended December 31, 2024, and our ten largest distributors represented, in the aggregate, 30% of our revenue for the year ended December 31, 2024.
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.
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. 36 Export control, sanctions, 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.
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 estimate that commercial data traffic originating outside the United States accounted for 94% and 96% of total commercial data traffic for the years ended December 31, 2024 and 2023, respectively, while commercial voice traffic originating outside the United States accounted for 91% of total commercial voice traffic for each of the years ended December 31, 2024 and 2023.
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.
We operate our satellite constellation from our satellite network operations center in 24 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.
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.
We have been and may in the future become subject to claims that our devices or services violate the patent or other intellectual property rights of others, which could be costly and disruptive to us.
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.
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 experienced a substantial delay in our ability to develop similar services with other third parties.
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.
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. Since 2023, we have paid quarterly cash dividends on our common stock.
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.
The satellite communications industry is subject to rapid advances and innovations in technology. We face competition 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 compete directly with one or more of our existing or planned products and services.
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.
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.
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.
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 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 the future, we may seek to make changes to our constellation to offer new services or adjust the power. 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.
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).
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.
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.
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 37 otherwise.
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.
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.
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.
Our current policy has a one-year term, which expires on December 8, 2025, and excludes coverage for all third-party damages relating to the 2009 collision of our satellite with a non-operational Russian satellite.
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.
Changes to trade policy by the U.S. or foreign governments, including tariff and customs regulations, could increase our costs, cause delays or cause us to evaluate alternative sourcing, all of which could adversely impact our operations. 29 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.
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.
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. 32 If we default under the Term Loan, the lenders may require immediate repayment in full of amounts borrowed or foreclose on our assets.
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. 36 These U.S. and foreign obligations and regulations may limit or delay our ability to offer products and services in a particular country.
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.
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.
The rules and regulations of these U.S. and foreign authorities may change, and such authorities may adopt regulations that limit or restrict our current or future operations or expand those of our competitors, including our orbital debris mitigation obligations. Such authorities may also make changes in the licenses of our competitors that affect our spectrum.
As of December 31, 2023, we had $1,500.0 million of consolidated gross indebtedness.
As of December 31, 2024, we had $1,807.7 million of consolidated gross indebtedness.
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.
In October 2023, Ligado sued the U.S. government alleging that the Department of Defense, the Department of Commerce, and Congress unlawfully prevented Ligado from using its FCC authorized spectrum and seeking damages based on its inability to deploy ATC services in the spectrum. The litigation is ongoing.
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. 29 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.
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.
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.
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 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.
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.
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.
As a U.S. government contractor or subcontractor, we are subject to extensive laws and regulations governing the award, administration and performance of U.S. government contracts. Among other things, these laws and regulations govern the allowability of costs incurred by us in the performance of U.S. government contracts.
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.
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.
If any of these risks were to materialize, it could affect our ability to successfully compete and expand internationally. 30 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.
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.
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.
We provide the majority of our services to the U.S. government pursuant to our EMSS, SDA, and ECS3 contracts. We entered into these contracts in September 2019, May 2022, and March 2024, respectively.
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.
Treasury Department’s Office of Foreign Assets Control relating to transactions involving entities sanctioned by the United States, and (iii) the U.S. State Department’s Office of Defense Trade Controls relating to satellite launch and to our support of Space Development Agency operations outside the United States.
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.
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, or, for traffic within Russian boundaries only, a gateway in Izhevsk, Russia.
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.
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.
Our relationship with the U.S. government is also subject to the 26 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.
U.S. government budget and policy decisions, including with respect to defense spending, are based on changing government priorities and objectives, which are driven by numerous factors, including administration changes, 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.
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.
The EMSS contract continues through September 2026; the SDA contract had a base term until January 2025, and we are currently in the first of up to five one-year options exercisable at the election of the U.S. government to extend the term; and the ECS3 contract has a base term 26 that runs through March 2025, with four one-year extension options exercisable at the election of the U.S. government .
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.
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. 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.
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.
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.
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.
Lower subscriber use may negatively affect our ability to negotiate a renewal of the EMSS contract on favorable terms in 2026, which could reduce our revenue from that contract.
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.
While the FCC’s decision to approve Ligado Network’s waiver included conditions designed to protect satellite services that use L-band 34 spectrum from harmful interference, these conditions may prove inadequate, resulting in harmful interference with our satellites and devices. These petitions remain pending.
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.
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.
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.
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.
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.
Interference with our satellite spectrum, including by operators seeking to repurpose L-band for terrestrial services, could adversely impact our ability to provide our services. Although we have globally coordinated rights to the use of our spectrum, spectrum interference may adversely affect the performance of our system for customers of our existing and future services.
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.
In particular, the FCC granted a waiver in 2020 to Ligado Networks to operate a terrestrial nationwide network in the United States on MSS spectrum that includes a 10 MHz band close to the spectrum that we use for all of our services.
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 to higher premiums, insurance policies may provide for higher deductibles, shorter coverage periods and additional policy exclusions. 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.
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.
Our current in-orbit liability insurance policy also contains, and we expect and future policies would likewise contain, specified exclusions and material change limitations that are customary in the industry. The price, terms and availability of insurance have fluctuated significantly since we began offering commercial satellite services.
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.
Further, operational control of some 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.
Removed
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 24 Leesburg, Virginia.
Added
The total number of satellites in low-earth orbit has increased significantly in recent years and is expected to continue to increase in the future, increasing the risk of collisions if not coordinated.
Removed
The satellite communications industry is subject to rapid advances and innovations in technology.
Added
Collisions between satellites or other space debris, such as rocket fragments, could cause a cascading effect of multiplying debris and collisions within Earth’s orbit, which could result in significant risk to the operation of our constellation. If our constellation experiences additional satellite collisions with space debris or other spacecraft, our service could be impaired.

… 24 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+1 added−1 removed14 unchanged
Biggest changeOur 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.
Biggest changeOur 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.
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.
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 20 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.
Our incident response and vulnerability management processes include reporting by management to the board of directors for certain cybersecurity incidents. 39 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 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.
We also maintain critical internal computer networks, as well as third-party hosted services, communications systems, hardware and software. 38 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.
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.
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.
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.
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.
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. 39 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 most important information system is our satellite network and related ground systems that carry our customers’ traffic on our network.
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.
Removed
Members of this committee work with our incident response team to help mitigate and remediate cybersecurity incidents of which they are notified.
Added
Our incident response and vulnerability management processes include reporting by management to the board of directors for certain cybersecurity incidents.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed0 unchanged
Biggest changeProperties The following table describes the facilities we own or lease: Location Country Approximate Square Feet Facilities Owned/Leased McLean, Virginia USA 30,600 Corporate Headquarters Leased Chandler, Arizona USA 197,000 Technical Support Center, Distribution Center, Warehouse and Satellite Teleport Network Facility Leased Leesburg, Virginia USA 40,000 Satellite Network Operations Center Owned Tempe, Arizona USA 31,000 System Gateway and Satellite Teleport Network Facility Owned Building on Leased Land Chandler, Arizona USA 24,000 Operations Office Space Leased Fairbanks, Alaska USA 4,000 Satellite Teleport Network Facility Owned Svalbard Norway 1,800 Satellite Teleport Network Facility Owned Building on Leased Land Izhevsk, Udmurtia Russia 8,785 System Gateway and Satellite Teleport Network Facility Leased Moscow Russia 2,158 Sales and Administration Offices Leased Punta Arenas Chile 3,200 Satellite Teleport Network Facility Owned Building on Leased Land Bishop’s Stortford United Kingdom 2,400 Sales Offices Leased
Biggest changeProperties The following table describes the facilities we own or lease: Location Country Approximate Square Feet Facilities Owned/Leased McLean, Virginia USA 30,600 Corporate Headquarters Leased Chandler, Arizona USA 197,000 Technical Support Center, Distribution Center, Warehouse and Satellite Teleport Network Facility Leased Leesburg, Virginia USA 40,000 Satellite Network Operations Center Owned Tempe, Arizona USA 31,000 System Gateway and Satellite Teleport Network Facility Owned Building on Leased Land Chandler, Arizona USA 24,000 Operations Office Space Leased Fairbanks, Alaska USA 4,000 Satellite Teleport Network Facility Owned Svalbard Norway 1,800 Satellite Teleport Network Facility Owned Building on Leased Land Izhevsk, Udmurtia Russia 8,785 System Gateway and Satellite Teleport Network Facility Leased Punta Arenas Chile 3,200 Satellite Teleport Network Facility Owned Building on Leased Land

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−2 removed1 unchanged
Biggest changeThe 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 Issuer Purchases of Equity Securities The following table presents our monthly share repurchases for the quarter ended December 31, 2023: Period (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 October 1-31 255,843 $41.23 255,843 $375.1 million November 1-30 844,963 (1) $37.37 816,963 $344.6 million December 1-31 261,264 $40.37 261,264 $334.0 million Total 1,362,070 $38.67 1,334,070 — (1) Includes 28,000 shares purchased on November 20, 2023 at an average price of $37.01 per share by Matthew J.
Biggest changeThe 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 Issuer Purchases of Equity Securities The following table presents our monthly share repurchases for the quarter ended December 31, 2024: Period (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 October 1-31 1,756,195 $29.98 1,756,195 $499.6 million November 1-30 1,594,591 $29.16 1,594,591 $453.1 million December 1-31 763,884 $29.85 763,884 $430.3 million Total 4,114,670 $29.65 4,114,670 $430.3 million In July 2023, our board of directors authorized a share repurchase program of up to $400.0 million through December 31, 2025, and in September 2024, our board of directors authorized an additional share repurchase program of up to $500.0 million through December 31, 2027.
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.
Dividends Stockholders are entitled to receive, when and if declared by our Board of Directors from time to time, dividends and other distributions in cash, stock or property from our assets or funds legally and contractually available for such purposes.
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.
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 7, 2025, there were 130 holders of record of our common stock.
The Board of Directors plans to increase the quarterly dividend to $0.14 per share starting with the second quarter 2024 dividend. 42 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 Board of Directors plans to increase the quarterly dividend to $0.15 per share starting with the third quarter 2025 dividend. 42 Stock Price Performance Graph The graph below compares the cumulative total return of our common stock from December 31, 2019 through December 31, 2024, 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 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.
Our liability related to dividends on common stock was $2.5 million and $1.3 million as of December 31, 2024 and 2023, respectively. 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.
In February 2024, our Board of Directors approved a dividend of $0.13 per share of common stock, which was paid on March 29 to stockholders of record as of March 15.
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.
In May 2024, August 2024 and December 2024, our Board of Directors approved dividends of $0.14 per share of common stock, which were paid on June 28, September 30 and December 31, 2024 to stockholders of record as of June 14, September 13 and December 16, 2024, respectively. We made total dividend payments of $64.7 million during 2024.
Removed
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.
Added
Since initiating share repurchases in February 2021, our board has authorized the repurchase of an aggregate $1,500.0 million of our common stock, including the programs referenced above. All shares included in the table above were purchased under this authorization in open market transactions.
Removed
Desch, our 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].
Added
Amounts reported in the table above do not include commissions incurred or excise taxes payable in connection with the repurchases. Item 6. [Reserved].

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

55 edited+17 added−27 removed30 unchanged
Biggest changeSee 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 Year Ended December 31, % of Total Revenue % of Total Revenue Change ($ In thousands) 2023 2022 Dollars Percent Revenue: Service revenue Commercial $ 478,454 61 % $ 428,721 59 % $ 49,733 12 % Government 106,000 13 % 106,000 15 % — 0 % Total service revenue 584,454 74 % 534,721 74 % 49,733 9 % Subscriber equipment 105,136 13 % 134,714 19 % (29,578) (22) % Engineering and support services 101,133 13 % 51,599 7 % 49,534 96 % Total revenue 790,723 100 % 721,034 100 % 69,689 10 % Operating expenses: Cost of services (exclusive of depreciation and amortization) 158,710 20 % 115,137 16 % 43,573 38 % Cost of subscriber equipment 66,410 8 % 86,012 12 % (19,602) (23) % Research and development 20,269 3 % 16,218 2 % 4,051 25 % Selling, general and administrative 143,706 18 % 123,504 17 % 20,202 16 % Depreciation and amortization 320,000 41 % 303,484 43 % 16,516 5 % Total operating expenses 709,095 90 % 644,355 90 % 64,740 10 % Operating income 81,628 10 % 76,679 10 % 4,949 6 % Other expense: Interest expense, net (90,387) (11) % (65,089) (9) % (25,298) 39 % Loss on extinguishment of debt — 0 % (1,187) 0 % 1,187 (100) % Other income, net 4,012 1 % 107 0 % 3,905 3,650 % Total other expense (86,375) (10) % (66,169) (9) % (20,206) 31 % Income (loss) before income taxes and equity in net earnings of affiliates (4,747) 0 % 10,510 1 % (15,257) (145) % Income tax benefit (expense) 26,251 3 % (292) 0 % 26,543 (9,090) % Loss on equity method investments (6,089) (1) % (1,496) 0 % (4,593) 307 % Net income $ 15,415 2 % $ 8,722 1 % $ 6,693 77 % 49 Commercial Service Revenue Year Ended December 31, 2023 2022 Change Revenue Billable Subscribers (1) ARPU (2) Revenue Billable Subscribers (1) ARPU (2) Revenue Billable Subscribers ARPU (Revenue in millions and subscribers in thousands) Commercial services: Voice and data $ 219.2 408 $ 45 $ 193.1 397 $ 42 $ 26.1 11 $ 3 IoT data 141.0 1,709 $ 7.45 125.0 1,448 $ 7.89 16.0 261 $ (0.44) Broadband (3) 57.9 16.7 $ 305 51.1 15.0 $ 302 6.8 1.7 $ 3 Hosted payload and other data 60.3 N/A 59.5 N/A 0.8 N/A Total commercial services $ 478.4 2,134 $ 428.7 1,860 $ 49.7 274 (1) Billable subscriber numbers are shown as of the end of the respective period.
Biggest changeSee 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, 2024 and 2023 Year Ended December 31, % of Total Revenue % of Total Revenue Change ($ In thousands) 2024 2023 Dollars Percent Revenue: Service revenue Commercial $ 508,618 61 % $ 478,454 61 % $ 30,164 6 % Government 106,296 13 % 106,000 13 % 296 0 % Total service revenue 614,914 74 % 584,454 74 % 30,460 5 % Subscriber equipment 91,416 11 % 105,136 13 % (13,720) (13) % Engineering and support services 124,352 15 % 101,133 13 % 23,219 23 % Total revenue 830,682 100 % 790,723 100 % 39,959 5 % Operating expenses: Cost of services (exclusive of depreciation and amortization) 178,140 22 % 158,710 20 % 19,430 12 % Cost of subscriber equipment 52,427 6 % 66,410 8 % (13,983) (21) % Research and development 28,422 3 % 20,269 3 % 8,153 40 % Selling, general and administrative 168,182 20 % 143,706 18 % 24,476 17 % Depreciation and amortization 203,127 25 % 320,000 41 % (116,873) (37) % Total operating expenses 630,298 76 % 709,095 90 % (78,797) (11) % Operating income 200,384 24 % 81,628 10 % 118,756 145 % Other expense: Interest expense, net (91,134) (11) % (90,387) (11) % (747) 1 % Other income, net 534 0 % 4,012 1 % (3,478) (87) % Total other expense (90,600) (11) % (86,375) (10) % (4,225) 5 % Income (loss) before income taxes and equity in net earnings of affiliates 109,784 13 % (4,747) 0 % 114,531 2,413 % Income tax (expense) benefit (12,259) (1) % 26,251 3 % (38,510) (147) % Gain (loss) on equity method investments 15,251 2 % (6,089) (1) % 21,340 350 % Net income $ 112,776 14 % $ 15,415 2 % $ 97,361 632 % 49 Commercial Service Revenue Year Ended December 31, 2024 2023 Change Revenue Billable Subscribers (1) ARPU (2) Revenue Billable Subscribers (1) ARPU (2) Revenue Billable Subscribers ARPU (Revenue in millions and subscribers in thousands) Commercial services: Voice and data $ 226.1 415 $ 46 $ 219.2 408 $ 45 $ 6.9 7 $ 1 IoT data 166.2 1,887 $ 7.70 141.0 1,709 $ 7.45 25.2 178 $ 0.25 Broadband (3) 56.1 16.6 $ 282 57.9 16.7 $ 305 (1.8) (0.1) $ (23) Hosted payload and other data 60.2 N/A 60.3 N/A (0.1) N/A Total commercial services $ 508.6 2,319 $ 478.4 2,134 $ 30.2 185 (1) Billable subscriber numbers are shown as of the end of the respective period.
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 provides for specified exceptions, including baskets measured as a percentage of trailing 45 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.
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.
Our accounting policies are more fully described in Note 2 to the consolidated financial statements included in this report. 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.
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.
If actual results are not consistent with our estimates and assumptions, this may result in material changes to our income tax provision. 47 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 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.
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, 2024 and 2023.
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.
If our current estimates change in future periods, the impact on the deferred tax assets and liabilities may change correspondingly. See Note 13 to our consolidated financial statements for more detail on the individual items impacting our effective tax rate for the years.
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.
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, 2023 compared to the year ended December 31, 2022 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, 2023, as filed with the SEC on February 15, 2024.
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.
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 or the 2024 increases and repricing, is designed to mirror the terms of the Term Loan and to offset the cash flows being hedged.
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.
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 $1,702.8 million. We expect to refinance this amount at or prior to maturity. Dividends On December 8, 2022, our Board of Directors initiated a quarterly dividend.
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.
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 event our consolidated first lien net leverage ratio rises above 3.5 to 1.
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.
At December 31, 2024, we had $1.8 billion of indebtedness, consisting exclusively of amounts outstanding under the Term Loan, 52 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, 2024.
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.
Total interest incurred during the years ended December 31, 2024, 2023 and 2022 was $102.8 million, $102.3 million and $72.1 million, respectively. Interest incurred includes amortization of deferred financing fees of $2.7 million, $4.0 million and $4.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.
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.
The Revolving Facility bears interest at an annual rate of SOFR plus 2.25% (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 is 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.
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.
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 46 • geographic market expansion through the ability to offer our services in additional countries.
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 services (exclusive of depreciation and amortization) increased by $19.4 million, or 12%, for the year ended December 31, 2024 compared to the prior year, primarily as a result of increased work under certain government projects, including the SDA contract, as noted above.
Net Income Net income was $15.4 million for the year ended December 31, 2023, compared to $8.7 million during the prior year.
Net Income Net income was $112.8 million for the year ended December 31, 2024, compared to $15.4 million during the prior year.
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.
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. At December 31, 2024, we had approximately 2,460,000 billable subscribers worldwide, an increase of 181,000, or 8%, from approximately 2,279,000 billable subscribers at December 31, 2023.
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.
Government Service Revenue Year Ended December 31, 2024 2023 Change Revenue Billable Subscribers (1) Revenue Billable Subscribers (1) Revenue Billable Subscribers (Revenue in millions and subscribers in thousands) Government service revenue $ 106.3 141 $ 106.0 145 $ 0.3 (4) (1) Billable subscriber numbers shown are at the end of the respective period.
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.
Contractual Obligations As of December 31, 2024, we held non-cancelable purchase obligations of approximately $9.3 million for inventory purchases with Benchmark, our primary third-party equipment supplier. Our purchase obligations, all of which are due during 2025, decreased $12.2 million from the end of 2023 primarily due to recovery from supply chain constraints.
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.
The decrease in income tax benefit is primarily related to the net impact of (i) pre-tax book income in the current year compared to pre-tax book loss in the prior year, (ii) a decrease in estimated R&D credits, (iii) an increased stock compensation tax expense, and (iv) a tax benefit for the Foreign Derived Intangible Income deduction.
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.
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 to be $33.1 million inclusive of the mandatory excess cash flow prepayment in 2025, and, based on the current interest rate, approximately $96.0 million, respectively, (ii) capital expenditures, of approximately $90.0 million in 2025 and moderating through the end of the decade, (iii) working capital, (iv) potential share repurchases, and (v) anticipated cash dividend payments to holders of our common stock.
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.
The prior year balance was primarily the 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, 2024, our income tax expense was $12.3 million, compared to income tax benefit of $26.3 million for the prior year.
Engineering and Support Service Revenue Year Ended December 31, 2023 2022 Change (In millions) Commercial $ 11.0 $ 7.8 $ 3.2 Government 90.1 43.8 46.3 Total $ 101.1 $ 51.6 $ 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.
Engineering and Support Service Revenue Year Ended December 31, 2024 2023 Change (In millions) Commercial $ 7.3 $ 11.0 $ (3.7) Government 117.0 90.1 26.9 Total $ 124.3 $ 101.1 $ 23.2 Engineering and support service revenue increased by $23.2 million, or 23%, for the year ended December 31, 2024 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, offset in part by decreases in commercial engineering projects.
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.
Term Loan and Revolving Facility On September 20, 2023, pursuant to a credit agreement (or, as amended to date, the Credit Agreement), we refinanced our previously existing term loan resulting in borrowing of $1,500.0 million, or the Term Loan, issued at a price equal to 99.75%, and an accompanying $100.0 million revolving loan, or the Revolving Facility.
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.
Cost of subscriber equipment decreased $14.0 million, or 21%, for the year ended December 31, 2024 compared to the prior year period primarily due to the decrease in volume of device sales, as described above, and decreased inventory component costs.
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.
See Note 12 to our consolidated financial statements included in this annual report. 44 We sell our products and services to commercial end users through a wholesale distribution network, encompassing approximately 110 service providers, 310 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.
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.
As of December 31, 2024, we reported an aggregate balance of $1,807.7 million in borrowings under the Term Loan, before $16.9 million of net deferred financing costs, for a net principal balance of $1,790.9 million outstanding in our consolidated balance sheet. Our Revolving Facility was undrawn as of December 31, 2024. Our Term Loan contains no financial maintenance covenants.
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.
These changes were partially offset by net income, as adjusted for non-cash activities, which decreased by $2.4 million over the prior year. Net income in 2023 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.
Interest capitalized during the years ended December 31, 2023, 2022 and 2021 was $5.1 million, $2.6 million and $2.1 million, respectively.
Interest capitalized during the years ended December 31, 2024, 2023 and 2022 was $5.0 million, $5.1 million and $2.6 million, respectively. As of December 31, 2024 and 2023, accrued interest on the Term Loan was $0.3 million and $1.0 million, respectively.
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.
The Cap provides us the right to receive payment from the counterparty if one-month SOFR exceeds 1.436%. 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, 2024 and 2023.
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 contains other customary representations and warranties, affirmative and negative covenants, and events of default. 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.
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.
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.
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 Term Loan has been repriced on several occasions, most recently in June 2024, and currently bears interest at an annual rate equal to the Secured Overnight Financing Rate, or SOFR, plus 2.25%, 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.
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.
Our effective tax rate was approximately 11.2% for the year ended December 31, 2024 compared to 553.0% for the prior year.
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 refinancing of the Term Loan in 2023, we incurred third-party financing costs of $15.9 million, of which $14.7 million was expensed. These costs are included within interest expense on the consolidated statements of operations and comprehensive income (loss).
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.
We expect that depreciation expense will generally remain in line with 2024 depreciation expense for the remainder of the estimated useful lives. Other Expense Interest Expense, net Interest expense, net, for the year ended December 31, 2024 was $91.1 million, compared to $90.4 million for the prior year.
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.
Cash Flows from Investing Activities Net cash used in investing activities for the year ended December 31, 2024 increased $97.1 million from the prior year period primarily as a result of our acquisition of Satelles on April 1, 2024, offset in part by a decrease in capital expenditures compared to the prior year.
Cash Flows - Comparison of the Years Ended December 31, 2023 and 2022 The following table shows our consolidated cash flows: Year Ended December 31, Statement of Cash Flows 2023 2022 Change (in thousands) Net cash provided by operating activities $ 314,913 $ 344,729 $ (29,816) Net cash used in investing activities $ (83,487) $ (121,267) $ 37,780 Net cash used in financing activities $ (327,052) $ (374,980) $ 47,928 Cash Flows from Operating Activities Net cash provided by operating activities for the year ended December 31, 2023 decreased $29.8 million from the prior year.
Cash Flows - Comparison of the Years Ended December 31, 2024 and 2023 The following table shows our consolidated cash flows: Year Ended December 31, Statement of Cash Flows 2024 2023 Change (in thousands) Net cash provided by operating activities $ 375,955 $ 314,913 $ 61,042 Net cash used in investing activities $ (180,603) $ (83,487) $ (97,116) Net cash used in financing activities $ (170,481) $ (327,052) $ 156,571 Cash Flows from Operating Activities Net cash provided by operating activities for the year ended December 31, 2024 increased $61.0 million from the prior year.
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.
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, or subject to letter of credit exposure. As of December 31, 2024, the aggregate exposure under the Revolving Facility was less than 35%.
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.
For each quarter through March 2024, our Board of Directors declared and paid a quarterly cash dividend in the amount of $0.13 per share of common stock. Beginning in June 2024, the Board of Directors increased the quarterly cash dividend to $0.14 per share of common stock for each quarter through December 2024.
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.
Cash flows related to changes in working capital increased by approximately $58.7 million, primarily as a result of changes in inventory, offset by corresponding decreases in accounts payable and accrued expenses. In 2023, we replenished finished goods and component inventory, including last time buys.
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.
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, 2024, total commercial service revenue increased $30.2 million, or 6%, primarily as a result of increases in IoT and voice and data services revenue.
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.
The Revolving Facility has a maturity date in September 2028. See Note 6 to the consolidated financial statements included in this annual report for further discussion of our Term Loan and Revolving Facility.
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.
Interest is paid monthly on the last business day of the month. Principal payments, payable quarterly, equal $18.3 million per annum, which is one percent of the full principal amount of the Term Loan, with the remaining principal due upon maturity.
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.
Gain (Loss) on Equity Method Investments For the year ended December 31, 2024, our gain on equity method investments was $15.3 million, compared to a loss of $6.1 million in the prior year.
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.
We expect our capital expenditures to be $90.0 million in 2025 and moderate through the end of the decade. 53 Cash Flows from Financing Activities Net cash used in financing activities for the year ended December 31, 2024 decreased $156.6 million compared to the prior year period primarily due to the additional $325.0 million in borrowings under the Term Loan, offset in part by increased repurchases of our common stock.
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.
Commercial IoT revenue increased $25.2 million, or 18%, compared to the prior year, driven by a 10% increase in IoT billable subscribers primarily in users of personal communications devices, and a new contract with a large customer executed in the first quarter of 2024.
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.
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. 51 Selling, general and administrative expenses increased by $24.5 million, or 17%, for the year ended December 31, 2024, primarily due to personnel costs from increased headcount and related costs, including higher employee stock-based compensation expense, increased expense from Satelles and related acquisition costs and certain costs that were previously recorded in cost of services, offset in part by a decrease in regulatory fees, decreased spending related to our channel partner conference which was held in the first quarter of the prior year and a decrease in stock appreciation rights expense in the current year resulting from a decrease in our stock valuation between the years.
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.
As of December 31, 2024, our total cash and cash equivalents balance was $93.5 million, up from $71.9 million as of December 31, 2023. The increase was principally the result of additional Term Loan borrowings in 2024, offset in part by an increase in share repurchases.
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.
Depreciation and Amortization Depreciation and amortization expense decreased by $116.9 million, or 37%, for the year ended December 31, 2024, compared to the prior year, primarily due to the change in estimated useful lives of our satellites during the fourth quarter of 2023 and the write-off of our final ground spare, that resulted in accelerated depreciation of $37.5 million in the second quarter of 2023.
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.
We expect engineering and support service revenue to be higher in 2025 than in 2024.
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.
Revenue for the year ended December 31, 2024 rose slightly reflecting a contractual step up in the EMSS contract on September 15, 2024. 50 Subscriber Equipment Revenue Subscriber equipment revenue decreased $13.7 million, or 13%, to $91.4 million for the year ended December 31, 2024 compared to the prior year, primarily due to a decrease in the volume of handset sales, offset in part by an increase in Short Burst Data sales.
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 voice and data revenue increased $6.9 million, or 3%, from the prior year primarily due to an increase in billable subscribers. Commercial broadband revenue decreased $1.8 million, or 3%, compared to the prior year, due to a decrease in ARPU reflecting the increased prevalence of usage of our service as a companion service.
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.
The overall decrease was is in line with our previously announced expectations, as we returned to more normal levels after the supply chain disruptions due to the pandemic. We expect equipment revenue in 2025 to be in line with 2024.
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.
Research and Development Research and development expenses increased by $8.2 million, or 40%, for the year ended December 31, 2024 compared to the prior year period based on increased spending by Satelles since its acquisition and other device-related features for our network, including Project Stardust, which is our multi-year project to develop Iridium NTN DirectSM, our 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.
Removed
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.
Added
In 2024, we acquired Satelles, Inc., or Satelles, a provider of highly secure, satellite-based position, navigation and timing (PNT) services that complement and protect GPS and other Global Navigation Satellite System, or GNSS, reliant systems.
Removed
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.
Added
Time synchronization and location data play an important role in the global economy, particularly for major industries supported by critical infrastructure, such as financial services, telecommunications, cyber-security and transportation.
Removed
In May 2023, we launched five of our remaining ground spare satellites, bringing our total number of in-orbit spares to 14.
Added
We believe the acquisition of Satelles’s business could generate substantial growth in our service revenue, as well as incremental equipment and engineering services revenue over the coming years from both government and commercial customers.
Removed
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.
Added
The maturity date of the Term Loan is in September 2030. During the year ended December 31, 2024, we borrowed an additional $325.0 million under our Term Loan, comprised of $125.0 million on March 25, 2024 and $200.0 million on July 30, 2024.
Removed
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.
Added
The additional amounts borrowed are fungible with the original $1,500.0 million, and have the same maturity date, interest rate and other terms. The additional $125.0 million was issued at a price equal to 99.875% of its face value, while the additional $200.0 million was issued at a price equal to 99.0% of its face value.
Removed
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.
Added
The proceeds from the March 2024 additional Term Loan were used for the acquisition of Satelles on April 1, 2024. In April 2024, we drew down $50.0 million on our Revolving Facility for general corporate purposes, including the funding of repurchases of our common stock.
Removed
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.
Added
This amount was repaid with the expansion of the Term Loan in July 2024, and there were no amounts outstanding under the Revolving Facility as of December 31, 2024. The remaining proceeds from the July 2024 additional Term Loan have been used for general corporate purposes, including share repurchases.
Removed
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%).
Added
Our mandatory excess cash flow prepayment, as specified in the Credit Agreement, was $28.6 million as of December 31, 2024. This amount is scheduled to be paid in 2025 and will be applied towards our required quarterly principal payments. As such, it was classified under current short-term secured debt in our consolidated balance sheet as of December 31, 2024.
Removed
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.
Added
The Credit Agreement permits repayment, prepayment, and repricing transactions. We were in compliance with all covenants under the Credit Agreement as of December 31, 2024. Derivative Financial Instruments In July 2021, we entered into an interest rate cap agreement, or the Cap, that began in December 2021.
Removed
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.
Added
See Note 7 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.
Removed
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.
Added
We incurred third-party financing costs of $2.3 million in connection with the expansion of the Term Loan in July 2024, $1.9 million related to the repricing of the Term Loan in June 2024 and $1.6 million in connection with the expansion of the Term Loan in March 2024, substantially all of which we expensed as incurred.
Removed
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.
Added
Hosted payload and other service revenue decreased $0.1 million, reflecting the quarterly year-over-year decrease due to the change in the estimated useful lives of our satellites made in the fourth quarter of 2023, offset in part by increases in other data service revenue including Satelles revenue.
Removed
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.

… 19 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−1 removed2 unchanged
Biggest changeFor 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.
Biggest changeFor every SOFR increase of 25 basis points above the level of the Cap, we expect our annual interest expense to increase by an additional $2.0 million related to the unhedged portion of the Term Loan. As of December 31, 2024, our Revolving Facility was undrawn.
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.
Accordingly, although the Revolving Facility bears interest at SOFR plus 2.25%, 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.
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%.
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 notional amount of $1.0 billion of our Term Loan. In 2024, the Cap provided the right for us to receive payment from the counterparty if one-month SOFR exceeded 1.436%.
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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We had an outstanding aggregate balance of $1,807.7 million under the Term Loan as of December 31, 2024. Under our Term Loan, we pay interest at an annual rate equal to SOFR plus 2.25%, with a 0.75% SOFR floor.
Removed
(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.
Added
(See Note 7 to the financial statements included in this report for further details on the changes to the Cap.) The interest rate was above the level of the Cap for the full year 2024.

Other IRDM 10-K year-over-year comparisons