Satellite communications provider Iridium announced better-than-expected revenue in Q3 2026, with sales up 8.3% year on year to $245.7 million. Its GAAP profit of $0.98 per share was significantly above analysts’ consensus estimates.
Revenue: $245.7 million vs analyst estimates of $242.8 million (8.3% year-on-year growth, 1.2% beat)
EPS (GAAP): $0.98 vs analyst estimates of $0.32 (significant beat)
Adjusted EBITDA: $135.6 million vs analyst estimates of $134.8 million (55.2% margin, 0.6% beat)
Operating Margin: 12.9%, down from 30.9% in the same quarter last year
Subscribers: 2.7 million, up 705,000 year on year
Market Capitalization: $4.68 billion
Company Overview
With a constellation of 66 low-earth orbit satellites providing coverage to every inch of the planet, Iridium Communications (NASDAQ:IRDM) operates a global satellite network that provides voice and data services to customers in remote areas where traditional telecommunications are unavailable.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $903 million in revenue over the past 12 months, Iridium is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand.
As you can see below, Iridium grew its sales at a solid 8.3% compounded annual growth rate over the last five years. This is an encouraging starting point for our analysis because it shows Iridium’s demand was higher than many business services companies.
Iridium Quarterly Revenue
Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Iridium’s annualized revenue growth of 5.4% over the last two years is below its five-year trend, but we still think the results were respectable.
Iridium Year-On-Year Revenue Growth
This quarter, Iridium reported year-on-year revenue growth of 8.3%, and its $245.7 million of revenue exceeded Wall Street’s estimates by 1.2%.
Looking ahead, sell-side analysts expect revenue to grow 7.2% over the next 12 months, an improvement versus the last two years. This projection is admirable and suggests its newer products and services will catalyze better top-line performance.
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Adjusted Operating Margin
Iridium has been a well-oiled machine over the last five years. It demonstrated elite profitability for a business services business, boasting an average adjusted operating margin of 18.3%.
Analyzing the trend in its profitability, Iridium’s adjusted operating margin rose by 11.2 percentage points over the last five years, as its sales growth gave it immense operating leverage.
In Q3, Iridium generated an adjusted operating margin profit margin of 21.1%, down 9.8 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.
Iridium’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.
Iridium Trailing 12-Month EPS (GAAP)
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
Iridium’s EPS grew at an astounding 27.4% compounded annual growth rate over the last two years, higher than its 5.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
We can take a deeper look into Iridium’s earnings to better understand the drivers of its performance. A two-year view shows that Iridium has repurchased its stock, shrinking its share count by 7.6%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.
Iridium Diluted Shares Outstanding
In Q3, Iridium reported EPS of $0.98, up from $0.35 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Iridium’s full-year EPS to shrink by 17.3% from $1.51 to $1.25. This is unusual as its revenue and operating margin are anticipated to increase, signaling the fall likely stems from “below-the-line” items such as taxes.
Key Takeaways from Iridium’s Q3 Results
It was good to see Iridium beat analysts’ EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock remained flat at $44.17 immediately after reporting.
