Iridium Communications reported another year of record revenue in 2022, growing revenue by 17% compared to 2021. The company reported full-year 2022 revenue of $721 million in its financial results on Thursday, attributing the growth to higher service revenue and record equipment sales.
CEO Matt Desch announced on Thursday’s call with investors that Iridium eclipsed 2 million subscribers at the start of 2023, and is now nearly 2,020,000. The company grew subscribers by 16% in 2022 compared to 2021, driven by growth in commercial IoT.
“This was a big milestone for us. It took us 18 years to get the first million in 2018,” Desch said. “So we’re excited to see the acceleration in recent years, particularly as consumers and enterprise IoT customers have chosen our network.”
Net income in 2022 was $8.7 million, or $0.07 per diluted share, as compared to a net loss of $9.3 million, or $0.07 per diluted share, for 2021. OEBITDA for 2022 was $424 million, a 12% increase from the prior year.
This financial performance follows strong financial results in 2021 when Iridium reported record revenue of $614.5 million, and 17% subscriber growth over 2020. Iridium has increased revenues each year for the past nine years.
“We finished out 2022 even better than expected and are forecasting another strong year of growth in 2023. By all measures 2022 was an amazing year,” Desch said of the growth in 2022. “We grew in every aspect of our business, from service revenue to equipment and engineering to subscriber count. We added new business partners, launched exciting new services, and welcomed several new partners’ products.”
Commercial service revenue which includes services to markets such as maritime, aviation, oil and gas, mining, recreation, forestry, construction, transportation, and emergency services is Iridium’s largest source of revenue. Commercial service revenue was $429 million in 2022, up 10% from the prior year.
At the end of 2022, Iridium reported 397,000 commercial voice and data subscribers, up 7% from the previous year. In commercial IoT data, Iridium has 1,448,000 customers, up 21% from the year-ago period, driven by growth in consumer personal communications devices. IoT data subscribers represent 78% of billable commercial subscribers, up from 76% last year.
“Our partners continue to invest in new retail-focused products to address growing demand. And we believe that this sector will remain a strong driver of revenue and subscribers as new mid-band capabilities roll out,” CFO Thomas Fitzpatrick commented on the IoT growth.
Government service revenue was nearly flat at $106 million, up 2% from the prior year.
Iridium saw large gains in both subscriber equipment revenue and engineering and support revenue. Equipment revenue grew 46% over 2021, to a record $135 million. Engineering and support grew 70% to $52 million.
The company expects this growth to continue in 2023, issuing guidance of total service revenue growth between 9% and 11%.
Desch also addressed Iridium’s recent announcement that Qualcomm’s new Snapdragon Satellite processors, part of the flagship Snapdragon 8 Gen 2 Mobile Platform, can enable satellite direct-to-cell service on next-generation Android phones. Qualcomm has said the first product will hit the market in the second half of this year, and Desch said more products will come in 2024.
Notably, the recently announced Samsung Galaxy S23 series will not feature satellite connectivity. Desch said it was “probably” too late for the feature to make it into that phone, and he hopes it will be adopted in future versions.
It is too early to guide what the unit economics of the deal with Qualcomm will look like and how it will impact Iridium’s incremental revenue, Desch said. “The exact revenues will depend on how many OEMs adopt a Snapdragon Satellite platform and the usage of this messaging capability by users, which is dependent on how it’s packaged in price. All things that we understand are actively being worked out,” he said.
“We believe that there are something like 80 to 100 million high-end Snapdragon processors produced each year by Qualcomm,” Desch added. “In the future, we hope demand for satellite connectivity will extend to their lower-end processors as well, which is an even larger population of devices. That’s a lot of potential customers each year, and it’s all incremental to our current growth plan.”
On the broader satellite IoT market, Desch previously said Iridium was evaluating partnerships with smaller narrowband IoT companies. On Thursday, he said most of these competitors do not provide real-time, two-way connectivity like Iridium, and the company will remain “very strongly positioned for many years” in the “premium IoT segment.” He does not think Iridium will build its own narrowband IoT constellation like EchoStar just announced. Rather, Iridium could invest in one company to become the breakout “low-end” IoT provider, Desch said.
