Strong 4Q 2024 results. Iridium’s 4Q print exceeded our expectations both on total revenue and on EPS (revenues of $213M versus our $203.5M estimate, and EPS of $0.32 versus our $0.17 estimate), and issued 2025 guidance that exceeded our model’s assumptions of 3.1% y/y revenue growth.

Total revenue increased 9% y/y, including a 4% increase in total service revenue. Service revenue (mostly recurring revenue from Iridium's subscriber base), was 72% of total revenue in 4Q.

Commercial IoT data revenue was $41.4M, +15% y/y. Subscriber growth was 10% from the year-ago period to 1,887,000 subscribers, driven by continued growth in consumer communications devices. Average revenue per user (ARPU) was $7.29 in 4Q, compared to $7.12 last year. Government service revenue grew 1% to $26.8M in 4Q reflecting a contractual rate increase in the EMSS Contract.

Iridium's U.S. government business ended the quarter with 141,000 subscribers, which compares to 145,000 for the prior-year quarter and 141,000 for 3Q’24. We believe that the government business remains safe from the ongoing cost cutting activities at various Federal agencies.

Guidance for 2025: Total service revenue growth of 5%-7% for full-year 2025. Full-year 2025 OEBITDA (Operational, or Adjusted EBITDA) of $490M-$500M million. O-EBITDA for 2024was $470.6 million. Net leverage below 4.0x O-EBITDA through 2026 and falling below 2.0x OEBITDA by the end of the decade, assuming ongoing execution of Iridium’s share repurchase authorization and the payment of expected quarterly dividends. Net leverage was 3.6x OEBITDA at December 31, 2024.

Changes to our model: We are raising our 1Q’25 revenue estimate from $207.9M to $210.0M and our YE’25 revenue estimate from $846.7M to $866.0M, implying 4.3% y/y growth; our OEBITDA estimate for 2025 from $494M to $498M, and our 2025 EPS estimate from $0.98 to$1.12.

Raising Price Target from $40 to $45. Shares are currently trading at ~6.3x our FY25 O-EBITDA estimate of $498M. In our opinion, IRDM shares can appreciate from current price levels, as Iridium shows acceleration of its previous ~4% revenue growth in FY24 to over 5% as its connectivity potential for mission-critical IoT networks begins to be realized. Our revised $45 price target values IRDM shares at an EV/O-EBITDA multiple of ~13.3x our 2025 O-EBITDA estimate of $498M.

IRDM shares have room for further price appreciation, we believe.