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SEC filingIridium's Q1 2026 revenue grew 2% to $219.1M, but net income fell 29% to $21.6M due to higher SG&A and tax expenses.
Iridium Communications Inc. reported total revenue of $219.1 million for the first quarter of 2026, a 2% increase from $214.9 million in the same period last year. The growth was primarily driven by a 9% increase in engineering and support services revenue to $40.8 million, largely due to increased work under government contracts, particularly with the Space Development Agency. Commercial services revenue grew 2% to $130.4 million, with IoT data revenue increasing 5% to $46.0 million and voice and data revenue rising 3% to $57.4 million. These gains were partially offset by a 13% decline in subscriber equipment revenue to $20.2 million, reflecting lower handset and L-band transceiver sales.
Gross profit increased 2% to $156.4 million, with gross margin remaining relatively stable at 71.4% compared to 71.3% in the prior year. Operating income, however, decreased 16% to $50.7 million, driven by a 28% increase in selling, general and administrative expenses to $45.8 million. The company attributed this rise to higher headcount costs, professional fees, and stock appreciation rights expense. Net income fell 29% to $21.6 million, or $0.20 per diluted share, compared to $30.4 million, or $0.27 per diluted share, in the prior year. The decline was also impacted by a 52% increase in income tax expense to $8.8 million.
As of March 31, 2026, Iridium reported total assets of $2.53 billion, relatively flat compared to December 31, 2025. Cash and cash equivalents increased to $111.6 million from $96.5 million, driven by strong operating cash flow. Total debt stood at $1.76 billion, net of unamortized deferred financing costs, with $1.77 billion in borrowings under the Term Loan. The company had no outstanding borrowings under its $100.0 million Revolving Facility as of quarter-end. Stockholders' equity increased to $468.4 million from $462.6 million, primarily due to net income, partially offset by dividend payments and an unrealized loss on cash flow hedges.
Cash provided by operating activities increased 17% to $71.6 million, compared to $61.1 million in the prior year, reflecting improved working capital management. Capital expenditures rose 22% to $30.0 million, resulting in free cash flow of $41.7 million. The company used $16.5 million for dividend payments and $9.9 million for tax withholdings on stock awards. No share repurchases were made during the quarter, as the company paused its buyback program in the fourth quarter of 2025 to increase financial flexibility.
Management highlighted several key trends and uncertainties. The company expects subscriber equipment revenue in 2026 to be in line with 2025, while engineering and support services revenue is expected to be higher. Selling, general and administrative expense growth is expected to moderate to a low double-digit rate for the full year. The EMSS contract with the U.S. government, which provides a fixed annual service fee of $110.5 million, expires in September 2026. Discussions for a new contract are underway, with an expected completion later in 2026 or 2027. The company also noted the enactment of the One Big Beautiful Bill Act in July 2025, which has been incorporated into the year-to-date effective tax rate.
Commercial IoT data revenue grew 5% to $46.0 million, driven by a 7% increase in billable subscribers to 2,019,000, partially offset by a decline in ARPU to $7.63. Commercial voice and data revenue increased 3% to $57.4 million, primarily due to higher ARPU from price increases implemented in the second half of 2025. Commercial broadband revenue decreased 5% to $12.2 million, reflecting a decline in ARPU to $254. Government services revenue increased slightly to $27.6 million, reflecting contractual step-ups in the EMSS contract. The company recognized $15.4 million in revenue that was previously recorded as deferred revenue. Stock-based compensation expense was $12.4 million, and the company paid dividends of $0.15 per share, totaling $16.5 million.