IRDM

Iridium operates a global low-earth-orbit satellite communications network, a high-fixed-cost, high-margin annuity business now in its harvest phase. FY2025 revenue grew 4.9% to $872M, operating income rose 17.8% to $236M (a 27.1% operating margin), and net income was roughly flat at $114M (EPS $1.06, +12.8% thanks to buybacks). The defining feature is cash conversion: with the expensive constellation already built and depreciating ($210M of D&A), operating cash flow reached $400M (+6.4%), far above net income — exactly the free-cash-flow profile a satellite operator targets once the network is in orbit.

Management returns that cash aggressively: $186M of buybacks shrank the share count 3.6% to 105M, plus a $62.9M dividend. The flip side is the balance sheet — long-term debt of $1.76B against just $463M of equity (4.47x liabilities/equity), with negative retained earnings of -$419M, the legacy of funding the constellation. Capex stepped up 43.5% to $100M, manageable against the cash flow but a reminder that satellite networks require periodic reinvestment and eventual replacement. The high leverage is serviceable given the recurring revenue, but it leaves little cushion.