0001418819--12-31Large Accelerated FilerTrueFalseFalseQ32024Suite 1400VA70322102False113,847,7820.0010.001300,000300,000114,246122,776114,246122,7760.210.010.630.1800207142020714202.500.0017.51,000.00.310.82.50.5——0.135,400,00016,100,00000006.256.25four yearsten years258.256.25four years2512.512.55050100100112233—150505010010021215.911.711.9——2.239.5iso4217:USDxbrli:sharesxbrli:sharesiso4217:USDutr:Ratexbrli:pure00014188192024-01-012024-09-300001418819exch:XNGS2024-01-012024-09-300001418819us-gaap:CommonStockMember2024-09-3000014188192024-10-1000014188192024-09-3000014188192023-12-310001418819us-gaap:CommonStockMember2023-12-310001418819us-gaap:ServiceMember2024-07-012024-09-300001418819us-gaap:ServiceMember2023-07-012023-09-300001418819us-gaap:ServiceMember2024-01-012024-09-300001418819us-gaap:ServiceMember2023-01-012023-09-300001418819us-gaap:SubscriptionAndCirculationMember2024-07-012024-09-300001418819us-gaap:SubscriptionAndCirculationMember2023-07-012023-09-300001418819us-gaap:SubscriptionAndCirculationMember2024-01-012024-09-300001418819us-gaap:SubscriptionAndCirculationMember2023-01-012023-09-300001418819irdm:EngineeringandSupportServicesMember2024-07-012024-09-300001418819irdm:EngineeringandSupportServicesMember2023-07-012023-09-300001418819irdm:EngineeringandSupportServicesMember2024-01-012024-09-300001418819irdm:EngineeringandSupportServicesMember2023-01-012023-09-3000014188192024-07-012024-09-3000014188192023-07-012023-09-3000014188192023-01-012023-09-300001418819us-gaap:CommonStockMember2024-06-300001418819irdm:CommonStockAmountMember2024-06-300001418819us-gaap:AdditionalPaidInCapitalMember2024-06-300001418819us-gaap:RetainedEarningsMember2024-06-300001418819us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-3000014188192024-06-300001418819us-gaap:CommonStockMember2023-06-300001418819irdm:CommonStockAmountMember2023-06-300001418819us-gaap:AdditionalPaidInCapitalMember2023-06-300001418819us-gaap:RetainedEarningsMember2023-06-300001418819us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-3000014188192023-06-300001418819us-gaap:AdditionalPaidInCapitalMember2024-07-012024-09-300001418819us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001418819us-gaap:CommonStockMember2024-07-012024-09-300001418819irdm:CommonStockAmountMember2024-07-012024-09-300001418819us-gaap:CommonStockMember2023-07-012023-09-300001418819irdm:CommonStockAmountMember2023-07-012023-09-300001418819us-gaap:RetainedEarningsMember2024-07-012024-09-300001418819us-gaap:RetainedEarningsMember2023-07-012023-09-300001418819us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-07-012024-09-300001418819us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001418819us-gaap:CommonStockMember2024-09-300001418819irdm:CommonStockAmountMember2024-09-300001418819us-gaap:AdditionalPaidInCapitalMember2024-09-300001418819us-gaap:RetainedEarningsMember2024-09-300001418819us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-09-300001418819us-gaap:CommonStockMember2023-09-300001418819irdm:CommonStockAmountMember2023-09-300001418819us-gaap:AdditionalPaidInCapitalMember2023-09-300001418819us-gaap:RetainedEarningsMember2023-09-300001418819us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-3000014188192023-09-300001418819us-gaap:CommonStockMember2023-12-310001418819irdm:CommonStockAmountMember2023-12-310001418819us-gaap:AdditionalPaidInCapitalMember2023-12-310001418819us-gaap:RetainedEarningsMember2023-12-310001418819us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001418819us-gaap:CommonStockMember2022-12-310001418819irdm:CommonStockAmountMember2022-12-310001418819us-gaap:AdditionalPaidInCapitalMember2022-12-310001418819us-gaap:RetainedEarningsMember2022-12-310001418819us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-3100014188192022-12-310001418819us-gaap:AdditionalPaidInCapitalMember2024-01-012024-09-300001418819us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300001418819us-gaap:CommonStockMember2024-01-012024-09-300001418819irdm:CommonStockAmountMember2024-01-012024-09-300001418819us-gaap:CommonStockMember2023-01-012023-09-300001418819irdm:CommonStockAmountMember2023-01-012023-09-300001418819us-gaap:RetainedEarningsMember2024-01-012024-09-300001418819us-gaap:RetainedEarningsMember2023-01-012023-09-300001418819us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-09-300001418819us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300001418819irdm:SatelliteSystemMember2023-09-300001418819irdm:SatelliteSystemMember2023-12-3100014188192023-01-012023-12-310001418819us-gaap:CashMember2024-09-300001418819us-gaap:CashMember2023-12-310001418819us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2024-09-300001418819us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2023-12-310001418819us-gaap:TradeNamesMember2024-09-300001418819us-gaap:LicensingAgreementsMember2024-09-300001418819us-gaap:IntellectualPropertyMember2024-09-300001418819us-gaap:PatentsMember2024-09-300001418819us-gaap:CustomerRelationshipsMember2024-09-300001418819us-gaap:TradeNamesMember2023-12-310001418819us-gaap:LicensingAgreementsMember2023-12-310001418819us-gaap:IntellectualPropertyMember2023-12-310001418819us-gaap:PatentsMember2023-12-310001418819us-gaap:CustomerRelationshipsMember2023-12-310001418819irdm:AssembledWorkforceMember2024-09-300001418819us-gaap:PatentsMembersrt:MinimumMember2024-09-300001418819us-gaap:PatentsMembersrt:MaximumMember2024-09-300001418819irdm:AssembledWorkforceMember2023-12-310001418819us-gaap:PatentsMembersrt:MinimumMember2023-12-310001418819us-gaap:PatentsMembersrt:MaximumMember2023-12-310001418819irdm:TermLoanBRefinancedMember2023-12-310001418819us-gaap:RevolvingCreditFacilityMember2023-12-310001418819irdm:TermLoanBRefinancedMember2024-03-252024-03-250001418819irdm:TermLoanBRefinancedMember2024-07-302024-07-300001418819irdm:TermLoanBRefinancedMember2024-03-250001418819irdm:TermLoanBRefinancedMember2024-07-300001418819irdm:TermLoanBRefinancedMember2024-01-012024-09-300001418819irdm:TermLoanBRefinancedMemberus-gaap:InterestRateFloorMember2024-01-012024-09-300001418819irdm:TermLoanBRefinancedMember2024-09-300001418819us-gaap:RevolvingCreditFacilityMember2024-01-012024-03-310001418819us-gaap:RevolvingCreditFacilityMember2024-04-012024-06-3000014188192024-07-302024-07-3000014188192024-06-032024-06-0300014188192024-03-252024-03-250001418819us-gaap:RevolvingCreditFacilityMember2024-01-012024-09-300001418819us-gaap:RevolvingCreditFacilityMemberus-gaap:InterestRateFloorMember2024-01-012024-09-300001418819us-gaap:InterestRateCapMember2024-09-300001418819us-gaap:InterestRateCapMember2023-12-310001418819us-gaap:InterestRateCapMember2024-07-012024-09-300001418819us-gaap:InterestRateCapMember2024-01-012024-09-300001418819us-gaap:InterestRateCapMember2023-07-012023-09-300001418819us-gaap:InterestRateCapMember2023-01-012023-09-3000014188192016-12-3100014188192024-04-012024-06-3000014188192024-01-012024-03-310001418819irdm:CommercialVoiceandDataServicesMember2024-07-012024-09-300001418819irdm:CommercialVoiceandDataServicesMember2023-07-012023-09-300001418819irdm:CommercialVoiceandDataServicesMember2024-01-012024-09-300001418819irdm:CommercialVoiceandDataServicesMember2023-01-012023-09-300001418819irdm:CommercialIoTDataServicesMember2024-07-012024-09-300001418819irdm:CommercialIoTDataServicesMember2023-07-012023-09-300001418819irdm:CommercialIoTDataServicesMember2024-01-012024-09-300001418819irdm:CommercialIoTDataServicesMember2023-01-012023-09-300001418819irdm:CommercialBroadbandServicesMember2024-07-012024-09-300001418819irdm:CommercialBroadbandServicesMember2023-07-012023-09-300001418819irdm:CommercialBroadbandServicesMember2024-01-012024-09-300001418819irdm:CommercialBroadbandServicesMember2023-01-012023-09-300001418819irdm:HostedPayloadandOtherDataServicesMember2024-07-012024-09-300001418819irdm:HostedPayloadandOtherDataServicesMember2023-07-012023-09-300001418819irdm:HostedPayloadandOtherDataServicesMember2024-01-012024-09-300001418819irdm:HostedPayloadandOtherDataServicesMember2023-01-012023-09-300001418819irdm:CommercialMemberus-gaap:ServiceMember2024-07-012024-09-300001418819irdm:CommercialMemberus-gaap:ServiceMember2023-07-012023-09-300001418819irdm:CommercialMemberus-gaap:ServiceMember2024-01-012024-09-300001418819irdm:CommercialMemberus-gaap:ServiceMember2023-01-012023-09-300001418819irdm:USGovernmentMemberus-gaap:ServiceMember2024-07-012024-09-300001418819irdm:USGovernmentMemberus-gaap:ServiceMember2023-07-012023-09-300001418819irdm:USGovernmentMemberus-gaap:ServiceMember2024-01-012024-09-300001418819irdm:USGovernmentMemberus-gaap:ServiceMember2023-01-012023-09-300001418819irdm:CommercialMemberirdm:EngineeringandSupportServicesMember2024-07-012024-09-300001418819irdm:CommercialMemberirdm:EngineeringandSupportServicesMember2023-07-012023-09-300001418819irdm:CommercialMemberirdm:EngineeringandSupportServicesMember2024-01-012024-09-300001418819irdm:CommercialMemberirdm:EngineeringandSupportServicesMember2023-01-012023-09-300001418819irdm:USGovernmentMemberirdm:EngineeringandSupportServicesMember2024-07-012024-09-300001418819irdm:USGovernmentMemberirdm:EngineeringandSupportServicesMember2023-07-012023-09-300001418819irdm:USGovernmentMemberirdm:EngineeringandSupportServicesMember2024-01-012024-09-300001418819irdm:USGovernmentMemberirdm:EngineeringandSupportServicesMember2023-01-012023-09-300001418819us-gaap:CustomerConcentrationRiskMemberirdm:PrimeContractsWithTheUSGovernmentMemberus-gaap:AccountsReceivableMember2024-01-012024-09-300001418819us-gaap:CustomerConcentrationRiskMemberirdm:PrimeContractsWithTheUSGovernmentMemberus-gaap:AccountsReceivableMember2023-01-012023-12-310001418819irdm:CommissionsMember2024-09-300001418819irdm:CommissionsMember2023-12-310001418819irdm:OtherContractAssetsMember2024-09-300001418819irdm:OtherContractAssetsMember2023-12-310001418819irdm:NextGenerationSatellitesMember2024-09-300001418819us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2024-01-012024-09-300001418819us-gaap:ShareBasedPaymentArrangementEmployeeMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2024-01-012024-09-300001418819us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2023-01-012023-09-300001418819us-gaap:ShareBasedPaymentArrangementEmployeeMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2023-01-012023-09-300001418819us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2024-01-012024-09-300001418819irdm:OutstandingRestrictedStockUnitsMember2023-12-310001418819irdm:OutstandingRestrictedStockUnitsMember2024-01-012024-09-300001418819irdm:OutstandingRestrictedStockUnitsMember2024-09-300001418819irdm:OutstandingRestrictedStockUnitsMember2022-12-310001418819irdm:OutstandingRestrictedStockUnitsMember2023-01-012023-09-300001418819irdm:OutstandingRestrictedStockUnitsMember2023-09-300001418819irdm:ServiceBasedRSUMembersrt:DirectorMember2024-01-012024-09-300001418819irdm:ServiceBasedRSUMembersrt:DirectorMember2023-01-012023-09-300001418819irdm:ServiceBasedRSUMember2024-01-012024-09-300001418819irdm:ServiceBasedRSUMember2023-01-012023-09-300001418819us-gaap:PerformanceSharesMember2024-01-012024-09-300001418819us-gaap:PerformanceSharesMember2023-01-012023-09-300001418819us-gaap:PerformanceSharesMembersrt:ExecutiveOfficerMember2024-01-012024-09-300001418819us-gaap:PerformanceSharesMembersrt:ExecutiveOfficerMember2023-01-012023-09-300001418819us-gaap:PerformanceSharesMembersrt:ExecutiveOfficerMembersrt:MinimumMember2024-01-012024-09-300001418819us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMembersrt:MaximumMember2024-01-012024-09-300001418819us-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMembersrt:ExecutiveOfficerMember2024-01-012024-09-300001418819us-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMembersrt:ExecutiveOfficerMember2024-01-012024-09-300001418819us-gaap:EmployeeStockOptionMember2024-01-012024-09-300001418819us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2024-01-012024-09-3000014188192022-01-012022-12-310001418819us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2024-01-012024-09-300001418819us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2023-01-012023-09-300001418819us-gaap:ShareBasedPaymentArrangementEmployeeMemberus-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2024-01-012024-09-300001418819us-gaap:ShareBasedPaymentArrangementEmployeeMemberus-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2023-01-012023-09-300001418819us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001418819us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2023-01-012023-09-300001418819us-gaap:ShareBasedPaymentArrangementEmployeeMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2024-01-012024-09-300001418819us-gaap:ShareBasedPaymentArrangementEmployeeMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2023-01-012023-09-300001418819us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2024-01-012024-09-300001418819us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2023-01-012023-09-300001418819us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2023-01-012023-09-300001418819us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMembersrt:DirectorMember2024-01-012024-09-300001418819us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMembersrt:DirectorMember2023-01-012023-09-300001418819us-gaap:PerformanceSharesMembersrt:ExecutiveOfficerMembersrt:MinimumMember2023-01-012023-09-300001418819us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMembersrt:MaximumMember2023-01-012023-09-300001418819us-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMembersrt:ExecutiveOfficerMember2023-01-012023-09-300001418819us-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMembersrt:ExecutiveOfficerMember2023-01-012023-09-300001418819us-gaap:RestrictedStockUnitsRSUMembersrt:DirectorMember2024-01-012024-09-300001418819us-gaap:RestrictedStockUnitsRSUMembersrt:DirectorMember2023-01-012023-09-300001418819irdm:SatellesAcquireeMember2024-04-010001418819irdm:SatellesAcquireeMember2024-04-012024-04-0100014188192024-04-010001418819us-gaap:CustomerRelationshipsMember2024-04-012024-04-010001418819us-gaap:AcquisitionRelatedCostsMember2024-07-012024-09-300001418819us-gaap:AcquisitionRelatedCostsMember2024-04-012024-09-300001418819us-gaap:AcquisitionRelatedCostsMember2023-07-012023-09-300001418819us-gaap:AcquisitionRelatedCostsMember2024-01-012024-09-300001418819us-gaap:AcquisitionRelatedCostsMember2023-01-012023-09-300001418819irdm:SatellesInc.Member2024-03-310001418819irdm:SatellesInc.Member2024-04-0100014188192024-04-012024-04-010001418819irdm:Aireon2022PreferredEquityInvestmentMember2024-01-012024-09-300001418819us-gaap:OtherInvesteesMemberirdm:Aireon2022PreferredEquityInvestmentMember2024-09-300001418819irdm:Aireon2022PreferredEquityInvestmentMember2024-09-300001418819irdm:Aireon2022PreferredEquityInvestmentMember2023-12-310001418819us-gaap:OtherInvesteesMember2024-09-300001418819us-gaap:EquityMethodInvesteeMembersrt:MaximumMemberirdm:HostingAgreementMember2024-01-012024-09-300001418819us-gaap:EquityMethodInvesteeMembersrt:MinimumMemberirdm:HostingAgreementMember2024-01-012024-09-300001418819us-gaap:EquityMethodInvesteeMemberirdm:HostingAgreementMember2024-07-012024-09-300001418819us-gaap:EquityMethodInvesteeMemberirdm:HostingAgreementMember2023-07-012023-09-300001418819us-gaap:EquityMethodInvesteeMemberirdm:HostingAgreementMember2024-01-012024-09-300001418819us-gaap:EquityMethodInvesteeMemberirdm:HostingAgreementMember2023-01-012023-09-300001418819us-gaap:EquityMethodInvesteeMembersrt:MaximumMemberirdm:PowerAgreementMember2024-01-012024-09-300001418819us-gaap:EquityMethodInvesteeMemberus-gaap:ServiceAgreementsMember2024-07-012024-09-300001418819us-gaap:EquityMethodInvesteeMemberus-gaap:ServiceAgreementsMember2024-01-012024-09-300001418819us-gaap:EquityMethodInvesteeMemberirdm:AdministrativeAndSupportAgreementAccountsReceivableMember2024-09-300001418819us-gaap:EquityMethodInvesteeMemberirdm:AdministrativeAndSupportAgreementAccountsReceivableMember2023-12-310001418819irdm:AireonInvestorBridgeLoanMember2024-09-300001418819us-gaap:EquityMethodInvesteeMemberus-gaap:ServiceAgreementsMember2023-07-012023-09-300001418819us-gaap:EquityMethodInvesteeMemberus-gaap:ServiceAgreementsMember2023-01-012023-09-300001418819irdm:AireonInvestorBridgeLoanMember2023-12-310001418819us-gaap:OtherInvesteesMember2023-12-310001418819us-gaap:EmployeeStockOptionMember2024-07-012024-09-300001418819us-gaap:EmployeeStockOptionMember2023-07-012023-09-300001418819us-gaap:RestrictedStockMember2024-07-012024-09-300001418819us-gaap:RestrictedStockMember2023-07-012023-09-300001418819us-gaap:RestrictedStockMember2024-01-012024-09-300001418819us-gaap:RestrictedStockMember2023-01-012023-09-300001418819us-gaap:PerformanceSharesMember2024-07-012024-09-300001418819us-gaap:PerformanceSharesMember2023-07-012023-09-300001418819us-gaap:PerformanceSharesMember2024-01-012024-09-300001418819us-gaap:PerformanceSharesMember2023-01-012023-09-300001418819us-gaap:RestrictedStockMember2024-07-012024-09-300001418819us-gaap:RestrictedStockMember2023-07-012023-09-300001418819us-gaap:RestrictedStockMember2024-01-012024-09-300001418819us-gaap:RestrictedStockMember2023-01-012023-09-300001418819us-gaap:EmployeeStockOptionMember2024-07-012024-09-300001418819us-gaap:EmployeeStockOptionMember2023-07-012023-09-300001418819us-gaap:EmployeeStockOptionMember2024-01-012024-09-300001418819us-gaap:EmployeeStockOptionMember2023-01-012023-09-30

 

1750 Tysons Boulevard, Suite 1400, McLean, VA 22102

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  x

The number of shares of the registrant’s common stock, par value $0.001 per share, outstanding as of October 10, 2024 was 113,847,782.

 

Iridium Communications Inc. (the “Company”) prepared its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The Company’s operations are primarily conducted through, and its operating assets are owned by, its principal operating subsidiary, Iridium Satellite LLC, Iridium Satellite LLC’s immediate parent, Iridium Holdings LLC, and their respective subsidiaries. The accompanying condensed consolidated financial statements include the accounts of (i) the Company, (ii) its wholly owned subsidiaries, and (iii) all less than wholly owned subsidiaries that the Company controls. All material intercompany transactions and balances have been eliminated.

In the opinion of management, the condensed consolidated financial statements reflect all normal recurring adjustments that the Company considers necessary for the fair presentation of its results of operations and cash flows for the interim periods covered, and of the financial position of the Company at the date of the interim condensed consolidated balance sheet. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to instructions, rules and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2023, as filed with the SEC on February 15, 2024.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to revenue recognition, the useful lives and recoverability of long-lived and intangible assets, goodwill, income taxes, stock-based compensation, the incremental borrowing rate for its leases, and contingencies, among others. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses. Actual results could differ materially from those estimates.

The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value.

The fair value hierarchy consists of the following tiers:

•Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities;

•Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The fair value estimates are based upon certain market assumptions and information available to the Company. The carrying values of the following financial instruments approximated their fair values as of September 30, 2024 and December 31, 2023: (1) cash and cash equivalents, (2) prepaid expenses and other current assets, (3) accounts receivable, (4) accounts payable, and (5) accrued expenses and other current liabilities. Fair values approximate their carrying values because of their short-term nature. The Level 2 cash equivalents include money market funds, commercial paper and short-term U.S. agency securities. The Company also classifies its derivative financial instruments as Level 2. In determining fair value of Level 2 assets, the Company uses a market approach utilizing valuation models that incorporate observable inputs such as interest rates, bond yields and quoted prices for similar assets. The Company did not hold any Level 3 assets as of September 30, 2024 or December 31, 2023.

For new leases, the Company will determine if an arrangement is or contains a lease at inception. Leases are included as (1) right-of-use (“ROU”) assets within other assets and (2) ROU liabilities within accrued expenses and other liabilities and are included within other long-term liabilities on the Company’s condensed consolidated balance sheets.

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Certain leases contain variable contractual obligations as a result of future base rate escalations which are estimated based on observed trends and included within the measurement of present value. The Company’s leases do not provide an implicit rate. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For certain leases, such as teleport network facilities, the Company elects the practical expedient to combine lease and non-lease components as a single lease component. When measuring new lease contracts or remeasuring existing lease contracts, taxes assessed on leases in which the Company is either a lessor or lessee are excluded from contract consideration and variable payments.

Inventory consists primarily of finished goods and raw materials from third-party manufacturers. The Company outsources manufacturing of subscriber equipment to a third-party manufacturer and purchases accessories from third-party suppliers. The Company’s cost of inventory includes freight and an allocation of overhead, including payroll and payroll-related costs of employees directly involved in bringing inventory to its existing condition. Inventories are valued using the average cost method and are carried at the lower of cost or net realizable value.

The Company has a manufacturing agreement with Benchmark Electronics Inc. (“Benchmark”) to manufacture most of its subscriber equipment. Pursuant to the agreement, the Company may be required to purchase excess materials at cost plus a contractual markup if the materials are not used in production within the periods specified in the agreement. Benchmark will then repurchase such materials from the Company at the same price paid by the Company, as required for the production of subscriber equipment.

The following table summarizes the Company’s inventory balances:

			September 30, 2024						December 31, 2023
			(In thousands)
Finished goods			$	47,965					$	48,698
Raw materials			35,338						43,599
Inventory valuation reserve			(1,075)						(1,162)
Total			$	82,228					$	91,135

The Company assesses its long-lived assets for impairment when indicators of impairment are present. During the fourth quarter of 2023, the Company updated its estimate of the satellites’ remaining useful lives based on the health of the constellation and related engineering data. As a result, the estimated useful lives of the satellites were extended by five years, from 12.5 years to 17.5 years. This change resulted in lower depreciation expense and hosted payload revenue for each of the first three quarters of 2024, compared to the corresponding quarter of the prior year.

The Company uses derivatives to manage its exposure to fluctuating interest rate risk on variable rate debt. Its derivatives are measured at fair value and are recorded on the condensed consolidated balance sheets within other assets and other current liabilities. When the Company’s derivatives are designated as cash flow hedges, the effective portion of the changes in fair value of the derivatives are recorded in accumulated other comprehensive income within the Company’s condensed consolidated balance sheets and subsequently recognized in earnings when the hedged items impact earnings. Any ineffective portion of a derivative’s change in fair value will be recognized in earnings in the same period in which the hedged interest payments affect earnings. Within the condensed consolidated statements of operations and comprehensive income (loss), the gains and losses related to cash flow hedges are recognized within interest income (expense), net, as this is the same financial statement line item used for any gains or losses associated with the hedged items. Cash flows from hedging activities are included in operating activities within the Company’s condensed consolidated statements of cash flows, which is the same category as the item being hedged. See Note 6 for further information.

The purchase price for business combinations is allocated to the assets acquired, including tangible and intangible assets, and assumed liabilities, where applicable, based on their respective fair values at the acquisition date. Acquisition-related costs are expensed as incurred. Goodwill is recorded when the cost of an acquired entity exceeds the amounts assigned to the assets acquired and liabilities assumed. The net assets and results of operations of an acquired entity are included in the Company’s consolidated financial statements from the acquisition date. Goodwill is not amortized but is tested for impairment annually or upon the occurrence of certain events.

The Company’s other intangible assets that have finite lives (customer relationships, patents and other intellectual property) are amortized over their useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If any such indicators are present, the Company would test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset.

A portion of the Company’s other intangible assets are spectrum, regulatory authorizations, and trade names, which are indefinite-lived. The Company reevaluates the useful life determination for these assets each reporting period to determine whether events and circumstances continue to support an indefinite useful life. Indefinite-lived intangible assets are not amortized and are instead tested for impairment annually, or upon the occurrence of certain events.

The following table presents the Company’s cash and cash equivalents:

The following table presents identifiable intangible assets:

Amortization expense was $2.4 million and $0.4 million for the three months ended September 30, 2024 and 2023, respectively, and $4.9 million and $1.2 million for the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, the Company acquired Satelles, Inc. (see Note 11), resulting in a goodwill balance of $100.3 million as of September 30, 2024. There was no goodwill balance as of December 31, 2023.

Pursuant to a credit agreement (as amended to date, the “Credit Agreement”), the Company previously entered into a term loan totaling $1,500.0 million (as so amended and restated, the “Term Loan”), issued at a price equal to 99.75%, and an accompanying $100.0 million revolving loan (the “Revolving Facility”). The maturity date of the Term Loan is in September 2030. During the nine months ended September 30, 2024, the Company borrowed an additional $325.0 million under its Term Loan, comprised of $125.0 million on March 25, 2024 and $200.0 million on July 30, 2024. The additional amounts borrowed are fungible with the original $1,500.0 million and have the same maturity date, interest rate and other terms. The additional $125.0 million was issued at a price equal to 99.875% of its face value, while the additional $200.0 million was issued at 99.0% of its face value.

The proceeds from the March 2024 additional Term Loan were used for the acquisition of Satelles, Inc. (see Note 11) on April 1, 2024. In April 2024, the Company drew down $50.0 million on its Revolving Facility for general corporate purposes, including the funding of repurchases of its common stock. This amount was repaid with the expansion of the Term Loan in July 2024, and there were no amounts outstanding under the Revolving Facility as of September 30, 2024. The remaining proceeds from the July 2024 additional Term Loan have been and are expected to be used for general corporate purposes, including share repurchases.

The Term Loan has been repriced on several occasions, most recently in June 2024, and currently bears interest at an annual rate equal to the Secured Overnight Financing Rate (“SOFR”) plus 2.25%, with a 0.75% SOFR floor. The Company typically selects a one-month interest period, with the result that interest is calculated using one-month SOFR. Interest is paid monthly on the last business day of the month. Principal payments, payable quarterly, are equal to $18.3 million per annum (approximately one percent of the full principal amount of the Term Loan following the additional Term Loan amounts borrowed in July 2024), with the remaining principal due upon maturity.

As of September 30, 2024 and December 31, 2023, the Company had aggregate borrowings of $1,812.3 million and $1,500.0 million, respectively, under the Term Loan. These amounts do not give effect to $17.5 million of net unamortized deferred financing costs at the end of each period. The principal balance in borrowings, net of the unamortized deferred financing costs, as of September 30, 2024 and December 31, 2023 amounted to $1,794.8 million and $1,482.5 million, respectively. As of September 30, 2024 and December 31, 2023, based upon recent trading prices (Level 2 - market approach), the fair value of the Company’s net borrowings under the Term Loan was $1,782.9 million and $1,506.6 million, respectively.

The Revolving Facility bears interest at an annual rate equal to SOFR plus 2.5% (but without a SOFR floor) if and as drawn, with no original issue discount, and a commitment fee of 0.5% per annum on the undrawn amount, which was reduced to 0.375% in the first quarter of 2024 because the Company had a consolidated first lien net leverage ratio (as defined in the Credit Agreement) of less than 3.5 to 1. The Revolving Facility has a maturity date in September 2028.

The Credit Agreement restricts the Company’s ability to incur liens, engage in mergers or asset sales, pay dividends, repay subordinated indebtedness, incur indebtedness, make investments and loans, and engage in other transactions as specified in the Credit Agreement.

The Credit Agreement provides for specified exceptions, including baskets measured as a percentage of trailing twelve months of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and unlimited exceptions in the case of incurring indebtedness and liens and making investments, dividend payments, and payments of subordinated indebtedness, based on achievement and maintenance of specified leverage ratios. The Credit Agreement also contains an annual mandatory prepayment sweep mechanism with respect to a portion of the Company’s excess cash flow (as defined in the Credit Agreement) in the event the Company’s consolidated first lien net leverage ratio rises above 3.5 to 1 as of the end of the Company's previous fiscal year. As of December 31, 2023, the Company was below the specified leverage ratio, and a mandatory prepayment sweep was therefore not required in 2024. The Credit Agreement permits repayment, prepayment, and repricing transactions.

The Credit Agreement contains no financial maintenance covenants with respect to the Term Loan. With respect to the Revolving Facility, the Credit Agreement requires the Company to maintain a consolidated first lien net leverage ratio of no greater than 6.25 to 1 if more than 35% of the Revolving Facility has been drawn or subject to letter of credit exposure. As of September 30, 2024, the aggregate exposure under the Revolving Facility was less than 35%. The Credit Agreement contains other customary representations and warranties, affirmative and negative covenants, and events of default. The Company was in compliance with all financial covenants as of September 30, 2024.

Total interest incurred includes amortization of deferred financing fees and capitalized interest. The Company incurred third-party financing costs of $2.2 million in connection with the expansion of the Term Loan in July 2024, $1.9 million related to the repricing of the Term Loan in June 2024 and $1.6 million in connection with the expansion of the Term Loan in March 2024, substantially all of which were expensed. The amounts expensed are included within interest expense on the condensed consolidated statements of operations and comprehensive income (loss). The following table presents the interest and amortization of deferred financing fees related to the Term Loan:

As of September 30, 2024 and December 31, 2023, accrued interest on the Term Loan was $0.4 million and $1.0 million, respectively.

The Company is exposed to interest rate fluctuations related to the Term Loan. The Company has reduced its exposure to fluctuations in the cash flows associated with changes in the variable interest rate by entering into offsetting positions through the use of interest rate hedges. This will reduce the negative impact of increases in the variable rate over the term of the derivative contracts. These contracts are not used for trading or other speculative purposes. Historically, the Company has not incurred, and does not expect to incur in the future, any losses as a result of counterparty default.

In July 2021, the Company entered into an interest rate cap contract (the “Cap”), which had an effective date of December 2021. The Cap manages the Company’s exposure to interest rate movements on a portion of the Term Loan through November 2026. The Cap, as modified to date, currently provides the Company with the right to receive payment from the counterparty if one-month SOFR exceeds 1.436%. The Company pays a fixed monthly premium based on an annual rate of 0.31% for the Cap. The Cap carried a notional amount of $1.0 billion as of September 30, 2024 and December 31, 2023.

The Cap, which was not affected by the expansion of the Term Loan in July 2024 and March 2024 or the repricing of the Term Loan in June 2024, is designed to mirror the terms of the Term Loan and to offset the cash flows being hedged. The Company designated the Cap as a cash flow hedge of the variability of the SOFR-based interest payments on the Term Loan. The effective portion of the Cap’s change in fair value is recorded in accumulated other comprehensive income. Any ineffective portion of the Cap’s change in fair value will be recorded in current earnings as interest expense.

Hedge effectiveness of the current interest rate cap contract is based on a long-haul hypothetical derivative methodology and includes all changes in value. The Company formally assesses, both at the hedge’s inception and on an ongoing quarterly basis, whether the designated derivative instruments are highly effective in offsetting changes in the cash flows of the hedged items. When the hedging instrument is sold, expires, is terminated, is exercised, no longer qualifies for hedge accounting, is de-designated, or is no longer probable, hedge accounting is discontinued prospectively.

As of September 30, 2024 and December 31, 2023, the Company had an asset balance of $41.7 million and $66.5 million, respectively, for the fair value of the Cap and a liability balance of $6.3 million and $8.4 million, respectively, for the fair value of the Cap premium. Both the Cap and the Cap premium are recorded net within other assets on the condensed consolidated balance sheet.

During each of the three and nine months ended September 30, 2024 and September 30, 2023, the Company collectively incurred $0.8 million and $2.5 million, respectively, in interest expense for the Cap premium. Interest expense was reduced by $9.8 million and $9.6 million for the three months ended September 30, 2024 and 2023, respectively, and $29.5 million and $26.3 million for the nine months ended September 30, 2024 and 2023, respectively, for payments received related to the Cap.

Gains and losses resulting from fair value adjustments to the Cap are recorded within accumulated other comprehensive income within the Company’s condensed consolidated balance sheets and reclassified to interest expense on the dates that interest payments become due. Cash flows related to the derivative contracts are included in cash flows from operating activities on the condensed consolidated statements of cash flows. Over the next 12 months, the Company expects any gains or losses for cash flow hedges amortized from accumulated other comprehensive income into earnings to have an immaterial impact on the Company’s consolidated financial statements.

The following table presents the amount of unrealized gain or loss and related tax impact associated with the Cap that the Company recorded in its condensed consolidated statements of operations and comprehensive income (loss):

The Company is authorized to issue 2.0 million shares of preferred stock with a par value of $0.0001 per share. The Company previously issued 1.5 million shares of preferred stock, all of which have converted to common stock. The remaining 0.5 million authorized shares of preferred stock remain undesignated and unissued. As of September 30, 2024 and December 31, 2023, there were no outstanding shares of preferred stock, as all previously designated and issued preferred stock was converted into common stock in prior periods.

Stockholders are entitled to receive, when and if declared by the Company’s Board of Directors from time to time, dividends and other distributions in cash, stock or property from the Company’s assets or funds legally and contractually available for such purposes. In December 2022, the Company’s Board of Directors initiated a quarterly dividend. The Company paid dividends of $0.13 on March 28, 2024 and $0.14 per share of common stock on each of June 28, 2024 and September 30, 2024, resulting in total payments to stockholders of $49.1 million for the nine months ended September 30, 2024. Dividend payments for the nine months ended September 30, 2023 totaled $48.8 million. The Company’s liability related to dividends payable on common shares underlying unvested RSUs was $2.2 million and $1.3 million as of September 30, 2024 and December 31, 2023, respectively.

Since February 2021, the Company’s Board of Directors has authorized the repurchase of up to an aggregate of $1,500.0 million of the Company’s common stock, including the most recent approval in September 2024 of an additional $500.0 million through December 31, 2027. This timeframe can be extended or shortened by the Board of Directors. Repurchases may be made from time to time on the open market at prevailing prices or in negotiated transactions off the market. The Company records share repurchases at cost, which includes broker commissions and related excise taxes. All shares are immediately retired upon repurchase in accordance with the board-approved policy. When treasury shares are retired, the Company’s policy is to allocate the excess of the repurchase price over the par value of shares acquired first, to additional paid-in capital, and then to retained earnings/accumulated deficit. The portion to be allocated to additional paid-in capital is calculated by applying a percentage, determined by dividing the number of shares to be retired by the number of shares outstanding, to the balance of additional paid-in capital as of the date of retirement.

During the three and nine months ended September 30, 2024, the Company repurchased and subsequently retired 4.7 million and 9.8 million shares of its common stock, respectively, for a total purchase price of $129.0 million and $282.3 million, respectively, inclusive of related commissions. During the three and nine months ended September 30, 2024, the Company incurred $1.2 million and $2.7 million, respectively, of related taxes, which are not included in the total purchase price.

In addition, in September 2024, the Company purchased 21,000 shares for $0.7 million, which were settled and retired in October 2024.

The Company repurchased and subsequently retired 1.4 million and 3.4 million shares of its common stock during the three and nine months ended September 30, 2023, respectively, for a total purchase price of $73.8 million and $193.0 million, respectively, exclusive of $0.7 million and $1.2 million of related taxes incurred for the three and nine months ended September 30, 2024, respectively. In addition, in September 2023, the Company purchased 22,000 shares for $0.9 million, which were settled and retired in October 2023.

As of September 30, 2024, $552.2 million remained available and authorized for repurchase under this program.

The following table summarizes the Company’s services revenue:

The following table summarizes the Company’s engineering and support services revenue:

Approximately 42% and 46% of the Company’s accounts receivable balance at September 30, 2024 and December 31, 2023, respectively, was due from prime contracts or subcontracts with agencies of the U.S. government.

The Company’s contracts with customers generally do not contain performance obligations with terms in excess of one year. As such, the Company does not disclose details related to the value of performance obligations that are unsatisfied as of the end of the reporting period. The total value of any performance obligations that extend beyond one year is immaterial to the financial statements.

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the condensed consolidated balance sheets. The Company bills amounts under its agreed-upon contractual terms at periodic intervals (for services), upon shipment (for equipment), or upon achievement of contractual milestones or as work progresses (for engineering and support services). Billing may occur subsequent to revenue recognition, resulting in unbilled accounts receivable (contract assets). The Company may also receive payments from customers before revenue is recognized, resulting in deferred revenue (contract liabilities). The Company recognized revenue that was previously recorded as deferred revenue in the amounts of $12.0 million and $3.3 million for the three months ended September 30, 2024 and 2023, respectively, and $26.4 million and $25.1 million for the nine months ended September 30, 2024 and 2023, respectively.

The Company has also recorded costs of obtaining contracts expected to be recovered in prepaid expenses and other current assets (contract assets or commissions), that are not separately disclosed on the condensed consolidated balance sheets. The commissions are recognized over the estimated usage period. The following table presents contract assets not separately disclosed:

Operating leases in which the Company is a lessor consist primarily of hosting agreements with Aireon LLC (“Aireon”) (see Note 13) and L3Harris Technologies, Inc. (“L3Harris”) for space on the Company’s satellites. These agreements provide for a fee that will be recognized over the estimated useful lives of the satellites, currently estimated to be approximately 17.5 years from their respective in-service dates. Lease income related to these agreements was $3.1 million and $5.4 million for the three months ended September 30, 2024 and 2023, respectively, and $9.3 million and $16.1 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease for the quarter ended September 30, 2024 as compared to September 30, 2023 was due to the change in estimated useful life of the satellites made in the fourth quarter of 2023. Lease income is recorded as hosted payload and other data service revenue within service revenue on the Company’s condensed consolidated statements of operations and comprehensive income (loss).

Aireon has made payments to the Company pursuant to its hosting agreement, and the Company expects Aireon will continue to do so. L3Harris has prepaid all amounts owed to the Company pursuant to its hosting arrangement. The following table presents future income with respect to the Company’s operating leases in which it is the lessor existing at September 30, 2024, exclusive of the $9.3 million recognized during the nine months ended September 30, 2024, by year and in the aggregate:

In May 2023, the Company’s stockholders approved the amendment and restatement of the Company’s 2015 Equity Incentive Plan (as so amended and restated, the “Amended 2015 Plan”). As of September 30, 2024, the remaining aggregate number of shares available for future grants under the Amended 2015 Plan was 8,574,398. The Amended 2015 Plan provides for the grant of stock-based awards, including nonqualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights and other equity securities to employees, consultants and non-employee directors of the Company and its affiliated entities. The number of shares of common stock available for issuance under the Amended 2015 Plan is reduced by (i) one share for each share of common stock issued pursuant to an appreciation award, such as a stock option or stock appreciation right with an exercise or strike price of at least 100% of the fair market value of the underlying common stock on the date of grant, and (ii) 1.8 shares for each share of common stock issued pursuant to any stock award that is not an appreciation award, also known as a “full value award.” The Amended 2015 Plan allows the Company to utilize a broad array of equity incentives and performance cash incentives in order to secure and retain the services of its employees, directors and consultants, and to provide long-term incentives that align the interests of its employees, directors and consultants with the interests of the Company’s stockholders. The Company accounts for stock-based compensation at fair value.

Beginning in March 2024, the RSUs granted to employees for service generally vest over three years, with 34% vesting on the first anniversary of the grant date and the remainder vesting ratably on a quarterly basis thereafter, subject to continued employment. RSUs granted prior to March 2024 generally vest over four years, with 25% vesting on the first anniversary of the grant date and the remainder vesting ratably on a quarterly basis thereafter, subject to continued employment.

Some RSUs granted to employees for performance vest upon the completion of defined performance goals, subject to continued employment. The RSUs granted to non-employee members of the Board of Directors generally vest in full on the first anniversary of the grant date. The RSUs granted to non-employee consultants generally vest 50% on the first anniversary of the grant date, with the remaining 50% vesting quarterly thereafter through the second anniversary of the grant date.

The Company’s RSUs are classified as equity awards because the RSUs will be settled in the Company’s common stock upon vesting. The fair value of the RSUs is determined based on the closing price of the Company’s common stock on the date of grant. The related compensation expense as of the grant date is then recognized over the service period, or shorter periods based on the retirement eligibility of grantees, based on the number of shares expected to vest. The fair value of the awards is not remeasured at the end of each reporting period. RSUs do not carry voting rights until they are vested, although certain unvested RSUs are entitled to accrue dividend equivalent rights, and shares (including additional shares issuable upon satisfaction of any accrued dividend equivalent rights) are issued upon settlement in accordance with the terms of the award.

The following tables summarize the Company’s RSU activity:

(1)     These RSUs were granted to the Company’s Board of Directors as a part of their compensation for board and committee service and had vested but had not yet settled, meaning that the underlying shares of common stock had not been issued and released.

The majority of the annual compensation the Company provides to non-employee members of its Board of Directors is paid in the form of RSUs. Some members of the Company’s Board of Directors may elect to receive the remainder of their annual compensation, or a portion thereof, in the form of RSUs. An aggregate amount of approximately 57,000 and 53,000 service-based RSUs were granted to the non-employee members of the Company’s Board of Directors as a result of these payments and elections during the nine months ended September 30, 2024 and 2023, respectively, with an estimated grant date fair value of $1.9 million and $2.8 million, respectively.

During the nine months ended September 30, 2024 and 2023, the Company granted approximately 1,579,000 and 667,000 service-based RSUs, respectively, to its employees, with an estimated aggregate grant date fair value of $46.5 million and $39.9 million, respectively.

In March 2024 and 2023, the Company granted approximately 461,000 and 193,000 annual incentive, performance-based RSUs, respectively, to the Company’s executives and employees (the “Bonus RSUs”), with an estimated grant date fair value of $13.7 million and $11.9 million, respectively. Vesting of the Bonus RSUs is dependent upon the Company’s achievement of defined performance goals over the respective fiscal year.

The Company records stock-based compensation expense related to performance-based RSUs when it is considered probable that the performance conditions will be met. Management believes it is probable that substantially all of the 2024 Bonus RSUs will vest. The level of achievement, if any, of performance goals will be determined by the compensation committee of the Company’s Board of Directors and, if such goals are achieved, the 2024 Bonus RSUs will vest, subject to continued employment, in March 2025. Substantially all of the 2023 Bonus RSUs vested in March 2024 upon the determination of the level of achievement of the performance goals.

Additionally, during the nine months ended September 30, 2024 and 2023, the Company granted approximately 303,000 and 134,000 long-term, performance-based RSUs, respectively, to the Company’s executives (the “Executive RSUs”). The estimated aggregate grant date fair value of the Executive RSU grants was $9.0 million and $8.2 million during the nine months ended September 30, 2024 and 2023, respectively. Vesting of the Executive RSUs is dependent upon the Company’s achievement of defined performance goals over a two-year period. The vesting of the March 2023 Executive RSUs will ultimately range from 0% to 150% of the number of shares underlying the Executive RSUs granted, and the vesting of the March 2024 Executive RSUs will ultimately range from 0% to 200% of the number of shares underlying the Executive RSUs granted, in each case based on the level of achievement of the performance goals. If the Company achieves the performance goals, 50% of the number of Executive RSUs earned based on performance will vest on the second anniversary of the grant date, and the remaining 50% will vest on the third anniversary of the grant date, in each case subject to the executive’s continued service as of the vesting date, which may be accelerated based on the retirement eligibility of grantees. During March 2024 and 2023, the Company awarded approximately 83,000 and 55,000 additional shares, respectively, related to long-term, performance-based RSUs granted to the Company’s executives in 2022 and 2021, respectively, for over-achievement of performance targets for the performance periods ended December 31, 2023 and 2022, respectively.

Stock option awards granted to employees generally (i) have a term of ten years, (ii) vest over four years with 25% vesting after the first year of service and the remainder vesting ratably on a quarterly basis thereafter, (iii) are contingent upon employment on the vesting date, and (iv) have an exercise price equal to the fair market value of the underlying shares at the date of grant. The fair value of stock options was determined at the grant date using the Black-Scholes option pricing model.

A summary of the activity of the Company’s stock options is as follows:

On April 1, 2024, the Company acquired Satelles, Inc., a provider of satellite-based time and location services that complement and protect GPS and other GNSS systems. This acquisition is intended to support the Company’s long-term business objectives. Satelles was merged with a subsidiary of the Company, with Satelles as the surviving entity, now a direct and indirect wholly owned subsidiary of the Company. The acquisition date fair value of the consideration paid to acquire the remaining 80.5% of the outstanding shares and voting interest of Satelles that was not previously owned by the Company was approximately $125.5 million. The purchase price allocation set forth below, including valuation of intangible assets, is preliminary.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:

The customer relationships recognized were determined to have an economic life of 12 years. The Company will amortize the customer relationships over their useful lives, utilizing the economic benefit model. The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of Satelles. None of the goodwill is expected to be deductible for income tax purposes. As of September 30, 2024, there were no changes in the recognized amounts of goodwill resulting from the acquisition of Satelles.

The Company incurred $2.8 million of acquisition related costs that were expensed in the nine months ended September 30, 2024. These costs are included within selling, general, and administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss).

The amounts of revenue and earnings of Satelles included in the Company’s condensed consolidated statements of operations and comprehensive income (loss), excluding the impact of the Company’s remeasurement of its prior equity interest in Satelles, are as follows:

The following unaudited pro forma data summarizes the results of operations for the periods indicated as if the acquisition of Satelles had been completed as of the beginning of the comparable prior annual reporting period. The unaudited pro forma data gives effect to actual operating results prior to the acquisition, adjusted to include the pro forma effect of amortization of intangibles and the elimination of intercompany sales and acquisition costs. These pro forma amounts are not intended to be indicative of the results that would have actually been obtained if the acquisition had occurred as of the beginning of the comparable prior annual reporting period or that may be obtained in the future.

Prior to the acquisition date, the Company accounted for its 19.5% interest in Satelles as an equity-method investment. The acquisition date fair value of the previous equity interest was $39.7 million and was included in the measurement of the consideration transferred. The Company recognized a gain of $19.8 million as a result of remeasuring its prior equity interest in Satelles held before the business combination. The gain is included within gain (loss) from equity method investments in the condensed consolidated statements of operations and comprehensive income (loss) for the nine months ended September 30, 2024.

Income before income taxes and gain on equity method investments was $30.9 million and $79.3 million for the three and nine months ended September 30, 2024, respectively, while the income tax expense was $6.0 million and $18.5 million for the three and nine months ended September 30, 2024, respectively. The effective tax rate was 19.4% and 23.3% for the three and nine months ended September 30, 2024, respectively, which differed from the federal statutory rate of 21%, primarily due to the discrete tax expense associated with stock compensation and nondeductible executive compensation, which was partially offset by the deduction for foreign derived intangible income.

Loss before income taxes and loss on equity method investments was $6.2 million and $35.0 million for the three and nine months ended September 30, 2023, respectively, while the income tax benefit was $6.0 million and $16.7 million for the three and nine months ended September 30, 2023, respectively. The effective tax rate was 97.5% and 47.7% for the three and nine months ended September 30, 2023, respectively, which differed from the federal statutory rate of 21%, primarily due to a discrete tax benefit associated with stock compensation and U.S. tax credits, which were partially offset by tax expense associated with nondeductible executive compensation.

The Company’s satellite constellation hosts the Aireon® system. The Aireon system was developed by Aireon LLC, which the Company formed in 2011, and which received subsequent investments from several air navigation service providers (“ANSPs”) to provide a global air traffic surveillance service through a series of automatic dependent surveillance-broadcast (“ADS-B”) receivers on the Company’s satellites. Aireon has contracted to offer this service to ANSPs, which use the service to provide improved air traffic control services over the oceans, as well as polar and remote regions. Aireon also markets its data and services to airlines and other commercial users. The Company and the other Aireon investors hold their interests in Aireon Holdings LLC (“Aireon Holdings”) through an amended and restated LLC agreement (“Aireon Holdings LLC Agreement”). Aireon Holdings holds 100% of the membership interests in Aireon, which is the operating entity.

In June 2022, the Company entered into a subscription agreement with Aireon Holdings and invested $50.0 million for a preferred membership interest of approximately 6%. The Company’s investment in Aireon Holdings is accounted for as an equity method investment. The carrying value of the Company’s investment in Aireon was $42.2 million and $44.6 million as of September 30, 2024 and December 31, 2023, respectively. The investments made by the Company in Aireon Holdings prior to June 2022 had previously been written down to a carrying value of zero.

At each of September 30, 2024 and December 31, 2023, the Company’s fully diluted ownership stake in Aireon Holdings was approximately 39.5%, which is subject to partial future redemption under provisions contained in the Aireon Holdings LLC Agreement.

Under the agreements with Aireon, Aireon agreed to pay the Company fees of $200.0 million to host the ADS-B receivers, of which $102.5 million had been paid as of September 30, 2024. These fees are recognized over the estimated useful life of the Company’s satellites, which is expected to result in revenue of approximately $9.3 million per year, following the change in estimate of the useful lives of the satellites that occurred in the fourth quarter of 2023. The Company recognized $2.3 million and $4.0 million of hosting fee revenue for the three months ended September 30, 2024 and 2023, respectively, and $6.9 million and $12.0 million for the nine months ended September 30, 2024 and 2023, respectively. Deferred hosting fee revenue totaled $3.0 million as of September 30, 2024.

Additionally, Aireon pays power and data services fees of approximately $23.5 million per year, in the aggregate, for the delivery of air traffic surveillance data over the Iridium® system. The Company recognized $5.9 million of power and data service fee revenue from Aireon for each of the three months ended September 30, 2024 and 2023, and $17.6 million for each of the nine months ended September 30, 2024 and 2023.

Under two services agreements, the Company also provides Aireon with administrative services and support services, the fees for which are paid monthly. Aireon receivables due to the Company under these two agreements totaled $2.1 million and $2.2 million as of September 30, 2024 and December 31, 2023, respectively.

The Company and the other Aireon investors have agreed to participate pro-rata, based on their fully diluted ownership stakes, in funding an investor bridge loan to Aireon. The Company’s maximum funding commitment for the bridge loan is $11.9 million. No bridge loan amounts were outstanding as of September 30, 2024 or December 31, 2023.

The Company calculates basic net income (loss) per share by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. In periods of net income, diluted net income per share takes into account the effect of potentially dilutive common shares when the effect is dilutive. Potentially dilutive common shares include (i) shares of common stock issuable upon exercise of outstanding stock options and (ii) contingently issuable RSUs that are convertible into shares of common stock upon achievement of certain service and performance requirements. The effect of potentially dilutive common shares is computed using the treasury stock method.

The following table summarizes the computations of basic and diluted net income (loss) per share:

The following table presents the incremental number of shares underlying stock options and RSUs outstanding with anti-dilutive effects:

You should read the following discussion along with our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on February 15, 2024 with the Securities and Exchange Commission, or the SEC, as well as our condensed consolidated financial statements included in this Form 10-Q.

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking statements include those that express plans, anticipation, intent, contingencies, goals, targets or future development or otherwise are not statements of historical fact. Without limiting the foregoing, the words “believe,” “anticipate,” “plan,” “expect,” “intend” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on our current expectations and projections about future events, and they are subject to risks and uncertainties, known and unknown, that could cause actual results and developments to differ materially from those expressed or implied in such statements. The important factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on February 15, 2024, as updated and supplemented by this Form 10-Q, could cause actual results to differ materially from those indicated by forward-looking statements made herein. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

We are engaged primarily in providing mobile voice and data communications services using a constellation of orbiting satellites. We are the only commercial provider of communications services offering true global coverage, connecting people, organizations and assets to and from anywhere, in real time. Our low-earth orbit, L-band satellite network provides reliable, weather-resilient communications services to regions of the world where terrestrial wireless or wireline networks do not exist or are limited, including remote land areas, open ocean, airways, the polar regions and regions where the telecommunications infrastructure has been affected by political conflicts or natural disasters.

We provide voice and data communications services to businesses, the U.S. and foreign governments, non-governmental organizations and consumers via our satellite network, which has an architecture of 66 operational satellites with in-orbit spares and related ground infrastructure. We utilize an interlinked mesh architecture to route traffic across the satellite constellation using radio frequency crosslinks between satellites. This unique architecture minimizes the need for ground facilities to support the constellation, which facilitates the global reach of our services and allows us to offer services in countries and regions where we have no physical presence.

On April 1, 2024, we acquired Satelles, Inc., or Satelles, a provider of satellite-based time and location services that complement and protect GPS and other GNSS systems. This acquisition is intended to support our long-term business objectives.

We sell our products and services to commercial end-users through a wholesale distribution network, encompassing approximately 110 service providers, 305 value-added resellers, or VARs, and 85 value-added manufacturers, or VAMs, who either sell directly to the end user or indirectly through other service providers, VARs or dealers. These distributors often integrate our products and services with other complementary hardware and software and have developed a broad suite of applications using our products and services targeting specific lines of business.

At September 30, 2024, we had approximately 2,482,000 billable subscribers worldwide, an increase of 246,000, or 11%, from approximately 2,236,000 billable subscribers as of September 30, 2023. We have a diverse customer base, with end users in land mobile, Internet of Things, or IoT, maritime, aviation and government.

Our industry and customer base have historically grown as a result of:

•demand for remote and reliable mobile communications services;

•a growing number of new products and services and related applications;

•a broad wholesale distribution network with access to diverse and geographically dispersed niche markets;

•increased demand for communications services by disaster and relief agencies, and emergency first responders;

•improved data transmission speeds for mobile satellite service offerings;

•regulatory mandates requiring the use of mobile satellite services;

•a general reduction in prices of mobile satellite services and subscriber equipment; and

•geographic market expansion through the ability to offer our services in additional countries.

Nonetheless, we face a number of challenges and uncertainties in operating our business, including:

•our ability to maintain the health, capacity, control and level of service of our satellites;

•our ability to develop and launch new and innovative products and services;

•changes in general economic, business and industry conditions, including the effects of currency exchange rates;

•our reliance on a single primary commercial gateway and a primary satellite network operations center;

•competition from other mobile satellite service providers and, to a lesser extent, from the expansion of terrestrial-based cellular phone systems and related pricing pressures;

•market acceptance of our products;

•regulatory requirements in existing and new geographic markets;

•challenges associated with global operations, including as a result of conflicts in or affecting markets in which we operate;

•rapid and significant technological changes in the telecommunications industry;

•our ability to generate sufficient internal cash flows to repay our debt;

•reliance on our wholesale distribution network to market and sell our products, services and applications effectively;

•reliance on a global supply chain, including single-source suppliers for the manufacture of most of our subscriber equipment and for some of the components required in the manufacture of our end-user subscriber equipment and our ability to purchase component parts that are periodically subject to shortages resulting from surges in demand, natural disasters or other events, including a global pandemic; and

•reliance on a few significant customers, particularly agencies of the U.S. government, for a substantial portion of our revenue, as a result of which the loss or decline in business with any of these customers may negatively impact our revenue and collectability of related accounts receivable.