Iridium's 2025 Results and 2026 Outlook Await Scrutiny Amid High Leverage and Contract Risks

What happened

Iridium announced its 2025 financial results and issued guidance for 2026, following a period where service revenue growth slowed to around 3% and net leverage remained elevated at 4.1x EBITDA. The DeepValue report indicates that 2025 likely saw continued pressure from declining U.S. government voice subscribers and broadband ARPU compression, offset partially by growth in commercial IoT and engineering services. Investors should critically assess the 2026 outlook for any revisions to growth targets or leverage metrics, as the stock's performance hinges on the upcoming EMSS contract renewal in 2026-27 and progress in new platforms like STL and NTN Direct. This announcement comes after multiple guidance resets and a ~30% stock drawdown, reflecting damaged sentiment and heightened risk perceptions. Management's ability to navigate these headwinds while maintaining OEBITDA margins will be key to validating the current 'WAIT' rating.

Implication

The 2025 results likely reinforce the narrative of slow, ~3% service revenue growth and high leverage, suggesting limited near-term upside unless the 2026 outlook shows improvement. Any guidance that is conservative or unchanged may sustain the 'WAIT' rating, emphasizing the need for patience amid binary risks like the EMSS renewal. Positive surprises in growth or leverage reduction could shift sentiment, but the elevated net debt of 4.1x EBITDA and competitive threats from direct-to-device services temper optimism. Long-term investors should monitor quarterly updates for early warning signals on government subscriber trends and STL/NTN Direct milestones. Ultimately, the stock's risk-reward profile remains modest, requiring either a cheaper entry or clearer evidence of acceleration to justify increased conviction.

Thesis delta

The thesis remains largely unchanged, as the news likely confirms existing trends of slow growth and high leverage, but the 2026 guidance could introduce a shift. If guidance signals service revenue growth above 3.5% and net leverage dropping below 3.25x, it would support an upgrade; conversely, deterioration or unclear EMSS renewal commentary would justify a downgrade. Until specific numbers are disclosed, the delta is neutral, maintaining the 'WAIT' stance with a re-assessment window of 6-12 months.