Iridium posts quarterly profit of $106.9 million, boosted by Aireon acquisition
Key Facts
Iridium Communications reported net income of $106.9 million for the third quarter of 2026 in its earnings release issued on October 20, benefiting from a gain related to its acquisition of Aireon. Diluted earnings per share under generally accepted accounting principles were $0.98, with the acquisition affecting both reported profit and service revenue. The increase in net income included a $103.9 million gain related to the deal, according to the company's quarterly disclosure. Adjusted earnings before interest, taxes, depreciation and amortization, however, fell to $135.6 million from $136.6 million in the same quarter a year earlier. The company said a $4.5 million increase in annual cash incentive expenses contributed to the change in adjusted operating earnings during the period.
Service revenue grew 13% from the third quarter a year earlier, with Iridium attributing the growth primarily to its acquisition of Aireon. Commercial service revenue reached $159.9 million in the third quarter, according to the earnings details released by the company. Billable subscribers totaled 2,696,000 at quarter-end, according to the customer figures Iridium disclosed alongside its financial results. Subscriber numbers rose 6% year on year, led by the commercial Internet of Things business, which the company identified as a driver of subscription growth. Iridium had reported total revenue of $225.237 million in the second quarter of 2026, according to its earnings release for that quarter issued on July 22.
The Aireon deal dates to July 2026, when Iridium purchased the remaining stake in the company for about $366.7 million, according to a filing with the U.S. Securities and Exchange Commission. The company paid half the purchase price in cash at closing under arrangements that included an upfront payment and a deferred portion of the consideration owed to the sellers. The sellers financed the deferred portion through an interest-free loan due one year after the acquisition closed, according to the financing terms in the filing. Iridium's net debt stood at $2.1 billion at the end of the third quarter, according to the earnings release, which also provided an update on leverage following the previous quarter. Net leverage was 4.2 times adjusted operating earnings for the trailing twelve months, compared with 3.3 times at the end of the second quarter of the same year.
Alongside the Aireon acquisition, Iridium shareholders approved Rocket Lab's acquisition of their company, according to a statement Iridium released on September 24, 2026. The deal terms include cash consideration of $27.00 for each Iridium share, payable at the merger's closing alongside the specified stock consideration. Shareholders will also receive Rocket Lab shares under an exchange ratio subject to a collar, according to the consideration terms the company announced to shareholders. Commenting on shareholder approval, Iridium Chief Executive Matt Desch said: "Today's vote marks an important milestone toward bringing together two companies with complementary capabilities." Desch's characterization of the vote appeared in the acquisition approval statement, linking the shareholders' action to the complementary capabilities of the two companies involved in the deal.
On dividends, Iridium's board plans to raise the quarterly cash dividend to $0.16 per share, according to the company's shareholder update. The board set the fourth quarter of 2026 as the start date for the planned dividend level, following the financial period covered by the third-quarter earnings announcement. In government services, the government satellite communications services contract runs through March 2027, according to Iridium's contract update. The contract remains in effect during the extension at the same contractual rate, according to the company, which left the announced pricing terms unchanged. The company's announced schedule for the coming milestones thus includes the start of the planned quarterly dividend in the fourth quarter, followed by the end of the government services contract extension in March.
Rocket Lab's acquisition of Iridium is expected to close by mid-2027, according to the timetable the company announced in its shareholder approval statement. Completion remains subject to the required regulatory approvals, under the terms Iridium outlined in its acquisition announcement. Closing also depends on the satisfaction of closing conditions, alongside regulatory approvals, during the period preceding the expected completion date. Shareholder approval is part of the announced process, while the stated approvals and conditions remain requirements for proceeding to completion. Mid-2027 thus marks the expected window for closing the deal, with completion remaining subject to the requirements announced by the company.