It has been about a month since the last earnings report for Iridium Communications (IRDM Quick QuoteIRDM - Free Report) . Shares have lost about 4.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Iridium due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Iridium Swings to Loss in Q2, Revenues Miss Estimates

Iridium reported loss of 24 cents per share for second-quarter 2023 against the Zacks Consensus Estimate of earnings of 3 cents. The company reported earnings of 4 cents in the prior-year quarter.

Management noted that the net loss was mainly due to write-off of the company’s remaining ground spare satellite after the earlier launch of five of its six ground spare satellites in May. IRDM recorded depreciation expense of $37.5 million in the second quarter pertaining to write-off of the spare satellite.

Quarterly revenues were $193.1 million, up 10% from the year-ago quarter’s levels. The upside can be attributed to momentum in commercial business lines and strength in the Engineering and Support segment’s sales. However, the top line missed the Zacks Consensus Estimate by 2.1%.

Total Service revenues rose 9% year over year to $145.1 million. Strong recurring revenues from a growing subscriber base resulted in the upside. Service revenues contributed 75% to total revenues in the second quarter.

Solid performance in commercial broadband, voice and data, and IoT contributed to the segment’s top-line performance.

Subscriber Equipment revenues fell 19% year over year to $27.4 million. Engineering and Support Service revenues rose 148% to $20.6 million from the prior-year quarter’s levels, mainly due to increased commercial and government activity.

Other Details

Total operating expenses were $209.1 million, up 35.7% from the prior-year quarter, mainly due to higher cost of services, selling, general and administrative expenses, and research and development expenses.

Operational EBITDA (OEBITDA) rose 9% year over year to $115.8 million.

Operating loss came in at $16 million against operating income of $20.8 million reported in the year-ago quarter.

As of Jun 30, the company had 2,140,000 billable subscribers, up 14% compared with 1,875,000 at the end of the prior-year quarter. The year-over-year increase was backed by strength in commercial IoT.

As of Jun 30, total cash and cash equivalents were $103.5 million with $1.4 billion of net debt. Capital expenditures were $22.4 million in the quarter under review.

In the second quarter of 2023, IRDM repurchased 1.1 million shares worth $66.1 million. On Mar 7, 2022, Iridium’s board of directors approved a new share repurchase authorization of an additional $300 million through Dec 31, 2023. As of Jun 30, 2023, the company had shares worth $60.4 million under the repurchase program.

2023 Guidance Reiterated

For 2023, management expects total Service revenue growth to be between 9% and 11% while OEBITDA is projected in the range of $455-$465 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -35.94% due to these changes.

VGM Scores

At this time, Iridium has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Iridium has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.