Globalstar Inc (GSAT) 2025 Q4 法說會逐字稿

(Operator Instuctions)

Good day and thank you for standing by. Welcome to the GlobalStar fourth quarter and full year 2025 earnings conference call. I would now like to hand the conference over to your speaker today, Rebecca Clary, CFO. Please go ahead.

Thank you, operator, and good morning, everyone.

Before we begin, please note that today's call contains forward-looking statements intended to fall within the safe harbor provided under the securities laws. Factors that could cause the results to differ materially are described in the risk factors section of Global Source SEC filings, including its most recent annual report on Form 10k and its other SEC filings, as well as today's earnings release.

Also note that management may reference EBITDA, adjusted EBITDA, free cash flow, or adjusted free cash flow on this call, which are financial measures not recognized under US GAAP as required by SEC rules and regulations. These non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in the earnings release, which is available on our website.

Today, I will walk through our fourth quarter and full year 2025 financial results, then discuss liquidity and our 2026 guidance. Starting with the full year, total revenue reached a record $273 million a 9% increase over 2024 and in line with our guidance. This marks our fourth consecutive year of record revenue.

Service revenue was $257.3 million up 8%, driven primarily by increased wholesale capacity services. Subscriber equipment revenue was $15.7 million up 24%, reflecting a higher volume of commercial IOT device sales.

Turning to profitability, we generated income from operations of $7.4 million compared to a loss of $0.9 million in 2024. This improvement was due to higher revenue, as previously discussed, partially offset by increased operating expenses, including personnel costs to support our next generation infrastructure buildout, continued investment in XCOM ran development, and higher legal and professional fees.

During the year, operating expenses benefited from $3.9 million in employee retention credits received under the CARES Act, which were allocated between cost of services and MGNA. Net loss improved to $7.6 million from $63.2 million in 2024.

This improvement was due primarily to the prior year, reflecting a non-recurring non-cash loss on extinguishment of debt related to the paydown of the 2023, 13% notes. We also benefited from favorable foreign currency remeasurement on intercompany balances and non-cash gains on the quarterly mark to market adjustment of our derivative assets. These items were partially offset by higher non-cash imputed interest related to the 2024 prepayment agreement.

Adjusted EBITDA reached a record $136.1 million dollars, representing a 50% margin in line with our guidance. This increase over 2024 reflects higher revenue, partially offset by higher operating expenses, primarily due to investment and growth opportunities. Specifically, while we continue to enhance and develop our XCOM RAN product and service offerings, we incur costs in advance of revenue.

Turning to Q4, total revenue was $72 million including $67.4 million of service revenue and $4.6 million from equipment sales. Service revenue increased 17% and equipment revenue increased 31% compared to Q4 2024. The revenue increase was driven primarily by wholesale capacity services, including performance bonuses earned in the quarter and additional service fees associated with network cost reimbursement.

We also saw contributions from growth and commercial IOT subscribers and device sales and revenue under our agreement with Parsons, partially offset by duplex and spot subscriber turn and lower XCOM RAN sales. Q4 loss from operations was $0.4 million a meaningful improvement from a $4.2 million loss from operations in Q4 2024.

I'd also note that cost of subscriber equipment sales included a $1.1 million charge related to tariffs on equipment imported and then re-exported to foreign subsidiaries where previously recorded duty drawbacks are no longer deemed probable of recovery.

Q4 net loss was $10.6 million compared to $50.2 million in the prior year, with the improvement largely attributable to the same non-cash activity that impacted the full year period. Q4 adjusted EBITDA was $32.4 million, up 7% from the prior year's quarter. Turning to the balance sheet, we ended the year with $447.5 million in cash and cash equivalents, up from $391.2 million a year in 2024.

Operating cash flows during 2025 were $621.7 million, which included $430.6 million received in connection with the infrastructure prepayment.

Capital expenditures were $550.4 million, primarily related to our commitments under the updated services agreements for the deployment of the saddle of the replacement satellites as well as the extended MSS network, which includes a new satellite constellation, expanded ground infrastructure, and increased global MFS licensing. Adjusted free cash flow for the year was $171.5 million, up from $131.9 million in 2024.

2025 benefited from $45 million in accelerated service payments and higher ongoing service fees, partially offset by increased operating costs.

Our principal debt balance was $410 million at year end, down modestly from $417.5 million at the end of 2024. We're collecting scheduled recoupments of $34.6 million under the 2021 funding agreement, partially offset by $27.1 million in new issuance under the 2023 funding agreement.

Looking ahead to 2026, we expect total revenue between $280 million and $305 million with an adjusted EBITDA margin of approximately 50%. This outlook reflects our confidence in the continued growth trajectory of the business as we scale our next generation infrastructure and expand our commercial opportunities. With that, I'll turn the call over to Paul.

Thanks, Rebecca, and good morning, everyone. It's great to be with you today and I appreciate everyone joining us for our fourth quarter and full year 2025 update.

2025 was a transformational year for GlobalStar. We closed the year with record full year revenue of $273 million representing a 9% increase year over year and delivered an adjusted EBITDA margin of 50%.

These results reflect strong execution, operating discipline, and continued progress across every major dimension of our business. Throughout the year, we focused on scaling the core business while laying the foundation for our next phase of growth, and we believe our financial performance clearly reflects that balanced approach.

From a strategic perspective, we made meaningful advances across product innovation, infrastructure expansion, regulatory progress, and market diversification. One of the most important milestones during the year was the launch of two-way satellite IoT capabilities and the completion of the commercial rollout of our RM 200M module.

This represents a significant expansion of our IOT portfolio, moving beyond one-way monitoring to enable reliable command and control for enterprise, government, and industrial customers. Two-way IOT meaningfully expands our addressable market, strengthens our partner-led go to market model, and enables higher value use cases where resilience, reliability, and confirmation are mission critical.

At the same time, we continued to accelerate diversification across end markets. During 2025, we secured early government and defense wins, expanded our presence in agriculture, wildfire response, industrial IoT, and public safety, and built momentum across multiple verticals.

This diversification strategy is intentional and increasingly important as it reduces reliance on any single market while positioning Global Star to serve a broad range of customers with complex connectivity requirements.

In the government and events sector specifically, we achieved several important milestones with our partner Parsons. We completed a successful proof of concept, began customer trials, and are expanding our relationship to include private 5G solutions for the federal market. We also completed and are continuing to invest in XCOM RAN-based 5G research to evaluate high-capacity private wireless architectures for defense applications. Additionally, we are also pleased to highlight a recent development validating the strength of our broader connectivity platform.

Fireworks, which was formerly XCOM Labs, was awarded a phase two Small Business Innovation contract worth $1.9 million from the Office of the Undersecretary of War to develop an advanced 5G system for challenging RF environments. As part of that effort, Fireworks selected GlobalStar as a technology partner, leveraging our XMM platform. This collaboration underscored the growing relevance of our technology beyond traditional satellite services and reflects confidence in our ability to support mission critical communications.

The initiatives reinforce the relevance of our architecture for defense and government use cases and demonstrate growing confidence in our ability to support high priority mission requirements.

Taken together, we believe these efforts are a meaningful expansion of our government and defense footprint, and we expect this area to become an increasingly important contributor to our business over time. And more broadly, we continue to see steady demand for our products and services with new customers and emerging use cases coming online as we execute against a clearly defined go to market strategy focused on scalable long-term growth.

That growth is underpinned by our continued investment in our infrastructure. During the year, we made significant progress expanding our global ground station network across multiple continents. We believe these investments will strengthen capacity, improve redundancy, and enhance readiness for next generation services, including our C3 constellation. In parallel, we advanced our ITU financial commitments, completing 50% of the investment we pledged. These efforts are foundational and are expected to prepare our network to support future satellite capacity and expanded service offerings.

We also continue to advance the XCOM-RAN ecosystem. Boingo completed a proof-of-concept trial demonstrating the ability for XCOM-RAN to support next generation private 5G deployments, and we believe the integration platform into Boingo's private network portfolio highlights growing partner engagement and commercial relevance.

From team performance standpoint, momentum remains strong throughout the year.

Average commercial IOT subscribers increased 6% year over year while IOT hardware sales revenue grew 50% year over year. This growth reflects sustained demand across asset tracking, monitoring, and safety applications, as well as increasing adoption of higher value solutions enabled by two-way connectivity. We believe these trends demonstrate both the durability of our IOT business and the upside potential as new capabilities continue to scale.

The progress we made in 2025 reflects disciplined execution across multiple fronts from infrastructure and regulation to product innovation and market expansion. We're moving decisively from groundwork to growth, and we believe we have a strong foundation in place as we enter 2026. Looking ahead, we remain confident in the strength of our strategic roadmap and our ability to execute against it.

With key authorizations for C3 and continued progress across our ground network commercial momentum for two-way IoT capabilities and creating traction for excom RAM, we believe GlobalStar is uniquely positioned to deliver differentiated connectivity solutions that combine satellite innovation, licensed spectrum, and proprietary wireless technology.

Finally, there's never been a more exciting time to be in space and the broader connectivity ecosystem. As demand continues to grow for resilient interoperable solutions that bridge satellite and terrestrial networks, we believe GlobalStar is ideally positioned to benefit from the convergence. One factor became increasingly clear last year proprietary, globally harmonized spectrum matters. Our licensed MSS spectrum remains a core differentiator and a foundational asset as the market evolves, whether it's traditional satellite communications, IOT, or D2D. Our dedication to global space spectrum can enable flexibility, reliability, and resiliency. The progress we achieved in 2025 reflects the talent and dedication of our global team, and we are energized by the momentum we are carrying into the year ahead.

Thank you again for joining us today and for your continued support of GlobalStar. We look forward to updating you on our progress in the quarters to come, and I'll now turn the call back to the operator for Q&A.

(Operator Instructions)

Thank you. As a reminder to ask a question, and our first question comes from Edison Yu, Deutsche Bank. Your line is open.

Thank you for taking our questions. Congratulations on progress and apologies about any background noise. First, I want to bring up, a topic to you, Paul. There's been a lot of excitement about data centers in space.

I think it's probably something maybe you don't want maybe tackle directly as as as a company but just curious on your thoughts about the the idea of doing this and potentially some maybe ancillary opportunities that that could evolve from that.

Yeah, I mean, obviously we're very focused on direct to sell and IoT and and not really on the data center side and obviously with all the demand for compute and AI and the difficulties people are having building data centers and power being an issue, I understand why people are excited about it and certainly it creates another reason for. Needing launch capacity, which there's going to be increasingly more launch capacity, as new vendors come online, so I understand sort of how the industry got excited about it. I mean, I think there's a lot of technical challenges to it, obviously maintenance is a lot harder, upgrades a lot harder, cooling and so forth are hard in space, so.

Yeah, but this is a great technical challenge for people and certainly an interesting thing. And if you're a science fiction fan, it kind of maps out to a lot of things people have talked about over the years and, about what humanity will do in space. So it's exciting, but yeah, it's definitely not our focus area.

Understood. And then, I've been switching gears. What should we think about? How should we think about the next milestones for C3 constellation? Is there anything this year that you would, that would call out that would be in particular, of particular importance?

Yeah, I mean, we just did the critical design review, so that's, a very important portion of making sure that the system design, and holistically the entire system. Is designed well, and, we will need to do a lot of work in terms of network, ground network build out, obviously a lot of work going on the regulatory side, and, discussion are advancing well, and, regulators are excited about the capabilities that Global Star has already brought to market, either by ourselves or with our partners. A lot of, you know.

SOS and these kinds of emergency capabilities and it's been demonstrated over and over. So, as we go to C3 things only get better, more capabilities and so forth, more satellites in orbit and so yeah, we're, we are continuing to just tick off, grind away, all these launches. It's not a high-level thing. It's a, it's really, you got to be on top of every single little detail, and that's what the teams have been doing. And so, it's, yeah, it's not one thing, it's sort of many things across the board to get done.

Indeed. Last one for me just on XCOM brand you made some progress since, last quarter with, Boingo.

Can you just remind us of indicate kind of what specific customer KPIs were kind of validated or that you found to be very encouraging as part of this process and is this, does this give you more confidence in getting future pipeline, before I come back? Thank you.

Yeah, so, I mean the kinds of things that people are obviously looking for the ability to get a lot of throughputs in a dense environment, so that was the thing that we always touted about the. The technology in the beginning, but, with Boingo, one of the other things that's really cool is that we can run the system over DS distributed antenna systems, so we can overlay that and a DAS system generally just gives you more coverage but not more capacity.

But because we can process the data from each radio node or head, we can actually then increase the capacity in the system as well. And then there's other things that we've demonstrated in the warehouse automation. Space and you know in terms of ease of deployment and the fact that if you cluster us in a given area it doesn't really take down you know capacity of the whole system it still shares the capacity of all the radio nodes that are there so.

That that kind of capability and those kind of KPIs are super important and then obviously just getting to commercial hardness you know we spent a lot of testing this system under you know difficult circumstances and we have been able to prove to very demanding customers that this system is commercially ready and so in terms of the hype.

My focus on warehouse automation back in and now we're looking at what are the uses obviously with the cyber both the military use cases and with going because we're talking about airport stadiums, convention centers, places that are. High density of users, and not to mention one of those military bases as well. So, I think you know pipeline is definitely growing. We're excited by some of the go to market partners that we have, I know like we said on in terms of the parts as well, looking at the 5G for defense and other. Government. So, these pipelines are great. And then as we look out there going to be a lot of demand for connectivity for things like physical AI and so forth, and we're upset by those opportunities when we're in the warehouse of ambitious space.

There's a lot of robotics, so upload down the information is important and certainly through COVID and latency are going to be important, aspects of that.

Thank you.

Thank you.

Thank you. Our next question comes from Mike Crawford, B. Riley Securities. Your line is open.

Thank you. Good morning. Could you, help walk through the utility of having both MSS and terrestrial 5G flexibility with your {SM} spectrum and as well as perhaps maybe how we should think about any potential interference issues?

Yeah, so obviously we bleep out the fact that in the future there's a lot of synergy between warehouse automation and the fact that you can track using IOT satellite IOT anywhere you go and cover a complete supply chain logistics. So those kinds of things are obviously super interesting, but it's also just the fact that because of a system that means that we have spectrum globally and so for, companies that are and partners that are looking to, have some kind of terrestrial capability anywhere in the world, the fact that have that, have this.

That's not to say that we've got authorization that we believe that we can go get those to the extent that our partner is professed in that as well. So, it's nice energy just a global nature, a global harmonized nature of it, from an interference standpoint, yeah, I mean, the idea is that if you are. And cellular recovery or we're running a terrestrial network on that spectrum.

If a device is not, it needs to go to it could also go to the terrestrial network as well. So either managing the which frequency bands are being used, which time is being used, or also what system do you does. Users need to use at a different time and our satellite modems, although they start out the first version of the two modems doesn't have multi-mode capability and that's we're working on that right now. So that, that's going to certification and so forth. So, they will have multimode capability very quickly and that'll be able to manage both and of course we support the terrestrial, modes.

Okay, thank you Paul. Actually, it's a little difficult to hear you because your line's breaking up a little bit. I'll just ask one final question, but can GlobalStar share any targeted launch windows for the replenishment satellites this year?

We have, we're not updating, we're saying second quarter this year for the 1st launch and second half for the, second launch.

Excellent, thank you.

Thank you.

Thank you. As a reminder, if you have a question, and our next question comes from Gregory Pendy, Clear Street. Your line is open.

Hey guys, thanks for taking my question and congrats in 2025. I just wanted to zero in on the IOT offering. Can you remind us of your services went live for two-way communications? I assume, I believe it was somewhat mid-quarter and in addition, it looks like from your, RPU you haven't, changed pricing. Is that correct? And is that the likely to continue going forward? Thanks.

Sure, so what's going on the two-way system is that our customers are actually building out their solutions right now, so you won't see revenues, from two-way IOT in any significant amount right now, and these, the customers are in the process of, validating their end to end systems and so forth, so it's still a little bit more that the. The module went commercial. It's tested, it's hardened, it's in mass production now, and really it's just, we're waiting on the customers to finish their applications because these are built into some other device.

Okay, so is it fair to say that that wasn't benefiting the subscribers too in the quarter because you had a decent growth and.

Subscribers, right, no, that's still one-way systems, predominantly.

Okay, very helpful. Thanks a lot.

Sure.

Thank you. And our next question comes from Logan Lillehaug, Craig-Hallum. Your line is open.

Hey guys, Logan on for George here this morning. You mentioned the contribution from Parsons in the quarter. I was hoping you could just talk kind of broadly about how the government pipeline has shaped up, over the past few quarters and just kind of what you're seeing there.

And kind of on that note as we think about the longer-term guidance how would you frame sort of what's considered in there from in terms of government contribution?

Okay, so the pipeline, I mean, there's sort of two aspects to it. It's the things that we are already talking about, working about, working with them on, and then there's some other newer opportunities that, we're still in the process of value and having contracted very large and the refills we're headed focused on the on the government opportunities there we haven't made any announcement about the what those news or the side except the sense that the growth in the.

Contract come from the idea that we will expand to other regions and we get as other regions come on our mind and so that's the near term and then as they ship their solution into the devices, then we get the revenue from revenue but predominantly today it's the build out of the network to support other regions of the world.

Got it. Just one other really quick one, can you just remind us of you on the upgrade of the ground infrastructure for the, longer-term MSS Network?

Yeah, I mean, it's, so one good metric is we committed to the ITU of spending $2 billion on extending the network and we're halfway through that and that includes money that went into the satellites as well, but you know it gives you a sense of. How far along we are that those build outs are going quite well on the on the ground side we're the company's pretty experienced in doing these kinds of things we had to do it for the, original launch of the original wholesale business for our current so we know how to do this pretty well.

And we've been making continuous announcements as different countries come online. I mean, you can see sort of a laundry list if you look through the press releases of all the places that are up and going now.

Yes, okay, got it, thank you.

Sure, thank you.

Thank you. I'm showing no further questions at this time. I would like to turn the conference back to Paul Jacobs for closing remarks.

Well, thanks everybody again for joining us. It was a great year. A lot of stuff going on and I really want to say thank you to our partners, our customers, and really to all the employees at GlobalStar. You guys have done an excellent job this year, really focused in on getting stuff done, and that obviously reflects the final, results that our investors are looking for. So we will continue to execute and look forward to talking to you. About our progress and our growth going forward. So thanks everybody again.

Thank you. We apologize if you experienced any technical issues today. This concludes today's conference call. Thank you for participating and you may now disconnect.