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Item 7. Management’s Discussion and Analysis

2026-02-12 compared with 2025-02-13 · 134 added, 120 removed, 181 unchanged (58% of the section changed)

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Overview of Our Business

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.

We are a leading provider of global voice, data and positioning, navigation and timing (PNT) satellite services and 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 compromised by political conflicts or natural disasters.

We provide voice and data communications services to businesses, 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.

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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.

In 2024, we acquired Satelles, Inc., or Satelles, a provider of highly secure, satellite-based position, navigation and timing (PNT) services that complement and protect GPS and other Global Navigation Satellite System, or GNSS, reliant systems.

Time synchronization and location data play an important role in the global economy, particularly for major industries supported by critical infrastructure, such as financial services, telecommunications, cyber-security and transportation.

We believe the acquisition of Satelles’s business could generate substantial growth in our service revenue, as well as incremental equipment and engineering services revenue over the coming years from both government and commercial customers.

See Note 12 to our consolidated financial statements included in this annual report.

We sell our products and services to commercial end users through a wholesale distribution network, encompassing approximately 110 service providers, 310 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 for our products and services targeting specific lines of business.

In 2024, we acquired Satelles, Inc.

(Satelles), a provider of highly secure, satellite-based PNT services that complement and protect GPS and other Global Navigation Satellite System reliant systems.

We believe this acquisition has the potential to generate substantial growth in our service revenue, as well as incremental equipment and engineering services revenue over the coming years from both government and commercial customers.

We sell our products and services to commercial end users through a wholesale distribution network, encompassing approximately 120 service providers, 310 value-added resellers (VARs), and 90 value-added manufacturers (VAMs), which 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 for our products and services targeting specific lines of business.

At December 31, 2025, we had approximately 2,537,000 billable subscribers worldwide, an increase of 77,000, or 3%, from approximately 2,460,000 billable subscribers at December 31, 2024.

We have a diverse customer base, including end users in land-mobile, Internet of Things, or IoT, maritime, aviation and government.

We have a diverse customer base, including end users in land-mobile, Internet of Things (IoT), maritime, aviation and government.

We recognize revenue primarily from the provision of services and the sale of equipment.

Service revenue represented 74% of total revenue for each of the years ended December 31, 2024 and 2023.

Service revenue represented 73% and 74% of total revenue for the years ended December 31, 2025 and 2024, respectively.

Voice and data, IoT data and broadband service revenues have historically generated higher margins than subscriber equipment revenue, and we expect this trend to continue.

We also recognize revenue from our hosted payloads, principally from Aireon, including fees for hosting the payloads and fees for transmitting data from the payloads over our network, as well as revenue from other services, such as satellite time and location services.

Term Loan and Revolving Facility

On September 20, 2023, pursuant to a credit agreement (or, as amended to date, the Credit Agreement), we refinanced our previously existing term loan resulting in borrowing of $1,500.0 million, or the Term Loan, issued at a price equal to 99.75%, and an accompanying $100.0 million revolving loan, or the Revolving Facility.

The maturity date of the Term Loan is in September 2030.

During the year ended December 31, 2024, we borrowed an additional $325.0 million under our 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 a price equal to 99.0% of its face value.

The proceeds from the March 2024 additional Term Loan were used for the acquisition of Satelles on April 1, 2024.

In April 2024, we drew down $50.0 million on our Revolving Facility for general corporate purposes, including the funding of repurchases of our 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 December 31, 2024.

The remaining proceeds from the July 2024 additional Term Loan have been 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, or SOFR, plus 2.25%, with a 0.75% SOFR floor.

We typically select 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, equal $18.3 million per annum, which is one percent of the full principal amount of the Term Loan, with the remaining principal due upon maturity.

The Revolving Facility bears interest at an annual rate of SOFR plus 2.25% (but without a SOFR floor) if and as drawn, with no original issue discount, a commitment fee of 0.5% per year on the undrawn amount, which is reduced to 0.375% if we have 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.

See Note 6 to the consolidated financial statements included in this annual report for further discussion of our Term Loan and Revolving Facility.

As of December 31, 2024, we reported an aggregate balance of $1,807.7 million in borrowings under the Term Loan, before $16.9 million of net deferred financing costs, for a net principal balance of $1,790.9 million outstanding in our consolidated balance sheet.

Our Revolving Facility was undrawn as of December 31, 2024.

Our Term Loan contains no financial maintenance covenants.

With respect to the Revolving Facility, we are required 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 December 31, 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 Credit Agreement restricts our 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, or 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 permits repayment, prepayment, and repricing transactions, subject, in the case of the Term Loan, to a 1% penalty in the event the Term Loan is prepaid or repriced within the first six months from the refinancing date.

The Credit Agreement also contains a mandatory prepayment sweep mechanism with respect to a portion of our excess cash flow (as defined in the Credit Agreement) in the event our consolidated first lien net leverage ratio rises above 3.5 to 1.

Our mandatory excess cash flow prepayment, as specified in the Credit Agreement, was $28.6 million as of December 31, 2024.

This amount is scheduled to be paid in 2025 and will be applied towards our required quarterly principal payments.

As such, it was classified under current short-term secured debt in our consolidated balance sheet as of December 31, 2024.

The Credit Agreement permits repayment, prepayment, and repricing transactions.

We were in compliance with all covenants under the Credit Agreement as of December 31, 2024.

Derivative Financial Instruments

In July 2021, we entered into an interest rate cap agreement, or the Cap, that began in December 2021.

The Cap manages our exposure to interest rate movements on a portion of the Term Loan through November 2026.

The Cap, which was not affected by the refinancing of the Term Loan in September 2023 or the 2024 increases and repricing, is designed to mirror the terms of the Term Loan and to offset the cash flows being hedged.

We 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 (loss) and reclassified into earnings during the period in which the hedged transaction affects earnings.

The Cap provides us the right to receive payment from the counterparty if one-month SOFR exceeds 1.436%.

We began paying a fixed monthly premium based on an annual rate of 0.31% for the Cap in December 2021.

The Cap carried a notional amount of $1.0 billion as of December 31, 2024 and 2023.

See Note 7 to our consolidated financial statements included in this report for further discussion of our derivative financial instruments.

Total Interest on Debt and Loss on Extinguishment

Total interest incurred includes amortization of deferred financing fees and capitalized interest.

We incurred third-party financing costs of $2.3 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 we expensed as incurred.

Due to the refinancing of the Term Loan in 2023, we incurred third-party financing costs of $15.9 million, of which $14.7 million was expensed.

These costs are included within interest expense on the consolidated statements of operations and comprehensive income (loss).

Total interest incurred during the years ended December 31, 2024, 2023 and 2022 was $102.8 million, $102.3 million and $72.1 million, respectively.

Interest incurred includes amortization of deferred financing fees of $2.7 million, $4.0 million and $4.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Interest capitalized during the years ended December 31, 2024, 2023 and 2022 was $5.0 million, $5.1 million and $2.6 million, respectively.

As of December 31, 2024 and 2023, accrued interest on the Term Loan was $0.3 million and $1.0 million, respectively.

Material Trends and Uncertainties

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• 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;

• increased competition or potential competition from other satellite service providers, including SpaceX following its recently announced plans to acquire a significant amount of spectrum enabling global D2D services, and, to a lesser extent, from the expansion of terrestrial-based cellular phone systems and related pricing pressures;

• market acceptance of our products;

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• 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;

• rapid and significant technological changes in the telecommunications industry, including announced plans for global satellite D2D broadband services;

• 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, such as COVID-19;

• 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, including as a result of an extended government shutdown or the use of continuing resolutions.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S.

The preparation of these financial statements requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

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Interest expense, net (88,252) (10) % (91,134) (11) % 2,882 (3) %

Other income, net

Other income (expense), net

(2,915) 0 % 534 0 % (3,449) (646) %

Total other expense (91,167) (10) % (90,600) (11) % (567) 1 %

Income (loss) before income taxes and equity in net earnings of affiliates

Income before income taxes and equity in net earnings of affiliates

144,813 17 % 109,784 13 % 35,029 32 %

Income tax (expense) benefit (12,259) (1) % 26,251 3 % (38,510) (147) %

Income tax expense

(27,618) (4) % (12,259) (1) % (15,359) 125 %

Gain (loss) on equity method investments (2,823) 0 % 15,251 2 % (18,074) (119) %

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(1) Billable subscriber numbers are shown as of the end of the respective period.

(2) Average monthly revenue per unit, or ARPU, is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period.

(2) Average monthly revenue per unit (ARPU) is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period.

Billable subscriber and ARPU data is not applicable for hosted payload and other data service revenue items.

(3) Commercial broadband consists of Iridium OpenPort and Iridium Certus broadband services.

For the year ended December 31, 2024, total commercial service revenue increased $30.2 million, or 6%, primarily as a result of increases in IoT and voice and data services revenue.

Commercial IoT revenue increased $25.2 million, or 18%, compared to the prior year, driven by a 10% increase in IoT billable subscribers primarily in users of personal communications devices, and a new contract with a large customer executed in the first quarter of 2024.

Commercial voice and data revenue increased $6.9 million, or 3%, from the prior year primarily due to an increase in billable subscribers.

Commercial broadband revenue decreased $1.8 million, or 3%, compared to the prior year, due to a decrease in ARPU reflecting the increased prevalence of usage of our service as a companion service.

Hosted payload and other service revenue decreased $0.1 million, reflecting the quarterly year-over-year decrease due to the change in the estimated useful lives of our satellites made in the fourth quarter of 2023, offset in part by increases in other data service revenue including Satelles revenue.

For the year ended December 31, 2025, total commercial service revenue increased $17.3 million, or 3%, primarily as a result of increases in IoT data, voice and data and hosted payload and other data service revenue, offset in part by a decrease in broadband.

Commercial IoT revenue increased $15.2 million, or 9%, compared to the prior year, driven primarily by a 6% increase in IoT billable subscribers and an increase in a contract with a large customer previously executed in the first quarter of 2024.

Commercial voice and data revenue increased $6.1 million, or 3%, from the prior year, primarily due to increased ARPU from price increases in the third quarter of 2025.

Hosted payload and other service revenue increased $1.4 million, or 2%, compared to the prior year, primarily due to increases in PNT and other broadcast data revenue, partially offset by decreases in other data service contracts.

These increases were offset in part by a decrease in commercial broadband revenue of $5.4 million, or 10%, compared to the prior year, primarily due to a decrease in ARPU reflecting the increased prevalence of use of lower-priced companion plans in the current year period and non-recurring revenue recognition of $1.4 million in the prior year period.

Government Service Revenue

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We provide airtime and airtime support to U.S.

government and other authorized customers pursuant to our Enhanced Mobile Satellite Services, or EMSS, contract.

government and other authorized customers pursuant to our Enhanced Mobile Satellite Services (EMSS) contract.

Under the terms of this agreement, which we entered into in September 2019, authorized customers utilize specified Iridium airtime services provided through the U.S.

government’s dedicated gateway.

The fee is not based on subscribers or usage, allowing an unlimited number of users access to these services.

Revenue for the year ended December 31, 2024 rose slightly reflecting a contractual step up in the EMSS contract on September 15, 2024.

The service fee under the EMSS contract is fixed at $110.5 million per year for the remainder of the term and is not based on subscribers or usage, allowing an unlimited number of users access to these services.

Revenue for the year ended December 31, 2025 increased slightly reflecting contractual step ups in the EMSS contract.

The EMSS contract expires in September 2026, although based on federal acquisition regulations, the government has the ability to unilaterally extend for an additional six months.

We have begun discussions with the U.S.

government on a new EMSS contract, which we expect to enter into later in 2026 or in 2027, prior to expiration.

Subscriber Equipment Revenue

Subscriber equipment revenue decreased $13.7 million, or 13%, to $91.4 million for the year ended December 31, 2024 compared to the prior year, primarily due to a decrease in the volume of handset sales, offset in part by an increase in Short Burst Data sales.

The overall decrease was is in line with our previously announced expectations, as we returned to more normal levels after the supply chain disruptions due to the pandemic.

Subscriber equipment revenue decreased $10.3 million, or 11%, to $81.1 million for the year ended December 31, 2025 compared to the prior year, primarily due to a decrease in the volume of handset sales and in Short Burst Data device sales, offset in part by an increase in Certus device sales.

We expect equipment revenue in 2026 to be in line with 2025.

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Total $ 156.6 $ 124.3 $ 32.3

Engineering and support service revenue increased by $23.2 million, or 23%, for the year ended December 31, 2024 compared to the prior year primarily due to the increased work under certain government projects, predominantly the contract awarded by the Space Development Agency, or the SDA, offset in part by decreases in commercial engineering projects.

Engineering and support service revenue increased by $32.3 million, or 26%, for the year ended December 31, 2025 compared to the prior year, primarily due to the increased work under certain government projects, predominantly the contract awarded by the Space Development Agency (SDA).

We expect engineering and support service revenue to be higher in 2026 than in 2025.

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Cost of subscriber equipment includes the direct costs of equipment sold, which consist of manufacturing costs, allocation of overhead, and warranty costs.

Cost of subscriber equipment decreased $14.0 million, or 21%, for the year ended December 31, 2024 compared to the prior year period primarily due to the decrease in volume of device sales, as described above, and decreased inventory component costs.

Cost of subscriber equipment decreased $2.0 million, or 4%, for the year ended December 31, 2025 compared to the prior year period, primarily due to the decrease in volume of device sales, as described above, offset in part by an increase in inventory reserves associated with revaluation and obsolescence.

Research and Development

Research and development expenses increased by $8.2 million, or 40%, for the year ended December 31, 2024 compared to the prior year period based on increased spending by Satelles since its acquisition and other device-related features for our network, including Project Stardust, which is our multi-year project to develop Iridium NTN DirectSM, our standards-based Narrowband-Internet of Things (NB-IoT) and Non-Terrestrial Network (NB-NTN) messaging and SOS capabilities for smartphones, tablets, cars and related consumer applications.

Research and development expenses decreased by $8.7 million, or 30%, for the year ended December 31, 2025 compared to the prior year period based on decreased spending on device-related features for our network.

Selling, General and Administrative

Selling, general and administrative expenses that are not directly attributable to the sale of services or products include sales and marketing costs as well as employee-related expenses (such as salaries, wages, and benefits), legal, finance, information technology, facilities, billing and customer care expenses.

Selling, general and administrative expenses increased by $24.5 million, or 17%, for the year ended December 31, 2024, primarily due to personnel costs from increased headcount and related costs, including higher employee stock-based compensation expense, increased expense from Satelles and related acquisition costs and certain costs that were previously recorded in cost of services, offset in part by a decrease in regulatory fees, decreased spending related to our channel partner conference which was held in the first quarter of the prior year and a decrease in stock appreciation rights expense in the current year resulting from a decrease in our stock valuation between the years.

Selling, general and administrative expenses decreased by $10.5 million, or 6%, for the year ended December 31, 2025, primarily due to lower equity compensation costs, partially offset by increased professional fees and spend related to our channel partner conference held in March 2025.

Depreciation and Amortization

Depreciation and amortization expense decreased by $116.9 million, or 37%, for the year ended December 31, 2024, compared to the prior year, primarily due to the change in estimated useful lives of our satellites during the fourth quarter of 2023 and the write-off of our final ground spare, that resulted in accelerated depreciation of $37.5 million in the second quarter of 2023.

We expect that depreciation expense will generally remain in line with 2024 depreciation expense for the remainder of the estimated useful lives.

Depreciation and amortization expense increased by $7.1 million, or 3%, for the year ended December 31, 2025, compared to the prior year, due to increased depreciation resulting from on-orbit spares launched in the second quarter of 2023 being placed into service in 2025 and being depreciated.

Other Expense

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Interest expense, net, for the year ended December 31, 2025 was $88.3 million, compared to $91.1 million for the prior year.

Interest expense, net in the current year reflects the higher average outstanding debt balance, offset in part by a $9.1 million decrease in repricing fees and the reduced interest rate in the current year.

Other Income, net

Other income, net, was $0.5 million for the year ended December 31, 2024, compared to $4.0 million for the prior year.

The prior year balance was primarily the result of a one-time customer contractual settlement which resulted in recognition of $3.5 million of other income in the fourth quarter of 2023.

Income Tax Benefit (Expense)

For the year ended December 31, 2024, our income tax expense was $12.3 million, compared to income tax benefit of $26.3 million for the prior year.

The decrease resulted primarily from a decrease in the average borrowing rate and the refinancing fees expensed in the prior year that did not recur in 2025, offset in part by the increased average outstanding debt balance in 2025 as compared to the prior year.

Other Income (Expense), net

Other expense, net, was $2.9 million for the year ended December 31, 2025, compared to other income, net of $0.5 million for the prior year, primarily as the result of changes in foreign currency exchange rates.

Income Tax Expense

For the year ended December 31, 2025, our income tax expense was $27.6 million, compared to $12.3 million for the prior year.

Our effective tax rate was approximately 19.1% for the year ended December 31, 2025 compared to 11.2% for the prior year.

The decrease in income tax benefit is primarily related to the net impact of (i) pre-tax book income in the current year compared to pre-tax book loss in the prior year, (ii) a decrease in estimated R&D credits, (iii) an increased stock compensation tax expense, and (iv) a tax benefit for the Foreign Derived Intangible Income deduction.

The increase in income tax expense is primarily related to the net impact of (i) an increase in pre-tax book income in the current year compared to the prior year, (ii) a decrease in estimated research and development credits, (iii) an increase in state deferred tax expense, (iv) a decrease in tax benefit from the Foreign Derived Intangible Income deduction, and (v) a decrease in tax expense from nondeductible executive compensation.

If our current estimates change in future periods, the impact on the deferred tax assets and liabilities may change correspondingly.

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Gain (Loss) on Equity Method Investments

For the year ended December 31, 2024, our gain on equity method investments was $15.3 million, compared to a loss of $6.1 million in the prior year.

The gain in 2024 primarily reflects the acquisition of Satelles, as we recorded a $19.8 million gain on our pre-acquisition equity method investment in Satelles, offset in part by the portion of losses recorded on other equity method investments.

The prior year reflects the portion of losses recorded on equity method investments, including Satelles, during the period.

For the year ended December 31, 2025, our loss on equity method investments was $2.8 million, compared to a gain of $15.3 million in the prior year.

The change is primarily the result of the acquisition of Satelles in 2024, upon which we recorded a $19.8 million gain on our pre-acquisition equity method investment in Satelles, offset in part by the portion of losses recorded on other equity method investments.

Net income was $114.4 million for the year ended December 31, 2025, compared to $112.8 million during the prior year.

The improvement primarily resulted from the decrease in depreciation expense, an increase in revenues, and the gain on equity method investments, as noted above, offset in part by an increase in income taxes and an increase in operating expenses other than depreciation.

The change in net income primarily resulted from the increase in operating income, primarily driven by increased revenues, offset in part by the change in the equity method investments and an increase in income taxes, as noted above.

Liquidity and Capital Resources

Our primary sources of liquidity are cash provided by operations, cash and cash equivalents and our Revolving Facility.

At December 31, 2024, we had $1.8 billion of indebtedness, consisting exclusively of amounts outstanding under the Term Loan,

the terms of which are described above under the section captioned “Term Loan.” We have additional borrowing available to us under our Revolving Facility of $100.0 million at December 31, 2024.

These sources are expected to meet our short-term and long-term liquidity needs, including annual payments for (i) required principal and interest on the Term Loan, which we expect to be $33.1 million inclusive of the mandatory excess cash flow prepayment in 2025, and, based on the current interest rate, approximately $96.0 million, respectively, (ii) capital expenditures, of approximately $90.0 million in 2025 and moderating through the end of the decade, (iii) working capital, (iv) potential share repurchases, and (v) anticipated cash dividend payments to holders of our common stock.

At December 31, 2025, we had approximately $1.8 billion of indebtedness, consisting of amounts outstanding under the Term Loan, the terms of which are described below.

We have $100.0 million of additional borrowing available to us under our Revolving Facility at December 31, 2025.

These sources are expected to meet our short-term and long-term liquidity needs, including annual payments for (i) required principal and interest on the Term Loan, which we expect to be $3.4 million, and, based on the current interest rate, approximately $85.0 million, respectively, (ii) capital expenditures in 2026 will be consistent with 2025, (iii) working capital, (iv) potential share repurchases, and (v) anticipated cash dividend payments to holders of our common stock.

As of December 31, 2025, our total cash and cash equivalents balance was $96.5 million, up from $93.5 million as of December 31, 2024.

The increase was principally the result of additional Term Loan borrowings in 2024, offset in part by an increase in share repurchases.

While we generated greater cash flows from operations, and used less cash for share repurchases in 2025 than in 2024, these factors were offset in part by increased capital expenditures.

Term Loan and Revolving Facility

Pursuant to a credit agreement (as amended to date, the “Credit Agreement”), we previously entered into a term loan totaling $1,500.0 million (the “Term Loan”), issued at a price equal to 99.75%, and an accompanying $100.0 million revolving loan (the “Revolving Facility”).

The maturity of the Term Loan and Revolving Facility are in September 2030 and September 2028, respectively.

During the year ended December 31, 2024, we borrowed an additional $325.0 million under our Term Loan, comprised of $125.0 million on March 25, 2024, issued at a price equal to 99.875% of its face value, and $200.0 million on July 30, 2024, issued at 99.0% of its face value.

The additional amounts borrowed are fungible with the original $1,500.0 million, and have the same maturity date, interest rate and other terms.

As of December 31, 2025, we reported an aggregate balance of $1,774.7 million in borrowings under the Term Loan, before $14.2 million of net deferred financing costs, for a net principal balance of $1,760.5 million outstanding in our consolidated balance sheet.

In the first half of 2025, we drew $50.0 million under our Revolving Facility for general corporate purposes, all of which was repaid in December 2025, and there were no amounts outstanding as of December 31, 2025.

The proceeds from the March 2024 additional Term Loan were used for the acquisition of Satelles on April 1, 2024.

In April 2024, we drew $50.0 million on our Revolving Facility for general corporate purposes, including the funding of repurchases of our 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 December 31, 2024.

The remaining proceeds from the July 2024 additional Term Loan have been used for general corporate purposes, including share repurchases.

In March and April 2025, the Company drew down $20.0 million and $30.0 million on its Revolving Facility, respectively, for general corporate purposes, all of which was repaid prior to December 31, 2025.

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.

We typically select 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, equal $18.3 million per annum (one percent of the full principal amount of the Term Loan following the additional Term Loan amounts borrowed in 2024), with the remaining principal due upon maturity.

As noted below, no quarterly principal payment has been made after the first quarter in 2025 as a result of the excess cash flow payment made in May 2025.

The Revolving Facility bears interest at an annual rate of SOFR plus 2.5% (but without a SOFR floor) if and as drawn, with no original issue discount, a commitment fee of 0.5% per year on the undrawn amount, which is reduced to 0.375% if we have a consolidated first lien net leverage ratio, as defined in the Credit Agreement, of less than 3.5 to 1.

Our Term Loan contains no financial maintenance covenants.

The Credit Agreement contains other customary representations and warranties, affirmative and negative covenants, and events of default.

The Company was in compliance with all covenants as of December 31, 2025.

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 Company’s mandatory excess cash flow prepayment, as specified in the Credit Agreement, was $28.6 million as of December 31, 2024.

This amount was paid in May 2025.

As a result, no quarterly principal payment was required for the last three quarters of 2025, and no quarterly principal payment will be required for the first three quarters of 2026.

As of December 31, 2025, the Company was below the specified leverage ratio and therefore the mandatory prepayment sweep was not required.

The Credit Agreement permits repayment, prepayment and repricing transactions.

We were in compliance with all covenants under the Credit Agreement as of December 31, 2025.

See Note 6 to

the consolidated financial statements included in this annual report for further discussion of our Term Loan and Revolving Facility.

Derivative Financial Instruments

In July 2021, we entered into an interest rate cap agreement (“Cap”) that began in December 2021.

The Cap manages our exposure to interest rate movements on a portion of the Term Loan through November 2026.

We designated the Cap as a cash flow hedge of the variability of the SOFR-based interest payments on the Term Loan.

The Cap provides us the right to receive payment from the counterparty if one-month SOFR exceeds 1.436%.

We began paying a fixed monthly premium based on an annual rate of 0.31% for the Cap in December 2021.

The Cap carried a notional amount of $1.0 billion as of December 31, 2025 and 2024.

See Note 7 to our consolidated financial statements included in this report for further discussion of our derivative financial instruments.

Total Interest on Debt

Total interest incurred includes amortization of deferred financing fees and capitalized interest.

Due to the refinancing of the Term Loan in 2023, we incurred third-party financing costs of $15.9 million, of which $14.7 million was expensed.

These costs are included within interest expense on the consolidated statements of operations and comprehensive income.

Total interest incurred (net of the Cap) during the years ended December 31, 2025, 2024 and 2023 was $98.1 million, $102.8 million and $102.3 million, respectively.

Interest incurred includes amortization of deferred financing fees of $2.9 million, $2.7 million and $4.0 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Interest capitalized during the years ended December 31, 2025, 2024 and 2023 was $4.6 million, $5.0 million and $5.1 million, respectively.

As of December 31, 2025 and 2024, accrued interest on the Term Loan was $0.3 million and $1.0 million, respectively.

A significant portion of our revenues and cash flow are derived from U.S.

government contracts.

During 2025, we did not experience delays in receiving payments from U.S.

government agencies despite the U.S.

government shutdown during the fourth quarter.

While none of our contracts were impacted as a result, an extended government shutdown could result in a delay or suspension of funding for our U.S.

government contracts and disrupt our cash flows and delay new contract awards.

Contractual Obligations

As of December 31, 2025, we held non-cancelable purchase obligations of approximately $8.4 million for inventory purchases with Benchmark, our primary third-party equipment supplier.

Our purchase obligations, all of which are due during 2025, decreased $12.2 million from the end of 2023 primarily due to recovery from supply chain constraints.

Our material long-term cash requirement is the repayment of the remaining principal amount under the Term Loan upon its maturity in 2030, which is expected to be $1,702.8 million.

We expect to refinance this amount at or prior to maturity.

Our purchase obligations, all of which are due during 2026, remained relatively consistent, decreasing $0.9 million from the end of 2024.

We also have contractual obligations in the short and long term related to our Term Loan and leases.

See Note 6 and Note 10 for more information on these payment obligations by year.

On December 8, 2022, our Board of Directors initiated a quarterly dividend.

For each quarter through March 2024, our Board of Directors declared and paid a quarterly cash dividend in the amount of $0.13 per share of common stock.

Beginning in June 2024, the Board of Directors increased the quarterly cash dividend to $0.14 per share of common stock for each quarter through December 2024.

Total dividends paid in 2024 were $64.7 million, while total dividends in 2023 were $64.8 million.

While we expect to continue the regular cash dividend program, any future dividends declared will be at the discretion of our Board of Directors and will depend, among other factors, upon our results of operations, financial condition and cash requirements, as well as such other factors our Board of Directors deems relevant.

The Board of Directors increased the quarterly cash dividend to $0.14 per share of common stock beginning in the second quarter of 2024 and to $0.15 per share of common stock beginning in the third quarter of 2025.

Total dividends paid in 2025 were $62.9 million, compared to total dividends in 2024 of $64.7 million.

We currently expect that comparable cash dividends will

continue to be paid in the future, although future dividends will depend on our earnings, capital requirements, financial conditions and other factors considered relevant by the Board.

Share Repurchases

During the year ended December 31, 2025, we repurchased and subsequently retired 6.8 million shares of our common stock under our previously announced share repurchase program at a total purchase price of approximately $185.0 million.

As of December 31, 2025, $245.3 million remained available and authorized for repurchase under this program through December 31, 2027.

Effective October 1, 2025, we have paused share repurchases to increase financial flexibility and will continue to evaluate the amount and timing of share repurchases under our share repurchase program, considering, among other factors, general market conditions, capital allocation priorities, general business conditions and other investment opportunities.

The repurchase program does not obligate us to repurchase any specific amount of common stock and may be modified, suspended, or discontinued at any time without notice at the discretion of our Board of Directors.

Cash Flows - Comparison of the Years Ended December 31, 2025 and 2024

8 unchanged sentences

Net cash provided by operating activities for the year ended December 31, 2025 increased $24.1 million from the prior year.

Cash flows related to changes in working capital increased by approximately $58.7 million, primarily as a result of changes in inventory, offset by corresponding decreases in accounts payable and accrued expenses.

In 2023, we replenished finished goods and component inventory, including last time buys.

These changes were partially offset by net income, as adjusted for non-cash activities, which decreased by $2.4 million over the prior year.

Net income in 2023 was adjusted for non-cash, positive adjustments, including depreciation expense associated with the write-off of the remaining spare satellite in the third quarter, and stock-based compensation expense.

The changes in operating cash relate primarily to increased net income, as adjusted for non-cash activities, which increased by $33.9 million over the prior year due to a decrease in non-cash income from equity method investments, including the gain on the acquisition of Satelles, and an increase in deferred income taxes.

These changes were partially offset by a decrease in working capital of approximately $9.7 million, primarily as a result of timing associated with changes in deferred revenue, accounts receivable and payable.

Cash Flows from Investing Activities

Net cash used in investing activities for the year ended December 31, 2024 increased $97.1 million from the prior year period primarily as a result of our acquisition of Satelles on April 1, 2024, offset in part by a decrease in capital expenditures compared to the prior year.

We expect our capital expenditures to be $90.0 million in 2025 and moderate through the end of the decade.

Net cash used in investing activities for the year ended December 31, 2025 decreased $80.3 million from the prior year period primarily as a result of our acquisition of Satelles in 2024, offset in part by an increase in capital expenditures, including costs associated with Iridium NTN Direct, compared to the prior year.

We expect our capital expenditures to be comparable to 2025 levels in 2026.

Cash Flows from Financing Activities

Net cash used in financing activities for the year ended December 31, 2024 decreased $156.6 million compared to the prior year period primarily due to the additional $325.0 million in borrowings under the Term Loan, offset in part by increased repurchases of our common stock.

Net cash used in financing activities for the year ended December 31, 2025 increased $129.4 million compared to the prior year period, primarily due to the additional $325.0 million in borrowings under the Term Loan in the prior year, offset in part by decreased repurchases of our common stock in the current year.

Tax Regulation Update

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

The OBBBA permanently extends certain expiring provisions of the Tax Cuts and Jobs Act, modifies the international tax framework, and restores certain favorable business tax provisions, among other changes.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027.

We have incorporated the impact of the new legislation into our year-to-date effective tax rate and continue to assess the impact on our consolidated financial statements.

Our results of operations have been subject to seasonal usage changes for commercial customers, and we expect that our results will be affected by similar seasonality going forward.

March through October are typically the peak months for commercial voice services revenue and related subscriber equipment sales.

In December 2024, a large IoT customer began to phase out its annual retail pricing plans.

As a result, that customer’s annual billable subscribers will move to monthly plans, which we expect to increase seasonality in billable subscribers.

We expect revenue to remain unaffected due to the fixed-price nature of our contract with this customer for 2025.

government revenue and commercial IoT revenue have been less subject to seasonal usage changes.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis