What changed in this filing

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Item 1. Financial Statements

2024-10-17 compared with 2024-07-23 · 119 added, 111 removed, 509 unchanged (31% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

September 30,

2024 December 31, 2023

25 unchanged sentences

Stockholders’ equity:

Common stock, $0.001 par value, 300,000 shares authorized, 118,518 and 122,776 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 119 123

Common stock, $0.001 par value, 300,000 shares authorized, 114,246 and 122,776 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively 114 123

Additional paid-in capital 1,003,736 1,089,466

7 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended

September 30, 2024

2024 2023 2024 2023

10 unchanged sentences

Total operating expenses 157,919 169,447 469,422 560,651

Operating income (loss) 43,646 ( 15,971 ) 93,417 7,177

Operating income 54,852 28,155 148,269 35,332

Other income (expense), net:

8 unchanged sentences

Weighted average shares outstanding - diluted 118,111 125,176 121,261 126,100

Net income (loss) per share - basic $ 0.27 $ ( 0.24 ) $ 0.43 $ ( 0.17 )

Net income (loss) per share - diluted $ 0.27 $ ( 0.24 ) $ 0.42 $ (0.17)

Net income (loss) per share - basic and diluted $ 0.21 $ ( 0.01 ) $ 0.63 $ ( 0.18 )

Comprehensive income (loss):

8 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023

Three Months Ended September 30, 2024 Three Months Ended September 30, 2023

Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated

13 unchanged sentences

Balances at end of period 114,246 $ 114 $ 1,003,736 $ ( 355,471 ) $ 15,378 $ 663,757 123,821 $ 124 $ 1,105,245 $ ( 233,593 ) $ 53,226 $ 925,002

Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated

9 unchanged sentences

Cumulative translation adjustments — — — — ( 1,011 ) ( 1,011 ) — — — — ( 753 ) ( 753 )

Unrealized gain on cash flow hedges, net of tax — — — — 1,883 1,883 — — — — 405 405

Unrealized gain (loss) on cash flow hedges, net of tax — — — — ( 17,518 ) ( 17,518 ) — — — — 2,416 2,416

Net income (loss) — — — 76,435 — 76,435 — — — ( 22,608 ) — ( 22,608 )

4 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

23 unchanged sentences

Cash flows from financing activities:

Borrowings under the Term Loan 221,783 —

Borrowings under the Term Loan, net of issuance costs 419,783 63,940

Payments on the Term Loan ( 109,629 ) ( 72,315 )

Borrowings under the Revolving Credit Facility 50,000 —

Payments on the Revolving Credit Facility ( 50,000 ) —

Repurchases of common stock ( 284,603 ) ( 195,139 )

5 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents, and restricted cash ( 958 ) ( 2,343 )

Net decrease in cash and cash equivalents, and restricted cash ( 8,329 ) ( 65,314 )

Net increase (decrease) in cash and cash equivalents, and restricted cash 87,718 ( 100,893 )

Cash, cash equivalents, and restricted cash, beginning of period 71,870 168,770

42 unchanged sentences

The fair value estimates are based upon certain market assumptions and information available to the Company.

The carrying values of the following financial instruments approximated their fair values as of June 30, 2024 and December 31, 2023:

The carrying values of the following financial instruments approximated their fair values as of September 30, 2024 and December 31, 2023:

(1) cash and cash equivalents, (2) prepaid expenses and other current assets, (3) accounts receivable, (4) accounts payable, and (5) accrued expenses and other current liabilities.

4 unchanged sentences

In determining fair value of Level 2 assets, the Company uses a market approach utilizing valuation models that incorporate observable inputs such as interest rates, bond yields and quoted prices for similar assets.

The Company did not hold any Level 3 assets as of June 30, 2024 or December 31, 2023.

The Company did not hold any Level 3 assets as of September 30, 2024 or December 31, 2023.

For new leases, the Company will determine if an arrangement is or contains a lease at inception.

18 unchanged sentences

The following table summarizes the Company’s inventory balances:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(In thousands)

7 unchanged sentences

As a result, the estimated useful lives of the satellites were extended by five years, from 12.5 years to 17.5 years.

This change will result in lower depreciation expense and hosted payload revenue for each of the first three quarters of 2024, compared to the corresponding quarter of the prior year.

This change resulted in lower depreciation expense and hosted payload revenue for each of the first three quarters of 2024, compared to the corresponding quarter of the prior year.

Derivative Financial Instruments

21 unchanged sentences

The following table presents the Company’s cash and cash equivalents:

June 30, 2024 December 31, 2023 Recurring Fair

September 30, 2024 December 31, 2023 Recurring Fair

Value Measurement

7 unchanged sentences

The following table presents identifiable intangible assets:

June 30, 2024

September 30, 2024

Carrying Value Accumulated

27 unchanged sentences

Total intangible assets $ 57,929 $ ( 16,834 ) $ 41,095

Amortization expense was $ 2.4 million and $ 0.4 million for the three months ended June 30, 2024 and 2023, respectively, and $ 2.5 million and $ 0.8 million for the six months ended June 30, 2024 and 2023, respectively.

During the six months ended June 30, 2024, the Company acquired Satelles, Inc.

(see Note 11 ), resulting in a goodwill balance of $100.3 million as of June 30, 2024.

Amortization expense was $ 2.4 million and $ 0.4 million for the three months ended September 30, 2024 and 2023, respectively, and $ 4.9 million and $ 1.2 million for the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, the Company acquired Satelles, Inc.

(see Note 11 ), resulting in a goodwill balance of $100.3 million as of September 30, 2024.

There was no goodwill balance as of December 31, 2023.

2 unchanged sentences

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

On March 25, 2024, the Company closed on an additional $ 125.0 million under its Term Loan, using the proceeds to complete the acquisition of Satelles, Inc.

During the nine months ended September 30, 2024, the Company borrowed an additional $325.0 million under its 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 99.0 % of its face value.

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

(see Note 11 ) on April 1, 2024.

The additional amount borrowed is fungible with the original $1,500.0 million and has the same maturity date, interest rate and other terms, but was issued at a price equal to 99.875 % of its face value.

In April 2024, the Company drew down $50.0 million on its Revolving Facility for general corporate purposes, including the funding of repurchases of its 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 September 30, 2024.

The remaining proceeds from the July 2024 additional Term Loan have been and are expected to be 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 (“SOFR”) plus 2.25 %, with a 0.75 % SOFR floor.

1 unchanged sentence

Interest is paid monthly on the last business day of the month.

Principal payments, payable quarterly, are equal to approximately $ 16.3 million per annum (one percent of the full principal amount of the Term Loan following the March 2024 increase), with the remaining principal due upon maturity.

As of June 30, 2024 and December 31, 2023, the Company had an aggregate borrowings of $ 1,616.9 million and $ 1,500.0 million, respectively, under the Term Loan.

These amounts do not give effect to $ 15.9 million and $ 17.5 million, respectively, of net unamortized deferred financing costs.

The principal balance in borrowings, net of the unamortized deferred financing costs, as of June 30, 2024 and December 31, 2023 amounted to $ 1,601.0 million and $ 1,482.5 million, respectively.

As of June 30, 2024 and December 31, 2023, based upon recent trading prices (Level 2 - market approach), the fair value of the Company’s net borrowings under the Term Loan was $ 1,615.9 million and $ 1,506.6 million, respectively.

In April 2024, the Company drew down $50.0 million on its Revolving Facility for general corporate purposes, including the funding of repurchases of its common stock.

This amount remained outstanding at June 30, 2024, and are included within long-term secured debt, net on the Company’s condensed consolidated balance sheet.

The Revolving Facility bears interest at an annual rate equal to SOFR plus 2.5% (but without a SOFR floor) if and as drawn, with no original issue discount, and a commitment fee of 0.5 % per year on the undrawn amount, which was reduced to 0.375 % in the first quarter of 2024 because the Company had a consolidated first lien net leverage ratio (as defined in the Credit Agreement) of less than 3.5 to 1.

Principal payments, payable quarterly, are equal to $ 18.3 million per annum (approximately one percent of the full principal amount of the Term Loan following the additional Term Loan amounts borrowed in July 2024), with the remaining principal due upon maturity.

As of September 30, 2024 and December 31, 2023, the Company had aggregate borrowings of $ 1,812.3 million and $ 1,500.0 million, respectively, under the Term Loan.

These amounts do not give effect to $ 17.5 million of net unamortized deferred financing costs at the end of each period.

The principal balance in borrowings, net of the unamortized deferred financing costs, as of September 30, 2024 and December 31, 2023 amounted to $ 1,794.8 million and $ 1,482.5 million, respectively.

As of September 30, 2024 and December 31, 2023, based upon recent trading prices (Level 2 - market approach), the fair value of the Company’s net borrowings under the Term Loan was $ 1,782.9 million and $ 1,506.6 million, respectively.

The Revolving Facility bears interest at an annual rate equal to SOFR plus 2.5% (but without a SOFR floor) if and as drawn, with no original issue discount, and a commitment fee of 0.5 % per annum on the undrawn amount, which was reduced to 0.375 % in the first quarter of 2024 because the Company had 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.

The Credit Agreement restricts the Company’s 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.

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 (“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 also contains an annual mandatory prepayment sweep mechanism with respect to a portion of the Company’s excess cash flow (as defined in the Credit Agreement) in the event the Company’s net leverage ratio rises above 3.5 to 1.

As of December 31, 2023, the Company

was below the specified leverage ratio, and a mandatory prepayment sweep was therefore not required.

As of December 31, 2023, the Company was below the specified leverage ratio, and a mandatory prepayment sweep was therefore not required in 2024.

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

The Credit Agreement contains no financial maintenance covenants with respect to the Term Loan.

With respect to the Revolving Facility, the Credit Agreement requires the Company to maintain a consolidated first lien net leverage ratio (as defined in the Credit Agreement) of no greater than 6.25 to 1 if more than 35 % of the Revolving Facility has been drawn, which was the case as of June 30, 2024.

With respect to the Revolving Facility, the Credit Agreement requires the Company 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 September 30, 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 Company was in compliance with all financial covenants as of June 30, 2024.

The Company was in compliance with all financial covenants as of September 30, 2024.

Interest on Debt

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

The Company incurred third-party financing costs of $ 1.6 million in connection with the expansion of the Term Loan in March 2024 and $ 1.9 million related to the repricing of the Term Loan in June 2024, substantially all of which were expensed.

The Company incurred third-party financing costs of $ 2.2 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 were expensed.

The amounts expensed are included within interest expense on the condensed consolidated statements of operations and comprehensive income (loss).

The following table presents the interest and amortization of deferred financing fees related to the Term Loan:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

3 unchanged sentences

Capitalized interest $ 1,272 $ 1,121 $ 3,460 $ 3,847

As of June 30, 2024 and December 31, 2023, accrued interest on the Term Loan was $ 1.1 million and $ 1.0 million, respectively.

As of September 30, 2024 and December 31, 2023, accrued interest on the Term Loan was $ 0.4 million and $ 1.0 million, respectively.

Derivative Financial Instruments

9 unchanged sentences

The Company pays a fixed monthly premium based on an annual rate of 0.31 % for the Cap.

The Cap carried a notional amount of $ 1.0 billion as of June 30, 2024 and December 31, 2023.

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

The Cap carried a notional amount of $ 1.0 billion as of September 30, 2024 and December 31, 2023.

The Cap, which was not affected by the expansion of the Term Loan in July 2024 and March 2024 or the repricing of the Term Loan in June 2024, is designed to mirror the terms of the Term Loan and to offset the cash flows being hedged.

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

5 unchanged sentences

Fair Value of Derivative Instruments

As of June 30, 2024 and December 31, 2023, the Company had an asset balance of $ 67.7 million and $ 66.5 million, respectively, for the fair value of the Cap and a liability balance of $ 7.0 million and $ 8.4 million, respectively, for the fair value of the Cap premium.

As of September 30, 2024 and December 31, 2023, the Company had an asset balance of $ 41.7 million and $ 66.5 million, respectively, for the fair value of the Cap and a liability balance of $ 6.3 million and $ 8.4 million, respectively, for the fair value of the Cap premium.

Both the Cap and the Cap premium are recorded net within other assets on the condensed consolidated balance sheet.

During each of the three and six months ended June 30, 2024 and June 30, 2023, the Company collectively incurred $ 0.8 million and $ 1.6 million, respectively, in interest expense for the Cap premium.

Interest expense was reduced by $ 9.8 million

and $ 9.0 million for the three months ended June 30, 2024 and 2023, respectively, and $ 19.7 million and $ 16.7 million for the six months ended June 30, 2024 and 2023, respectively, for payments received related to the Cap.

During each of the three and nine months ended September 30, 2024 and September 30, 2023, the Company collectively incurred $ 0.8 million and $ 2.5 million, respectively, in interest expense for the Cap premium.

Interest expense was reduced by $ 9.8 million and $ 9.6 million for the three months ended September 30, 2024 and 2023, respectively, and $ 29.5 million and $ 26.3 million for the nine months ended September 30, 2024 and 2023, respectively, for payments received related to the Cap.

Gains and losses resulting from fair value adjustments to the Cap are recorded within accumulated other comprehensive income within the Company’s condensed consolidated balance sheets and reclassified to interest expense on the dates that interest payments become due.

2 unchanged sentences

The following table presents the amount of unrealized gain or loss and related tax impact associated with the Cap that the Company recorded in its condensed consolidated statements of operations and comprehensive income (loss):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

9 unchanged sentences

The remaining 0.5 million authorized shares of preferred stock remain undesignated and unissued.

As of June 30, 2024 and December 31, 2023, there were no outstanding shares of preferred stock, as all previously designated and issued preferred stock was converted into common stock in prior periods.

As of September 30, 2024 and December 31, 2023, there were no outstanding shares of preferred stock, as all previously designated and issued preferred stock was converted into common stock in prior periods.

Stockholders are entitled to receive, when and if declared by the Company’s Board of Directors from time to time, dividends and other distributions in cash, stock or property from the Company’s assets or funds legally and contractually available for such purposes.

In December 2022, the Company’s Board of Directors initiated a quarterly dividend.

The Company paid dividends of $ 0.13 and $ 0.14 per share of common stock on March 28, 2024 and June 28, 2024, respectively, resulting in total payments to stockholders of $ 32.8 million for the six months ended June 30, 2024.

Dividend payments for the six months ended June 30, 2023 totaled $ 32.7 million.

The Company’s liability related to dividends payable on common shares underlying unvested RSUs was $ 2.0 million and $ 1.3 million as of June 30, 2024 and December 31, 2023, respectively.

The Company paid dividends of $ 0.13 on March 28, 2024 and $ 0.14 per share of common stock on each of June 28, 2024 and September 30, 2024, resulting in total payments to stockholders of $ 49.1 million for the nine months ended September 30, 2024.

Dividend payments for the nine months ended September 30, 2023 totaled $ 48.8 million.

The Company’s liability related to dividends payable on common shares underlying unvested RSUs was $ 2.2 million and $ 1.3 million as of September 30, 2024 and December 31, 2023, respectively.

Share Repurchase Program

Since February 2021, the Company’s Board of Directors has authorized the repurchase of up to an aggregate of $ 1,000.0 million of the Company’s common stock through December 31, 2025.

Since February 2021, the Company’s Board of Directors has authorized the repurchase of up to an aggregate of $ 1,500.0 million of the Company’s common stock, including the most recent approval in September 2024 of an additional $500.0 million through December 31, 2027.

This timeframe can be extended or shortened by the Board of Directors.

4 unchanged sentences

The portion to be allocated to additional paid-in capital is calculated by applying a percentage, determined by dividing the number of shares to be retired by the number of shares outstanding, to the balance of additional paid-in capital as of the date of retirement.

During the three and six months ended June 30, 2024, the Company repurchased and subsequently retired 3.3 million and 5.1 million shares of its common stock, respectively, for a total purchase price of $ 96.6 million and $ 153.3 million, respectively.

During the three and six months ended June 30, 2024, the Company incurred $ 0.9 million and $ 1.5 million, respectively, of related taxes, which are not included in the total purchase price.

The Company repurchased and subsequently retired 1.1 million and 2.0 million shares of its common stock during the three and six months ended June 30, 2023, respectively, for a total purchase price of $ 66.1 million and $ 119.2 million, respectively, exclusive of $ 0.5 million of related taxes.

As of June 30, 2024, $ 180.8 million remained available and authorized for repurchase under this program.

During the three and nine months ended September 30, 2024, the Company repurchased and subsequently retired 4.7 million and 9.8 million shares of its common stock, respectively, for a total purchase price of $ 129.0 million and $ 282.3 million, respectively, inclusive of related commissions.

During the three and nine months ended September 30, 2024, the Company

incurred $ 1.2 million and $ 2.7 million, respectively, of related taxes, which are not included in the total purchase price.

In addition, in September 2024, the Company purchased 21,000 shares for $ 0.7 million, which were settled and retired in October 2024.

The Company repurchased and subsequently retired 1.4 million and 3.4 million shares of its common stock during the three and nine months ended September 30, 2023, respectively, for a total purchase price of $ 73.8 million and $ 193.0 million, respectively, exclusive of $ 0.7 million and $ 1.2 million of related taxes incurred for the three and nine months ended September 30, 2024, respectively.

In addition, in September 2023, the Company purchased 22,000 shares for $ 0.9 million, which were settled and retired in October 2023.

As of September 30, 2024, $ 552.2 million remained available and authorized for repurchase under this program.

The following table summarizes the Company’s services revenue:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

9 unchanged sentences

The following table summarizes the Company’s engineering and support services revenue:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

3 unchanged sentences

Total engineering and support services revenue $ 30,747 $ 25,230 $ 86,973 $ 70,068

Approximately 40 % and 46 % of the Company’s accounts receivable balance at June 30, 2024 and December 31, 2023, respectively, was due from prime contracts or subcontracts with agencies of the U.S.

Approximately 42 % and 46 % of the Company’s accounts receivable balance at September 30, 2024 and December 31, 2023, respectively, was due from prime contracts or subcontracts with agencies of the U.S.

The Company’s contracts with customers generally do not contain performance obligations with terms in excess of one year.

5 unchanged sentences

The Company may also receive payments from customers before revenue is recognized, resulting in deferred revenue (contract liabilities).

The Company recognized revenue that was previously recorded as deferred revenue in the amounts of $ 7.8 million and $ 7.5 million for the three months ended June 30, 2024 and 2023, respectively, and $ 19.2 million and $ 21.8 million for the six months ended June 30, 2024 and 2023, respectively.

The Company recognized revenue that was previously recorded as deferred revenue in the amounts of $ 12.0 million and $ 3.3 million for the three months ended September 30, 2024 and 2023, respectively, and $ 26.4 million and $ 25.1 million for the nine months ended September 30, 2024 and 2023, respectively.

The Company has also recorded costs of obtaining contracts expected to be recovered in prepaid expenses and other current assets (contract assets or commissions), that are not separately disclosed on the condensed consolidated balance sheets.

1 unchanged sentence

The following table presents contract assets not separately disclosed:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(In thousands)

6 unchanged sentences

These agreements provide for a fee that will be recognized over the estimated useful lives of the satellites, currently estimated to be approximately 17.5 years from their respective in-service dates.

Lease income related to these agreements was $ 3.1 million and $ 5.3 million for the three months ended June 30, 2024 and 2023, respectively, and $ 6.2 million and $ 10.7 million for the six months ended June 30,

2024 and 2023, respectively.

The decrease for the quarter ended June 30, 2024 as compared to June 30, 2023 was due to the change in estimated useful life of the satellites made in the fourth quarter of 2023.

Lease income related to these agreements was $ 3.1 million and $ 5.4 million for the three months ended September 30, 2024 and 2023, respectively, and $ 9.3 million and $ 16.1 million for the nine months ended September 30, 2024 and 2023, respectively.

The decrease for the quarter ended September 30, 2024 as compared to September 30, 2023 was due to the change in estimated useful life of the satellites made in the fourth quarter of 2023.

Lease income is recorded as hosted payload and other data service revenue within service revenue on the Company’s condensed consolidated statements of operations and comprehensive income (loss).

1 unchanged sentence

L3Harris has prepaid all amounts owed to the Company pursuant to its hosting arrangement.

The following table presents future income with respect to the Company’s operating leases in which it is the lessor existing at June 30, 2024, exclusive of the $ 6.2 million recognized during the six months ended June 30, 2024, by year and in the aggregate:

The following table presents future income with respect to the Company’s operating leases in which it is the lessor existing at September 30, 2024, exclusive of the $ 9.3 million recognized during the nine months ended September 30, 2024, by year and in the aggregate:

Year Ending December 31, Amount

4 unchanged sentences

In May 2023, the Company’s stockholders approved the amendment and restatement of the Company’s 2015 Equity Incentive Plan (as so amended and restated, the “Amended 2015 Plan”).

As of June 30, 2024, the remaining aggregate number of shares available for future grants under the Amended 2015 Plan was 8,726,346 .

As of September 30, 2024, the remaining aggregate number of shares available for future grants under the Amended 2015 Plan was 8,574,398 .

The Amended 2015 Plan provides for the grant of stock-based awards, including nonqualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights and other equity securities to employees, consultants and non-employee directors of the Company and its affiliated entities.

3 unchanged sentences

Beginning in March 2024, the RSUs granted to employees for service generally vest over three years , with 34 % vesting on the first anniversary of the grant date and the remainder vesting ratably on a quarterly basis thereafter, subject to continued employment.

RSUs granted prior to March 2024 generally vest over four years , with 25 % vesting on the first anniversary of the grant date and the remainder vesting ratably on a quarterly basis thereafter, subject to continued employment.

RSUs granted prior to March 2024 generally vest over four years , with 25 % vesting on the first anniversary of the

grant date and the remainder vesting ratably on a quarterly basis thereafter, subject to continued employment.

Some RSUs granted to employees for performance vest upon the completion of defined performance goals, subject to continued employment.

13 unchanged sentences

Released ( 1,197 ) 43.69

Outstanding at June 30, 2024 4,344 $ 33.15

Vested and unreleased at June 30, 2024 (1)

Outstanding at September 30, 2024 4,012 $ 32.92

Vested and unreleased at September 30, 2024 (1)

Shares Underlying RSUs Weighted-

4 unchanged sentences

Released ( 999 ) 37.37

Outstanding at June 30, 2023 3,200 $ 39.38

Vested and unreleased at June 30, 2023 (1)

Outstanding at September 30, 2023 3,030 $ 39.52

Vested and unreleased at September 30, 2023 (1)

(1) These RSUs were granted to the Company’s Board of Directors as a part of their compensation for board and committee service and had vested but had not yet settled, meaning that the underlying shares of common stock had not been issued and released.

2 unchanged sentences

Some members of the Company’s Board of Directors may elect to receive the remainder of their annual compensation, or a portion thereof, in the form of RSUs.

An aggregate amount of approximately 54,000 and 47,000 service-based RSUs were granted to the non-employee members of the Company’s Board of Directors as a result of these payments and elections during the six months ended June 30, 2024 and 2023, respectively, with an estimated grant date fair value of $ 2.1 million and $ 2.4 million, respectively.

During the six months ended June 30, 2024 and 2023, the Company granted approximately 1,446,000 and 626,000 service-based RSUs, respectively, to its employees, with an estimated aggregate grant date fair value of $ 43.1 million and $ 37.9 million, respectively.

An aggregate amount of approximately 57,000 and 53,000 service-based RSUs were granted to the non-employee members of the Company’s Board of Directors as a result of these payments and elections during the nine months ended September 30, 2024 and 2023, respectively, with an estimated grant date fair value of $ 1.9 million and $ 2.8 million, respectively.

During the nine months ended September 30, 2024 and 2023, the Company granted approximately 1,579,000 and 667,000 service-based RSUs, respectively, to its employees, with an estimated aggregate grant date fair value of $ 46.5 million and $ 39.9 million, respectively.

Performance-Based RSUs

In March 2024 and 2023, the Company granted approximately 461,000 and 193,000 annual incentive, performance-based RSUs, respectively, to the Company’s executives and employees (the “Bonus RSUs”), with an estimated grant date fair value of $ 13.7 million and $ 11.9 million, respectively.

Vesting of the Bonus RSUs is dependent upon the Company’s achievement of defined performance goals over the respective fiscal year.

Vesting of the Bonus RSUs is dependent upon the Company’s achievement of

defined performance goals over the respective fiscal year.

The Company records stock-based compensation expense related to performance-based RSUs when it is considered probable that the performance conditions will be met.

2 unchanged sentences

Substantially all of the 2023 Bonus RSUs vested in March 2024 upon the determination of the level of achievement of the performance goals.

Additionally, during the six months ended June 30, 2024 and 2023, the Company granted approximately 303,000 and 134,000 long-term, performance-based RSUs, respectively, to the Company’s executives (the “Executive RSUs”).

The estimated aggregate grant date fair value of the Executive RSU grants was $ 9.0 million and $8.2 million during the six months ended June 30, 2024 and 2023, respectively.

Additionally, during the nine months ended September 30, 2024 and 2023, the Company granted approximately 303,000 and 134,000 long-term, performance-based RSUs, respectively, to the Company’s executives (the “Executive RSUs”).

The estimated aggregate grant date fair value of the Executive RSU grants was $ 9.0 million and $8.2 million during the nine months ended September 30, 2024 and 2023, respectively.

Vesting of the Executive RSUs is dependent upon the Company’s achievement of defined performance goals over a two-year period.

The vesting of the March 2023 Executive RSUs will ultimately range from 0 % to

150 % of the number of shares underlying the Executive RSUs granted, and the vesting of the March 2024 Executive RSUs will ultimately range from 0% to 200% of the number of shares underlying the Executive RSUs granted, in each case based on the level of achievement of the performance goals.

The vesting of the March 2023 Executive RSUs will ultimately range from 0 % to 150 % of the number of shares underlying the Executive RSUs granted, and the vesting of the March 2024 Executive RSUs will ultimately range from 0% to 200% of the number of shares underlying the Executive RSUs granted, in each case based on the level of achievement of the performance goals.

If the Company achieves the performance goals, 50 % of the number of Executive RSUs earned based on performance will vest on the second anniversary of the grant date, and the remaining 50 % will vest on the third anniversary of the grant date, in each case subject to the executive’s continued service as of the vesting date, which may be accelerated based on the retirement eligibility of grantees.

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The fair value of stock options was determined at the grant date using the Black-Scholes option pricing model.

Option Summary

A summary of the activity of the Company’s stock options is as follows:

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Exercised ( 298 ) 9.62 $ 5,488

Options outstanding and exercisable at June 30, 2024 403 $ 12.92 2.48 $ 5,530

Options outstanding and exercisable at September 30, 2024 378 $ 13.08 2.37 $ 6,571

Shares Weighted-

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Exercised ( 486 ) 7.72 $ 26,420

Options outstanding and exercisable at June 30, 2023 702 $ 11.53 2.91 $ 35,534

Options outstanding and exercisable at September 30, 2023 695 $ 11.54 2.66 $ 23,616

Acquisition of Satelles

On April 1, 2024, the Company closed its acquisition of Satelles, Inc., a provider of satellite-based time and location services that complement and protect GPS and other GNSS systems.

On April 1, 2024, the Company acquired Satelles, Inc., a provider of satellite-based time and location services that complement and protect GPS and other GNSS systems.

This acquisition is intended to support the Company’s long-term business objectives.

Subject to the terms and conditions of the merger agreement underlying the transaction, Satelles was merged with a subsidiary of the Company, with Satelles as the surviving entity, now a direct and indirect wholly owned subsidiary of the Company.

Satelles was merged with a subsidiary of the Company, with Satelles as the surviving entity, now a direct and indirect wholly owned subsidiary of the Company.

The acquisition date fair value of the consideration paid to acquire the remaining 80.5 % of the outstanding shares and voting interest of Satelles that was not previously owned by the Company was approximately $ 125.5 million.

The purchase price allocation, including valuation of intangible assets, is preliminary.

The purchase price allocation set forth below, including valuation of intangible assets, is preliminary.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:

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None of the goodwill is expected to be deductible for income tax purposes.

As of June 30, 2024, there were no changes in the recognized amounts of goodwill resulting from the acquisition of Satelles.

The Company incurred $ 2.4 million of acquisition related costs that were expensed in the six months ended June 30, 2024.

As of September 30, 2024, there were no changes in the recognized amounts of goodwill resulting from the acquisition of Satelles.

The Company incurred $ 2.8 million of acquisition related costs that were expensed in the nine months ended September 30, 2024.

These costs are included within selling, general, and administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss).

The amounts of revenue and earnings of Satelles included in the Company’s condensed consolidated statements of operations and comprehensive income (loss), excluding the impact of the Company’s remeasurement of its prior equity interest in Satelles, from the acquisition date to June 30, 2024 are as follows:

Three Months Ended June 30, 2024

(In thousands)

Three Months Ended

September 30, 2024 Period from Acquisition Date to

September 30, 2024

(In thousands) (In thousands)

Revenue $ 5,257 $ 7,927

Net income (loss) ( 4,793 )

Net loss ( 2,735 ) ( 7,529 )

The following unaudited pro forma data summarizes the results of operations for the periods indicated as if the acquisition of Satelles had been completed as of the beginning of the comparable prior annual reporting period.

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These pro forma amounts are not intended to be indicative of the results that would have actually been obtained if the acquisition had occurred as of the beginning of the comparable prior annual reporting period or that may be obtained in the future.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Prior to the acquisition date, the Company accounted for its 19.5 % interest in Satelles as an equity-method investment.

The acquisition-date fair value of the previous equity interest was $ 39.7 million and is included in the measurement of the consideration transferred.

The acquisition date fair value of the previous equity interest was $ 39.7 million and was included in the measurement of the consideration transferred.

The Company recognized a gain of $ 19.8 million as a result of remeasuring its prior equity interest in Satelles held before the business combination.

The gain is included within gain (loss) from equity method investments in the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2024.

Income before income taxes and gain on equity method investments was $ 19.2 million and $ 48.4 million for the three and six months ended June 30, 2024, respectively, while the income tax expense was $ 4.6 million and $ 12.5 million for the three and six months ended June 30, 2024, respectively.

The effective tax rate was 23.8 % and 25.8 % for the three and six months ended

June 30, 2024, respectively, which differed from the federal statutory rate of 21 %, primarily due to the discrete tax expense associated with stock compensation and nondeductible executive compensation, which was partially offset by the deduction for foreign derived intangible income.

Loss before income taxes and loss on equity method investments was $ 34.3 million and $ 28.8 million for the three and six months ended June 30, 2023, respectively, while the income tax benefit was $ 5.2 million and $ 10.7 million for the three and six months ended June 30, 2023, respectively.

The effective tax rate was 15.2 % and 37.0 % for the three and six months ended June 30, 2023, respectively, which differed from the federal statutory rate of 21 %, primarily due to tax expense associated with nondeductible executive compensation and non-creditable foreign taxes, which was partially offset by U.S.

tax credits and a discrete tax benefit associated with stock compensation.

The gain is included within gain (loss) from equity method investments in the condensed consolidated statements of operations and comprehensive income (loss) for the nine months ended September 30, 2024.

Income before income taxes and gain on equity method investments was $ 30.9 million and $ 79.3 million for the three and nine months ended September 30, 2024, respectively, while the income tax expense was $ 6.0 million and $ 18.5 million for the three and nine months ended September 30, 2024, respectively.

The effective tax rate was 19.4 % and 23.3 % for the three and nine months ended September 30, 2024, respectively, which differed from the federal statutory rate of 21 %, primarily due to the

discrete tax expense associated with stock compensation and nondeductible executive compensation, which was partially offset by the deduction for foreign derived intangible income.

Loss before income taxes and loss on equity method investments was $ 6.2 million and $ 35.0 million for the three and nine months ended September 30, 2023, respectively, while the income tax benefit was $ 6.0 million and $ 16.7 million for the three and nine months ended September 30, 2023, respectively.

The effective tax rate was 97.5 % and 47.7 % for the three and nine months ended September 30, 2023, respectively, which differed from the federal statutory rate of 21 %, primarily due to a discrete tax benefit associated with stock compensation and U.S.

tax credits, which were partially offset by tax expense associated with nondeductible executive compensation.

Related Party Transactions

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Aireon Holdings holds 100% of the membership interests in Aireon, which is the operating entity.

In June 2022, the Company entered into a subscription agreement with Aireon Holdings and invested $ 50.0 million for a preferred membership interest of approximately 6 % preferred membership interest.

In June 2022, the Company entered into a subscription agreement with Aireon Holdings and invested $ 50.0 million for a preferred membership interest of approximately 6 %.

The Company’s investment in Aireon Holdings is accounted for as an equity method investment.

The carrying value of the Company’s investment in Aireon was $ 42.8 million and $ 44.6 million as of June 30, 2024 and December 31, 2023, respectively.

The carrying value of the Company’s investment in Aireon was $ 42.2 million and $ 44.6 million as of September 30, 2024 and December 31, 2023, respectively.

The investments made by the Company in Aireon Holdings prior to June 2022 had previously been written down to a carrying value of zero.

At each of June 30, 2024 and December 31, 2023, the Company’s fully diluted ownership stake in Aireon Holdings was approximately 39.5 %, which is subject to partial future redemption under provisions contained in the Aireon Holdings LLC Agreement.

Under the agreements with Aireon, Aireon will pay the Company fees of $ 200.0 million to host the ADS-B receivers, of which $ 102.5 million had been paid as of June 30, 2024.

At each of September 30, 2024 and December 31, 2023, the Company’s fully diluted ownership stake in Aireon Holdings was approximately 39.5 %, which is subject to partial future redemption under provisions contained in the Aireon Holdings LLC Agreement.

Under the agreements with Aireon, Aireon agreed to pay the Company fees of $ 200.0 million to host the ADS-B receivers, of which $ 102.5 million had been paid as of September 30, 2024.

These fees are recognized over the estimated useful life of the Company’s satellites, which is expected to result in revenue of approximately $9.3 million per year, following the change in estimate of the useful lives of the satellites that occurred in the fourth quarter of 2023.

The Company recognized $ 2.3 million and $ 4.0 million of hosting fee revenue for the three months ended June 30, 2024 and 2023, respectively, and $ 4.6 million and $ 8.0 million for the six months ended June 30, 2024 and 2023, respectively.

Deferred hosting fee revenue totaled $5.4 million as of June 30, 2024.

The Company recognized $ 2.3 million and $ 4.0 million of hosting fee revenue for the three months ended September 30, 2024 and 2023, respectively, and $ 6.9 million and $ 12.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Deferred hosting fee revenue totaled $3.0 million as of September 30, 2024.

Additionally, Aireon pays power and data services fees of approximately $ 23.5 million per year, in the aggregate, for the delivery of air traffic surveillance data over the Iridium ® system.

The Company recorded $ 5.9 million of power and data service fee revenue from Aireon for each of the three months ended June 30, 2024 and 2023, and $ 11.7 million for each of the six months ended June 30, 2024 and 2023.

The Company recognized $ 5.9 million of power and data service fee revenue from Aireon for each of the three months ended September 30, 2024 and 2023, and $ 17.6 million for each of the nine months ended September 30, 2024 and 2023.

Under two services agreements, the Company also provides Aireon with administrative services and support services, the fees for which are paid monthly.

Aireon receivables due to the Company under these two agreements totaled $ 2.1 million and $ 2.2 million as of June 30, 2024 and December 31, 2023, respectively.

Aireon receivables due to the Company under these two agreements totaled $ 2.1 million and $ 2.2 million as of September 30, 2024 and December 31, 2023, respectively.

The Company and the other Aireon investors have agreed to participate pro-rata, based on their fully diluted ownership stakes, in funding an investor bridge loan to Aireon.

The Company’s maximum funding commitment for the bridge loan is $ 11.9 million.

No bridge loan amounts were outstanding as of June 30, 2024 or December 31, 2023.

No bridge loan amounts were outstanding as of September 30, 2024 or December 31, 2023.

Net Income (Loss) Per Share

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The following table summarizes the computations of basic and diluted net income (loss) per share:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Weighted average common shares — diluted 118,111 125,176 121,261 126,100

Net income (loss) per share - basic $ 0.27 $ ( 0.24 ) $ 0.43 $ ( 0.17 )

Net income (loss) per share - diluted $ 0.27 $ ( 0.24 ) $ 0.42 $ ( 0.17 )

Net income (loss) per share - basic and diluted $ 0.21 $ ( 0.01 ) $ 0.63 $ ( 0.18 )

The following table presents the incremental number of shares underlying stock options and RSUs outstanding with anti-dilutive effects:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

4 unchanged sentences

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-Q

Item 1. Financial Statements