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Item 8. Financial Statements and Supplementary Data

2025-02-13 compared with 2024-02-15 · 306 added, 268 removed, 791 unchanged (42% of the section changed)

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Report of KPMG LLP, Independent Registered Public Accounting Firm (PCAOB ID:

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Iridium Communications Inc.

and subsidiaries (the Company) as of December 31, 2023 and December 31, 2022, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the years then ended, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of Iridium Communications Inc.

and subsidiaries (the Company) as of December 31, 2024 and December 31, 2023, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and December 31, 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 13, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

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Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Changes in estimated useful lives of satellites

As discussed in Note 2 to the consolidated financial statements, the Company’s satellites are depreciated using the straight-line method over their respective estimated useful lives, which was extended from 12.5 years to 17.5 years during the fourth quarter of 2023.

The Company applied judgment in determining the useful lives based on factors such as engineering data relating to the operation and performance of its satellite network, the Company’s long-term strategy for using the assets, and the manufacturer’s estimated design life for the assets.

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A high degree of subjective auditor judgment was required to evaluate the Company’s estimated useful lives of the satellites.

Specifically, assessing the factors used to determine the estimated useful lives required subjective auditor judgment due to the degree of uncertainty associated with the outcome of uncertain future events which required forward looking assumptions.

Specifically, assessing the factors used to determine the estimated useful lives required subjective auditor

judgment due to the degree of uncertainty associated with the outcome of uncertain future events which required forward looking assumptions.

Changes to the estimated useful lives of satellites could have a significant impact on the timing of recognition of depreciation expense and hosted payload revenue.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of an internal control related to the Company’s process to determine changes in the

estimated useful lives of its satellites.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the estimated useful lives of the satellites by:

• comparing the Company’s useful life estimates to the manufacturer’s estimated design life, and the lives of its first-generation satellite constellation

We evaluated the design and tested the operating effectiveness of an internal control related to the Company’s process to determine changes in the estimated useful lives of its satellites.

We evaluated the factors the Company used to determine the estimated useful lives of the satellites by:

• comparing the Company’s useful life estimates to the manufacturer’s estimated design life, the Company’s longevity assessment for the satellites, and the lives of its first-generation satellite constellation

• reading publicly available information on the estimated useful lives of similar assets

• inquiring of operations and engineering management personnel regarding satellite operation and performance

• evaluating the Company’s longevity assessment for the satellites

• evaluating the effect of changes, if any, in the Company’s long-term strategy for use of the assets on the useful life estimates.

Evaluation of acquisition-date fair value of customer relationships

As discussed in Note 12 to the consolidated financial statements, on April 1, 2024, the Company acquired the remaining 80.5% of the outstanding shares and voting interest of Satelles, Inc.

that was not previously owned by the Company for consideration totaling $125.5 million.

The Company accounted for the acquired business using the acquisition method of accounting by recording assets acquired and liabilities assumed at their respective fair values.

As part of the transaction, the Company acquired customer relationship intangible assets with an acquisition date fair value of $57 million, which was determined using the multi-period excess earnings method.

We identified the evaluation of the fair value of customer relationship intangible assets acquired in the Satelles, Inc.

transaction as a critical audit matter.

Subjective auditor judgment was involved in evaluating certain assumptions, including the forecasted revenue growth, forecasted revenue attributable to customer contracts, forecasted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins, and the discount rate used to value the customer relationships.

Changes in these assumptions used could have a significant impact on the acquisition-date fair value of this intangible asset.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including controls over the assumptions discussed above.

We evaluated the forecasted revenue growth, forecasted revenue attributable to customer contracts, and EBITDA margins used to value the customer relationships by comparing them to those of the Company’s peers and Satelles Inc.’s historical and forecasted results.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s discount rate used to value the customer relationships by comparing the Company’s inputs to the discount rate to publicly available data for comparable entities and assessing the resulting discount rate.

We have served as the Company’s auditor since 2022.

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February 13, 2025

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Iridium Communications Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for the year ended December 31, 2021 and the related notes (collectively referred to as the “consolidated financial statements”) of Iridium Communications Inc.

(the Company).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Company’s operations and its cash flows for the year ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We served as the Company’s auditor from 2001 to 2022.

Tysons, Virginia

February 17, 2022

Iridium Communications Inc.

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Intangible assets, net 90,877 41,095

Goodwill 98,186 —

Total assets $ 2,671,471 $ 2,661,775

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Loss on extinguishment of debt — — ( 1,187 )

Other income (expense), net 4,012 107 ( 417 )

Other income, net 534 4,012 107

Total other expense ( 90,600 ) ( 86,375 ) ( 66,169 )

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109,784 ( 4,747 ) 10,510

Income tax benefit (expense) 26,251 ( 292 ) 19,569

Loss on equity method investments ( 6,089 ) ( 1,496 ) —

Net income (loss) 15,415 8,722 ( 9,319 )

Income tax (expense) benefit ( 12,259 ) 26,251 ( 292 )

Gain (loss) on equity method investments 15,251 ( 6,089 ) ( 1,496 )

Net income 112,776 15,415 8,722

Weighted average shares outstanding - basic 118,566 125,598 128,255

Weighted average shares outstanding - diluted 119,792 127,215 130,134

Net income (loss) attributable to common stockholders per share - basic and diluted

Net income attributable to common stockholders per share - basic $ 0.95 $ 0.12 $ 0.07

Net income (loss) attributable to common stockholders per share - diluted

$ 0.94 $ 0.12 $ 0.07

Comprehensive income (loss):

Net income (loss) $ 15,415 $ 8,722 $ ( 9,319 )

Net income $ 112,776 $ 15,415 $ 8,722

Foreign currency translation adjustments ( 3,143 ) ( 58 ) ( 53 )

Unrealized gain (loss) on cash flow hedges, net of tax (see Note 8 )

Unrealized (loss) gain on cash flow hedges, net of tax (see Note 7 )

( 12,493 ) ( 17,598 ) 58,668

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Repurchases and retirements of common stock ( 6,794 ) ( 7 ) ( 59,776 ) — ( 197,276 ) ( 257,059 )

Net loss — — — — ( 9,319 ) ( 9,319 )

Net income — — — — 8,722 8,722

Dividends declared — — ( 16,616 ) — — (16,616)

Cumulative translation adjustments — — — ( 53 ) — ( 53 )

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Cumulative translation adjustments — — — ( 58 ) — ( 58 )

Unrealized gain on cash flow hedges, net of tax — — — 58,668 — 58,668

Unrealized loss on cash flow hedges, net of tax — — — ( 17,598 ) — ( 17,598 )

Balance at December 31, 2023 122,776 123 1,089,466 33,907 ( 235,397 ) 888,099

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Cash flows from operating activities:

Net income (loss) $ 15,415 $ 8,722 $ ( 9,319 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 112,776 $ 15,415 $ 8,722

Adjustments to reconcile net income to net cash provided by operating activities:

Deferred income taxes 6,560 ( 31,828 ) ( 1,189 )

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Amortization of deferred financing fees 2,523 3,739 4,602

Loss on equity method investments

6,089 1,496 —

(Gain) loss on equity method investments ( 15,251 ) 6,089 1,496

All other items, net 715 732 638

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— ( 10,000 ) ( 50,000 )

Purchases of other investments — — ( 1,635 )

Sales and maturities of marketable securities — — 7,400

Acquisition of Satelles, Inc., net of cash acquired ( 110,713 ) — —

Net cash used in investing activities ( 180,603 ) ( 83,487 ) ( 121,267 )

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The Company holds various licenses and authorizations from the U.S.

Federal Communications Commission (the “FCC”) and from foreign regulatory bodies that permit the Company to conduct its business, including the operation of its satellite constellation.

Federal Communications Commission (the “FCC”) and from international and foreign regulatory bodies that permit the Company to conduct its business, including the operation of its satellite constellation.

The Company’s operations are conducted through, and its operating assets are owned by, its principal operating subsidiary, Iridium Satellite LLC (“Iridium Satellite”), Iridium Satellite’s immediate parent, Iridium Holdings LLC, and their subsidiaries.

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The Company has reclassified certain items in the consolidated financial statements for the prior periods to be comparable with the classification for the year ended December 31, 2024.

These reclassifications had no effect on previously reported net income (loss).

These reclassifications had no effect on previously reported net income.

Use of Estimates

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Actual results could differ materially from those estimates.

Recent Accounting Pronouncements Not Yet Adopted

Adopted and Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

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This guidance improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The Company intends to apply the new guidance effective for the year ending December 31, 2024, as required.

The Company is assessing the potential effects of the standard but has not yet completed its review of the impact of this guidance.

During the year ended December 31, 2024, the Company adopted ASU 2023-07, as required, the effects of which are presented in Note 16 .

In December 2023, the FASB issued ASU No.

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Investments where the Company has the ability to exercise significant influence, but does not control, are accounted for under the equity method of accounting and are included in Equity Method Investments on the Company’s consolidated balance sheets.

Significant influence typically exists if the Company’s has a 20% to 50% ownership interest in the investee.

Significant influence typically exists if the Company has a 20% to 50% ownership interest in the investee.

Under this method of accounting, the Company’s share of the net earnings (losses) of the investee is included in loss on equity method investments on the consolidated statement of operations and comprehensive income (loss).

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Inventory consists primarily of finished goods, although the Company also maintains an inventory of raw materials from third-party manufacturers.

The Company outsources manufacturing of subscriber equipment to a third-party manufacturer and

purchases accessories from third-party suppliers.

The Company outsources manufacturing of subscriber equipment to a third-party manufacturer and purchases accessories from third-party suppliers.

The Company’s cost of inventory includes an allocation of overhead, including payroll and payroll-related costs of employees directly involved in bringing inventory to its existing condition, and freight.

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Derivative Financial Instruments

The Company uses derivatives (interest rate swap, swaption, cap) to manage its exposure to fluctuating interest rate risk on variable rate debt.

Its derivatives are measured at fair value and are recorded on the consolidated balance sheets within assets and other current liabilities.

The Company uses derivatives to manage its exposure to fluctuating interest rate risk on variable rate debt.

Its derivatives are measured at fair value and are recorded on the consolidated balance sheets within other assets and other current liabilities.

When the Company’s derivatives are designated as cash flow hedges, the effective portion of the changes in fair value of the derivatives are recorded in accumulated other comprehensive income (loss) within the Company’s consolidated balance sheets and subsequently recognized in earnings when the hedged items impact earnings.

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Wholesaler of satellite communications products and services

Pursuant to wholesale agreements, the Company sells its products and services to service providers and recognizes revenue as it fulfills its performance obligations to the service providers, based an amount that reflects the consideration to which it expects to be entitled to in exchange for those products and services.

Pursuant to wholesale agreements, the Company sells its products and services to service providers and recognizes revenue as it fulfills its performance obligations to the service providers, based on amounts that reflect the consideration to which it expects to be entitled to in exchange for those products and services.

The service providers, in turn, sell the products and services to other distributors or directly to the end users.

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The Company provides airtime and airtime support to U.S.

government and other authorized customers pursuant to the Enhanced Mobile Satellite Services (“EMSS”) contract managed by the U.S.

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

Under the terms of this agreement, authorized customers continue to utilize airtime services, provided through the U.S.

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The Company’s policy is to recognize interest and penalties on uncertain tax positions as a component of income tax expense.

Net Income (Loss) Per Share

The Company calculates basic net income (loss) per share by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted net income (loss) per share takes into account the effect of potentially dilutive common shares when the effect is dilutive.

Net Income Per Share

The Company calculates basic net income per share by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted net income per share takes into account the effect of potentially dilutive common shares when the effect is dilutive.

The effect of potentially dilutive common shares, including common stock issuable upon exercise of outstanding stock options, is computed using the treasury stock method.

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The Company’s unvested RSUs awarded to the board of directors contain non-forfeitable rights to dividends and therefore are considered to be participating securities in periods of net income.

The calculation of basic and diluted net income (loss) per share excludes net income attributable to these unvested RSUs from the numerator and excludes the impact of these unvested RSUs from the denominator.

The calculation of basic and diluted net income per share excludes net income attributable to these unvested RSUs from the numerator and excludes the impact of these unvested RSUs from the denominator.

Cash and Cash Equivalents

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$ 2,080,544 $ 2,195,758

Other construction-in-process consisted of the following:

(In thousands)

Internally developed and purchased software $ 80,665 $ 60,467

Equipment 5,948 6,859

Ground system 12,402 12,351

Total other construction-in-process $ 99,015 $ 79,677

Depreciation expense was $ 195.9 million, $ 318.5 million and $ 301.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.

See “Property and Equipment” in Note 2 above for more information with respect to depreciation expense incurred in the year ended December 31, 2023.

See “Property and Equipment” in Note 2 above for more information with respect to changes in depreciation expense incurred.

Intangible Assets and Goodwill

Intangible Assets

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Intellectual property 20 years 16,439 ( 11,420 ) 5,019

Assembled workforce 7 years 5,678 ( 5,678 ) —

Patents 14 - 20 years 587 ( 209 ) 378

Customer Relationships 12 years 57,000 ( 6,745 ) 50,255

Total 74,026 ( 18,374 ) 55,652

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Total estimated future amortization expense $ 55,652

The Company has operating leases for land, office space, satellite network operations center (“SNOC”) facilities, system gateway facilities, a warehouse and a distribution center.

The Company also has operations and maintenance (“O&M”) agreements that include leases associated with two teleport network facilities.

Some of the Company’s leases include options to extend the leases for up to 10 years.

The Company does not include term extension options as part of its present value calculation of lease liabilities unless it is reasonably certain to exercise those options.

As of December 31, 2023, the Company’s weighted-average remaining lease term relating to its operating leases was 4.7 years, and the weighted-average discount rate used to calculate the operating lease liability payment was 6.7 %.

The following table summarizes the Company’s lease-related assets and liabilities:

Leases Classification December 31, 2023 December 31, 2022

(In thousands)

Operating lease assets

Noncurrent Other assets $ 16,133 $ 16,925

Total lease assets $ 16,133 $ 16,925

Operating lease liabilities

Current Accrued expenses and other current liabilities $ 4,327 $ 3,784

Noncurrent Other long-term liabilities $ 14,087 15,801

Total lease liabilities $ 18,414 $ 19,585

During the years ended December 31, 2023, 2022 and 2021, the Company incurred lease expense of $ 5.2 million, $ 5.2 million and $ 5.6 million, respectively.

A portion of lease expense during these comparable periods was derived from leases that were not included within the ROU asset and liability balances shown above as they had terms shorter than twelve months and were therefore excluded from balance sheet recognition under ASU 2016-02.

The following table presents future payment obligations with respect to the Company’s operating leases in which it was the lessee at December 31, 2023, by year and in the aggregate:

Year Ending December 31, Amount

(In thousands)

Thereafter 2,592

Total lease payments $ 21,786

Lessor Arrangements

Operating leases in which the Company is a lessor consist primarily of hosting agreements with Aireon LLC (“Aireon”) (see Note 14 ) and L3Harris Technologies, Inc.

(“L3Harris”) for space on the Company’s satellites.

These agreements provide for a fee that will be recognized over the estimated useful lives of the satellites, which is now approximately 17.5 years, prospectively from the change in estimated useful lives of the satellites that occurred in the fourth quarter of 2023.

Lease income related to these agreements was $ 19.2 million for the year ended December 31, 2023 and $ 21.4 million for each of the years ended December 31, 2022 and 2021.

The decrease for 2023 as compared to 2022 was solely the result of the change in estimated useful life of the satellites.

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

The following table presents future income, after giving effect to the extension of estimated useful lives of the satellites, with respect to the Company’s operating leases in which it was the lessor at December 31, 2023, by year and in the aggregate:

Year Ending December 31, Amount

(In thousands)

Thereafter 82,106

Total lease income $ 144,061

During the year ended December 31, 2024, the Company acquired Satelles, Inc.

(see Note 12 ), resulting in a goodwill balance of $ 98.2 million as of December 31, 2024.

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

Term Loan and Revolving Facility

In September 2023, pursuant to an amended and restated credit agreement (the “Credit Agreement”), the Company refinanced its previously existing term loan resulting in total borrowing of $ 1,500.0 million (as so amended and restated, the “Term Loan”) in aggregate principal amount with various lenders administered by Deutsche Bank AG and an accompanying $ 100.0 million revolving loan (the “Revolving Facility”).

The Term Loan was issued at a price equal to 99.75% of its face value and bears interest at an annual rate equal to the Secured Overnight Financing Rate (“SOFR”) plus 2.50 %, with a 0.75 % SOFR floor.

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

The maturity of the Term Loan is in September 2030.

During the year ended December 31, 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 12 ) on April 1, 2024.

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 December 31, 2024.

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

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.

The Company typically selects 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 beginning with the quarter ending March 31, 2024, equal $ 15.0 million per annum (one percent of the full principal amount of the Term Loan), with the remaining principal due upon maturity.

The Revolving Facility bears interest at the same rate (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 will be reduced to 0.375 % if the Company has a consolidated first lien net leverage ratio (as defined in the Credit Agreement) of less than 3.5 to 1, and a maturity date in September 2028.

The Company paid $ 3.8 million of issuance costs to refinance the Term Loan in September 2023, which were deferred and will be amortized through the term of the loan.

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.

The Revolving Facility bears interest at the same rate (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 the Company has a consolidated first lien net leverage ratio (as defined in the Credit Agreement) of less than 3.5 to 1, and a maturity date in September 2028.

The Company paid fees 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 were expensed as incurred.

The amounts expensed are included within interest expense.

In September 2023, the Company paid $ 3.8 million of issuance costs to refinance the Term Loan, which costs were deferred and will be amortized through the term of the loan.

Lenders making up approximately $ 16.8 million of the Term Loan did not participate in the refinancing.

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This resulted in an immaterial loss on extinguishment of debt, as the Company wrote off the unamortized debt issuance costs related to the lenders who were fully repaid in an exchange of principal.

The Company deferred an additional $ 1.2 million of third-party fees associated with the refinancing of the Term Loan and the Revolving Facility.

The Company deferred an additional $ 1.2 million of third-party fees associated with the refinancing of the Term Loan and the Revolving Facility in September 2023.

In the fourth quarter of 2022, the Company elected to prepay $ 100.0 million of principal on the Term Loan.

This resulted in a $ 1.2 million loss on extinguishment of debt, as the Company wrote off the unamortized debt issuance costs related to this prepayment.

In the third quarter of 2021, the Company repriced the Term Loan and incurred a $ 0.9 million loss on extinguishment of debt, as the Company wrote off the unamortized debt issuance costs related to the lenders who were fully repaid in an exchange of principal.

As of December 31, 2024 and 2023, the Company reported an aggregate of $ 1,807.7 million and $ 1,500.0 million in borrowings under the Term Loan, respectively.

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As of December 31, 2024 and 2023, based upon over-the-counter bid levels (Level 2 - market approach), the fair value of the borrowings under the Term Loan was $ 1,802.1 million and $ 1,506.6 million, respectively.

The Company had not borrowed under the Revolving Facility as of December 31, 2023 or 2022.

The Company had no outstanding borrowings under the Revolving Facility as of December 31, 2024 or 2023.

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.

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 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 therefore no mandatory prepayment sweep was not required.

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 will be paid in 2025 and will be applied to the Company’s required quarterly principal payments.

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

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.

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Total long-term debt, net $ 1,757,767

The repayment schedule above excludes future amounts that may be required to be prepaid pursuant to the excess cash flow sweep provision of the Credit Agreement, as those amounts are not determinable in advance.

The table above includes only the cash flow sweep amount payable in 2025 with respect to 2024 excess cash.

The schedule excludes future amounts that may be required to be prepaid pursuant to the excess cash flow sweep provision of the Credit Agreement, as those amounts are not determinable in advance.

Derivative Financial Instruments

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The Company formally assesses, both at the hedge’s inception and on an ongoing quarterly basis, whether the designated derivative instruments are highly effective in offsetting changes in the cash flows of the hedged items.

When the hedging instrument is sold, expires, is terminated, is exercised, no longer qualifies for hedge accounting, is designated, or is no longer probable, hedge accounting is discontinued prospectively.

When the hedging instrument is sold, expires, is terminated, is exercised, no longer qualifies for hedge accounting, is de-designated, or is no longer probable, hedge accounting is discontinued prospectively.

Interest Rate Cap

In July 2021, the Company entered into the Cap, which had an effective date of December 2021 upon the expiration of the Company’s long-term interest rate swap (the “Swap”).

In July 2021, the Company entered into the Cap, which had an effective date of December 2021.

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

In December 2022, the Company modified the Cap to replace the previous LIBOR base rate with SOFR and received a credit risk adjustment of 0.064 %.

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

Prior to the modification, the Company received payment under the terms of the Cap if one-month LIBOR exceeded 1.5%.

The Cap, as modified to date, currently provides the Company with the right to receive payment from the counterparty if one-month SOFR exceeds 1.436 %.

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 December 31, 2024 and 2023.

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

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 and September 2023, 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 rate interest payments on the Term Loan.

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Any ineffective portion of the Cap’s change in fair value will be recorded in current earnings as interest expense.

Interest Rate Swaps

In November 2019, the Company entered into the Swap which had a term through November 2021 and was intended to mitigate variability in forecasted interest payments on a portion of the Term Loan.

On the last business day of each month, the Company received variable interest payments based on one-month LIBOR from the counterparty.

The Company paid a fixed rate of 1.565 % per annum on the notional amount of $ 1.0 billion on the Swap until its expiration in November 2021.

The Company also entered into an interest rate swaption agreement (“Swaption”), for which the Company paid a fixed annual rate of 0.50 % of the notional amount.

At inception, the Swap and Swaption (collectively, the “swap contracts”) were designated as cash flow hedges for hedge accounting.

The unrealized changes in market value were recorded in accumulated other comprehensive income (loss) and any remaining balance was reclassified into earnings during the period in which the hedged transaction affected earnings.

Due to the changes made to the Term Loan as a result of the July 2021 repricing, at that time the Company elected to de-designate the Swap as a cash flow hedge.

Accordingly, as the related interest payments were still probable, the accumulated balance within other comprehensive income (loss) as of the de-designation date was amortized into earnings through the November 2021 expiration date.

Fair Value of Derivative Instruments

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

During the years ended December 31, 2023, 2022, and 2021 the Company collectively incurred $ 3.3 million, $ 3.3 million, and $ 8.5 million, respectively, in net interest expense for the Cap and Swap contracts.

Interest expense was reduced by $ 36.2 million and $ 7.2 million for the years ended December 31, 2023 and 2022, respectively, for payments received related to the Cap.

There were no such interest payments received for the year ended December 31, 2021.

During each of the years ended December 31, 2024, 2023 and 2022 the Company collectively incurred $ 3.3 million in net interest expense for the cost of the interest rate hedges.

Interest expense was reduced by $38.2 million, $ 36.2 million and $ 7.2 million for the years ended December 31, 2024, 2023 and 2022, 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 consolidated balance sheet and reclassified to interest expense on the dates that interest payments become due.

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(In thousands)

Unrealized gain (loss), net of tax

$ ( 17,598 ) $ 58,668 $ 10,408

Unrealized (loss) gain, net of tax $ ( 12,493 ) $ ( 17,598 ) $ 58,668

Tax benefit (expense)

$ 3,688 $ 5,379 $ ( 17,834 )

Equity Transactions

Preferred Stock

The Company is authorized to issue 2.0 million shares of preferred stock with a par value of $ 0.0001 per share.

The Company previously issued 1.5 million shares of preferred stock.

The remaining 0.5 million authorized shares of preferred stock remain undesignated and unissued as of December 31, 2024 and 2023.

As of December 31, 2024 and 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, such 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 per share of common stock for each quarter of 2023 and for the first quarter of 2024.

The Company paid dividends of $ 0.14 per share of common stock for each of the quarters ended June 30, September 30 and December 31, 2024.

The dividends resulted in total payments of $ 64.7 million and $ 64.8 million during the years ended 2024 and 2023, respectively.

The Company’s liability related to dividends on common stock was $ 2.5 million and $ 1.3 million as of December 31, 2024 and 2023, respectively.

Share Repurchase Program

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

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

Repurchases may be made from time to time on the open market at prevailing prices or in negotiated transactions off the market.

The Company records share repurchases at cost, which includes broker commissions and related excise taxes.

All shares are immediately retired upon repurchase in accordance with the board-approved policy.

When treasury shares are retired, the Company’s policy is to allocate the excess of the repurchase price over the par value of shares acquired first, to additional paid-in capital, and then to retained earnings/accumulated deficit.

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.

The Company repurchased and subsequently retired 14.0 million, 4.8 million and 6.8 million shares of its common stock during the years ended December 31, 2024, 2023 and 2022, respectively, for a total purchase price of $ 403.8 million, $ 244.6 million and $ 257.0 million, respectively, exclusive of $ 3.6 million and $1.4 million of excise taxes incurred in the year ended December 31, 2024 and 2023, respectively, with no such taxes incurred in the year ended December 31, 2022.

In addition, in

December 2023, the Company repurchased 26,000 shares for $ 1.0 million, which were settled and retired in January 2024.

As such, these shares were recorded as treasury stock as of December 31, 2023.

As of December 31, 2024, $ 430.3 million remained available and authorized for repurchase under this program.

The following table summarizes the Company’s services revenue:

Year Ended December 31,

2024 2023 2022

(In thousands)

Commercial services:

Voice and data $ 226,197 $ 219,242 $ 193,112

IoT data 166,166 141,036 125,015

Broadband 56,095 57,878 51,143

Hosted payload and other data (1)

60,160 60,298 59,451

Total commercial services 508,618 478,454 428,721

Government services 106,296 106,000 106,000

Total services $ 614,914 $ 584,454 $ 534,721

(1) Includes immaterial revenue related to the Company’s operating leases in which it is a lessor (see Note 10 for additional information).

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

Year Ended December 31,

2024 2023 2022

(In thousands)

Commercial $ 7,307 $ 11,050 $ 7,833

Government 117,045 90,083 43,766

Total $ 124,352 $ 101,133 $ 51,599

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

As such, the Company does not disclose details related to the value of performance obligations that are unsatisfied as of the end of the reporting period.

The total value of any performance obligations that extend beyond a year is immaterial to the financial statements.

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the consolidated balance sheets.

The Company bills amounts under its agreed-upon contractual terms at periodic intervals (for services), upon shipment (for equipment), or upon achievement of contractual milestones or as work progresses (for engineering and support services).

Billing may occur subsequent to revenue recognition, resulting in unbilled accounts receivable (contract assets).

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 $ 36.9 million, $ 31.4 million and $ 26.3 million for the years ended December 31, 2024, 2023 and 2022, 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 consolidated balance sheets.

The commissions are recognized over the estimated usage period.

The following table presents contract assets not separately disclosed:

Year Ended December 31,

(In thousands)

Contract Assets:

Commissions $ 1,058 $ 1,114

Other contract costs $ 1,798 $ 1,970

The Company has operating leases for land, office space, satellite network operations center (“SNOC”) facilities, system gateway facilities, a warehouse and a distribution center.

The Company also has operations and maintenance (“O&M”) agreements that include leases associated with two teleport network facilities.

Some of the Company’s leases include options to extend the leases for up to 8 years.

The Company does not include term extension options as part of its present value calculation of lease liabilities unless it is reasonably certain to exercise those options.

As of December 31, 2024, the Company’s weighted-average remaining lease term relating to its operating leases was 4.4 years, and the weighted-average discount rate used to calculate the operating lease liability payment was 6.8 %.

The following table summarizes the Company’s lease-related assets and liabilities:

Leases Classification December 31, 2024 December 31, 2023

(In thousands)

Operating lease assets

Noncurrent Other assets $ 14,285 $ 16,133

Total lease assets $ 14,285 $ 16,133

Operating lease liabilities

Current Accrued expenses and other current liabilities $ 5,043 $ 4,327

Noncurrent Other long-term liabilities $ 11,059 14,087

Total lease liabilities $ 16,102 $ 18,414

During the years ended December 31, 2024, 2023 and 2022, the Company incurred lease expense of $ 6.0 million, $ 5.2 million and $ 5.2 million, respectively.

The following table presents future payment obligations with respect to the Company’s operating leases in which it was the lessee at December 31, 2024, by year and in the aggregate:

Year Ending December 31, Amount

(In thousands)

Thereafter 1,617

Total lease payments $ 18,694

Lessor Arrangements

Operating leases in which the Company is a lessor consist primarily of hosting agreements with Aireon LLC (“Aireon”) (see Note 14 ) and L3Harris Technologies, Inc.

(“L3Harris”) for space on the Company’s satellites.

Lease income related to these agreements for the years ended December 31, 2024, 2023 and 2022 was $ 12.4 million, $ 19.2 million and $ 21.4 million, respectively.

The decreases in 2024 and 2023 as compared to 2022 were solely the result of the timing of the change in estimated useful life of the satellites.

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

Year Ending December 31, Amount

(In thousands)

2025 $ 12,391

Thereafter 70,084

Total lease income $ 132,039

Stock-Based Compensation

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Restricted Stock Units

Each RSU represents the right to receive one share of common stock at a future date.

Historically, RSUs granted to employees for service generally vested 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.

Beginning with grants made in 2024, RSUs granted to employees for service will 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.

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 vested 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.

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The fair value of RSUs is determined at the grant date based on the closing price of the Company’s common stock on the date of grant.

The related compensation expense is recognized over the service period, or shorter periods based on the retirement eligibility of certain grantees, and is based on the grant date fair value of the Company’s common stock and the number of shares expected to vest.

The related compensation expense is recognized over the service period, or shorter periods based on the retirement eligibility of certain grantees, based on the grant date fair value of the Company’s common stock and the number of shares expected to vest.

The fair value of the awards is not remeasured at the end of each reporting period.

RSUs do not carry voting rights until the RSUs are vested, but certain unvested RSUs are entitled to accrue dividends, and shares are issued upon settlement in accordance with the terms of the award.

RSUs do not carry voting rights until the RSUs are vested, although unvested RSUs and vested but unsettled RSUs granted to non-employee directors are entitled to accrue dividend equivalent rights, and shares (including additional shares issuable upon satisfaction of any accrued dividend equivalent rights) are issued upon settlement in accordance with the terms of the award.

The following table summarizes the Company’s RSU activity:

2 unchanged sentences

Outstanding at December 31, 2021 2,550 $ 25.80

2,664 $ 18.96

Granted 1,562 $ 40.21

2 unchanged sentences

Outstanding at December 31, 2022 2,970 $ 31.60

2,550 $ 25.80

Granted 1,184 $ 57.85

2 unchanged sentences

Outstanding at December 31, 2023 2,795 $ 40.24

2,970 $ 31.60

Granted 2,613 $ 30.05

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The Company recognized $ 63.5 million, $ 57.5 million and $ 43.2 million of stock-based compensation expense related to RSUs in the years ended December 31, 2024, 2023 and 2022, respectively.

Service-Based RSU Awards

Service-Based RSUs

The majority of the annual compensation the Company provides to non-employee members of its board of directors is paid in the form of RSUs.

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During the years ended December 31, 2024, 2023 and 2022, the Company granted approximately 14,000 , 1,000 and 7,000 service-based RSUs, respectively, to non-employee consultants, with an estimated grant date fair value of $ 0.8 million, $ 0.1 million and $ 0.3 million, respectively.

Performance-Based RSU Awards

Performance-Based RSUs

In March 2024, 2023 and 2022, the Company awarded approximately 461,000 , 193,000 and 248,000 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, $ 11.9 million and $ 9.7 million, respectively.

Vesting of the Bonus RSUs is and was dependent upon the Company’s achievement of defined performance goals for the respective fiscal year in which the Bonus RSUs were granted.

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

The Company records stock-based compensation expense related to performance-based RSUs when it is considered probable that the

performance conditions will be met.

Management believes it is probable that substantially all of the 2024 Bonus RSUs will vest.

3 unchanged sentences

The estimated aggregate grant date fair value of the Executive RSUs for the 2024, 2023 and 2022 grants was $ 9.0 million, $ 8.2 million and $ 6.5 million, respectively.

Vesting of the Executive RSUs is and was dependent upon the Company’s achievement of defined performance goals over a two-year period (the year of grant and the following year).

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

The vesting of Executive RSUs will ultimately range from 0 % to 200 % of the number of shares underlying the Executive RSUs granted based on the level of achievement of the performance goals.

If the Company achieves the performance goals for the Executive RSUs at the end of the two-year performance period, 50 % of the number of Executive RSUs earned based on performance will then vest on the second anniversary of the grant date, and the remaining 50 % will then vest on the third anniversary of the grant date, in each case subject to the executive’s continued service as of the vesting date.

In March 2023, the Company awarded approximately 55,000 additional shares related to performance-based RSUs granted to the Company’s executives for over-achievement of performance targets for the Executive RSUs with a performance period that ended December 31, 2022.

In March 2022, the Company cancelled approximately 50,000 shares related to performance-based RSUs granted to the Company’s executives in 2020 for under-achievement of performance targets for the performance period that ended December 31, 2021.

In March 2021, the Company awarded approximately 3,000 additional shares related to performance-based RSUs granted to the Company’s executives in 2019 for over-achievement of performance targets for the performance period that ended December 31, 2020.

In March 2024 and 2023, the Company awarded approximately 83,000 and 55,000 additional shares related to performance-based RSUs granted to the Company’s executives for over-achievement of performance targets for the Executive RSUs with a performance period that ended December 31, 2023 and 2022, respectively.

In March 2022, the Company cancelled approximately 50,000 shares related to performance-based RSUs granted to the Company’s executives for under-achievement of performance targets for the performance period that ended December 31, 2021.

Stock Option Awards

9 unchanged sentences

Options outstanding at December 31, 2021 1,681 $ 9.35 3.28 $ 53,698

2,554 $ 9.10 3.94 $ 77,182

Cancelled or expired ( 1 ) 8.28

2 unchanged sentences

Options outstanding at December 31, 2022 1,185 $ 9.97 2.64 $ 49,094

1,681 $ 9.35 3.28 $ 53,698

Cancelled or expired ( 4 ) 10.25

Exercised ( 505 ) 7.84 $ 26,928

Forfeited ( 1 ) 18.35

Options outstanding at December 31, 2023 676 $ 11.55 2.39 $ 20,036

1,185 $ 9.97 2.64 $ 49,094

Cancelled or expired — —

1 unchanged sentence

Options outstanding and exercisable at December 31, 2024 319 $ 13.74 2.45 $ 4,881

676 $ 11.55 2.39 $ 20,036

The total fair value of the shares underlying stock options that vested during the years ended December 31, 2022 and 2021 was $ 0.6 million and $ 2.3 million, respectively.

The total fair value of the shares underlying stock options that vested during the year ended December 31, 2023 was immaterial.

Equity Transactions

Preferred Stock

The Company is authorized to issue 2.0 million shares of preferred stock with a par value of $ 0.0001 per share.

The Company previously issued 1.5 million shares of preferred stock.

The remaining 0.5 million authorized shares of preferred stock remain undesignated and unissued as of December 31, 2023 and 2022.

As of December 31, 2023 and 2022, there were no outstanding shares of preferred stock, as all previously designated and issued preferred stock was converted into common stock in prior periods.

In each of December 2022, May 2023, September 2023 and December 2023, the Company’s Board of Directors approved a dividend of $ 0.13 per share of common stock.

The dividends, which were paid on March 30, June 30, September 29 and December 29, 2023 to stockholders of record as of March 15, June 15, September 15 and December 15, 2023, respectively, resulted in total payments of $ 64.8 million during 2023.

The Company’s liability related to dividends on common stock was $ 1.3 million and $ 16.6 million as of December 31, 2023 and 2022, respectively.

Share Repurchase Program

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

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

Repurchases may be made from time to time on the open market at prevailing prices or in negotiated transactions off the market.

The Company records share repurchases at cost, which includes broker commissions and related excise taxes.

All shares are immediately retired upon repurchase in accordance with the board-approved policy.

The Company repurchased and subsequently retired 4.8 million, 6.8 million and 4.3 million shares of its common stock during the years ended December 31, 2023, 2022 and 2021, respectively, for a total purchase price of $ 244.6 million, $ 257.0 million and $ 163.4 million, respectively, exclusive of $ 1.4 million of excise taxes incurred in the year ended December 31, 2023, with no such taxes incurred in the years ended December 31, 2022 and 2021, respectively.

In addition, in December 2023, the Company purchased 26,000 shares for $ 1.0 million, which were settled and retired in January 2024.

As such, these shares are recorded as treasury stock as of December 31, 2023.

As of December 31, 2023, $ 334.0 million remained available and authorized for repurchase under this program.

The following table summarizes the Company’s services revenue:

Year Ended December 31,

2023 2022 2021

The total fair value of the shares underlying stock options that vested during the years ended December 31, 2024 and 2023 was immaterial.

Acquisition of Satelles

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.

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 Company accounted for the acquired business using the acquisition method of accounting by recording assets acquired and liabilities assumed at their respective fair values.

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

April 1, 2024

Fair Value Useful Life

(In thousands)

Commercial services:

Voice and data $ 219,242 $ 193,112 $ 175,584

IoT data 141,036 125,015 110,919

Broadband 57,878 51,143 42,990

Hosted payload and other data 60,298 59,451 58,611

Total commercial services 478,454 428,721 388,104

Government services 106,000 106,000 103,887

Total services $ 584,454 $ 534,721 $ 491,991

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

Year Ended December 31,

Cash $ 14,738

Other current assets 1,901

Customer relationships 57,000 12 years

Other noncurrent assets 7,188

Goodwill 98,186

Total identifiable assets acquired 179,013

Liabilities assumed ( 13,821 )

Net identifiable assets acquired $ 165,192

The Company acquired customer relationship intangible assets with an acquisition date fair value of $57.0 million, which was determined using the multi-period excess earnings method.

The Company included the following assumptions:

the forecasted revenue growth, forecasted revenue attributable to customer contracts, forecasted capital expenditures, forecasted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins, and the discount rate used to value the customer relationships.

Changes in these assumptions used could have a significant impact on the acquisition-date fair value of this intangible asset.

The customer relationships recognized were determined to have a useful life of 12 years.

The Company will amortize the customer relationships over their useful lives, utilizing the economic benefit model.

The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of Satelles.

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

During the period ended December 31, 2024, the Company updated its estimate related to deferred taxes, which resulted in a decrease in goodwill and an increase to deferred tax assets of $2.1 million.

These updates are reflected in the table above.

The Company incurred $ 3.1 million of acquisition related costs that were expensed in the year ended December 31, 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, are as follows:

Three Months Ended

December 31, 2024 Period from Acquisition Date to

December 31, 2024

(In thousands) (In thousands)

Revenue $ 4,710 $ 12,637

Net loss ( 5,230 ) ( 12,758 )

The following unaudited pro forma data summarizes the combined company’s 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.

The unaudited pro forma data gives effect to actual operating results prior to the acquisition, adjusted to include the pro forma effect of amortization of intangibles and the elimination of intercompany sales and acquisition costs.

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 December 31, Twelve Months Ended December 31,

2024 2023 2024 2023

(In thousands)

Commercial $ 11,050 $ 7,833 $ 4,613

Government 90,083 43,766 25,825

Total $ 101,133 $ 51,599 $ 30,438

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

As such, the Company does not disclose details related to the value of performance obligations that are unsatisfied as of the end of the reporting period.

The total value of any performance obligations that extend beyond a year is immaterial to the financial statements.

Billing may occur subsequent to revenue recognition, resulting in unbilled accounts receivable (contract assets).

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 $ 31.4 million, $ 26.3 million and $ 43.0 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The commissions are recognized over the estimated usage period.

The following table presents contract assets not separately disclosed:

Year Ended December 31,

(In thousands)

Contract Assets:

Commissions $ 1,114 $ 1,258

Other contract costs $ 1,970 $ 2,255

(In thousands) (In thousands)

Revenue $ 212,990 $ 197,231 $ 832,553 $ 801,199

Net income (loss) 37,617 32,680 96,314 ( 11,379 )

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 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 consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2024.

The following table presents U.S.

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Current taxes:

Federal tax benefit $ — $ — $ ( 537 )

Federal tax expense $ 1,128 $ — $ —

State tax expense 1,731 1,032 272

Foreign tax expense 2,840 4,545 1,209

Total current tax (benefit) expense 5,577 1,481 1,745

Total current tax expense 5,699 5,577 1,481

Deferred taxes:

Federal tax benefit ( 31,311 ) ( 3,354 ) ( 14,109 )

Federal tax expense (benefit) 10,524 ( 31,311 ) ( 3,354 )

State tax expense (benefit) ( 3,542 ) ( 226 ) 1,794

Foreign tax expense (benefit) ( 422 ) ( 291 ) 371

Total deferred tax benefit ( 31,828 ) ( 1,189 ) ( 21,314 )

Total deferred tax expense (benefit) 6,560 ( 31,828 ) ( 1,189 )

Total income tax expense (benefit) $ 12,259 $ ( 26,251 ) $ 292

8 unchanged sentences

$ 23,054 $ ( 997 ) $ 1,893

State taxes, net of federal benefit 927 1,260 ( 9,094 )

State tax expense (benefit), net of federal effect ( 1,999 ) 927 1,260

State tax valuation allowance ( 175 ) ( 338 ) 748

Deferred impact of state tax law changes and elections — — 1,200

Equity-based compensation 2,876 ( 10,234 ) ( 6,184 )

3 unchanged sentences

Foreign taxes 2,563 3,570 386

Foreign derived intangible income ( 5,240 ) — —

Other adjustments 536 ( 1,487 ) 200

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federal net operating loss carryforwards for 2018 and thereafter and interest expense carryforwards do not expire.

The Company had deferred tax assets related to the state net operating loss carryforwards of approximately $ 59.2 million and $ 60.0 million as of December 31, 2023 and 2022, respectively, some of which expire as early as 2025.

The Company had deferred tax assets related to the state net operating loss carryforwards of

approximately $ 55.9 million and $ 59.2 million as of December 31, 2024 and 2023, respectively.

The Company does not expect to fully utilize all of its state net operating losses within the respective carryforward periods and as such reflects a partial valuation allowance of $ 32.8 million and $ 33.0 million as of December 31, 2024 and 2023, respectively, against these deferred tax assets on its consolidated balance sheets.

The Company had deferred tax assets related to the foreign net operating loss carryforwards of approximately $ 0.5 million and $ 0.7 million, as of December 31, 2023 and 2022, respectively, that do not expire.

The Company had deferred tax assets related to the foreign net operating loss carryforwards of approximately $ 0.4 million and $ 0.5 million, as of December 31, 2024 and 2023, respectively.

The Company does not expect to fully utilize all of its foreign net operating losses within the carryforward periods.

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The Company had approximately $ 42.3 million and $ 32.3 million of deferred tax assets related to research and development tax credits as of December 31, 2024 and 2023, respectively, that expire in various amounts from 2032 through 2044.

As of December 31, 2023 , the Company established a reserve of approximately $ 2.4 million on its estimate of R&D credits.

As of December 31, 2024 and 2023, the Company established a reserve of approximately $ 3.5 million and $ 2.4 million on its estimate of R&D credits, respectively.

The Company had approximately $ 7.9 million and $ 8.7 million of deferred tax assets related to foreign tax credits as of December 31, 2024 and 2023, respectively, that expire in various amounts through 2034.

Previously, the Company did not expect to utilize all of its foreign tax credits, resulting in the Company recording a partial valuation allowance of $ 0.5 million as of December 31, 2022.

There is no valuation allowance on foreign tax credits as of December 31, 2023 .

There is no valuation allowance on foreign tax credits as of December 31, 2024 and 2023.

The Company has provided for U.S.

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are fully supportable.

The Company adjusts these liabilities in light of changing facts and circumstances, such as the outcome of

The Company adjusts these liabilities in light of changing facts and circumstances, such as the outcome of a tax audit.

The provision for income taxes includes the impact of changes to these liabilities.

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tax credits from prior periods.

There were no unrecognized tax benefits as of December 31, 2022.

There were unrecognized tax benefits of approximately $ 2.4 million as of December 31, 2023.

Any changes in the next twelve months are not anticipated to have a significant impact on the results of operations, financial position or cash flows of the Company.

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federal and state tax returns from 2011 to 2023 remain subject to examination by tax authorities and the Company’s foreign tax returns from 2017 to 2023 remain subject to examination by tax authorities.

Net Income (Loss) Per Share

The Company calculates basic net income (loss) per common share by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

In periods of net income, diluted net income per share takes into account the effect of potentially dilutive common shares when the effect is dilutive.

Potentially dilutive common shares include (i) shares of common stock issuable upon exercise of outstanding stock options and (ii) shares underlying RSUs that are contingently issuable upon achievement of certain service and performance requirements.

The effect of potentially dilutive common shares is computed using the treasury stock method.

The following table summarizes the computations of basic and diluted net loss per common share:

Year Ended December 31,

2023 2022 2021

(In thousands, except per share data)

Net income (loss) attributable to common stockholders - basic and diluted $ 15,415 $ 8,722 $ ( 9,319 )

Weighted average common shares - basic 125,598 128,255 133,530

Weighted average common shares - diluted 127,215 130,134 133,530

Net income (loss) attributable to common stockholders per share - basic and diluted

$ 0.12 $ 0.07 $ ( 0.07 )

For the year ended December 31, 2022, 0.2 million unvested service-based RSUs were excluded from the computation of basic net income per share and not included in the computation of diluted net income per share, as the effect would be anti-dilutive, and 0.2 million unvested performance-based RSUs were not included in the computation of basic and diluted net income per share, as certain performance criteria have not been satisfied.

There were no such shares for the year ended December 31, 2023.

Due to the Company’s net loss position for the year ended December 31, 2021 all potential common stock equivalents were anti-dilutive and therefore excluded from the calculation of diluted net loss per share.

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

Year Ended December 31,

2023 2022 2021

(In thousands)

Performance-based RSUs — 210 183

Service-based RSUs — — 536

Stock options — — 1,189

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 in exchange for an approximate 6 % preferred membership interest.

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

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

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Under the agreements with Aireon, Aireon will pay the Company fees of $ 200.0 million to host the ADS-B receivers, of which $ 110.5 million had been paid as of December 31, 2024.

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

The Company recognized $ 14.4 million of hosting fee revenue under the Hosting Agreement for the year ended December 31, 2023 and $ 16.1 million of hosting fee revenue for the years ended December 31, 2022 and 2021.

There were no receivables due under the Hosting Agreement as of December 31, 2023 and 2022.

These fees are recognized over the estimated useful lives of the 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 hosting fee revenue of $ 9.3 million, $ 14.4 million and $16.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.

There were no receivables due from Aireon for hosting fees as of December 31, 2024 and 2023.

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

The Company recorded $ 23.5 million of power and data service fee revenue from Aireon for each of the years ended December 31, 2024, 2023 and 2022.

During the year ended December 31, 2023, the Company recorded other income of $ 3.5 million related to a contractual settlement with Aireon.

This is a one-time payment that is not expected to recur.

Receivables due from Aireon under this agreement totaled $2.0 million as of December 31, 2024.

There were no receivables due under this agreement as of December 31, 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 $ 2.2 million at each of December 31, 2023 and 2022.

Aireon receivables due to the Company under these two agreements totaled $1.7 million and $ 2.2 million for the years ended December 31, 2024 and 2023, respectively.

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

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

In the first quarter of 2023, the Company entered into a stock purchase agreement with Satelles, Inc.

(“Satelles”) and invested $ 10.0 million, in addition to its previous equity investment in Satelles.

The Company’s fully diluted ownership stake in Satelles was approximately 19.5 % as of December 31, 2023, and the investment in Satelles is now accounted for as an equity method investment.

The carrying value of the Company’s investment in Satelles was approximately $ 21.8 million as of December 31, 2023.

Net Income Per Share

The Company calculates basic net income per common share by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

In periods of net income, diluted net income per share takes into account the effect of potentially dilutive common shares when the effect is dilutive.

The effect of potentially dilutive common shares is computed using the treasury stock method.

The following table summarizes the computations of basic and diluted net income per common share:

Year Ended December 31,

2024 2023 2022

(In thousands, except per share data)

Net income attributable to common stockholders - basic and diluted $ 112,776 $ 15,415 $ 8,722

Weighted average common shares - basic 118,566 125,598 128,255

Weighted average common shares - diluted 119,792 127,215 130,134

Net income attributable to common stockholders per share - basic $ 0.95 $ 0.12 $ 0.07

Net income attributable to common stockholders per share - diluted $ 0.94 $ 0.12 $ 0.07

There were no such shares for the years ended December 31, 2024 or 2023.

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

Year Ended December 31,

2024 2023 2022

(In thousands)

Performance-based RSUs — — 210

Segments, Significant Customers, Supplier and Service Providers and Geographic Information

The Company operates in one business segment, providing global satellite communications services and products.

The Company’s operations are primarily located in the United States and the Company operates in one business segment, providing global satellite communications services and products.

Its Chief Executive Officer has been determined to be the Chief Operating Decision Maker (“CODM”) to make key operating decisions and assess performance.

The CODM evaluates the segment operating performance based on consolidated net income and reviews components of cost of services, including certain costs related to delivering engineering and other support services, which is considered a significant expense.

Costs to support engineering and other support services, included within cost of services in the accompanying consolidated statements of operations and comprehensive income (loss), were $93.7 million, $77.6 million and $35.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The CODM considers budget-to-actual forecast and prior view-to-current view variances on a monthly and quarterly basis for evaluating performance and making decisions about allocating capital and other resources on a consolidated basis.

The Company derived approximately 27 %, 25 % and 21 % of its total revenue in the years ended December 31, 2024, 2023 and 2022, respectively, from prime contracts or subcontracts with agencies of the U.S.

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The Company contracts for the manufacture of its subscriber equipment primarily from a limited number of manufacturers and utilizes other sole source suppliers for certain component parts of its devices.

Should events or circumstances prevent the manufacturer or the suppliers from producing the equipment or component parts, the Company’s business could be adversely affected until the Company is able to move production to other facilities of the manufacturer or secure a replacement manufacturer or an alternative supplier for such component parts.

Should events or circumstances prevent the manufacturer or the suppliers from producing the equipment or component parts, the Company’s business could be adversely

affected until the Company is able to move production to other facilities of the manufacturer or secure a replacement manufacturer or an alternative supplier for such component parts.

The following table summarizes net property and equipment by geographic area:

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United States $ 437,984 $ 431,476 $ 374,687

Canada 88,386 65,772 67,893

Other countries (1)

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The Company matches employees’ contributions equal to 100 % of the salary deferral contributions up to 5 % of the employees’ eligible compensation each pay period.

The Company’s matching contributions to the Plan were $ 4.3 million, $ 3.5 million and $ 3.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Subsequent Event

On February 2, 2024 , the Company’s Board of Directors approved a dividend of $ 0.13 per share payable on March 29, 2024 , to stockholders of record as of March 15, 2024 .

The Company’s expenses related to matching under the Plan were $ 5.9 million, $ 4.3 million and $ 3.5 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data