What: Shares of Iridium Communications (NASDAQ:IRDM), a provider of satellite voice and data communication services, surged on Thursday after the company reported strong third-quarter results. At 3 p.m. Thursday, the stock was up about 20%.
So what: Iridium reported quarterly revenue of $106 million, down 1% year-over-year but slightly higher than the average analyst estimate. Service revenue was flat year-over-year, accounting for 77% of the total revenue. The company had 781,000 billable subscribers at the end of the quarter, up 8% year-over-year, with the growth driven by new machine-to-machine customers. Revenue from government customers grew 13% year-over-year, driven by a services contract with the Defense Information Systems Agency.
Iridium reported net income of $0.24 per share, up from $0.17 per share during the third quarter of 2014 and $0.05 better than analysts were expecting. Operating expenses declined by 29% year-over-year, driving the rise in earnings.
Now what: Iridium used its third-quarter earnings report to affirm both its 2015 guidance and its long-term outlook. The company expects service revenue to grow by 1%-3% this year, with operational EBITDA, or OEBITDA, expected to reach $230 million. In the long term, Iridium expects service revenue to be between $420 million and $465 million in 2018, with an OEBITDA margin of 60%.
This earnings beat comes three months after the company cut its guidance for 2015 and its long-term outlook. The stock is still well below it 52-week high, even after the 20% jump today, but the company's solid third-quarter results have given investors something to celebrate.
Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Iridium Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.