What: Shares of Iridium Communications (IRDM 6.55%), 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.
