Image: Iridium Communications.

Satellite communications specialist Iridium Communications (IRDM 2.59%) has been a key player in the market for years, and it has served a wide variety of customers who need ubiquitous communications and data access in remote locations. Coming into Thursday's fourth-quarter financial report, however, Iridium investors were prepared for a slight drop in earnings, due in part to pressure on some of its key customer industries such as energy. The company actually posted a big loss on a one-time charge, and even after adjusting for that item, earnings fell short of what most had hoped to see. Yet Iridium said that it's still on track with most of its long-term goals. Let's look more closely at how Iridium Communications did this quarter and what's ahead for the sat-comm specialist.

Iridium, we have a (goodwill) problem
Iridium Communications' fourth-quarter results were mixed in investors' eyes. Revenue climbed 6% to $106.4 million, which was a faster pace of growth than the 4% that most of those following the stock had expected. An $87 million goodwill impairment charge produced a GAAP net loss of $69.4 million, but even adjusting for that item, net income would have fallen by more than 23%. Adjusted earnings of $0.14 per share were $0.04 below the consensus forecast among investors.

Looking more closely at some of Iridium's numbers, subscriber growth slowed during the quarter. Counts were up 43,000 year-over-year to 782,000, but that was up just 1,000 since the end of September. Services revenue rose 5% and continued to make up more than three-quarters of Iridium's overall sales.

The disparity between Iridium's two key segments continued. The Commercial Services division saw mixed results, with revenue climbing 1% because of an increase in demand for machine-to-machine service. However, voice and data subscriber counts fell 1%, and average revenue per user dropped by $1 to $42. Commercial data subscriber counts grew 10%, but many of them chose lower-usage plans, sending average revenue for those users down $2 to $14 per user.

By contrast, the Government Services kept growing. Segment revenue jumped 20%, and subscriber counts for the government business were up 12,000 to 72,000. Data subscriptions grew at twice the rate of voice and data subscribers. Revenue from equipment sales was unchanged from the previous year, and Engineering and Support sales climbed by a third to $6.9 million.

CEO Matt Desch lauded his company's performance, noting that "Iridium executed well to achieve good results in a challenging macroeconomic environment." Between commercial data and the success on the government side of the business, Desch sees plenty of upside potential for the future.

What's in Iridium's future?
Iridium did point out that it has had to shift its scheduling for its key NEXT program. Launch partner Kosmotros told Iridium that it hasn't gotten required approvals for launches, and so Iridium will launch its first 10 satellites using rival launch company SpaceX beginning in July. Despite the shift, Iridium says that it's still on track to meet its full deployment goal for 2017.

Iridium's guidance for 2016 was a bit lackluster, with expectations of service revenue growth of 4% to 6% for the full year falling short of the 7% growth that investors had expected. However, the company affirmed its long-range outlook, expecting service revenue of $420 million to $465 million by 2018.

Still, Iridium is hoping for more growth opportunities. The company said it has partnered with a wide range of companies to deliver push-to-talk service, including Rockwell Collins (COL). Iridium pointed to Rockwell Collins' pioneering development of communication and avionics solutions for both the government and private sectors, and with similar companies that are Rockwell Collins' peers in the aviation and communications industries, Iridium hopes to make the most of its niche opportunities.

Despite that hope, Iridium shareholders were unhappy with the company's results, sending the stock down 13% in early morning trading following the announcement. To bounce back, Iridium will need its NEXT deployments to go flawlessly, and that's a tough order in an industry in which logistical difficulties come up unexpectedly all the time.