Globalstar, Inc.

Good day and thank you for standing by. Welcome to the Global Star third quarter 2025 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question please press star 1 1 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Rebecca Clary, CFO. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Before we begin, please note that today's call contains forward-looking statements intended to fall within the safe harbor provided under the securities laws. Factors that could cause the results to differ materially are described in the risk factors section of GlobalSTAR's SEC filings including its annual report on Form 10-K for the financial year ending 2024 and its other SEC filings, as well as today's earnings release. Also note that management may reference EBITDA, adjusted EBITDA, pre-cash flow, or adjusted pre-cash flow on this call, which are financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in the earnings release, which is available on our website. Today, I will walk you through our third quarter and year-to-date financial results, discuss our liquidity position, and touch briefly on outlook. We delivered solid top-line performance in the third quarter, with total revenue of $73.8 million. This represents growth over the prior year's third quarter, reaching a record quarterly amount. This improvement was driven by two key areas, wholesale capacity services and continued strength in commercial IoT. Our wholesale capacity services revenue increased primarily due to the timing of service fees associated with the reimbursement of network-related costs as we continue to expand and upgrade our global ground infrastructure. Commercial IoT also continues to be a growth driver for us. IoT service revenue increased on the back of subscriber growth, with average subscribers reaching 543,000, a 6% increase from the prior year's third quarter. This growth was again propelled by a record number of growth activations over the last 12 months. We also saw particularly strong equipment sales performance. Equipment revenue from commercial IoT device sales was up 60% compared to the prior year's third quarter. We expect this momentum to continue, particularly with the recent commercial availability of our two-way module, which we believe will drive additional demand. Income from operations was $10.2 million in the quarter, up from $9.4 million in the prior year's third quarter. This improvement came despite higher operating expenses during the quarter due to planned increased investments in our business. Net income was lower than the prior year's third quarter, driven primarily by non-cash items. Specifically, we recognized higher interest expense from non-cash imputed interest related to the 2024 prepayment agreement. We also recorded net foreign currency losses from the remeasurement of intercompany balances. These items were partially offset by a non-cash gain on the quarterly mark-to-market adjustment of our derivative assets. Adjusted EBITDA for the third quarter reflects our strategic investment in growth opportunities, particularly XCOM. We continue to enhance and develop our XCOM-ran product and service offerings, and as we've discussed previously, we're incurring costs, primarily personnel-related, in advance of significant revenue contribution from this business. We believe this is a solid investment for the company, and we remain confident in the strategic value of this initiative. particularly based on recent developments towards commercialization. Importantly, we continue to maintain healthy adjusted EBITDA margins, 51% in the third quarter and 52% year to date, even while making substantial investments in XCOM and next generation products. This demonstrates the profitability of our core business and gives us confidence that as these new revenue streams scale, we'll see meaningful margin expansion. For the year-to-date period, total revenue was $201 million, representing 6% growth compared to the same period last year. Service revenue was also up 6%, while equipment revenue increased 21%. The revenue and operating income story for the nine-month period largely mirrors what we saw in Q3. Now let me turn to our balance sheet and cash flow. We ended the third quarter with cash and cash equivalents of $346.3 million. During the first nine months of 2025, we generated operating cash flow of $445.8 million, a strong result that reflects $299.6 million received in connection with the infrastructure prepayment and also demonstrates the cash generating capabilities of our business. Capital expenditures were $485.9 million during the period, reflecting our commitments under our updated services agreements for network expansion and upgrades, including ground infrastructure as well as satellite construction and launch costs. These investments are fundamental to our ability to deliver enhanced services and support our long-term growth. Financing activities used $6.1 million in cash. primarily for debt recoupment under the 2021 funding agreement and preferred stock dividend payments, offset partially by $27.1 million in proceeds under the 2023 funding agreement, which will be used to fund CapEx for our replacement satellites. Adjusted free cash flow for the nine-month period was $133.3 million, up significantly from $74.5 million in the prior year period. This increase reflects primarily higher customer payments, including $37.5 million in accelerated service payments received during 2025. Total debt principal outstanding was $418.7 million at September 30th, 2025, largely in line with the prior year end and reflecting the financing activities previously discussed. Our financial position remains strong. with solid cash generation, ample liquidity, and strategic investments that position us for long-term growth. We're making deliberate investments in XCOM and next-generation products, and we're executing on our infrastructure commitments to support our wholesale services agreement. The fundamentals of our business are sound. We're growing revenue in strategic areas, generating strong operating cash flow, and managing our cost structure while investing for the future. Given our results to date and expectations for the balance of the year, we are reiterating our full year 2025 outlook and continue to expect revenue in the range of $260 million to $285 million and an adjusted EBITDA margin of approximately 50%. With that, I'd like to turn the call over to Paul.

Thanks, Rebecca, and good afternoon, everyone. I'm pleased to be with you today and to discuss what has been a robust order for GlobalStar. Across every major part of our business, we're executing our strategy and delivering measurable progress that strengthens our position in the market. It's really never been a more exciting time to be in the connectivity industry and for GlobalStar in particular. My team and I have spent our careers driving many of the hottest trends in mobile communications and computing. Well, here we are again. On the satellite side, we couldn't be more proud to have helped pioneer direct-to-device services and witness the lifesaving impact of our network. There are now over half a billion devices capable of utilizing our network, and we continue to invest and innovate to maintain our leading position. And on the mobile wireless network side, our XCOM RAN technology is proving its benefits both in performance for mission-critical applications and its cost-effectiveness and ease of deployment. As I've said previously, what drew us to GlobalStar is the strength and differentiation of our globally harmonized spectrum, three decades of LEO constellation operations, and deep engineering capability to deliver secure, reliable connectivity worldwide with the quality of service demanded by some of the world's most innovative technology leaders, something few others, if anyone, can claim. Recent activity in the market underscores that value as a wide variety of players now better understand the need for dedicated mobile satellite service or MSS spectrum. Other participants in the direct-to-device solution space have spent tens of billions to acquire L and S band assets that, while useful, lack the global coverage, priority rights, and harmonization with an established hardware ecosystem that defines our portfolio, one that has been deployed for decades by our GlobalStar customers. We believe this validates the global orientation of our strategy from inception, building the company around globally harmonized and licensed spectrum assets and a global Leo platform. We see extraordinary potential for disruptive innovation around our spectrum bands and are confident we are playing a defining role now and for some time to come. For many reasons, GlobalStar holds the critical jigsaw pieces that complete the broader D2D puzzle. This moment is a strategic inflection point that could shape or reshape the future of a rapidly converging communications industry. Before I turn to the other parts of our business, let me acknowledge that you may have seen recent media reports regarding a potential strategic transaction involving GlobalStar. As a matter of policy, we do not comment on press articles, rumors, or market speculation, and therefore, we will not be addressing this topic during today's call or the Q&A following our remarks. Now, let's turn to the business, and let me start with our infrastructure expansion and satellite roadmap for our C3 constellation. We continue to make significant progress in the construction of our extended MSS network. In addition to development of our third generation C3 satellite system, this effort includes the build out of our global ground network with new infrastructure across multiple continents, including Europe, Asia, and North America. This global ground expansion is continuing, including up to 90 new tracking antennas supporting GlobalSTAR's C3 satellite system, representing a significant investment in the functionality of our network. This significantly underscores our mission and strategy to support resilient and robust connectivity that not only serves the needs of today, but also prepares for those of tomorrow. And to that end, our Hiblio XL1 filing is designed to expand operational frequencies, which is a foundational step towards our planned next satellite era. This system will introduce new satellites, orbital shells, and frequency bands to enable greater capacity and throughput. It's an important step forward that aligns with the other network investments we are making today. And while we are not currently planning significant investment in our own mega constellation, this filing gives us the future option to work with partners supporting our constellation, sorry, our spectrum on a mega constellation that is coordinated with our existing and planned constellations. Let's turn to the government sector. We continue to see strong traction following our wins earlier this year. We've made meaningful progress with Parsons Corporation, transitioning from proof of concept to commercial engagement that leverages our satellite network within their advanced software-defined communications architecture. This partnership highlights GlobalStar's ability to deliver resilient, low latency, and mission-critical connectivity for defense and public safety applications. We continue to expect government-related opportunities to represent an expanding source of revenue in 2026 and beyond. Our commercial IoT subscriber growth is strong and accelerating with strong MSS device sales supported by growing adoption in safety, logistics, and infrastructure markets. Gross activations are up 40% over the same quarter last year, and total units are up 100% on a quarterly basis compared to the prior year. That doesn't even include the new two-way module, which is now being integrated into our customers' finished products. These sales, combined with increased enterprise demand, are contributing to a balanced and diversified revenue profile. Another milestone this quarter is the global availability of our two-way commercial IoT module, the RM200M. Already receiving certifications in key regions, the RM200M is now officially available for worldwide deployment. Leveraging GlobalSTAR's licensed LNS band spectrum and second-generation satellites, the module delivers reliable two-way connectivity, reducing friction when deploying across numerous geographic regions. On the private wireless side, momentum continues to build for XCOM RAN. During the quarter, we received an initial order from a new XCOM RAN customer advancing their next-generation robotics application and a significant expansion of this program. XCOM RAN is positioned to play a critical part in ensuring quality of service in warehouse and factory automation, where reliable and secure connectivity is at the core of a robotic future in these environments. We believe we can demonstrate not only significantly differentiated performance of our 5G-based systems over industrial Wi-Fi, but also improved economics for large area applications. And we are addressing new applications outside of warehouse automation, which we believe will grow our addressable market significantly. Stepping back, this has been a year of meaningful acceleration for GlobalStar. We've expanded our infrastructure, strengthened our product lineups, deepen our government relationships, and enhance the commercial viability and visibility of our technology portfolio. These accomplishments have not gone unnoticed. Increased partner engagement and growing investor confidence reflect a renewed understanding of GlobalStar's strong market position, combining spectrum ownership, global infrastructure, product lineup, and operational expertise that few others can match. Overall, This has contributed to positioning the company in the market as a high-value strategic asset in the rapidly converging satellite and terrestrial communications ecosystem. While we remain focused on executing our plan, this recognition underscores the scalability and relevance of what we've built and what's still ahead. As we look to the close of the year, our focus remains on execution, including completing key infrastructure milestones expanding enterprise and government deployments, and continuing to drive adoption of our new technologies across both satellite and terrestrial domains. We're proud of what our team has accomplished and energized by the growing momentum we see across all segments of our business. Thank you for your continued support. I look forward to sharing more about our progress in the quarters to come. With that, I will turn the call back to the operator.