Globalstar, Inc.

Good day and thank you for standing by. Welcome to the Global Star fourth quarter and full year 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rebecca Clary, CFO. Please go ahead.

Thank you, Operator, and good morning, 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 Global Search SEC filings, including its most recent annual report on Form 10-K and its other SEC filings, as well as today's earnings release. Also note that management may reference EBITDA, adjusted EBITDA, free cash flow, or adjusted free 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 through our fourth quarter and full year 2025 financial results, then discuss liquidity and our 2026 guidance. Starting with the full year. Total revenue reached a record $273 million, a 9% increase over 2024 and in line with our guidance. This marks our fourth consecutive year of record revenue. Service revenue was $257.3 million, up 8%, driven primarily by increased wholesale capacity services. Subscriber equipment revenue was 15.7 million, up 24%, reflecting a higher volume of commercial IoT device sales. Turning to profitability, we generated income from operations of 7.4 million, compared to a loss of 0.9 million in 2024. This improvement was due to higher revenue, as previously discussed, partially offset by increased operating expenses. including personnel costs to support our next-generation infrastructure build-out, continued investment in XCOM RAN development, and higher legal and professional fees. During the year, operating expenses benefited from $3.9 million in employee retention credits received under the CARES Act, which were allocated between cost of services and MG&A. Net loss improved to $7.6 million, from $63.2 million in 2024. This improvement was due primarily to the prior year reflecting a non-recurring, non-cash loss on extinguishment of debt related to the paydown of the 2023 13% notes. We also benefited from favorable foreign currency remeasurement on intercompany balances and non-cash gains on the quarterly mark-to-market adjustment of our derivative assets. These items were partially offset by higher non-cash imputed interest related to the 2024 prepayment agreement. Adjusted EBITDA reached a record $136.1 million, representing a 50% margin in line with our guidance. This increase over 2024 reflects higher revenue, partially offset by higher operating expenses, primarily due to investment and growth opportunities. Specifically, while we continue to enhance and develop our XCOM RAM product and service offerings, we incur costs in advance of revenue. Turning to Q4, total revenue was $72 million, including $67.4 million of service revenue and $4.6 million from equipment sales. Service revenue increased 17% and equipment revenue increased 31% compared to Q4 2024. The revenue increase was driven primarily by wholesale capacity services, including performance bonuses earned in the quarter and additional service fees associated with network cost reimbursement. We also saw contributions from gross and commercial IoT subscribers and device sales and revenue under our agreement with Parsons partially offset by duplex and spot subscriber churn and lower XCOM RAN sales. Q4 loss from operations was $0.4 million, a meaningful improvement from a $4.2 million loss from operations in Q4 2024. I'd also note that cost of subscriber equipment sales included a $1.1 million charge related to tariffs on equipment imported and then re-exported to foreign subsidiaries where previously recorded duty drawbacks are no longer deemed probable of recovery. Q4 net loss was $10.6 million compared to $50.2 million in the prior year, with the improvement largely attributable to the same non-cash activity that impacted the full year period. Q4 adjusted EBITDA was $32.4 million, up 7% from the prior year's quarter. Turning to the balance sheet, We ended the year with $447.5 million in cash and cash equivalents, up from 391.2 million a year in 2024. Operating cash flows during 2025 were 621.7 million, which included 430.6 million received in connection with the infrastructure prepayment. Capital expenditures were 550.4 million, primarily related to our commitments under the updated services agreements for the deployment of the replacement satellites, as well as the extended MSS network, which includes a new satellite constellation, expanded ground infrastructure, and increased global MSS licensing. Adjusted free cash flow for the year was $171.5 million, up from $131.9 million in 2024. 2025 benefited from $45 million in accelerated service payments and higher ongoing service fees, partially offset by increased operating costs. Our principal debt balance was $410 million at year end, down modestly from $417.5 million at the end of 2024, reflecting scheduled recoupments of $34.6 million under the 2021 funding agreement, partially offset by $27.1 million in new issuance under the 2023 funding agreement. Looking ahead to 2026, we expect total revenue between $280 million and $305 million, with an adjusted EBITDA margin of approximately 50%. This outlook reflects our confidence in the continued growth trajectory of the business as we scale our next-generation infrastructure and expand our commercial opportunities. With that, I'll turn the call over to Paul.

Thanks, Rebecca, and good morning, everyone. It's great to be with you today, and I appreciate everyone joining us for our fourth quarter and full year 2025 update. 2025 was a transformational year for GlobalStar. We closed the year with record full year revenue of $273 million, representing a 9% increase year over year. and delivered an adjusted EBITDA margin of 50%. These results reflect strong execution, operating discipline, and continued progress across every major dimension of our business. Throughout the year, we focused on scaling the core business while laying the foundation for our next phase of growth. And we believe our financial performance clearly reflects that balanced approach. From a strategic perspective, We made meaningful advances across product innovation, infrastructure expansion, regulatory progress, and market diversification. One of the most important milestones during the year was the launch of two-way satellite IoT capabilities and the completion of the commercial rollout of our RM200M module. This represents a significant expansion of our IoT portfolio moving beyond one-way monitoring to enable reliable command and control for enterprise, government, and industrial customers. Two-way IoT meaningfully expands our addressable market, strengthens our partner-led go-to-market model, and enables higher-value use cases where resilience, reliability, and confirmation are mission critical. At the same time, we continue to accelerate diversification across end markets, During 2025, we secured early government and defense wins, expanded our presence in agriculture, wildfire response, industrial IoT, and public safety, and built momentum across multiple verticals. This diversification strategy is intentional and increasingly important as it reduces reliance on any single market while positioning GlobalStar to serve a broad range of customers with complex connectivity requirements. the government and events sector specifically we achieved several important milestones with our partner parsons we completed a successful proof of concept began customer trials and are expanding our relationship to include private 5g solutions for the federal market we also completed and are continuing to invest in XCOM RAN-based 5G research to evaluate high-capacity private wireless architectures for defense applications. Additionally, we are also pleased to highlight a recent development validating the strength of our broader connectivity platform, Fireworks, which was formerly XCOM Labs, was awarded a Phase II Small Business Innovation Reef Contract worth $1.9 million from the Office of the Undersecretary of War to develop an advanced 5G system for challenging RF environments. As part of that effort, Fireworks selected GlobalStar as a technology partner, leveraging our extra-marine 5G platform. This collaboration underscores the growing relevance of our technology on traditional satellite services, and reflects confidence in our ability to support mission-critical communications solutions. The initiatives reinforce the relevance of our architecture for defense and government use cases and demonstrate growing confidence in our ability to support high-priority mission requirements. Taken together, we believe these efforts are a meaningful expansion of our government and defense footprint, and we expect this area to become an increasingly important contributor to our business over time. And more broadly, we continue to see steady demand for our products and services with new customers and emerging use cases coming online as we execute against a clearly defined go-to-market strategy focused on scalable long-term growth. That growth is underpinned by our continued investment in our infrastructure. During the year, we made significant progress expanding our global ground station network across multiple continents. We believe these investments will strengthen capacity, improve redundancy, and enhance readiness for our next generation services, including our C3 constellation. In parallel, we advanced our ITU financial commitment, completing 50% of the investment we pledged. These efforts are foundational and are expected to prepare our network to support future satellite capacity and expanded service offerings. We also continue to advance the XCOM RAN ecosystem. completed a proof-of-concept trial demonstrating the ability for XCOM RAN to support next-generation private 5G deployments. And we believe the integration platform into Boingo's private network portfolio highlights growing partner engagement and commercial relevance. From team performance standpoint, momentum remains strong throughout the year. Average commercial IoT subscribers increased 6% year-over-year, while IoT hardware sales revenue grew 50% year-over-year. This growth reflects sustained demand across asset tracking, monitoring, and safety applications, as well as increasing adoption of higher-value solutions enabled by two-way connectivity. We believe these trends demonstrate both the durability of our IoT business and the upside potential as new capabilities continue to scale. The progress we made in 2025 reflects disciplined execution across multiple fronts, from infrastructure and regulation to product innovation and market expansion. We're moving decisively from groundwork to growth, and we believe we have a strong foundation in place as we enter 2026. Looking ahead, we remain confident in the strength of our strategic roadmap and our ability to execute against it. With key authorizations for C3 and continued progress, Across our ground network commercial momentum for two-way IoT capabilities and creating traction for XCOM RAM, we believe GlobalStar is uniquely positioned to deliver differentiated connectivity solutions that combine satellite innovation, licensed spectrum, and proprietary wireless technology. Finally, there's never been a more exciting time to be in space and the broader connectivity ecosystem. As demand continues to grow for resilient, interoperable solutions that bridge satellite and terrestrial networks, We believe GlobalStar is ideally positioned to benefit from the convergence. One factor became increasingly clear last year. Proprietary globally harmonized spectrum matters. Our licensed MSS spectrum remains a core differentiator and a foundational asset as the market evolves. Whether it's traditional satellite communications, IoT, or D2D, our dedication global space spectrum can enable flexibility, reliability, and resiliency. The progress we achieved in 2025 reflects the talent and dedication of our global team, and we are energized by the momentum we are carrying into the year ahead. Thank you again for joining us today and for your continued support of Global Star. We look forward to updating you on our progress in quarters to come, and I'll now turn the call back to the operator for Q&A.