GSAT Q1 Earnings Call: New IoT Launches and Satellite Investments Shape Outlook

Satellite communications provider Globalstar (NASDAQ:GSAT) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 6.3% year on year to $60.03 million. On the other hand, the company’s full-year revenue guidance of $272.5 million at the midpoint came in 3.1% above analysts’ estimates. Its non-GAAP loss of $0.09 per share was 33.7% below analysts’ consensus estimates.

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StockStory’s Take

Globalstar’s first quarter performance was shaped by continued expansion in its wholesale capacity services and increased adoption within its commercial Internet of Things (IoT) offerings. Management attributed service revenue growth to higher demand for wholesale capacity and the successful introduction of new IoT devices and services. CFO Rebecca Clary emphasized the impact of ongoing investments in the XCOM RAN product, which led to higher costs but was offset by revenue gains from core businesses. CEO Paul Jacobs highlighted the company's execution on its product roadmap, pointing to the recent launch of a two-way satellite IoT solution, and mentioned that the company’s refocused product development team accelerated new releases using Globalstar’s existing satellite infrastructure. These factors collectively influenced Globalstar’s quarterly results.

Looking forward, Globalstar’s guidance is anchored in expectations for sustained demand across its IoT and terrestrial network platforms, along with anticipated contributions from newly launched products and partnerships. CEO Paul Jacobs stated, “We’re seeing this device ecosystem expand consistently with promising growth trajectories in our wholesale partnerships and our IoT and terrestrial network business lines.” Management views the upcoming commercial deployment of XCOM RAN and the progress on next-generation satellite constellations as key growth drivers. However, the team also noted potential headwinds related to the timing of large customer launches and global trade uncertainties. CFO Rebecca Clary explained that Globalstar has strategies in place to mitigate tariff impacts, suggesting any near-term effects should be minor. The company expects continued operational investments and new executive hires to further strengthen its go-to-market capabilities.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to growing wholesale capacity services, ongoing investments in terrestrial network technology, and the successful launch of new IoT solutions.

• Wholesale capacity momentum: The company saw continued demand from wholesale customers, especially for capacity services linked to its satellite network, which was a significant contributor to service revenue growth this quarter.
• Commercial IoT adoption: Average subscriber numbers and engagement levels rose for Globalstar’s commercial IoT devices, reflecting customer interest in new two-way satellite solutions that support applications like fleet tracking and precision agriculture.
• XCOM RAN development costs: Upfront investments in the XCOM RAN product, a terrestrial wireless network solution, increased expenses and modestly weighed on margins. Management views these costs as necessary for long-term profitability in this segment.
• Leadership and operational upgrades: Two experienced executives joined the management team to lead the terrestrial network and wholesale consumer businesses, aiming to accelerate market expansion. Additionally, the opening of a new satellite operations center in Louisiana is expected to enhance fleet management and network performance.
• Tariff mitigation strategies: Management outlined flexible manufacturing and global supply chain approaches to limit the impact of evolving trade tariffs, with the ability to shift production and pass through some costs to customers if needed.

Drivers of Future Performance

Globalstar’s outlook centers on expanding IoT and terrestrial network offerings, commercializing new technology, and managing external risks such as customer launch timing and tariff changes.

• IoT and terrestrial network growth: The company expects increased adoption of its new two-way satellite IoT solution and the upcoming commercial deployment of XCOM RAN to drive future revenue, especially as use cases in sectors like logistics and agriculture expand.
• Satellite constellation investments: Significant capital is being allocated to next-generation satellite launches, with contracts in place for both near-term replacement satellites and a larger, extended constellation. Management believes these investments will underpin service growth and long-term customer contracts.
• External headwinds and mitigation: While management anticipates minimal near-term financial impact from tariffs due to flexible supply chain arrangements, they acknowledge that the timing of large partner launches and the broader trade environment remain risks that could influence revenue and profitability.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the commercial rollout and customer adoption of XCOM RAN, (2) progress on the next-generation satellite constellation launches and associated service milestones, and (3) the pace of new IoT device deployments and subscriber growth. Execution on mitigating external risks, including tariffs and customer launch schedules, will also be important to track.

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