It has been about a month since the last earnings report for Iridium Communications (IRDM). Shares have added about 1.7% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Iridium due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Iridium Communications Inc before we dive into how investors and analysts have reacted as of late.

Iridium Q2 Earnings Miss Estimates

Iridium reported earnings per share (EPS) of 9 cents for the second quarter of 2026, missing the Zacks Consensus Estimate of 26 cents. The bottom line also compared unfavorably with the prior-year quarter's figure of 20 cents. Management attributed most of the decline to transaction costs related to the pending Rocket Lab Corporation acquisition and higher cash-based employee incentive compensation.

Iridium reported second-quarter revenue of $225.2 million, representing 4% year-over-year growth. The consensus mark was pinned at $221.2 million. The biggest headline remains Rocket Lab's planned acquisition of Iridium. Rather than operating independently, Iridium is likely to become part of a vertically integrated space company spanning satellite manufacturing, launch services, space systems, global communicationsand government space infrastructure. For Iridium, Rocket Lab provides direct access to satellite manufacturing expertise, launch capacity and potentially lower deployment costs for future constellation upgrades.Management believes this integration will accelerate innovation while improving operational efficiency over time.

The most compelling aspect of the quarter is Iridium's progress across four major growth initiatives, which is likely to open new market avenues. Iridium introduced the Iridium 9604 tri-mode communication module, combining satellite connectivity, LTE-M cellular and GNSS positioning. This integrated approach simplifies hardware development while lowering deployment costs for enterprise customers. Later this year, it also plans to launch Iridium NTN Direct, enabling standards-based direct-to-device satellite connectivity.

The recent commercial launch of Iridium's PNT ASIC significantly expands opportunities beyond communications. If adoption accelerates, Assured PNT could evolve into an entirely new recurring revenue platform. Iridium continues to strengthen its role within the U.S. defense infrastructure. Its work supporting the Space Development Agency's Proliferated Warfighter Space Architecture demonstrates that Iridium is becoming an increasingly strategic technology partner rather than simply a communications provider. As defense spending shifts toward space-based infrastructure, this business could generate substantial long-term opportunities.

The major strategic move was completing the acquisition of Aireon LLC, operator of the world's only space-based ADS-B aircraft surveillance network. Management expects the acquisition to contribute approximately $100 million in annual service revenue and $30 million in annual OEBITDA.

Segmental Details

Total Service revenues rose 4% year over year to $161.3 million. Service revenues contributed 72% to total revenues in the second quarter. Our estimate for the metric was $159.9 million. Commercial services generated $133.7 million, representing 59% of total company revenue. Several business verticals contributed. Commercial IoT revenue increased 5%, hosted payload and data services rose 14% and voice and traditional data services grew 3%. Government services continue providing stability.

Revenue from U.S. government customers increased 3% to $27.6 million, primarily due to contractual pricing increases under the Enhanced Mobile Satellite Services (EMSS) contract. The U.S. government remains Iridium's largest customer and represents nearly all engineering and support services revenue. Importantly, management expects renewal of the EMSS contract by March 2027. Given the increasing geopolitical tensions and growing military reliance on resilient satellite communications, this business should remain a dependable source of recurring revenue.

Subscriber Equipment sales increased 7% to $20.8 million. We projected the figure to be $18.2 million.

Engineering and support revenues jumped 3% to $43.1 million, led by Iridium’s expanding work with the Space Development Agency, reinforcing its emphasis on growth driven by national security programs. Our estimate was $42 million.

Other Details

Total operating expenses were 191.2 million compared with $166.6 million in the prior-year quarter, primarily due to higher depreciation and amortization costs and selling, general and administrative expenses.

OEBITDA remained relatively stable at $119.1 million, only slightly below last-year quarter’s $121.3 million. The decline was largely due to a change in compensation structure, shifting to fully cash-based incentives. This added about $3.9 million in expenses for the quarter. 

Operating income came in at $34 million compared with $50.3 million reported in the year-ago quarter.

The company ended the quarter with 2,627,000 billable subscribers, a 6% increase from the previous-year quarter. Commercial IoT remained the primary growth engine as enterprises continue deploying connected sensors and remote monitoring systems across industries such as logistics, agriculture, energy and environmental monitoring. The continued growth of commercial IoT subscribers, which increased 9%, is encouraging.

Capital Structure Remains Manageable

Iridium continues investing aggressively. Capital expenditures totaled $21.8 million during the quarter. As of June 30, 2026, gross debt reached approximately $1.8 billion with cash balance of $184.2 million.

As part of its capital return program, Iridium paid a second-quarter dividend of 15 cents per share on June 30, 2026, distributing $16.2 million to shareholders

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Iridium has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock has a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Iridium has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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