THIRD QUARTER FINANCIAL REVIEW

Revenue

Total revenue for the third quarter of 2024 was $72.3 million, which was comprised of $68.9 million of service revenue and $3.4 million of revenue generated from subscriber equipment sales. Total revenue increased 25% from the prior year's third quarter due to an increase in service revenue.

Higher service revenue of $15.3 million, or 28%, was due predominantly to revenue generated from wholesale capacity services. Wholesale capacity revenue increased during the third quarter of 2024 due, in part, to the Company's achievement of performance-based bonuses under the services agreements, including an out-of-period amount of $7.5 million associated with 2023 and first half 2024 performance and first half 2024 performance.

We also continue to make progress on other strategic initiatives, including XCOM RAN equipment shipments, recognition of fees associated with a proof of concept with a government services company and other engineering contract work.

For our subscriber driven service revenue, Commercial IoT service revenue increased 5% from the prior year's third quarter due primarily to a 7% increase in average number of subscribers. Service revenue associated with legacy Duplex and SPOT services was lower due to fewer subscribers.

Income from operations

Income from operations was $9.4 million during the third quarter of 2024, compared to $2.0 million during the prior year's quarter. This variance was due primarily to higher revenue (as discussed above) partially offset by higher operating expenses.

Higher cost of services resulted from network operating costs, primarily personnel costs and maintenance. These costs are necessary to support our new and upgraded global ground infrastructure. A significant portion of these costs are reimbursed to us, and this consideration is recognized as revenue when earned in the subsequent year. We currently do not expect the operating costs that support existing Phase 1 services to increase meaningfully beyond current levels. Cost of services also increased due to product development efforts as well as non-cash costs associated with the Support Services Agreement (the "SSA") we entered into in August 2023 in connection with the XCOM License Agreement.

Stock-based compensation increased from the prior year's third quarter due primarily to restricted stock units ("RSUs") granted in connection with the XCOM License Agreement in September 2023. The total fair value of the RSUs was $39.5 million and is being recognized over the derived service period of 2.6 years. We expect that nearly 60% of the compensation cost for these RSUs will be recognized during 2024.

Net income (loss)

Net income was $9.9 million for the third quarter of 2024, compared to net loss of $6.2 million for the prior year's quarter. This variance was due primarily to higher operating income, lower interest expense and a favorable fluctuation in foreign currency gains and losses due to the remeasurement of intercompany balances.

Adjusted EBITDA

Adjusted EBITDA increased 34% to $42.8 million during the third quarter of 2024 compared to $32.0 million during the prior year's third quarter, due primarily to an increase in high-margin service revenue. Adjusted EBITDA is a non-GAAP financial measure. For more information on its usage and presentation, as well as a reconciliation to GAAP net income (loss), refer to "Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA".

YEAR TO DATE FINANCIAL REVIEW

Revenue

Total revenue was $189.2 million during the nine months ended September 30, 2024, which was comprised of $180.0 million of service revenue and $9.2 million of revenue generated from subscriber equipment sales. Total revenue increased 10% from the same period in 2023 due to an increase in service revenue, offset partially by a decrease in revenue generated from subscriber equipment sales.

Service revenue increased $24.8 million, or 16%, for the nine months ended September 30, 2024 compared to the same period in 2023. Consistent with the quarterly results discussed above, higher wholesale capacity revenue was the primary driver of the increase. Higher Commercial IoT subscribers and average revenue per user ("ARPU") also positively impacted this variance, offset partially by fewer Duplex and SPOT subscribers. ARPU is a non-GAAP financial measure. For more information, refer to "Schedule of Selected Operating Measures".

Revenue generated from subscriber equipment sales decreased $7.0 million due primarily to the timing of Commercial IoT sales. Our pipeline for Commercial IoT opportunities remains strong, evidenced by a 14% increase in equipment sales volume on a consecutive quarter basis.

Income from operations

Income from operations was $3.3 million for the nine months ended September 30, 2024 compared to $11.8 million during the same period in 2023. This variance was primarily due to increases in revenue being offset by higher operating expenses. Higher stock-based compensation and cost of services were the primary expense increases during the first nine months of 2024, offset partially by lower cost of subscriber equipment.

Net income (loss)

Net loss was $12.9 million for the nine months ended September 30, 2024 compared to $9.6 million during the same period in 2023. This variance was due primarily to lower operating income and unfavorable fluctuations in foreign currency gains and losses due to the remeasurement of intercompany balances. These items were offset partially by a non-recurring, non-cash loss on extinguishment of debt incurred in 2023.

Adjusted EBITDA

Adjusted EBITDA increased 15% to $105.0 million for the nine months ended September 30, 2024 compared to $91.6 million during the same period in 2023. Generally consistent with the quarterly variance discussed above, an increase in high-margin service revenue was partially offset by higher operating expenses (both excluding adjustments for non-cash or non-recurring items).

Liquidity

As of September 30, 2024, we held cash and cash equivalents of $51.9 million, compared to $56.7 million as of December 31, 2023. During the first nine months of 2024, net cash flows generated from operations of $98.5 million and net cash flows from financing activities of $4.9 million were used to fund capital expenditures of $107.7 million (excluding the effect of exchange rate changes on cash).

Operating cash flows include cash receipts from our customers, primarily from the performance of wholesale capacity services, as well as from subscribers for the purchase of equipment and satellite voice and data services. We use cash in operating activities primarily for network costs, personnel costs, inventory purchases and other general corporate expenditures. Investing outflows largely relate to network upgrades for certain vendors, including milestone work under the satellite procurement agreement and the launch services agreement. Financing activities relate primarily to the 2021 and 2023 funding agreements with our largest customer.

FINANCIAL OUTLOOK

We are updating our previously issued financial outlook for full year 2024 with anticipated results below.

• Total revenue between $245 million and $250 million (prior anticipated range was $235 million to $250 million)

• Adjusted EBITDA margin of approximately 54% (prior anticipated margin was 53%)

CONFERENCE CALL INFORMATION

As previously announced, the Company will host a conference call to discuss its results at 5:00 p.m. Eastern Time (ET) on Thursday, November 7, 2024. Details are as follows:

About Globalstar, Inc.

Globalstar empowers its customers to connect, transmit, and communicate in smarter ways – easily, quickly, securely, and affordably – offering reliable satellite and terrestrial connectivity services as an international telecom infrastructure provider. The Company’s low Earth orbit ("LEO") satellite constellation ensures secure data transmission for connecting and protecting assets, transmitting critical operational data, and saving lives for consumers, businesses, and government agencies across the globe. Globalstar’s terrestrial spectrum, Band 53, and its 5G variant, n53, offer carriers, cable companies, and system integrators a versatile, fully licensed channel for private networks with a growing ecosystem to improve customer wireless connectivity, while Globalstar’s XCOM Radio Access Network ("RAN") product offers significant capacity gains in dense wireless deployments. In addition to SPOT GPS messengers, Globalstar offers next-generation internet of things ("IoT") hardware and software products for efficiently tracking and monitoring assets, processing smart data at the edge, and managing analytics with cloud-based telematics solutions to drive safety, productivity, and profitability.

Note that all SPOT products described in this press release are the products of SPOT LLC, which is not affiliated in any manner with Spot Image of Toulouse, France or Spot Image Corporation of Chantilly, Virginia.

For more information, visit www.globalstar.com.

Safe Harbor Language for Globalstar Releases

Certain statements contained in this press release other than purely historical information, including, but not limited to, expectations regarding future revenue, financial performance, financial condition, liquidity, projections, estimates and guidance, statements relating to our business plans, objectives and expected operating results, our anticipated financial resources, our ability to integrate the licensed technology into our current line of business, our expectations with respect to the pursuit of terrestrial spectrum authorities globally, the success of current and potential future applications for our terrestrial spectrum, our ability to meet our obligations and attain the attempted benefits under the updated services agreements, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "plan," "may," "could," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions, although not all forward-looking statements contain these identifying words. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Risks and uncertainties that could cause or contribute to such differences include, without limitation, those described under Item 1A. Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and in the Company’s other filings with the SEC. The Company undertakes no obligation to update any of the forward-looking statements after the date of this press release to reflect actual results, future events or circumstances or changes in our assumptions, business plans or other changes.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241107317312/en/

Contacts

Investor Contact Information:
[email protected]