Globalstar, Inc. (NYSE American: GSAT) (“Globalstar” or the
“Company”) today announced its financial results for the third
quarter ended September 30, 2024.
"Globalstar reported strong third quarter results highlighted by
a 25% increase in total revenue. Net income and Adjusted EBITDA
both benefited significantly from the increase in high-margin
revenue with a favorable fluctuation in net income of $16 million
and an increase in Adjusted EBITDA of 34%, reaching a record high
during the quarter. Growth in wholesale capacity revenue continues
to be the primary driver of our improved financial results with
other recent business initiatives also contributing overall. As a
result, we are increasing the low end of our revenue guidance to
$245 million from $235 million and Adjusted EBITDA margin to 54%
from 53%,” commented Rebecca Clary, Chief Financial Officer.
Dr. Paul E. Jacobs, Chief Executive Officer, said, “I am pleased
with our third quarter results and progress on our long-term growth
strategy. I am also extremely proud of the Globalstar team's
efforts in response to the tragic events of Hurricanes Helene and
Milton, during which we maintained excellent service quality
throughout the impacted regions. Globalstar's system was
commercially available and able to serve a dramatic increase in
usage as numerous users affected by such events were able to access
our satellites to request emergency assistance as well as
communicate with friends and family."
Dr. Jacobs added, "In support of our mission to provide
mainstream satellite connectivity, during the third quarter, the
FCC approved our application to extend the term of our senior
HIBLEO-4 constellation by an additional 15 years and operate up to
26 replacement satellites. This modification will enable us to
continue to provide a variety of essential communications services
to our customers.”
Dr. Jacobs concluded, “Building on the foundation of successful
execution in our wholesale consumer segment, we recently announced
a significant extension of the services agreements with our largest
customer. The updated services agreements enable further growth of
our mobile satellite services, and include a new satellite
constellation, expanded ground infrastructure and increased global
mobile satellite services licensing. We are pleased to enter this
next phase of growth, and look forward to providing updates on a
wide range of activities and initiatives at our upcoming investor
day on December 12.”
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:
Earnings Call:
The earnings call will be available via
webcast from the following link.
Webcast Link:
https://edge.media-server.com/mmc/p/ssnimn99
To participate in the earnings call via
teleconference or to participate in the live Q&A session,
participants should register at the following link to receive an
email containing the dial-in number and unique passcode.
Participant Teleconference Registration
Link:
https://register.vevent.com/register/BIfbf09ce58a9544b79a79cf28dde1ae2a
Audio Replay:
For those unable to participate in the
live call, a replay of the webcast will be available in the
Investor Relations section of the Company's website.
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.
GLOBALSTAR, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Revenue:
Service revenue
$
68,908
$
53,643
$
180,008
$
155,245
Subscriber equipment sales
3,399
4,040
9,164
16,154
Total revenue
72,307
57,683
189,172
171,399
Operating expenses:
Cost of services (exclusive of
depreciation, amortization, and accretion shown separately
below)
19,185
13,872
54,058
37,938
Cost of subscriber equipment sales
2,515
3,458
6,739
13,429
Marketing, general and administrative
10,439
12,090
31,438
31,843
Stock-based compensation
8,254
4,346
26,645
10,638
Reduction in the value of long-lived
assets
231
35
536
35
Depreciation, amortization, and
accretion
22,249
21,865
66,456
65,688
Total operating expenses
62,873
55,666
185,872
159,571
Income from operations
9,434
2,017
3,300
11,828
Other income (expense):
Loss on extinguishment of debt
—
—
—
(10,403
)
Interest income and expense, net of
amounts capitalized
(2,872
)
(3,945
)
(10,301
)
(11,047
)
Foreign currency gain (loss)
4,918
(4,151
)
(3,417
)
(206
)
Other
186
25
(605
)
373
Total other income (expense)
2,232
(8,071
)
(14,323
)
(21,283
)
Income (loss) before income taxes
11,666
(6,054
)
(11,023
)
(9,455
)
Income tax expense
1,732
115
1,922
185
Net income (loss)
$
9,934
$
(6,169
)
$
(12,945
)
$
(9,640
)
Net income (loss) attributable to common
shareholders
7,261
(8,842
)
(20,906
)
(17,572
)
Net income (loss) per common share:
Basic
$
0.00
$
(0.00
)
$
(0.01
)
$
(0.01
)
Diluted
0.00
$
(0.00
)
(0.01
)
(0.01
)
Weighted-average shares outstanding:
Basic
1,892,253
1,836,251
1,886,377
1,820,582
Diluted
1,910,061
1,836,251
1,886,377
1,820,582
GLOBALSTAR, INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except par value
and share data)
(Unaudited)
September 30, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
51,916
$
56,744
Accounts receivable, net of allowance for
credit losses of $1,446 and $2,312, respectively
43,021
48,743
Inventory
11,877
14,582
Prepaid expenses and other current
assets
20,638
22,584
Total current assets
127,452
142,653
Property and equipment, net
617,064
624,002
Operating lease right of use assets,
net
34,364
34,164
Intangible and other assets, net of
accumulated amortization of $14,742 and $12,385, respectively
138,681
123,490
Total assets
$
917,561
$
924,309
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Current portion of long-term debt
$
34,600
$
34,600
Accounts payable and accrued expenses
34,417
28,985
Accrued satellite construction costs
1,015
58,187
Payables to affiliates
274
459
Deferred revenue, net
46,548
53,677
Total current liabilities
116,854
175,908
Long-term debt
359,759
325,700
Operating lease liabilities
28,554
29,244
Other non-current liabilities
18,301
14,478
Total non-current liabilities
406,614
369,422
Stockholders’ equity:
Series A Preferred Convertible Stock of
$0.0001 par value; 300,000 shares authorized and 149,425 issued and
outstanding at September 30, 2024 and December 31, 2023,
respectively
—
—
Voting Common Stock of $0.0001 par value;
2,150,000,000 shares authorized; 1,892,348,276 and 1,881,194,682
shares issued and outstanding at September 30, 2024 and December
31, 2023, respectively
189
188
Additional paid-in capital
2,466,279
2,438,703
Accumulated other comprehensive income
5,552
5,070
Retained deficit
(2,077,927
)
(2,064,982
)
Total stockholders’ equity
394,093
378,979
Total liabilities and stockholders’
equity
$
917,561
$
924,309
GLOBALSTAR, INC.
RECONCILIATION OF GAAP NET
INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net income (loss)
$
9,934
$
(6,169
)
$
(12,945
)
$
(9,640
)
Interest income and expense, net
2,872
3,945
10,301
11,047
Derivative (gain) loss
(130
)
56
849
(243
)
Income tax expense
1,732
115
1,922
185
Depreciation, amortization, and
accretion
22,249
21,865
66,456
65,688
EBITDA (1)
36,657
19,812
66,583
67,037
Non-cash compensation
8,254
4,346
26,645
10,638
Foreign exchange (gain) loss and other
(4,973
)
4,070
3,175
(234
)
Reduction in value of inventory and
long-lived assets
266
35
571
35
Non-cash expenses and transaction costs
associated with the License Agreement (2)
1,844
3,743
5,455
3,743
Transaction costs
757
—
2,571
—
Loss on extinguishment of debt
—
—
—
10,403
Adjusted EBITDA (1)
$
42,805
$
32,006
$
105,000
$
91,622
(1)
EBITDA represents earnings before
interest, income taxes, depreciation, amortization, accretion and
derivative (gains)/losses. Adjusted EBITDA excludes non-cash
compensation expense, reduction in the value of assets, foreign
exchange (gains)/losses, and certain other non-cash or
non-recurring charges as applicable. Management uses Adjusted
EBITDA to manage the Company's business and to compare its results
more closely to the results of its peers. EBITDA and Adjusted
EBITDA do not represent and should not be considered as
alternatives to GAAP measurements, such as net income/(loss). These
terms, as defined by us, may not be comparable to similarly titled
measures used by other companies.
The Company uses Adjusted EBITDA as a
supplemental measurement of its operating performance. The Company
believes it best reflects changes across time in the Company's
performance, including the effects of pricing, cost control and
other operational decisions. The Company's management uses Adjusted
EBITDA for planning purposes, including the preparation of its
annual operating budget. The Company believes that Adjusted EBITDA
also is useful to investors because it is frequently used by
securities analysts, investors and other interested parties in
their evaluation of companies in similar industries. As indicated,
Adjusted EBITDA does not include interest expense on borrowed money
or depreciation expense on our capital assets or the payment of
income taxes, which are necessary elements of the Company's
operations. Because Adjusted EBITDA does not account for these
expenses, its utility as a measure of the Company's operating
performance has material limitations. Because of these limitations,
the Company's management does not view Adjusted EBITDA in isolation
and also uses other measurements, such as revenues and operating
profit, to measure operating performance.
(2)
In connection with the License Agreement
with XCOM, the Company entered into a Support Services Agreement
(the “SSA”) with XCOM. Fees payable by Globalstar pursuant to the
SSA were or may be paid in shares of its common stock. Costs also
include the initial nonrecurring costs associated with the
transaction as well as non-cash intangible asset technology
amortization associated with the initial purchase of certain
intangible assets made in the form of Globalstar common stock.
GLOBALSTAR, INC.
SCHEDULE OF SELECTED OPERATING
METRICS
(In thousands, except subscriber
and ARPU data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30,
2023
Service revenue:
Subscriber services
Duplex
$
5,955
$
7,978
$
15,675
$
20,088
SPOT
10,444
11,350
31,066
33,703
Commercial IoT
6,650
6,347
19,803
16,881
Wholesale capacity services
43,861
27,517
109,149
83,406
Government and other services
1,998
451
4,315
1,167
Total service revenue
68,908
53,643
180,008
155,245
Subscriber equipment sales
3,399
4,040
9,164
16,154
Total revenue
$
72,307
$
57,683
$
189,172
$
171,399
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Average subscribers
Duplex
26,535
33,501
27,899
35,143
SPOT
242,134
258,485
245,592
262,818
Commercial IoT
512,260
477,344
506,657
472,812
Other
286
376
298
391
Total
781,215
769,706
780,446
771,164
ARPU (1)
Duplex
$
74.81
$
79.38
$
62.43
$
63.51
SPOT
14.38
14.64
14.05
14.25
Commercial IoT
4.33
4.43
4.34
3.97
(1)
Average monthly revenue per user ("ARPU")
measures service revenues per month divided by the average number
of subscribers during that month. Average monthly revenue per user
as so defined may not be similar to average monthly revenue per
unit as defined by other companies in the Company's industry, is
not a measurement under GAAP and should be considered in addition
to, but not as a substitute for, the information contained in the
Company's statement of operations. The Company believes that
average monthly revenue per user provides useful information
concerning the appeal of its rate plans and service offerings and
its performance in attracting and retaining high value
customers.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241107317312/en/
Investor Contact Information:
investorrelations@globalstar.com
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