Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Globalstar Inc (GSAT, Financial) reported a 25% increase in total revenue for the third quarter of 2024, reaching a record $72 million.
- Service revenue increased by 28%, driven primarily by wholesale capacity revenue and performance bonuses.
- Adjusted EBITDA increased by 34% with a margin of 59%, up from 55% in the prior year's third quarter.
- The company successfully extended its services agreement with its largest customer, which includes the provision of a new network.
- Globalstar Inc (GSAT) received FCC approval to extend its authorization for 15 years to operate up to 26 replacement satellites, enhancing its leadership in mobile satellite services.
Negative Points
- The financial results included an out-of-period item totaling $7.5 million, which contributed to variability in financial performance.
- There is uncertainty regarding the quantification of network usage during recent hurricanes, with no specific data provided.
- The timeline for the new satellite constellation and its impact on revenue remains uncertain, with no specific details disclosed.
- The company faces challenges in meeting customer expectations and internal processes for broader rollout of services.
- There may still be variability in future financial results due to performance bonuses and other factors.
Q & A Highlights
Q: Can you quantify the network usage during the recent hurricanes and provide insights on the location of usage with the latest software update?
A: Paul Jacobs, CEO, explained that while specific quantification in terms of power usage isn't straightforward, there was a significant increase in satellite utilization. However, details on location usage cannot be disclosed due to customer confidentiality. He also noted skepticism about other companies' claims of usage during the hurricanes, as Globalstar's own employees faced access issues.
Q: With the new constellation announcement, when do customer interest and revenue discussions begin?
A: Paul Jacobs, CEO, stated that while it's early to disclose specifics, discussions have started regarding the services to be provided with the new constellation. The technology team is actively working on capabilities, but no specific details are available yet.
Q: Is everything on track for the satellite launches next year, and can you provide more specific timing?
A: Paul Jacobs, CEO, confirmed that the satellite launches are progressing according to expectations, but no updated timing has been provided.
Q: Can you explain the cash flow from the new service agreement and satellite constellation funding?
A: Rebecca Clary, CFO, detailed that the new deal is funded by a $1.1 billion infrastructure prepayment and a $400 million equity sale in the SPE. This $1.5 billion will be used for CapEx on a quarterly basis during the construction period. Additionally, the debt refinancing has been completed as per the recent 8-K filing.
Q: Regarding the Liquid Intelligent deal, when might it impact financials, and is this a strategy to be duplicated?
A: Paul Jacobs, CEO, mentioned that proof of concepts are underway to train Liquid's team, and similar value-added reseller strategies are expected to be used in the future. This approach allows Globalstar to leverage partners' expertise in deep vertical applications.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
