GSAT - NASDAQ

Good day, and thank you for standing by. Welcome to the Globalstar, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rebecca S. Clary, CFO. Please go ahead.

Thank you, operator, and good morning, everyone. Before we begin, please note that today's call contains forward-looking statements intended to fall within the safe harbor provided under the securities laws. Factors that could cause results to differ materially are described in the Risk Factors section of Globalstar, Inc.’s SEC filings, including its most recent Annual Report on Form 10-Ks and its other SEC filings, as well as today's earnings release. Also note that management may reference EBITDA, adjusted EBITDA, free cash flow, or adjusted free cash flow on this call, which are financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in the earnings release, which is available on our website. Today, I will walk through our fourth quarter and full year 2025 financial results, then discuss liquidity and our 2026 guidance. Starting with the full year, total revenue reached a record $273,000,000, a 9% increase over 2024 and in line with our guidance. This marks our fourth consecutive year of record revenue. Service revenue was $257,300,000, up 8%, driven primarily by increased wholesale services. Subscriber equipment revenue was $15,700,000, up 24%, reflecting a higher volume of commercial IoT device sales. Turning to profitability, we generated income from operations of $7,400,000 compared to a loss of $900,000 in 2024. This improvement was due to higher revenue, as previously discussed, partially offset by increased operating expenses, including personnel costs to support our next-generation buildout, continued investment in XCOM RAN development, and higher legal and professional fees. During the year, operating expenses benefited from $3,900,000 in employee retention credits received under the CARES Act, which were allocated between cost of services and SG&A. Net loss improved to $7,600,000 from $63,200,000 in 2024. This improvement was due primarily to the prior year reflecting a non-recurring non-cash loss on extinguishment of debt related to the paydown of the 2023 13% notes. We also benefited from favorable foreign currency remeasurement on intercompany balances and non-cash gains on the quarterly mark-to-market adjustment of our derivative asset. These items were partially offset by higher non-cash imputed interest related to the 2024 prepayment agreement. Adjusted EBITDA reached a record $136,100,000, representing a 50% margin, in line with our guidance. This increase over 2024 reflects higher revenue, partially offset by higher operating expenses, primarily due to investment in growth opportunities. Specifically, while we continue to enhance and develop our XCOM RAN product and service offerings, we incur costs in advance of revenue. Turning to Q4, total revenue was $72,000,000, including $67,400,000 of service revenue and $4,600,000 from equipment sales. Service revenue increased 17% and equipment revenue increased 31% compared to Q4 2024. The revenue increase was driven primarily by wholesale services, including performance bonuses earned in the quarter and additional service fees associated with network cost reimbursement. We also saw contributions from growth in commercial IoT subscribers and device sales and revenue under our agreement with Parsons, partially offset by Duplex and SPOT subscriber churn and lower XCOM RAN sales. Q4 loss from operations was $400,000, a meaningful improvement from a $4,200,000 loss from operations in Q4 2024. I would also note that cost of subscriber equipment sales included a $1,100,000 charge related to tariffs on equipment imported and then re-exported to foreign subsidiaries where previously recorded duty drawbacks are no longer deemed probable of recovery. Q4 net loss was $10,600,000 compared to $50,200,000 in the prior year, with the improvement largely attributable to the same non-cash activity that impacted the full year period. Q4 adjusted EBITDA was $32,400,000, up 7% from the prior year's quarter. Turning to the balance sheet, we ended the year with $447,500,000 in cash and cash equivalents, up from $391,200,000 at year-end 2024. Operating cash flows during 2025 were $621,700,000, which included $430,600,000 received in connection with the infrastructure prepayment. Capital expenditures were $550,400,000, primarily related to our commitments under the updated services agreements for the deployment of the replacement satellites as well as the extended MSS network, which includes a new satellite constellation, expanded ground infrastructure, and increased global MSS licensing. Adjusted free cash flow for the year was $171,500,000, up from $131,900,000 in 2024. 2025 benefited from $45,000,000 in accelerated service payments and higher ongoing service fees, partially offset by increased operating cost. Our principal debt balance was $410,000,000 at year-end, down modestly from $417,500,000 at the end of 2024, reflecting scheduled recoupments of $34,600,000 under the 2021 funding agreement, partially offset by $27,100,000 in new issuance under the 2023 funding agreement. Looking ahead to 2026, we expect total revenue between $280,000,000 and $305,000,000 with an adjusted EBITDA margin of approximately 50%. This outlook reflects our confidence in the continued growth trajectory of the business as we scale our next-generation infrastructure and expand our commercial opportunities. With that, I will turn the call over to Paul.

Thanks, Rebecca, and good morning, everyone. Great to be with you today, and I appreciate everyone joining us for our fourth quarter and full year 2025 update. 2025 was a transformational year for Globalstar, Inc. We closed the year with record full-year revenue of $273,000,000, representing a 9% increase year over year, and delivered an adjusted EBITDA margin of 50%. These results reflect strong execution, operating discipline, and continued progress across every major dimension of our business. Throughout the year, we focused on scaling the core business while laying the foundation for our next phase of growth, and we believe our financial performance clearly reflects that balanced approach. From a strategic perspective, we made meaningful advances across product innovation, infrastructure expansion, regulatory progress, and market diversification. One of the most important milestones during the year was the launch of two-way satellite IoT capabilities and the completion of the commercial rollout of our RM-200MS module. This represents a significant expansion of our IoT portfolio, moving beyond one-way monitoring to enable reliable command and control for enterprise, government, and industrial customers. Two-way IoT meaningfully expands our addressable market, strengthens our partner-led go-to-market model, and enables higher-value use cases where resilience, reliability, and confirmation are mission critical. At the same time, we continue to accelerate diversification across end markets. During 2025, we secured early government and defense wins, expanded our presence in agriculture, wildfire response, industrial IoT, and public safety, and built momentum across multiple verticals. This diversification strategy is intentional and increasingly important as it reduces reliance on any single market while positioning Globalstar, Inc. to serve a broad range of customers with complex connectivity requirements. In the government and defense sector specifically, we achieved several important milestones. With our partner Parsons, we completed a successful proof of concept, began customer trials, and are expanding our relationship to include private 5G solutions for the federal market. We also completed and are continuing to invest in XCOM RAN-based 5G research to evaluate high-capacity private wireless architectures for defense applications. Additionally, we are also pleased to highlight a recent development validating the strength of our broader connectivity platform. Fireworks, which was formerly XCOM Labs, was awarded a Phase II Small Business Innovation Research contract worth $1,900,000 from the Office of the Undersecretary of War to develop an advanced 5G system for challenging RF environments. As part of that effort, Fireworks selected Globalstar, Inc. as a technology partner, leveraging our XMRI5 platform. This collaboration underscores the growing relevance of our technology beyond traditional satellite services and reflects the confidence in our ability to support mission-critical communications. These initiatives reinforce the relevance of our architecture for defense and government use cases and demonstrate growing confidence in our ability to support high-priority mission requirements. Taken together, we believe these efforts are a meaningful expansion of our government and defense footprint, and we expect this area to become an increasingly important contributor to our business over time. More broadly, we continue to see steady demand for our products and services, with new customers and emerging use cases coming online as we execute against a clearly defined go-to-market strategy focused on scalable long-term growth. That growth is underpinned by our continued investment in our infrastructure. During the year, we made significant progress expanding our global ground station network across multiple continents. We believe these investments will strengthen capacity, improve redundancy, and enhance readiness for our next-generation services, including our C3 constellation. In parallel, we advanced our ITU financial commitments, completing 50% of the investment we pledged. These efforts are foundational and are expected to prepare our network to support future satellite capacity and expanded service offerings. We also continue to advance the XCOM RAN ecosystem. Boingo completed a proof-of-concept trial demonstrating the ability for XCOM RAN to support next-generation private 5G deployments, and we believe the integration of our platform into Boingo's private network portfolio highlights growing partner engagement and commercial relevance. From a team standpoint, momentum remains strong throughout the year. Average commercial IoT subscribers increased 6% year over year, while IoT hardware sales revenue grew 50% year over year. This growth reflects sustained demand across asset tracking, monitoring, and safety applications, as well as increasing adoption of higher-value solutions enabled by two-way connectivity. We believe these trends demonstrate both the durability of our IoT business and the upside potential as new capabilities continue to scale. The progress we made in 2025 reflects disciplined execution across multiple fronts, from infrastructure and regulation to product innovation and market expansion. We are moving decisively from groundwork to growth, and we believe we have a strong foundation in place as we enter 2026. Looking ahead, we remain confident in the strength of our strategic roadmap and our ability to execute against it. With key authorizations for C3 and continued progress across our ground network, commercial momentum for two-way IoT capabilities, and growing traction for XCOM RAN, we believe Globalstar, Inc. is uniquely positioned to deliver differentiated connectivity solutions that combine satellite innovation, licensed spectrum, and proprietary wireless technology. Finally, there has never been a more exciting time to be in space and the broader connectivity ecosystem. As demand continues to grow for resilient, interoperable solutions that bridge satellite and terrestrial networks, we believe Globalstar, Inc. is ideally positioned to benefit from the convergence. One factor became increasingly clear last year: proprietary, globally harmonized spectrum matters. Our licensed MSS spectrum remains a core differentiator and a foundational asset as the market evolves. Whether it is traditional satellite communications, IoT, or D2D, our dedicated global space spectrum can enable flexibility, reliability, and resiliency. The progress we achieved in 2025 reflects the talent and dedication of our global team, and we are energized by the momentum we are carrying into the year ahead. Thank you again for joining us today and for your continued support of Globalstar, Inc. We look forward to updating you on our progress in quarters to come. I will now turn the call back to the operator for Q&A.

Thank you. We will now open for questions. Please press *11 on your telephone and wait for your name to be announced.

And our first question comes from Edison Yu of Deutsche Bank. Your line is open.

Thank you for taking our questions. Congratulations on progress, and apologies about any background noise. First, I want to bring up a topic to you, Paul. There has been a lot of excitement about data centers in space. I think it is probably something maybe not something you would tackle directly as a company, but just curious on your thoughts about the idea of doing this and potentially some ancillary opportunities that could evolve from that.

I mean, obviously, we are very focused on direct-to-cell and IoT and not really on the data center side. And obviously, with all the demand for compute and AI and the difficulties people are having building data centers and power being an issue, I understand why people are excited about it. And it certainly creates another reason for needing launch capacity, which there is going to be increasingly more launch capacity as new vendors come online. So I understand how the industry is excited about it. I think there are a lot of technical challenges to it. Obviously, maintenance is a lot harder, upgrades are a lot harder, cooling and so forth are hard in space. But this is a great technical challenge for people and certainly an interesting thing. And if you are a science fiction fan, it kind of maps out to a lot of things people have talked about over the years about what humanity will do in space. So it is exciting, but it is definitely not our focus area.

Understood. And then switching gears, what should we think about as the next milestones for the C3 constellation? Is there anything this year that you would call out that would be of particular importance?

We just did the critical design review, so that is a very important portion of making sure that the system design, and holistically the entire system, is designed well. We will continue to do a lot of work in terms of ground network buildout. Obviously, there is a lot of work going on on the regulatory side, and discussions are advancing well, and regulators are excited about the capabilities that Globalstar, Inc. has already brought to market either by ourselves or our partners. There are a lot of SOS and emergency capabilities, and it has been demonstrated over and over. So as we go to C3, things only get better: more capabilities and more satellites in orbit. We are continuing to tick off and grind away on all these items. It is not a high-level thing; you have to be on top of every single little detail, and that is what the teams have been doing. It is not one thing; it is many, many things across the board to get done.

Indeed. And last one for me, just on XCOM RAN. You made some progress since last quarter with Boingo. Can you remind us what specific customer KPIs were validated or that you found to be very encouraging as part of this process? And is this giving more confidence in getting future pipeline?

The kinds of things that people are looking for include the ability to get a lot of throughput in a dense environment. That was the thing that we always touted about the technology in the beginning. With Boingo, one of the other things that is really cool is that we can run the system over DAS—distributed antenna systems—so we can overlay that. A DAS system generally just gives you more coverage, but not more capacity, but because we can process the data from each radio node or head, we can actually increase the capacity in the system as well. Then there are other things that we have demonstrated in warehouse automation in terms of ease of deployment and the fact that if you cluster users in a given area, it does not take down the capacity of the whole system; it still shares the capacity of all the radio nodes that are there. Those kinds of capabilities and KPIs are important. And then, obviously, just getting to commercial hardening. We have been testing the system under difficult circumstances, and we have been able to prove to very demanding customers that this system is commercially ready. In terms of the pipeline, we focused on warehouse automation, and now we are looking at what are the other use cases. Is it with CBRS, is it military use cases, and with Boingo, we are talking about other stadiums, convention centers—places where there is high density of users—and not to mention military bases as well. The pipeline is one we are excited by, as are the go-to-market partners that we have.

Thank you.

Thank you.

Thank you. Our next question comes from Mike Crawford of B. Riley Securities. Your line is open.

Thank you. Good morning. Could you help walk through the utility of having both MSS and terrestrial 5G flexibility with your S-band spectrum and as well as perhaps maybe how we should think about any potential interference issues?

We have talked about the fact that in the future, there is a lot of synergy between warehouse automation and the fact that you can track using IoT—satellite IoT—anywhere you go and cover a complete supply chain and logistics. Those kinds of things are interesting, but it is also the fact that because of a global system, we have spectrum globally, and so for companies and partners that are looking to have some kind of terrestrial capability anywhere in the world, the fact that we have that spectrum means we really believe that we can go get those opportunities to the extent that our partner is interested in that as well. It is a nice synergy due to the global, harmonized nature of it. From an enterprise standpoint, the idea is that if you are in cellular coverage or running a terrestrial network on that spectrum, if a device is not immune, we can manage which frequency bands are being used, which time is being used, and what system data the end user needs to use at a given time. Our satellite modem started out—the first version of the two-way modem does not have multimode capability—that is what we are working on right now. That is going through certification, and they will have multimode capability very quickly and be able to manage both and, of course, support terrestrial modes.

Okay. Thank you, Paul. Actually, it is a little difficult to hear you because your line is breaking up a little bit. I will just ask one final question. Can Globalstar, Inc. share any targeted launch windows for the replenishment satellites this year?

We are not updating beyond saying second quarter this year for the first launch and second half for the second launch.

Excellent. Thank you.

Thank you.

Thank you. As a reminder, if you have a question, please press *11.

And our next question comes from Gregory R. Pendy of Clear Street. Your line is open.

Hey, guys. Thanks for taking my question, and congrats on 2025. I just wanted to zero in on the IoT offering. Can you remind us when your services went live for two-way communications? I believe it was somewhat mid-quarter. And, in addition, it looks like from your ARPU, you have not changed pricing. Is that correct, and is that likely to continue going forward? Thanks.

What is going on with the two-way system is that our customers are actually building out their solutions right now, so you will not see revenues from two-way IoT in any significant amount right now. These customers are in process of validating their end-to-end systems and so forth. The module went commercial; it is tested, it is hardened, it is in mass production now, and we are waiting on customers to finish their applications because these are built into some other device.

So is it fair to say that that was not benefiting the subscribers in the quarter because you had decent growth?

That is still one-way systems predominantly.

Okay. Very helpful. Thanks a lot.

Sure.

Thank you.

And our next question comes from Logan W Lillehaug of Craig-Hallum. Your line is open.

Hey, guys. Logan on for George here this morning. You mentioned the contribution from Parsons in the quarter. I was hoping you could just talk kind of broadly about how the government pipeline has shaped up over the past few quarters and just what you are seeing there. And on that note, as we think about the longer-term guidance, how would you frame what is considered in there in terms of government contribution?

The pipeline has two aspects. There are things that we are already talking about and working with them on, and then there are newer opportunities that we are still in the process of evaluating and contracting. The pipeline is very large, and I am really busy, pretty much with a focus on the near-term opportunities there. We have not made any announcements about new awards beyond what we have said. The near-term revenue comes from the idea that we will expand over other regions, and we get payment as other regions come online. That is the near-term. Then, as they shift their solution into the devices, we get the revenue from that. Predominantly today, it is the buildout of the network to support other regions of the world.

Got it. Just one other really quick one. Can you remind us where you are on the upgrade of the ground infrastructure for the longer-term MSS network?

We committed to the ITU to spend $2,000,000,000 on extending the network, and we are halfway through that. That includes money that went into the satellites as well, but it gives you a sense of how far along we are. Those buildouts are going quite well on the ground side. The company is experienced in doing these kinds of things. We had to do it for the original launch of the original wholesale business for our current customer. We know how to do this pretty well, and we have been making continuous announcements as different countries come online. You can see a list if you look through the press releases of all the places that are up and going now.

Yep. Okay. Got it. Thank you.

Sure. Thank you.

Thank you. I am showing no further questions at this time. I would like to turn the conference back to Paul E. Jacobs for closing remarks.

Thanks, everybody, again for joining us. It was a great year, a lot of stuff going on, and I really want to say thank you to our partners, our customers, and to all the employees at Globalstar, Inc. You have done an excellent job this year, really focused on getting stuff done, and that obviously reflects results that our investors are looking for. We will continue to execute and look forward to talking to you about progress and our growth going forward. Thanks, everybody, again.