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The Shocking Recent History Of Iridium Communications
As everybody knows, companies are wont to talk a big game and then deliver a slightly smaller game. Nowhere is this more true than in the technology sector. Enterprise software companies in particular - because software is, one, ephemeral in nature and two, still unbelievably basic in function - like to paint a Utopian picture of how the world is going to be (well, the world of enterprise software anyway) and then show you a little pencil sketch of how their little corner of the world is decidedly mired in real-world problems today but with the help of this public-spirited vendor can edge just a little bit towards Utopia tomorrow. Then beat the guide a little. Stock up! Rinse and repeat.
Iridium Communications doesn’t have software DNA. It has telco DNA. The good kind. Not bloated wannabe media company telco. Telco telco. You know, sending electrons and photons and radio waves from A to B as cheaply and efficiently and as reliably as possible. Then charging you big for the privilege and printing cashflow all day long to then fork over to the retirement scheme that the telco has been dragging around these last hundred years.
Oh, except $IRDM doesn’t have an AT&T or Verizon style army of retired janitors to feed. It has some big ol loans to pay down, but then it’s telco, so nothing new there. And its loans look like leveraged buyout loans which means they are relatively cheap and undemanding as regards amortization payments.
Most importantly, $IRDM just did something totally unexpected in telco-land or indeed corporate-land. It just did exactly what it said it was going to do when it raised and then spent a Yuge Amount Of Capex in the 2015-2018 timeframe. Here’s what it did:
It stopped spending Yuge Amounts Of Capex.
Then it did something even more remarkable.
It started generating the level of unlevered pretax free cashflow margins (trans., n., “Actual Money”) that it promised it would when it raised the Yuge Loans to pay for the Yuge Capex.
Wait, what?
Yup.
And this has been going on for a while now while everyone was fretting about the end of mobility and how you didn’t need phones or data on ships anymore because, you know, no ships going anywhere because no supply chain and blah.
The company printed its Q1 earnings yesterday before the bell. In our Growth Investor Pro service we were at Buy going in, and yea verily was our confidence rewarded. And we think there’s plenty more gains yet to come. We walk you through the numbers and our outlook below, for our paying subscribers only.
If you’re not yet a paying subscriber and you’d like to receive our actionable calls in this newsletter, we’d love you to join. We keep our costs low, low, low. Just $9/mo or $89/yr right now, though we are surrendering to the tide of inflation and moving prices up to $19/mo or $149/yr come 1 May, so if you’re on the fence, jump now! We NEVER raise prices on existing members - you keep your day one price for as long as you stay with us.
Anyway, back to the glittering story of Iridium.