IRDM

You should read the following discussion along with our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed on February 12, 2026 (our “2025 Form 10-K”) with the SEC, as well as our condensed consolidated financial statements included in this Form 10-Q. This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking statements include those that express plans, anticipation, intent, contingencies, strategies, goals, targets or future developments, market trends, expected competition or otherwise are not statements of historical fact. Without limiting the foregoing, the words “believe,” “anticipate,” “plan,” “expect,” “intend” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on our current expectations and projections about future events, and they are subject to risks and uncertainties, known and unknown, that could cause actual results and developments to differ materially from those expressed or implied in such statements. The important factors described under the caption “Risk Factors” in our 2025 Form 10-K, as updated and supplemented by this Form 10-Q, could cause actual results to differ materially from those indicated by forward-looking statements made herein. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Overview of Our Business We are a leading provider of global voice, data and positioning, navigation and timing (“PNT”) satellite services and are the only commercial provider of communications services offering true global coverage, connecting people, organizations, and assets to and from anywhere, in real time. Our low-earth orbit (“LEO”), L-band network provides specialized, reliable, weather-resilient communications services to regions of the world where terrestrial wireless or wireline networks do not exist or are limited, including remote land areas, open ocean, airways, the polar regions and regions where the telecommunications infrastructure has been affected by political conflicts or natural disasters. In addition, our satellites have other payloads that facilitate specific additional services for customers, such as our subsidiary Aireon LLC’s space-based air traffic surveillance system. We also utilize our long history operating a commercial LEO satellite system to provide a growing array of engineering and operational services to government customers and government network operators such as the U.S. Space Force. Our primary business is to provide voice and data communications services to businesses, U.S. and foreign governments, non-governmental organizations and consumers via our satellite network, which has an architecture of 66 operational satellites with in-orbit spares and related ground infrastructure. We utilize an interlinked mesh architecture to route traffic across the satellite constellation using radio frequency crosslinks between satellites. This architecture minimizes the need for ground facilities to support the constellation, which facilitates the global reach of our services and allows us to offer services in countries and regions where we have no physical presence. We primarily sell our products and services to commercial end users by recruiting and expanding a global wholesale distribution network, currently encompassing approximately 120 service providers, approximately 320 value-added resellers (“VARs”), and approximately 100 value-added manufacturers, which create and sell technology that uses the Iridium network either directly to the end user or indirectly through other service providers, VARs or dealers. These distributors often integrate our products and services with other complementary hardware and software and have developed a broad suite of applications using our products and services to target specific industries or business areas. We expect that demand for our services will increase as more applications are developed and deployed that utilize our technology. As of June 30, 2026, we had approximately 2,627,000 billable subscribers worldwide, an increase of 144,000, or 6%, from approximately 2,483,000 billable subscribers as of June 30, 2025. We have a diverse customer base, including end users in land mobile, Internet of Things (“IoT”), maritime, aviation and government. Aireon Acquisition On May 13, 2026, we entered into a Securities Purchase Agreement with NAV CANADA, the Irish Air Navigation Service, ENAV S.P.A., Naviair Surveillance A/S, NATS (Services) Limited, and certain of their affiliated entities (the “Sellers”), pursuant to which, on July 2, 2026 (the “Aireon Closing Date”), we, through our wholly owned subsidiary, Iridium Monitor Holdings LLC (“Iridium Monitor Holdings”), closed our acquisition of Aireon Holdings LLC (“Aireon Holdings”), acquiring the remaining 60.5% of equity interests in Aireon Holdings that we did not already own (the “Aireon Closing”). We now indirectly own all of the membership interests in Aireon Holdings and its subsidiary Aireon LLC (“Aireon”), which is the operator of the world’s only space-based ADS-B air traffic surveillance system. We acquired the additional equity interest for approximately $366.7 million, 50% in cash and 50% deferred and in the form of a loan by the Sellers, payable one year following the Aireon Closing pursuant to a Credit and Guaranty Agreement. We view this acquisition as a defining step toward achieving our long-term business objective to provide the foundational architecture for global aviation safety, bringing space-based surveillance, safety communications, PNT, and operational data together on a single network. 20 Anticipated Merger with Rocket Lab Corporation On June 28, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Rocket Lab Corporation (“Rocket Lab”), pursuant to which we agreed to be acquired by Rocket Lab (the “Transaction”). Subject to the terms and conditions set forth in the Merger Agreement, each issued and outstanding share of our common stock, other than as specified in the Merger Agreement, will be converted into the right to receive (i) $27.00 in cash and (ii) a number of shares of Rocket Lab’s common stock equal to the Exchange Ratio (as defined below). The “Exchange Ratio” will be the following: (i) if the Rocket Lab Common Stock Price (as defined below) is equal to or less than $67.50, then the Exchange Ratio will be 0.4000; (ii) if the Rocket Lab Common Stock Price is greater than $67.50 but less than $112.50, then the Exchange Ratio will be the quotient obtained by dividing $27.00 by the Rocket Lab Common Stock Price, rounded to four decimal places; and (iii) if the Rocket Lab Common Stock Price is equal to or greater than $112.50, then the Exchange Ratio will be 0.2400. “Rocket Lab Common Stock Price” is defined as the volume weighted average price per share of Rocket Lab’s common stock on the Nasdaq Global Select Market for the period of the ten consecutive trading days ending on and including the second full trading day prior to the First Effective Time (as defined in the Merger Agreement). The Merger Agreement provides each of us and Rocket Lab with certain termination rights and, under certain circumstances, may require us to pay a $223.6 million termination fee. Our Board of Directors unanimously approved the Merger Agreement and resolved to recommend that our stockholders approve the adoption of the Merger Agreement and the Transaction. In addition, each of our directors holding shares of our common stock has entered into a voting agreement to support the Transaction. The Transaction is expected to be completed in mid-2027, subject to the satisfaction of customary closing conditions, including (i) the adoption of the Merger Agreement and the Transaction by the affirmative vote of the holders of a majority of our outstanding common stock; (ii) the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and consent of the U.S. Federal Communications Commission to the transfer of control of certain of our telecommunication authorizations; (iii) receipt of clearances or approvals under other specified foreign investment and satellite and telecommunications laws; (iv) the absence of any order or law issued, enforced or enacted by a governmental authority in certain specified jurisdictions that prevents, makes illegal or enjoins the consummation of the Transaction; (v) there having not occurred a Company Material Adverse Effect or a Parent Material Adverse Effect, each as defined in the Merger Agreement; and (vi) the effectiveness of a registration statement on Form S-4 with respect to shares of Rocket Lab Common Stock to be issued in the Transaction and approval of such shares for listing on the Nasdaq Global Select Market. The Merger Agreement also subjects us to interim operating covenants that generally require us to conduct our business in the ordinary course consistent with past practice and preserve our business organization, key personnel, customer and business relationships, and material assets, and restrict us from or limit us in taking certain actions, including amending our organizational documents; issuing or repurchasing equity securities; declaring dividends or distributions; pursuing acquisitions, dispositions or significant investments; incurring material indebtedness or capital expenditures; entering into, terminating or materially modifying certain significant contracts; taking certain actions with respect to employee compensation and benefit arrangements, accounting, and tax matters; settling material litigation; and taking certain actions affecting our satellite operations, telecommunications permits, or other material assets. For more information regarding the Transaction and related arrangements, see the Current Report on Form 8-K that we filed on June 29, 2026. 21 Material Trends and Uncertainties Our industry and customer base have historically grown as a result of: •demand for remote and reliable mobile communications services; •a growing number of new products and services and related applications; •a broad wholesale distribution network with access to diverse and geographically dispersed niche markets; •increased demand for communications services by disaster and relief agencies, emergency first responders, businesses and consumers; •improved data transmission speeds for mobile satellite service offerings; •regulatory mandates requiring the use of mobile satellite services; •a general reduction in prices of mobile satellite services and subscriber equipment; and •geographic market expansion through the ability to offer our services in additional countries. Nonetheless, we face a number of challenges and uncertainties in operating our business, including: •our ability to maintain the health, capacity, control, and level of service of our satellites; •our ability to develop and launch new and innovative products and services; •changes in general economic, business, and industry conditions, including the effects of currency exchange rates; •our reliance on a single primary commercial gateway and a primary satellite network operations center; •increased competition or potential competition from other satellite service providers, including SpaceX following its announced plans to acquire a significant amount of spectrum enabling global direct-to-device (“D2D”) services, and, to a lesser extent, from the expansion of terrestrial-based cellular phone systems and related pricing pressures; •market acceptance of our products; •regulatory requirements in existing and new geographic markets; •challenges associated with global operations, including as a result of conflicts in or affecting markets in which we operate; •rapid and significant technological changes in the telecommunications industry, including global satellite D2D broadband services; •our ability to generate sufficient internal cash flows to repay our debt; •reliance on our wholesale distribution network to market and sell our products, services, and applications effectively; •reliance on a global supply chain, including single-source suppliers for the manufacture of most of our subscriber equipment and for some of the components required in the manufacture of our end-user subscriber equipment and our ability to purchase component parts that are periodically subject to shortages resulting from surges in demand, natural disasters or other events, such as a global pandemic and the imposition of tariffs; •reliance on a few significant customers, particularly agencies of the U.S. government, for a substantial portion of our revenue, as a result of which the loss or decline in business with any of these customers may negatively impact our revenue and collectability of related accounts receivable, including as a result of an extended government shutdown or the use of continuing resolutions; •our ability to realize the expected benefits of our acquisition of Aireon Holdings and effectively integrate Aireon and its personnel with our existing operations; •our ability to complete the Transaction on the anticipated timeline or at all; •the occurrence of any event, change or other circumstance that could give rise to the right of one or both of Rocket Lab or us to terminate the Merger Agreement; •disruption to our business as a result of the announcement and pendency of the Transaction, including due to diversion of management’s attention and time and restrictions in the Merger Agreement that could affect our ability to pursue business opportunities or execute business strategies; and •the possibility that the Transaction may be more expensive to complete than anticipated; and the reputational risk and adverse reactions of customers, suppliers, employees, or other business partners resulting from the announcement of the Transaction. 22 Comparison of Our Results of Operations for the Three Months Ended June 30, 2026 and 2025 Three Months Ended June 30, Change 2026 % of Total Revenue 2025 % of Total Revenue ($ in thousands) Dollars Percent Revenue: Services $ 161,328 72 % $ 155,570 72 % $ 5,758 4 % Subscriber equipment 20,767 9 % 19,455 9 % 1,312 7 % Engineering and support services 43,142 19 % 41,881 19 % 1,261 3 % Total revenue 225,237 100 % 216,906 100 % 8,331 4 % Operating expenses: Cost of services (exclusive of depreciation and amortization) 51,314 23 % 53,603 25 % (2,289) (4) % Cost of subscriber equipment 13,478 6 % 11,302 5 % 2,176 19 % Research and development 5,530 2 % 4,279 2 % 1,251 29 % Selling, general and administrative 67,044 30 % 44,627 21 % 22,417 50 % Depreciation and amortization 53,863 24 % 52,837 24 % 1,026 2 % Total operating expenses 191,229 85 % 166,648 77 % 24,581 15 % Operating income 34,008 15 % 50,258 23 % (16,250) (32) % Other expense: Interest expense, net (19,246) (9) % (22,752) (10) % 3,506 (15) % Other income, net (448) — % (871) — % 423 (49) % Total other expense, net (19,694) (9) % (23,623) (10) % 3,929 (17) % Income before income taxes and loss on equity method investments 14,314 6 % 26,635 13 % (12,321) (46) % Income tax expense (3,125) (1) % (3,807) (2) % 682 (18) % Loss on equity method investments (1,510) (1) % (860) — % (650) 76 % Net income $ 9,679 4 % $ 21,968 11 % $ (12,289) (56) % 23 Revenue Commercial Service Revenue Three Months Ended June 30, 2026 2025 Change Revenue BillableSubscribers (1) ARPU (2) Revenue BillableSubscribers (1) ARPU (2) Revenue Billable Subscribers ARPU (Revenue in millions and subscribers in thousands) Commercial services: Voice and data $ 58.4 402 $ 49 $ 56.8 415 $ 46 $ 1.6 (13) $ 3 IoT data 47.1 2,091 7.64 44.8 1,924 7.83 2.3 167 (0.19) Broadband (3) 11.7 16.0 243 12.7 16.3 260 (1.0) (0.3) (17) Hosted payload and other data 16.5 N/A 14.5 N/A 2.0 N/A Total commercial services $ 133.7 2,509 $ 128.8 2,355 $ 4.9 154 (1)Billable subscriber numbers shown are at the end of the respective period. (2)Average monthly revenue per unit (“ARPU”) is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period. Billable subscriber and ARPU data is not applicable for hosted payload and other data service revenue items. (3)Commercial broadband service consists of Iridium OpenPort and Iridium Certus broadband services. For the three months ended June 30, 2026, total commercial services revenue increased $4.9 million, or 4%, from the prior year period primarily as a result of increases in IoT data, voice and data services and hosted payload and other data services. Commercial IoT revenue increased $2.3 million, or 5%, for the three months ended June 30, 2026, compared to the same period of the prior year, driven by a 9% increase in billable subscribers, offset in part by a decline in ARPU. Hosted payload and other data service revenue increased $2.0 million, or 14%, compared to the prior year period, primarily due to increases in other data services contracts. Commercial voice and data revenue increased $1.6 million, or 3%, for the three months ended June 30, 2026, compared to the same period of the prior year, primarily due to increased ARPU from price increases implemented during the second half of the prior year. The increases in commercial services were partially offset by a decrease in commercial broadband revenue of $1.0 million, or 8%, for the three months ended June 30, 2026, compared to the prior year period, due primarily to the decline in ARPU to $243 in the second quarter of 2026, as compared to $260 in the prior year period, reflecting the increased prevalence of use of lower-priced companion plans in the current year period. Government Service Revenue Three Months Ended June 30, 2026 2025 Change Revenue BillableSubscribers (1) Revenue BillableSubscribers (1) Revenue Billable Subscribers (Revenue in millions and subscribers in thousands) Government services $ 27.6 118 $ 26.8 128 $ 0.8 (10) (1)Billable subscriber numbers shown are at the end of the respective period. We provide airtime and airtime support to U.S. government and other authorized customers pursuant to our Enhanced Mobile Satellite Services (“EMSS”) contract. Under the terms of this EMSS contract, which we entered into in September 2019, authorized customers utilize specified Iridium airtime services provided through the U.S. government’s dedicated gateway. The service fee under the EMSS contract is fixed at $110.5 million per year for the remainder of the term and is not based on subscribers or usage, allowing an unlimited number of users access to these services. Revenue for the three months ended June 30, 2026 increased slightly reflecting the contractual step ups in the EMSS contract. The EMSS contract expires in September 2026, although based on federal acquisition regulations, the government has the ability to unilaterally extend for an additional six months, at the same rate. We have begun discussions with the U.S. government on a new EMSS contract, which we expect to enter into by March 2027, prior to expiration of the existing EMSS contract. For more on risks associated with the EMSS contract expiration, see the risk factor captioned “—Our agreements with U.S. government customers, particularly the Department of War (“DoW”), which represent a significant portion of our revenue, are subject to termination and renewal” in our 2025 Form 10-K. 24 Subscriber Equipment Revenue Subscriber equipment revenue increased by $1.3 million, or 7%, for the three months ended June 30, 2026, compared to the prior year period, primarily as a result of an increase in volume of L-band transceiver and Certus device sales offset in part by a decrease in volume of Short Burst Data® device sales. We continue to expect equipment revenue in 2026 to be in line with 2025. Engineering and Support Service Revenue Three Months Ended June 30, 2026 2025 Change (In millions) Commercial engineering and support services $ 1.7 $ 2.4 $ (0.7) Government engineering and support services 41.5 39.5 2.0 Total engineering and support services $ 43.2 $ 41.9 $ 1.3 Engineering and support service revenue increased by $1.3 million, or 3%, for the three months ended June 30, 2026, compared to the prior year period, primarily due to increased work under certain government contracts. We expect engineering and support service revenue to be higher in 2026 than in 2025. Operating Expenses Cost of Services (exclusive of depreciation and amortization) Cost of services (exclusive of depreciation and amortization) includes the cost of network engineering and operations staff, including contractors, software maintenance, product support services and cost of services for government and commercial engineering and support service revenue. Cost of services (exclusive of depreciation and amortization) decreased by $2.3 million, or 4%, for the three months ended June 30, 2026 from the prior year period, primarily as a result of decreased costs for network and satellite operations, maintenance and product support, as well as a decrease in work under commercial engineering contracts. Cost of Subscriber Equipment Cost of subscriber equipment includes the direct costs of equipment sold, which consist of manufacturing costs, allocation of overhead, and warranty costs. Cost of subscriber equipment increased by $2.2 million, or 19%, for the three months ended June 30, 2026, compared to the prior year period, primarily due to the net increase in volume of device sales, as noted above. The percentage increase in equipment revenue did not match the change in cost of subscriber equipment primarily related to increased costs. Research and Development Research and development expenses increased by $1.3 million, or 29%, for the three months ended June 30, 2026, compared to the prior year period based on increased spending on new products and device-related features and technology for our network. Selling, General and Administrative Selling, general and administrative expenses that are not directly attributable to the sale of services or products include sales and marketing costs, as well as employee-related expenses (such as salaries, wages, and benefits), legal, finance, information technology, facilities, billing and customer care expenses. Selling, general and administrative expenses increased by $22.4 million, or 50%, for the three months ended June 30, 2026, compared to the prior year period, primarily due to increases in transaction costs totaling $14.3 million, associated with the Merger Agreement with Rocket Lab and the Aireon acquisition. The increase was also due to professional fees, including stock appreciation rights expense in the current year resulting from changes in our stock valuation, including the effect of the announcement of the Merger Agreement with Rocket Lab, between the years. We expect our selling, general and administrative expenses to increase due to increases in professional and advisory fees during the pendency of the Transaction and in connection with the closing and integration of Aireon. Depreciation and Amortization Depreciation and amortization expense increased by $1.0 million, or 2%, for the quarter ended June 30, 2026, compared to the prior year period, primarily related to intangible asset amortization. 25 Other Income (Expense), net Interest Expense, Net Interest expense, net decreased $3.5 million, or 15%, for the three months ended June 30, 2026, compared to the same period of the prior year. The decrease resulted primarily from a decrease in the average borrowing rate and the decrease in average outstanding debt balance in 2026 as compared to the prior year which had $50.0 million outstanding under the Revolving Facility. We expect interest expense to increase as a result of our drawing $100.0 million on July 1, 2026 under our Revolving Facility. Other Expense, net Other expense, net, was $0.4 million for the three months ended June 30, 2026, compared to $0.9 million for the prior year period, primarily as the result of changes in foreign currency exchange rates. Income Tax Expense For the three months ended June 30, 2026, our income tax expense was $3.1 million, compared to $3.8 million for the prior year period. The decrease in income tax expense is primarily related to decreased tax expense associated with stock compensation and nondeductible executive compensation, partially offset by decreased tax benefit from the deduction for foreign derived deduction eligible income and tax expense from acquisition costs. The Organisation for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenue and profits above certain thresholds (referred to as Pillar 2). Although the U.S. has not enacted legislation to implement Pillar 2, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. Pillar 2 is applicable to us beginning in 2026. However based on the guidance issued to date, we do not expect it to have a material impact on our effective tax rate or our results of operation and financial position. Loss on Equity Method Investments For the three months ended June 30, 2026, our loss on equity method investments was $1.5 million compared to a loss of $0.9 million in the prior year period. These amounts reflect the portion of losses recorded on our equity method investments. Net Income Net income was $9.7 million for the three months ended June 30, 2026, compared to $22.0 million for the prior year period. The $12.3 million decrease in net income was primarily the result of the increases in total operating expense, primarily selling, general and administrative expenses, partially offset by the increases in commercial services revenue, as described above and decreased interest expense. 26 Comparison of Our Results of Operations for the Six Months Ended June 30, 2026 and 2025 Six Months Ended June 30, Change 2026 % of Total Revenue 2025 % of Total Revenue ($ in thousands) Dollars Percent Revenue: Services $ 319,357 72 % $ 309,862 72 % $ 9,495 3 % Subscriber equipment 40,986 9 % 42,576 10 % (1,590) (4) % Engineering and support services 83,951 19 % 79,346 18 % 4,605 6 % Total revenue 444,294 100 % 431,784 100 % 12,510 3 % Operating expenses: Cost of services (exclusive of depreciation and amortization) 100,950 23 % 102,389 24 % (1,439) (1) % Cost of subscriber equipment 26,492 6 % 24,169 5 % 2,323 10 % Research and development 11,704 3 % 9,696 2 % 2,008 21 % Selling, general and administrative 112,823 25 % 80,380 19 % 32,443 40 % Depreciation and amortization 107,604 24 % 104,504 24 % 3,100 3 % Total operating expenses 359,573 81 % 321,138 74 % 38,435 12 % Operating income 84,721 19 % 110,646 26 % (25,925) (23) % Other expense: Interest expense, net (38,612) (9) % (44,576) (10) % 5,964 (13) % Other expense, net (642) — % (2,556) (1) % 1,914 (75) % Total other expense, net (39,254) (9) % (47,132) (11) % 7,878 (17) % Income before income taxes and loss on equity method investments 45,467 10 % 63,514 15 % (18,047) (28) % Income tax expense (11,952) (3) % (9,626) (2) % (2,326) 24 % Loss on equity method investments (2,242) (1) % (1,508) — % (734) 49 % Net income $ 31,273 6 % $ 52,380 13 % $ (21,107) (40) % 27 Revenue Commercial Service Revenue Six Months Ended June 30, 2026 2025 Change Revenue BillableSubscribers (1) ARPU (2) Revenue BillableSubscribers (1) ARPU (2) Revenue Billable Subscribers ARPU (Revenue in millions and subscribers in thousands) Commercial services: Voice and data $ 115.8 402 $ 48 $ 112.8 415 $ 45 $ 3.0 (13) $ 3 IoT data 93.0 2,091 7.58 88.6 1,924 7.75 4.4 167 (0.17) Broadband (3) 23.9 16.0 248 25.6 16.3 260 (1.7) (0.3) (12) Hosted payload and other data 31.4 N/A 29.4 N/A 2.0 N/A Total commercial services $ 264.1 2,509 $ 256.4 2,355 $ 7.7 154 (1)Billable subscriber numbers shown are at the end of the respective period. (2)ARPU is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period. Billable subscriber and ARPU data is not applicable for hosted payload and other data service revenue items. (3)Commercial broadband service consists of Iridium OpenPort and Iridium Certus broadband services. For the six months ended June 30, 2026, total commercial services revenue increased $7.7 million, or 3%, from the prior year period primarily driven by increases in IoT data, voice and data and hosted payload and other data services revenue. Commercial IoT revenue increased $4.4 million, or 5%, for the six months ended June 30, 2026, compared to the prior year period, driven by a 9% increase in IoT billable subscribers, offset in part by a decline in ARPU. Commercial voice and data revenue increased $3.0 million, or 3%, from the prior year period, primarily due to increased ARPU from price increases implemented during the second half of the prior year. Hosted payload and other data service revenue increased $2.0 million, or 7%, compared to the prior year period, primarily due to increases in other data services contracts. Commercial broadband revenue decreased $1.7 million, or 7%, for the six months ended June 30, 2026, compared to the prior year period, primarily due to a decrease in ARPU to $248 in the second quarter of 2026, as compared to $260 in the prior year period, reflecting the increased prevalence of use of lower-priced companion plans in the current year period. Government Service Revenue Six Months Ended June 30, 2026 2025 Change Revenue BillableSubscribers (1) Revenue BillableSubscribers (1) Revenue Billable Subscribers (Revenue in millions and subscribers in thousands) Government services $ 55.3 118 $ 53.5 128 $ 1.8 (10) (1)Billable subscriber numbers shown are at the end of the respective period. We provide airtime and airtime support to the U.S. government and other authorized customers pursuant to our EMSS contract. Under the terms of this agreement, which we entered into in September 2019, authorized customers utilize specified Iridium airtime services provided through the U.S. government’s dedicated gateway. The service fee under the EMSS contract is fixed at $110.5 million per year for the remainder of the term and is not based on subscribers or usage, allowing an unlimited number of users access to these services. Revenue for the six months ended June 30, 2026 increased $1.8 million reflecting the contractual step ups in the EMSS contract. The EMSS contract expires in September 2026, although based on federal acquisition regulations, the government has the ability to unilaterally extend for an additional six months, at the same rate. We have begun discussions with the U.S. government on a new EMSS contract, which we expect to enter into by March 2027, prior to expiration of the existing EMSS contract. For more on risks associated with the EMSS contract expiration, see the risk factor captioned “—Our agreements with U.S. government customers, particularly the DoW, which represent a significant portion of our revenue, are subject to termination and renewal” in our 2025 Form 10-K. 28 Subscriber Equipment Revenue Subscriber equipment revenue decreased $1.6 million, or 4%, for the six months ended June 30, 2026, compared to the prior year period, primarily as a result of a decrease in volume of handset, L-band transceiver and Short Burst Data device sales, offset in part by an increase in the volume of Certus device sales. We continue to expect equipment revenue in 2026 to be in line with 2025. Engineering and Support Service Revenue Six Months Ended June 30, 2026 2025 Change (In millions) Commercial engineering and support services $ 3.0 $ 4.0 $ (1.0) Government engineering and support services 80.9 75.3 5.6 Total engineering and support services $ 83.9 $ 79.3 $ 4.6 Engineering and support service revenue increased $4.6 million, or 6%, for the six months ended June 30, 2026 compared to the prior year period due to increased work under certain government projects, predominantly the contract with the Space Development Agency (“SDA”). We expect engineering and support service revenue to be higher in 2026 than in 2025. Operating Expenses Cost of Services (exclusive of depreciation and amortization) Cost of services (exclusive of depreciation and amortization) decreased by $1.4 million, or 1%, for the six months ended June 30, 2026 from the prior year period, primarily as a result of decreased costs for network operations, maintenance and product support, as well as a decrease in work under commercial engineering contracts, offset in part by an increase in work under certain government engineering contracts, including the SDA contract, as noted above. Cost of Subscriber Equipment Cost of subscriber equipment increased $2.3 million, or 10%, for the six months ended June 30, 2026, compared to the prior year period, primarily due to an increase in inventory component costs and product mix. The increase in equipment costs was partially offset by the decrease in equipment volume for the same period, as noted above. Research and Development Research and development expenses increased by $2.0 million, or 21%, for the six months ended June 30, 2026 compared to the prior year period based on increased spending on device-related features and technology for our network. Selling, General and Administrative Selling, general and administrative expenses increased by $32.4 million, or 40%, for the six months ended June 30, 2026 compared to the prior year period, primarily due to primarily due to increases in transaction costs totaling $15.0 million, associated with the Merger Agreement with Rocket Lab and the Aireon acquisition. The increase was also due to professional fees, including stock appreciation rights expense in the current year resulting from changes in our stock valuation, including the effect of the announcement of the Merger Agreement with Rocket Lab, between the years, and increases associated with the timing of headcount costs and related benefits allocated to programs. We expect our selling, general and administrative expenses to increase due to increases in professional and advisory fees during the pendency of the Transaction and and in connection with the closing and integration of Aireon. Depreciation and Amortization Depreciation and amortization expense increased by $3.1 million, or 3%, for the six months ended June 30, 2026, compared to the prior year period, primarily related to intangible asset amortization and depreciation on satellites placed into service during the prior year. Other Expense Interest Expense, Net Interest expense, net decreased $6.0 million for the six months ended June 30, 2026 compared to the prior year period. The decrease resulted primarily from a decrease in the average borrowing rate and the decrease in average outstanding debt balance in 2026 as compared to the prior year which had $50.0 million outstanding under the Revolving Facility. We expect interest expense to increase as a result of our drawing $100.0 million on July 1, 2026 under our Revolving Facility. 29 Other Expense, net Other expense, net, was $0.6 million for the six months ended June 30, 2026, compared to $2.6 million for the prior year period, primarily as the result of changes in foreign currency exchange rates. Income Tax Expense For the six months ended June 30, 2026, our income tax expense was $12.0 million, compared to $9.6 million for the prior year period. The increase in income tax expense is primarily related to decreased tax benefit from the deduction for foreign derived deduction eligible income and tax expense from acquisition costs. The Organisation for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenue and profits above certain thresholds (referred to as Pillar 2). Although the U.S. has not enacted legislation to implement Pillar 2, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. Pillar 2 is applicable to us beginning in 2026. However based on the guidance issued to date, we do not expect it to have a material impact on our effective tax rate or our results of operation and financial position. Loss on Equity Method Investments For the six months ended June 30, 2026, our loss on equity method investments was $2.2 million, compared to a loss of $1.5 million for the prior year period. These amounts reflect the portion of losses recorded on our equity method investments. Net Income Net income was $31.3 million for the six months ended June 30, 2026, compared to $52.4 million for the prior year period. The change primarily resulted from increases in total operating expense, primarily selling, general and administrative expenses and increased income tax expense, partially offset by the increases in commercial services revenue and a decrease in interest expense, as described above. Liquidity and Capital Resources Our primary sources of liquidity are cash provided by operations, cash and cash equivalents and our Revolving Facility. As of June 30, 2026, we had approximately $1.8 billion of indebtedness, consisting of amounts outstanding under the Term Loan, the terms of which are described below. We had $100.0 million of additional borrowing available to us under our Revolving Facility as of June 30, 2026, which was subsequently fully drawn on July 1, 2026, to fund the acquisition of Aireon Holdings. These sources are expected to meet our short-term and long-term liquidity needs, including annual payments for (i) required principal and interest on the Term Loan, which we expect to be $12.5 million, and, based on the current interest rate, approximately $90.0 million, respectively in the next 12 months, (ii) capital expenditures, (iii) working capital, (iv) anticipated cash dividend payments to holders of our common stock and (v) required principal and interest on the Aireon Term Loans and the Credit and Guaranty Agreement associated with the Aireon Closing. As of June 30, 2026, our total cash and cash equivalents balance was $184.2 million, up from $96.5 million as of December 31, 2025. While we generated cash flows from operations and used less for share repurchases in 2026 than in 2025, these factors were offset in part by increased capital expenditures. The Merger Agreement provides for the payment of a termination fee of $223.6 million by us to Rocket Lab upon termination of the Merger Agreement under specified circumstances, including if the Merger Agreement is terminated (i) by us to enter into a definitive agreement for an alternative acquisition proposal that constitutes a Superior Proposal (as defined in the Merger Agreement) or (ii) by Rocket Lab because our Board of Directors withdraws its recommendation to our stockholders to vote in favor of the adoption of the Merger Agreement and the Transaction or because we materially and intentionally breach the “no-shop” restrictions in the Merger Agreement. The termination fee is also payable by us to Rocket Lab if the Merger Agreement is terminated in specified circumstances and we either consummate an alternative acquisition transaction or enter into a definitive agreement providing for an alternative acquisition transaction within one year of such termination. In addition, we have incurred and expect to continue to incur significant costs, expenses and fees for professional services and other transaction costs in connection with the Transaction. The substantial majority of these costs will be non-recurring expenses relating to the Transaction. Many of these costs are payable regardless of whether or not the Transaction is consummated. Term Loan and Revolving Facility Pursuant to a credit agreement (as amended and restated to date, the “Credit Agreement”), we previously entered into a term loan totaling $1,500.0 million (the “Term Loan”), issued at a price equal to 99.75%, and an accompanying $100.0 million revolving loan (the “Revolving Facility”). The maturity of the Term Loan and Revolving Facility are in September 2030 and September 2028, respectively. During 2024, we borrowed an additional $325.0 million under the Term Loan, comprised of 30 $125.0 million in March 2024, issued at a price equal to 99.875% of its face value, and $200.0 million in July 2024, issued at 99.0% of its face value. The additional amounts borrowed are fungible with the original $1,500.0 million, and have the same maturity date, interest rate, and other terms. As of June 30, 2026, we reported an aggregate balance of $1,774.7 million in borrowings under the Term Loan before $12.8 million of net unamortized deferred financing costs for a net principal balance of $1,761.9 million outstanding in our condensed consolidated balance sheet. In the first half of 2025, we drew $50.0 million under our Revolving Facility for general corporate purposes, all of which was repaid in December 2025, and there were no amounts outstanding as of June 30, 2026 or December 31, 2025. On July 1, 2026, we drew down $100.0 million on our Revolving Facility, the proceeds of which were used for the acquisition of Aireon Holdings. The Term Loan has been repriced on several occasions, most recently in June 2024, and currently bears interest at an annual rate equal to the SOFR, plus 2.25%, with a 0.75% SOFR floor. We typically select a one-month interest period, with the result that interest is calculated using one-month SOFR. Interest is paid monthly on the last business day of the month. Principal payments, payable quarterly, equal $18.3 million per annum (one percent of the full principal amount of the Term Loan following the additional amount Term Loan amounts borrowed in 2024), with the remaining principal due upon maturity. As noted below, no quarterly principal payment has been made after the first quarter in 2025 as a result of the excess cash flow payment made in May 2025. The Revolving Facility bears interest at an annual rate equal to SOFR plus 2.5% (but without a SOFR floor) if and as drawn, with no original issue discount, a commitment fee of 0.5% per year on the undrawn amount, which was reduced to 0.375% in the first quarter of 2026 because we had a consolidated first lien net leverage ratio (as defined in the Credit Agreement) of less than 3.5 to 1. The Term Loan contains no financial maintenance covenants. With respect to the Revolving Facility, we are required to maintain a consolidated first lien net leverage ratio of no greater than 6.25 to 1 if more than 35% of the Revolving Facility has been drawn, or subject to letter of credit exposure. The Credit Agreement contains other customary representations and warranties, affirmative and negative covenants, and events of default. We complied with all covenants under the Credit Agreement as of June 30, 2026. The Credit Agreement restricts our ability to incur liens, engage in mergers or asset sales, pay dividends, repay subordinated indebtedness, incur indebtedness, make investments and loans, and engage in other transactions as specified in the Credit Agreement. The Credit Agreement provides for specified exceptions, including baskets measured as a percentage of trailing twelve months of earnings before interest, taxes, depreciation and amortization, and unlimited exceptions in the case of incurring indebtedness and liens and making investments, dividend payments, and payments of subordinated indebtedness, based on achievement and maintenance of specified leverage ratios. The Credit Agreement permits repayment, prepayment, and repricing transactions. The Credit Agreement also contains a mandatory prepayment sweep mechanism with respect to a portion of our excess cash flow (as defined in the Credit Agreement) in the event our consolidated first lien net leverage ratio rises above 3.5 to 1. Our mandatory excess cash flow prepayment, as specified in the Credit Agreement, was $28.6 million as of December 31, 2024. This amount was paid in May 2025. As a result, no quarterly principal payment was required for the quarters ended March 31, 2026 and June 30, 2026, and no quarterly principal payment will be required until the fourth quarter of 2026. As of December 31, 2025, our first lien net leverage ratio was below the specified leverage ratio and therefore the mandatory prepayment sweep was not required. Credit and Guaranty Agreement In connection with the Aireon Closing, the aggregate purchase price payable to the Sellers was approximately $366.7 million, paid in two installments: (i) 50% in cash at the Aireon Closing; and (ii) 50% deferred and in the form of a loan by the Sellers. In connection with the deferred portion of the purchase price, on the Aireon Closing Date, Iridium Monitor Holdings, as borrower, and the Sellers entered into a Credit and Guaranty Agreement (the “Credit and Guaranty Agreement”) pursuant to which the Sellers provided Iridium Monitor Holdings with a $183.4 million term loan, bearing no interest, and maturing one year following the Aireon Closing Date, to fund the deferred portion of the purchase price. The loan is secured by a first priority lien on the equity interests of Aireon Holdings and other intermediate holding company entities. The Credit and Guaranty Agreement contains no financial maintenance covenants, and contains customary representations and warranties, affirmative and negative covenants (including limitations on indebtedness, liens, restricted payments, investments and affiliate transactions), and events of default (including payment defaults, breaches of covenants, cross-defaults, bankruptcy and change of control). Upon the occurrence of an event of default, the lenders may accelerate the obligations under the Credit and Guaranty Agreement, subject to mandatory acceleration for certain bankruptcy events. The loan is subject to voluntary prepayment at any time subject to prior written notice, and mandatory repayment out of the net cash proceeds of new indebtedness or the issuance or sale of equity interests or in the event of a change of control. Aireon Term Loans and Credit Facility 31 As a result of the Aireon Closing, on a going forward basis, Aireon’s previously existing credit facility will be consolidated with our financial position and results of operations. That credit facility provides for secured term loans in the original aggregate principal amount of $175 million (the “Aireon Term Loans”) with a scheduled maturity date of October 10, 2028, and is reflected in a Credit and Guaranty Agreement, dated as of October 10, 2023, as amended by the First Amendment to Credit and Guaranty Agreement, dated as of July 2, 2026, by and among Aireon as borrower, Aireon Holdings and other subsidiaries of Aireon Holdings from time to time party thereto as guarantors (together with Aireon Holdings, the “Aireon Guarantors”), GLAS USA LLC, as administrative agent, GLAS Americas LLC, as collateral agent, and the lenders from time to time party thereto (the “Aireon Credit Agreement”). As of the filing date of this Form 10-Q, the aggregate principal balance of the Aireon Term Loans is $154.7 million. In connection with the Aireon Closing, on July 2, 2026, we entered into a Parent Guaranty Agreement (the “Parent Guaranty”), pursuant to which we provided an unsecured guarantee of the repayment of Aireon’s obligations under the Aireon Credit Agreement. The Aireon Term Loans bear interest at a per annum rate equal to, at Aireon’s option, either (i) a SOFR-based rate plus a margin of 6.25% or (ii) a base rate plus a margin of 5.25%. In the event of a prepayment of all or a portion of the Aireon Term Loans, subject to certain exceptions, Aireon is required to pay a prepayment premium equal to (x) 3.00% of the aggregate principal amount of Aireon Term Loans so prepaid, if such prepayment is made on or prior to October 10, 2026, and (y) 1.00% of the aggregate principal amount of Aireon Term Loans so prepaid, if such prepayment is made after October 10, 2026 and on or prior to October 10, 2027. The Aireon Credit Agreement currently requires quarterly amortization payments equal to 1.875% of the original principal amount of the Aireon Term Loans, with such quarterly amortization payments increasing to 3.125% of the original principal amount of the Aireon Term Loans beginning with the quarter ending December 31, 2026 and each quarter thereafter until maturity. Aireon Holdings and, subject to certain exceptions, substantially all of Aireon’s existing and future direct and indirect wholly owned subsidiaries are required to guarantee the repayment of Aireon’s obligations under the Aireon Credit Agreement. The obligations of Aireon and each of the Aireon Guarantors with respect to the Aireon Credit Agreement are secured by a pledge of substantially all assets of Aireon and each Aireon Guarantor. The Aireon Credit Agreement contains customary representations and warranties and affirmative and negative covenants applicable to Aireon Holdings and its subsidiaries, including limitations on the ability of Aireon Holdings and its subsidiaries to incur debt, permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, pay dividends and distributions, pay junior indebtedness and enter into affiliate transactions, in each case, subject to certain exceptions. In addition, the Aireon Credit Agreement contains a financial covenant requiring Aireon Holdings and its subsidiaries to maintain, on a consolidated basis as of the last day of each quarterly period, a consolidated total leverage ratio, as defined in the Aireon Credit Agreement, of not more than 5.0 to 1.0. The Aireon Credit Agreement also includes events of default customary for facilities of this type. Upon the occurrence of an event of default, among other things, all outstanding Aireon Term Loans may be accelerated and collateral remedies may be exercised. U.S. Government A significant portion of our revenues and cash flow are derived from U.S. government contracts. During 2025, we did not experience delays in receiving payments from U.S. government agencies despite the U.S. government shutdown during the fourth quarter. While none of our contracts were impacted as a result, an extended government shutdown could result in a delay or suspension of funding for our U.S. government contracts and disrupt our cash flows and delay new contract awards. Contractual Obligations As of June 30, 2026, we had non-cancelable purchase obligations of approximately $11.5 million for inventory purchases with Benchmark, our primary third-party equipment supplier. Our purchase obligations, all of which are due during the next twelve months, did not change materially from the end of 2025. As of June 30, 2026, we also had contractual obligations in the short and long term related to the Term Loan (see Note 5) and leases. Dividends In December 2022, our Board of Directors initiated a quarterly dividend. Total dividends paid during the six months ended June 30, 2026 and June 30, 2025 were $32.7 million and $30.8 million, respectively. We currently expect that comparable cash dividends will continue to be paid in the future, although future dividends will depend on our earnings, capital requirements, financial conditions and other factors that our Board of Directors deems relevant. Share Repurchases On June 28, 2026, in connection with the Transaction with Rocket Lab, our Board of Directors terminated our share repurchase program. 32 Cash Flows The following table summarizes our cash flows: Six Months Ended June 30, 2026 2025 Change (In thousands) Cash provided by operating activities $ 185,762 $ 190,696 $ (4,934) Cash used in investing activities $ (51,791) $ (45,256) $ (6,535) Cash used in financing activities $ (46,951) $ (162,608) $ 115,657 Cash Flows Provided by Operating Activities Net cash provided by operating activities for the six months ended June 30, 2026 decreased by $4.9 million from the prior year period. The changes in operating cash relate primarily to the decreased net income from increased transaction costs incurred. These changes were offset in part by a working capital decrease of approximately $11.6 million, primarily due timing of customer and vendor payments and related accruals and changes in inventory. Cash Flows Used in Investing Activities Net cash used in investing activities for the six months ended June 30, 2026 increased by $6.5 million as compared to the prior year period, as a result of the change in spending on capital expenditures. Cash Flows Used in Financing Activities Net cash used in financing activities for the six months ended June 30, 2026 decreased by $115.7 million compared to the prior year period. Cash flows used in the prior year were higher primarily due to share repurchases and the mandatory excess cash flow payment, offset in part by the $50.0 million draw down on the revolver. U.S. Tax Regulation Update On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA permanently extends certain expiring provisions of the Tax Cuts and Jobs Act, modifies the international tax framework, and restores certain favorable business tax provisions, among other changes. The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. We have incorporated the impact of the new legislation into our year-to-date effective tax rate and continue to assess the impact on our consolidated financial statements. Seasonality Our results of operations have been subject to seasonal usage changes for commercial customers, and we expect that our results will be affected by similar seasonality going forward. March through October are typically the peak months for commercial voice services revenue and related subscriber equipment sales. U.S. government revenue and commercial IoT revenue have been less subject to seasonal usage changes. Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, income taxes, useful lives of property and equipment, loss contingencies, and other estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. There have been no changes to our critical accounting policies and estimates from those described in our 2025 Form 10-K.