Press release·02/28/2025 22:45:55

Globalstar’s Financial Performance: Navigating Growth and Transformation

Overview

Globalstar, a leading provider of mobile satellite services (MSS), has reported its financial results for the years ended December 31, 2024 and 2023. The company has experienced a 12% increase in total revenue, reaching $250.3 million in 2024, driven primarily by growth in wholesale capacity services. However, the company has also faced challenges, including a decline in subscriber services revenue and increased operating expenses.

Revenue and Profit Trends

Globalstar’s revenue is categorized into two main areas: service revenue and equipment revenue. Service revenue, which accounts for 95% of total revenue, increased by 16% in 2024, reaching $237.7 million. This growth was primarily driven by a 33% increase in wholesale capacity services revenue, which now makes up 58% of total revenue.

The company’s subscriber-based services, such as Commercial IoT, SPOT, and Duplex, experienced mixed results. Commercial IoT service revenue increased by 15% due to higher average subscribers and average revenue per user (ARPU). However, SPOT and Duplex service revenue declined by 7% and 22%, respectively, due to lower subscriber numbers.

Government and other services revenue, which includes fees from various governmental service contracts and XCOM RAN sales, increased by 126% in 2024.

Subscriber equipment sales revenue decreased by $7.0 million, or 42%, due to the timing of Commercial IoT and SPOT device sales.

Overall, the company’s net income has been impacted by increased operating expenses, particularly in the areas of cost of services, stock-based compensation, and interest expense related to the company’s debt financing.

Strengths and Weaknesses

One of Globalstar’s key strengths is its growing wholesale capacity services revenue, which now accounts for the majority of its total revenue. This revenue stream is less dependent on subscriber growth and provides a more stable source of income.

However, the company’s subscriber-based services, such as SPOT and Duplex, have faced challenges, with declining subscriber numbers and revenue. This highlights the need for Globalstar to continue innovating and developing new products and services to maintain its competitiveness in the MSS market.

The company’s significant investments in network upgrades and the Extended MSS Network, funded through the Updated Services Agreements and other financing arrangements, represent both a strength and a potential weakness. While these investments are necessary to ensure the long-term viability of the Globalstar system, they have also resulted in increased operating expenses and debt levels.

Outlook and Future Prospects

Globalstar’s outlook appears promising, with several key initiatives underway to drive future growth and profitability.

The company’s partnership with Parsons Corporation to utilize the Globalstar system for a mission-critical government application represents a significant opportunity, with the potential for annual minimum revenue commitments of up to $20 million by the fifth year of the agreement.

Additionally, Globalstar is developing new MSS subscriber devices, which it expects will increase equipment sales in the future. The company is also focused on improving its product engineering efforts to develop a new consumer SPOT device, which it hopes will stabilize or increase demand for its SPOT services.

The successful implementation of the Extended MSS Network, funded through the Updated Services Agreements, is crucial for Globalstar’s long-term success. The company expects that over the next few years, the costs to support the Updated Services Agreements will increase substantially, but it does not anticipate a meaningful increase in operating costs to support existing services during the initial phase of the agreements.

Globalstar’s liquidity position has improved significantly, with cash and cash equivalents of $391.2 million as of December 31, 2024, up from $56.7 million at the end of 2023. This increase was primarily due to the cash prepayments received under the Updated Services Agreements, which will be used to fund the company’s capital expenditures for the Extended MSS Network.

However, Globalstar’s debt levels have also increased, with the principal amount of debt outstanding reaching $417.5 million as of December 31, 2024, up from $398.7 million at the end of 2023. The company will need to carefully manage its debt obligations and ensure that the investments in the Extended MSS Network generate sufficient returns to support its financial position.

Conclusion

Globalstar’s financial performance in 2024 reflects a company in transition, navigating growth opportunities in its wholesale capacity services while addressing challenges in its subscriber-based services. The company’s significant investments in network upgrades and the Extended MSS Network represent both a strength and a potential risk, as they are necessary to ensure the long-term viability of the Globalstar system but have also resulted in increased operating expenses and debt levels.

Looking ahead, Globalstar’s focus on developing new products and services, expanding its government and enterprise partnerships, and successfully implementing the Extended MSS Network will be crucial in determining the company’s future success. Investors and stakeholders will be closely watching Globalstar’s ability to manage its debt obligations and leverage its improved liquidity position to drive sustainable growth and profitability.