Globalstar, the company responsible for Apple’s satellite-powered SOS application, reported a significant 50% rise in quarterly sales on August 3rd, attributed to promising growth in its business of connecting remote Internet of Things (IoT) devices.
Approximately half of Globalstar’s $55 million revenue during the quarter ending on June 30th was generated by wholesale capacity service revenues, largely driven by Apple. Apple has been utilizing Globalstar’s satellites since November for its iPhone emergency messaging feature.
In addition, the company’s commercial IoT segment contributed $9 million to the revenue, marking a 33% increase compared to the same period last year. Globalstar aims to expand this IoT business by introducing two-way services by the end of 2023. Currently, the IoT services are unidirectional, offering tracking and monitoring functions in regions with poor or no terrestrial network coverage. The integration of two-way capabilities would empower customers with command and control functionalities.
Apple is supporting Globalstar in launching 17 new satellites to enhance its low Earth orbit fleet. In exchange, Apple will have access to 85% of the satellite capacity for its emergency messaging requirements. The remaining 15% of capacity could potentially accommodate a substantial increase in commercial IoT subscribers, as indicated by B. Riley analyst Mike Crawford.
According to CEO David Kagan, Globalstar is confident about securing a substantial portion of the remaining satellite capacity, especially following the implementation of its two-way module.
Kagan stated that half of the required infrastructure for the two-way IoT service has been deployed across Globalstar’s gateways. The company is preparing to initiate beta services for select clients later this year.
Furthermore, Globalstar confirmed that its upcoming next-generation satellites are progressing as scheduled for launch in 2025. These launches adhere to the original agreements with MDA and Rocket Lab. The satellites are currently entering a critical design review phase, indicating steady progress in their development.
The supply chain challenges that previously caused delays in producing Globalstar’s legacy Spot GPS and messaging devices have been resolved by mid-April, as reported by Kagan during the earnings call.
Despite a 4% decrease in Spot service revenues for the second quarter of 2023, Kagan anticipates a surge in subscriber numbers throughout this year. Adjusted EBITDA witnessed a substantial 86% increase, reaching $27 million.
The company has revised its revenue expectations for 2023, now projecting a range between $200 million and $230 million. This represents a growth of 35% to 55% compared to 2022. The earlier guidance had indicated total sales between $185 million and $230 million for 2023. These estimates exclude potential revenue from Globalstar’s spectrum leasing for terrestrial use.
During the earnings call, Globalstar’s Executive Chair, James Monroe, expressed optimism about the adoption of devices capable of utilizing the company’s Band 53 frequencies. Monroe expects these devices to reach hundreds of millions by the same time next year, as Globalstar continues discussions with terrestrial partners and regulatory authorities worldwide.