Globalstar, Inc. (NYSE American: GSAT) today announced its
financial results for the second quarter ended June 30, 2024.
"Globalstar reported record revenue during the second quarter,
driven primarily by growth in wholesale capacity services and other
recent business initiatives. The high-margin nature of this revenue
contributed to a 20% increase in Adjusted EBITDA and an increase in
cash on hand to $64 million as of June 30, 2024," commented Rebecca
Clary, Chief Financial Officer. Clary continued, “Based on the
continued momentum across our key growth categories, we are raising
the low end of our revenue guidance to $235 million from $225
million and projected Adjusted EBITDA margin to 53% from 50%.”
Dr. Paul E. Jacobs, Chief Executive Officer, said, “This quarter
highlighted Globalstar’s ability to enable new capabilities by
leveraging our core competencies as an MSS operator, as well as the
flexibility of our network to reliably and rapidly support and
deploy new technologies and services. We are pleased that our
wholesale services are growing in both the government and consumer
segments. We are continuing to make good progress through the proof
of concept that commenced this year for a government services
company. We have been installing and validating XCOM RAN in our
customer's Micro Fulfillment Centers, demonstrating XCOM RAN’s
ability to uniquely support their mission critical requirements.
Additionally, we are in the midst of a government study of use
cases for our XCOMP technology. We remain focused on building on
our strong customer relationships to create value leveraging the
differentiated assets of our LEO network, Band 53 spectrum, and
XCOM RAN technology."
SECOND QUARTER FINANCIAL REVIEW
Total Revenue
Total revenue increased 10% to $60.4 million during the second
quarter of 2024 compared to the second quarter of 2023, due to an
increase in service revenue offset partially by a decrease in
revenue generated from subscriber equipment sales.
Service Revenue
Service revenue increased $9.0 million, or 18%, during the
second quarter of 2024 from the second quarter of 2023. This
increase was due predominantly to revenue generated from wholesale
capacity services.
The highlight for our subscriber driven service revenue was
continued growth in Commercial IoT. Commercial IoT service revenue
reached a record high this quarter, totaling $6.7 million, an
increase of 25% from the prior year's quarter, due to both growth
in our subscriber base and higher ARPU. Gross subscriber
activations have continued to increase over this period, including
on a consecutive basis with activations up 20% from the first
quarter of 2024 to the second quarter of 2024, which we expect will
further contribute to future service revenue for Commercial
IoT.
Consistent with prior quarters, service revenue associated with
legacy services was lower due to fewer Duplex and SPOT subscribers.
The number of SPOT subscribers has been unfavorably impacted by
competitive pressure, as well as supply chain disruptions that have
now been resolved. We are encouraged by an almost 40% increase in
gross SPOT subscriber activations from the first quarter of 2024 to
the second quarter of 2024. While this increase may be attributable
in part to the seasonality of SPOT subscriber activity, this
increase is more than double the activity from the same periods in
the prior year. Duplex service revenue declined due to expected
attrition in the subscriber base.
Subscriber Equipment Sales
Revenue generated from subscriber equipment sales was down $3.7
million from the prior year's quarter due to the timing of
Commercial IoT and SPOT device sales. During 2023, we recovered
from inventory shortages that impacted both device categories and
experienced higher sales as a result of improved product
availability.
(Loss) Income from Operations
Loss from operations was $1.4 million during the second quarter
of 2024, compared to income from operations of $2.6 million during
the second quarter of 2023. This variance was due primarily to
higher operating expenses.
Cost of services increased resulting from higher network
operating costs, including gateway maintenance, security, IT and
personnel expenses. These costs are necessary to support our new
and upgraded global ground infrastructure. A significant portion of
these costs are reimbursed to us, and this consideration is
recognized as revenue when earned in the subsequent year. We do not
expect the operating costs that support existing Phase 1 services
to increase meaningfully beyond current levels. Cost of services
also increased due to non-cash costs associated with the Support
Services Agreement (the “SSA”) we entered into in August 2023 in
connection with the XCOM License Agreement.
Stock-based compensation increased from the prior year's second
quarter due primarily to restricted stock units granted in
connection with the XCOM License Agreement in September 2023. The
total fair value of the RSUs was $39.5 million and is being
recognized over the derived service period of 2.6 years; nearly 60%
of the compensation cost for these RSUs will be recognized during
2024.
Partially offsetting these increases was lower cost of
subscriber equipment sales, which was down consistent with the
decrease in equipment revenue.
Net Loss (Income)
Net loss was $9.7 million for the second quarter of 2024,
compared to net income of less than $0.1 million for the second
quarter of 2023. This variance was due primarily to a loss from
operations (for the reasons discussed above) as well as unfavorable
fluctuations in foreign currency gains and losses due to the
remeasurement of intercompany balances.
Adjusted EBITDA
Adjusted EBITDA increased 20% to $32.6 million during the second
quarter of 2024 compared to $27.0 million during the prior year's
second quarter, due primarily to an increase in high margin service
revenue. Adjusted EBITDA is a non-GAAP financial measure. For more
information on its usage and presentation, as well as a
reconciliation to GAAP net income (loss), refer to “Reconciliation
of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA”.
YEAR TO DATE FINANCIAL REVIEW
Revenue
Total revenue increased to $116.9 million during the six months
ended June 30, 2024 compared to the six months ended June 30, 2023,
due to an increase in service revenue offset partially by a
decrease in revenue generated from subscriber equipment sales.
Service revenue increased $9.5 million, or 9%, for the six
months ended June 30, 2024 compared to the same period in 2023.
Consistent with the quarterly results discussed above, higher
wholesale capacity service revenue was the primary driver of the
increase. Higher Commercial IoT subscribers and ARPU also
positively impacted this variance, offset by fewer Duplex and SPOT
subscribers.
Revenue generated from subscriber equipment sales decreased $6.3
million due primarily to the timing of Commercial IoT sales. Our
pipeline for Commercial IoT opportunities remains strong and we
expect sales to rebound in the second half of 2024.
(Loss) Income from Operations
Loss from operations was $6.1 million for the six months ended
June 30, 2024 compared to income from operations of $9.8 million
during the same period in 2023. Higher operating expenses more than
offset the increase in revenue for the period.
As discussed above, higher stock-based compensation and cost of
services were the primary expense increases during the first six
months of 2024. Additionally, a 6% increase in MG&A costs was
due primarily to non-cash costs associated with the SSA and certain
non-routine items, including professional fees to support increased
regulatory efforts and negotiations of new commercial arrangements.
Lower cost of subscriber equipment partially offset these
increases.
Net Loss
Net loss was $22.9 million for the six months ended June 30,
2024 compared to $3.5 million during the same period in 2023. The
higher net loss in 2024 was due to the increase in loss from
operations (discussed above) coupled with various noncash items.
During the first quarter of 2023, we recognized a nonrecurring,
non-cash loss on extinguishment of debt. This favorable fluctuation
was offset by unfavorable fluctuations in foreign currency gains
and losses due to the remeasurement of intercompany balances.
Liquidity
As of June 30, 2024, we held cash and cash equivalents of $64.3
million, compared to $56.7 million as of December 31, 2023. During
the first half of 2024, net cash flows generated from operations of
$66.5 million and net cash flows from financing activities of $16.2
million were used to fund capital expenditures of $74.5
million.
Operating cash flows include cash receipts from our customers,
primarily from the performance of wholesale capacity services, as
well as from subscribers for the purchase of equipment and
satellite voice and data services. We use cash in operating
activities primarily for network costs, personnel costs, inventory
purchases and other general corporate expenditures. Investing
outflows largely relate to network upgrades associated with the
Service Agreements, including milestone work under the satellite
procurement agreement with MDA and the launch services agreement
with SpaceX. Financing activities relate primarily to the 2021 and
2023 Funding Agreements.
Over the next twelve months, our sources of cash are expected to
include operating cash flows generated from the business and
proceeds under the 2023 Funding Agreement. These sources of cash
will be used to pay capital expenditures associated with the new
satellites and associated launch costs as well as debt service
costs.
FINANCIAL OUTLOOK
We are raising our prior financial outlook for full year 2024
with anticipated results below.
- Total revenue between $235 million and $250 million (an
increase from the prior range of $225 million to $250 million)
- Adjusted EBITDA margin of approximately 53% (an increase from
the prior margin of 50%)
CONFERENCE CALL INFORMATION
As previously announced, the Company will host a conference call
to discuss its results at 9:00 a.m. Eastern Time (ET) on Thursday,
August 8, 2024. Details are as follows:
Earnings Call:
The earnings call will be available via
webcast from the following link.
Webcast Link:
https://edge.media-server.com/mmc/p/whk4vk5x
To participate in the earnings call via
teleconference or to participate in the live Q&A session,
participants should register at the following link to receive an
email containing the dial-in number and unique passcode.
Participant Teleconference Registration
Link:
https://register.vevent.com/register/BIdfcd476ba38644cabd29808c5afa55b7
Audio Replay:
For those unable to participate in the
live call, a replay of the webcast will be available in the
Investor Relations section of the Company's website.
About Globalstar, Inc.
Globalstar empowers its customers to connect, transmit, and
communicate in smarter ways – easily, quickly, securely, and
affordably – offering reliable satellite and terrestrial
connectivity services as an international telecom infrastructure
provider. The Company’s LEO satellite constellation ensures secure
data transmission for connecting and protecting assets,
transmitting critical operational data, and saving lives for
consumers, businesses, and government agencies across the globe.
Globalstar’s terrestrial spectrum, Band 53, and its 5G variant,
n53, offers carriers, cable companies, and system integrators a
versatile, fully licensed channel for private networks with a
growing ecosystem to improve customer wireless connectivity, while
Globalstar’s XCOM RAN product offers significant capacity gains in
dense wireless deployments. In addition to SPOT GPS messengers,
Globalstar offers next-generation IoT hardware and software
products for efficiently tracking and monitoring assets, processing
smart data at the edge, and managing analytics with cloud-based
telematics solutions to drive safety, productivity, and
profitability.
Note that all SPOT products described in this press release are
the products of SPOT LLC, which is not affiliated in any manner
with Spot Image of Toulouse, France or Spot Image Corporation of
Chantilly, Virginia.
For more information, visit www.globalstar.com.
Safe Harbor Language for Globalstar Releases
This press release contains certain statements that are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are based on current expectations and assumptions that
are subject to risks and uncertainties which may cause actual
results to differ materially from the forward-looking statements.
Forward-looking statements, such as the statements regarding our
ability to identify and realize opportunities and to generate the
expected revenues and other benefits of the XCOM License Agreement,
our ability to integrate the licensed technology into our current
line of business, the ability of Dr. Jacobs and other new employees
to drive innovation and growth, our expectations with respect to
the pursuit of terrestrial spectrum authorities globally, the
success of current and potential future applications for our
terrestrial spectrum, future increases in our revenue and
profitability, our ability to meet our obligations under, and
profit from, the Service Agreements, and other statements contained
in this release regarding matters that are not historical facts,
involve predictions. Any forward-looking statements made in this
press release are believed to be accurate as of the date made and
are not guarantees of future performance. Actual results or
developments may differ materially from the expectations expressed
or implied in the forward-looking statements, and we undertake no
obligation to update any such statements. Additional information on
factors that could influence our financial results is included in
our filings with the Securities and Exchange Commission, including
our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K.
GLOBALSTAR, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per
share data) (Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Revenue:
Service revenue
$
57,635
$
48,648
$
111,100
$
101,602
Subscriber equipment sales
2,750
6,424
5,765
12,114
Total revenue
60,385
55,072
116,865
113,716
Operating expenses:
Cost of services (exclusive of
depreciation, amortization, and accretion shown separately
below)
18,114
12,246
34,873
24,066
Cost of subscriber equipment sales
2,066
5,662
4,224
9,971
Marketing, general and administrative
10,353
10,122
20,999
19,753
Stock-based compensation
9,164
2,532
18,391
6,292
Reduction in the value of long-lived
assets
—
—
305
—
Depreciation, amortization, and
accretion
22,110
21,890
44,207
43,823
Total operating expenses
61,807
52,452
122,999
103,905
(Loss) income from operations
(1,422
)
2,620
(6,134
)
9,811
Other (expense) income:
Loss on extinguishment of debt
—
—
—
(10,403
)
Interest income and expense, net of
amounts capitalized
(3,644
)
(5,070
)
(7,429
)
(7,102
)
Foreign currency (loss) gain
(4,493
)
2,038
(8,335
)
3,945
Other
58
447
(791
)
348
Total other expenses
(8,079
)
(2,585
)
(16,555
)
(13,212
)
(Loss) income before income taxes
(9,501
)
35
(22,689
)
(3,401
)
Income tax expense
182
26
190
70
Net (loss) income
$
(9,683
)
$
9
$
(22,879
)
$
(3,471
)
Net loss attributable to common
shareholders
(12,327
)
(2,635
)
(28,167
)
(8,730
)
Net loss per common share:
Basic
$
(0.01
)
$
(0.00
)
$
(0.01
)
$
0.00
Diluted
(0.01
)
$
(0.00
)
(0.01
)
0.00
Weighted-average shares outstanding:
Basic
1,884,208
1,813,393
1,883,406
1,812,617
Diluted
1,884,208
1,813,393
1,883,406
1,812,617
GLOBALSTAR, INC. CONSOLIDATED BALANCE
SHEETS (In thousands, except par value and share data)
(Unaudited)
June 30, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
64,334
$
56,744
Accounts receivable, net of allowance for
credit losses of $1,461 and $2,312, respectively
43,148
48,743
Inventory
13,107
14,582
Prepaid expenses and other current
assets
23,421
22,584
Total current assets
144,010
142,653
Property and equipment, net
620,553
624,002
Operating lease right of use assets,
net
34,424
34,164
Intangible and other assets, net of
accumulated amortization of $13,634 and $12,385, respectively
127,259
123,490
Total assets
$
926,246
$
924,309
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Current portion of long-term debt
$
34,600
$
34,600
Accounts payable and accrued expenses
25,643
28,985
Accrued satellite construction costs
19,866
58,187
Payables to affiliates
522
459
Deferred revenue, net
57,712
53,677
Total current liabilities
138,343
175,908
Long-term debt
358,525
325,700
Operating lease liabilities
28,752
29,244
Other non-current liabilities
17,651
14,478
Total non-current liabilities
404,928
369,422
Stockholders’ equity:
Preferred Stock of $0.0001 par value;
99,700,000 shares authorized and none issued and outstanding at
June 30, 2024 and December 31, 2023, respectively
—
—
Series A Preferred Convertible Stock of
$0.0001 par value; 300,000 shares authorized and 149,425 issued and
outstanding at June 30, 2024 and December 31, 2023,
respectively
—
—
Voting Common Stock of $0.0001 par value;
2,150,000,000 shares authorized; 1,892,156,225 and 1,881,194,682
shares issued and outstanding at June 30, 2024 and December 31,
2023, respectively
189
188
Additional paid-in capital
2,461,320
2,438,703
Accumulated other comprehensive income
9,327
5,070
Retained deficit
(2,087,861
)
(2,064,982
)
Total stockholders’ equity
382,975
378,979
Total liabilities and stockholders’
equity
$
926,246
$
924,309
GLOBALSTAR, INC. RECONCILIATION OF
GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA (In
thousands) (Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Net (loss) income
$
(9,683
)
$
9
$
(22,879
)
$
(3,471
)
Interest income and expense, net
3,644
5,070
7,429
7,102
Derivative loss (gain)
26
(299
)
979
(299
)
Income tax expense
182
26
190
70
Depreciation, amortization, and
accretion
22,110
21,890
44,207
43,823
EBITDA
16,279
26,696
29,926
47,225
Non-cash compensation
9,164
2,532
18,391
6,292
Foreign exchange loss (gain) and other
4,410
(2,186
)
8,148
(4,304
)
Reduction in value of long-lived
assets
—
—
305
—
Non-cash expenses associated with License
Agreement (2)
2,178
—
3,570
—
Transaction costs
530
—
1,855
—
Loss on extinguishment of debt
—
—
—
10,403
Adjusted EBITDA (1)
$
32,561
$
27,042
$
62,195
$
59,616
(1)
EBITDA represents earnings before
interest, income taxes, depreciation, amortization, accretion and
derivative (gains)/losses. Adjusted EBITDA excludes non-cash
compensation expense, reduction in the value of assets, foreign
exchange (gains)/losses, and certain other non-cash or
non-recurring charges as applicable. Management uses Adjusted
EBITDA to manage the Company's business and to compare its results
more closely to the results of its peers. EBITDA and Adjusted
EBITDA do not represent and should not be considered as
alternatives to GAAP measurements, such as net income/(loss). These
terms, as defined by us, may not be comparable to similarly titled
measures used by other companies.
The Company uses Adjusted EBITDA as a
supplemental measurement of its operating performance. The Company
believes it best reflects changes across time in the Company's
performance, including the effects of pricing, cost control and
other operational decisions. The Company's management uses Adjusted
EBITDA for planning purposes, including the preparation of its
annual operating budget. The Company believes that Adjusted EBITDA
also is useful to investors because it is frequently used by
securities analysts, investors and other interested parties in
their evaluation of companies in similar industries. As indicated,
Adjusted EBITDA does not include interest expense on borrowed money
or depreciation expense on our capital assets or the payment of
income taxes, which are necessary elements of the Company's
operations. Because Adjusted EBITDA does not account for these
expenses, its utility as a measure of the Company's operating
performance has material limitations. Because of these limitations,
the Company's management does not view Adjusted EBITDA in isolation
and also uses other measurements, such as revenues and operating
profit, to measure operating performance.
(2)
In connection with the License Agreement
with XCOM, the Company entered into a Support Services Agreement
(the “SSA”) with XCOM. Fees payable by Globalstar pursuant to the
SSA were or may be paid in shares of its common stock. Costs also
include noncash intangible asset technology amortization associated
with the initial purchase of certain intangible assets made in the
form of Globalstar common stock.
GLOBALSTAR, INC. SCHEDULE OF SELECTED
OPERATING METRICS (In thousands, except subscriber and ARPU
data) (Unaudited)
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Service revenue:
Subscriber services
Duplex
$
4,965
$
6,359
$
9,720
$
12,110
SPOT
10,379
11,039
20,622
22,353
Commercial IoT
6,716
5,356
13,153
10,534
Wholesale capacity services
34,700
25,478
66,329
55,889
Engineering and other services
875
416
1,276
716
Total service revenue
57,635
48,648
111,100
101,602
Subscriber equipment sales
2,750
6,424
5,765
12,114
Total revenue
$
60,385
$
55,072
$
116,865
$
113,716
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Average subscribers
Duplex
27,893
34,974
28,715
36,047
SPOT
246,182
261,734
248,329
264,162
Commercial IoT
508,518
466,609
506,793
467,059
Other
302
385
306
395
Total
782,895
763,702
784,143
767,663
ARPU (1)
Duplex
$
59.33
$
60.61
$
56.42
$
55.99
SPOT
14.05
14.06
13.84
14.10
Commercial IoT
4.40
3.83
4.33
3.76
(1)
Average monthly revenue per user (ARPU)
measures service revenues per month divided by the average number
of subscribers during that month. Average monthly revenue per user
as so defined may not be similar to average monthly revenue per
unit as defined by other companies in the Company's industry, is
not a measurement under GAAP and should be considered in addition
to, but not as a substitute for, the information contained in the
Company's statement of operations. The Company believes that
average monthly revenue per user provides useful information
concerning the appeal of its rate plans and service offerings and
its performance in attracting and retaining high value
customers.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808775783/en/
Investor Contact Information:
investorrelations@globalstar.com
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