You should read the following discussion along with our Annual Report on Form10-K for the fiscal year endedDecember 31, 2020 , filed onFebruary 11, 2021 with theSecurities and Exchange Commission , or theSEC , as well as ourcondensed consolidated financial statements included in this Form 10-Q.This report contains forward-looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995. For this purpose, anystatements contained herein that are not statements of historical fact may bedeemed to be forward-looking statements. Such forward-looking statements includethose that express plans, anticipation, intent, contingencies, goals, targets orfuture development or otherwise are not statements of historical fact. Withoutlimiting the foregoing, the words "believe," "anticipate," "plan," "expect,""intend" and similar expressions are intended to identify forward-lookingstatements. These forward-looking statements are based on our currentexpectations and projections about future events, and they are subject to risksand uncertainties, known and unknown, that could cause actual results anddevelopments to differ materially from those expressed or implied in suchstatements. These risks and uncertainties may be amplified by the COVID-19pandemic and its potential impact on our business and the global economy. Theimportant factors described under the caption "Risk Factors" in this report andin our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2020 filed onFebruary 11, 2021 could cause actual results to differ materially fromthose indicated by forward-looking statements made herein. We undertake noobligation to publicly update or revise any forward-looking statements, whetheras a result of new information, future events or otherwise.Overview of Our BusinessWe are engaged primarily in providing mobile voice and data communicationsservices using a constellation of orbiting satellites. We are the onlycommercial provider of communications services offering true global coverage,connecting people, organizations and assets to and from anywhere, in real time.Our unique L-band satellite network provides reliable communications services toregions of the world where terrestrial wireless or wireline networks do notexist or are limited, including remote land areas, open ocean, airways, thepolar regions and regions where the telecommunications infrastructure has beenaffected by political conflicts or natural disasters.We provide voice and data communications services to businesses, theU.S. andforeign governments, non-governmental organizations and consumers via ourupgraded satellite network, which has an architecture of 66 operationalsatellites with in-orbit and ground spares and related ground infrastructure. Weutilize an interlinked mesh architecture to route traffic across the satelliteconstellation using radio frequency crosslinks between satellites. This uniquearchitecture minimizes the need for ground facilities to support theconstellation, which facilitates the global reach of our services and allows usto offer services in countries and regions where we have no physical presence.Our upgraded satellite constellation is compatible with all of our end-userequipment and supports more bandwidth and higher data speeds for our newproducts, including our Iridium Certus® broadband service.We sell our products and services to commercial end-users through a wholesaledistribution network, encompassing approximately 110 service providers,approximately 280 value-added resellers, or VARs, and approximately 85value-added manufacturers, or VAMs, who either sell directly to the end user orindirectly through other service providers, VARs or dealers. These distributorsoften integrate our products and services with other complementary hardware andsoftware and have developed a broad suite of applications for our products andservices targeting specific lines of business.AtSeptember 30, 2021 , we had approximately 1,690,000 billable subscribersworldwide, representing an increase of 18% from approximately 1,429,000 billablesubscribers atSeptember 30, 2020 . We have a diverse customer base, with endusers in the following lines of business: land mobile, maritime, aviation,Internet of Things, or IoT, hosted payloads and other data services and theU.S. government.We recognize revenue from both the provision of services and the sale ofequipment. Over the past several years, service revenue, including revenue fromhosting and data services, has represented an increasing proportion of ourrevenue, and we expect that trend to continue.Effects of the COVID-19 Pandemic on Our BusinessThe COVID-19 pandemic and measures taken in response continue to affectcountries, communities and markets around the world. Like many other businesses,we started to see a slowdown in the final weeks ofMarch 2020 as a result of thewidespread economic shutdown. Our distributors have also experienced businessand operational restrictions, which continue to limit their ability to visitcustomers, complete new installations, and close on new business opportunities,particularly internationally. The economic slowdown extended through 2020 andinto 2021, although we have seen significant recovery in some markets, mostnotably IoT. Other markets, including aviation and maritime, and someinternational areas continue to suffer significant effects from reduced activityduring the pandemic. Aviation, in particular, has started to see recovery butmay take years to recover to pre-pandemic levels. In other industries, such asmaritime, the effects are significant, but vary greatly by region and business 21--------------------------------------------------------------------------------model, and we expect that additional shutdowns and other restrictions willcontinue to impact our results of operations. The ultimate effects of theCOVID-19 pandemic are difficult to assess or predict with certainty at this timebut may include additional risks. For further information on the potentialeffects of the COVID-19 pandemic on our business, financial condition andresults of operations, see "Part I, Item 1A. Risk Factors" of our Annual Reporton Form 10-K for the fiscal year endedDecember 31, 2020 , filed with theSecurities and Exchange Commission onFebruary 11, 2021 , as well as the "RiskFactors" section of this report below.Material Trends and UncertaintiesOur 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 andgeographically dispersed niche markets;•increased demand for communications services by disaster and relief agencies,and emergency first responders;•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 subscriberequipment; and•geographic market expansion through the ability to offer our services inadditional countries.Nonetheless, we face a number of challenges and uncertainties in operating ourbusiness, including:•our ability to maintain the health, capacity, control and level of service ofour satellites;•our ability to develop and launch new and innovative products and services;•changes in general economic, business and industry conditions, including theeffects of currency exchange rates;•our reliance on a single primary commercial gateway and a primary satellitenetwork operations center;•competition from other satellite service providers and, to a lesser extent,from the expansion of terrestrial-based cellular phone systems and relatedpricing pressures;•market acceptance of our products;•regulatory requirements in existing and new geographic markets;•rapid and significant technological changes in the telecommunications industry;•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 themanufacture of most of our subscriber equipment and for some of the componentsrequired in the manufacture of our end-user subscriber equipment and our abilityto purchase component parts that are periodically subject to shortages resultingfrom surges in demand, natural disasters or other events, including the COVID-19pandemic; and•reliance on a few significant customers, particularly agencies of theU.S. government, for a substantial portion of our revenue, as a result of which theloss or decline in business with any of these customers may negatively impactour revenue and collectability of related accounts receivable. 22--------------------------------------------------------------------------------Comparison of Our Results of Operations for the Three Months EndedSeptember 30,2021 and 2020 Three Months Ended September 30, % of Total % of Total Change($ in thousands) 2021 Revenue 2020 Revenue Dollars PercentRevenue:Services$ 127,774 78 %$ 116,914 77 %$ 10,860 9 %Subscriber equipment 26,898 17 % 25,120 17 % 1,778 7 %Engineering and support services 7,487 5 % 9,438 6 % (1,951) (21) %Total revenue 162,159 100 % 151,472 100 % 10,687 7 %Operating expenses:Cost of services (exclusive ofdepreciationand amortization) 25,186 16 % 23,909 16 % 1,277 5 %Cost of subscriber equipment 15,544 10 % 15,429 10 % 115 1 %Research and development 2,815 2 % 3,116 2 % (301) (10) %Selling, general and administrative 25,897 16 % 20,631 14 % 5,266 26 %Depreciation and amortization 77,688 47 % 75,654 50 % 2,034 3 %Total operating expenses 147,130 91 % 138,739 92 % 8,391 6 %Operating income 15,029 9 % 12,733 8 % 2,296 18 %Other expense:Interest expense, net (17,614) (10) % (22,628) (15) % 5,014 (22) %Loss on extinguishment of debt (879) (1) % - - % (879) (100) %Other income (expense), net (81) - % 205 - % (286) (140) %Total other expense, net (18,574) (11) % (22,423) (15) % 3,849 (17) %Loss before income taxes (3,545) (2) % (9,690) (7) % 6,145 (63) %Income tax benefit 1,460 1 % 5,685 4 % (4,225) (74) %Net loss$ (2,085) (1) %$ (4,005) (3) %$ 1,920 23
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Revenue
Commercial Service Revenue
Three Months Ended September 30, 2021 2020 Change Billable Billable Billable Revenue Subscribers (1) ARPU (2) Revenue Subscribers (1) ARPU (2) Revenue Subscribers ARPU (Revenue in millions and subscribers in thousands)
Commercial services:Voice and data$ 45.7 372$ 41 $ 42.8 352$ 41 $ 2.9 20 $ -IoT data ...
IRIDIUM COMMUNICATIONS : MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND