Iridium (IRDM, Financial), a leading mobile voice and data communications services vendor, offering global coverage via satellite, increased 18.1% and added 58 bps to performance. The stock outperformed as the company’s revenue growth accelerated, leading to strong profitability and cash flow, which the company used to buy back its stock. The company continues to benefit from its $3 billion investment in its satellite constellation, which is a technologically and capital-intensive effort and a strong barrier to entry. Iridium continues to generate consistent and growing revenue and cash flow, which should lead to a return of capital to shareholders for at least the next 10 years. That is since its satellites last longer than its competitors’ satellites, and they offer stronger broadband given its low-earth orbit positioning.
Shares of Iridium Communications Inc., a leading satellite-based mobile voice and data communications services vendor, rose on increased expectations for smartphone compatibility after it announced a related development agreement and other market participants announced similar capabilities. In addition, Iridium reported record quarterly results showing an acceleration of revenue growth with strong profitability. Lastly, growth initiatives continue to mature including Aireon, an award from the Space Development Agency, and increasing speeds for its Certus offering.
From Ron Baron (Trades, Portfolio)'s Baron Focused Growth Fund third-quarter 2022 commentary.
