Full Year 2026 Eutelsat Communications SA Earnings Call Transcript
Key Points
- LEO revenues surged nearly 70% year-on-year to almost EUR300 million, now representing 25% of total group revenues and exceeding expectations.
- Successfully completed a comprehensive EUR5 billion refinancing package, including a EUR1.5 billion bond offering, securing midterm CapEx needs and improving financial flexibility.
- Secured a major $350 million call-off contract under the Nexus framework with the French Ministry of Armed Forces, validating strategic role in sovereign defense communications.
- Received FCC C-band clearing order, expected to deliver $504 million in incentive payments in 2031, contributing to long-term financing needs.
- Achieved a key milestone with the IRIS² first rendezvous closure, confirming Eutelsat's leadership in the LEO segment and securing future growth until 2040.
- Connectivity revenues grew 16.4% like-for-like, driven by robust LEO performance across all verticals, with fixed, government, and mobile connectivity all posting strong growth.
- Net debt to EBITDA ratio improved significantly to 2.32x from 3.9x, reflecting the successful capital increase and refinancing.
- Backlog remains strong at $3.4 billion, with connectivity representing 61% of total backlog, up from 57% a year ago.
- Commercial momentum is strong with new partner agreements in maritime, aviation, and fixed connectivity, including deals with AST Network, Anuvu, and Japan Airlines.
- CapEx came in below expectations at just under EUR600 million, reflecting good control over GEO and ground capexes.
- Video revenues declined 13.1% year-on-year, impacted by market trends, Russian sanctions, and termination of capacity contracts on two Russian satellites.
- Adjusted EBITDA margin decreased to 51.2% from 54.4%, reflecting higher cost of goods sold for LEO business and mix effects from declining high-margin video.
- Group share of net result remained a loss of $457 million, though improved from a $1.1 billion loss last year.
- CapEx is expected to ramp up significantly to EUR1.2 billion in fiscal year 2026-27, with a cumulative $4 billion investment plan over four years, putting pressure on cash flow.
- Revenue growth for fiscal year 2026-27 is expected to be only slight, as LEO growth is offset by continued decline in GEO video and connectivity revenues.
- The company faces ongoing challenges in GEO connectivity, with softer trends in maritime and other segments partially offsetting LEO growth.
- Backlog decreased slightly to $3.4 billion from $3.5 billion, reflecting shorter LEO contracts and pay-as-you-go arrangements not fully recognized.
- The company's EBITDA margin guidance for fiscal year 2028-29 was toned down to above 60%, reflecting continued GEO weakness and mix effects.
- There is uncertainty regarding the phasing of government contracts, with the Q4 catch-up revenue from the French MOD contract not expected to recur at the same level.
- The company faces intense competition from Starlink and other players, and the Starlink IPO highlighted the significant support from the US government, which could impact competitive dynamics.
Welcome to the Eutelsat Full Year 2025-2026 results presentation. For the first part of the conference, the participants will be in listen-only mode. During the questions and answers session, participants will be able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speaker, Jean-Francois Felache, Chief Executive Officer, and Sebastien Rouge, Chief Financial Officer. Please go ahead.
Hello, welcome, and thank you for joining us today in the middle of the summer for Utelsat's full-year 2025-26 results presentation. I am Jean-Ponce Falacher, the CEO of Utelsat, and I am joined today by Sebastien Brouge, our Chief Financial Officer, and Joanna Darlington, Head of Investors Relations.
So let's go directly to the meat of this meeting and the highlights of our year. So I want to stress that our EU revenues were ahead of expectations, up nearly 70% year-on-year to almost
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