UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, ~~2020~~2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-33963

Iridium Communications Inc.

(Exact name of registrant as specified in its charter)


DE						26-1344998
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1750 Tysons Boulevard, Suite 1400, McLean, VA 22102

(Address of principal executive offices, including zip code)

703-287-7400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, $0.001 par value

IRDM

The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting Company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The number of shares of the registrant’s common stock, par value $0.001 per share, outstanding as of October 14, ~~2020~~2021 was ~~133,301,722.~~132,202,392.

IRIDIUM COMMUNICATIONS INC.

TABLE OF CONTENTS

Item No.

Page

Part I. Financial Information

Financial Statements:

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Operations and Comprehensive Loss

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Condensed Consolidated Statements of Cash Flows

Notes to Condensed Consolidated Financial Statements

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

1721

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

2932

ITEM 4.

Controls and Procedures

2932

Part II. Other Information

ITEM 1.

ITEM 1A.

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 3.

Defaults Upon Senior Securities

3334

ITEM 4.

Mine Safety Disclosures

ITEM 5.

ITEM 6.

PART I.

Iridium Communications Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	182,702	$	223,561	Cash and cash equivalents	$	287,004	$	237,178
Marketable securities						Marketable securities	2,002		7,548
Accounts receivable, net	Accounts receivable, net	59,340		68,697		Accounts receivable, net	70,390		61,151
Inventory	Inventory	33,309		39,938		Inventory	23,388		32,480
Prepaid expenses and other current assets	Prepaid expenses and other current assets	11,188		10,739		Prepaid expenses and other current assets	9,786		9,464
Total current assets	Total current assets	286,539		342,935		Total current assets	392,570		347,821
Property and equipment, net	Property and equipment, net	2,981,370		3,180,799		Property and equipment, net	2,720,281		2,917,076
Other assets						Other assets	48,761		50,548
Intangible assets, net	Intangible assets, net	45,881		46,977		Intangible assets, net	44,361		45,504
Other assets		51,735		52,846
Total assets	Total assets	$	3,365,525	$	3,623,557	Total assets	$	3,205,973	$	3,360,949
Liabilities and stockholders’ equity
Liabilities and stockholders’ equity						Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Short-term secured debt	Short-term secured debt	$	16,500	$	10,875	Short-term secured debt	$	16,500	$	16,766
Accounts payable	Accounts payable	7,181		6,713		Accounts payable	10,927		14,390
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	40,727		49,293		Accrued expenses and other current liabilities	39,794		49,504
Interest payable		246		7,790
Deferred revenue	Deferred revenue	36,017		39,080		Deferred revenue	26,243		32,412
Total current liabilities	Total current liabilities	100,671		113,751		Total current liabilities	93,464		113,072
Long-term secured debt, net	Long-term secured debt, net	1,600,387		1,412,501		Long-term secured debt, net	1,584,511		1,596,893
Long-term senior unsecured notes, net		0		352,994
Deferred income tax liabilities, net	Deferred income tax liabilities, net	165,053		188,653		Deferred income tax liabilities, net	134,563		155,084
Deferred revenue, net of current portion	Deferred revenue, net of current portion	52,600		67,092		Deferred revenue, net of current portion	49,187		51,258
Other long-term liabilities	Other long-term liabilities	31,351		29,284		Other long-term liabilities	22,467		25,203
Total liabilities	Total liabilities	1,950,062		2,164,275		Total liabilities	1,884,192		1,941,510
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock, $0.001 par value, 300,000 shares authorized; 133,279 and 131,632 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		133		132
Common stock, $0.001 par value, 300,000 shares authorized, 132,188 and 134,056 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively						Common stock, $0.001 par value, 300,000 shares authorized, 132,188 and 134,056 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	132		134
Additional paid-in capital	Additional paid-in capital	1,151,606		1,134,048		Additional paid-in capital	1,155,414		1,160,570
Retained earnings	Retained earnings	283,840		331,969		Retained earnings	176,464		275,915
Accumulated other comprehensive loss, net of tax	Accumulated other comprehensive loss, net of tax	(20,116)		(6,867)		Accumulated other comprehensive loss, net of tax	(10,229)		(17,180)
Total stockholders’ equity	Total stockholders’ equity	1,415,463		1,459,282		Total stockholders’ equity	1,321,781		1,419,439
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	3,365,525	$	3,623,557	Total liabilities and stockholders’ equity	$	3,205,973	$	3,360,949

See notes to unaudited condensed consolidated financial statements.

Iridium Communications Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share amounts)

(Unaudited)


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Revenue:	Revenue:									Revenue:
Services	Services	$	116,914	$	115,853	$	346,239	$	333,601	Services	$	127,774	$	116,914	$	365,247	$	346,239
Subscriber equipment	Subscriber equipment	25,120		21,375		67,198		65,803		Subscriber equipment	26,898		25,120		72,607		67,198
Engineering and support services	Engineering and support services	9,438		7,557		23,495		22,166		Engineering and support services	7,487		9,438		20,759		23,495
Total revenue	Total revenue	151,472		144,785		436,932		421,570		Total revenue	162,159		151,472		458,613		436,932

Operating expenses:	Operating expenses:									Operating expenses:
Cost of services (exclusive of depreciation and amortization)	Cost of services (exclusive of depreciation and amortization)	23,909		23,581		69,021		71,709		Cost of services (exclusive of depreciation and amortization)	25,186		23,909		71,784		69,021
Cost of subscriber equipment	Cost of subscriber equipment	15,429		12,862		39,772		38,663		Cost of subscriber equipment	15,544		15,429		41,243		39,772
Research and development	Research and development	3,116		2,822		7,940		10,718		Research and development	2,815		3,116		8,156		7,940
Selling, general and administrative	Selling, general and administrative	20,631		22,934		62,556		67,744		Selling, general and administrative	25,897		20,631		72,524		62,556
Depreciation and amortization	Depreciation and amortization	75,654		74,575		227,260		222,617		Depreciation and amortization	77,688		75,654		229,266		227,260
Total operating expenses	Total operating expenses	138,739		136,774		406,549		411,451		Total operating expenses	147,130		138,739		422,973		406,549
Operating income	Operating income	12,733		8,011		30,383		10,119		Operating income	15,029		12,733		35,640		30,383

Other expense, net:	Other expense, net:									Other expense, net:
Interest expense, net	Interest expense, net	(22,628)		(30,493)		(71,578)		(85,076)		Interest expense, net	(17,614)		(22,628)		(58,013)		(71,578)
Loss on extinguishment of debt	Loss on extinguishment of debt	0		0		(30,209)		(207)		Loss on extinguishment of debt	(879)		—		(879)		(30,209)
Other income (expense), net	Other income (expense), net	205		26		332		(926)		Other income (expense), net	(81)		205		(225)		332
Total other expense, net	Total other expense, net	(22,423)		(30,467)		(101,455)		(86,209)		Total other expense, net	(18,574)		(22,423)		(59,117)		(101,455)
Loss before income taxes	Loss before income taxes	(9,690)		(22,456)		(71,072)		(76,090)		Loss before income taxes	(3,545)		(9,690)		(23,477)		(71,072)
Income tax benefit	Income tax benefit	5,685		4,444		22,943		21,948		Income tax benefit	1,460		5,685		20,042		22,943
Net loss	Net loss	(4,005)		(18,012)		(48,129)		(54,142)		Net loss	$	(2,085)	$	(4,005)	$	(3,435)	$	(48,129)
Series B preferred stock dividends, declared and paid excluding cumulative dividends		0		0		0		4,194
Net loss attributable to common stockholders		$	(4,005)	$	(18,012)	$	(48,129)	$	(58,336)
Weighted average shares outstanding - basic and diluted	Weighted average shares outstanding - basic and diluted	133,760		131,688		133,177		122,816		Weighted average shares outstanding - basic and diluted	132,869		133,760		133,763		133,177
Net loss attributable to common stockholders per share - basic and diluted	Net loss attributable to common stockholders per share - basic and diluted	$	(0.03)	$	(0.14)	$	(0.36)	$	(0.47)	Net loss attributable to common stockholders per share - basic and diluted	$	(0.02)	$	(0.03)	$	(0.03)	$	(0.36)
Comprehensive loss:
Comprehensive income (loss):										Comprehensive income (loss):
Net loss	Net loss	$	(4,005)	$	(18,012)	$	(48,129)	$	(54,142)	Net loss	$	(2,085)	$	(4,005)	$	(3,435)	$	(48,129)
Foreign currency translation adjustments, net of tax		(1,348)		(864)		(4,241)		1,302
Foreign currency translation adjustments										Foreign currency translation adjustments	(592)		(1,348)		(171)		(4,241)
Unrealized gain (loss) on cash flow hedges, net of tax (see Note 6)	Unrealized gain (loss) on cash flow hedges, net of tax (see Note 6)	1,794		0		(9,008)		0		Unrealized gain (loss) on cash flow hedges, net of tax (see Note 6)	3,040		1,794		7,122		(9,008)
Comprehensive loss		$	(3,559)	$	(18,876)	$	(61,378)	$	(52,840)
Comprehensive income (loss)										Comprehensive income (loss)	$	363	$	(3,559)	$	3,516	$	(61,378)

See notes to unaudited condensed consolidated financial statements.

Iridium Communications Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Total stockholders’ equity, beginning balance $ 1,409,160 $ 1,572,951 $ 1,459,282 $ 1,601,577
Common stock:
Beginning balance 133 131 132 112
Stock options exercised and awards vested 0 0 1 2
Preferred stock converted to common 0 0 0 17
Ending balance 133 131 133 131
Additional paid-in capital:
Beginning balance 1,141,744 1,121,613 1,134,048 1,108,550
Stock-based compensation 5,134 4,423 13,775 12,559
Stock options exercised and awards vested 5,175 1,155 7,786 9,941
Stock withheld to cover employee taxes (447) (395) (4,003) (4,237)
Preferred stock converted to common 0 0 0 (17)
Ending balance 1,151,606 1,126,796 1,151,606 1,126,796
Retained earnings:
Beginning balance 287,845 457,838 331,969 501,712
Net loss (4,005) (18,012) (48,129) (54,142)
Dividends on Series B preferred stock 0 0 0 (7,744)
Ending balance 283,840 439,826 283,840 439,826
Accumulated other comprehensive loss, net of tax:
Beginning balance (20,562) (6,631) (6,867) (8,797)
Cumulative translation adjustments, net of tax (1,348) (864) (4,241) 1,302
Unrealized gain (loss) on cash flow hedge, net of tax 1,794 0 (9,008) 0
Ending balance (20,116) (7,495) (20,116) (7,495)
Total stockholders’ equity, ending balance $ 1,415,463 $ 1,559,258 $ 1,415,463 $ 1,559,258
Dividends declared per share:
Series B preferred stock $ 0 $ 0 $ 0 $ 16.88


	Three Months Ended September 30, 2021											Three Months Ended September 30, 2020
				Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity					Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
	Common Stock											Common Stock
	Shares	Amount										Shares	Amount
Balances at beginning of period	131,928	$	132	$	1,146,160	$	(12,677)	$	180,563	$	1,314,178	132,526	$	133	$	1,141,744	$	(20,562)	$	287,845	$	1,409,160
Stock-based compensation	—	—		8,150		—		—		8,150		—	—		5,134		—		—		5,134
Stock options exercised and awards vested	348	—		2,378		—		—		2,378		769	—		5,175		—		—		5,175
Stock withheld to cover employee taxes	(16)	—		(650)		—		—		(650)		(16)	—		(447)		—		—		(447)
Repurchases and retirements of common stock	(72)	—		(624)		—		(2,014)		(2,638)		—	—		—		—		—		—
Cumulative translation adjustments	—	—		—		(592)		—		(592)		—	—		—		(1,348)		—		(1,348)
Unrealized gain on cash flow hedges, net of tax	—	—		—		3,040		—		3,040		—	—		—		1,794		—		1,794
Net loss	—	—		—		—		(2,085)		(2,085)		—	—		—		—		(4,005)		(4,005)
Balances at end of period	132,188	$	132	$	1,155,414	$	(10,229)	$	176,464	$	1,321,781	133,279	$	133	$	1,151,606	$	(20,116)	$	283,840	$	1,415,463


	Nine Months Ended September 30, 2021											Nine Months Ended September 30, 2020
				Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity					Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
	Common Stock											Common Stock
	Shares	Amount										Shares	Amount
Balances at beginning of period	134,056	$	134	$	1,160,570	$	(17,180)	$	275,915	$	1,419,439	131,632	$	132	$	1,134,048	$	(6,867)	$	331,969	$	1,459,282
Stock-based compensation	—	—		22,129		—		—		22,129		—	—		13,775		—		—		13,775
Stock options exercised and awards vested	1,626	1		7,192		—		—		7,193		1,796	1		7,786		—		—		7,787
Stock withheld to cover employee taxes	(131)	—		(5,390)		—		—		(5,390)		(149)	—		(4,003)		—		—		(4,003)
Repurchases and retirements of common stock	(3,363)	(3)		(29,087)		—		(96,016)		(125,106)		—	—		—		—		—		—
Cumulative translation adjustments	—	—		—		(171)		—		(171)		—	—		—		(4,241)		—		(4,241)
Unrealized gain (loss) on cash flow hedges, net of tax	—	—		—		7,122		—		7,122		—	—		—		(9,008)		—		(9,008)
Net loss	—	—		—		—		(3,435)		(3,435)		—	—		—		—		(48,129)		(48,129)
Balances at end of period	132,188	$	132	$	1,155,414	$	(10,229)	$	176,464	$	1,321,781	133,279	$	133	$	1,151,606	$	(20,116)	$	283,840	$	1,415,463

See notes to unaudited condensed consolidated financial statements.

Iridium Communications Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


		Nine Months Ended September 30,							Nine Months Ended September 30,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(48,129)	$	(54,142)	Net loss	$	(3,435)	$	(48,129)
Adjustments to reconcile net loss to net cash provided by operating activities:	Adjustments to reconcile net loss to net cash provided by operating activities:					Adjustments to reconcile net loss to net cash provided by operating activities:
Deferred income taxes	Deferred income taxes	(23,600)		(18,543)		Deferred income taxes	(20,521)		(23,600)
Depreciation and amortization	Depreciation and amortization	227,260		222,617		Depreciation and amortization	229,266		227,260
Loss on extinguishment of debt	Loss on extinguishment of debt	30,209		207		Loss on extinguishment of debt	879		30,209
Stock-based compensation (net of amounts capitalized)	Stock-based compensation (net of amounts capitalized)	12,560		11,524		Stock-based compensation (net of amounts capitalized)	20,087		12,560
Amortization of deferred financing fees	Amortization of deferred financing fees	2,724		15,485		Amortization of deferred financing fees	3,025		2,724
All other items, net	All other items, net	548		394		All other items, net	(525)		548
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	7,958		1,051		Accounts receivable	(8,702)		7,958
Inventory	Inventory	6,709		(11,038)		Inventory	9,408		6,709
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(986)		4,886		Prepaid expenses and other current assets	(309)		(986)
Other assets	Other assets	2,545		293		Other assets	2,538		2,545
Accounts payable	Accounts payable	556		2,998		Accounts payable	(5,050)		556
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	(14,025)		(15,618)		Accrued expenses and other current liabilities	(2,386)		(14,025)
Interest payable	Interest payable	(7,072)		(5,516)		Interest payable	(69)		(7,072)
Deferred revenue	Deferred revenue	(16,576)		(9,769)		Deferred revenue	(8,312)		(16,576)
Other long-term liabilities	Other long-term liabilities	(1,544)		(2,376)		Other long-term liabilities	(2,757)		(1,544)
Net cash provided by operating activities	Net cash provided by operating activities	179,137		142,453		Net cash provided by operating activities	213,137		179,137

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(29,267)		(102,756)		Capital expenditures	(28,016)		(29,267)
Purchase of other investments	Purchase of other investments	0		(10,000)		Purchase of other investments	(1,128)		—
Maturities of marketable securities						Maturities of marketable securities	5,400		—
Net cash used in investing activities	Net cash used in investing activities	(29,267)		(112,756)		Net cash used in investing activities	(23,744)		(29,267)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Payments on the Credit Facility, including extinguishment costs		0		(126,000)

Borrowings under the Term Loan	Borrowings under the Term Loan	202,000		0		Borrowings under the Term Loan	179,285		202,000
Payments on the Term Loan	Payments on the Term Loan	(8,250)		0		Payments on the Term Loan	(191,660)		(8,250)
Repayments on the senior unsecured notes, including extinguishment costs		(383,451)		0
Payments on the senior unsecured notes, including extinguishment costs						Payments on the senior unsecured notes, including extinguishment costs	—		(383,451)
Repurchases of common stock						Repurchases of common stock	(125,106)		—
Payment of deferred financing fees	Payment of deferred financing fees	(2,562)		0		Payment of deferred financing fees	(4,053)		(2,562)
Proceeds from exercise of stock options	Proceeds from exercise of stock options	7,786		9,941		Proceeds from exercise of stock options	7,193		7,786
Tax payment upon settlement of stock awards	Tax payment upon settlement of stock awards	(4,003)		(4,237)		Tax payment upon settlement of stock awards	(5,390)		(4,003)
Payment of Series B preferred stock dividends		0		(8,387)
Net cash used in financing activities	Net cash used in financing activities	(188,480)		(128,683)		Net cash used in financing activities	(139,731)		(188,480)

Effect of exchange rate changes on cash and cash equivalents		(2,249)		453
Net decrease in cash and cash equivalents		(40,859)		(98,533)
Effect of exchange rate changes on cash and cash equivalents, and restricted cash						Effect of exchange rate changes on cash and cash equivalents, and restricted cash	164		(2,249)
Net increase (decrease) in cash and cash equivalents, and restricted cash						Net increase (decrease) in cash and cash equivalents, and restricted cash	49,826		(40,859)
Cash, cash equivalents, and restricted cash, beginning of period	Cash, cash equivalents, and restricted cash, beginning of period	223,561		465,287		Cash, cash equivalents, and restricted cash, beginning of period	237,178		223,561
Cash, cash equivalents, and restricted cash, end of period	Cash, cash equivalents, and restricted cash, end of period	$	182,702	$	366,754	Cash, cash equivalents, and restricted cash, end of period	$	287,004	$	182,702

See notes to unaudited condensed consolidated financial statements.

Nine Months Ended September 30,
2020 2019
Supplemental cash flow information:
Interest paid, net of amounts capitalized $ 77,047 $ 101,061
Income taxes paid, net $ 934 $ 999
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment received but not paid $ 2,533 $ 1,307
Interest capitalized but not paid $ 0 $ 2,526
Capitalized amortization of deferred financing costs $ 82 $ 2,276
Capitalized stock-based compensation $ 1,215 $ 1,034


	Nine Months Ended September 30,
	2021		2020
Supplemental cash flow information:
Interest paid, net of amounts capitalized	$	56,985	$	77,047
Income taxes paid, net	$	1,304	$	934

Supplemental disclosure of non-cash investing and financing activities:
Property and equipment received but not paid	$	4,941	$	2,533
Capitalized amortization of deferred financing costs	$	90	$	82
Capitalized stock-based compensation	$	2,042	$	1,215

See notes to unaudited condensed consolidated financial statements.

Iridium Communications Inc.

Notes to Condensed Consolidated Financial Statements

1. Basis of Presentation and Principles of Consolidation

Iridium Communications Inc. (the “Company”) has prepared its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The Company's operations are conducted through, and its operating assets are owned by, its principal operating subsidiary, Iridium Satellite LLC, Iridium Satellite's immediate parent, Iridium Holdings, LLC, and their subsidiaries. The accompanying condensed consolidated financial statements include the accounts of (i) the Company, (ii) its wholly owned subsidiaries, and (iii) all less than wholly owned subsidiaries that the Company controls. All material intercompany transactions and balances have been eliminated.

In the opinion of management, the condensed consolidated financial statements reflect all normal recurring adjustments that the Company considers necessary for the fair presentation of its results of operations and cash flows for the interim periods covered, and of the financial position of the Company at the date of the interim condensed consolidated balance sheet. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to instructions, rules and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10‑K for the year ended December 31, ~~2019,~~2020, as filed with the SEC on February ~~25, 2020.~~11, 2021.

2. Significant Accounting Policies

Adopted Accounting Pronouncements

Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This guidance introduces a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses. Adoption of ASU 2016-13 did not have a material impact on the Company’s consolidated financial statements and related disclosures and no cumulative adjustment was recorded.

~~Recent Accounting Developments Not Yet Adopted~~

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). This guidance amends certain aspects of the accounting for income taxes. ~~The Company intends to apply the new guidance effective~~Adoption of ASU 2019-12 on January 1, 2021 ~~as required. The~~had no impact ~~of the adoption of the ASU~~ on the Company's condensed consolidated financial statements and related ~~disclosures is not expected to be material.~~disclosures.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ~~This~~The guidance provides optional expedients and exceptions for ~~applying GAAP to~~ contracts, hedging relationships, and other transactions ~~affected by reference rate reform. The amendments apply only to contracts and hedging relationships~~ that reference London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be ~~discontinued due to reference rate reform. The Company is evaluating~~discontinued. ASU 2020-04 was further amended in January 2021 when the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), which clarified the applicability of certain provisions. Both ASU 2020-04 and ~~considering~~ASU 2021-01 are currently effective prospectively for all entities through December 31, 2022 when the ~~possible adoption~~reference rate replacement activity is expected to have been completed. The guidance in ASU 2020-04 and ASU 2021-01 is optional and may be elected over time as reference rate reform activities occur. As of ~~certain~~September 30, 2021, the Company elected to apply the optional expedient for hedge accounting specifically to the interest rate cap agreement (the "Cap") which was executed in July 2021. This allowed the Company to assume that the index upon which future interest payments on the hedged portion of the Term Loan (see Note 5) will be based matches the index on the Cap. Adoption of this practical expedient had no impact on the Company's condensed consolidated financial statements upon adoption. The Company has not yet adopted any other expedients ~~stated within~~and will continue to evaluate the ~~guidance as well as the impacts they~~impact this standard may have on its consolidated financial ~~statements and related disclosures.~~statements.

Fair Value Measurements

The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by management of the Company. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value.

The fair value hierarchy consists of the following tiers:

•Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities;

•Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The ~~fair value estimates are based upon certain market assumptions and information available to the Company. The~~ carrying ~~value~~values of the following financial instruments approximated their fair values as of September 30, ~~2020~~2021 and December 31, ~~2019:~~2020: cash and cash equivalents, prepaid expenses and other current assets, accounts receivable, accounts payable, and accrued expenses and other current liabilities. Fair values approximate their carrying values because of their short-term nature. The Level 2 cash equivalents include money market funds, commercial paper and short-term U.S. agency securities. The Company also classifies its fixed income debt investments and derivative financial instruments as Level 2. The Company did not hold any Level 3 assets as of September 30, 2021 and December 31, 2020.

The fair values of the Company’s Level 2 estimates are based upon certain market assumptions and information available to the Company. In determining fair value, the Company uses a market approach utilizing valuation models that incorporate observable inputs such as interest rates, bond yields and quoted prices for similar assets.

Leases

For new leases, the Company will determine if an arrangement is or contains a lease at inception. Leases are included as right-of-use (“ROU”) assets within other assets and ROU liabilities within accrued expenses and other liabilities and within other long-term liabilities on the Company’s condensed consolidated balance sheets.

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Certain leases contain variable contractual obligations as a result of future base rate escalations which are estimated based on observed trends and included within the measurement of present value. The Company’s leases do not provide an implicit rate. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For certain leases, such as teleport network ~~(“TPN”)~~ facilities, the Company elected the practical expedient to combine lease and non-lease components as a single lease component. Taxes assessed on leases in which the Company is either a lessor or lessee are excluded from contract consideration and variable payments when measuring new lease contracts or remeasuring existing lease contracts.

Derivative Financial Instruments

The Company uses ~~interest~~derivatives (interest rate swap, ~~agreements~~swaption, Cap) to manage its ~~exposures~~exposure to fluctuating interest rate risk on variable rate debt. Its derivatives are measured at fair value and are recorded on the condensed consolidated balance ~~sheet~~sheets within other current liabilities and other ~~long-term liabilities. The~~assets. When the Company’s derivatives are designated as cash flow hedges, ~~with~~ the effective portion of the changes in fair value of the derivatives are recorded in accumulated other comprehensive loss within the Company’s condensed consolidated balance sheets and subsequently recognized in earnings when the hedged items impact earnings. Any ineffective portion of ~~cash flow hedges would~~a derivative's change in fair value will be ~~recorded~~recognized in ~~current~~earnings in the same period in which the hedged interest payments affect earnings. Within the condensed consolidated ~~statement~~statements of operations and comprehensive ~~income,~~loss, the gains and losses related to cash flow hedges are recognized within interest income (expense), net, as this is the same financial statement line item used for any gains or losses associated with the hedged items. Cash flows from hedging activities are included in operating activities within the ~~company’s~~Company’s condensed consolidated statements of cash flows, which is the same category as the ~~items~~item being hedged. See Note 6 for further information.

3. Cash and Cash Equivalents and ~~Restricted Cash and Cash Equivalents~~Marketable Securities

Cash and Cash Equivalents

The following table ~~summarizes~~presents the Company’s cash and cash ~~equivalents:~~equivalents as of September 30, 2021 and December 31, 2020:


		September 30, 2020		December 31, 2019		Recurring Fair Value Measurement		September 30, 2021		December 31, 2020		Recurring Fair Value Measurement
		(in thousands)								(In thousands)
Cash and cash equivalents:	Cash and cash equivalents:						Cash and cash equivalents:
Cash	Cash	$	20,886	$	13,943		Cash	$	43,323	$	27,168
Money market funds	Money market funds	161,816		209,618		Level 2	Money market funds	243,681		208,005		Level 2
Fixed income debt securities							Fixed income debt securities	—		2,005		Level 2
Total cash and cash equivalents	Total cash and cash equivalents	$	182,702	$	223,561		Total cash and cash equivalents	$	287,004	$	237,178

Marketable Securities

As of September 30, 2021, the Company's marketable securities consisted of only fixed income debt securities. The amortized cost of these securities amounted to $2.0 million and $7.6 million as of September 30, 2021 and December 31, 2020, respectively. The estimated fair value of these securities amounted to $2.0 million and $7.5 million as of September 30, 2021 and December 31, 2020, respectively. The gross unrealized gains and gross unrealized losses on these marketable securities were not material as of September 30, 2021 and December 31, 2020. All marketable securities are classified as Level 2 investments in the fair value hierarchy. The Company determined that any decline in fair value of these investments is temporary as the Company does not intend to sell these securities and it is not likely that the Company will be required to sell the securities before the recovery of their amortized cost basis.

The following table presents the contractual maturities of the Company's fixed income debt securities as of September 30, 2021 and December 31, 2020:


	September 30, 2021				December 31, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)				(In thousands)
Mature within one year	$	2,002	$	2,002	$	5,530	$	5,525
Mature after one year and within three years	—		—		2,024		2,023
Total	$	2,002	$	2,002	$	7,554	$	7,548

4. Leases

Lessor Arrangements

Operating leases in which the Company is a lessor consist primarily of hosting agreements with Aireon LLC (“Aireon”) (see Note 1112) and L3Harris Technologies, Inc. (“L3Harris”) for space on the Company’s satellites. These agreements provide for a fee that will be recognized over the life of the satellites, currently ~~expected~~estimated to be approximately 12.5 years. Lease income related to these agreements was $5.4 million for each of the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020 and $16.1 million ~~and $16.2 million during~~for each of the nine months ended September 30, ~~2020~~2021 and ~~2019, respectively.~~2020. Lease income is recorded as hosted payload and other data service revenue within service revenue on the Company’s condensed consolidated statements of operations and comprehensive loss.

Both Aireon and L3Harris have made payments pursuant to their hosting agreements, and the Company expects they will continue to do so. ~~Future~~The following table presents future income with respect to the Company’s operating leases in which it is the lessor existing at September 30, ~~2020,~~2021, exclusive of the $16.1 million recognized during the nine months ended September 30, ~~2020,~~2021, by year and in the ~~aggregate, is as follows:~~aggregate:


Year Ending December 31,	Year Ending December 31,	Amount		Year Ending December 31,	Amount
		(in thousands)			(In thousands)
2020		$	5,361
2021	2021	21,445		2021	$	5,361
2022	2022	21,445		2022	21,445
2023	2023	21,445		2023	21,445
2024	2024	21,445		2024	21,445
2025				2025	21,445
Thereafter	Thereafter	120,353		Thereafter	98,907
Total lease income	Total lease income	$	211,494	Total lease income	$	190,048

5. Debt

Term Loan and Revolving Facility

On November 4, 2019, pursuant to a ~~new~~ loan agreement ~~(the~~(as amended to date, the “Credit Agreement”), the Company entered into a $1,450.0 million term loan with ~~various lenders and~~ Deutsche Bank AG ~~New York Branch as the Administrative Agent and the Collateral Agent~~ (the ~~“Term~~“Original Term Loan”) and an accompanying $100.0 million revolving loan (the “Revolving Facility”). The Company used the proceeds of the Term Loan, along with its debt service reserve account and cash on hand, to prepay all of the indebtedness outstanding under the loan facility with Bpifrance Assurance Export S.A.S. as well as related expenses. TheOriginal Term Loan was issued at a price equal to 99.5% of its face value, bears interest at an annual rate of LIBOR plus 3.75%, with a 1.0% LIBOR floor, and matures in November 2026. Principal payments, which are payable quarterly and began on June 30, 2020, equal one percent of the original loan amount per annum, with the remaining principal due upon maturity. Interest is payable monthly on the last business day of the month. Borrowings under the Revolving Facility, if any, bear interest at the same rate (but without a LIBOR floor) if and as drawn, with no original issue discount, a commitment fee of 0.5% per year on the undrawn amount, and mature in November 2024.

value. On February 7, 2020, the Company closed on an additional $200.0 million under its ~~Term Loan. On February 13, 2020,~~Credit Agreement for a total borrowing of $1,650.0 million (as expanded, the ~~Company used these proceeds, together with cash on hand, to prepay and retire all of the indebtedness outstanding under the~~

~~senior unsecured notes (the “Notes”~~“Term Loan”)~~, including premiums for early prepayment.~~. The additional amount is fungible with the ~~original $1,450.0 million,~~Original Term Loan, having the same maturity date, interest rate and other terms, but was issued at a 1.0% premium to face value. The Term Loan initially bore interest at an annual rate of LIBOR plus 3.75%, with a 1.0% LIBOR floor.

The Term Loan was initially repriced in January 2021 with a new annual interest rate of LIBOR plus 2.75%, with a 1.0% LIBOR floor. The Term Loan was repriced again in July 2021 for a new annual interest rate of LIBOR plus 2.50%, with a 0.75% LIBOR floor. The maturity date remains unchanged in November 2026. The interest rate on the Revolving Facility remained unchanged at LIBOR plus 3.75% with no LIBOR floor, and a maturity date in November 2024. Principal payments, which are payable quarterly and began on June 30, 2020, equal $16.5 million per annum (one percent of the full principal amount of the Term Loan), with the remaining principal due upon maturity.

In July 2021, the Company paid $4.1 million of original issuance costs to reprice the Term Loan. Lenders making up approximately $65.2 million of the Term Loan did not participate in the repricing. Those portions of the Term Loan were replaced by new or existing lenders. This resulted in a $0.9 million loss on extinguishment of debt during the three months ended September 30, 2021, as the Company wrote off the unamortized debt issuance costs related to the lenders who were fully repaid in an exchange of principal.

In February 2020, the Company used the proceeds of the additional $200.0 million under the Term Loan noted above, together with cash on hand, to prepay and retire all of the indebtedness outstanding under then outstanding senior unsecured notes (the “Notes”), including premiums for early prepayment. To prepay the Notes, the Company paid a call price equal to the present value at the redemption rate of (i) 105.125% of the $360.0 million principal amount of the Notes plus (ii) all interest due through the first call date in April 2020, representing a total call premium of $23.5 million, plus all accrued and unpaid interest to the redemption date. As a result of the prepayment, the Company also wrote off the remaining unamortized debt issuance costs, which resulted in a $30.2 million loss on extinguishment of debt during the three months ended March 31, 2020.

As of September 30, 2021 and December 31, 2020, the Company reported an aggregate of ~~$1,641.8~~$1,625.3 million and $1,637.6 million in borrowings under the Term Loan, ~~before $24.9~~respectively. These amounts do not include $24.2 million and $24.0 million of net unamortized deferred financing costs ~~for a~~as of September 30, 2021 and December 31, 2020, respectively. The net principal balance ~~of $1,616.9 million~~ in borrowings in the accompanying condensed consolidated balance ~~sheet.~~sheets as of September 30, 2021 and December 31, 2020 amounted to $1,601.0 million and $1,613.6 million, respectively. As of September 30, 2021 and December 31, 2020, based upon over-the-counter bid levels (Level 2 - market approach), the fair value of the ~~Company’s $1,641.8 million in aggregate~~ borrowings under the Term Loan was ~~$1,642.8 million.~~$1,627.3 million and $1,647.9 million, respectively. The Company had not borrowed under the Revolving Facility as of September 30, 2021 and December 31, 2020.

The Credit Agreement restricts the Company’s ability to incur liens, engage in mergers or asset sales, pay dividends, repay subordinated indebtedness, incur indebtedness, make investments and loans, and engage in other transactions as specified in the Credit ~~Agreement, and also contains a mandatory prepayment mechanism with respect to a portion of the Company’s excess cash flow (as defined in the Credit Agreement).~~Agreement. The Credit Agreement provides for specified exceptions, including baskets measured as a percentage of trailing twelve months of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and unlimited exceptions in the case of incurring indebtedness and liens and making investments, dividend payments, and payments of subordinated indebtedness, as well as a phase-out of the mandatory excess cash flow prepayments, based on achievement and maintenance of specified leverage ratios, for, among other things, incurring indebtedness and liens and making investments, restricted payments for dividends and share repurchases, and payments of subordinated indebtedness. The Credit Agreement also contains a mandatory prepayment sweep mechanism with respect to a portion of the Company’s excess cash flow (as defined in the Credit Agreement), which is phased out based on achievement and maintenance of specified leverage ratios. The Company’s mandatory excess cash flow prepayment, as specified in the Credit Agreement, was calculated to be $12.7 million as of December 31, 2020. Lenders have the right to decline payment. As such, the Company paid $4.7 million to lenders who did not decline payment in May 2021. This amount counted towards the Company's required quarterly principal payments through September 30, 2021. The Credit Agreement permits repayment, prepayment, and repricing transactions.

The Credit Agreement contains no financial maintenance covenants with respect to the Term Loan. With respect to the Revolving Facility, the Credit Agreement requires the Company to maintain a consolidated first lien net leverage ratio (as defined in the Credit Agreement) of no greater than 6.25 to 1 if more than 35% of the Revolving Facility has been drawn. The Credit Agreement contains other customary representations and warranties, affirmative and negative covenants, and events of default.

~~Senior Unsecured Notes~~

As The Company was in compliance with all covenants as of September 30, 2020, the Company had fully paid down and retired the total gross outstanding principal balance of the Notes, as discussed above. As of December 31, 2019, the Company reported an aggregate of $360.0 million in borrowings under the Notes, before $7.0 million of net unamortized deferred financing costs, for a net principal balance of $353.0 million in borrowings in the accompanying condensed consolidated balance sheet.2021.

Interest on Debt

Total interest incurred was $23.6 million and $35.7 million during the three months ended September 30, 2020 and 2019, respectively, and $75.0 million and $107.2 million during the nine months ended September 30, 2020 and 2019, respectively. Interest incurred includes amortization of deferred financing fees and capitalized interest. To reprice the Term Loan in January 2021 and July 2021, the Company incurred third-party financing costs of ~~$1.0~~$3.6 million and ~~$5.7~~$1.3 million, respectively. These costs were expensed and are included within interest expense on the condensed consolidated statements of operations and comprehensive loss for the respective three ~~months ended September 30, 2020~~ and ~~2019, respectively, and $2.8 million and $17.9 million for the~~ nine months ended September 30, ~~2020 and 2019, respectively. Interest capitalized was $0.9 million and $2.3 million~~2021. There were no such costs during the three ~~months ended September 30, 2020~~ and ~~2019, respectively, and $2.4 million and $13.5 million, respectively, during the~~ nine months ended September 30, ~~2020~~2020.

The following table presents the interest and ~~2019. Accrued interest as~~amortization of deferred financing fees related to the Term Loan for the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In thousands)				(In thousands)
Total interest incurred	$	18,462	$	23,658	$	61,018	$	75,023
Amortization of deferred financing fees	$	1,148	$	957	$	3,115	$	2,806
Capitalized interest	$	438	$	861	$	1,795	$	2,367

At each of September 30, ~~2020~~2021 and December 31, ~~2019~~2020, accrued interest was $0.2 ~~million and $7.8 million, respectively.~~million.

6. Derivative Financial Instruments

The Company is exposed to interest rate fluctuations related to its Term Loan. The Company has reduced its exposure to fluctuations in the cash flows associated with changes in the variable interest ~~rates~~rate by entering into offsetting positions through the use of interest rate swap and interest rate cap contracts which result in recognizing a fixed interest rate for ~~the~~a portion of the Term Loan. This will reduce the negative impact of increases in the variable rate over the term of the ~~interest rate swap~~derivative contracts. These ~~financial instruments~~contracts are not used for trading or other speculative purposes. Historically, the Company has not incurred, and does not expect to incur in the future, any losses as a result of counterparty default.

Hedge effectiveness of interest rate swap and cap contracts is based on a long-haul hypothetical derivative methodology and includes all changes in value. The Company formally assesses, both at the hedge’s inception and on an ongoing quarterly basis, whether the designated derivative instruments are highly effective in offsetting changes in the cash flows of the hedged items. When the hedging instrument is sold, expires, is terminated, or is exercised, or no longer qualifies for hedge accounting, is de-designated, or is no longer probable, hedge accounting is discontinued prospectively.

1112

Interest Rate Swaps

On November 27, 2019, the Company executed a long-term interest rate swap (“Swap”) ~~effective~~ through November 2021 to mitigate variability in forecasted interest payments on a portion of the Company’s borrowings under its Term Loan. On the last business day of each month, the Company receives variable interest payments based on one-month LIBOR from the counterparty. The Company pays a fixed rate of 1.565% per annum on the Swap. The Company also entered into an interest rate swaption agreement (“Swaption”) ~~that, if executed on November 22, 2021, would extend~~, for which the ~~term of the Swap through November 2026. The~~ Company pays a fixed annual rate of 0.50% for the Swaption and a fixed rate of 1.565% on the Swap. Both the Swap and the Swaption derivative instruments carry a notional amount of $1,000.0 million as of September 30, 2020. The Company has designated both the Swap and Swaption as qualifying hedging instruments and accounts for these derivatives as cash flow hedges.

. At inception, the Swap and Swaption (collectively, the "swap contracts") were designated as cash flow hedges for hedge accounting. The unrealized changes in market value ~~are~~were recorded in accumulated other comprehensive ~~income (loss)~~loss and will be reclassified into earnings during the period in which the hedged transaction affects earnings. Due to the changes made to the Term Loan as a result of the July repricing, in July 2021, the Company elected to de-designate the Swap as a cash flow hedge. Accordingly, as the related interest payments are still probable, the accumulated balance within other comprehensive loss as of the de-designation date will be amortized into earnings through the remaining term, and future changes in the valuation of the Swap will be recorded directly into earnings. As of both September 30, 2021 and December 31, 2020, the Swap carried a notional amount of $1,000.0 million, and as of September 30, 2021 and December 31, 2020, the Company had recorded a current liability balance of $1.0 million and $5.2 million, respectively, in other current liabilities related to the fair value of the Swap.

The Swaption carried a notional amount of $1,000.0 million as of December 31, 2020. The Company sold the Swaption in May 2021 for $0.7 million. The Company will continue to pay the fee for the Swaption through November 2021. The Company had a current liability balance of $0.8 million as of September 30, 2021 related to the premium liability associated with the Swaption. As of December 31, 2020, the premium liability was netted with the Swaption, for a fair value of $4.4 million which was recorded in other current liabilities.

Over the next 12 months, the Company expects any gains or losses for cash flow hedges ~~reclassified~~amortized from accumulated other comprehensive ~~income (loss)~~loss into earnings to have an immaterial impact on the Company’s condensed consolidated financial statements.

Interest Rate Cap

On July 21, 2021, the Company entered into an interest rate cap agreement (the "Cap") beginning in November 2021. The Cap will manage the Company's exposure to interest rate movements on a portion of the Term Loan after the Swap expires. The Cap provides the right to receive payment if one-month LIBOR exceeds the contractual rate of 1.5%. Beginning in December 2021, the Company will pay a fixed monthly premium based on an annual rate of 0.31% for the Cap. The Cap carried a notional amount of $1,000.0 million as of September 30, 2021.

The Cap is designed to mirror the terms of the Term Loan and to be highly effective at offsetting the cash flows being hedged. The Company designated the Cap as a cash flow hedge of the variability of the LIBOR-based interest payments on the Term Loan. The effective portion of the Cap's change in fair value will be recorded in accumulated other comprehensive loss. Any ineffective portion of the Cap's change in fair value will be recorded in current earnings as interest expense.

Fair Value of Derivative Instruments

As of September 30, ~~2020,~~2021, the Company had ~~a current liability~~an asset balance of $2.3 million recorded in other assets for the fair value of the Swap in the amount of $6.7 million, recorded in other current liabilities. As of December 31, 2019, the Company had a long-term asset balance for the fair value of the Swap in the amount of $0.8 million, recorded in other long-term assets. As of September 30, 2020 and December 31, 2019, the Company had a long-term liability balance for the fair value of the Swaption in the amount of $5.7 million and $0.9 million, respectively, recorded in other long-term liabilities.Cap.

During the three and nine months ended September 30, 2021, the Company collectively incurred $1.8 million and $6.6 million, respectively, in net interest expense for the swap contracts and the Cap. During the three and nine months ended September 30, 2020, the Company collectively incurred $2.7 million and $6.4 million, respectively, in net interest expense for the ~~Swap and the Swaption, collectively. The Company did not hold any cash flow hedges during the comparable prior year periods.~~swap contracts. Gains and losses resulting from fair value adjustments to the ~~Swap and Swaption~~Cap are recorded within accumulated other comprehensive loss within the Company’s condensed consolidated balance sheets and reclassified to interest expense on the dates that interest payments become due. Cash flows related to the ~~Swap~~derivative contracts are included in cash flows from operating activities on the condensed consolidated statements of cash flows.

The following table presents the amount of unrealized gain or loss and related totax impact the ~~Swap and Swaption that was~~Company recorded in ~~accumulated other~~ comprehensive loss in ~~the~~its condensed consolidated ~~balance sheets was $9.0 million as~~statements of operations for the three and nine months ended September 30, ~~2020, net of a $3.2 million tax impact. There were no gains or losses related to derivative financial instruments during the comparable prior year period.~~2021 and 2020:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In thousands)				(In thousands)
Unrealized gain (loss), net of tax	$	3,040	$	1,794	$	7,122	$	(9,008)
Tax (benefit)	1,010		630		2,222		(3,159)

7. Stock-Based Compensation

In May 2019, the Company’s stockholders approved the amendment and restatement of the Company’s 2015 Equity Incentive Plan (as so amended and restated, the “Amended 2015 Plan”), primarily to increase the number of shares available under the plan. The Company registered with the SEC an additional 2,542,664 shares of common stock made available for issuance pursuant to the Amended 2015 Plan, bringing the total to 30,944,912 shares registered.. As of September 30, ~~2020,~~2021, the remaining aggregate number of shares of the Company’s common stock available for future grants under the Amended 2015 ~~plan~~Plan was ~~11,799,631.~~10,538,835. The Amended 2015 Plan provides for the grant of stock-based awards, including nonqualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights and other equity securities to employees, consultants and non-employee directors of the Company and its affiliated entities. The number of shares of common stock available for issuance under the Amended 2015 Plan is reduced by (i) 1 share for each share of common stock issued pursuant to an appreciation award, such as a stock option or stock appreciation right with an exercise or strike price of at least 100% of the fair market value of the underlying common stock on the date of grant, and (ii) 1.8 shares for each share of common stock issued pursuant to any stock award that is not an appreciation award, also known as a “full value award.” The Amended 2015 Plan allows the Company to utilize a broad array of equity incentives and performance cash incentives in order to secure and retain the services of its employees, directors and consultants, and to provide long-term incentives that align the interests of its employees, directors and consultants with the interests of the Company’s stockholders. The Company accounts for stock-based compensation at fair value.

Stock Option Awards

The fair value of stock options is determined at the grant date using the Black-Scholes option pricing model. The stock option awards granted to employees generally (i) have a term of ten years, (ii) vest over four years with 25% vesting after the first year of service and the remainder vesting ratably on a quarterly basis thereafter, (iii) are contingent upon employment on the vesting date, and (iv) have an exercise price equal to the fair market value of the underlying shares at the date of grant.

The Company historically granted stock options to newly hired and promoted employees, but now almost exclusively utilizes RSUs. The Company did not grant any stock options during the ~~nine-month period~~nine-months ended September 30, 2021 and 2020. ~~During~~

Option Summary

The following tables summarize the ~~nine months~~Company's stock option activity for the nine-months ended September 30, ~~2019, the Company granted approximately 139,000 stock options to its employees, with an estimated aggregate grant date fair value of $1.3 million.~~2021 and 2020:


	Shares	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
	(In thousands, except years and per share data)
Options outstanding at December 31, 2020	2,554	$	9.10	3.94	$	77,182
Cancelled or expired	(1)	7.78
Exercised	(844)	8.46			$	31,171
Forfeited	(11)	15.45
Options outstanding at September 30, 2021	1,698	$	9.38	3.54	$	51,755
Options exercisable at September 30, 2021	1,592	$	8.73	3.31	$	49,552
Options exercisable and expected to vest at September 30, 2021	1,698	$	9.37	3.54	$	51,732


	Shares	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
	(In thousands, except years and per share data)
Options outstanding at December 31, 2019	4,153	$	8.78	4.03	$	65,887
Cancelled or expired	(4)	20.17
Exercised	(944)	8.28			$	18,654
Forfeited	(13)	18.57
Options outstanding at September 30, 2020	3,192	$	8.87	3.58	$	53,332
Options exercisable at September 30, 2020	2,927	$	8.13	3.24	$	51,074
Options exercisable and expected to vest at September 30, 2020	3,187	$	8.86	3.57	$	53,297

Restricted Stock Units

The RSUs granted to employees for service generally vest over four years, with 25% vesting on the first anniversary of the grant date and the remainder vesting ratably on a quarterly basis thereafter, subject to continued employment. The RSUs granted to non-employee directors generally vest in full on the first anniversary of the grant date. Some RSUs granted to employees for performance vest upon the completion of defined performance goals, subject to continued employment. The Company’s RSUs are ~~generally~~ classified as equity awards because the RSUs will be paid in the Company’s common stock upon vesting. The related compensation expense is recognized over the service period and is based on the grant date fair value of the Company’s common stock and the number of shares expected to vest. The fair value of the awards is not remeasured at the end of each reporting period. The awards do not carry voting rights until they are vested and released in accordance with the terms of the award.

RSU Summary

The following tables summarize the Company’s RSU activity for the nine-months ended September 30, 2021 and 2020:


	RSUs	Weighted- Average Grant Date Fair Value Per RSU
	(In thousands)
Outstanding at December 31, 2020	2,664	$	18.96
Granted	843	41.67
Forfeited	(90)	28.41
Released	(782)	21.22
Outstanding at September 30, 2021	2,635	$	25.23
Vested and unreleased at September 30, 2021 (1)	860


	RSUs	Weighted- Average Grant Date Fair Value Per RSU
	(In thousands)
Outstanding at December 31, 2019	2,702	$	14.62
Granted	1,030	26.75
Forfeited	(61)	16.81
Released	(852)	15.73
Outstanding at September 30, 2020	2,819	$	18.67
Vested and unreleased at September 30, 2020 (1)	802

(1) These RSUs were granted to the Company's board of directors as a part of their compensation for board and committee service, as detailed below, and had vested but had not yet been issued and released, pursuant to the terms of the applicable compensation program.

Service-Based RSUs

The majority of the annual compensation the Company provides to non-employee members of its board of directors is paid in the form of RSUs. In addition, certain such members of the Company’s board of directors elect to receive the remainder of their annual compensation, or a portion thereof, in the form of RSUs. An aggregate amount of approximately ~~58,000~~39,000 and ~~76,000~~58,000 service-based RSUs were granted to the Company’s non-employee directors as a result of these payments and elections during the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, with an estimated grant date fair value of $1.6 million and $1.4 million, ~~for each period.~~respectively.

During the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the Company granted approximately ~~683,000~~461,000 and ~~651,000~~683,000 service-based RSUs, respectively, to its employees, with an estimated aggregate grant date fair value of ~~$18.3~~$19.2 million and ~~$15.0~~$18.3 million, respectively.

During the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the Company granted approximately ~~10,000~~2,000 and ~~11,000~~10,000 RSUs to non-employee consultants that are generally subject to service-based vesting. The RSUs granted will vest 50% on the first anniversary of the grant date, and the remaining 50% will vest quarterly thereafter through the second anniversary of the grant date. The estimated aggregate grant date fair value of the RSUs granted to non-employee consultants during the nine months ended September 30, 2021 and 2020 was $0.1 million and ~~2019 was~~ $0.2 million, ~~for each period.~~respectively.

Performance-Based RSUs

In March ~~2020~~2021 and ~~2019,~~2020, the Company granted approximately ~~115,000~~228,000 and ~~125,000~~115,000 annual incentive, performance-based RSUs, respectively, to the Company’s executives and employees (the “Bonus RSUs”), with an estimated grant date fair value of ~~$3.1~~$9.5 million and ~~$2.9~~$3.1 million, respectively. Vesting of the Bonus RSUs is and was dependent upon the Company’s achievement of defined performance goals over the respective fiscal year. The Company records stock-based compensation expense related to performance-based RSUs when it is considered probable that the performance conditions will be met. Management believes

it is probable that substantially all of the ~~2020~~2021 Bonus RSUs will vest. The level of achievement, if any, of performance goals will be determined by the compensation committee of the Company’s board of directors and, if such goals are achieved, the ~~2020~~2021 Bonus RSUs will vest, subject to continued employment, in March ~~2021.~~2022. Substantially all of the ~~2019~~2020 Bonus RSUs vested in March ~~2020~~2021 upon the determination of the level of achievement of the performance goals.

Additionally, in March ~~2020~~2021 and ~~2019,~~2020, the Company granted approximately ~~144,000~~110,000 and ~~96,000~~144,000 long-term, performance-based RSUs, respectively, to the Company’s executives (the “Executive RSUs”). The estimated aggregate grant date fair value of the Executive RSUs was $4.6 million for the 2021 grants and $3.9 million for the 2020 ~~grants and $2.2 million for the 2019~~ grants. Vesting of the Executive RSUs is and was dependent upon the Company’s achievement of ~~specified~~defined performance goals over a two-year period (fiscal years 2020 and 2021 for the Executive RSUs granted in 2020 and fiscal years 2019 and 2020 for the Executive RSUs granted in 2019) and further subject to additional time-based vesting. Management believes it is probable that the Executive RSUs will vest at least in part.period. The vesting of Executive RSUs will ultimately range from 0% to 150% of the number of shares underlying the Executive RSUs granted based on the level of achievement of the performance goals. If the Company achieves the performance goals, 50% of the number of Executive RSUs earned based on performance will vest on the second anniversary of the grant date, and the remaining 50% will vest on the third anniversary of the grant date, in each case subject to the executive’s continued service as of the vesting date. During March 2021 and 2020, the Company awarded ~~approximately 20,000~~ additional shares underlying performance-based RSUs to the Company’s executives for over-achievement of performance ~~goal~~ targets ~~during 2018 and 2019~~ related to the Executive RSUs ~~granted~~originally awarded in ~~2018.~~2019 and 2018 in the amounts of 3,000 shares and 20,000 shares, respectively.

8. Equity Transactions

Preferred Stock

The Company is authorized to issue 2.0 million shares of preferred stock with a par value of $0.0001 per share. The Company previously issued and converted 1.5 million shares of preferred ~~stock, and the~~stock. The remaining 0.5 million authorized shares of preferred stock remain undesignated and unissued as of September 30, 2021 and December 31, 2020. As of September 30, 2021 and December 31, 2020, there were no outstanding shares of preferred ~~stock, as all preferred stock was converted in prior periods into common stock according to its terms.~~stock.

~~Series B Cumulative Perpetual Convertible Preferred Stock~~Share Repurchases and Retirement

In ~~May 2014,~~February 2021, the Company ~~issued 0.5~~announced that its Board of Directors had authorized the repurchase of up to $300.0 million of its common stock through December 31, 2022. This time frame can be extended or shortened by the Board of Directors. Repurchases are made from time to time on the open market at prevailing prices or in negotiated transactions off the market. All shares are immediately retired upon repurchase in accordance with the board-approved policy. When treasury shares are retired, the Company’s policy is to allocate the excess of the repurchase price over the par value of shares acquired first, to additional paid-in capital, and then to retained earnings. The portion to be allocated to additional paid-in capital is calculated by applying a percentage, determined by dividing the number of shares to be retired by the number of shares outstanding, to the balance of additional paid-in capital as of the date of retirement.

The Company repurchased and subsequently retired 0.1 million and 3.4 million shares of its ~~6.75% Series B Cumulative Perpetual Convertible Preferred Stock (the “Series B Preferred Stock”) in an underwritten public offering. Holders~~common stock during the three and nine months ended September 30, 2021, respectively, for a total purchase price of ~~Series B Preferred Stock~~$2.6 million and $125.1 million, respectively. No shares were ~~entitled to receive cumulative cash dividends at a rate~~repurchased during the year ended December 31, 2020. As of ~~6.75% per annum of the $250 liquidation preference per share (equivalent to an annual rate of $16.875 per share). Dividends were payable quarterly in arrears on each March 15, June 15,~~ September 1530, 2021, $174.9 million remained available and ~~December 15.~~ authorized for repurchase under this program.

During the three months ended June 30, 2019, the Company’s daily volume-weighted average stock price remained at or above $11.21 per share for a period of 20 out of 30 trading days, allowing for the conversion of the Series B Preferred Stock at the election of the Company. On May 15, 2019, the Company converted all outstanding shares of its Series B Preferred Stock into shares of common stock, resulting in the issuance of 16,627,632 shares of common stock. To convert the stock, the Company declared and paid all current and cumulative dividends to holders of record of Series B Preferred Stock as of May 8, 2019, resulting in a dividend payment of $8.4 million. As a result, the Company did not have any shares of Series B Preferred Stock outstanding as of September 30, 2020 and December 31, 2019.

9. Revenue

The following table summarizes the Company’s services ~~revenue:~~revenue for the three and nine months ended September 30, 2021 and 2020:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(in thousands)															(In thousands)			(In thousands)
Commercial services revenue:	Commercial services revenue:									Commercial services revenue:
Voice and data	Voice and data	$	42,736	$	44,717	$	126,748	$	129,526	Voice and data	$	45,737	$	42,736	$	130,444	$	126,748
IoT data										IoT data	30,040		25,410		82,018		71,802
Broadband	Broadband	9,120		8,135		26,339		22,332		Broadband	11,461		9,120		31,531		26,339
IoT data		25,410		25,346		71,802		71,740
Hosted payload and other data	Hosted payload and other data	14,511		12,037		46,213		37,871		Hosted payload and other data	14,649		14,511		43,867		46,213
Total commercial services revenue	Total commercial services revenue	91,777		90,235		271,102		261,469		Total commercial services revenue	101,887		91,777		287,860		271,102
Government services revenue	Government services revenue	25,137		25,618		75,137		72,132		Government services revenue	25,887		25,137		77,387		75,137
Total services revenue	Total services revenue	$	116,914	$	115,853	$	346,239	$	333,601	Total services revenue	$	127,774	$	116,914	$	365,247	$	346,239

The following table summarizes the Company’s engineering and support services ~~revenue:~~revenue for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in thousands)
Commercial engineering and support services $ 1,127 $ 795 $ 3,264 $ 1,851
Government engineering and support services 8,311 6,762 20,231 20,315
Total engineering and support services revenue $ 9,438 $ 7,557 $ 23,495 $ 22,166


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In thousands)				(In thousands)
Commercial	$	1,249	$	1,127	$	2,978	$	3,264
Government	6,238		8,311		17,781		20,231
Total engineering and support services revenue	$	7,487	$	9,438	$	20,759	$	23,495

14Approximately 24% and 35% of the Company's accounts receivable balance at September 30, 2021 and December 31, 2020, respectively, was due from prime contracts or subcontracts with agencies of the U.S. government.

The Company's contracts with customers generally do not contain performance obligations with terms in excess of one year. As such, the Company does not disclose details related to the value of performance obligations that are unsatisfied as of the end of the reporting period. The total value of any performance obligations that extend beyond a year is immaterial to the financial statements. The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the condensed consolidated balance sheets. The Company bills amounts under its agreed-upon contractual terms at periodic intervals (for services), upon shipment (for equipment), or upon achievement of contractual milestones or as work progresses (for engineering and support services). Billing may occur subsequent to revenue recognition, resulting in unbilled accounts receivable (contract assets). The Company may also receive payments from customers before revenue is recognized, resulting in deferred revenue (contract liabilities). The Company recognized revenue that was previously recorded as deferred revenue in the amounts of ~~$9.6~~$10.6 million and ~~$9.1~~$9.5 million during the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$33.1~~$32.4 million and ~~$34.4~~$33.5 million during the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The Company has also recorded costs of obtaining contracts expected to be recovered in prepaid expenses and other current assets (contract assets or commissions), that are not separately disclosed on the condensed consolidated balance sheets. The commissions are recognized over the estimated ~~prepaid~~ usage period. The following table presents contract assets not separately disclosed ~~are~~ as ~~follows:~~of September 30, 2021 and December 31, 2020:


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
		(in thousands)							(In thousands)
Contract Assets:	Contract Assets:					Contract Assets:
Commissions	Commissions	$	820	$	1,116	Commissions	$	1,066	$	993
Other contract costs	Other contract costs	$	2,946	$	3,231	Other contract costs	2,634		2,860

10. Income Tax Benefit

Loss before income taxes was $3.5 million and $23.5 million for the three and nine months ended September 30, 2021, respectively while the income tax benefit was $1.5 million and $20.0 million for the three and nine months ended September 30, 2021, respectively. The effective tax rates were 46.1% and 90.4% for the three and nine months ended September 30, 2021, respectively. The effective tax rate for the three-month period ended September 30, 2021 differed from the

federal statutory rate of 21% primarily due to the net impact of a discrete tax benefit associated with the stock compensation tax deduction and the decrease to the prior year valuation allowance for state net operating losses, offset by a discrete state tax expense associated with state apportionment changes. The effective tax rate for the nine-month period ended September 30, 2021 differed from the federal statutory rate of 21% primarily due to the net impact of the discrete state tax benefit associated with state apportionment changes, a stock compensation tax deduction and the Company's U.S. tax credits.

Loss before income taxes was $9.7 million and $71.1 million for the three and nine months ended September 30, 2020, respectively, while the income tax benefit was $5.7 million and $22.9 million for the three and nine months ended September 30, 2020, respectively. The effective tax rates were 58.8% and 32.6% for the three and nine months ended September 30, 2020, respectively. The effective tax rate for the three-month period ended September 30, 2020 differed from the federal statutory rate of 21% primarily due to the net impact of the tax benefit from U.S. state tax losses, the discrete tax benefits associated with the stock compensation tax deduction, and a decrease in the prior year valuation allowance for state net operating losses, offset by the discrete tax expense associated with the Company’s U.S. tax credits.The effective tax rate for the nine-month period ended September 30, 2020, differed from the federal statutory rate of 21% primarily due to the net impact of the tax benefit from U.S. state tax losses and the discrete tax benefit associated with the stock compensation tax deduction.

11. Net Loss Per Share

The Company calculates basic net loss per share by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. In periods of net income, diluted net income per share takes into account the effect of potential dilutive common shares when the effect is dilutive. Potentially dilutive common shares include (i) common stock issuable upon exercise of outstanding stock options, and (ii) contingently issuable RSUs that are convertible into shares of common stock upon achievement of certain service and performance requirements. The effect of potentially dilutive common shares is computed using the treasury stock method. The RSUs granted to members of the Company’s board of directors contain non-forfeitable rights to dividends and therefore are considered to be participating securities in periods of net income. As a result, the calculation of basic and diluted net income per share excludes net income attributable to the unvested RSUs granted to the Company’s board of directors from the numerator and excludes the impact of the unvested RSUs granted to the Company’s board of directors from the denominator.

The following table summarizes the computations of basic and diluted net loss per share for the three and nine months ended September 30, ~~2020~~2021 and ~~2019 are as follows:~~2020:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(in thousands, except per share data)															(In thousands, except per share data)
Numerator:	Numerator:									Numerator:
Net loss - basic and diluted	Net loss - basic and diluted	$	(4,005)	$	(18,012)	$	(48,129)	$	(58,336)	Net loss - basic and diluted	$	(2,085)	$	(4,005)	(3,435)		(48,129)

Denominator:	Denominator:									Denominator:
Weighted average common shares - basic and diluted	Weighted average common shares - basic and diluted	133,760		131,688		133,177		122,816		Weighted average common shares - basic and diluted	132,869		133,760		133,763		133,177

Net loss per share - basic and diluted	Net loss per share - basic and diluted	$	(0.03)	$	(0.14)	$	(0.36)	$	(0.47)	Net loss per share - basic and diluted	$	(0.02)	$	(0.03)	$	(0.03)	$	(0.36)

Due to the Company’s net loss position for the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, all potential common stock equivalents were anti-dilutive and therefore excluded from the calculation of diluted net loss per share. Unvested performance-based RSUs were not included in the computation of basic and diluted net loss per share as certain performance criteria had not yet been satisfied. The following table presents the incremental number of shares underlying stock options and RSUs outstanding with anti-dilutive effects for the three and nine months ended September 30, ~~2020~~2021 and ~~2019, were as follows:~~2020:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in thousands, except per share data)
Anti-dilutive contingent performance-based RSUs 352 413 298 396
Anti-dilutive service-based RSUs 0 0 3 0
Anti-dilutive options 93 218 145 201


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
	(In thousands)		(In thousands)
Performance-based RSUs	49	79	101	129
Service-based RSUs	404	435	547	520
Stock options	1,130	1,870	1,236	2,028

1519

~~11.~~12. Related Party Transactions

Aireon LLC and Aireon Holdings LLC

The ~~Company’s~~Company's satellite constellation hosts the Aireon^®system, which provides a global air traffic surveillance service through a series of automatic dependent surveillance-broadcast (“ADS-B”) receivers. The Company formed Aireon in 2011, with subsequent investments from the air navigation service providers (“ANSPs”) of Canada, Italy, Denmark, Ireland and the United Kingdom, to develop and market this service. In December 2018, in connection with Aireon’s entry into a debt facility, the Company and the other Aireon investors contributed their respective interests in Aireon into a new holding company, Aireon Holdings LLC, and entered into an Amended and Restated Aireon Holdings LLC Agreement (the “Aireon Holdings LLC Agreement”). Aireon Holdings LLC holds 100% of the membership interests in Aireon LLC, which remains the operating entity. At September 30, 2020, the Company had a fully diluted ownership stake in Aireon Holdings LLC of approximately 35.7%, subject to certain redemption provisions contained in the Aireon Holdings LLC Agreement.

Aireon has contracted to pay the Company a fee to host the ADS-B receivers on its constellation, as well as fees for power and data services in connection with the delivery of the air traffic surveillance data. Pursuant to ~~an agreement~~agreements with Aireon, ~~(“the Hosting Agreement”),~~ Aireon will pay the Company fees of $200.0 million to host the ADS-B receivers, of which ~~$54.1~~$54.5 million had been paid as of September 30, ~~2020, as well as~~2021. Aireon also pays power fees of up to approximately $3.7 million per ~~year. Pursuant to~~year under a ~~separate data transmission services~~hosting agreement (the ~~“Data Services~~“Hosting Agreement”), ~~Aireon also pays the Company monthly~~as well as data ~~service~~services fees ~~on a per-satellite basis totaling~~of approximately $19.8 million per year for the delivery of the air traffic surveillance data ~~through the Iridium~~^® ~~network, as well as specified~~under a data transmission services ~~relating to Aireon’s hosted payload operations center.~~agreement. The Aireon ADS-B receivers were activated on an individual basis as the satellite on which the receiver is hosted began carrying traffic. Pursuant to ASU 2016-02, the Company considers the Hosting Agreement as an operating lease. ~~Under this agreement, the~~The Company recognized $4.0 million of hosting fee revenue for each of the ~~three-month periods~~three months ended September 30, ~~2020~~2021 and ~~2019,~~2020 and $12.0 million for each of the nine months ended September 30, 2021 and ~~$11.9~~2020. Aireon receivables under the Hosting Agreement totaled $3.5 million as of September 30, 2021. There were no such receivables as of December 31, 2020. The Company recorded power and data service revenue from Aireon of $5.9 million for each of the three months ended September 30, 2021 and 2020, and $17.6 million and $18.0 million for the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively. For power and data service fees, the Company recognized revenue from Aireon of $5.9 million and $3.2 million for the three months ended September 30, 2020 and 2019, respectively, and $18.0 million and $9.4 million for the nine months ended September 30, 2020 and 2019, respectively. These increases related to a contractual step-up and increased Aireon power fees in 2020.

Under two services agreements, the Company also provides Aireon with administrative services and support services, the fees for which are paid monthly. Aireon receivables due to the Company under ~~all~~these two agreements totaled $2.0 million and $2.3 million ~~and $1.4 million at~~as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

In December 2018, in connection with Aireon's entry into a debt facility, the Company and the other Aireon investors contributed their respective interests in Aireon into a new holding company, Aireon Holdings LLC, and entered into an amended and restated LLC agreement (the “Amended and Restated Limited Liability Company Agreement”). Aireon Holdings LLC holds 100% of the membership interests in Aireon LLC, which remains the operating entity. At each of September 30, 2021 and December 31, 2020, the Company's fully diluted ownership stake in Aireon Holdings LLC was approximately 35.7%, subject to certain redemption provisions contained in the Amended and Restated Limited Liability Company Agreement. In addition, pursuant to a debt facility for Aireon LLC provided by the Company and the other Aireon investors, the Company will participate pro-rata, based on its fully diluted ownership stake, in an investor bridge loan. In December 2020, the Company invested $0.2 million in the Aireon LLC debt facility, which was subsequently repaid in June 2021. The Company’s maximum commitment under the investor bridge loan is $10.7 million.


ITEM 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion along with our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, filed on February ~~25, 2020~~11, 2021 with the Securities and Exchange Commission, or the SEC, as well as our condensed consolidated financial statements included in this Form 10-Q.

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking statements include those that express plans, anticipation, intent, contingencies, goals, targets or future development or otherwise are not statements of historical fact. Without limiting the foregoing, the words “believe,” “anticipate,” “plan,” “expect,” “intend” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on our current expectations and projections about future events, and they are subject to risks and uncertainties, known and unknown, that could cause actual results and developments to differ materially from those expressed or implied in such statements. These risks and uncertainties may be amplified by the COVID-19 pandemic and its potential impact on our business and the global economy. The important factors described under the caption “Risk Factors” in this report and in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020 filed on February ~~25, 2020~~11, 2021 could cause actual results to differ materially from those indicated by forward-looking statements made herein. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview of Our Business

We are engaged primarily in providing mobile voice and data communications services using a constellation of orbiting satellites. We are the only commercial 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 to regions of the world where terrestrial wireless or wireline networks do not exist or are limited, including remote land areas, open ocean, airways, the polar regions and regions where the telecommunications infrastructure has been affected by political conflicts or natural disasters.

We provide voice and data communications services to businesses, the U.S. and foreign governments, non-governmental organizations and consumers via our upgraded satellite network, which has an architecture of 66 operational satellites with in-orbit and ground spares and related ground infrastructure. We utilize an interlinked mesh architecture to route traffic across ~~our~~the satellite constellation using radio frequency crosslinks between satellites. This unique architecture minimizes the need for ~~local~~ ground facilities to support the constellation, which facilitates the global reach of our services and allows us to offer services in countries and regions where we have no physical presence.

~~In 2019, we completed the Iridium~~^® ~~NEXT program, which replaced~~ Our upgraded satellite constellation is compatible with all of our ~~first-generation constellation of satellites with upgraded satellites that support new services~~end-user equipment and supports more bandwidth and higher data speeds for our new products. We deployed a total of 75 new satellites on eight Falcon 9 rockets launched by SpaceX, with 66 operational satellites, as well as in-orbit and ground spares, maintaining the same interlinked mesh architecture ofproducts, including our ~~first-generation constellation.~~Iridium Certus

~~Our new constellation also hosts the Aireon~~^® system, which provides a global air traffic surveillance service through a series of automatic dependent surveillance-broadcast, or ADS-B, receivers on the upgraded satellites. We formed Aireon LLC in 2011, with subsequent investments from the air navigation service providers, or ANSPs, of Canada, Italy, Denmark, Ireland and the United Kingdom, to develop and market thisbroadband service. Aireon has contracted to provide the service to our co-investors in Aireon and to other ANSPs around the world, including the U.S. Federal Aviation Authority, or FAA. Aireon has also contracted to pay us a fee to host the ADS-B receivers on our constellation, as well as power and data services fees for the delivery of the air traffic surveillance data over the Iridium network. Aireon has made payments of $54.1 million for a portion of its hosting fees since the inception of the contract. Aireon also pays us power and data services fees of up to approximately $23.5 million per year in the aggregate for the delivery of the air traffic surveillance data over the Iridium system. In addition, we have entered into an agreement with L3Harris Technologies, Inc., or L3Harris, the manufacturer of the Aireon hosted payload, pursuant to which L3Harris pays us fees to allocate the remaining hosted payload capacity to its customers and data service fees on behalf of these customers.

We sell our products and services to commercial end-users through a wholesale distribution network, encompassing approximately ~~135~~110 service providers, approximately ~~285~~280 value-added resellers, or VARs, and approximately 9585 value-added manufacturers, or VAMs, ~~which create and~~who either sell ~~technology that uses the Iridium network either~~ directly to the end user or indirectly through other service providers, VARs or dealers. These distributors often integrate our products and services with other complementary hardware and software and have developed a broad suite of applications ~~using~~for our products and services ~~to target~~targeting specific lines of business.

At September 30, ~~2020,~~2021, we had approximately ~~1,429,000~~1,690,000 billable subscribers worldwide, representing an increase of ~~13%~~18% from approximately ~~1,269,000~~1,429,000 billable subscribers at September 30, ~~2019.~~2020. We have a diverse customer base, with end users in the following lines of business: land mobile, maritime, aviation, Internet of Things, or IoT, hosted payloads and other data services and the U.S. government.

We recognize revenue from both the provision of services and the sale of equipment. Over the past several years, service revenue, including revenue from hosting and data services, has represented an increasing proportion of our revenue, and we expect that trend to continue.

Effects of the COVID-19 Pandemic on Our Business

The COVID-19 pandemic and measures taken in response ~~are currently affecting~~continue to affect countries, communities and markets around the world. Like many other businesses, we started to see a slowdown in the final weeks of March 2020 as a result of ~~this~~the widespread economic shutdown. Our distributors have also experienced business and operational restrictions, which continue to limit their ability to visit customers, complete new installations, and close on new business ~~opportunities. This~~opportunities, particularly internationally. The economic slowdown ~~continued during the second~~extended through 2020 and ~~third quarters, though~~into 2021, although we have seen significant recovery in some markets, most notably IoT. Other markets, including aviation and maritime, and some international areas continue to suffer significant effects from reduced activity during the pandemic. Aviation, in particular, has started to see recovery but may take years to recover to pre-pandemic levels. In other industries, such as maritime, the effects are significant, but vary greatly by region and business ~~model. In April, following an analysis~~

model, and we expect that additional shutdowns and other restrictions will continue to impact our results of the effects of the pandemic on our business, as well as expected future effects, including lower equipment sales, lower levels of subscriber growth, and the potential for increased customer use of lower-cost plans, we substantially reduced our revenue and profitability outlook, and increased our leverage outlook, for 2020 from the levels that we previously forecast in February 2020. As we have seen recovery in some markets over the last two quarters, we subsequently improved our revenue, profitability and leverage outlook, to a level approaching what we initially forecast in February.operations. The ultimate effects of the COVID-19 pandemic are difficult to assess or predict with certainty at this time but may include additional risks. For further information on the potential effects of the COVID-19 pandemic on our business, financial condition and results of operations, see “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the Securities and Exchange Commission on February 11, 2021, as well as the “Risk Factors” ~~in Part II, Item 1A~~section of this ~~Form 10-Q.~~report below.

Material Trends and Uncertainties

Our 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 and geographically 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 subscriber equipment; and

•geographic market expansion through the ability to offer our services in additional countries.

Nonetheless, we face a number of challenges and uncertainties in operating our business, including:

•the effects of the COVID-19 pandemic on us and on Aireon, including on revenue, employee health and safety, employee productivity, and the financial health and effectiveness of our distributors and suppliers;

•our ability to maintain the health, capacity, control and level of service of our satellites;

•our ability to develop and launch new and innovative products and services;

•changes in general economic, business and industry conditions, including the effects of currency exchange rates;

•our reliance on a single primary commercial gateway and a primary satellite network operations center;

•competition from other ~~mobile~~ satellite service providers and, to a lesser extent, from the expansion of terrestrial-based cellular phone systems and related pricing pressures;

•~~interference with our services caused by the repurposing of L-band satellite spectrum for terrestrial purposes;~~

•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 the manufacture of most of our subscriber equipment and for some of the components required in the manufacture of our end-user subscriber equipment and our ability to purchase component parts that are periodically subject to shortages resulting from surges in demand, natural disasters or other events, ~~potentially~~ including the COVID-19 pandemic; and

•reliance on a few significant customers, particularly agencies of the U.S. government, for a substantial portion of our revenue, as a result of which the loss or decline in business with any of these customers may negatively impact our revenue and collectability of related accounts receivable.

1922

Comparison of Our Results of Operations for the Three Months Ended September 30, ~~2020~~2021 and ~~2019~~2020


		Three Months Ended September 30,															Change											Three Months Ended September 30,											Change
		2020		% of Total Revenue		2019		% of Total Revenue						Change									% of Total Revenue				2020				% of Total Revenue				Change
($ in thousands)	($ in thousands)																Percent		($ in thousands)		2021				% of Total Revenue			2020				% of Total Revenue						Percent
Revenue:	Revenue:													Revenue:
Services	Services	$	116,914	77	%	$	115,853	80	%	$	1,061	1	%	Services	$	127,774		78		%			$	116,914				77		%		$	10,860			9	%
Subscriber equipment	Subscriber equipment	25,120		17	%	21,375		15	%	3,745		18	%	Subscriber equipment	26,898			17		%	25,120				17	%		1,778				7		%
Engineering and support services	Engineering and support services	9,438		6	%	7,557		6	%	1,881		25	%	Engineering and support services	7,487			5		%	9,438				6	%		(1,951)				(21)		%
Total revenue	Total revenue	151,472		100	%	144,785		100	%	6,687		5	%	Total revenue	162,159			100		%	151,472				100	%		10,687				7		%

Operating expenses:	Operating expenses:													Operating expenses:
Cost of services (exclusive of depreciation	Cost of services (exclusive of depreciation													Cost of services (exclusive of depreciation
and amortization)	and amortization)	23,909		16	%	23,581		16	%	328		1	%	and amortization)	25,186			16		%	23,909				16	%		1,277				5		%
Cost of subscriber equipment	Cost of subscriber equipment	15,429		10	%	12,862		9	%	2,567		20	%	Cost of subscriber equipment	15,544			10		%	15,429				10	%		115				1		%
Research and development	Research and development	3,116		2	%	2,822		2	%	294		10	%	Research and development	2,815			2		%	3,116				2	%		(301)				(10)		%
Selling, general and administrative	Selling, general and administrative	20,631		14	%	22,934		16	%	(2,303)		(10)	%	Selling, general and administrative	25,897			16		%	20,631				14	%		5,266				26		%
Depreciation and amortization	Depreciation and amortization	75,654		50	%	74,575		52	%	1,079		1	%	Depreciation and amortization	77,688			47		%	75,654				50	%		2,034				3		%
Total operating expenses	Total operating expenses	138,739		92	%	136,774		95	%	1,965		1	%	Total operating expenses	147,130			91		%	138,739				92	%		8,391				6		%
Operating income	Operating income	12,733		8	%	8,011		5	%	4,722		59	%	Operating income	15,029			9		%	12,733				8	%		2,296				18		%

Other expense:	Other expense:													Other expense:
Interest expense, net	Interest expense, net	(22,628)		(15)	%	(30,493)		(21)	%	7,865		(26)	%	Interest expense, net	(17,614)			(10)		%	(22,628)				(15)	%		5,014				(22)		%
Other income, net		205		—	%	26		—	%	179		688	%
Loss on extinguishment of debt														Loss on extinguishment of debt	(879)			(1)		%	—				—	%		(879)				(100)		%
Other income (expense), net														Other income (expense), net	(81)			—		%	205				—	%		(286)				(140)		%
Total other expense, net	Total other expense, net	(22,423)		(15)	%	(30,467)		(21)	%	8,044		(26)	%	Total other expense, net	(18,574)			(11)		%	(22,423)				(15)	%		3,849				(17)		%
Loss before income taxes	Loss before income taxes	(9,690)		(7)	%	(22,456)		(16)	%	12,766		(57)	%	Loss before income taxes	(3,545)			(2)		%	(9,690)				(7)	%		6,145				(63)		%
Income tax benefit	Income tax benefit	5,685		4	%	4,444		3	%	1,241		28	%	Income tax benefit	1,460			1		%	5,685				4	%		(4,225)				(74)		%
Net loss	Net loss	$	(4,005)	(3)	%	$	(18,012)	(12)	%	$	14,007	(78)	%	Net loss	$	(2,085)		(1)		%	$	(4,005)			(3)	%		$	1,920

2023

Revenue

Commercial Service Revenue


		Three Months Ended September 30,																									Three Months Ended September 30,
		2020								2019										Change									2021					2020	Change
		Revenue		Billable Subscribers ⁽¹⁾	ARPU ⁽²⁾		Revenue		Billable Subscribers ⁽¹⁾	ARPU ⁽²⁾		Revenue		Billable Subscribers	ARPU			Revenue			Billable Subscribers (1)	ARPU (2)		Revenue		Billable Subscribers (1)	ARPU (2)		Revenue		Billable Subscribers	ARPU
		(Revenue in millions and subscribers in thousands)																														(Revenue in millions and subscribers in thousands)
Commercial services:	Commercial services:																Commercial services:
Voice and data	Voice and data	$	42.8	352	$	41	$	44.7	360	$	41	$	(1.9)	(8)	$	—	Voice and data	$	45.7		372	$	41	$	42.8	352	$	41	$	2.9	20	$	—
IoT data																	IoT data	30.0			1,156	8.93		25.4		924	9.48		4.6		232	(0.55)
Broadband ⁽³⁾	Broadband ⁽³⁾	9.1		11.4	$	270	8.1		10.6	$	260	1.0		0.8	10		Broadband (3)	11.5			13.0	299		9.1		11.4	270		2.4		1.6	29
IoT data		25.4		924	$	9.48	25.3		767	$	11.36	0.1		157	(1.88)
Hosted payload and other data	Hosted payload and other data	14.5		N/A			12.0		N/A			2.5		N/A			Hosted payload and other data	14.7			N/A			14.5		N/A			0.2		N/A
Total commercial services	Total commercial services	$	91.8	1,287			$	90.1	1,138			$	1.7	149			Total commercial services	$	101.9		1,541			$	91.8	1,287			$	10.1	254

⁽¹⁾Billable subscriber numbers shown are at the end of the respective period.

⁽²⁾Average monthly revenue per unit, or ARPU, is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period. Billable subscriber and ARPU data is not applicable for hosted payload and other data service revenue items.

⁽³⁾Commercial broadband service consists of Iridium OpenPort^® and Iridium Certus^® broadband ~~services, which were previously reported in commercial voice and data revenue. Prior year periods have been conformed to this presentation.~~services.

For the three months ended September 30, ~~2020,~~2021, total commercial services revenue increased ~~$1.7~~$10.1 million, or 2%, primarily as a result of the increase in hosted payload and other data revenue of $2.5 million, or 21%. This increase resulted from the increased Aireon data service fees related to a contractual step-up and increased Aireon power fees. The increase in hosted payload and other data revenue was largely offset by a decrease in voice and data services revenue of $1.9 million, or 4%, from the prior year period. This decrease resulted from reduced subscribers and a decrease in usage following mobility restrictions associated with the COVID-19 pandemic. Commercial broadband revenue increased $1.0 million, or 12%11%, from the prior year period ~~principally~~primarily as a result of increases in IoT, voice and data, and broadband revenue. These increases were driven primarily by increases in billable subscribers across all commercial service lines. Commercial IoT revenue increased $4.6 million, or 18%, for the three months ended September 30, 2021, compared to the same period of the prior year. The increase in IoT revenue was driven by a 25% increase in IoT billable subscribers due to ~~sales~~continued strength in consumer personal communications devices, as well as the lifting of many mobility restrictions that had been imposed due to COVID-19. The subscriber increase effect on revenue was partially offset by a 6% reduction in IoT ARPU, primarily due to the increased proportion of personal communication subscribers using lower ARPU plans, countered in part by an increase in usage and ARPU by aviation subscribers due to increases in air travel from the prior year quarter. Commercial voice and data revenue increased $2.9 million, or 7%, for the three months ended September 30, 2021, compared to the same period of the prior year. This increase was primarily due to an increase in volume across all voice and data services. Commercial broadband revenue increased $2.4 million, or 26%, for the three months ended September 30, 2021, compared to the prior year period, driven by an increase in broadband billable subscribers and an increase in ARPU associated with the increase in the mix of subscribers utilizing higher ARPU Iridium Certusbroadband ~~services, which were commercially introduced in January 2019. Commercial IoT data~~plans. Hosted payload and other service revenue remained relatively flat for the three months ended September 30, ~~2020,~~2021, compared to the prior year period, at approximately $25.4 million primarily due to a 20% increase in commercial IoT data billable subscribers, primarily from continued strength in consumer personal communications devices. The increase in IoT related to subscriber growth was offset in part by a decrease in ARPU, driven by the decrease in usage revenue related to COVID-19, particularly with aviation customers, and an increase in the proportion of consumer personal communications device users comprising IoT subscribers, as users of these devices typically utilize lower ARPU plans.$14.7 million.

Government Service Revenue

Three Months Ended September 30,
2020 2019 Change
Revenue
Billable
Subscribers ⁽¹⁾
Revenue
Billable
Subscribers ⁽¹⁾
Revenue Billable
Subscribers
(Revenue in millions and subscribers in thousands)
Government services $ 25.1 142 $ 25.6 131 $ (0.5) 11


	Three Months Ended September 30,
	2021			2020			Change
	Revenue		Billable Subscribers (1)	Revenue		Billable Subscribers (1)	Revenue		Billable Subscribers
	(Revenue in millions and subscribers in thousands)
Government services	$	25.9	149	$	25.1	142	$	0.8	7

⁽¹⁾Billable subscriber numbers shown are at the end of the respective period.

We provide airtime and airtime support to U.S. government and other authorized customers pursuant to our Enhanced Mobile Satellite Services contract, or the EMSS Contract. Under the terms of this agreement, which we entered into in September 2019, authorized customers utilize specified Iridium® airtime services provided through the U.S. government’s dedicated gateway. The fee is not based on subscribers or usage, allowing an unlimited number of users access to these services. ~~During the three months ended September 30, 2019, we operated~~The annual rate under ~~month-to-month extension contracts while~~ the EMSS Contract ~~was being negotiated.~~increased from $103.0 million to $106.0 million during the third quarter of 2021.

2124

Subscriber Equipment Revenue

Subscriber equipment revenue increased by ~~$3.7~~$1.8 million, or ~~18%~~7%, for the three months ended September 30, ~~2020~~2021 compared to the prior year period, primarily due to an increase in the volume of ~~IoT and L-band transceiver device~~handset sales, partially offset by a decrease in the volume of ~~handset~~L-band transceiver device sales.

Engineering and Support Service Revenue


		Three Months Ended September 30,									Three Months Ended September 30,
		2020		2019		Change			2021		2020		Change
		(Revenue in millions)											(Revenue in millions)
Commercial engineering and support services	Commercial engineering and support services	$	1.1	$	0.8	$	0.3	Commercial engineering and support services	$	1.3	$	1.1	$	0.2
Government engineering and support services	Government engineering and support services	8.3		6.8		1.5		Government engineering and support services	6.2		8.3		(2.1)
Total engineering and support services	Total engineering and support services	$	9.4	$	7.6	$	1.8	Total engineering and support services	$	7.5	$	9.4	$	(1.9)

Engineering and support service revenue ~~increased $1.8~~decreased by $1.9 million or ~~25%,~~20% for the three months ended September 30, ~~2020~~2021 compared to the prior year period, primarily ~~as a result of an increase in the volume of contracted work to enable services for the U.S. government, and an increase in the volume of work for commercial customers, primarily related~~due to the ~~Aireon hosted payload operations center.~~episodic nature of contract work under certain government contracts.

Operating Expenses

Cost of Services (exclusive of depreciation and amortization)

Cost of services (exclusive of depreciation and amortization) includes the cost of network engineering and operations staff, including contractors, software maintenance, product support services and cost of services for government and commercial engineering and support service revenue.

Cost of services (exclusive of depreciation and amortization) increased by ~~$0.3~~$1.3 million, or 1%5%, for the three months ended September 30, ~~2020~~2021 from the prior year period, primarily as a result of higher ~~costs to~~maintenance, product support ~~the new EMSS Contract~~ and ~~increased volume of contacted engineering work to enable services for the U.S. government. These increases were~~satellite operation costs, partially offset by athe decrease in ~~in-orbit insurance costs, which were amortized over a one-year period from the in-service date,~~work under certain government engineering contracts, as ~~we completed the placement of upgraded satellites in-orbit in February 2019.~~noted above.

Cost of Subscriber Equipment

Cost of subscriber equipment includes the direct costs of equipment sold, which consist of manufacturing costs, allocation of overhead, and warranty costs.

Cost of subscriber equipment increased by ~~$2.6~~$0.1 million, or ~~20%~~1%, for the three months ended September 30, ~~2020~~2021 compared to the prior year period primarily due to ~~the~~an increase in ~~IoT and~~volume of higher margin handsets, partially offset by a decrease in the volume of L-band transceiver device ~~sales, as described above.~~sales.

Research and Development

Research and development expenses ~~increased~~decreased by $0.3 million, or 10%, for the three months ended September 30, ~~2020~~2021 compared to the prior year period ~~due to increased spend~~based on ~~new devices~~consistent spending on device-related features for our ~~upgraded~~ network.

Selling, General and Administrative

Selling, general and administrative expenses that are not directly attributable to the sale of services or products include sales and marketing costs, as well as employee-related expenses (such as salaries, wages, and benefits), legal, finance, information technology, facilities, billing and customer care expenses.

Selling, general and administrative expenses ~~decreased~~increased by ~~$2.3~~$5.3 million, or ~~10%~~26%, for the three months ended September 30, ~~2020~~2021 compared to the prior year period, primarily due to ~~decreases~~higher management incentive costs incurred in the current year quarter as compared to the prior year quarter, which were adversely impacted by the COVID-19 pandemic. The increase was also partially due to higher legal and ~~consulting~~other professional fees, and ~~decreased spending on conferences as a result of COVID-19 travel restrictions.~~stock appreciation rights expense in the current year quarter resulting from changes in our stock valuation between the respective reporting periods.

Depreciation and Amortization

Depreciation and amortization expense ~~remained relatively flat as we completed~~increased by $2.0 million, or 3%, for the ~~replacement of~~three months ended September 30, 2021 compared to the prior year period. The increase was primarily due to software enhancements related to our first-generation satellites in February 2019. As the upgraded satellites are the largest proportion of our asset base, we anticipate depreciation and amortization expense to remain relatively consistent from quarter to quarter based on our anticipated capital expenditures.

Iridium Certus service line that were placed into service during July 2021.

Other Expense

Interest Expense, Net

Interest expense, net decreased ~~$7.9~~$5.0 million, or 22%, for the three months ended September 30, 2021 compared to the prior year period. The decrease resulted primarily from a decrease in the annual interest rate to LIBOR plus 2.5%, with a 0.75% LIBOR

floor, from an annual interest rate of LIBOR plus 3.75%, with a 1.0% LIBOR floor as a result of the repricing of our term loan with Deutsche Bank AG, or the Term Loan, in January 2021 and July 2021. The decrease in interest expense was offset in part by $1.3 million of third-party financing costs paid in the current year period in connection with the July repricing.

Loss on Extinguishment of Debt

Loss on extinguishment of debt was $0.9 million for the three months ended September 30, ~~2020 compared~~2021. During July 2021, we repriced our Term Loan, and wrote off unamortized debt issuance costs related to several lenders who did not participate in the repricing and whose portions of the Term Loan were replaced by new or existing lenders. There was no extinguishment of debt during the prior year period, primarily related to the impact of the refinancing of our debt including a decrease in the weighted average effective interest rate and lower average outstanding borrowings under our total debt obligations.period.

Income Tax Benefit

For the three months ended September 30, ~~2020,~~2021, our income tax benefit was ~~$5.7~~$1.5 million, compared to ~~income tax benefit of $4.4~~$5.7 million for the prior year period. The ~~increase~~decrease in income tax benefit iswas primarily related to ~~an increased stock compensation benefit, as well as the reduction in state net operating loss valuation allowance compared to the prior year, partially offset by~~ a decrease in loss before income taxes compared to the prior year, a lower discrete tax benefit associated with stock compensation as a result of a lower number of exercised stock options, and a discrete state tax expense associated with state apportionment changes. This was offset in part by an increased benefit related to a decrease in the valuation allowance for state net operating losses compared to the prior year.

Net Loss

Net loss was ~~$4.0~~$2.1 million for the three months ended September 30, ~~2020,~~2021, compared to ~~a net loss of $18.0~~$4.0 million for the prior year period. The change was primarily ~~resulted from the $7.9~~a result of a $5.0 million decrease in interest expense, net, and ~~the $6.7~~a $2.3 million increase in ~~total revenues, as well as~~operating income offset by the ~~$2.3~~$4.2 million decrease in ~~selling, general and administrative expenses and~~ the ~~$1.2 million increase in~~ income tax benefit as described above. ~~These increases were partially offset by the $4.3 million increase in other operating expenses.~~

Comparison of Our Results of Operations for the Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020


		Nine Months Ended September 30,															Change											Nine Months Ended September 30,											Change
		2020		% of Total Revenue		2019		% of Total Revenue						Change									% of Total Revenue				2020				% of Total Revenue				Change
($ in thousands)	($ in thousands)																Percent		($ in thousands)		2021				% of Total Revenue			2020				% of Total Revenue						Percent
Revenue:	Revenue:													Revenue:
Services	Services	$	346,239	79	%	$	333,601	79	%	$	12,638	4	%	Services	$	365,247		79		%			$	346,239				79		%		$	19,008			5	%
Subscriber equipment	Subscriber equipment	67,198		16	%	65,803		16	%	1,395		2	%	Subscriber equipment	72,607			16		%	67,198				16	%		5,409				8		%
Engineering and support services	Engineering and support services	23,495		5	%	22,166		5	%	1,329		6	%	Engineering and support services	20,759			5		%	23,495				5	%		(2,736)				(12)		%
Total revenue	Total revenue	436,932		100	%	421,570		100	%	15,362		4	%	Total revenue	458,613			100		%	436,932				100	%		21,681				5		%

Operating expenses:	Operating expenses:													Operating expenses:
Cost of services (exclusive of depreciation	Cost of services (exclusive of depreciation													Cost of services (exclusive of depreciation
and amortization)	and amortization)	69,021		16	%	71,709		17	%	(2,688)		(4)	%	and amortization)	71,784			16		%	69,021				16	%		2,763				4		%
Cost of subscriber equipment	Cost of subscriber equipment	39,772		9	%	38,663		9	%	1,109		3	%	Cost of subscriber equipment	41,243			9		%	39,772				9	%		1,471				4		%
Research and development	Research and development	7,940		2	%	10,718		3	%	(2,778)		(26)	%	Research and development	8,156			2		%	7,940				2	%		216				3		%
Selling, general and administrative	Selling, general and administrative	62,556		14	%	67,744		16	%	(5,188)		(8)	%	Selling, general and administrative	72,524			16		%	62,556				14	%		9,968				16		%
Depreciation and amortization	Depreciation and amortization	227,260		52	%	222,617		53	%	4,643		2	%	Depreciation and amortization	229,266			49		%	227,260				52	%		2,006				1		%
Total operating expenses	Total operating expenses	406,549		93	%	411,451		98	%	(4,902)		(1)	%	Total operating expenses	422,973			92		%	406,549				93	%		16,424				4		%
Operating income	Operating income	30,383		7	%	10,119		2	%	20,264		200	%	Operating income	35,640			8		%	30,383				7	%		5,257				17		%

Other expense:	Other expense:													Other expense:
Interest expense, net	Interest expense, net	(71,578)		(16)	%	(85,076)		(20)	%	13,498		(16)	%	Interest expense, net	(58,013)			(13)		%	(71,578)				(16)	%		13,565				(19)		%
Loss on extinguishment of debt	Loss on extinguishment of debt	(30,209)		(7)	%	(207)		—	%	(30,002)		14,494	%	Loss on extinguishment of debt	(879)			—		%	(30,209)				(7)	%		29,330				(97)		%
Other income (expense), net	Other income (expense), net	332		—	%	(926)		—	%	1,258		(136)	%	Other income (expense), net	(225)			—		%	332				—	%		(557)				(168)		%
Total other expense, net	Total other expense, net	(101,455)		(23)	%	(86,209)		(20)	%	(15,246)		18	%	Total other expense, net	(59,117)			(13)		%	(101,455)				(23)	%		42,338				(42)		%
Loss before income taxes	Loss before income taxes	(71,072)		(16)	%	(76,090)		(18)	%	5,018		(7)	%	Loss before income taxes	(23,477)			(5)		%	(71,072)				(16)	%		47,595				(67)		%
Income tax benefit	Income tax benefit	22,943		5	%	21,948		5	%	995		5	%	Income tax benefit	20,042			4		%	22,943				5	%		(2,901)				(13)		%
Net loss	Net loss	$	(48,129)	(11)	%	$	(54,142)	(13)	%	$	6,013	(11)	%	Net loss	$	(3,435)		(1)		%	$	(48,129)			(11)	%		$	44,694			(93)		%

2326

Revenue

Commercial Service Revenue


		Nine Months Ended September 30,																									Nine Months Ended September 30,
		2020								2019										Change									2021					2020	Change
		Revenue		Billable Subscribers ⁽¹⁾	ARPU ⁽²⁾		Revenue		Billable Subscribers ⁽¹⁾	ARPU ⁽²⁾		Revenue		Billable Subscribers	ARPU			Revenue			Billable Subscribers (1)	ARPU (2)		Revenue		Billable Subscribers (1)	ARPU (2)		Revenue		Billable Subscribers	ARPU
		(Revenue in millions and subscribers in thousands)																														(Revenue in millions and subscribers in thousands)
Commercial services:	Commercial services:																Commercial services:
Voice and data	Voice and data	$	126.8	352	$	40	$	129.6	360	$	40	$	(2.8)	(8)	$	—	Voice and data	$	130.4		372	$	40	$	126.8	352	$	40	$	3.6	20	$	—
IoT data																	IoT data	82.0			1,156	8.60		71.8		924	9.25		10.2		232	(0.65)
Broadband⁽³⁾	Broadband⁽³⁾	26.3		11.4	$	263	22.3		10.6	$	245	4.0		0.8	18		Broadband (3)	31.5			13.0	284		26.3		11.4	263		5.2		1.6	21
IoT data		71.8		924	$	9.25	71.7		767	$	11.27	0.1		157	(2.02)
Hosted payload and other data	Hosted payload and other data	46.2		N/A			37.9		N/A			8.3		N/A			Hosted payload and other data	43.9			N/A			46.2		N/A			(2.3)		N/A
Total commercial services	Total commercial services	$	271.1	1,287			$	261.5	1,138			$	9.6	149			Total commercial services	$	287.8		1,541			$	271.1	1,287			$	16.7	254

⁽¹⁾Billable subscriber numbers shown are at the end of the respective period.

⁽³⁾Commercial broadband service consists of Iridium OpenPort and Iridium Certus broadband ~~services, which were previously reported in commercial voice and data revenue. Prior year periods have been conformed to this presentation.~~services.

For the nine months ended September 30, ~~2020,~~2021, total commercial services revenue increased ~~from the prior year period by $9.6~~$16.7 million, or 4%, primarily due to increased hosted payload and other data services revenue and increased commercial broadband revenue. Hosted payload and other data service revenue increased $8.3 million, or 22%, primarily due to increased Aireon data service fees related to a contractual step-up and increased Aireon power fees. Commercial broadband revenue increased $4.0 million, or 18%6%, from the prior year period ~~principally due to sales~~primarily as a result of ~~Iridium Certusbroadband services, which were commercially introduced in January 2019. The~~ increases in ~~hosted payload~~IoT, broadband, and ~~other data service revenue and commercial broadband revenue were partially offset by a $2.8 million, or 2%, decline in commercial~~ voice and data revenue ~~from the prior year period resulting from a decrease~~mainly driven by increases in ~~subscribers and decreased usage following mobility restrictions associated with the COVID-19 pandemic.~~billable subscribers. Commercial IoT ~~data~~ revenue ~~remained relatively flat~~increased $10.2 million, or 14%, for the nine months ended September 30, ~~2020, at $71.8 million. This primarily reflects a 20%~~2021, compared to the prior year period. The increase in ~~commercial~~ IoT ~~data~~revenue was driven by a 25% increase in IoT billable subscribers ~~primarily from~~due to continued strength in ~~consumer~~ personal communications devices, as well as the lifting of many mobility restrictions that had been imposed due to COVID-19. The subscriber increase effect on revenue was partially offset by a 7% reduction in IoT ARPU, primarily due to the increased proportion of personal communication subscribers using lower ARPU plans, countered in part by an increase in usage and ARPU by aviation subscribers due to increases in air travel from the prior year quarter. Commercial broadband revenue increased $5.2 million, or 20%, for the nine months ended September 30, 2021, compared to the prior year period, due primarily to the increase in broadband billable subscribers and an increase in ARPU associated with the increase in the mix of subscribers utilizing higher ARPU Iridium Certus broadband plans. Commercial voice and data revenue increased $3.6 million, or 3%, from the prior year period primarily due to an increase in volume across all voice and data services. These increases were offset in part by a decrease in ~~ARPU, driven by~~hosted payload and other service revenue of $2.3 million, or 5%, for the nine months ended September 30, 2021, compared to the prior year period. This decrease was due to two non-recurring events, a data billing settlement that resulted in ~~usage revenue related to COVID-19, particularly with aviation customers, and an increase~~recognition of $1.3 million in the ~~proportion~~prior year period, plus the recognition of ~~consumer personal communications device users comprising IoT subscribers, as users~~an additional $1.4 million of ~~these devices typically utilize lower ARPU plans.~~

additional hosting data service revenue in the prior year due to an updated estimate of data service usage.

Government Service Revenue

Nine Months Ended September 30,
2020 2019 Change
Revenue
Billable
Subscribers ⁽¹⁾
Revenue
Billable
Subscribers ⁽¹⁾
Revenue Billable
Subscribers
(Revenue in millions and subscribers in thousands)
Government services $ 75.1 142 $ 72.1 131 $ 3.0 11


	Nine Months Ended September 30,
	2021			2020			Change
	Revenue		Billable Subscribers (1)	Revenue		Billable Subscribers (1)	Revenue		Billable Subscribers
	(Revenue in millions and subscribers in thousands)
Government services	$	77.4	149	$	75.1	142	$	2.3	7

⁽¹⁾Billable subscriber numbers shown are at the end of the respective period.

We provide airtime and airtime support to U.S. government and other authorized customers pursuant to ~~our Enhanced Mobile Satellite Services contract, or~~ the EMSS Contract. Under the terms of this agreement, which we entered into in September 2019, authorized customers utilize specified Iridium airtime services provided through the U.S. government’s dedicated gateway. The fee is not based on subscribers or usage, allowing an unlimited number of users access to these services. ~~For~~The annual rate under the ~~nine months ended September 30, 2020, government service revenue~~EMSS Contract increased ~~$3.0~~from $103.0 million to $106.0 million during the third quarter of 2021 and from $100.0 million to $103.0 million during the ~~prior year period as a result~~third quarter of ~~the higher pricing in the new EMSS Contract.~~2020.

2427

Subscriber Equipment Revenue

Subscriber equipment revenue increased by ~~$1.4~~$5.4 million, or 2%8%, for the nine months ended September 30, ~~2020~~2021 compared to the prior year period, primarily due to an increase in the volume of ~~L-band transceivers~~handset and IoT device sales, partially offset by a decrease in the volume of ~~handset~~L-band transceiver device sales.

Engineering and Support Service Revenue


		Nine Months Ended September 30,									Nine Months Ended September 30,
		2020		2019		Change			2021		2020		Change
		(Revenue in millions)											(Revenue in millions)
Commercial engineering and support services	Commercial engineering and support services	$	3.3	$	1.9	$	1.4	Commercial engineering and support services	$	3.0	$	3.3	$	(0.3)
Government engineering and support services	Government engineering and support services	20.2		20.3		(0.1)		Government engineering and support services	17.8		20.2		(2.4)
Total engineering and support services	Total engineering and support services	$	23.5	$	22.2	$	1.3	Total engineering and support services	$	20.8	$	23.5	$	(2.7)

Engineering and support service revenue ~~increased $1.3~~decreased $2.7 million, or 6%12%, for the nine months ended September 30, ~~2020~~2021 compared to the prior year period primarily ~~as a result of an increase in the volume of work for commercial customers, primarily related~~due to the ~~Aireon hosted payload operations center.~~episodic nature of contract work under certain government projects.

Operating Expenses

Cost of Services (exclusive of depreciation and amortization)

Cost of services (exclusive of depreciation and amortization) ~~decreased~~increased by ~~$2.7~~$2.8 million, or 4%, for the nine months ended September 30, ~~2020~~2021 from the prior year period, primarily as a result of ahigher maintenance, product support and network operation costs, partially offset by the decrease in ~~in-orbit insurance costs, which were amortized over a one-year period from the in-service date,~~work under certain government engineering contracts, as we completed the placement of upgraded satellites in-orbit in February 2019. This decrease was offset in part by higher costs to support the new EMSS Contract and higher satellite operations support associated with higher levels of activity directed towards operating the completed system.noted above.

Cost of Subscriber Equipment

Cost of subscriber equipment increased by ~~$1.1~~$1.5 million, or 4%, for the nine months ended September 30, 2021 compared to the prior year period primarily due to an increase in volume of higher margin handsets and an increase in IoT device sales, partially offset by a decrease in the volume of L-band transceiver device sales.

Research and Development

Research and development expenses increased by $0.2 million, or 3%, for the nine months ended September 30, ~~2020~~2021 compared to the prior year period ~~primarily due to the increase in the volume of L-band transceivers and IoT device sales, as described above.~~

~~Research and Development~~

~~Research and development expenses decreased by $2.8 million, or 26%,~~based on consistent spending on device-related features for ~~the nine months ended September 30, 2020 compared to the prior year period due to decreased spend on new devices for~~ our ~~upgraded~~ network.

Selling, General and Administrative

Selling, general and administrative expenses ~~decreased~~increased by ~~$5.2~~$10.0 million, or 8%16%, for the nine months ended September 30, ~~2020~~2021 compared to the prior year period, primarily due to ~~a decrease in~~higher management incentive ~~compensation and decreased spend on travel and marketing related events~~costs incurred in the current year period as ~~a result of COVID-19. We~~compared to the prior year period, which were adversely impacted by the COVID-19 pandemic. The increase was also ~~experienced a decrease in~~partially due to higher stock appreciation rights expense in the current year resulting from changes in our stock valuation between the respective reporting periods. These ~~decreases~~increases in costs were offset in part by ~~an increase~~a decrease in ~~wages associated with an increase in headcount in our general~~legal fees and ~~administrative functions.~~bad debt expense.

Depreciation and Amortization

Depreciation and amortization expense increased by $4.6 million, or 2%, for the nine months ended September 30, 2020 compared to the prior year period, primarily due to the increased number of upgraded satellites in service during the current periodremained relatively flat as we completed the replacement of our first-generation satellites in February 2019. As the upgraded satellites are the largest proportion of our asset base, we anticipate depreciation and amortization expense to remain relatively consistent from ~~period~~quarter to ~~period for the next several years.~~quarter based on our anticipated capital expenditures.

Other Expense

Interest Expense, Net

Interest expense, net decreased ~~$13.5~~$13.6 million for the nine months ended September 30, ~~2020~~2021 compared to the prior year ~~period,~~period. The decrease resulted primarily ~~related to the impact of the refinancing of our debt including~~from a decrease in the ~~weighted average effective~~annual interest rate to LIBOR plus 2.5%, with a 0.75% LIBOR floor, from an annual interest rate of LIBOR plus 3.75%, with a 1.0% LIBOR floor as a result of the repricing of our Term Loan in January 2021 and ~~lower average outstanding borrowings under our total debt obligations.~~July 2021. The decrease in interest expense was offset in part by $4.9 million of third-party financing costs paid in the current year period in connection with the repricings.

Loss on Extinguishment of Debt

Loss on extinguishment of debt was ~~$30.2~~$0.9 million for the nine months ended September 30, ~~2020,~~2021 compared to ~~approximately $0.2~~a $30.2 million loss on extinguishment of debt recorded for the ~~prior year period.~~nine months ended September 30, 2020. During ~~February~~July 2021, we repriced our Term Loan and wrote off unamortized debt issuance costs related to several lenders who did not participate in the repricing and whose portions of the Term Loan were replaced by new or existing lenders. The loss on extinguishment of debt in 2020 resulted from the write off of unamortized debt issuance costs when we closed on an additional $200.0 million under our Term Loan in February 2020 and used ~~these~~the proceeds, together with cash on hand, to prepay all of the indebtedness outstanding under ~~the Notes,~~our senior unsecured notes, including premiums for early prepayment. ~~In conjunction with the prepayment of the Notes, we wrote off the remaining unamortized debt~~

~~issuance costs, resulting in the $30.2 million loss on extinguishment of debt. In the prior year period, we used hosting fees received from Aireon to extinguish debt.~~

Income Tax Benefit

For the nine months ended September 30, ~~2020,~~2021, our income tax benefit was ~~$22.9~~$20.0 million, compared to income tax benefit of ~~$21.9~~$22.9 million for the prior year period. The ~~increase~~decrease in income tax benefit iswas primarily related to ~~the reduction~~a decrease in ~~state net operating~~ loss ~~valuation allowance~~before income taxes compared to the prior ~~year, as well as prior year non-recurring adjustments to our deferred~~year. This was offset in part by the discrete state tax ~~assets~~benefit associated with state apportionment changes and ~~liabilities related to state law changes, partially offset by~~ a ~~reduced~~greater stock compensation ~~benefit compared to~~tax deduction which resulted from an increase in the ~~prior year.~~value of both stock options exercised and vested restricted stock units.

Net Loss

Net loss was ~~$48.1~~$3.4 million for the nine months ended September 30, ~~2020,~~2021, compared to ~~net loss of $54.1~~$48.1 million for the prior year period. The change primarily resulted from the ~~$15.4 million increase in total revenues, the $4.9~~$29.3 million decrease in ~~total operating expenses and~~ the ~~$13.5~~loss on extinguishment of debt, the $13.6 million decrease in interest expense, net, ~~partially~~as well as the $5.3 million increase in operating income. These changes were offset by the ~~$30.0~~$2.9 million ~~increase~~decrease in ~~loss on extinguishment of debt,~~the income tax benefit as described above.

Liquidity and Capital Resources

In November 2019, we ~~borrowed~~issued our $1,450.0 million ~~under our~~ Term Loan with an accompanying $100.0 million revolving loan, or the Revolving ~~Facility. We~~Facility, or, collectively, the Credit Agreement. Both facilities are under a credit agreement with the lenders, or the Credit Agreement.

In February 2020, we issued an additional $200.0 million under our Term Loan and used the proceeds and approximately $183.5 million of ~~the Term Loan, cash in our debt service reserve account and~~ cash on hand to repay in full all of the indebtedness outstanding under our previous loan facility with Bpifrance Assurance Export S.A.S., including premiums for early prepayment. In February 2020, we borrowed an additional $200.0 million under our Term Loan and used the proceeds and cash on hand to repay in full and retire all of the indebtedness outstanding under our Notes,senior unsecured notes, including premiums for early repayment.

In both January 2021 and July 2021, we repriced all borrowings outstanding under our Term Loan. The Term Loan now bears interest at an annual rate of LIBOR plus 2.50%, with a 0.75% LIBOR floor. All other terms remain the same, including maturity in November 2026. To reprice the Term Loan in January 2021 and July 2021, we incurred third-party financing costs of $3.6 million and $1.3 million, respectively. On July 21, 2021, we entered into an interest rate cap agreement, or the Cap, beginning in November 2021. The Cap is intended to manage our exposure to interest rate movements on a portion of our Term Loan. The Cap provides the right to receive payment if one-month LIBOR exceeds the contractual rate of 1.5%. Beginning in December 2021, we will pay a fixed monthly premium at an annual rate of 0.31% for the Cap. The Cap carried a notional amount of $1,000.0 million as of September 30, 2021.

As of September 30, ~~2020,~~2021, we reported an aggregate balance of ~~$1,641.8~~$1,625.3 million in borrowings under the Term Loan, before ~~$24.9~~$24.2 million of net deferred financing costs, for a net principal balance of ~~$1,616.9~~$1,601.0 million outstanding in our condensed consolidated balance sheet. We have not drawn on our Revolving Facility.

Our Term Loan contains no financial maintenance covenants. With respect to the Revolving Facility, we are required to maintain a consolidated first lien net leverage ratio of no greater than 6.25 to 1 if more than 35% of the Revolving Facility has been drawn. The Credit Agreement contains other customary representations and warranties, affirmative and negative covenants, and events of default. We were in compliance with all covenants under the Credit Agreement as of September 30, 2021.

The Credit Agreement restricts our ability to incur liens, engage in mergers or asset sales, pay dividends, repay subordinated indebtedness, incur indebtedness, make investments and loans, and engage in other transactions as specified in the Credit Agreement. The Credit Agreement provides for specified exceptions, including baskets measured as a percentage of trailing twelve months of earnings before interest, taxes, depreciation and amortization, or EBITDA, and unlimited exceptions based on achievement and maintenance of specified leverage ratios, for, among other things, incurring indebtedness and liens and making investments, restricted payments for dividends and share repurchases, and payments of subordinated indebtedness. The Credit Agreement also contains a mandatory prepayment sweep mechanism with respect to a portion of our excess cash flow (as defined in the Credit Agreement), which is phased out based on achievement and maintenance of specified leverage ratios. Our mandatory excess cash flow prepayment, as specified in the Credit Agreement, was calculated to be $12.7 million as of

December 31, 2020. Lenders have the right to decline payment. As such, we paid $4.7 million to lenders who did not decline payment in May 2021. This amount counted towards our required quarterly principal payments through September 30, 2021. The Credit Agreement permits repayment, prepayment, and repricing transactions.

As of September 30, ~~2020,~~2021, our total cash and cash equivalents balance was ~~$182.7~~$287.0 million, our marketable securities balance was $2.0 million, and we had $100.0 million of borrowing availability under our Revolving Facility. In addition to the Revolving Facility, our principal sources of liquidity are cash, cash equivalents and internally generated cash flows. Our principal liquidity requirements over the next twelve months are primarily principal and interest on the Term ~~Loan.~~

Loan, working capital and potential share repurchases under the share repurchase program described in
Note 8

~~The Credit Agreement contains a mandatory prepayment mechanism with respect~~ to ~~a portion of our excess cash flow (as defined~~the financial statements included in the Credit Agreement). It provides for specified exceptions, baskets measured as a percentage of trailing twelve months of earnings before interest, taxes, depreciation and amortization, and unlimited exceptions in the case of incurring indebtedness and liens and making investments, dividend payments, and payments of subordinated indebtedness, as well as a phase-out of the mandatory excess cash flow prepayments, based on achievement and maintenance of specified leverage ratios. The Credit Agreement permits repayment, prepayment, and repricing transactions.this report.

We believe our liquidity sources will provide sufficient funds for us to meet our liquidity requirements for at least the next 12 months.

Cash Flows

The following table summarizes our cash flows:


		Nine Months Ended September 30,									Nine Months Ended September 30,
		2020		2019		Change			2021		2020		Change
		(in thousands)											(In thousands)
Cash provided by operating activities	Cash provided by operating activities	$	179,137	$	142,453	$	36,684	Cash provided by operating activities	$	213,137	$	179,137	$	34,000
Cash used in investing activities	Cash used in investing activities	$	(29,267)	$	(112,756)	$	83,489	Cash used in investing activities	$	(23,744)	$	(29,267)	$	5,523
Cash used in financing activities	Cash used in financing activities	$	(188,480)	$	(128,683)	$	(59,797)	Cash used in financing activities	$	(139,731)	$	(188,480)	$	48,749

Cash Flows Provided by Operating Activities

Net cash provided by operating activities for the nine months ended September 30, ~~2020~~2021 increased by ~~$36.7~~$34.0 million from the prior year period. Net loss, as adjusted for non-cash activities, improved by ~~$24.0~~$27.2 million over the prior year, primarily ~~due to the non-cash $30.0 million increase in the loss on extinguishment~~as a result of ~~debt and increased revenues.~~improved profitability. Net cash from operating activities also increased related to working capital changes of approximately ~~$12.7~~$6.8 million. ~~This increase was~~Working capital increased primarily ~~the~~as a result of ~~timing of accounts receivable collections, as well as lower purchases of inventory~~a decrease in ~~2020, compared~~accrued expenses and other current liabilities, which decreased due to a decreased payout on management incentives due to the ~~prior year. In 2019, there was an increase in inventory primarily associated with last-time purchases~~COVID-19 impact on 2020 results. Working capital also increased as a result of ~~manufacturers' discontinued parts that did not recur in 2020. These improvements in cash were offset in part by~~ a decrease in the interest payable compared to the prior year. ~~In November 2019~~These increases were offset by net cash outflows resulting from the timing of customer collections and ~~February 2020, we replaced our Credit Facility and Notes, respectively, with the Term Loan, resulting in monthly interest~~ payments ~~and an increase in cash used compared~~ to ~~previous semi-annual interest payments. As a result, there is minimal interest payable in the 2020 working capital balance for the new Term Loan.~~vendors.

Cash Flows Used in Investing Activities

Net cash used in investing activities for the nine months ended September 30, ~~2020~~2021 decreased by ~~$83.5~~$5.5 million ~~compared to~~from the prior year period due primarily ~~due~~ to ~~a decrease~~maturities of marketable securities in ~~capital~~the current year. Capital expenditures ~~as we completed payments for~~remained relatively flat between the ~~construction of our upgraded constellation in 2019.~~periods. We ~~estimate~~continue to expect our capital expenditures ~~will~~to average approximately $40.0 million per year until 2029.

Cash Flows Used in Financing Activities

Net cash used in financing activities for the nine months ended September 30, ~~2020 increased~~2021 decreased by ~~$59.8~~$48.7 million compared to the prior year period primarily due to ~~utilizing~~lower net principal payments as we utilized our cash to pay down additional debt in the ~~current~~prior year. ~~This~~The combination of full repayment of the senior unsecured notes and additional borrowings under the Term Loan resulted in net ~~principal~~ payments ~~and related costs~~ of $189.7 million for the nine months ended September 30, 2020 compared to ~~a $126.0~~net payments of $12.4 million ~~principal payment on~~for 2021. This decrease in cash outflows was partially offset by $125.1 million used in 2021 for the ~~Credit Facility in 2019.~~repurchase of our common stock. See Note 5 to our condensed consolidated financial statements included in this report for further discussion of our ~~indebtedness.~~indebtedness and Note 8 for further information on our stock repurchase program.

Off-Balance Sheet Arrangements

We do not currently have, nor have we had in the last three years, any relationships with unconsolidated entities or financial partnerships, such as entities referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Seasonality

Our results of operations have been subject to seasonal usage changes for commercial customers, and our results will be affected by similar seasonality going forward. March through October are typically the peak months for commercial voice services revenue and related subscriber equipment sales. U.S. government revenue and commercial IoT revenue have been less subject to seasonal usage changes.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these financial statements requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, useful lives of property and equipment, long-lived assets and other intangible assets, deferred financing costs, income taxes, stock-based compensation, and other estimates. We base our estimates on historical experience and on various other assumptions that we believe to be

reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. There have been no changes to our critical accounting policies from those described in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, as filed with the SEC on February ~~25, 2020.~~11, 2021.

Recent Accounting Pronouncements

Refer to Note 2 to our condensed consolidated financial statements for a full description of recent accounting pronouncements and recently adopted pronouncements.

2831


ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We ~~have~~had an outstanding aggregate balance of ~~$1,641.8~~$1,625.3 million under the Term Loan as of September 30, ~~2020.~~2021. We ~~have~~ executed a long-term interest rate swap, or the Swap, for $1,000.0 million of the Term Loan, through November 2021. ~~We also~~On July 21, 2021, we entered into an interest rate ~~swaption,~~cap agreement beginning in November 2021, or the ~~Swaption, that~~Cap. The Cap will manage our exposure to interest rate movements on a portion of our Term Loan following the expiration of the Swap. The Cap provides the right to receive payment if ~~executed on November 22, 2021, would extend our Swap through November 2026.~~one-month LIBOR exceeds the contractual rate of 1.5%. For the portion of the Term Loan not covered under ~~the Swap,~~our hedging arrangements, we pay interest at an annual rate equal to the London Interbank Offered Rate, or LIBOR, plus ~~3.75%~~2.5%, with a ~~1.0%~~0.75% LIBOR ~~floor, which will, accordingly,~~floor. Accordingly, we are subject us to interest rate fluctuations in future periods. A one-half percentage point increase or decrease in the LIBOR would not have had a material impact on our interest cost for the period.

We have ~~no borrowings~~not borrowed under our Revolving ~~Facility as of September 30, 2020.~~Facility. Accordingly, although the Revolving Facility bears interest at ~~the same~~ LIBOR plus 3.75% ~~rate, but~~, without a LIBOR floor, if and as drawn, we ~~were~~are not currently exposed to fluctuations in interest rates with respect to our Revolving Facility.

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, as well as accounts receivable. We maintain our cash and cash equivalents with financial institutions with high credit ratings and at times maintain the balance of our deposits in excess of federally insured limits. The majority of our cash is swept nightly into a money market fund invested in U.S. treasuries, ~~Agency Mortgage Backed Securities~~agency mortgage backed securities and/or U.S. government guaranteed debt. Accounts receivable are due from both domestic and international customers. We perform credit evaluations of our customers’ financial condition and record reserves to provide for estimated credit losses. Accounts payable are owed to both domestic and international vendors.


ITEM 4.			CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer, who is our principal executive officer, and our chief financial officer, who is our principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by this report. In evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.

Based on this evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, ~~2020,~~2021, there were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the factors described in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, filed with the Securities and Exchange Commission on February ~~25, 2020,~~11, 2021, as supplemented by the following updated risk ~~factors.~~

Our business has been negatively affected by the COVID-19 pandemic, actions taken to mitigate the pandemic, and economic disruptions that have resulted, but we are unable to predict the full extent or nature of these impacts at this time.

In response to the COVID-19 pandemic, many jurisdictions in the United States and around the world ordered their residents to cease traveling to non-essential jobs and to stay in their homes as much as possible. Since mid-March, we have been conducting business with remote work for most employees, prohibition on most employee travel, and remote sales and support activities, among other modifications. The pandemic and the steps taken to respond have also caused substantial domestic and global economic disruption, including similar restrictions on activity among our distributors, which has led to reduced sales and has limited our distributors’ ability to install or service our products. These limitations may continue for the duration of these pandemic-related restrictions, and we or our distributors may take additional actions to respond as the situation evolves.

Further, unemployment has significantly increased, and financial markets are experiencing significant levels of volatility and uncertainty, which could have an adverse effect on consumer and commercial spending and negatively affect demand for our and our distributors’ products and services, particularly in markets such as aviation and recreation. This, in turn, could negatively affect the value of our current agreements with our distributors and their willingness to enter into or renew contracts with us. The pandemic has also negatively affected the payment of accounts receivable and collections. One of our distributors has sought protection in bankruptcy, causing us to reduce the amount we expect to receive from them for past services. If additional distributors seek protection in bankruptcy, it could further harm our cash flows and results of operations.

As a result of the negative effects we have seen, we substantially reduced our initial revenue and earnings outlook for 2020. Other effects of the COVID-19 pandemic and the effects of the modifications we and others have made in response are difficult to assess or predict with certainty at this time but may include risks to employee health and safety, a further decline in the market price of our common stock, a prolonged economic downturn, and deterioration of the economy and consumer and commercial spending, any of which could further adversely affect our business, results of operations and/or financial condition in 2020 and beyond.

Aireon, our primary hosted payload customer, has been affected by reduced air traffic as a result of the COVID-19 pandemic, which could reduce or eliminate the value of our agreements with, and ownership interest in, Aireon.

Aireon is our primary hosted payload customer, and we expect annual revenue to us from Aireon hosting, data services and power fees to be approximately $39.5 million. In addition, if and when funds are available following a planned refinancing of its credit facility, Aireon’s parent company, Aireon Holdings, is required to redeem a portion of our ownership interest for a payment of $120.0 million, and we would then retain a common ownership interest of approximately 22% in Aireon Holdings. Based on Aireon’s business plan and restrictions under Aireon’s debt facility, we do not expect this redemption of our ownership interest to occur for several years.

Aireon provides air traffic surveillance services to ANSPs around the world, as well as other offerings based on its collection of air traffic surveillance data. The COVID-19 pandemic has resulted in substantially reduced air traffic worldwide, and it is uncertain when air traffic volumes will recover. A portion of Aireon’s customers pay them on a per-flight-hour basis, and even those customers with fixed-fee arrangements may seek to renegotiate their fees in the face of dramatically reduced air traffic. Further, Aireon’s business model requires expansion of its customer base to achieve its projected financial results, which may be substantially more difficult until air traffic volumes recover. While our fee arrangements with Aireon do not depend on traffic volumes, if Aireon’s revenues are substantially reduced, they may not be able to pay us the contractually required hosting, data services and power fees in a timely manner or at all. Further, Aireon may need to seek additional financing. Any sale of equity securities by Aireon would dilute our ownership if and to the extent that we do not invest additional funds to maintain our proportional ownership interest. If additional funding is not available, Aireon may default on its credit facility, which could result in the loss or reduction in value of our investment in Aireon, or be forced out of business, in which case we would not receive any further hosting, data or power fees, or the expected $120.0 million redemption payment, and we would lose the value of our retained investment in Aireon Holdings.

~~We are dependent on third parties to market and sell our products and services, and their inability to do so effectively could impair our revenue and our reputation.~~

We select third-party distributors, in some cases on an exclusive basis, and rely on them to market and sell our products and services to end users and to determine the prices end users pay. We also depend on our distributors to develop innovative and improved solutions and applications integrating our product and service offerings. As a result of these arrangements, we are dependent on the performance of our distributors to generate most of our revenue. Our distributors operate independently of us, and we have limited control over their operations, which exposes us to significant risks. Distributors may not commit the same level of resources to market and sell our products and services that we would, and these distributors may also market and sell competitive products and services. In addition, our distributors may not comply with the laws and regulatory requirements in their local jurisdictions, which could limit their ability to market or sell our products and services. If our distributors develop faulty or poorly performing products using our technology or services, we may be subject to claims, and our reputation could be harmed. If current or future distributors do not perform adequately, or if we are unable to locate competent distributors in particular countries and secure their services on favorable terms, we may be unable to increase or maintain our revenue in these markets or enter new markets, we may not realize our expected growth, and our brand image and reputation could be hurt.

In addition, we may lose distributors due to competition, consolidation, regulatory developments, business developments affecting our distributors or their customers, or for other reasons. For example, the COVID-19 pandemic and the steps taken to respond are causing substantial domestic and global economic disruption, including financial difficulties and restrictions on activity among our distributors, which have led to reduced sales and limited our distributors’ ability to install or service our products. These disruptions have also negatively affected the payment of accounts receivable and collections. For example, one of our distributors has sought protection in bankruptcy, causing us to reduce the amount we expect to receive from them for past services. Other distributors could similarly seek to reorganize or seek protection from creditors, including us. These financial disruptions could also result in industry consolidation. In 2009, one of our largest competitors, Inmarsat, acquired our then largest distributor, Stratos Global Wireless, Inc., and in 2014, Inmarsat acquired Globe Wireless, one of our service providers. Following each acquisition, Inmarsat essentially stopped promoting sales of our products and services, and they may further reduce their efforts in the future. Any future consolidation of our distributors would further increase our reliance on a few key distributors of our services and the amount of volume discounts that we may have to give those distributors. Our two largest distributors, Applied Satellite Technology LTD and Marlink Group, together represented approximately 10% of our revenue for the year ended December 31, 2019, and our ten largest distributors represented, in the aggregate, 31% of our revenue for the year ended December 31, 2019. The loss or consolidation of any of these distributors, or a decrease in the level of effort expended by any of them to promote our products and services, could reduce the distribution of our products and services as well as the development of new products and applications, which would negatively impact our revenue.factor.

We rely on a limited number of key vendors for supply of equipment, components and ~~services,~~services; the loss of any ~~of which~~such supplier, or shortages experienced by such suppliers, could cause us to incur additional costs and delays in the production and delivery of our ~~products.~~products, which could reduce the sales of those products and use of the related services.

We currently rely on two manufacturers of our devices, including our mobile handsets, ~~L-Band~~L-band transceivers and SBD^® devices. We also utilize sole source suppliers for some of the component parts of our devices. If any of our suppliers were to terminate its relationship with us, we may not be able to find a replacement supplier in a timely manner, at an acceptable price or at all.

~~Our~~Further, our manufacturers and suppliers may cease production of our components or products or become capacity-constrained, or could face financial difficulties as a result of a surge in demand, a natural disaster or other event, including the impacts of the COVID-19 pandemic. ~~In addition, one or more component suppliers may decide to cease production of various components~~For example, several of our suppliers are experiencing production delays as a result of the global silicon chip shortage.As a result, we have experienced and expect to continue to experience delays in fulfilling some product orders and are evaluating replacement components and product changes. These delays have increased our costs and reduced our sales of those products ~~resulting in a shortage or interruption in supplies or an inability~~and use of the related services, and we expect these effects to ~~meet increased demand.~~ continue into 2022.

Any future delay in production or delivery of our products or components by our suppliers ~~due to an extended closure of their plants or other restrictions imposed in response to the COVID-19 pandemic~~ could ~~also~~similarly adversely affect our business. ~~Although~~Even if we ~~may be~~are able to replace or supplement sole source or other component suppliers, there could be a substantial period of time in which our products would not be available; any new relationship may involve higher costs and delays in development and delivery, and we may encounter technical challenges in successfully replicating the manufacturing processes. If our manufacturers or suppliers terminate their relationships with us, fail to provide equipment or services to us on a timely basis, or fail to meet our performance expectations, we may be unable to provide products or services to our customers in a competitive manner, which could in turn negatively affect our financial results and our reputation.

~~Conducting and expanding our operations outside the United States creates numerous risks, which may harm our operations and compromise our ability to expand our international operations.~~

We have significant operations outside the United States. We estimate that commercial data traffic originating outside the United States, excluding our Iridium OpenPort broadband data service traffic, accounted for~~71% and~~72% of total commercial data traffic for the years ended December 31, 2019 and 2018, respectively, while commercial voice traffic originating outside the United States, excluding Iridium OpenPort traffic, accounted for90% of total commercial voice traffic for the years ended December 31, 2019 and 2018. We cannot provide the precise geographical distribution of revenue from end users because we do not contract directly with them. Instead, we determine the country in which we earn our revenue based on where we invoice our distributors. These distributors sell services directly or indirectly to end users, who may be located or use our products and services elsewhere. We and our distributors are also seeking authorization to sell our services in additional countries. The

~~COVID-19 pandemic has, and we expect will continue to, put pressure on global economic conditions and overall spending, which could negatively affect end user adoption of our products.~~

Conducting operations outside the United States involves numerous risks and, while expanding our international operations would advance our growth, it would also increase our exposure to these risks. For example, in 2013 we commenced the provision of satellite communications services in Russia through a local subsidiary and its authorized Russian service providers and subsequently constructed a dedicated gateway in Russia. The U.S. government has imposed economic and diplomatic sanctions on certain Russian corporations, banks, and citizens and might impose additional sanctions in the future. If such sanctions, or any Russian response to such sanctions, affects our operations in Russia, it could limit our growth in Russia or prevent us from continuing to operate there at all, which would reduce our revenues.

~~Other risks associated with the proposed expansion of our international operations include:~~

•~~effects of the COVID-19 pandemic, including on international economies, supply chains and travel;~~

•~~difficulties in penetrating new markets due to established and entrenched competitors;~~

•~~difficulties in developing products and services that are tailored to the needs of local customers;~~

•~~lack of local acceptance or knowledge of our products and services;~~

•~~lack of recognition of our products and services;~~

•~~unavailability of, or difficulties in establishing, relationships with distributors;~~

•significant investments, including the development and deployment of dedicated gateways, as some countries require physical gateways within their jurisdiction to connect the traffic coming to and from their territory;

•~~instability of international economies and governments;~~

•~~changes in laws and policies affecting trade and investment in other jurisdictions, including the United Kingdom’s exit from the European Union;~~

•~~exposure to varying legal standards, including data privacy, security and intellectual property protection in other jurisdictions;~~

•~~difficulties in obtaining required regulatory authorizations;~~

•~~difficulties in enforcing legal rights in other jurisdictions;~~

•~~local domestic ownership requirements;~~

•~~requirements that operational activities be performed in-country;~~

•~~changing and conflicting national and local regulatory requirements;~~

•~~foreign currency exchange rates and exchange controls; and~~

•ongoing compliance with the U.S. Foreign Corrupt Practices Act, U.S. export controls, anti-money laundering and trade sanction laws, and similar anti-corruption and international trade laws in other countries.

~~If any of these risks were to materialize, it could affect our ability to successfully compete and expand internationally.~~

Government organizations, foreign military and intelligence agencies, natural disaster aid associations, and event-driven response agencies use our commercial voice and data satellite communications services. Accordingly, we may experience reductions in usage due to changing global circumstances.

The prices for our products and services are typically denominated in U.S. dollars. Any appreciation of the U.S. dollar against other currencies, including as a result of the COVID-19 pandemic, will increase the cost of our products and services to our international customers and, as a result, may reduce the competitiveness of our international offerings and make it more difficult for us to grow internationally. Conversely, in some locations, primarily Russia, we conduct business in the local currency, and a depreciation of the local currency against the U.S. dollar will reduce the U.S. dollar value of our revenues from those countries. In recent years, Russia has experienced significant currency depreciation against the U.S. dollar.

~~Repurposing of satellite spectrum by adjacent operators of L-band spectrum for terrestrial services could interfere with our services.~~

In February 2003, the U.S. Federal Communications Commission, or FCC, adopted Ancillary Terrestrial Component, or ATC, rules that permit satellite service providers to establish terrestrial wireless networks in previously satellite-only bands, subject to certain requirements intended to ensure that terrestrial services remain ancillary to primary satellite operations and do not interfere with existing operators. In 2011, the FCC granted Ligado Networks (then known as Lightsquared), or Ligado, a waiver to convert its L-band satellite spectrum to terrestrial use, including a 10 MHz band close to the spectrum that we use for all of our services. That waiver was subsequently suspended in 2012 due to concerns about potential interference to GPS operations. Ligado sought another waiver in 2015 to modify the ATC of its L-band mobile satellite service network with a terrestrial-only proposal designed to address GPS industry concerns. In April 2020, the FCC announced that it had approved Ligado’s waiver request. We oppose this waiver out of concern for the interference that we believe Ligado’s proposed operations would cause to our operations in adjacent L-band spectrum.

Ligado’s implementation of these services would result in terrestrial use of L-band spectrum in the 1.6 GHz band, which we use to provide our services, and such implementation may affect the performance of our system for customers of our existing and future services. While the FCC’s decision to approve these services included conditions designed to protect other satellite services that use L-band spectrum from harmful interference, these conditions may prove insufficient, or the level of services provided may exceed those estimated by the FCC, in which case these or future terrestrial services permitted by the FCC could substantially interfere with our satellites and devices, which would adversely affect our services. If other countries permit similar terrestrial use of L-band spectrum in the 1.6 GHz band, the performance of our system may be subject to interference there as well.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

~~None.~~Issuer Purchases of Equity Securities


Period	(a) Total number of shares purchased	(b) Average price paid per share	(c) Total number of shares purchased as part of publicly announced plans or programs	(d) Maximum dollar value) of shares that may yet be purchased under the plans or programs
July 1-31	71,818	$36.73	71,818	$174.9 million
August 1-31	—	—	—	$174.9 million
September 1-30	—	—	—	$174.9 million
Total	71,818	$36.73	71,818	—

On February 10, 2021, we announced that our board of directors had approved the repurchase of up to $300.0 million of our common stock through December 31, 2022. All shares listed above were purchased under this share repurchase program in open market transactions.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

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ITEM 6. EXHIBITS.

The following list of exhibits includes exhibits submitted with this Form 10-Q as filed with the Securities and Exchange Commission.


Exhibit						Description
10.1†						Amendment No. 3 to Credit Agreement dated November 4, 2019, among Iridium Holdings LLC, Iridium Communications Inc., Iridium Satellite LLC, Various Lenders, and Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent, dated as of July 28, 2021, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 29, 2021.
31.1						Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to section 302 of The Sarbanes-Oxley Act of 2002.
31.2						Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to section 302 of The Sarbanes-Oxley Act of 2002.
32.1**						Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(b) and 15d-14(b) promulgated under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to section 906 of The Sarbanes-Oxley Act of 2002.
101						The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2020,~~2021, filed with the Securities and Exchange Commission on October ~~20, 2020,~~19, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 30, ~~2020~~2021 and December 31, ~~2019;~~ 2020; (ii) Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, ~~2020~~2021 and ~~2019;~~ 2020; (iii) Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, ~~2020~~2021 and ~~2019;~~ 2020; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2020~~2021 and ~~2019;~~2020; and (iv) Notes to Condensed Consolidated Financial Statements.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).






†			Exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K and will be furnished on a supplemental basis to the Securities and Exchange Commission upon request.
**			These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
**			~~Denotes management contract or compensatory plan or arrangement.~~

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			IRIDIUM COMMUNICATIONS INC.

			By:			/s/ Thomas J. Fitzpatrick
						Thomas J. Fitzpatrick
						Chief Financial Officer (as duly authorized officer and as principal financial officer of the registrant)

Date: October ~~20, 2020~~19, 2021

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