Iridium Communications (IRDM) reported third-quarter 2026 earnings per share of $0.98 against an analyst estimate of $0.3356, on revenue of $245.7M, which was 8.3% higher than a year earlier. The headline beat is real, but net income ran well above operating income, and operating margin was lower than a year ago. A Fool.com headline from Oct. 24, 2026 also says Rocket Lab is buying Iridium, which could matter more for the stock than the quarter if confirmed.
Key facts
- Oct. 20, 2026: Iridium reported diluted EPS of $0.98 versus an estimate of $0.3356, a difference of +$0.64.
- Third quarter ended Sept. 30, 2026: revenue was $245.7M versus an estimate of $236.3M, a difference of +$9.4M (4.0%).
- Third quarter ended Sept. 30, 2026: net income was $106.9M, up 187.9% from the year-ago quarter. Operating income was $31.6M, versus $70.1M a year earlier.
- As of Oct. 23, 2026: the shares traded at $44.40, up 1.39%. The 52-week range is $15.65 to $57.18.
- As of Sept. 30, 2026: total debt was $2.14B and cash and short-term investments were $97.9M.
- Next earnings date: Feb. 11, 2027, with an EPS estimate of $0.25 and a revenue estimate of $239.7M.
What happened
The theme: a reported takeover frames the quarter. Iridium runs a network of low-orbit satellites that carries voice, data and tracking, and it is designed to work where cell towers do not reach. The Fool.com headline says Rocket Lab, a launch and spacecraft company, is buying Iridium. We could not confirm the deal's terms from the data available to us, so treat it as reported and not yet confirmed. Shareholders who follow this stock should read the quarter with that context in mind.
The quarter itself. Revenue of $245.7M beat the $236.3M estimate. By segment, Service revenue was $187.5M, Engineering and Support Services revenue was $39.2M, and Subscription and Circulation revenue was $19.0M. Service is by far the largest piece, so the revenue story is mostly about the subscription and usage side of the network, not one-time engineering work.
The EPS beat needs a closer look. Net income of $106.9M was far above operating income of $31.6M. Operating income is profit from running the business, before interest, taxes and non-operating items. A gap this size usually points to a non-operating gain or a tax item. The data we have does not say which, so we cannot tell you how much of the $0.98 will repeat. The EPS "beat" of 192.0% is therefore a weaker signal than the revenue beat. Also, the Q3 estimate may not have captured whatever lifted net income.
Five-quarter trend. Operating margin (the share of revenue left after operating costs) has fallen each quarter:
| Quarter | Revenue | Operating margin | Net income | |---|---|---|---| | Q3 FY2025 (ended Sept. 30, 2025) | $226.9M | 30.9% | $37.1M | | Q4 FY2025 (ended Dec. 31, 2025) | $212.9M | 25.9% | $24.9M | | Q1 FY2026 (ended Mar. 31, 2026) | $219.1M | 23.2% | $21.6M | | Q2 FY2026 (ended June 30, 2026) | $225.2M | 15.1% | $9.7M | | Q3 FY2026 (ended Sept. 30, 2026) | $245.7M | 12.9% | $106.9M |
Revenue has recovered from its low in the fourth quarter of 2025, but operating margin has dropped from 30.9% to 12.9%. Gross margin was 70.6% in Q3 FY2026, versus 77.2% in the prior quarter, so some of the squeeze is in direct costs. The year-ago gross margin figure of 48.7% looks like it was measured differently, so we do not rely on it. Our data does not include management's explanation for the margin trend, so we will not guess at it.
Cash flow. Free cash flow (cash from operations minus capital spending) was $68.5M in Q3 FY2026. The earlier quarters were $92.3M in Q2 FY2026, $41.7M in Q1 FY2026, $75.1M in Q4 FY2025 and $79.2M in Q3 FY2025. Cash generation is lumpy but still solid, and it is steadier than the swings in net income. The company paid dividends of $16.2M in Q3 FY2026 and made no buybacks that quarter. It also made no buybacks in Q1 or Q2 FY2026.
Why it matters for investors
Valuation versus peers. On trailing 12-month figures Iridium trades at a P/E (price relative to per-share earnings) of 29.02, price/sales of 5.21, EV/EBITDA of 13.57 and price/free cash flow of 16.95. Its net margin is 18.1% and its dividend yield is 1.4%. The satellite peers we track look very different:
| Company | Market cap | P/E | Net margin | |---|---|---|---| | Iridium (IRDM) | $4.71B | 29.02 | 18.1% | | Globalstar (GSAT) | $10.69B | -161.01 | -21.3% | | Gogo (GOGO) | $294.1M | -328.79 | -0.1% | | Telesat (TSAT) | $642.8M | -2.41 | -102.9% | | NextPlat (NXPL) | $23.1M | -2.23 | -20.4% |
Iridium is the only profitable company in this group on a net-margin basis. A negative P/E means a company is losing money, so those ratios are not directly comparable. The comparison shows that Iridium is the steady earner in a group of money-losing peers, not that it is cheap.
Analysts. Of 14 ratings, 6 are buy, 5 are hold and 3 are sell, for a consensus of "Buy". The consensus price target averages $51.33, with a median of $54.00, a high of $60.00 and a low of $40.00. The share price of $44.40 sits inside that range. If a takeover is pending, targets and the share price may now follow the deal terms more than the fundamentals. Analyst estimates for later periods come from a single analyst each, so they are thin: revenue of $246.8M and EPS of $0.16 for the period ending March 30, 2028. FMP's discounted cash flow model gives $101.41 per share, but that kind of model is very sensitive to its inputs and we treat it as a rough reference only.
Our MoonshotScore. Stock Expert AI's MoonshotScore V2 for Iridium is 71.4, rated Strong. Compared with other stocks in its sector, the pillars are growth 92, momentum 90, quality 78, safety 36 and valuation 34. Growth and momentum are the strong areas, and the quality pillar is also solid. The two weak pillars, safety and valuation, match the balance sheet and multiples described here.
What could go wrong.
- Debt. Total debt of $2.14B and net debt of $2.04B are large next to $577.0M in shareholders' equity, giving debt/equity of 3.71. The Altman Z-score, a bankruptcy-risk gauge, is 1.57, which is a weak reading, and the Piotroski score, a 0-9 measure of financial health, is 6.
- Margins. Operating margin has fallen for four straight quarters.
- Earnings quality. Net income was well above operating income this quarter, so the headline EPS may not be repeatable.
- Deal uncertainty. A reported acquisition may be subject to approvals or changes in terms.
- Insiders. Among the 30 most recent insider filings, those from the last 90 days show 0 open-market purchases and 11 sales. Insider sales are common and not proof of anything, but there were no insider buys in that window.
What to watch next
- Deal details. Check whether Iridium and Rocket Lab confirm terms, timing and approvals in official filings.
- Operating margin. Watch whether it stabilizes after four quarterly declines.
- Non-operating items. The next filings should clarify what lifted net income in the third quarter.
- Feb. 11, 2027 earnings. Analysts expect EPS of $0.25 and revenue of $239.7M.
- Debt and cash. Look for any change in debt, the dividend or buyback activity.
Frequently asked questions
Q: Did Iridium beat earnings in the third quarter of 2026?
Yes. On Oct. 20, 2026, Iridium reported diluted EPS of $0.98 versus an estimate of $0.3356, and revenue of $245.7M versus an estimate of $236.3M, for the quarter ended Sept. 30, 2026. Net income of $106.9M was much higher than operating income of $31.6M, so the EPS beat likely includes items outside normal operations.
Q: Is Rocket Lab buying Iridium?
A Fool.com headline dated Oct. 24, 2026 says so. The data we used does not include the terms, price or closing conditions, so we cannot confirm details. Check the companies' official announcements and regulatory filings before drawing conclusions.
Q: Is Iridium stock expensive compared with its peers?
On trailing 12-month numbers, Iridium has a P/E of 29.02 and price/sales of 5.21. Its peers Globalstar, Gogo, Telesat and NextPlat all have negative P/E ratios because they lose money, so a straight comparison is not possible. Analysts' price targets average $51.33 against a $44.40 share price as of Oct. 23, 2026. This is information, not advice, and any pending deal could change how the stock trades.
This is educational content, not investment advice. Past performance does not guarantee future results.