Executive Summary / Key Takeaways

• Globalstar is undergoing a significant transformation, leveraging its unique LEO satellite constellation, globally harmonized spectrum (L-S bands, Band 53/n53), and strategic partnerships, most notably with Apple (AAPL), to pivot from historical challenges towards a funded growth phase.
• The Updated Services Agreements with Apple provide substantial funding for new satellite constellations and ground infrastructure, forming the core of a new Extended MSS Network expected to double total revenue to $500 million in its first full year of service, with robust margins exceeding 54%.
• Beyond wholesale, Globalstar is expanding its addressable market by developing new products like a two-way Commercial IoT solution and commercializing its XCOM RAN technology for high-performance private wireless networks, aiming to diversify revenue streams and capture opportunities in mission-critical applications.
• While near-term adjusted EBITDA margins are expected to compress to around 50% in 2025 due to strategic investments in new product development and terrestrial technology, the long-term outlook points to significant margin expansion driven by operating leverage and contractual cash flows from the wholesale business.
• Key factors for investors to monitor include the successful deployment and operationalization of the new satellite constellations, the commercial traction and profitability of the XCOM RAN and new two-way IoT offerings, and the management of risks such as customer concentration and competitive pressures in the evolving satellite and terrestrial connectivity markets.

A New Orbit: Globalstar's Transformation from Niche Player to Connectivity Enabler

Globalstar, Inc. has long been a fixture in the mobile satellite services (MSS) industry, operating a constellation of Low Earth Orbit (LEO) satellites and associated ground infrastructure to provide connectivity in areas underserved by terrestrial networks. With a history spanning over 25 years, the company navigated early industry challenges, including a period of bankruptcy alongside its peer Iridium (IRDM), as they attempted to establish voice and data services outside cellular coverage with separate devices. This history underscores the inherent difficulties and evolving nature of the satellite communications market.

Today, Globalstar is charting a significantly different course, underpinned by strategic partnerships and a renewed focus on leveraging its foundational assets: its LEO satellite network, its globally harmonized L-S band spectrum, and its terrestrial Band 53/n53 spectrum. The company has strategically organized its business around several key categories, including wholesale satellite capacity, consumer retail services (SPOT, Duplex), commercial IoT, government services, XCOM RAN technology, and n53 spectrum licensing. While reporting as a single MSS segment, this multi-faceted approach reflects a deliberate strategy to capitalize on its unique position in the connectivity landscape.

Central to Globalstar's strategic pivot is its differentiated technology and spectrum assets. The LEO constellation, combined with a bent-pipe architecture, allows for ground-based processing, enabling faster and more cost-effective system maintenance and upgrades compared to satellite-based processing. This architecture facilitates the rapid deployment of new technologies and services. Crucially, Globalstar holds significant globally licensed L-S band spectrum, described as nearly four times that of any other direct-to-device (D2D) player, and its terrestrial Band 53/n53 spectrum (11.5 MHz in the U.S. and licenses in 12 countries totaling ~11.9 billion MHz-POPs). Management highlights this dedicated, licensed spectrum as a unique asset, particularly for mission-critical applications where guaranteed availability is essential, contrasting it with shared or unlicensed bands like CBRS which face potential interference or priority issues.

The company is actively developing and commercializing new technologies leveraging these assets. The XCOM RAN technology, acquired through a license agreement with Virewirx (formerly XCOM Labs), is a key differentiator for terrestrial applications. This coordinated multi-point radio system has demonstrated impressive performance, achieving speeds of 400 megabits per second using just 10 megahertz of licensed n53 spectrum in a contested environment like Mobile World Congress. This breakthrough is expected to enable advanced applications such as robotics, autonomous vehicles, and augmented reality, offering partners a versatile, fully licensed channel. The XCOM RAN system is anticipated to be available for commercial deployment in the second quarter of 2025, with management bullish on its potential profitability and meaningful contribution to future revenue, despite acknowledging the long sales cycles for large retail and government customers.

On the satellite side, Globalstar is expanding its product portfolio beyond traditional one-way tracking. A significant development is the launch of a two-way satellite Commercial IoT solution, which entered alpha stage testing in Q3 2024 and beta testing in Q1 2025, with commercial sales of a two-way reference design module expected in Q2 2025. This expands capabilities to include command and control functions, addressing rising demand for reliable, low-power, low-latency systems in areas like fleet tracking, asset monitoring, and precision agriculture. Management is also working on a new consumer SPOT device to counter competitive pressures in that market segment.

Performance Reflecting Strategic Shifts and Investment

Globalstar's recent financial performance reflects the impact of its evolving strategy and significant new partnerships. For the three months ended March 31, 2025, total revenue increased 6% year-over-year to $60.0 million, primarily driven by a robust 18% increase in wholesale capacity services revenue to $36.7 million. This growth was largely attributed to fees related to expanded services that commenced in March 2024 and revenue associated with higher network costs, which are reimbursed under the Updated Services Agreements. The wholesale customer accounted for 61% of total revenue in Q1 2025, up from 55% in Q1 2024, highlighting the increasing importance of this relationship.

In contrast, subscriber services revenue declined 10% in Q1 2025 to $19.4 million. Commercial IoT service revenue saw a modest 2% increase to $6.6 million, supported by higher subscriber activations, with further growth anticipated from the new two-way module. However, SPOT service revenue decreased 9% to $9.4 million due to competitive pressures and fewer subscribers, while Duplex service revenue fell 27% to $3.5 million as the company strategically discontinued device manufacturing to focus on other revenue streams. Government and other services revenue increased 17% to $1.0 million, benefiting from governmental service contracts and XCOM RAN-related services.

Operating expenses increased to $68.5 million in Q1 2025 from $61.2 million in Q1 2024. This rise was driven by higher cost of services (including expenses for the XCOM Support Services Agreement and new MSS product development) and increased marketing, general, and administrative costs (professional fees, personnel, XCOM support), partially offset by a decrease in stock-based compensation. A $7.0 million loss on disposal of an inoperable satellite also contributed to higher expenses. Despite the revenue growth, the increase in operating expenses, particularly investments in new initiatives, resulted in a loss from operations of $8.5 million in Q1 2025, compared to a loss of $4.7 million in Q1 2024.

Adjusted EBITDA, a key performance indicator for management, increased 3% to $30.4 million in Q1 2025, with a margin of approximately 51%. While this reflects continued profitability, management's full-year 2025 guidance anticipates an adjusted EBITDA margin of approximately 50%. This expected short-term compression from the 54% margin achieved in 2024 is explicitly attributed to strategic investments in the XCOM RAN terrestrial solution and the expansion of the MSS product portfolio.

Liquidity and capital resources have been significantly impacted by the Updated Services Agreements with Apple, which became effective in November 2024. These agreements provide substantial funding for the Extended MSS Network. As of March 31, 2025, cash and cash equivalents stood at $241.4 million, down from $391.2 million at the end of 2024, primarily due to capital expenditures for the new network. Net cash provided by operating activities was strong at $51.9 million in Q1 2025, a significant increase from $29.8 million in Q1 2024, driven by favorable working capital changes, including $22.5 million in accelerated service fees from the customer. However, net cash used in investing activities surged to $190.6 million in Q1 2025, up from $54.2 million in Q1 2024, largely due to $143.6 million in milestone payments to MDA for the Extended MSS Network satellites.

The Updated Services Agreements include an Infrastructure Prepayment of up to $1.1 billion (funded quarterly as needed) and $400 million from the sale of a 20% equity interest in Globalstar SPE (the entity owning the Extended MSS Network assets). These funds are designated to cover the construction and launch costs of the new satellites and expanded ground infrastructure. As of March 31, 2025, outstanding purchase orders for this project totaled $744.0 million. The agreements also facilitated the retirement of Globalstar's 2023 13% Notes via a $235.0 million payment from the customer (the 2024 Debt Repayment), which is expected to be repaid through service fee offsets over 32 quarters. Additional funding agreements (2023 Funding Agreement, 2021 Funding Agreement) are also being repaid through service fee offsets, structuring a significant portion of the company's debt around contractual customer payments.

Competitive Landscape and Strategic Positioning

Globalstar operates within a competitive landscape that includes other LEO satellite operators like Iridium Communications and companies focused on satellite IoT and tracking such as Orbcomm (ORBC), as well as broader satellite communication providers like Viasat (VIA). Indirect competition comes from terrestrial networks and emerging satellite broadband services like SpaceX's Starlink.

Globalstar differentiates itself primarily through its unique spectrum holdings and bent-pipe architecture, which management argues provides advantages in spectral efficiency and the ability to rapidly deploy new ground-based technologies. Its Band 53/n53 spectrum is highlighted as particularly valuable for mission-critical private wireless applications, offering guaranteed availability compared to shared bands. While Globalstar is considerably smaller than some direct competitors like Iridium and Viasat, it aims to compete aggressively on price and differentiate its solutions, particularly in niche markets like commercial IoT and emergency services (SPOT).

The wholesale capacity agreement with Apple provides a significant competitive advantage by securing a major customer and funding the buildout of a new, state-of-the-art constellation. This partnership not only provides a stable revenue base but also enhances the device ecosystem for Globalstar's Band 53/n53 spectrum. However, this reliance on a single large customer also represents a significant risk, as the loss of this customer would have a material adverse impact.

In the terrestrial space, the XCOM RAN technology positions Globalstar to compete in the growing private wireless market, offering performance enhancements that differentiate it from standard cellular or Wi-Fi solutions. Partnerships like the one with Liquid Intelligent Technologies provide channels to expand geographic reach, while the collaboration with Parsons Corporation (PSN) targets the high-value government and defense sectors for mission-critical communications.

Management acknowledges that the business model for providing full cellular services outside of traditional coverage areas via satellite is still "unproven," referencing past industry challenges. They emphasize focusing on areas that generate real profitability and revenue streams, leveraging their existing assets and relationships. While competitors like Iridium are also pursuing D2D strategies, Globalstar highlights its existing commercial scale and experience, as well as its dedicated spectrum, as key differentiators.

Outlook and Factors to Watch

Globalstar is reiterating its full year 2025 outlook, expecting revenue in the range of $260 million to $285 million and adjusted EBITDA margin of approximately 50%. This outlook reflects the ongoing strategic investments in XCOM RAN and new MSS products, which are expected to pressure margins in the short term but position the company for future growth.

The long-term outlook, tied to the deployment of the Extended MSS Network, is significantly more bullish. Management expects total revenue to double the 2024 amount, reaching $500 million, and adjusted EBITDA margins to exceed 54% during the first full year of service from this new constellation. This forecast is based on the contractual arrangements under the Updated Services Agreements and the anticipated operating leverage of the new network. Importantly, this long-term target excludes potential upside from large terrestrial spectrum and XCOM RAN deployments, suggesting these represent additional growth opportunities.

Key factors for investors to monitor include:

• Execution on New Constellations: The successful construction, launch (expected to begin in 2025 for the HIBLEO-4 replacement satellites), and operationalization of both the HIBLEO-4 replacement satellites and the Extended MSS Network satellites are critical for realizing the long-term revenue and margin targets.
• XCOM RAN Commercialization: Progress in securing significant commercial deployments for the XCOM RAN technology, particularly with the large retail customer and in the government sector, will be crucial for diversifying revenue and validating the potential of the terrestrial business.
• Two-Way IoT Adoption: The market reception and subscriber growth for the new two-way Commercial IoT solution will indicate the success of Globalstar's efforts to enhance its product portfolio and compete in this growing segment.
• Competitive Dynamics: The evolving strategies and technological advancements of competitors, particularly in the D2D and satellite IoT markets, could impact Globalstar's market share and pricing power.
• Regulatory Landscape: Continued clarity and favorable outcomes regarding spectrum use and licensing are essential for Globalstar to fully leverage its assets.

Conclusion

Globalstar is at a pivotal juncture, transitioning from a period of leveraging existing assets to one of significant investment and expansion, largely funded by a transformative wholesale partnership. The company's core investment thesis is increasingly centered on the successful execution of its multi-pronged strategy: capitalizing on the funded buildout of a new, higher-capacity satellite network to secure long-term wholesale revenue, while simultaneously developing and commercializing new satellite products and terrestrial technologies to capture growth in diverse markets.

While near-term profitability will be impacted by necessary investments, the long-term financial outlook, underpinned by contractual cash flows and the potential for operating leverage from the new infrastructure, appears promising. Globalstar's differentiated spectrum and bent-pipe architecture provide a foundation for competitive advantage. However, realizing the full potential of this new trajectory hinges on effective execution, successful commercialization of new offerings like two-way IoT and XCOM RAN, and navigating the dynamic competitive and regulatory environment. Investors should weigh the significant growth opportunities presented by the funded network expansion and new technology initiatives against the risks inherent in customer concentration and the challenges of competing in rapidly evolving connectivity markets.