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Good day, and thank you for standing. Welcome to the Globalstar Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Rebecca Clary, CFO. Please go ahead.

Thank you, operator, and good morning, everyone. Before we begin, please note that today's call contains forward-looking statements intended to fall within the safe harbor provided under the securities laws. Factors that could cause the results to differ materially are described in the Risk Factors section of Globalstar's SEC filings, including its most recent annual report on Form 10-K and its other SEC filings as well as today's earnings release.

Also note that management may reference EBITDA, adjusted EBITDA, free cash flow or adjusted free cash flow on this call, which are financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in the earnings release, which is available on our website.

Today, I will walk through our fourth quarter and full year 2025 financial results, then discuss liquidity and our 2026 guidance. Starting with the full year. Total revenue reached a record $273 million, a 9% increase over 2024 and in line with our guidance. This marks our fourth consecutive year of record revenue.

Service revenue was $257.3 million, up 8%, driven primarily by increased wholesale capacity services. Subscriber equipment revenue was $15.7 million, up 24%, reflecting a higher volume of commercial IoT device sales.

Turning to profitability. We generated income from operations of $7.4 million compared to a loss of $0.9 million in 2024. This improvement was due to higher revenue, as previously discussed, partially offset by increased operating expenses, including personnel costs to support our next-generation infrastructure build-out, continued investment in XCOM RAN development and higher legal and professional fees.

During the year, operating expenses benefited from $3.9 million in employee retention credits received under the CARES Act, which were allocated between cost of services and MG&A.

Net loss improved to $7.6 million from $63.2 million in 2024. This improvement was due primarily to the prior year, reflecting a nonrecurring, noncash loss on extinguishment of debt related to the paydown of the 2023 13% notes. We also benefited from favorable foreign currency remeasurement on intercompany balances and noncash gains on the quarterly mark-to-market adjustment of our derivative asset. These items were partially offset by higher noncash imputed interest related to the 2024 prepayment agreement.

Adjusted EBITDA reached a record $136.1 million, representing a 50% margin, in line with our guidance. This increase over 2024 reflects higher revenue, partially offset by higher operating expenses, primarily due to investment and growth opportunities. Specifically, while we continue to enhance and develop our XCOM RAN product and service offerings, we incur costs in advance of revenue.

Turning to Q4. Total revenue was $72 million, including $67.4 million of service revenue and $4.6 million from equipment sales. Service revenue increased 17% and equipment revenue increased 31% compared to Q4 2024. The revenue increase was driven primarily by wholesale capacity services, including performance bonuses earned in the quarter and additional service fees associated with network cost reimbursement.

We also saw contributions from growth in commercial IoT subscribers and device sales and revenue under our agreement with Parsons, partially offset by Duplex and SPOT subscriber churn and lower XCOM RAN sales.

Q4 loss from operations was $0.4 million, a meaningful improvement from a $4.2 million loss from operations in Q4 2024. I'd also note that cost of subscriber equipment sales included a $1.1 million charge related to tariffs on equipment imported and then reexported to foreign subsidiaries, where previously recorded duty drawbacks are no longer deemed probable of recovery.

Q4 net loss was $10.6 million compared to $50.2 million in the prior year, with the improvement largely attributable to the same noncash activity that impacted the full year period. Q4 adjusted EBITDA was $32.4 million, up 7% from the prior year's quarter.

Turning to the balance sheet. We ended the year with $447.5 million in cash and cash equivalents, up from $391.2 million at year-end 2024. Operating cash flows during 2025 were $621.7 million, which included $430.6 million received in connection with the infrastructure prepayment. Capital expenditures were $550.4 million, primarily related to our commitments under the updated services agreement for the deployment of the replacement satellites as well as the extended MSS network, which includes a new satellite constellation, expanded ground infrastructure and increased global MSS licensing.

Adjusted free cash flow for the year was $171.5 million, up from $131.9 million in 2024. 2025 benefited from $45 million in accelerated service payments and higher ongoing service fees, partially offset by increased operating costs.

Our principal debt balance was $410 million at year-end, down modestly from $417.5 million at the end of 2024, reflecting scheduled recoupments of $34.6 million under the 2021 funding agreement, partially offset by $27.1 million in new issuance under the 2023 funding agreement.

Looking ahead to 2026, we expect total revenue between $280 million and $305 million, with an adjusted EBITDA margin of approximately 50%. This outlook reflects our confidence in the continued growth trajectory of the business as we scale our next-generation infrastructure and expand our commercial opportunities.

With that, I'll turn the call over to Paul.

Thanks, Rebecca, and good morning, everyone. It's great to be with you today, and I appreciate everyone joining us for our fourth quarter and full year 2025 update.

2025 was a transformational year for Globalstar. We closed the year with record full year revenue of $273 million, representing a 9% increase year-over-year and delivered an adjusted EBITDA margin of 50%. These results reflect strong execution, operating discipline and continued progress across every major dimension of our business. Throughout the year, we focused on scaling the core business while laying the foundation for our next phase of growth, and we believe our financial performance clearly reflects that balanced approach.

From a strategic perspective, we made meaningful advances across product innovation, infrastructure expansion, regulatory progress and market diversification. One of the most important milestones during the year was the launch of two-way satellite IoT capabilities and the completion of the commercial rollout of our RM200M module. This represents a significant expansion of our IoT portfolio, moving beyond one-way monitoring to enable reliable command and control for enterprise, government and industrial customers.

Two-way IoT meaningfully expands our addressable market, strengthens our partner-led go-to-market model and enables higher-value use cases where resilience, reliability and confirmation are mission-critical. At the same time, we continue to accelerate diversification across end markets. During 2025, we secured early government and defense wins, expanded our presence in agriculture, wildfire response, industrial IoT and public safety and built momentum across multiple verticals. This diversification strategy is intentional and increasingly important as it reduces reliance on any single market while positioning Globalstar to serve a broad range of customers with complex connectivity requirements.

In the government and defense sector specifically, we achieved several important milestones. With our partner, Parsons, we completed a successful proof of concept, began customer trials and are expanding our relationship to include private 5G solutions for the federal market. We also completed and are continuing to invest in XCOM RAN-based 5G research to evaluate high-capacity private wireless architectures for defense applications.

Additionally, we are also pleased to highlight a recent development validating the strength of our broader connectivity platform, Virewirx, which was formerly XCOM Labs, was awarded a Phase II Small Business Innovation Research contract worth $1.9 million from the Office of the Under Secretary of War to develop an advanced 5G system for challenging RF environments.

As part of that effort, Virewirx selected Globalstar as a technology partner, leveraging our XCOM RAN Private 5G platform. This collaboration underscores the growing relevance of our technology beyond traditional satellite services and reflects the confidence in our ability to support mission-critical communication solutions. The initiatives reinforce the relevance of our architecture for defense and government use cases and demonstrate growing confidence in our ability to support high-priority mission requirements. Taken together, we believe these efforts are a meaningful expansion of our government and defense footprint, and we expect this area to become an increasingly important contributor to our business over time.

More broadly, we continue to see steady demand for our products and services, with new customers and emerging use cases coming online as we execute against a clearly defined go-to-market strategy focused on scalable long-term growth. That growth is underpinned by our continued investment in our infrastructure.

During the year, we made significant progress expanding our global ground station network across multiple continents. We believe these investments will strengthen capacity, improve redundancy, and enhance readiness for our next-generation services, including our C-3 constellation. In parallel, we advanced our ITU financial commitments, completing 50% of the investment we pledged. These efforts are foundational and are expected to prepare our network to support future satellite capacity and expanded service offerings.

We also continue to advance the XCOM RAN ecosystem. Boingo completed a proof-of-concept trial demonstrating the ability for XCOM RAN to support next-generation private 5G deployments, and we believe the integration of our platform into Boingo's private network portfolio highlights growing partner engagement and commercial relevance.

From a [ team performance standpoint ], momentum remains strong throughout the year. Average commercial IoT subscribers increased 6% year-over-year, while IoT hardware sales revenue grew 50% year-over-year. This growth reflects sustained demand across asset tracking, monitoring and safety applications as well as increasing adoption of higher-value solutions enabled by two-way connectivity. We believe these trends demonstrate both the durability of our IoT business and the upside potential as new capabilities continue to scale.

The progress we made in 2025 reflects disciplined execution across multiple fronts, from infrastructure and regulation to product innovation and market expansion. We're moving decisively from groundwork to growth, and we believe we have a strong foundation in place as we enter 2026.

Looking ahead, we remain confident in the strength of our strategic roadmap and our ability to execute against it. With key authorizations for C-3 and continued progress across our ground network, commercial momentum for two-way IoT capabilities and creating traction for XCOM RAN, we believe Globalstar is uniquely positioned to deliver differentiated connectivity solutions that combine satellite innovation, licensed spectrum and proprietary wireless technology.

Finally, there's never been a more exciting time to be in space and the broader connectivity ecosystem. As demand continues to grow for resilient, interoperable solutions that bridge satellite and terrestrial networks, we believe Globalstar is ideally positioned to benefit from the convergence.

One factor became increasingly clear last year, proprietary, globally harmonized spectrum matters. Our licensed MSS spectrum remains a core differentiator and a foundational asset as the market evolves. Whether it's traditional satellite communications, IoT, or D2D, our dedicated global space spectrum can enable flexibility, reliability and resiliency. The progress we achieved in 2025 reflects the talent and dedication of our global team, and we are energized by the momentum we are carrying into the year ahead.

Thank you again for joining us today and for your continued support of Globalstar. We look forward to updating you on our progress in quarters to come. And I'll now turn the call back to the operator for Q&A.

[Operator Instructions] And our first question comes from Edison Yu of Deutsche Bank.

Congratulations on the progress and apologies about any background noise. First, I wanted to bring up a topic to you, Paul. There's been a lot of excitement about data centers in space. I think it's probably something maybe you don't want to maybe tackle directly as a company, but just curious on your thoughts about the idea of doing this and potentially some maybe ancillary opportunities that could evolve from that.

Yes. I mean, obviously, we're very focused on direct to sell and IoT and not really on the data center side. And obviously, with all the demand for compute and AI and the difficulties people are having building data centers and power being an issue, I understand why people are excited about it. And certainly, it creates another reason for needing launch capacity, which there's going to be increasingly more launch capacity as new vendors come online. So I understand sort of how the industry got excited about it. I mean I think there's a lot of technical challenges to it. Obviously, maintenance is a lot harder. Upgrades a lot harder. Cooling and so forth are hard in space. So yes, but this is a great technical challenge for people and certainly an interesting thing. And if you're a science fiction fan, it kind of maps out to a lot of things people have talked about over the years and about what humanity will do in space. So it's exciting. But yes, it's definitely not our focus area.

Understood. Understood. And then I mean switching gears, what should we think about -- how should we think about the next milestones for C-3 constellation? Is there anything this year that you would call out that would be in particular of particular importance?

Yes. I mean we just did the critical design review. So that's a very important portion of making sure that the system design and holistically, the entire system is designed well. And we will continue to do a lot of work in terms of network, ground network build-out. Obviously, a lot of work going on, on the regulatory side and some discussions are advancing well. And regulators are excited about the capabilities that Globalstar has already brought to market either by ourselves or with our partners, a lot of SOS and these kind of emergency capabilities, and it's been demonstrated over and over.

So as we go to C-3, things only get better, more capabilities and so forth, more satellites in orbit. And so yes, we are continuing to just tick off, grind away. All these launches, it's not a high-level thing. It's really -- you got to be on top of every single little detail, and that's what the teams have been doing. And so it's -- yes, it's not one thing, it's sort of many, many things across the board to get done.

And last one for me, just on XCOM RAN, you made some progress since last quarter with Boingo. Can you just remind us or any kind of what specific customer KPIs were kind of validated or that you found to be very, very encouraging as part of this process? And does this give you more confidence in getting future pipeline for XCOM RAN?

Yes. So I mean, the kinds of things that people are obviously looking for the ability to get a lot of throughput in a dense environment. So that was the thing that we always touted about the technology in the beginning. But with Boingo, one of the other things that's really cool is that we can run the system over DAS, distributed antenna systems. So we can overlay that. And a DAS system generally just gives you more coverage, but not more capacity. But because we can process the data from each radio node or head, we can actually then increase the capacity in the system as well.

And then there's other things that we've demonstrated in the warehouse automation space in terms of ease of deployment and the fact that if you cluster users in a given area, it does not really take down the capacity of the whole system, it still shares the capacity of all the radio nodes that are there. So that kind of capabilities and those kind of KPIs are super important.

And then, obviously, just getting to commercial hardening, we've been [Technical Difficulty] testing the system under difficult circumstances, and we have been able to prove to very demanding customers that this system is commercially ready. And so in terms of the pipeline, [Technical Difficulty] we focused on warehouse automation, [Technical Difficulty] and now we are looking at what are the other use cases [Technical Difficulty] military use cases, and with Boingo, [Technical Difficulty] because we're talking about airports, stadiums, convention centers, places where there is high density of users and not to mention Boingo [Technical Difficulty] military bases as well. So I think the pipeline is definitely one we are excited by, some of the go-to-market partners that we have.

I know as we said [Technical Difficulty] looking at [Technical Difficulty]. So these pipelines are great. And then as we look out, there's going to be a lot of demand for connectivity, for things like physical AI and so forth and we're extended by those opportunities. We're in the warehouse automation space, a lot of robotics. So these [Technical Difficulty] important and certainly throughput and latency are going to be important aspects of that.

Our next question comes from Mike Crawford of B. Riley Securities.

Could you help walk through the utility of having both MSS and terrestrial 5G flexibility with your S-band spectrum and as well as perhaps maybe how we should think about any potential interference issues?

Yes. So obviously, we have talked about the fact that in the future, there is a lot of synergy between warehouse automation and the fact that you can track using IoT, satellite IoT anywhere you go and cover a complete supply chain and logistics. So those kinds of things are obviously super interesting, but it's also just the fact that because of [Technical Difficulty] that we have spectrum globally, and so for companies that are and partners that are looking to have some kind of terrestrial capability anywhere in the world, the fact that we have that spectrum [Technical Difficulty] we really believe that we can go get those opportunities to the extent that our partner is interested in that as well. So it is a nice synergy due to the global nature -- global, harmonized nature of it.

From an enterprise standpoint, I mean the idea is that if you are in cellular coverage or you're running a terrestrial network on that spectrum, if a device is not immune, [Technical Difficulty] which frequency bands are being used, which time is being used [Technical Difficulty] what system data the end user needs to use at a given time. Our satellite [Technical Difficulty] first version of the two-way modem does not have multimode capability, that is what we are working on right now. So that is going through certification so on and so forth, so they'll have multimode capability very quickly and be able to manage both and, of course, support terrestrial [Technical Difficulty] modes.

Okay. Paul, actually, it's a little difficult to hear you because your line is breaking up a little bit. I'll just ask one final question. But can Globalstar share any targeted launch windows for the replenishment satellites this year?

We have -- we're not updating. We're saying second quarter this year for the first launch and the second half for the second launch.

[Operator Instructions] And our next question comes from Greg Pendy of Clear Street.

Congrats on 2025. I just wanted to zero in on the IoT offering. Can you remind us when your services went live for two-way communications. I believe it was somewhat mid-quarter? And in addition, it looks like from your ARPU, you haven't changed pricing. Is that correct? And is that likely to continue going forward?

Sure. So what's going on, on the two-way system is that our customers are actually building out their solutions right now. So you won't see revenues from two-way IoT and any significant amount right now. And these -- the customers are in process of validating their end-to-end systems and so forth. So still a little bit more that the module went commercial, it's tested, it's hardened. It's in mass production now, and really, it's just -- we're waiting on the customers to finish their applications because these are built into some other device.

Okay. So is it fair to say that, that wasn't benefiting the subscribers too in the quarter because you had decent growth in...

Right. No, that's still one-way systems predominantly.

And our next question comes from Logan Lillehaug of Craig-Hallum.

Logan on for George this morning. You mentioned the contribution from Parsons in the quarter. I was hoping you could just talk kind of broadly about how the government pipeline has shaped up over the past few quarters and just kind of what you're seeing there? And kind of on that note, as we think about the longer-term guidance, how would you frame sort of what's considered in there from -- in terms of government contribution?

Okay. So the pipeline -- I mean, there's sort of 2 aspects to it. It's the things that we are already talking about, working about -- working with them on, and then there are other newer opportunities that we're still in the process of evaluating and [Technical Difficulty] focus on the near-term opportunities there. We haven't made any announcements about [Technical Difficulty] the idea that we will expand over other regions, and we get payment as other regions come online. And so that's the near-term. Then, as they shift their solution into the devices, then we get the revenue from [Technical Difficulty] predominantly today, it's the build-out of the network to support other regions of the world.

Got it. Just one other really quick one. Can you just remind us where you are on the upgrade of the ground infrastructure for the longer-term MSS network?

Yes. I mean it's -- so one good metric is we committed to the ITU of spending $2 billion on extending the network and we're halfway through that, and that includes money that went into the satellites as well. But it gives you a sense of how far along we are. That those build-outs are going quite well on the ground side. The company is pretty experienced in doing these kinds of things. We had to do it for the original -- launch of the original wholesale business for our customer. So we know how to do this pretty well. And we've been making continuous announcements as different countries come online. I mean you can see sort of a laundry list if you look through the press releases of all the places that are up and going now.

I'm showing no further questions at this time. I would like to turn the conference back to Paul Jacobs for closing remarks.

Well, thanks, everybody, again for joining us. It was a great year, a lot of stuff going on, and I really want to say thank you to our partners, our customers and really to all the employees at Globalstar, you guys have done an excellent job this year, really focused in on getting stuff done. And that obviously reflects [Technical Difficulty] results that our investors are looking for. So we will continue to execute and look forward to talking to you about our progress and our growth going forward. So thanks, everybody, again.

Thank you. We apologize if you experienced any technical issues today. This concludes today's conference call. Thank you for participating, and you may now disconnect.

Good day, and thank you for standing by. Welcome to the Globalstar Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded.

I would now like to hand the conference over to your first speaker today, Rebecca Clary, CFO. Please go ahead.

Thank you, operator, and good afternoon, everyone.

Before we begin, please note that today's call contains forward-looking statements intended to fall within the safe harbor provided under the securities laws. Factors that could cause the results to differ materially are described in the Risk Factors section of Globalstar's SEC filings, including its annual report on Form 10-K for the financial year ending 2024 and its other SEC filings as well as today's earnings release.

Also note that management may reference EBITDA, adjusted EBITDA, free cash flow or adjusted free cash flow on this call, which are financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in the earnings release, which is available on our website.

Today, I will walk you through our third quarter and year-to-date financial results, discuss our liquidity position and touch briefly on outlook. We delivered solid top line performance in the third quarter with total revenue of $73.8 million. This represents growth over the prior year's third quarter, reaching a record quarterly amount. This improvement was driven by two key areas: wholesale capacity services, and continued strength in Commercial IoT.

Our wholesale capacity services revenue increased primarily due to the timing of service fees associated with the reimbursement of network-related costs as we continue to expand and upgrade our global ground infrastructure.

Commercial IoT also continues to be a growth driver for us. IoT service revenue increased on the back of subscriber growth with average subscribers reaching 543,000, a 6% increase from the prior year's third quarter. This growth was again propelled by a record number of gross activations over the last 12 months.

We also saw particularly strong equipment sales performance. Equipment revenue from Commercial IoT device sales was up 60% compared to the prior year's third quarter. We expect this momentum to continue, particularly with the recent commercial availability of our two-way module, which we believe will drive additional demand.

Income from operations was $10.2 million in the quarter, up from $9.4 million in the prior year's third quarter. This improvement came despite higher operating expenses during the quarter due to planned increased investments in our business. Net income was lower than the prior year's third quarter, driven primarily by noncash items. Specifically, we recognized higher interest expense from noncash imputed interest related to the 2024 prepayment agreement. We also recorded net foreign currency losses from the remeasurement of intercompany balances. These items were partially offset by a noncash gain on the quarterly mark-to-market adjustment of our derivative assets.

Adjusted EBITDA for the third quarter reflects our strategic investment in growth opportunities, particularly XCOM. We continue to enhance and develop our XCOM RAN product and service offerings. And as we've discussed previously, we're incurring costs, primarily personnel related in advance of significant revenue contribution from this business. We believe this is a solid investment for the company, and we remain confident in the strategic value of this initiative, particularly based on recent developments towards commercialization.

Importantly, we continue to maintain healthy adjusted EBITDA margins, 51% in the third quarter and 52% year-to-date, even while making substantial investments in XCOM and next-generation products. This demonstrates the profitability of our core business and gives us confidence that as these new revenue streams scale, we'll see meaningful margin expansion.

For the year-to-date period, total revenue was $201 million, representing 6% growth compared to the same period last year. Service revenue was also up 6%, while equipment revenue increased 21%. The revenue and operating income story for the 9-month period largely mirrors what we saw in Q3.

Now let me turn to our balance sheet and cash flow. We ended the third quarter with cash and cash equivalents of $346.3 million. During the first 9 months of 2025, we generated operating cash flow of $445.8 million, a strong result that reflects $299.6 million received in connection with the Infrastructure Prepayment and also demonstrates the cash-generating capabilities of our business.

Capital expenditures were $485.9 million during the period, reflecting our commitments under our Updated Services Agreements for network expansion and upgrades, including ground infrastructure as well as satellite construction and launch costs. These investments are fundamental to our ability to deliver enhanced services and support our long-term growth.

Financing activities used $6.1 million in cash, primarily for debt recoupment under the 2021 Funding Agreement and preferred stock dividend payments, offset partially by $27.1 million in proceeds under the 2023 Funding Agreement, which will be used to fund CapEx for our replacement satellites.

Adjusted free cash flow for the 9-month period was $133.3 million, up significantly from $74.5 million in the prior year period. This increase reflects primarily higher customer payments, including $37.5 million in accelerated service payments received during 2025.

Total debt principal outstanding was $418.7 million at September 30, 2025, largely in line with the prior year-end and reflecting the financing activities previously discussed. Our financial position remains strong with solid cash generation, ample liquidity and strategic investments that position us for long-term growth. We're making deliberate investments in XCOM and next-generation products, and we're executing on our infrastructure commitments to support our wholesale services agreement. The fundamentals of our business are sound. We're growing revenue in strategic areas, generating strong operating cash flow and managing our cost structure while investing for the future.

Given our results to date and expectations for the balance of the year, we are reiterating our full year 2025 outlook and continue to expect revenue in the range of $260 million to $285 million and an adjusted EBITDA margin of approximately 50%.

With that, I'd like to turn the call over to Paul.

Thanks, Rebecca, and good afternoon, everyone. I'm pleased to be with you today and to discuss what has been a robust quarter for Globalstar. Across every major part of our business, we're executing our strategy and delivering measurable progress that strengthens our position in the market. It's really never been a more exciting time to be in the connectivity industry and for Globalstar in particular. My team and I have spent our careers driving many of the hottest trends in mobile communications and computing. And well, here we are again.

On the satellite side, we couldn't be more proud to have helped pioneer direct-to-device services and witnessed the life-saving impact of our network. There are now over 0.5 billion devices capable of utilizing our network, and we continue to invest and innovate to maintain our leading position. And on the mobile wireless network side, our XCOM RAN technology is proving its benefits both in performance for mission-critical applications and its cost effectiveness and ease of deployment.

As I've said previously, what drew us to Globalstar is the strength and differentiation of our globally harmonized spectrum, 3 decades of LEO constellation operations and deep engineering capability to deliver secure, reliable connectivity worldwide with the quality of service demanded by some of the world's most innovative technology leaders, something few others, if anyone, can claim.

Recent activity in the market underscores that value as a wide variety of players now better understand the need for dedicated mobile satellite service or MSS spectrum. Other participants in the direct-to-device solution space have spent tens of billions to acquire L- and S-band assets that, while useful, lack the global coverage, priority rights and harmonization with an established hardware ecosystem that defines our portfolio, one that has been deployed for decades by our Globalstar customers.

We believe this validates the global orientation of our strategy from inception, building the company around globally harmonized and licensed spectrum assets and a global LEO platform. We see extraordinary potential for disruptive innovation around our spectrum bands and are confident we are playing a defining role now and for some time to come. For many reasons, Globalstar holds the critical jigsaw pieces that complete the broader D2D puzzle. This moment is a strategic inflection point that could shape or reshape the future of a rapidly converging communications industry.

Before I turn to the other parts of our business, let me acknowledge that you may have seen recent media reports regarding a potential strategic transaction involving Globalstar. As a matter of policy, we do not comment on press articles, rumors or market speculation. And therefore, we will not be addressing this topic during today's call or the Q&A following our remarks.

Now let's turn to the business, and let me start with our infrastructure expansion and satellite road map for our C-3 constellation. We continue to make significant progress in the construction of our extended MSS network. In addition to development of our third-generation C-3 satellite system, this effort includes the build-out of our global ground network with new infrastructure across multiple continents, including Europe, Asia and North America. This global ground expansion is continuing, including up to 90 new tracking antennas supporting Globalstar's C-3 satellite system, representing a significant investment in the functionality, capacity and future-proofing of our network. This significantly underscores our mission and strategy to support resilient and robust connectivity that not only serves the needs of today, but also prepares for those of tomorrow.

And to that end, our HIBLEO XL-1 filing is designed to expand operational frequency, which is a foundational step towards our planned next satellite era. This system will introduce new satellites, orbital shells and frequency bands to enable greater capacity and throughput. It's an important step forward that aligns with the other network investments we are making today. And while we are not currently planning significant investment in our own mega constellation, this filing gives us the future option to work with partners supporting our constellation -- sorry, our spectrum on a mega constellation that is coordinated with our existing and planned constellations.

Let's turn to the government sector. We continue to see strong traction following our wins earlier this year. We've made meaningful progress with Parsons Corporation, transitioning from proof of concept to commercial engagement that leverages our satellite network within their advanced software-defined communications architecture. This partnership highlights Globalstar's ability to deliver resilient, low latency and mission-critical connectivity for defense and public safety applications. We continue to expect government-related opportunities to represent an expanding source of revenue in 2026 and beyond.

Our Commercial IoT subscriber growth is strong and accelerating with strong MSS device sales supported by growing adoption in safety, logistics and infrastructure markets. Gross activations are up 40% over the same quarter last year, and total units are up 100% on a quarterly basis compared to the prior year. That doesn't even include the new two-way module, which is now being integrated into our customers' finished products. These sales, combined with increased enterprise demand are contributing to a balanced and diversified revenue profile.

Another milestone this quarter is the global availability of our two-way Commercial IoT module, the RM200M. Already receiving certifications in key regions, the RM200M is now officially available for worldwide deployment. Leveraging Globalstar's licensed L&S band spectrum and second-generation satellites, the module delivers reliable two-way connectivity, reducing friction when deploying across numerous geographic regions.

On the private wireless side, momentum continues to build for XCOM RAN. During the quarter, we received an initial order from a new XCOM RAN customer, advancing their next-generation robotics application and a significant expansion of this program.

XCOM RAN is positioned to play a critical part in ensuring quality of service in warehouse and factory automation, where reliable and secure connectivity is at the core of a robotic future in these environments. We believe we can demonstrate not only significantly differentiated performance of our 5G-based systems over industrial Wi-Fi, but also improved economics for large area applications. And we are addressing new applications outside of warehouse automation, which we will believe -- which we believe will grow our addressable market significantly.

Stepping back, this has been a year of meaningful acceleration for Globalstar. We've expanded our infrastructure, strengthened our product lineup, deepened our government relationships and enhanced the commercial viability and visibility of our technology portfolio. These accomplishments have not gone unnoticed. Increased partner engagement and growing investor confidence reflect a renewed understanding of Globalstar's strong market position, combining spectrum ownership, global infrastructure, product lineup and operational expertise that few others can match. Overall, this has contributed to positioning the company in the market as a high-value strategic asset in the rapidly converging satellite and terrestrial communications ecosystem. While we remain focused on executing our plan, this recognition underscores the scalability and relevance of what we've built and what's still ahead.

As we look to the close of the year, our focus remains on execution, including completing key infrastructure milestones, expanding enterprise and government deployments and continuing to drive adoption of our new technologies across both satellite and terrestrial domains. We're proud of what our team has accomplished and energized by the growing momentum we see across all segments of our business.

Thank you for your continued support. I look forward to sharing more about our progress in the quarters to come. With that, I will turn the call back to the operator.

[Operator Instructions] Our first call comes from the line of Mike Crawford at B. Riley Securities.

Regarding your C-3 constellation, correct me if I'm wrong, if this is not completely synonymous with your extended MSS network. But can the ground segment improvements that you're putting in at these gateways be used by your existing constellation that's being refreshed?

Yes. So we put in antennas that are specific for the [indiscernible] system -- or sorry, the C-3 system. And yes, so we have the existing satellite antennas for the existing constellation already.

Okay. And I believe it's going to be two batch launches for -- to replenish that constellation. Is there any update on when the first of those might occur?

We have not given any new indications on when the launches are going to occur.

And just to add to that, Mike, for the Extended MSS network, as you know, we haven't provided timing. For the replacement satellites, which you might be referring to that are being launched in two batches, we're working with SpaceX to confirm an updated launch window in the first half of 2026.

Okay. And then maybe just stepping back, Paul, to Globalstar's global harmonized spectrum holdings. Can you just maybe define those again in terms of megahertz POPs or some related measurements or what you have in the U.S. as well as where you have landing rights internationally?

I mean it's essentially global coverage. So on the S-band, we have 16.5 megahertz. On the L-band, we have almost 9. On the C-band, we have over 300 megahertz. So let's see there are 7 billion people on earth. So...

Okay. I can do that math. And then on the C-band, I believe there remains 59 megahertz slot that might not necessarily be required to operate your satellite networks given improvements in technology over the past 20 years?

No. It's -- there's actually -- so if you look at the C-band spectrum, it's a large percentage of it is covered by Wi-Fi, so unlicensed band use. And then there's a chunk at the lower end that is not covered by that. And all of the spectrum is being used as feeder link because the way the existing satellites work is that chunks of the feeder spectrum are allocated to reproducing the entire spectrum band on the L&S band side. per beam on the satellite.

So it is actually all used for the satellite system. It's a question of if we look at it for terrestrial use, there's a chunk that hasn't been allocated for Wi-Fi use. Now with that said, even in Wi-Fi bands, the team that came along from XCOM Labs is the same team that built the unlicensed band cellular technologies. And so it is possible that we can look at those bands for hosting unlicensed band NR, for example, 5G.

Okay. And then final question for me just goes back to XCOM RAN. So in the test applications that you've been doing for quite some time now. What is the latest data that you're seeing in terms of increased performance and reliability versus industrial Wi-Fi?

Yes. So it works much better than industrial Wi-Fi because we don't have handoff regions and Wi-Fi wasn't really built for handoffs anyways. We also have ease of deployment. We have this clustering where if the robots cluster under one of the radios, you don't just depend on the capacity of that radio, actually depend -- you actually get the capacity of the entire system.

So in terms of performance benefits, it's dramatically better. It's more reliable, more mission-critical. But what we've also been finding is that in these large area deployments, we're also economically better. So the economics of rolling out our system relative to an industrial Wi-Fi is much better. And part of that comes from the fact that we have now built our own radio units and significantly cost reduce those as well as being able to provide more frequency bands on a faster basis when those are requested by our customers.

Our next call comes from the line of Greg Pendy at Clear Street.

Just on the accelerating IoT, can you just add any color on what the acceleration is? Do you think you're gaining share in the space? Or do you think the market was just seeing outsized healthy growth? And how should we think about pricing with the two-way capabilities on a forward basis?

Okay. So we -- there are definitely new applications that we're able to address. I think that there is also the fact that when we look at some of the competitors in the area who have been in this area for a long time, there's definitely interest of our customer base to have diversity of supply or change suppliers. So that's definitely driving part of it. So some of it's taking share, some of it's new, it's growing the pie.

And then the other -- on the two-way pricing, yes, I mean, it's a new set of capabilities, and there is market pricing out there for two-way systems. Of course, we expect to be aggressive and take share with the two-way system.

And the growth so far, though -- if I just want to reiterate, the growth so far is not on the two-way system yet. The two-way system is still -- we brought out the module. We betted it with people. They then started building it into their products, and that takes a little bit of time for them to get up to speed and get their products rolled out. So the growth that you're seeing is actually the existing -- of the existing systems, which is really quite impressive.

Got it. That's very helpful. And then just wholesale looks pretty strong relative to what we were thinking. Just wondering, you mentioned there's 0.5 billion devices. So just trying to understand the underlying growth. Is it just a growing number of enabled devices? Are you seeing usage? Is it -- can you just kind of -- higher usage from those who are already enabled? Just trying to understand why that...

Right. So I can't really comment on the customers of our customer. So let me not do that. But it's -- the number of devices that are out there is just talking about the growth of the number of devices that actually have the satellite modem and radio capabilities in it. So that -- those set of devices continues to grow quite rapidly.

[Operator Instructions] Our next question comes from the line of George Sutton of Craig-Hallum Capital Group.

This is Logan on for George. You guys have been kind of talking about the XCOM RAN investment throughout the year, and I think you've been expanding the sales force a bit. And it certainly feels like you have a lot of opportunities in front of that asset. I was wondering if you could just talk a little bit about sort of how should investors think about the return profile or even the profitability of those assets over the next few years?

Okay. So I mean, the margins are good in that business. We're right at the beginning of the sort of the commercial adoption cycle. And so we expect to see growth not just from the existing customer that we had been focused on in the past, but from a new set of customers and also into a new set of areas. And we've put up various numbers on sort of total addressable market. And so there's a significant addressable market going forward.

And what we're seeing also is that companies that have been in the 5G private network space that didn't have any differentiated technology are starting to feel a lot of pressure. We've seen layoffs and things like that. And we have not just differentiated technology, we have better economics. And of course, we have the dedicated spectrum for mission-critical applications, which, by the way, that hasn't even really started to come into play yet because we were focused on CBRS.

So a lot of areas of growth. We don't expect to see a lot of revenue in this fiscal year. But as we look forward into the next year, we expect to see growth there. And then like I said, the margins are good. So we should be in a good place to build both revenues and profitability off of that business.

Got it. And then next one for me. I was kind of hoping you could talk a little bit about early traction with the two-way module, just sort of the feedback you're getting, any use cases that you want to call out that are kind of standing out and just sort of maybe your sense on adoption here over the next few years.

Yes. I can't really give you a lot on the customers because they're all in the process of building their products and want to make their own announcements. But it is a lot of the similar industries that we've been in the past, but with new applications and new sets of customers. And there was a set of customers that weren't very interested in talking to us when we were only one way, and now we are able to -- I think we'll take share in a number of markets with the two-way system. And then as we look forward to making the system also multimode with cellular capability as well, that will also satisfy demands of a certain customer base.

So yes, it's not like there is some brand-new area that I'd say, okay, this we can address now that we didn't, but we certainly have a set of customers that are talking to us that wouldn't have talked to us in the past with a one-way-only system.

[Operator Instructions] Our next call comes from the line of Michael Ridgeway.

Paul, a question first on the XCOM RAN warehouse implementation. Is this related to the early work that you have been doing and has been ongoing since you alluded to a large retail testing implementation?

Yes. So we are now in a position where I think we can address a larger customer set and also not just the original application that we were looking at of the sort of micro fulfillment concept, but larger scale operations as well. And then we're going beyond just the warehouse automation space. We're talking to companies that do things like build out high-density environments, convention centers, airports, stadiums, that kind of hotspots, that kind of stuff.

And so as time has gone on and we've been able to invest in the system, it's got a more horizontal feature set as opposed to just super focused on the warehouse automation space. So all these things provide us with growth opportunities.

So is that to say then that ultimately, there's more of a unified connectivity outside the warehouse as well using that as an example?

Yes, for sure. Yes, that's where we're...

And then can you help us understand the revenue model behind this? Obviously, you've got an equipment side and then there's the spectrum side of this. Is there any ongoing service associated with those implementations? And how should we think about the profitability over time as clients grow, as new customers grow in that space?

Yes. So there is those things that you said, but also there is an annuity component of software license because the main computation is done on commercial off-the-shelf servers. And so we license the software into those servers as well.

And then the other thing that's happened is that over time, we've been able to build out the entire stack. So we look forward to the ability to provide Network as a Service. And that obviously is very much a nice annuity kind of business. So that hasn't happened yet. That's the thing that we're sort of looking to in the medium term, but we get the idea that we don't want to just sell something and then walk away.

All right. So from a margin perspective, we could expect a delay on margin accretion as installs happen over the last several quarters?

Margin accretion to the overall company?

To the overall business. From that business...

Yes, yes. Well, this business right now is still in an investment phase, so for sure. But on a gross margin basis, gross margins are solid here, and we have differentiated technology, and we put the effort into driving the cost -- driving down the cost curve. So yes, so margins should be good. And then to the extent that you get an embedded base, I think this might be where you were going, embedded base of kind of annuity revenue, then obviously, that's very high margin.

That's super helpful. Just last question, talking about this. We've come through 10 years where we haven't seen any market transactions in MSS and now we've gotten a few and another one announced this morning. Can you maybe spend a little bit more time, you did at the beginning of the call, but just differentiate what Globalstar has and the utility and the global harmonization from a relative value perspective from what we've seen in the market, if you could?

Yes. So I don't want to talk about transactions or speculation, but I will talk about our competitive positioning, which is we have spectrum, which is globally harmonized, meaning that it is not just for a small number of markets. You don't have to worry as a satellite operator, whether you're crossing boundaries, whether there are country boundaries or just inter system, interoperator boundaries. The spectrum covers the entire earth. And yes, there might be a few countries here and there, we didn't get landing rights. But for the most part, the world is covered by our spectrum and system.

So that is differentiated. Some of the transactions that have been seen in the market have been focused on particular geographies. And in some cases, I would say there's questions about whether some of the spectrum that -- whether it will continue to be available post license reauthorization processes of some of the spectrum that's transacted. So that -- we're watching that. We've put our hat in the ring for some of these spectrum assets in case they are reallocated, and we certainly can put them to good use, and they are also covered by our HIBLEO XL-1 filing.

Great. That's helpful. One last question on the C-3 ground station build-out. You've mentioned 90 new tracking antennas. Does that -- where does that put you in terms of the total build-out plan in percentage terms?

That's the build-out. I mean the 90-plus is the new set of antennas for the...

Okay. And how many of those are actually deployed...

Some not -- I mean, we're in the process of rolling out. I don't think we've given an exact number to date. But you Rebecca, if we have said anything more precise than that, please speak up.

No, we haven't. We've talked about the sites where we're currently in construction, which is around now close to 30. So making really good progress and definitely on track with those milestone dates in the various agreements, both regulatory ground infrastructure build-out and satellite construction.

At this time, I'm showing no further questions. I would like to turn the call back over to Paul Jacobs for closing remarks.

Well, I think it has been a great quarter, and we're really firing on all cylinders, and we're excited by, as I said, the fact that we focused on building a global company and a global spectrum position, global set of customers, global infrastructure from the very beginning. And that is showing to be a particularly valuable place to be in this change in the industry. And I do, as I said earlier, see this as a strategic inflection point. And so being in that part of the industry again and with the ability to play in a new inflection point, it's extremely exciting and should be -- we expect it should be good for all of us and our supporters and investors.

So thank you very much for being there for us, and we look forward to updating you more into the future.

Thank you very much. This concludes today's conference. You may now disconnect.