Globalstar, Inc. Q4 FY2024 Earnings Call

Good day, and thank you for standing by. Welcome to the Globalstar Fourth Quarter 2024 Earnings Conference Call. Please be advised that today's conference 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 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 or adjusted EBITDA 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. I'll begin today by sharing our fourth quarter and full year 2024 results. I'll then turn it over to Paul, who will cover key business updates. Before I get into the financials, I am pleased to share two strategic actions we have recently completed. In an effort to enhance our stock's liquidity and marketability, we successfully completed our uplifting to the NASDAQ Global Select Market earlier this month. This milestone represents a natural evolution for Globalstar and aligns with our strategy to increase our visibility within the investment community. In connection with our transfer to NASDAQ, we implemented our planned 1 for 15 reverse stock split, which serves multiple strategic purposes. This action realigns our outstanding shares to more normalized levels relative to our peers and optimizes our trading fundamentals through improved liquidity. Importantly, our post-split shares now meet institutional minimum stock price requirements, potentially broadening our investor base. For modeling purposes, our current common shares outstanding are approximately $126.4 million. Tomorrow, we plan to file new and amended registration statements to, among other things, reflect the impact of this split. You can also find more information related to the split in our February 7, 8-K filing. Now turning to our results, beginning with the fourth quarter. Total revenue increased 17% to $61.2 million compared to the prior year period of $52.4 million. Service revenue increased 18%, driven primarily by wholesale capacity revenue. Additionally, commercial IoT increased 8% during the quarter due to an increase in both average subscribers and ARPU. We are pleased to see continued adoption of our IoT services. Fourth quarter adjusted EBITDA increased 21% to $30.4 million compared to the prior year period of $25.1 million. Adjusted EBITDA margin also increased from the prior year period due to higher revenue of $8.8 million, which was offset partially by an increase in operating expenses of $3.5 million. Turning to our full year results. Total revenue for the year increased 12%, reaching a record $250.3 million and exceeding the top end of our guidance range. Service revenue increased 16% year-over-year, driven primarily by wholesale capacity and our second full year of providing service under this contract. Additionally, we saw record annual service revenue from our commercial IoT business in 2024, which is a testament to the growth that we are seeing with existing and new customers due to the wider variety of new use cases that have expanded our addressable market. As Paul will discuss, we look forward to the expansion of our product offerings this year with the long-awaited launch of a QA device as announced yesterday. In 2024, we achieved record annual adjusted EBITDA of $135.3 million, a 16% increase year-over-year. From a margin perspective, adjusted EBITDA margin was 54%, up 190 basis points from 52% in 2023. Moving to our balance sheet. We ended the year with $391.2 million of cash on hand. Cash costs from 2024 were impacted significantly by the updated services agreements. Since the closing of these agreements in November of 2024 through the end of the year, the company has received a total investment from its customer of $913 million, including cash payments totaling $689 million and certain in-kind asset contributions. The cash payments included the proceeds from the sale of 20% equity in the Globalstar SPE subsidiary, the proceeds from the current debt repayment used to pay off the 2023 13% notes and certain advanced service payments under the infrastructure prepayment. A portion of the cash payments received was used to fund capital expenditures for the extended MSS network. The remaining amount of approximately $320 million was held in cash and cash equivalents as of December 31, 2024, and will be used in 2025 to fund infrastructure for the extended MSS network. We expect additional advanced service payments under the infrastructure prepayment to continue through the duration of the construction and launch of this new network. This activity is more fully disclosed in our November 1 and 7 8-K filings and in our 10-K, which we plan to file with the SEC tomorrow after the markets close. Now turning to our guidance, which we announced at our Analyst and Investor Day on December 12. For 2025, we are expecting revenue to be between $260 million and $285 million, representing 9% year-over-year growth at the midpoint and an adjusted EBITDA margin around 50%. Our forecasted adjusted EBITDA margin reflects short-term compression driven by strategic investments to support long-term growth initiatives, primarily relating to further development of our XCOM RAN terrestrial solution and expansion of our MSS product portfolio. During the Analyst Day, we also reiterated a long-range forecast, reflecting the updated services agreements. During the first full year of service provided over the extended MSS network, we expect total revenue to double the 2024 amount, reaching $500 million and to generate robust margins in excess of 54%. This forecast excludes certain key growth opportunities that are too difficult to forecast with precision, such as large terrestrial spectrum and XCOM RAN deployments. However, this in no way means we are not confident in our future contributions. I want to emphasize that these targets factor in our expectations regarding market position, growth drivers, and operational capabilities. In just over two years, our wholesale capacity partnership has transformed Globalstar with a series of significant planned network investments. These investments provide us with a foundation to deliver sustainable increased earnings while we position the company for future growth. We believe we have the right strategy and execution capability to deliver on these commitments while creating sustainable long-term shareholder value. Additionally, this outlook underscores several key themes. First, our ability to consistently deliver strong top-line growth while maintaining healthy margins. Second, our disciplined approach to balancing growth investments; and finally, our confidence in the expanding market opportunities ahead of us. With that, I'd like to turn the call over to Paul.

Thanks, Rebecca. It's great to be on the call with all of you today. I'm very pleased with our strong performance in 2024 and the recent progress we've made on a commercial and operational basis. So I'll start off with a high-level review and then update on those topics before providing an overview of our expectations for 2025. First, I'd just say it's great to be back at NASDAQ a few weeks ago to ring the opening bell, and it really signifies a new stage for Globalstar. I've obviously been there and experienced many milestones at NASDAQ, as shown by pictures on the walls and some innovations that we've been involved in developing and that's now in the museum, and we added a Globalstar satellite model into the NASDAQ museum. This event really marked another moment that our team can be proud of. It's clear to me that Globalstar is very well-positioned in both the satellite and terrestrial connectivity markets, both of which present significant growth opportunities for the company. We've invested billions of dollars in the satellite business, and we're happy to say that hundreds of millions of devices can connect to our satellite, and that number continues to grow both for our wholesale and our direct businesses. Until now, Globalstar's 500,000-plus deployed active units have only been able to support one-way tracking and telemetry applications. So we could do tracking around the world very well but lacked the ability to communicate back to the device for command applications. I'm proud that our refocused product development team, whose hard work under new leadership, has enabled us to deliver the full two-way satellite commercial IoT solutions. We have an extremely low-cost structure, which leverages the investments in our wholesale business. With our time-tested uplink and our new state-of-the-art downlink, we intend to aggressively compete for subscribers in markets that already exist and are right for disruption. We believe that our globally licensed L-S bands offer a unique asset to anyone looking to deliver connectivity. Our dedicated spectrum resource, which is almost four times that of any other D2D player currently, and our bent pipe architecture differentiate Globalstar. Everyone else has to borrow spectrum or put up more or larger satellites to match where we already are, and we're not standing still. It's an exciting time in D2D. We've been a leader in the space with our transformational deal, and we'll continue to innovate. Of course, with any new technology that's rapidly evolving comes a lot of speculation. I just want to take the opportunity to address a few inquiries we've received. First of all, we've been in development with our wholesale customer since long before other providers made their direct-to-cell announcements. We enabled the first commercial D2D service years ago, and we've been successfully operating it since that time with progressively improved features. We believe that speculation about the capabilities of other services has been overstated. No other direct-to-cellular service provider is currently supporting hundreds of millions of devices with years of experience operating at commercial scale, and none have deployed outside the U.S. across contiguous bands. While it's early days for others, we're in development for our next constellation. We've extended our initial contract with our customer, funding a significant investment for new and improved satellite constellations. The structure of our relationship is one in which we pre-sold certain capacity, and our revenues were unaffected by utilization, except, of course, to the extent that additional satellites may be needed to provide increased capacity or capabilities in the future. Regarding the speculation around the regulatory landscape and the potential for sharing our spectrum, I just want to say that we've been at this for a long time. Globalstar has worked with various administrations for over 25 years, and these systems take years to plan and operate for decades. There are now hundreds of millions of consumers globally who have access to life-saving and convenient connectivity through our constellation. Our spectrum is being actively used to provide these and other important services available globally. And that's what regulators want to see, and the regulatory landscape has fostered a wave of innovation in the satellite industry. As recent announcements have shown, there is no lack of competition in the provision of direct cellular services. We provide mission-critical connectivity that saves lives, and we continue to launch new technologies using our spectrum. Our bent pipe satellite architecture is uniquely suited to enable the rapid deployment of new innovations, and the certainty of our spectrum position for over 30 years has enabled us and our customers to make billions of dollars of investments in satellites, ground networks, and research and development. We believe we're well-positioned with our arrangement with our wholesale capacity customer and with current and future growth opportunities. Our unique financial arrangement provides network funding, enabling us to create valuable capacity solutions at a very competitive price point. Even with our spectrum advantage and the wholesale agreements, we do remain considerably smaller than certain of our direct competitors, and we're working to close that gap and are now well positioned to do so aggressively. On the terrestrial side of the business, Globalstar's Band n53 and XCOM RAN capabilities present partners with valuable mission-critical applications and connectivity solutions that are high performance and reliable. The XCOM RAN team has met every technical milestone put in front of them and continued to develop technologies that will allow us to better serve our customers. We're believers in the future of automation in both consumer, industrial, enterprise and defense environments that all benefit from connectivity solutions that we are well-suited to deliver. Additionally, the Band n53 ecosystem, along with the XCOM RAN and other technologies, is ready to generate cash. We're expanding the sales force, both internally and externally, to push both Band n53 and XCOM RAN out into the world and expect to make tangible progress this year. To update on some of the projects we've discussed, first and very importantly, we detailed in our November 1 Form 8-K an updated service agreement with our wholesale customer that demonstrates continued investment in support of product and service development. While there are other options, our team and our assets continue to be the chosen partner. Under these updated agreements, we'll maintain 100% of all terrestrial, MSS, and other revenue while continuing to allocate 85% of our network capacity for satellite services to the customer across both existing and new satellites. The remaining 15% capacity will continue serving our direct MSS customers, ensuring we maintain our commitment to our diverse and growing customer base. We've achieved a major milestone in our partnership with Parsons Corporation, successfully demonstrating our software-defined salt communication solution using our lower orbit constellation. This first-of-its-kind demonstration in North America represents a breakthrough in providing mission-critical solutions for RF congested environments, particularly in the public sector and defense applications. Proof-of-concept initiated in early 2024 is advancing towards commercial service positioning us to capture significant opportunities in these high-value markets. As we have said, this opportunity has the potential to be a significant annual contributor to revenue and cash flow and our confidence in it remains high. Our technology leadership continues to strengthen as evidenced by our successful completion of the first 5G data call on our Band n53 spectrum, achieving impressive speeds of 100 megabits per second download and 60 megabits per second upload in 10 megahertz of spectrum. This breakthrough enables advanced applications such as robotics, autonomous vehicles and augmented reality while offering our partners a versatile fully licensed channel for enhanced wireless connectivity. On the regulatory front, we enhanced our long-term operational foundation with a 15-year renewal of our blanket mobile earth terminal authorization from the FCC, ensuring continued authority to operate our mobile earth terminals with satellites throughout the United States and its territories. This builds upon the company winning terrestrial authority in Mexico earlier in the first quarter. Collectively, these developments reinforce our position as a leader in satellite communications and innovative spectrum solutions while expanding our market reach and strengthening revenue potential across multiple sectors. In summary, we believe we're well positioned to continue to execute on our long-term growth strategy. We're seeing results from investments we've made so far and are excited for 2025 and the years ahead. We've spent a significant amount of time identifying markets that we can grow in and design proprietary solutions to address the needs of customers for years to come. Further to this, we've been increasing our team at Globalstar with professionals that know how to win, grow and scale businesses and I cannot be more excited about our future. Finally, I just want to thank all my colleagues at Globalstar for their dedication and hard work in 2024. So I'll turn the call back to the operator for a Q&A.

The first question comes from Mike Crawford with B. Riley Securities.

We saw the details of the extended MSS network constellation, which includes over 50 software-defined Aurora satellites that are state-of-the-art, allowing for alternating levels of power. Is that correct? Can you explain what that feature provides?

I mean so those Aurora satellites have beam forming capabilities. And obviously, yes, we've been able to control power and it's a digital satellite. So the processing that can be done is minimal, but it does allow us to direct signals to different antenna elements.

Okay. Can you provide any update on the timing of when these satellites might be fully deployed? We know that the design of the architecture has been in progress for almost 1.5 years now. Is there any information on when these could potentially launch?

Yes. We haven't given an update on that yet, unfortunately.

And then related, there's a number of new ground infrastructure and gateways you'll be putting in place? Or is that something that's going to be occurring this year?

That's all underway. There are numerous tasks to complete for gateways, especially in greenfield projects. It begins with selecting the appropriate location and acquiring the land, whether building from scratch or finding suitable teleports. A lot of work needs to be done, including addressing connectivity, redundancy, and resilience issues. Consequently, this process is quite long-term. So yes, all of that is in progress.

Okay. I'll just ask one more, switching gears to XCOM brand. So we do know that initially that you were designing that to work with unlicensed CBRS spectrum. Now I believe you've done incorporating Band n53 into the solution more natively, but is there any progress on your one large retail customer or other customers that we could look to or maybe hold forth as some guidepost to work for accomplishments that we can measure you against in this year?

Yes. I mean it's like I've said before, and I experienced this in Qualcomm too. Like you have a lead customer for a new technology, you keep building. It's a great tailwind, but you're subject to the customer's decision on when they decide to push the button and roll out, and it doesn't necessarily have to do with just the communication system. So we're in the place where we've done a tremendous amount of work. We've built out to the technical requirements. Actually now, a bunch of the team is working on being able to cost-reduce, coming down the cost curve so that we can be even more effective and more competitive with other potential solutions. So we don't have to just be at the high end of the market but also be competitive with WiFi or mesh WiFi solutions that we see or other 5G small cell solutions. So we're really focused on that as we sort of wait for the customer to make their own decisions about the rollout. And then, of course, we're also working on the pipeline of other opportunities as well.

The next question comes from the line of Simon Flannery with Morgan Stanley.

Rebecca, you mentioned that EBITDA margins are currently under some short-term pressure, but there is a long-term expectation of returning to the mid-50s range. Should we view 25% as the lowest point for EBITDA margins, expecting gradual improvement from there? Or will it remain at this level until the extended MSS is in place? Additionally, could you provide any insight on CapEx and free cash flow for 2025? Paul, regarding the expanded MSS, we are aware of the MDA deal that has been made public. Could you share what the timeline looks like? Is a three-year estimate reasonable from the signing of the contract to when we can expect to see the constellation launched and operational?

Thanks for the question, Simon. So on the first one for the margin compression, I would say it's in the 12- to 18-month time line or certainly not waiting on the extended MSS network to be deployed since the investments are more related to the XCOM RAN and MSS product development. We expect to generate revenue in the shorter time frame. And then your second question, sorry, on free cash flow.

Yes. Just any color you could give us on how CapEx free cash might look like this year?

Operating cash was very strong in 2024, and more details will be available when we file the 10-K tomorrow. We provided some information in the earnings release. Each phase of the wholesale arrangement has its own specifics. In Phase 2, some of that capital expenditure is funded upfront and appears in financing, and then it will be reimbursed over time. For the extended MSS network, we are currently receiving funding. Most of that is impacting operating cash flow due to deferred revenues and service payments that we will earn over the satellite's lifespan. So, it is largely a timing issue to consider when evaluating reimbursable capital expenditure in the context of free cash flow. I hope that clarifies things.

The modeling as fact. Yes, I know it's a lot of moving parts.

Yes. Right. So yes, sorry.

I thought you were done.

Go ahead, Paul. No, I was just going to talk to the next question. I was just going to give a little bit more color, Simon. We've incurred about $250 million to date under the Phase 2 satellites and $155 million of that has been funded by our customer, that number and the balance by us through operating cash flow and the objective through that funding agreement is to pay for the upfront CapEx 50-50, right? We've probably got another $150 million to get through that first launch of the satellite, and again, that will be split evenly. Hopefully, that's helpful with the launch still expected to happen in 2025.

Okay.

On the MSS timeline, as I mentioned to Mike, we haven't provided any updates or announcements. Our customers are attentive to the timing of their service launches, so I can't go into much detail on that.

Okay, understood. Maybe just one more on the 2-way IoT. It was nice to see that coming through, and it sounds like there's a nice opportunity there. When does that become material to the numbers? Is that something we will see in '25? Or is it still going to be small for a couple of years until that scales?

I mean we're expecting to start... Sorry, go ahead, Paul.

Sorry, go ahead, Paul.

I mean we're in beta right now. As we went into data with customers, we were looking for customers that could rapidly turn on. But I would say, this year, I think it's the beginning of the ramp. Next year, we would expect to get very well into the deployment of it. If it turns out that somebody has something that hits, we are set up for manufacturing, and that will be ready to go. It's a little bit dependent on our partners building out their particular applications with it. Obviously, some of our customers that we're talking to have 2-way based devices already. In some cases, it's relatively easy for them to swap a modem in. We’re hopeful that some of those can come to market sooner, but I can't commit to that at this point. It's really de minimus.

It seems like you're getting good feedback from the field, yes.

We are definitely getting good feedback, which is good. We spent a lot of time hammering on this thing. It is beta, so every so often it or something, but we were able to turn those around when somebody has an issue with something or a feature request for the future, that kind of stuff. So it's been quite a good beta process for us. Obviously, having some customers that know they've been banging on the downlink, which we haven't been able to supply in the past. So it's really good to see packets flying over that part of the network, too.

Next question comes from the line of Walter Piecyk with LightShed Partners.

In the filing a petition that you made to the FCC recently, you referenced basically this new satellite, this new constellation providing the essential foundation for a variety of new innovative direct-to-device satellite features on supported devices. Can you just kind of provide a little bit more color on what some of those new innovative features might be?

It's similar to what I said earlier. We have customers who are mindful of their feature roadmap and service launch timing. The only point I can mention is that the satellites have some new capabilities, and I expect that our customers will make use of them.

Is there a way to conceptualize the market user demand and what those new innovative features address in terms of how many years it will be before consumers demand more? How many years do you think this timeframe provides before we move on to potentially greater and new features?

Gosh, projecting what the consumer is going to demand and what the price points are going to be is kind of hard to do. I mean I've already talked a lot about the fact that there is a proven business model for broadband kind of Netflix and the mountains broadband out of coverage. Most people are in coverage, spend very little time out of coverage, except for maybe dead zones or something like that. I think understanding that is something everybody is watching carefully. There are companies that are building kind of the field of dreams and the expectation that consumers will demand these services and would be willing to spend significant amounts of incremental dollars. Certainly, there's some companies building kind of the field of dreams and the expectation that consumers will demand these services and they would be willing to spend significant amounts of incremental dollars. As you know, back in Qualcomm, we built a video service in 3G days called MediaFlow, and it was an incremental cost to your service and limo drivers in Vegas loved it, but not that many other people are willing to pay extra for that kind of service. So maybe it's a little bit like that, how much will you pay for video service outside of coverage? I don't think that we've seen that model proven at all. So until we see that, we see other kinds of demand. I think it's unknown. Obviously, there are investors who believe heavily in this and are investing heavily in this, but you and I have been through a number of these technology cycles. It's not clear which ones take off and which ones don't. What is proven is that there's clear benefit for safety and security, and it's being used, it's saving lives. While people may be willing to pay incremental dollars for more multimedia in their messaging is not known yet. Globalstar and Iridium went bankrupt decades ago, trying to do voice and relatively low-speed data outside of cellular coverage. That was with a separate device, but the demand was fairly niche. We are quite focused on finding those parts of the business that are able to generate revenues and profitability that can fund constellations. Fortunately, we have the wholesale business, which does a very good job of funding the constellation. Others, I think, have to prove that their business model will do that.

I know it's still early, but is there any indication regarding the locations where the direct-to-device technology is being used? For example, while people often refer to the stranded hiker in Utah, I am using it in Westchester County to send texts about locations where I have stored sulfates. Do you have any information, even if it's just anecdotal, about where the product has been used since its activation?

I mean the anecdotes you hear are often around something where there's been a natural event or something where the cell service has gone down over a wide area. That makes sense because that's where there's a lot of people. Even cellular dead zones are relatively small geographic regions. You're not going to generate massive usage through that; you will provide peace of mind to people. That’s important. When you have a natural event, fire or weather event, that's where you can see large numbers of people wanting to have some connectivity, but obviously, that's very infrequent and relatively constrained geographical areas.

Maybe I'll rephrase the question. I understand what the consumer might be willing to spend for that occasional use at that specific time and place. So, have you noticed any usage that has gone beyond just the desert and the situations I've mentioned? Is it being utilized in different locations, or is it mainly being used during events like a power outage or other situations related to national security?

No, sorry, I didn't mean to say that it was only being used there. I think we have examples of people that got rescued from being in the mountains and other situations. There is usage, and the opportunity to charge a lot to somebody who's in need exists. I don't know whether it's the nicest thing to do, but kind of a one-time usage thing, but the question is, does that build a business model that supports billions of dollars of satellite constellation investment?

So one last one. Yes, sorry.

I was just going to say, I mean the model that seems clear to me for any handset manufacturer is if they can reduce a replacement cycle time on a large volume, large installed base, that's real money, with small changes in the replacement cycle time. So it's really, I think, the business model around having new features and a road map of new features is a proven one that certainly can work. The T-Mobile advertisement during the Super Bowl was talking about providing service to customers of other cellular networks. They’re clearly looking to create some churn, whether that actually is something that can create churn remains to be seen, but I'm personally a little skeptical given that there are hundreds of millions of people that already have connectivity over our constellation. All these things really do remain to be seen. There are some lessons that we can draw from history, and you and I have been at this long enough that we can draw these lessons.

Just one last question. Reflecting on your extensive experience and my own as well, Iridium has mentioned that their technology has finally aligned with the 3GPP standard, which is integrated into the chip. This change is theoretically supposed to simplify things for the Android ecosystem, particularly for Samsung, enabling them to achieve what you've accomplished with Apple. Is it really that straightforward? I don’t mean to place too much expectation on them, but if Qualcomm provides the standard chip, isn’t it just a matter of Samsung agreeing to use it? Will there be minimal additional cost, and can they implement it quickly enough to have Galaxy devices that offer the same capabilities that Apple has managed to achieve with your collaboration?

I don't know exactly what they have done. I would say that NTN, the cellular standard, is quite complex. It's certainly not as efficient since it was designed to extend existing protocols and chipsets. We've been examining how much overhead this adds, and it's considerable. This might necessitate additional changes to the standard to improve functionality. Additionally, there are discussions about geo-based NTN services already. I haven't looked into it specifically, but I've heard claims that Google Pixels have satellite capabilities from GEO. Transitioning to LEO requires more effort, which has been incorporated into later parts of the standard. The chip manufacturers we talked to mentioned that there is extra work involved in adapting chips from GEO to LEO, particularly because of the movement involved.

The next question comes from Chris Quilty with Quilty Space.

Paul, can you explain to us what's going on with the big LEO MSS spectrum and some of the filings and deliberations there?

Yes. I think it's relatively simple. There are certain providers that have a spectrum solution, which is less than optimal, particularly those that are using mobile network operator spectrum. There are all sorts of opportunity cost issues and potential interference issues because the beams are wide and make an overlap with terrestrial networks and so forth. There are efforts by some other operators to find spectrum, and we're in a good position. We've been here for 30 years. Our spectrum has the highest priority when it comes to coordination. I think we're in a good position, but there are those who see this position that have come into this market later, and they're trying to find any way that they could potentially get access to spectrum.

Last question comes from Lyman Delano with Beck, Mack & Oliver.

I have three questions sort of related to the upcoming launches. You have 17 satellites coming from MDA beginning this year, I think it was the right to nine additional satellites and all of that was to upgrade the current existing constellation. In February, earlier this month, you announced the new contract with MDA for the 50 Aurora satellites, and I'm just sort of wondering are these satellites related to the existing constellation, or would you say it's more of a new constellation? And then my final question is, if you could update us on the application made in Germany back with the ITU in December of 2020. Now it's over four years ago and that was a later registration in May of '22. The constellation was for 3,080 satellites and 10 orbital planes at 500 to 700 kilometers. Can you give us any color on what that is all about?

The Aurora satellite is indeed a new constellation, but it operates at the same altitude and uses the same spectrum as the existing satellites, allowing them to work together. The satellites can interoperate because we control both groups, enabling us to utilize technologies across them. They are both bent-pipe style satellites, which offers us numerous capabilities. Regarding the filing in Germany, it's common for companies to make such filings, providing us with options for scaling up constellations and navigating regulatory requirements. If you'd like, I can provide more details, but essentially, it gives us flexibility for future developments.

One moment for we do have one more question. The next question comes from George Sutton with Craig Hallum.

Very nice to see the move forward with the two-way device. So can you just talk about examples of two-way use cases and what we might see there?

Yes. The main thing for the two-way is now that you can do commanding down so we can actually control things. If it turned out you need to turn a valve or you need to make something respond. If you're controlling something that's a remote asset, you can do that. Now it's not a real-time thing. It's still the same kind of packet delivery; we can get a little more throughput through it. As I look to the future, we put additional processing capability built into the modem. One of the things that I like a lot is that you can imagine a remote asset out in the field running a local program that's monitoring that asset, maybe some AI on the edge. It could send an alert if it sees something out of normal operating parameters. The system could then or the company that's running that asset or monitoring that asset could send back, okay, we need to know more; send us data on this or send us data on that or so forth. You can control it so that you can not have all assets sending all of their information, their sensor data back; you can just have it at the one that actually needs to be talked to, and sensor data can be sent back, but most of the work can be done on the local processing. That's an area I'm super excited about going forward.

Got you. I was certainly impressed by the presentation you had with Parsons at your Analyst Day. Can you again, in the same kind of light, give us some sense of what kind of use cases they may be deploying with you? And how exactly will that go-to-market work?

The go-to-market is through their channels. We haven't been much of a government service provider in the past. We don't have all the same depth of relationships that someone who's been in that area for a long time has, so they are building a pipeline, and they have their people who can do field support and so forth. That's a great go-to-market strategy for us. It's another company that could come in, put their technology on the constellation because of the bent-pipe structure and bring that to market. We provide certain capabilities to them that they then leverage. The use case, I can't say the specific things, but it is specifically to provide resilience of communication in RF challenged environments, which seems quite clear why the government would be interested in that capability. We're quite excited about it. The initial tests went off extremely well; it was quite easy for them to get their technology up and running in a very short period of time. We did a lot of testing. The process now is to do some of that work in other markets at this point. Everything's moving ahead very well, and I think the relationship between the companies is extremely strong.

This concludes the question-and-answer session. I would now like to turn it back to Paul for closing remarks.

Thanks, everybody, again, for joining us and for the support. I think it's been a great year, a lot of growth and a lot of innovation. I think this year was really one where we got our execution going well. We've done a good job on executing for the wholesale consumer business, as evidenced in the fact that that relationship continues to expand, but I'm also super happy about the product organization bringing the two-way to market after quite a long period of time. I think between the new leadership and other system engineers that we brought in with XCOM being able to look at the system, that really helped. We made a lot of progress on some other areas of our product business, and we'll look forward to updating you on those things as they make their way into commercial service. There are a lot of good opportunities there. We have some exciting stuff we're working on in the XCOM RAN side. I look forward to the time when people look at Globalstar, and they don't see a satellite company only. They see a company that's executing well to provide mission-critical connectivity in space, but on the ground, too. I look forward to updating you more on that journey and appreciate your support as we head there. Thanks very much, everyone.