Iridium Communications Inc.IRDM
Iridium Communications Inc. Income Taxes Disclosure
Income Taxes
The following table presents U.S. and foreign components of income (loss) before income taxes:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| U.S. income (loss) | $ | 143,779 | $ | 106,340 | $ | (10,596) | |||||||||||
| Foreign income | 1,034 | 3,444 | 5,849 | ||||||||||||||
| Total income (loss) before income taxes | $ | 144,813 | $ | 109,784 | $ | (4,747) | |||||||||||
The following table summarizes the components of the Company’s income tax provision:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Current taxes: | |||||||||||||||||
| Federal tax expense | $ | 1,372 | $ | 1,128 | $ | — | |||||||||||
| State tax expense | 2,104 | 1,731 | 1,032 | ||||||||||||||
| Foreign tax expense | 1,975 | 2,840 | 4,545 | ||||||||||||||
| Total current tax expense | 5,451 | 5,699 | 5,577 | ||||||||||||||
| Deferred taxes: | |||||||||||||||||
| Federal tax expense (benefit) | 20,603 | 10,524 | (31,311) | ||||||||||||||
| State tax expense (benefit) | 1,339 | (3,542) | (226) | ||||||||||||||
| Foreign tax expense (benefit) | 225 | (422) | (291) | ||||||||||||||
| Total deferred tax expense (benefit) | 22,167 | 6,560 | (31,828) | ||||||||||||||
| Total income tax expense (benefit) | $ | 27,618 | $ | 12,259 | $ | (26,251) | |||||||||||
The following table presents a reconciliation of the U.S. federal statutory income tax expense to the Company’s effective income tax provision after the adoption of ASU 2023-09. Any amounts that do not have a meaningful impact on this reconciliation are not separately disclosed.
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
(In thousands) | |||||||||||
Amount | Rate | ||||||||||
U.S. federal statutory tax rate | $ | 30,411 | 21.0 | % | |||||||
State & local taxes, net of federal income tax effect (1) | 3,001 | 2.1 | % | ||||||||
Foreign tax effects | 2,352 | 1.6 | % | ||||||||
Effect of cross-border tax | |||||||||||
| Foreign-derived intangible income | (4,027) | (2.8) | % | ||||||||
Tax credits | |||||||||||
| Research and development tax credits | (5,470) | (3.8) | % | ||||||||
| Foreign tax credits | (2,408) | (1.7) | % | ||||||||
Nontaxable/Nondeductible items | 389 | 0.3 | % | ||||||||
| Unrecognized Tax Benefits (UTBs) | 493 | 0.3 | % | ||||||||
Other adjustments | |||||||||||
| Equity compensation | 2,414 | 1.7 | % | ||||||||
| Other | 463 | 0.4 | % | ||||||||
Total income tax expense (benefit) | $ | 27,618 | 19.1 | % | |||||||
(1) For 2025, state taxes in Virginia made up the majority (greater than 50%) of the tax effect in this category.
The following table presents a reconciliation of the U.S. federal statutory income tax expense to the Company’s effective income tax provision prior to the adoption of ASU 2023-09. Any amounts that do not have a meaningful impact on this reconciliation are not separately disclosed.
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
(In thousands) | |||||||||||
| Expected tax expense (benefit) at U.S. federal statutory tax rate | $ | 23,054 | $ | (997) | |||||||
| State tax expense (benefit), net of federal effect | (1,999) | 927 | |||||||||
| State tax valuation allowance | (175) | (338) | |||||||||
| Equity-based compensation | 2,876 | (10,234) | |||||||||
| Limitation on executive compensation deduction | 3,535 | 4,011 | |||||||||
| Other nondeductible items | 430 | 114 | |||||||||
| Tax credits | (13,321) | (21,817) | |||||||||
| Foreign taxes | 2,563 | 3,570 | |||||||||
| Foreign derived intangible income | (5,240) | — | |||||||||
| Other adjustments | 536 | (1,487) | |||||||||
| Total income tax expense (benefit) | $ | 12,259 | $ | (26,251) | |||||||
The following table presents the components of deferred tax assets and liabilities:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Deferred tax assets | |||||||||||
| Long-term contracts | $ | 50,415 | $ | 50,878 | |||||||
Federal, state and foreign net operating losses, other carryforwards and tax credits | 256,875 | 306,701 | |||||||||
| Other | 29,536 | 27,107 | |||||||||
| Total deferred tax assets | 336,826 | 384,686 | |||||||||
| Valuation allowance | (32,941) | (32,882) | |||||||||
| Net deferred tax assets | 303,885 | 351,804 | |||||||||
| Deferred tax liabilities | |||||||||||
| Fixed assets, intangibles and research and development expenditures | (366,322) | (385,972) | |||||||||
| Investment in joint venture | (54,913) | (64,071) | |||||||||
| Other | (11,124) | (14,063) | |||||||||
| Total deferred tax liabilities | (432,359) | (464,106) | |||||||||
| Net deferred income tax liabilities | $ | (128,474) | $ | (112,302) | |||||||
Pursuant to ASC 740, Income Taxes, the Company nets deferred tax assets and liabilities within the same jurisdiction. As of December 31, 2025, the Company had a net deferred tax asset of $2.1 million that is included in other assets on the balance sheet and a net deferred tax liability of $130.5 million.
The Company recognizes valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In assessing the likelihood of realization, management considers: (i) future reversals of existing taxable temporary differences; (ii) future taxable income exclusive of reversing temporary differences and carryforwards; (iii) taxable income in prior carryback year(s) if carryback is permitted under applicable tax law; and (iv) tax planning strategies.
The Company had deferred tax assets related to cumulative U.S. federal net operating loss carryforwards and interest expense carryforwards of approximately $155.7 million and $209.9 million as of December 31, 2025 and 2024, respectively. The 2017 U.S. federal net operating loss carryforward, if not utilized, will expire in 2037. The Company believes that the 2017 U.S. federal net operating losses will be utilized before the expiration date and, as such, no valuation allowance has been established for this deferred tax asset. U.S. federal net operating loss carryforwards for 2018 and thereafter and interest expense carryforwards do not expire. The Company had deferred tax assets related to the state net operating loss carryforwards of approximately $50.7 million and $55.9 million as of December 31, 2025 and 2024, respectively. The Company does not expect to fully utilize all of its state net operating losses within the respective carryforward periods and as such reflects a partial valuation allowance of $32.6 million and $32.8 million as of December 31, 2025 and 2024, respectively, against these deferred tax assets on its consolidated balance sheets. The Company had deferred tax assets related to the foreign net operating loss carryforwards of approximately $0.4 million for each of December 31, 2025 and 2024. The Company does not expect to fully utilize all of its foreign net operating losses within the carryforward periods. As such, the Company had recorded a partial valuation allowance of $0.1 million for each of December 31, 2025 and 2024, against these deferred tax assets on its consolidated balance sheets. The timing and manner in which the Company will utilize the net operating loss carryforwards in any year, or in total, may be limited in the future as a result of changes in the Company’s ownership and any limitations imposed by the jurisdictions in which the Company operates.
The Company had approximately $45.3 million and $42.3 million of deferred tax assets related to research and development tax credits as of December 31, 2025 and 2024, respectively, that expire in various amounts from 2034 through 2045. As of December 31, 2025 and 2024, the Company established a reserve of approximately $3.9 million and $3.5 million on its estimate of R&D credits, respectively. The Company had approximately $7.0 million and $7.9 million of deferred tax assets related to foreign tax credits as of December 31, 2025 and 2024, respectively, that expire in various amounts through 2035. There was no valuation allowance on foreign tax credits as of December 31, 2025 and 2024.
The Company has provided for U.S. income taxes on all undistributed earnings of its significant foreign subsidiaries since the Company does not indefinitely reinvest these undistributed earnings. The Company measures deferred tax assets and liabilities
using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company recognizes the effect on deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date.
The following table presents the actual cash taxes paid by the Company after the adoption of ASU 2023-09.
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Federal Income Taxes Paid | $ | 2,190 | $ | 800 | $ | — | |||||||||||
| State Income Taxes Paid | |||||||||||||||||
California | 410 | * | * | ||||||||||||||
| Illinois | 531 | 304 | * | ||||||||||||||
| Maine | 521 | * | 266 | ||||||||||||||
| Virginia | 838 | 845 | 537 | ||||||||||||||
| Other jurisdictions | 469 | 926 | 661 | ||||||||||||||
| Total State Income Taxes Paid | 2,769 | 2,075 | 1,464 | ||||||||||||||
| Foreign Income Taxes Paid | |||||||||||||||||
| Brazil | 1,494 | 1,160 | 1,875 | ||||||||||||||
| Russia | 470 | 1,092 | 646 | ||||||||||||||
| Other foreign jurisdictions | 84 | 121 | 240 | ||||||||||||||
| Total Foreign Income Taxes Paid | 2,048 | 2,373 | 2,761 | ||||||||||||||
| Total Income Taxes Paid/Refund | $ | 7,007 | $ | 5,248 | $ | 4,225 | |||||||||||
*The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.
Uncertain Income Tax Positions
The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. Significant judgment is required in evaluating tax positions and determining the provision for income taxes. The Company establishes liabilities for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due. These liabilities are established when the Company believes that certain positions might be challenged despite its belief that its tax return positions are fully supportable. The Company adjusts these liabilities in light of changing facts and circumstances, such as the outcome of a tax audit. The provision for income taxes includes the impact of changes to these liabilities.
The Company had unrecognized tax benefits of approximately $3.9 million as of December 31, 2025 primarily due to U.S. tax credits from prior periods. There were unrecognized tax benefits of approximately $3.5 million as of December 31, 2024. Any changes in the next twelve months are not anticipated to have a significant impact on the results of operations, financial position or cash flows of the Company. The Company has elected an accounting policy to classify interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2025 and 2024, there were no interest and penalties on unrecognized tax benefits. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits which includes related interest and penalties:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Balance at January 1, | $ | 3,454 | $ | 2,398 | |||||||
| Change attributable to tax positions taken in a prior period | 30 | 500 | |||||||||
| Change attributable to tax positions taken in the current period | 463 | 556 | |||||||||
| Balance at December 31, | $ | 3,947 | $ | 3,454 | |||||||
The Company is subject to tax audits in all jurisdictions for which it files tax returns. Tax audits by their very nature are often complex and can require several years to complete. Currently, there are no U.S. federal, state or foreign jurisdiction tax audits
pending. The Company’s corporate U.S. federal and state tax returns from 2011 to 2024 remain subject to examination by tax authorities and the Company’s foreign tax returns from 2016 to 2024 remain subject to examination by tax authorities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 11, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 25, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.