[Via Satellite 08-01-2014] Iridium has signed a major contract with a prominent Original Equipment Manufacturer (OEM) for use of its satellite services. Matt Desch, CEO of Iridium announced the win was one of multiple heavy equipment OEM customer deals the company has landed or is in the process of completing during the company’s second quarter earnings call, July 31, 2014.

“We signed up a large multinational manufacturer of agricultural and construction equipment at the tail end of the second quarter, and expect to bring in another heavy equipment OEM before the end of the year,” said Desch.

The contract is one of many, according to Desch, that are in the company’s sales pipeline. These contracts are at various stages of completion for customers in agriculture, energy, construction and mining. Iridium has decided not to reveal the names of many of these up and coming sales because the customers prefer anonymity.

Desch said heavy equipment OEMs are going through a transition toward fully embracing Machine-to-Machine (M2M) technology. This bodes well for Iridium, as approximately half of the 29,000 subscribers gained during Q2 came from M2M sales.

“That whole sector has moved from what I would call the early days of initial trials and using telematics for some products to starting to accept that this is just a fundamental part of business. It’s a core capability that has to be on everything going out the door,” he said.

Iridium’s commercial M2M data subscriber growth has accelerated recently, with an 18 percent increase over last year, compared to a 3 percent year over year increase in commercial voice and data. The company’s government business is also seeing improvement, increasing 11 percent from the same time last year. Iridium has two contracts with the United Sates’ Defense Information Systems Agency (DISA) as well as a $38 million contract for supporting the Department of Defense‘s (DoD) dedicated gateway. Increased momentum with government projects contributed to a boost in engineering and support revenue as well. Iridium saw a 72 percent increase in revenue compared to last year in this segment.

Jim Breen, CFA at William Blair, highlighted other areas of growth in a research note. “During the quarter, the company was able to regain its footing in the maritime market as OpenPort revenue increased 15 percent from last year. With OpenPort product issues largely behind the company and new product launches that include Iridium GO!, the modest growth in the commercial voice and data services segment should remain stable,” he wrote.

Chris Quilty, SVP of equity research at Raymond James & Associates also pointed out the company’s robust progress. “Iridium reported its ‘best quarter in two years’ during the first quarter, but easily exceeded 1Q results (revenues, net adds, OEBITDA) in the second quarter. Iridium faces a challenging 4Q comparison, but with two solid quarters under its belt, the company is on a solid trajectory to meet or exceed its full-year guidance,” he wrote in a research note.

Desch said Iridium is in peak spending for the company’s upcoming constellation, Iridium NEXT. Thales Alenia Space has completed the first five Main Mission Antennas (MMAs), for which one goes on each NEXT satellite, paving the way for high volume production. Additionally, Iridium recently selected Radisys’ T-Series Commercial Off-The-Shelf (COTS) platforms to upgrade the ground station infrastructure for NEXT. Iridium also placed the first call through NEXT hardware, and initiated a process where it will select partners for next-gen terminals. The company submitted more than 30 Requests for Proposals (RFPs) to different companies, and expects to make a decision by the end of 2014.

Last month the company also completed dispenser qualification testing with SpaceX, which has a $453.1 million contract to launch 70 NEXT satellites. SpaceX is tasked with launching the satellites 10 at a time using the Falcon 9 rocket. The full constellation is made of 66 satellites, with additional spares both in orbit and on the ground. Desch believes that despite some of SpaceX’s recent delays, the constellation will still launch on schedule beginning next year, with full deployment by 2017.

“[SpaceX is] scheduled to really pick up their launch pace as the year goes on. We are confident they’ll be ready to start our primary launch campaign in late 2015,” he said.

The added SpaceX enthusiasm could be influenced by the need to avoid Russian launches. Should the Russia-Ukraine crisis continue, Quilty suspects the company may have to skip launching test satellites through Kosmotras, or at least in some way alter the current plan.

“Iridium is currently planning to launch its first two NEXT satellites in mid-2015 on a Dnepr rocket, but the launch could face a possible delay or cancellation given the fact that the Dnepr rocket is Ukrainian-manufactured and launched from Russian soil,” he wrote. “Management is exploring alternatives and could forego the initial two satellite launch (originally planned as a trial run) altogether, and jump straight to its SpaceX launches (10-12 satellites per launch).”

It remains to be seen if SpaceX can fit more satellites into its already packed launch manifest.