Eutelsat Q3 2024-25 presentation: Connectivity growth offsets Video decline

Introduction & Market Context

Eutelsat Group (EPA:ETL) presented its third quarter 2024-25 revenue results on May 15, 2025, revealing a slight decline in quarterly revenue but maintaining its full-year financial objectives. The satellite operator continues to navigate a challenging environment for its traditional Video business while capitalizing on growth opportunities in connectivity services, particularly through its LEO-enabled solutions.

The company reported third-quarter Operating Verticals revenues of €300.6 million, down 2.2% year-on-year on a like-for-like basis. Despite this quarterly dip, Eutelsat’s nine-month revenues remain up 1.8% compared to the same period last year, highlighting the company’s resilience amid ongoing market transitions.

As shown in the following quarterly highlights:

Quarterly Performance Highlights

Eutelsat’s total revenues for Q3 2024-25 reached €300 million, representing a 1.9% decline on a like-for-like basis compared to the same period last year. The company benefited from a positive currency effect due to the favorable €/$ exchange rate of 1.04 versus 1.09 last year, which partially offset operational declines.

The following bridge chart illustrates the evolution of revenue from Q3 2023-24 to Q3 2024-25, showing the impact of currency effects (+€7m) against the operational trend (-€6m):

Breaking down the performance by business segment reveals divergent trends across Eutelsat’s portfolio. The traditional Video segment, which still accounts for half of the company’s revenue, continued its structural decline with a 6.4% year-on-year decrease. Meanwhile, Government Services showed impressive growth of 10.2%, driven by LEO-enabled solutions.

The detailed revenue breakdown by vertical provides a clear picture of Eutelsat’s business mix:

Detailed Financial Analysis

The Video segment, which generated €151.7 million in Q3 (50% of total revenue), saw a 6.4% year-on-year decline, which Eutelsat described as "in line with broader market decline." The segment faces additional headwinds from the application of EU Regulation 269/2014 by the end of FY25, which is expected to have a negative impact of approximately €16 million on annual revenues and EBITDA related to Russian operations.

Fixed Connectivity, the second-largest segment at 20% of revenue, posted modest growth of 0.8% year-on-year to €59.7 million. This growth was primarily driven by LEO-enabled connectivity solutions, which continue to gain traction in the market.

Government Services delivered the strongest performance among all segments, with revenues increasing by 10.2% to €49.5 million, representing 17% of total revenue. This growth was also attributed to the success of LEO-enabled solutions, highlighting the strategic importance of Eutelsat’s expanded satellite constellation capabilities.

Mobile Connectivity revenues declined by 2.7% to €39.7 million, with lower GEO revenues offsetting potential growth in this segment.

Eutelsat’s backlog, a key indicator of future revenue visibility, stood at €3.6 billion as of March 31, 2025, compared to €3.9 billion a year earlier. The company attributed this decline to "natural erosion, especially in the Video segment, in the absence of major renewals." The backlog represents approximately 3.0 years of revenues, with Connectivity segments now accounting for 57% of the total, reflecting the ongoing shift in Eutelsat’s business mix.

As shown in the following backlog chart:

Forward-Looking Statements

Despite the mixed quarterly performance, Eutelsat confirmed its financial objectives for the full fiscal year 2024-25. The company expects revenues from its four operating verticals to remain around the same level as FY 2023-24, while the Adjusted EBITA margin is anticipated to be slightly below the previous year’s level.

Capital expenditure is projected to be between €500 and €600 million for FY 2024-25, as the company continues to invest in its satellite infrastructure. In terms of financial leverage, Eutelsat is targeting a medium-term net debt to EBITDA ratio of approximately 3x.

The following slide summarizes Eutelsat’s financial outlook:

Eutelsat’s strategic pivot toward connectivity services continues to gain momentum, with these segments now representing 57% of the company’s backlog compared to 55% a year ago. This transition is crucial for offsetting the structural decline in the traditional Video business, which still accounts for half of current revenues but faces ongoing market challenges.

The company’s stock closed at €4.26 on May 15, 2025, trading within a 52-week range of €1.17 to €9.00. Investors will be watching closely to see if Eutelsat’s strategic shift toward higher-growth connectivity segments can successfully counterbalance the continued erosion in its legacy video business while maintaining financial stability.

Full presentation:

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