Earnings call transcript: Eutelsat Q1 2025 sees modest revenue decline

Eutelsat Communications reported its Q1 2025 earnings, revealing a total revenue of €293 million, slightly below the forecasted €299.8 million. The company’s stock remained stable at €4.26, reflecting no immediate change in investor sentiment. According to InvestingPro analysis, Eutelsat currently shows a FAIR overall financial health score of 1.86, with particularly strong momentum and cash flow metrics. The earnings call highlighted a mixed performance across different business segments, with some areas showing growth while others faced challenges.

Want deeper insights? InvestingPro offers 8 additional key tips about Eutelsat’s performance and prospects, available with a subscription.

Key Takeaways

• Total Q1 revenue was €293 million, a slight decline of 0.3% on a like-for-like basis.
• Video segment revenue fell by 10.5%, while Fixed Connectivity grew by 16%.
• The company confirmed its fiscal year 2025-2026 financial objectives.
• Strategic partnerships were announced for LEO connectivity in Greenland and India.

Company Performance

Eutelsat’s Q1 2025 performance showed resilience in certain areas despite a slight overall revenue decline. The company has been navigating a challenging landscape, particularly in its Video segment, which saw a notable decrease. However, growth in Fixed and Government Connectivity segments provided a counterbalance. The company continues to focus on expanding its LEO satellite services, which experienced a 70% year-on-year revenue increase.

Financial Highlights

• Revenue: €293 million, a 0.3% decline like-for-like.
• Video segment: €133.6 million, down 10.5%.
• Fixed Connectivity: €62.3 million, up 16%.
• Government Services: €52 million, up 18.5%.
• Mobile Connectivity: €34.7 million, down 12%.

Outlook & Guidance

Eutelsat reaffirmed its financial objectives for the fiscal year 2025-2026, with expectations for continued growth in LEO revenues, projected to increase by 50% year-on-year. The company aims for operating vertical revenues between €1.5 billion and €1.7 billion by 2028-2029, with an EBITDA margin target of at least 60%. InvestingPro analysts forecast continued challenges, with negative EPS expected for FY2026 at -€0.73, though the company maintains healthy liquidity with a current ratio of 1.38.

Discover more exclusive insights and financial metrics with InvestingPro’s comprehensive analysis tools and Pro Research Reports, covering 1,400+ top stocks.

Executive Commentary

Christophe Gaudier, CFO, emphasized the robust growth in LEO revenues, stating, "LEO revenues continued their robust growth rate, up 70%." He also noted the increasing demand for satellite connectivity, particularly from LEO constellations: "The demand for connectivity by satellite and more specifically from LEO constellation is growing and is growing fast."

Risks and Challenges

• Declining Video segment: The ongoing secular decline in the Video segment could continue to impact overall revenue.
• Russian sanctions: Expected to impact revenues by €16 million for the full year.
• Competitive pressures: Competition from Starlink and potential market entry by Amazon could affect market share.
• Regulatory hurdles: Pending FCC approval for equity injection could delay strategic initiatives.
• High CapEx: Planned gross CapEx of €1-1.1 billion could strain financial resources if revenue growth doesn’t meet expectations.

Q&A

During the Q&A session, analysts focused on the decline in the Video segment and the impact of Russian sanctions. There were also inquiries about the LEO revenue mix and pending regulatory approvals. Executives addressed these concerns by highlighting strategic partnerships and ongoing efforts to diversify revenue streams.

Eutelsat’s Q1 2025 results underscore the challenges and opportunities in the satellite communications industry. While some segments face headwinds, the company’s strategic focus on LEO services and connectivity could pave the way for future growth.

Full transcript - Eutelsat Communications SA (ETL) Q1 2026:

Conference Moderator: Welcome to the EUTELSAT First Quarter twenty twenty five-twenty twenty six Revenues Presentation. Now I will hand the conference over to the speaker, Christophe Cadrelia, Chief Financial Officer. Please go ahead.

Christophe Gaudier, Chief Financial Officer, EUTELSAT: Hello, everyone. Welcome, and thank you for joining us today for Ustepstat’s First Quarter twenty twenty fivetwenty twenty six Revenues Presentation. I’m Christophe Gaudier, CFO, and I’m joined today by Joanna Darlington, Head of Communication and Investor Relations. Let’s start with the highlights of the past quarter. LEO revenues continued their robust growth rate, up 70%.

Overall, first quarter revenues were in line with expectations, enabling us to confirm all our full year 2526 financial objectives as well as our longer term targets. And finally, at the September, EUTELSAT, on the thirtieth exactly, EUTELSAT held an ordinary and extraordinary general meeting where all resolutions related to the contemplated capital increases were approved. Let’s now turn to the Q1 performance. First, as a reminder, all commentary is on a like for like basis, that is to say, at constant currency and perimeter. Total revenues for the first quarter stood at EUR $293,000,000, virtually stable at minus 0.3% on a like for like basis.

They reflected a €10,000,000 negative currency effect and a €7,000,000 positive swing in other revenues, mainly from hedging as well as revenue recognition from iRiskware related to EUTELSAT’s involvement as consortium system development prime. Revenues of the four operating verticals were down 1.2% on a like for like basis. Let’s have a look at the segmental reporting. Video, representing 47% of revenues, stood at EUR 133,600,000.0, a decline of 10.5%. Fixed connectivity revenues, representing 22 of the group total, rose 16% to EUR 62,300,000.0.

Government services, 19% of revenues, stood at EUR 52,000,000, a rise of 18.5%. And finally, mobile connectivity revenues, representing 12% of the group total, stood at EUR 34,700,000.0, a decline of 12%. I will come back to this. Let’s now start with video. As said above, Q1 video revenues amounted to EUR 134,000,000, down 10.5% year on year.

They reflect the ongoing mid to high single digit secular market decline, but also the negative effect of the latest sanctions imposed on Russian channels. As a reminder, this started in July 2025 with an impact of around €16,000,000 expected for the full year twenty twenty five, twenty twenty six. On a quarter on quarter basis, revenues were down by 8.3%, more in line with the underlying market trend. On the commercial front, EUTELSAT renewed contracts, notably with key regional player, BHS Telecommunications, confirming the seven, eight degree west video neighborhood as the leading satellite position in the MENA region. Let’s now have a closer look to connectivity.

Total connectivity accounts for 53% of total sales and well over half of the operating verticals revenues. First quarter revenues stood at EUR 149,000,000, up 8.6%. As stated above, this growth was primarily driven by LEO revenues, up 71% to EUR 54,000,000 and representing over onethree of the connectivity top line. The LEO trend fully offsets the GEO connectivity decline of 10% to EUR 95,000,000. Quarter on quarter revenues were down by 13.2.

This sequential decline was mainly the reflection of an exceptionally high level of LEO terminal sales in Q4 twenty twenty four, 2025 across all three verticals, but predominantly government services and mobility. As a result, LEO revenues in the first quarter were down 20%, reflecting this impact as well as the non recurrence of catch up revenues recorded in Q4 twenty twenty five. Let’s look at each vertical in more detail now. Q1 fixed connectivity revenues stood at EUR 62,000,000, up 15.9% year on year, reflecting continuing growth in LEO services. Revenues were impacted by the cessation of revenue recognition from TEAM on Connect VHTS since January 2025 with an annualized impact of around EUR 12,000,000.

As a reminder, this impact will wash through as of Q3 twenty twenty five, twenty twenty six. On a quarter on quarter basis, revenues were down by 6%. This reflected, in particular, more challenging conditions for GEO enabled solutions. On the commercial front, EUTELSAT signed a strategic partnership with Trisas for LEO connectivity in Greenland as well as an agreement with Nelco, part of the Tata Group, to deliver LEO connectivity across India. Moving to Government Services.

Revenues stood at EUR 52,000,000, up 18.5% year on year. This rise reflected the growing demand demand on LEO enabled connectivity solutions for governmental applications, notably with services delivered in Ukraine. On a quarter on quarter basis, revenues were down 17%, reflecting mainly the above mentioned terminal impact. Mobile connectivity revenues stood at EUR 35,000,000, down 12.1% year on year. They mainly reflected lower GEO revenues as well as the nonrecurrence of a one off contract in aviation for about EUR 3,000,000 in Q1 twenty twenty five twenty four, twenty twenty five.

On a quarter on quarter basis, revenues were down by 19%, reflecting a one off revenue catch up in Q4 twenty twenty five and a slowdown in GEO in addition to the above mentioned terminal impact. Moving to backlog. It stood at EUR 3,500,000,000.0 at the September 2025, stable versus June 2025. It was equivalent to 2.8x fiscal year twenty twenty four, twenty twenty five revenues, with Connectivity now representing 58% of the total. Let’s now turn to the outlook.

The first quarter performance was in line with our expectations with a further sharp rise of LEO revenues offsetting the decline in GEO, which embarked the impact of further Russian sanctions in video from July 1. As a result, we confirm our fiscal year twenty five-twenty six financial objectives with revenues of the four operating verticals in line with the level of fiscal year twenty twenty four-twenty twenty five, LEO revenues to grow by 50% year on year and adjusted EBITDA margin slightly below the level of fiscal year twenty twenty four-twenty twenty five. Gross CapEx expenditure is expected in a range of EUR 1,000,000,000 to EUR 1,100,000,000.0. Following the contemplated capital increases announced in June 2025 and due to be completed by the end of calendar year 2025, net debt on adjusted EBITDA ratio is estimated at around 2.5x by year end twenty twenty five, twenty twenty six. Our longer term objectives are also confirmed.

Revenues of the four operating verticals between EUR 1,500,000,000.0 to EUR 1,700,000,000.0 by the end of fiscal year twenty twenty eight, twenty twenty nine, with LEO revenues significantly outperforming the market. Operating leverage, driving a mid to high single digit percentage point improvement in the EBITDA margin, resulting in a margin of at least 60% by fiscal year twenty twenty eight, twenty twenty nine. With that, I thank you very much for your attention. And together with Joanna, we are now ready to take your questions.

Conference Moderator: The next question comes from Roshan Ranjit from Deutsche Bank. Please go ahead.

Roshan Ranjit, Analyst, Deutsche Bank: Good evening, everyone. Thank you for the questions. I’ve got three, please. Firstly, on video, we saw a bit of a steeper decline this quarter with the Russian sanctions. And Christophe, in your comments, you mentioned a mid- high single digit decline.

Can I check, is that the headline decline expected? Or is that kind of the underlying decline, I. E, the mid single digit is now maybe could be high single digit within video? And just wondering if there are any kind of big video renewals expected this year. Secondly, within government, a good kind of performance you highlighted outside of The U.

S. Any details on the French framework agreement? Is there any contribution from that agreement within the government segment, please? And lastly, just on the LEO revenues, we did see this quarter on quarter decline, I guess, sales driven. When should we start thinking that the revenue mix moves much more into the services component, sorry, and therefore, we should see a quarter on quarter growth within stand alone LEO?

Thank you.

Christophe Gaudier, Chief Financial Officer, EUTELSAT: Okay. Very clear. Thanks, Roshan. So if I start by the your first question related to Video, I mean, as you said and as we commented, the biggest impact for this quarter is obviously the cessation of some of the Russian channels following the sanctions. But, yes, I mean, we already mentioned in the last communication that the decline we saw on video.

I mean, obviously, if you look quarter by quarter, as usual, you may have some hiccups and some might vary a bit or different be different from one quarter to another quarter. But yes, I mean, we confirm that the trend that we see is more mid to high single digit rather than low to mid single digits. So that’s for the video part. For the gov, so you mentioned, first of all, The U. S.

Part. As a precision, I would say that and to make sure that we’re clear, the U. S. Gov used to be in the past a very significant proportion, if not the almost a sole proportion, the integrity of the video business for EUTELSAT. It now represents less than 50% or less than half.

And the increase coming from other governments. I mean, we mentioned Ukraine, but not only. More specifically related on the discussion or the contracts with the French DoD or the French so called Direction General de la Amemand. And the main contract that agreement, it’s not a contract, it’s a framework agreement that was signed with the French MOD is Nexus. So as a reminder, this is a framework agreement that is due to last for ten years.

It does include different elements. Obviously, capacity and services, but also development, co development in order to reinforce certain aspect of the military purposes, and it also includes hosted payload. So at this point, it’s a framework. We are currently working and discussing with the French MOD so called DGA in order to finalize and to precise more the content of this framework agreement with the objective to start the recognition of revenues as from fiscal year twenty twenty six, so as from this year. We are, in particular, discussing the content and the hosted payloads in order to secure a first contract on these specific items by the end of this year.

But I can say that, generally speaking, the revenue generation from this contract will be heavily, I would say, second half loaded during the period of the Nexus agreement, which I remind is a ten year agreement or ten years framework. So this will come more in the later part of this agreement. Moving now to your question on LEO and the mix of the sales of the LEO. I mean, clearly, what I would like to stress on is, first of all, that the high level of equipment sales is a good sign. It’s a very good sign because that means that more and more the usage of the constellation is increasing significantly, is increasing at the pace of the development of the installation of the, what the so called, UTs.

What I must also stress that, again, Q4 was a bit specific, but the proportion between equipment sales and service revenues in the total revenues is still equipment are still representing a minor part of the total sales. And I would say that also you have a kind of delay a bit because we the equipment that are installed and that are sold today allow also our customer to use more of their telco pay, so more of their capacities that they have already contracted. And again, it’s showing a significant increase in the usage of the constellation, not directly or not immediately an increase in revenue recognition because it’s already taken into consideration in some of the take or pay. Obviously, it also increases what we call the pay as you go. I mean, the more UTs you have, obviously, the more pay as you go, you also have.

But again, and I want to stress what I said, it’s still I mean, it’s a minor part, okay, of the total sale. It’s not the majority that is represented by equipment sales.

Roshan Ranjit, Analyst, Deutsche Bank: That’s great. That’s very clear. Can I just check minor part? Are we talking about 20% of the LEO revenue base is equipment perhaps?

Christophe Gaudier, Chief Financial Officer, EUTELSAT: Well, really, I mean, it’s not any detail that we give, and it depends from quarter from quarter. Difficult for me to tell you more on this.

Roshan Ranjit, Analyst, Deutsche Bank: Okay, understood. Thank you.

Conference Moderator: As a reminder, if you wish to ask a question, please dial pound key or hashtag five on your telephone keypad. If you wish to withdraw your question, please dial 6 on your telephone keypad. The next question comes from Ben Rickett from New Street Research.

Ben Rickett, Analyst, New Street Research: I have two questions, please. First question just around sort of phasing of revenue. So revenue was down 1% in the first

Joanna Darlington, Head of Communication and Investor Relations, EUTELSAT: Ben, can you speak up a bit, please? Ben, sorry, we can’t

Ben Rickett, Analyst, New Street Research: No, it’s short.

Joanna Darlington, Head of Communication and Investor Relations, EUTELSAT: Thanks.

Ben Rickett, Analyst, New Street Research: Is this better, like, now? Can you hear me okay now?

Christophe Gaudier, Chief Financial Officer, EUTELSAT: It’s it’s it’s still a bit lower, Ben. Try to to to increase the on our side to Okay.

Ben Rickett, Analyst, New Street Research: I’ll try and really shout. So hopefully, this works.

Christophe Gaudier, Chief Financial Officer, EUTELSAT: Okay. Thanks.

Ben Rickett, Analyst, New Street Research: So first question, just around revenue phasing. So it was down 1% in Q1. Do you expect I mean, for the full year, will we be around that level? Or should we expect revenue to improve throughout the year? Is there any sort of particular phasing we should be aware of?

And then second question, I was just could you give us an update on the IRIS squared process, the technical review process? And also specifically, could you say anything about the possibility of The UK joining Iris Squared? Thank you, and I hope that was clear.

Christophe Gaudier, Chief Financial Officer, EUTELSAT: Okay. Thanks, Ben. So for the first question, I mean, we gave our objectives and we confirm our full year objective of a level of operating verticals revenues for this fiscal year 2026 in line with the one of last year, so 2025, meaning that the significant increase in LEO revenues, I remind that we expect we are at plus 70% compared to last year for Q1. But for the overall year, we expect a growth of LEO revenues of around 50%, and this will offset the decrease of GEO revenues, both on video and connectivity. But so the trend is is as we confirm, the trend is is to be at the same level of of last year.

On the Iris Square question, maybe, Joanna, can give some more insights.

Joanna Darlington, Head of Communication and Investor Relations, EUTELSAT: Well, I can’t really. So, yes, like you, we I also did see the article, where our French minister was was talking about The UK being welcomed to join Iris Squares. But I I don’t think it’s anything that’s that’s particularly concrete, and it’s certainly not something that we’ve heard, particularly with with our our, discussions with our institutional counterparts in The UK. So I think, obviously, from our point of view, it would be very much welcome, but I’m not really aware that there are lots of legs to that particular story.

Ben Rickett, Analyst, New Street Research: Okay. That’s helpful. Thank you.

Conference Moderator: As a last reminder, if you wish to ask a question, please dial 5 on your telephone keypad. We will wait a few moments to allow people to join the queue if they want to participate. The next question comes from Roshan Ranjit from Deutsche Bank. Please go ahead.

Roshan Ranjit, Analyst, Deutsche Bank: Hi, again. So I’ll take the opportunity for another question. Just on the equity injection, you reiterated to closing by the end of the year. Are there any you’ve got all the approvals on the governance side, but are there any regulatory approvals that are still waiting as part of the process, either as part of the reserved capital increase or the, I guess, true rights issue? Anything you can say there?

Okay.

Christophe Gaudier, Chief Financial Officer, EUTELSAT: Yes. Yes, very clear, Russian. So we have all the authorization, all the regulatory approvals, but there is a piece one piece missing, and this one is coming from The US. As as you may remember, we need to have two approvals actually from The US. One is coming from the foreign investment side and and this one, which is SifyOS, called SifyOS.

And this one is fully obtained, so it’s secured. And we have another one as we are in the telco environment. So there is another one that another authorization that is needed coming from the FCC. And this one is still pending. And, obviously, you know, with the current situation in The US, with the current shutdown, it’s taking a bit more time.

So we’re still waiting for this approval, but we expect, as we confirm, we expect to execute both the reserve capital increase and the rights issue before the end of this calendar year, so before the December.

Roshan Ranjit, Analyst, Deutsche Bank: The

Conference Moderator: next question comes from Stephane Beyajian from Auto BHF. You.

Stephane Beyajian, Analyst, Auto BHF: Can you hear me?

Roshan Ranjit, Analyst, Deutsche Bank: Can can

Christophe Gaudier, Chief Financial Officer, EUTELSAT: hear you now, Stephane.

Stephane Beyajian, Analyst, Auto BHF: I’m sorry about that. Apologies. Yes, was just wondering whether you can make any comment on the competitive environment, generally speaking, in your different segments, if you’ve seen any changes lately. I mean, we know Amazon is also progressively trying to come into the market. So any comment?

Thank you.

Christophe Gaudier, Chief Financial Officer, EUTELSAT: No. Thanks, Stephane, for your question. I mean, nothing really new from, you know, last time. I mean, we we have discussed that in previous meetings and previous communication with, obviously, you know, the fast ramp up of Starlink. I mean, I think we’re still in the same situation.

We still see a strong progress of Starlink on the broadband and the b2c segment, as you know. For the other ones, I would say, I mean, we are, again, the only two players. Star sorry, Amazon, I mean, is going to come, but we we don’t really know exactly when as we speak. Right? And it still needs to be confirmed.

But at this point, I have nothing else to comment compared to what we see. I mean, the the the market, clearly, the demand for connectivity by satellite and more specifically from LEO constellation is growing and is growing fast. The competition is still the same, and we still expect to have at least Amazon to come in the coming years and others. But I mean, I have nothing to add on that.

Conference Moderator: There are no more questions at this time. So I hand the conference back to the speakers to conclude the call.

Christophe Gaudier, Chief Financial Officer, EUTELSAT: Well, thank you. Thank you very much for your questions. And I wish you now a very pleasant evening for those in Europe, and good day for those in The U. S, if any. And let’s speak and let’s gather to during our next financial communication.

Thank you very much, everyone. Bye bye.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.