…if you consider “slightly declining revenue” to be a performance.
They managed to bring in €2,001 million, which is down 0.9% year-over-year. But don’t worry! They still proudly declare that this is at the “top end of their financial outlook” because apparently, setting the bar low enough that even tripping over it looks like a victory is a valid strategy.
Now, let’s talk about their supposed big win, Adjusted EBITDA grew by a mind-blowing 0.9%. That’s right, for the first time in a decade, they managed to nudge that number up by a fraction of a percentage point. Pop the champagne, folks!
Of course, this has less to do with actual revenue growth and more to do with cutting costs aggressively, which, let’s be real, is the corporate equivalent of going on a diet by skipping lunch and calling it a “health transformation.”
The real story here is that SES is being kept alive by government and mobility contracts because its media business is slowly circling the drain. Media revenue dropped 5.3%, but that’s totally fine, because, according to SES, this was “in line with expectations.” Yes, when you expect your business to shrink, and it does exactly that, apparently it’s a cause for celebration.
Meanwhile, the Networks business grew by 2.9%, thanks to the Government sector (+6.4%) and Mobility (+7.1%). This just means SES has smartly positioned itself to profit from airlines, cruise ships, and governments that love writing checks, because if there’s one thing bureaucracies are good at, it’s spending (your) money.
But let’s talk cash flow, because that’s where things get interesting. SES is proudly flaunting €3.2 billion in cash, which sounds fantastic until you realize a large chunk of it is already spoken for. They’ve got a massive €1.8 billion capital expenditure plan for hashtag#IRIS² (2027-2030) and, oh yeah, that little Intelsat acquisition they’re trying to pull off. It’s almost as if they’re stockpiling cash like a doomsday prepper who knows the next few years might get rough.
And speaking of Intelsat, SES keeps insisting that this is a “value-accretive transformational acquisition.” In normal human language, that translates to “a really big gamble.” If this works, SES will become a dominant player in the satellite industry. If it doesn’t? Well, let’s just say that investors will be watching SES stock drop faster than a de-orbiting satellite.
Over the next 1-2 years, the stock could explode upwards if the Intelsat deal works. But if integration problems arise, … you’re shares are toast, jam side down
But finally, in the long-term, SES is putting all its chips on government contracts, IRIS², and its O3b mPOWER satellites. If everything goes as planned, it could be a big win.
But let’s be honest, this is the space industry.
When do things ever go exactly as planned?
Read to the tune of …. ?
SES: Sovereignty With Stock Tickers