Beam Communications reports a pivotal FY25 marked by the divestment of its Zoleo joint venture, unlocking significant capital and delivering improved margins despite a statutory revenue decline. The company projects positive operating cash flow and growth in FY26.
- Divestment of Zoleo Inc. JV unlocking ~US$9.5 million for shareholder capital return
- Statutory revenue down 21.6% to $25.7 million due to JV exit, but normalised EBITDA positive at $1.9 million
- Gross margin improved to 34.4% as sales shifted from low-margin Zoleo devices
- Cost savings exceeding $2.7 million on track for FY26 with executive pay cuts and waived director fees
- Positive FY26 outlook with expected higher revenue, positive operating cash flow, and increased cash holdings
A Year of Transformation
Beam Communications Holdings Limited (ASX, BCC) has reported a transformative financial year ending June 2025, highlighted by the strategic divestment of its 50% stake in the Zoleo Inc. joint venture. This move unlocked approximately US$9.5 million (around A$14.6 million), earmarked to fund a return of capital to shareholders, signaling a decisive shift in the company’s strategic focus.
While statutory revenue declined by 21.6% year-on-year to $25.7 million, primarily due to the exit from the Zoleo JV, the underlying business demonstrated resilience. Normalised free cash flow surged 47.5% to $2.1 million, and normalised EBITDA turned positive at $1.9 million, a stark contrast to the statutory EBITDA loss of $2.3 million. This reflects the strength of Beam’s core satellite communications operations beyond the divested venture.
Margin Expansion and Cost Discipline
Beam’s gross margins improved to 34.4% from 32.1% in the prior year, driven by a sales mix shift away from the lower-margin Zoleo devices. This margin enhancement underscores the company’s focus on higher-value products and services within its satellite communications portfolio.
Cost rationalisation remains a key pillar of Beam’s strategy. The company is on track to exceed $2.7 million in annualised cost savings in FY26, supported by significant executive pay reductions and the removal of fees for Non-Executive Directors. These measures contribute to a leaner cost base, positioning Beam for sustainable profitability.
Operational Highlights and Business Units
Recurring revenue from airtime and services grew 25.4% to $2.1 million, while Zoleo royalty revenue increased by 32.8% to $1.4 million, though royalties will cease from December 2025 following the JV exit. Core equipment revenue, excluding Zoleo devices, declined 19.1% to $15.6 million, impacted by delivery delays of Iridium devices and the transfer of manufacturing responsibilities to Roadpost Inc.
SatPhone Shop, Beam’s wholly owned subsidiary and Telstra’s largest satellite dealer, experienced a 4.2% dip in hardware sales due to website migration and SEO disruptions. However, these issues have largely been resolved with sales improving in FY26.
Balance Sheet Strength and Capital Return
Beam closed FY25 with cash holdings of $1.8 million and access to an additional $300,000 in undrawn overdraft facilities. The company plans to repay a US$320,000 director’s loan by year-end from operating cash flow, negating the immediate need for equity raising.
The proceeds from the Zoleo divestment will be paid in four instalments over three years, with the first payment received shortly after the valuation report release in August 2025. Beam has engaged BDO Australia to advise on capital return options and further shareholder value initiatives, with updates expected ahead of the November AGM.
Looking Ahead, FY26 and Beyond
Beam’s outlook for FY26 is positive, underpinned by a strong and clean balance sheet and a rebound in second-half FY25 performance. The company anticipates higher revenue driven by growth in recurring airtime services, positive operating cash flow, and increased year-end cash reserves. This outlook is tempered by the cessation of Zoleo royalties and ongoing market risks.
Key risks identified include foreign exchange volatility given Beam’s US dollar revenue exposure, reliance on strategic partnerships, rapid technological changes in satellite communications, channel partner support, access to capital, regulatory compliance, and cybersecurity threats. The company continues to monitor and manage these risks proactively.
Governance and Leadership
FY25 saw several board changes with the appointment of David Stewart as Non-Executive Chairman and new directors Carl Hung and Brendon Lau joining the board. The leadership team remains focused on executing the company’s strategic priorities and driving operational efficiencies.
Beam Communications continues to innovate in satellite and dual-mode communication technologies, serving major global clients including Iridium, Telstra, and KDDI. The company’s strategic repositioning and disciplined cost management set the stage for renewed growth and shareholder value creation in the coming years.
Bottom Line?
Beam’s FY25 restructuring and Zoleo exit lay a foundation for growth, but investors should watch closely for execution on capital returns and FY26 revenue trends.
Questions in the middle?
- How will Beam replace the recurring revenue lost from Zoleo royalties after December 2025?
- What are the detailed plans and timing for the capital return to shareholders from the Zoleo divestment proceeds?
- How effectively can Beam manage foreign exchange and partnership risks amid evolving satellite communications markets?