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DigitalGlobe: No impact seen from WorldView-4 delay or NGA contract with Planet

DigitalGlobe CEO Jeffrey Tarr said investment in replacement satellites for WorldView-1 and 2 would start in 2017, and that the Saudi-built constellation in which DigitalGlobe is a partner would launch in 2019. Credit: Space Foundation

PARIS — Geospatial imagery and services provider DigitalGlobe on Oct. 25 reported increased revenue and gross profit for the three months ending Sept. 30 with a surprisingly large increase in commercial business.

Westminster, Colorado-based DigitalGlobe, whose main revenue source is a 10-year contract with the U.S. National Geospatial-Imagery Agency (NGA), brushed aside NGA’s recent contracts with operators of small-satellite constellations, saying it’s a long-expected flirtation.

Asked specifically to address a $20 million NGA contract with San Francisco-based Planet, DigitalGlobe Chief Executive Jeffrey R. Tarr said:

“There’s nothing new there. NGA has been talking for a couple of years now about experimenting with some of the emerging small-sat players as they come on line. We see no impact whatsoever on our relationship with the NGA. Very different use case: We’re foundational and part of the core [NGA] mission.”

The launch of DigitalGlobe’s WorldView-4 satellite, whose 30-centimeter ground resolution is dedicated to the company’s non-U.S. government customers, has been delayed from September and is now scheduled for Nov. 6.

In a conference call with investors, DigitalGlobe Chief Financial Officer Gary W. Ferrera said the launch delay is not expected to have any material impact on the company’s 2017 revenue.

DigitalGlobe has 10 Direct Access Partners that can control the spacecraft within their specified geographic territories up to the limit of their contracts’ imagery volume. DigitalGlobe has said several DAP customers were frustrated at their limited access to the in-orbit WorldView-3 satellite’s 30-centimeter imagery, much of which has been pre-purchased under the NGA contract.

WorldView-4 will open that same resolution, which is currently without equal on the global commercial market, more widely to the company’s commercial customers.

Once WorldView-4 is in service, DigitalGlobe’s next capacity-augmentation event will be the scheduled 2019 launch of six or more smaller satellites, each with a ground resolution sharper than one meter but likely not as sharp as WorldView-4.

Ferrera said contractual commitments and letters of intent for WorldView-4 imagery so far could add $55 million to the company’s annual revenue.

A Saudi constellation in 2019, and its own bigger satellites in 2021

These smaller satellites, called Scouts, will be operated as a constellation. The satellites’ development and launch are being managed by two Saudi Arabian government entities, Taqnia Space and the King Abdulaziz City for Science and Technology (KACST).

DigitalGlobe has not disclosed details on the revenue share for the Scout constellation beyond saying the Saudi-built satellites will be used to give DigitalGlobe a “tip and cue” capability wherein the smaller satellites spot something of potential interest and then inform DigitalGlobe’s higher-resolution satellites to take a closer look.

Starting in 2017, DigitalGlobe expects to begin investment in one or more satellites to replace the company’s aging WorldView-1 and WorldView-2 satellites. Tarr said the entire spending program — presumably including the satellites’ construction, launch and insurance — would be no more than $600 million.

Tarr declined to specify the imaging capability of the next satellites but said DigitalGlobe intends “to sustain our lead in resolution.”

The current 30-centimeter resolution is already at the limit of what the U.S. government will permit for commercial satellite imagery. But Tarr said the the new spacecraft could reduce the time between image acquisition, a key metric for many government and commercial customers.

For the three months ending Sept. 30, DigitalGlobe reported revenue of $181.8 million, up 4.9 percent over the same period a year ago. Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was 53.7 percent of revenue, up from 53 percent the previous year.

The company said its full-year 2016 revenue would be between d$700 million and $710 million, flat from 2015. But EBITDA is expected to be 52.5 percent of revenue against 50.5 percent last year.

U.S. government-derived revenue for the three months ending Sept. 30 was $114.5 million, up 3.2 percent from the previous year. While the company’s core 10-year EnhancedView contract with NGA was stable, as expected, the government purchased more value-added services from DigitalGlobe than a year ago.

A commercial surprise and a Russian rebound

The real surprise in the quarterly results was on the commercial side. Diversified commercial revenue was up 8 percent from last year, to $67.3 million. DAP customers accounted for $30.3 million of the commercial total, up 4.8 percent.

Tarr said Microsoft, which sold much of its mapping business to Uber, it retained the portion that feeds its Bing internet search engine, which like all location-based services must be regularly refreshed.

DigitalGlobe said its Russian business, which in the past couple of years has fallen sharply, appears to be rebounding, with revenue increases for each of the first three quarters of 2016. As of Sept. 30, Russian customers generated $5.4 million in revenue, compared to $4.3 million for all of 2015.

SpaceNews.com

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DigitalGlobe: No impact seen from WorldView-4 delay or NGA contract with Planet

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