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DigitalGlobe reports commercial growth ahead of WorldView-4 launch

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PARIS – Geospatial imagery and services provider DigitalGlobe on July 28 reported a sharp increase in non-U.S. government revenue for the six months ending June 30 and said on-line mapmaking companies may be lured into purchasing the company’s highest-resolution products – but on DigitalGlobe’s terms.

DigitalGlobe’s principal customer, the U.S. government, is generating about the same level of revenue as last year, but the strength of the commercial division – which has been an issue in the past couple of years – enabled the company to raise its anticipated revenue and gross profit for the year.

In a July 28 conference call with investors, DigitalGlobe Chief Executive Jeffrey R. Tarr said a recent contract with on-line transportation company Uber, while small, could signal a broader rethink by on-line location-based services providers about how to value DigitalGlobe’s highest-resolution product.

Westminster, Colorado-based DigitalGlobe in 2015 said it would preserve the market value of its 30-centimeter imagery by not striking bulk-sales deals with Google Maps, Microsoft and others because of the risk of commoditization of the product.

For now, DigitalGlobe is the only commercial company with a 30-centimeter product on the market, an advantage it is likely to keep for a couple of years.

“We have been selling 30-centimeter imagery to a few of our LBS [location-based services] customers, primarily on an experimental or trial basis,” Tarr said. He declined to speculate on the scale or timing of larger contracts beyond saying they were a possibility.

One market where DigitalGlobe’s traction was thought to be diminishing was China, which has launched its own high-resolution optical Earth observation satellites and has seen a corresponding drop in total imagery purchased from non-Chinese sources.

But for the six months ending June 30, DigitalGlobe sold $4.1 million in goods and services in China, the same volume as a year ago. The company did not disclose whether these sales were mainly of 30-centimeter products.

Inside DigitalGlobe’s commercial business lies what the company calls its Direct Access Program (DAP), which includes governments that agree to long-term contracts and receive volume discounts in exchange for direct access to the company’s constellation over these governments’ specified territories.

DAP customers accounted for $61.7 million in DigitalGlobe revenue for the six months ending June 30, up 9.8 percent over the same period a year ago. Non-DAP commercial customer revenue totaled $67.1 million, up 5.8 percent from a year ago, DigitalGlobe said in a July 28 filing with the U.S. Securities and Exchange Commission (SEC).

DigitalGlobe said it had recently signed a letter of intent with a 12th DAP partner for multi-year access to DigitalGlobe’s full constellation.

DigitalGlobe operates four satellites in low Earth orbit. A fifth, called WorldView-4, is scheduled for launch on Sept. 15 aboard a United Launch Alliance Atlas 5 rocket from Vandenberg Air Force Base, California.

WorldView-4, once in service in early 2017, will enable to DigitalGlobe to offer more of its highest-resolution imagery to non-U.S. government customers, who have struggled for access to the 30-centimeter-resolution WorldView-3 satellite because much of that satellite’s capacity that has been reserved for the U.S. government.

The U.S. National Geospatial-Intelligence Agency (NGA) on July 28 exercised an option for a seventh contract year under the EnhancedView contract with DigitalGlobe. Structured as one firm year and then a series of one-year options, EnhancedView guarantees DigitalGlobe predictable revenue if the company meets image volume and quality requirements.

The U.S. government accounts for about two-thirds of DigitalGlobe’s revenue. For the six months ending June 30, the EnhancedView contract accounted for $168.6 million in revenue, the same as in 2015. Total U.S. government revenue for the period was $222.2 million, down 2.2 percent from a year ago.

DigitalGlobe’s business is witnessing a flurry of new entrants as Silicon Valley-type startups plan their own constellations of small satellites and government and commercial entities in Europe and Asia bolster their fleets.

Even U.S. defense and intelligence agency customers have expressed interest in getting more commercial imagery.

That being the case, DigitalGlobe is regularly asked whether the increasingly crowded commercial landscape is having any effect on its business. As he has in the past, Tarr on July 28 said he’d seen no effect.

The company in February entered into a partnership with the Saudi Arabian government to build a constellation of at least six small satellites carrying imagers with a resolution sharper than 1 meter.

For DigitalGlobe, such a constellation could “tip and cue” the company’s larger, higher-resolution satellites to extract detailed information from phenomena that the smaller satellites can image only vaguely.

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DigitalGlobe reports commercial growth ahead of WorldView-4 launch

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