exactEarth revenues reflect impact of Canada’s AIS contract upset
WASHINGTON — Canada’s exactEarth is urging investor patience, saying the sharply lower earnings it saw during its first year as a standalone company will improve as government customers warm to using satellites to track ships.
For the 12 months ended Oct. 31, exactEarth revenue fell nearly 30 percent to 18.9 million Canadian dollars ($14.2 million) with annual earnings before interest, taxes, depreciation and amortization finishing in positive territory despite a poor fourth quarter.
The company expects revenue to rebound once its second-generation of ship-tracking Automatic Identification System (AIS) sensors have all been launched.
The first four exactView AIS payloads were launched Jan. 14 as hosted payloads aboard the first batch of Iridium Next satellites a SpaceX Falcon 9 carried to orbit in its return-to-flight mission.
In exactEarth’s first full-year earnings call since spinning off from Com Dev International in November 2015, company CEO Peter Mabson said Jan. 19 the initial exactView payloads are expected to enter service within four months. ExactEarth currently has a constellation of nine active satellites equipped with AIS sensors that collect maritime information such as the location, identity, and velocity of a vessel. Government agencies are showing increased interest in using AIS to keep an eye on ships for security reasons and trade and environmental compliance.
Mabson also told investors that the Canadian government is competing a second satellite AIS contract after its renewal agreement with exactEarth last May shrunk to an underwhelming dollar figure.
The Canadian government renewed exactEarth’s AIS contract for 11.8 million Canadian dollars, down 7.2 million Canadian dollars from the worth of its 2014 contract. Mabson said the Canadian government issued a new Request for Proposal in October after performing an internal review. ExactEarth submitted a bid for the contract in December.
The unexpectedly small size of that contract, combined with a non-recurring sale of historical AIS data to Harris Corp. the previous year, caused exactEarth revenues to shrink in 2016. For the 12 months ended Oct. 31, exactEarth reported 18.9 million Canadian dollars in revenue, down from 26.6 million in 2015.
Mabson said exactEarth submitted its new proposal in December and is still waiting to learn who the government picks. Last year, exactEarth fended off bids from Orbcomm of Rochelle Park, New Jersey, and the French space agency subsidiary CLS to clinch its disappointing renewal.
ExactEarth’s adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was -960,000 Canadian dollars for the quarter ended Oct. 31, and stood at 520,000 Canadian dollars for the year. In 2015 the company had a fourth quarter adjusted EBITDA of 3.4 million Canadian dollars and a total for the year of 9.0 million.
Subscription services — the company’s main focus and source of growth — shrunk from 20.6 million Canadian dollars in 2015 to 15.1 million last year. In a financial press release issued Jan. 19, exactEarth said subscription revenue not including the government of Canada contract increased by 900,000 Canadian dollars.
Mabson said government subscribers typically have planning cycles that seek to forecast needs for seven or more years at a time, and that many are just getting acquainted with satellite-AIS. Contract durations also face different rules compared to private-sector customers.
“A number of governments simply aren’t able to sign up to more than 12 months at a time just by government procurement statutes, but there are others that tend to look at it more strategically and have the freedom within their procurement system to do that,” he said.
Some government customers, namely China and India, have allowed for multiyear subscriptions. ExactEarth also has a four-year contract with the French Navy through an Airbus-Telespazio team.
Mabson said the exactView constellation’s faster revisit rate and other improvements should unlock more revenue opportunities. Through an agreement with Harris Corp., exactEarth will perform ground-based data processing while Harris deploys and operates the 65 second generation exactView hosted payloads. ExactEarth also has exclusive distribution rights for the data in all markets except the U.S. government.
“As the various satellites become operational it will mark the beginning of our move towards a continuous real time global vessel tracking service capability in 2018,” he said.
The exactView deployment schedule is tied to Iridium Next, which has at least six more SpaceX launches of 10 satellites each planned between now and June 2018.
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January 24, 2017 at 12:45PM