UrtherCast reported mixed third quarter earnings yesterday and indicated that it was poised to follow through on its business plan to deliver machine-to-machine Earth observation software as a service.
UrtheCast is a Vancouver-based technology that currently operates two Earth Observation satellites, Deimos-1 and Deimos-2, through its subsidiary Deimos Imaging.
According to UrtheCast, OptiSAR is “the world’s first fully-integrated constellation of sixteen multispectral optical and synthetic aperture radar (SAR) satellites.
UrtheDaily is a “six-satellite constellation designed to capture high-quality, medium-resolution optical imagery of the Earth’s entire landmass (excluding Antarctica) every day.”
— DEIMOS IMAGING (@deimosimaging) November 7, 2017
Third Quarter 2017 Results
Taken at face value, the third quarter earnings by UrtheCast weren’t good. Revenue was $10.2 million down $5.3 from the same quarter in 2016. UrtheCast attributes this to “unexpected delay in the award of a multimillion dollar, multiyear contract” by one of their largest customers. They expect that contract to renewed in the coming months.
During the earnings call with institutional investors Wade Larson, CEO of UrtheCast said “the third quarter also, however, represented a major inflection point for our key initiatives to transform UrtheCast to a business model based upon long-term, high-margin, recurring business through the successful commercialization of our best-in-class technologies. This new business model moves us from a contract-to-contract existence of the current industry towards predictable models based on committed, multiyear, long-term, take-or-pay contracts. In fact, this takes our EO (Earth Observation) business from being project-based to being a SaaS (Software as a Service) model-based with more predictable and visible revenue streams.”
“UrtheDaily will be the world’s most advanced change detection, change monitoring and analysis system. In fact, it will be the world’s first EO (Earth Observation) constellation built from the ground up not for human eyeballs or GIS software, but for machine learning and artificial intelligence.”
There is Good News
While their quarterly financial results weren’t what they had hope for, there was good news.
To start, UrtheCast said it expects to close its current round of financing for $175 million to build and launch the UrtherDaily constellation by the end of the year. Larson said they had “received strong interest in excess of our needs from various world-class institutional lenders.”
With that news, UrtheCast also announced that it had contracted Surrey Satellite Technology Ltd. (SSTL) of the U.K., to build the constellation using the SSTL-250 platform. The satellites would be launched and operational in 2020.
UrtheCast also said it had a new unidentified customer for the UrtherDaily constellation.
They have also expanded their partnerships enabling new revenue streams to come online. These include agreements with Italy’s e-geos, China’s Twenty First Century Aerospace Technology (21AT), and U.S. based ESRI.
In August UrtheCast had announced the $100 million XL-Sat Accelerator Mission, a “dual-frequency stand-alone Synthetic Aperture Radar (SAR) operational-class satellite as an ‘accelerator’ for the OptiSAR Constellation.” According to Larson they have been “actively engaged with the government of Canada relating to the primary precondition for this contract, which was the export permit” and they expect that permit to be in place in shortly, allowing the program to go ahead in early 2018.
While revenue took a hit in the third quarter, UrtheCast appears poised to take the next step in executing its business plan. When they close their current round of financing, that step, committing to building and launching the first satellites for their UrtheDaily constellation, will be one of its most significant ones to date.