Cambridge, Ontario based exactEarth has had a bit of a bumpy ride after being spun-off from COM DEV in 2015 and being publicly listed in January 2016.
Today, the company appears to have stabilized, in large part due to the rolling out of its second generation services from its Automatic Identification System (AIS) tracking sensors hosted on the Iridium NEXT satellite constellation which went fully operational in January 2019.
Importantly, CEO Peter Mabson said during the companies first ever virtual Annual General Meeting (AGM) on April 23, that they won’t need to make “further CapEx (capital expenditures) investments in AIS satellite capability for the next 12 years or more.” In part, that’s because the sensors onboard the Iridium Next constellation can be updated with new software as needed to offer new services.
The days of large capital expenditures are behind them for some time, and the company is fully focused on making the investments payoff from what they see as a leading position in the AIS marketplace.
Mabson in discussing their future outlook, and taking into account the current pandemic, said “our outlook for the business is now stronger than it has been at any time in the past few years.” He then qualified that by saying “this is our current view, although of course the longer term economic implications of the pandemic and the recovery from it are difficult for any business to predict at this point.”
The market size exactEarth is trying to tap into is growing.
The two market areas the company addresses include the vessel tracking market which Mabson says should reach $150 million by 2024. The other market, the “broader maritime information and analytics market” which their second generation, known as exactView RT, can tap into, is currently a $1 billion marketplace and “moving towards more than $2 billion in value mid decade.” He then said “with a robust and reliable real time vessel tracking service, we think we now have an opportunity to address a portion of this market.”
exactEarth cost savings
In their fiscal year 2019, revenue was $15.2 million, up 17% compared to $13.0 million in fiscal year 2018.
Here’s some of the highlights from their Q1 2020 results:
- Revenue was $4.1 million, up 17% compared to $3.5 million in Q1 Fiscal 2019.
- Subscription Services revenue was $3.8 million, up 23% compared to $3.1 million in Q1 Fiscal 2019.
- Order Bookings were $7.1 million compared to $3.0 million in Q1 Fiscal 2019.
- Adjusted EBITDA* was $0.3 million compared to ($0.9) million in Q1 Fiscal 2019.
- Cash and short-term investments were $8.7 million at the end of Q1 Fiscal 2020 compared to $10.2 million at the end of Fiscal 2019.
Maybee spent some time discussing some recent developments which he says will “reduce our cost base and what we believe is required for us to get to positive adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization).” He went on to say “these two developments are, 1 – the amended agreement with L3 Harris completed in January, and 2 – the sale (of) select Gen1 assets to Myriota, which we announced at the end of March.”
The amended agreement with L3 Harris significantly reduces their quarterly payments along with other cost saving measures.
The sale of Gen1 satellites to Myriota, an Australian IoT (Internet of Things) company they’ve invested in, rids them of some older satellites which Myriota will use for its IoT business. exactEarth will have access to the Gen1 satellite sensors for their data.
exactEarth’s fiscal year 2020 second quarter ends on April 30, and they expect to announce results in the second week of June.