AAC Clyde expects several of its satellites to launch in the coming months — developments that the company said should encourage follow-on orders. Credit: AAC Clyde

PARIS — Cubesat builder AAC Clyde reported sharply lower-than-expected revenue and gross profit for the three months ending Sept. 30 but said it will convert enough backlog to reach its full-year revenue target and become EBITDA-positive by year’s end.

The company, which combines the satellite-manufacturing capabilities of AAC Microtec in Sweden and Clyde Space of Scotland, is heading into what may be a crucial period.

Several of its customers are launching their first proof-of-concept satellites. If successful, these first spacecraft could unlock the follow-on funding needed to launch the planned constellations, and that’s where AAC Clyde makes its money.

Combining its AAC and Clyde facilities, AAC Clyde can produce 100 satellites per year, mainly 3u and 6u cubists that it sells. Its price range is $100,000 to $1 million per satellite, delivered in orbit.

AAC Clyde’s customer set includes several companies, such as Kepler and NSLComm, preparing constellations of commercial satellites. Credit: AAC Clyde

Thirty AAC Clyde spacecraft are already in orbit, with three more expected to launch within weeks as ride-share passengers on U.S., Russian and Indian rockets.

The company is building a 50-kilogram satellite, the upper limit of its range, which is expected to launch in 2019.

Like many other non-American smallsat builders, AAC Clyde is looking to expand its presence in the United States and in the past has said it is reviewing acquisition targets.

Short of that, it has signed a memorandum of understanding with Ball Aerospace to address smallsat market opportunities “in the U.S. and globally,” AAC Clyde said in announcing the agreement.

While Ball Aerospace’s smallsat product line, notably its Ball Configurable Platform, overlaps with AAC Clyde’s, the two companies said they viewed their portfolios as complementary.

“The intent of the MoU is to conduct open-ended discussions on various topics with a view to explore market opportunities,” the two companies said in announcing the agreement on Nov. 20.

The year 2018 has not been kind to AAC Clyde’s stock and the Q3 financials did nothing to reverse the trend. A rebound might follow the year-end results, which are expected to be in line with company forecasts despite the third-quarter slump. Credit: Redeye AB

AAC Clyde Chief Executive Alfonso Barreiro said in a Nov. 22 statement to investors that the company hopes the Ball relationship “is the first step towards a significant partnership and an important source of future business in the United States.” Ball is particularly well-placed in the U.S. government market. The U.S. Defense Department is moving toward small satellites as a way to improve the resilience of its satellite infrastructure by distributing sensors over a large number of satellites.

For the three months ending Sept. 30, AAC Clyde reported net sales of 10.4 million Swedish krona ($1.15 million), down 53% from the previous quarter. For the nine months ending Sept. 30, revenue was 48.9 million krona, with a negative EBITDA of 31.9 million krona. After-tax profit for the nine months was a negative 43.1 million krona, compared to a negative 18 million krona a year ago.

In a statement to shareholders — AAC Clyde is traded on the Nasdaq First North Stockholm exchange — AAC Clyde said was sticking with its full-year forecast of 85 million krona in revenue, with positive EBITDA for the quarter.

AAC Clyde Chief Executive Alfonso Barreiro. Credit: AAC Clyde via Youtube

Barreiro said in his statement to shareholders that the third-quarter results suffered from a project previously referenced by AAC Clyde that apparently will result in a cost at completion that makes it unprofitable. The project, which was not identified, is nearing completion and deliveries are in progress, he said.

“We won several orders from existing and new customers” during the third quarter, Barreiro said, mentioning IoT constellation startup Kepler Communications of Canada as an example. “Our sales are developing in the right direction.”