Cubesat manufacturer GomSpace of Denmark and Sweden opened subsidiaries in the United States, Singapore and Luxembourg in 2017 and more than doubled its work force to 176 employees. The expansion in headcount and facilities resulted in lower gross margins in 2017 and a deeper operating loss. Credit: GomSpace

PARIS — European cubesat builder GomSpace reported a 78% increase in revenue but lower gross margin and a much wider operating loss in 2017 as it invested in new plant and equipment capacity and more than doubled its employment by the end of the year.

The company added subsidiaries in the United States, Luxembourg and Singapore during the year and said the growth of its core cubesat/nanosatellite market was even faster than expected.

In a note to shareholders on its annual results, GomSpace said it was sticking with its forecast, made during its 2016 IPO on the NASDAQ Swedish First North market in Stockholm, of an eightfold increase in revenue and a 65% gross margin by 2021.

For 2017, GomSpace reported an operating loss of nearly 54 million Swedish krona on revenue of 96.4 million krona, equivalent to $11.7 million at December 2017 exchange rates. Gross margin was 28%, down from 47% in 2016.

GomSpace had told shareholders to expect a couple of rough years as it sized itself to capture what still looks like a large cubesat/nanosatellite opportunity.

By GomSpace’s count, more than 300 satellites weighing 50 kilograms or less were launched in 2017, triple the number launched in 2016. More importantly, some 75% of them were for commercial applications, a far higher percentage than used to be the case for smallsats.

Planet of the United States, which is regularly launching small, short-lived satellites for its commercial geospatial imagery business, remained the largest contributor to the 2017 count.

But GomSpace said 22% of the 300 small satellites launched last year were for communications. This is the market in which GomSpace expects to thrive.

GomSpace is under contract to build three constellations — for Sky and Space Global Ltd. of Britain and Australia; Aistech Space of Spain; and Aerial & Maritime Ltd. of Mauritius, a spinoff of GomSpace.

Sky and Space Global launched its first three satellites and has been certified by the British telecom regulator, Ofcom, has having “brought into service” its network under International Telecommunication Union (ITU) rules. The company is planning a 200-satellite constellation.

GomSpace reiterated its target, announced at the 2016 IPO on the NASDAQ First North Premier exchange in Stockholm, of 2021 revenue of T.SEK 820,000 and a gross margin of 65%. Credit: GomSpace

GomSpace has said the Sky and Space Global contract carries a total value, depending on options and including a late-2017 contract amendment, of between 48 million euros and 70 million euros ($57 million to $83 million).

Aistech, which plans a constellation of satellites for aircraft and asset tracking, is scheduled to launch its first 10 GomSpace-built spacecraft in 2018.

Aerial & Maritime is expected to launch its first satellites in 2018 as well for equatorial coverage, with a full 80-satellite constellation to be in place in 2021. The company raised $5 million in 2017, bringing its total capital to $12.2 million, enough to fund the first eight spacecraft including launch and early operations.

Among GomSpace’s products are a deployable tracking solar antenna, improved reaction wheels and a gas-propulsion system. Credit: GomSpace

The fresh investment into Aerial & Maritime in 2017 reduced GomSpace’s stake to 39%. GomSpace said it remains responsible for a pro rata share of any project cost overruns at Aerial and Maritime, but only until November 2019.

The Civil Aviation Authority of Singapore (CAAS) and Singapore Technologies Electronics Ltd. (ST Electronics) in 2017 signed an MoU with GomSpace to research a space-based VHF constellation for air-traffic management. But the MoU has not yet been converted into a contract.

Some 57% of GomSpace’s 2017 revenue was generated from customers in Europe, 18% from the United States, 10.4% from Asia and 14% from the rest of the world.

During the year, GomSpace booked 8.2 million Swedish krona in public grants, including two from Innovation Denmark: one called MegaMan to develop techniques to management satellite constellations; and a second, called MARS 2, to develop radio components for broadband satellite constellations.

GomSpace in March raised 125 million Swedish krona by issuing new shares.