Orbcomm Chief Executive Marc J. Eisenberg said the company’s recent wins of satellite-based AIS maritime vessel surveillance increase Orbcomm’s AIS business to around $8 million per year — more than half of what Orbcomm views as the total global addressable market. Credit: Orbcomm
PARIS — Satellite M2M/IoT hardware and services provider Orbcomm Inc. bested incumbent exactEarth to win the Canadian government’s space-based marine vessel tracking contract in a deal that Orbcomm said is valued at more than three times the amount exactEarth was paid.
The one-year contract, with up to two renewals, came after Orbcomm won a similar contract from the Australian Maritime Safety Authority.
In a Feb. 28 conference call with investors, Orbcomm Chief Executive Marc J. Eisenberg said the two contracts carry a combined value of the Canadian and Australian contracts is around $500,000 per year, bringing Orbcomm’s Automatic Identification System (AIS) maritime tracking business’s annual revenue to early $8 million. Customers include the U.S. Coast Guard and the European Maritime Safety Agency (EMSA) and a recent contract renewal from Lloyd’s List Group.
Eisenberg said during the call that the global AIS business totals no more than $10 million to $15 million per year — far short of other companies’ estimates of the addressable market.
exactEarth: Canadian loss ‘disappointing, not financial significant
Peter Mabson, chief executive of exactEarth, said his company’s Canadian government contract, which runs through March, is valued at around 10,000 Canadian dollars ($7,600) per month, which he said is “not significant” for the the overall business.
“We are disappointed with this outcome and are reviewing this decision,” Mabson said. “This development… does not impact what we believe is a significant long-term growth opportunity for exactEarth in the maritime information services market.”
Orbcomm said that the Canadian contract, won with Aerospace, “is more than three and one-half times the value” of the exactEarth contract.
“These are important deals,” said of the European, Canadian and Australian awards. “Think of the areas they’re in and the amount of oceanic coverage these suggest need. “I don’t remember losing one of these opportunities for a really long time.”
Orbcomm and exactEarth, as well as competitor Spire Global, place AiS terminals on their low-orbiting satellites to capture broadcasts from ships whose already-installed broadcast hardware is beyond the range of coastal ground radars.
With at least three commercial satellite AIS suppliers, plus CLS of France a regular competitor on the services side and several governments launching their own AIS payload, there is a question of whether the global market can sustain all the players even if the market extends to smaller vessels.
Orbcomm’s principal business is providing hardware and services to transport companies to permit tracking of goods through the installation of very small terminals that can toggle between Orbcomm’s satellite fleet and terrestrial cellular networks.
The company has reported several large recent contracts, including one for at least 90,000 vessels from J.B. Hunt Transport Solutions, and a renewed contract from AT&T and the U.S. Postal Service.
As of Dec. 31, Orbcomm reported 1.72 million subscribers, meaning the number of subscriber modules activated under contract, a 9.8 percent increase over a year earlier.
Total company 2016 revenue was $186.7 million, also up 9.8 percent for the year despite a dip in equipment sales because of later-than-expected shipments to customers at the end of 2016. Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was 15 percent of revenue.
For 2017, Orbcomm is forecasting revenue of around $215 million, with an EBITDA margin of 26 percent, on the strength of a rebound in hardware sales.
Orbcomm happy to be far from the satellite broadband battles
Eisenberg said Orbcomm’s niche of delivering to customers relatively low-bandwidth transmissions with low hardware cost looks like an advantage at a time when the news is filled with companies planning mega-constellations of Internet delivery satellites, or single units of high-throughput satellites for broadband distribution.
“I like the fact that Orbcomm is really focused on little bits of data and really cheap modems and trying to get to $100 per installation per truck and smaller bites of data,” Eisenberg said. “We’re hunkered down there in a really good spot. But looking at some of my competitors, they are going to be infringing on the higher end.
“It feels to me like every 15 years Wall Street kind of forgets how difficult the space business is,” Eisenberg said. “They support the deployments of these big constellations and there’s going to be a lot of bandwidth out there. I don’t know that these guys are going to affect our little IoT business.”