Credit: ESA

PARIS — Two companies offering satellite-based AIS tracking of maritime traffic reported revenue and said the market is about to expand — perhaps quadrupling in size — with new sensors capturing smaller vessels including leisure craft fitted with lower-cost transponders.

The companies, Orbcomm Inc. and exactEarth Ltd., are far from the only ones providing commercial satellite Automatic Identification System (AIS) data to corporate and government customers. But they are the only two publicly traded for which satellite AIS is a large enough piece of the business to feature in their financial reporting.

Satellite AIT is about 5% of the business of Industrial IoT hardware and service provider Orbcomm and is 100% of Canada-based exactEarth’s business.

For the three months ending Sept. 30, Orbcomm reported AIS revenue of $3.2 million, up 10% from a year ago and continuing an upward trajectory of recent years, with $9.4 million in AIS revenue in 2017 and $11 million in 2018.

At exactEarth, revenue is also growing, to 4 million Canadian dollars ($3.04 million) for the three months ending July 31.

Orbcomm Chief Executive Marc Eisenberg, in an Oct. 30 investor call, said Orbcomm’s recent order of two new small satellites will “add incremental visibility of ships at sea and increase the ability to detect Class B vessels including leisure boats.”

The two satellites will be built, owned and operated by AAC Clyde Space of Sweden and Scotland, with Orbcomm paying for the data as exclusive customer. The first is scheduled for launch in late 2020, with the second in 2021:

The AAC Clyde Space satellites will be fitted into Orbcomm’s current second-generation constellation of low-orbiting spacecraft.

The exactEarth satellite infrastructure is composed of AIS payloads on 65 satellites, including 58 Iridium second-generation satellites that exactEarth uses under an agreement with L3 Harris. The seven other payloads include an AIS sensor on the Spanish government’s Paz radar Earth observation satellite, operated by Hisdesat.

Tracking Class B vessels through what exactEarth describes as its patented capability will expand the addressable AIS market to more than 1 million vessels by 2020, exactEarth estiamtes.

Figures here are in thousands of Canadian dollars. Credit: exactEarth Ltd.

L3 Harris notified exactEarth in February that the Iridium-based AIS payloads had reached initial operating capability, which triggered a payment formula to L3 Harris based on annual AIS revenue.

Margins pulled down by L3 Harris revenue-sharing terms

Whether exactEarth’s business can grow enough, and fast enough, to easily absorb the agreed-to revenue-sharing with L3 Harris is an open question. For the three months ending July 31, exactEarth reported a negative EBITDA of 1.7 million Canadian dollars, compared to a negative 1.5 million Canadian dollars in the previous quarter.

“Our agreement with [L3 Harris] is now in effect,” exactEarth said. “This has put pressure on our gross margin that is expected to remain in place for the short- to mid-term. However, we have several initiatives that we are pursuing to reduce costs related to both our first- and second-generation constellations.”

In a statement to the Toronto Stock Market, exactEarth said it had “given notice to L3 Harris that there are several capabilities and service-level agreements that need to be rectified.”