Satellite Imagery Provider DigitalGlobe Files for IPO

Credit: DigitalGlobe
Credit: DigitalGlobe
DigitalGlobe, Inc., a U.S. based satellite imagery provider, has filed this week a registration statement with the Securities and Exchange Commission for an IPO on the New York Stock Exchange.

DigitalGlobe owns two satellites, QuickBird, launched in 2001, and WorldView-1, launched in 2007. Together these satellites are capable of collecting nearly one million square kilometers (more than France and Germany combined) of imagery per day with a resolution below one meter. “The planned launch of our WorldView-2 satellite in mid-2009 is expected to expand our collection capabilities by nearly one million square kilometers per day [and] enable intra-day revisits to a specific geographic area” said the company in its filing.

Its consumer clients include Google Maps, Microsoft Virtual Earth, and mobile devices from vendors such as Garmin. Digital map maker Navteq is also a customer of the company, but its biggest client is the U.S. government. Under the NextView program, the National Geospatial-Intelligence Agency, or NGA, purchases earth imagery content and related solutions from commercial providers on behalf of various agencies within the U.S. government. US government represented 60% of DigitalGlobe’s revenue in 2007 and other international intelligence agencies an additional 8%. Main competitors to DigitalGlobe include GeoEye (which has huge contracts with NGA too), SPOT Image, ImageSat International N.V. and the Indian National Remote Sensing Agency.

DigitalGlobe has been profitable since 2006 and from 2005 through 2007 its revenue grew at a compound annual growth rate of 52.3%. In 2007 the company generated revenue of $151.7 million and net income before tax of $37.9 million.

While it does not seem to be the best market condition for an IPO, DigitalGlobe has some very particular assets, one of them is a strategic partnership and a very important contract with the U.S. government as mentioned in its filing: “NGA’s minimum earth imagery purchase commitment under the NextView agreement from January 2008 through the expiration of the agreement in July 2009 is $238.0 million, payable in increments of $12.5 million per month […]”. If anything else, this might reassure fearful investors.

Thursday, April 17th 2008

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