PARIS — Commercial Earth imaging provider DigitalGlobe on Sept. 23 said its 10-year, $3.55 billion contract to provide satellite imagery to the U.S. government likely will enable the company to surpass its promise to double revenue within five years.

In remarks to an investor conference in New York organized by Morgan Stanley — a major DigitalGlobe investor that is now selling 40 percent of its stake — DigitalGlobe Chief Executive Jill D. Smith said satellite imagery and services sales to governments in Asia, Latin America and elsewhere, plus an expanding consumer business with location-based services, will grow even faster than its revenue from the U.S. government.

Longmont, Colo.-based DigitalGlobe, which reported revenue of $281.9 million in 2009, has told investors to expect that figure to double within three to five years. The commercial segment, which accounted for just $52.8 million of revenue in 2009, will at least double and may triple during the same period, Smith said.

Not for the first time, Smith sought to distinguish DigitalGlobe from competitor GeoEye Inc. of Dulles, Va., which won a $3.8 billion award as part of the same EnhancedView contract that both companies signed in August with the U.S. National Geospatial-Intelligence Agency (NGA).

Without mentioning GeoEye by name, Smith said DigitalGlobe refused to accept U.S. government financing for its WorldView-3 satellite, now under construction and scheduled for launch in 2014. The NGA is funding some $337 million of the GeoEye-3 satellite, also under construction, as part of the EnhancedView deal.


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While DigitalGlobe will be receiving about as much money as GeoEye, the co-investment will not be in a satellite, but in an extensive modification of DigitalGlobe’s ground infrastructure that will take about two years to complete. WorldView-3 is likely to cost around $450 million including its launch and insurance.

By refusing government co-financing, the company retains room to maneuver that it would not otherwise have.

“Very unusual for this type of contract with the U.S. government, we made a proposal that says we are not going to meet the requirements simply by doing everything specifically and explicitly for the U.S. government. We felt that may impair the rest of our business.

“We said, ‘No, no, no, no. We will determine how [to meet the contract specifications]. We will deliver your requirements, but we will determine how we enable that.’ If I build a satellite for the government, then I may have limited capabilities to then leverage that to the rest of my customers.”

The EnhancedView contract will increase the annual NGA revenue to DigitalGlobe from $12.5 million per month to $20.83 million per month beginning immediately, and to $25 million per month starting in the contract’s fifth year.

To deliver on the promise of doubling its revenue within three to five years, DigitalGlobe is counting on striking deals with non-U.S. government partners that would agree to multiyear contracts for imagery and value-added services. The company has said its commercial business, which includes civil government business beyond the United States as well as consumer contracts, will grow by at least 25 percent in 2010 after showing little real growth in the past three years.

Smith said the revenue growth would come without sacrificing profitability. EBITDA, or earnings before interest, taxes, depreciation and amortization, will remain at 60 percent, where it was in 2009, or higher, and at least a 15 percent return on investment.

In addition to upgrading its ground infrastructure under a two-year, fixed-price contract with NGA, DigitalGlobe has agreed to lower the orbit of WorldView-2 by September 2011, with a further lowering possible — the NGA decides the issue — in late 2013.

Smith said that the first four years of the EnhancedView contract will give NGA 50 percent of DigitalGlobe’s fleet capacity. Starting in the fifth year, when annual revenue from NGA increases to $300 million, the U.S. agency will be taking 60 percent of the company’s total fleet capacity, including the WorldView-3 satellite to be in orbit by then.

Morgan Stanley is selling 6.9 million DigitalGlobe shares at a price of $30.25 per share. The investment bank will continue to own some 7.5 million shares after the transaction, according to a Sept. 23 filing with the U.S. Securities and Exchange Commission. DigitalGlobe went public in May 2009 at a price of $19 per share.

Peter B. de Selding was the Paris bureau chief for SpaceNews.