PARIS — Satellite machine-to-machine messaging provider Orbcomm Inc. reported Aug. 9 sharply higher revenue and profit for the six months ending June 30 and said its ship-identification business has suffered no erosion from competitors entering the Automatic Identification Service (AIS) market.
Ft. Lee, N.J.-based Orbcomm said its AIS service, currently provided by two small satellites owned by LuxSpace of Luxembourg, is set for a major increase in business once Orbcomm’s own AIS-equipped second-generation satellites are launched starting next year.
In a conference call with investors, Orbcomm Chief Executive Marc J. Eisenberg said the appearance of competitors in the AIS market likely will end up whetting customers’ appetite for Orbcomm’s service rather than taking business from it.
Principal among those competitors is exacEarth of Canada, which is counting on a smaller constellation of satellites to provide global ship-location and identification services to the world’s coastal authorities.
Eisenberg said Orbcomm’s 18 second-generation satellites, plus the two microsatellites already in orbit, will provide a service that cannot be equaled by companies with just a few spacecraft.of Canada, which owns a majority stake in exactView, has disputed that point, saying its technology for identifying the signals from thousands of ships is superior to what Orbcomm is using and does not require a large constellation.
“We have always said [AIS] is a $1 million or $2 million business with one or two satellites,” Eisenberg said. “What really makes the offer compelling is when you’ve got 20 satellites delivering real-time service with Earth stations all over the globe. We’ve always said that was our competitive advantage.”
Orbcomm’s second-generation satellites are being built by Sierra Nevada Corp. of Sparks, Nev., under a $117 million contract. Boeing Argon ST of Fairfax, Va., is providing the satellites’ electronic payloads.
The launch of the second-generation constellation, which in addition to AIS will provide Orbcomm customers with higher data throughput, has been delayed for multiple reasons during the last two years and is now dependent on the launch schedule of Space Exploration Technologies Corp. () of Hawthorne, Calif. SpaceX is launching the satellites under a $46.6 million contract.
Sierra Nevada on Aug. 9 said a prototype second-generation Orbcomm satellite has successfully completed testing and is ready for launch on the next SpaceX Falcon 9 rocket that will also be carrying SpaceX’s Dragon cargo canister to the international space station under a NASA contract.
Eisenberg said that launch is scheduled for October. The 17 other satellites will be carried into low Earth orbit aboard two or three Falcon 9 vehicles expected to launch in 2013 and 2014, he said.
For the six months ending June 30, Orbcomm reported total revenue of $32.2 million, up 72 percent from the same period a year ago. Service revenue, which is key to Orbcomm’s long-term success, was up 46 percent, to $23.9 million.
Orbcomm has made two purchases of small companies in the past 12 months. When these companies’ sales are removed from the equation, Orbcomm’s service revenue still grew by 18 percent year on year.
Orbcomm’s operating income, at $4.1 million for the six months ending June 30, compares to an operating loss of $762,000 a year ago.
Eisenberg said that in the three months ending June 30, the company booked more than $400,000 in AIS-related revenue, a figure he said should rise by about $100,000 every three months in the period between now and when Orbcomm begins launching its second-generation spacecraft. By the end of the year, Eisenberg said, the AIS business alone should be producing annual revenue equivalent to at least $2 million.
“We’re going to be adding eight or nine satellites next year, and that’s when [the AIS business] becomes significant,” Eisenberg said.
Also contributing to the revenue increase was a larger subscriber base. Orbcomm counts as subscribers the number of modules deployed and generating revenue. As of June 30, the company had 715,000 subscribers, an 18 percent increase over where the count stood a year ago.
Much of Orbcomm’s business comes from equipment manufacturers such as Caterpillar and Kumatsu that install Orbcomm gear in their heavy machinery.
The second-generation constellation will operate in an orbit that is inclined at 52 degrees relative to the equator, compared to the 45-degree inclination of Orbcomm’s current 27 satellites. The higher inclination should give the company better access to markets in Europe, Eisenberg said.