PARIS — Geospatial imaging services provider UrtheCast Corp. of Canada on March 30 gave investors an in-depth look at the company’s strategy, including a new eight-satellite constellation addition to the 16-satellite system announced in 2015.
UrtheCast declined to say when its OptiSAR constellation of eight optical and eight two-band radar satellites would be built, insisting that the company would not seek funding from the capital markets but would wait for prospective customers to commit the needed resources.
The same is true for the newly disclosed UrtheDaily constellation of eight medium-resolution optical satellites. To be built by the same Surrey Satellite Technology Ltd.-based team that will build OptiSAR, UrtheDaily will not happen without firm customer commitments, the company said.
“The trigger is when we’ve signed up enough customers whose contractual demand is enough for us to finance against it,” UrtheCast Chief Executive Wade Larson said, adding that the company’s business model borrows more from established geospatial imagery provider DigitalGlobe of Westminster, Colorado, than from Google’s Skybox Imaging, recently renamed Terra Bella, of Mountain View, California.
UrtheCast, following its July 2015 purchase of Deimos Imaging of Spain, operates four optical sensors. The medium-resolution Deimos-1 satellite and a medium-resolution Theia camera mounted on the Russian side of the international space station offer wide-area coverage.
The high-resolution Deimos-2 satellite provides sharper imagery but of smaller areas and for sales purposes is often bundled with UrtheCast’s high-resolution Iris video camera, also on board the space station.
Iris faced multiple delays because of a defective installation and reached full operating capability only this year. Even so, its appeal to defense and intelligence-agency customers is not what was expected, in part because of the installation issues. UrtheCast early this year received the final payment on its Iris-related insurance claim.
“We had to do a lot of engineering to fix the vibration and friction issues” after the initial Iris installation, Larson said. “In the end, we were able to produce a really good product in spite of that. It’s not absolutely at the exact specifications” of its designed performance.
UrtheCast’s cloud-based Web platform, considered perhaps its biggest product differentiator in a market growing thick with commercial Earth observation businesses, is now merging imagery from the two Deimos satellites and the medium-resolution Theia camera.
UrtheCast reported revenue of 41.1 million Canadian dollars for the 12 months ending Dec. 31, up from 11.9 million Canadian dollars in 2014, with an EBITDA – earnings before interest, taxes, depreciation and amortization – loss of 12.9 million Canadian dollars.
The company did not disclose how much revenue came from the six months of Deimos ownership in 2015. Deimos had expected to generate $40 million in revenue for the year.
For 2016, UrtheCast said revenue should rise to about 57.5 million Canadian dollars, with an adjusted EBITDA of 5.2 million Canadian dollars.
With the two Deimos satellites and the two station-mounted cameras now in service, 2016 might have been considered as UrtheCast’s first year at cruising altitude for its business. But as it suggested in 2015 with the announcement of OptiSAR, UrtheCast’s ambitions are growing as fast as it expects the Earth observation business to grow.
The company reported 250 employees as of last Dec. 31, up from 100 a year earlier. Eighty of the new hires came with the Deimos acquisition.
UrtheCast announced in 2015 that it had signed memoranda of understanding with two prospective OptiSAR customers valued at $370 million. The company announced no new deals on March 30 but said it is in active discussions with multiple leads.
One of the customers that signed the MoU also has financed the majority of the 100 million Canadian dollars ($72 million) in research and development that UrtheCast has devoted to refining the OptiSAR system.
“If they’ve invested that much money, they’re probably likely to buy the capacity that comes out of this,” said Jeff Rath, UrtheCast’s executive vice president for strategy and corporate finance.
Larson said the OptiSAR constellation would be deployed in two orbital planes, with eight satellites in polar sun-synchronous orbit and the other eight in a medium-inclination orbit at an angle of between 20 and 45 degrees relative the equator.
The synthetic-aperture radar (SAR) satellites, each weighing 1,400 kilograms at launch, would carry two sensors, one in lower-resolution L-band, and one in higher-resolution X-band. They will also be equipped with Automatic Identification System (AIS) sensors for maritime sip tracking.
The optical satellites, weighing 670 kilograms at launch, would carry two focal planes, one with a ground resolution of 50 centimeters operating in push-broom mode, and the other carrying a 30-frames-per-second video.
Larson said the video camera could produce videos with a 40-centimeter ground resolution. In still-photography mode, the camera could produce 25-centimeter-resolution pictures.
OptiSAR’s general outlines were disclosed in mid-2015. In their March 30 presentations, company officials said the customers they have surveyed want still more. UrtheCast’s answer is UrtheDaily.
Apparently using the same satellite manufacturing team, the eight-satellite UrtheDaily constellation would carry 5-meter-resolution optical sensors in polar orbit to image 145 million square kilometers a day to monitor global change – human and natural.
OptiSAR’s focus is on rapidly revisiting a given area of interest to customers. UrtheDaily is focused on broad-area coverage, a market that does not require high-resolution imagery.
UrtheCast declined to estimate how much OptiSAR and UrtheDaily would cost. It said the two constellations’ synergies on the satellite platform, payload and operations side would minimize cost.
The business model, Larson said, hews more closely to traditional Earth observation systems now in orbit such as DigitalGlobe than it is to recent Silicon Valley startups.
“Earth observation is entirely a sugar daddy-funded business,” Larson said of the sector’s history. “Look at the major players in the United States, Canada and Europe. They’ve found some major anchor customer – call it a sugar daddy – who substantially funds the system in one of two ways: They put money up front and you use that in the build phase, or they give you a promissory note – a guarantee to pay you for data – and you take that promissory note and you finance against it.
“There is a new model, which has emerged in Silicon Valley, where you go find obscenely rich venture capitalists, convince them to give you hundreds of millions of dollars and then you build satellites on spec and you launch them.
“We are not following that model. We’ve simply innovated a little bit on the sugar daddy model. We don’t have one big sugar daddy, we federate lots of little sugar daddies around the world. We get them to buy in on a time-share basis. Once you’ve got enough of them with an aggregate financeable buy-in from them, you go and raise capital.”
Larson said he would not speculate on when the company would receive sufficient commitments to build the OptiSAR and UrtheDaily systems. “It’s not years, but it’s not days either,” he said.
He said OptiSAR would take 3.5 years to build once construction started.
