14 August 2018
UrtheCast endured another brusing quarter as revenue slumped and losses soared – but at the close of the first half, new management is striking a far more confident tone than was heard from the Vancouver-headquartered Earth observation services business earlier this year.
The company’s full-year 2017 statement highlighted operating losses and a deteriorating cash position that left management warning that it may not be able to continue as a going concern. But recent events have given a new chief executive cause for optimism. These include headway toward accessing US$142 million agreed financing to build and orbit the planned 5m-resolution multispectral UrtheDaily optical constellation and agreement to acquire an analytics company, Geosys, with customers in agriculture.
Don Osborne, a former president of Maxar’s MDA businesses in Canada, took over at Urthecast on 5 July from founder Wade Larson, who stepped down in March; he says that by realising UrtheDaily and moving “up the geoanalytics value chain” through Geosys “we believe that we can unlock the vast potential of UrtheCast’s deep industry experience and best-in-class technology portfolio to establish clear market leadership and create lasting value for our shareholders.”
Just prior to its results announcement, UrtheCast got another boost in the form of a “multi million-Euro contract” to provide “a very large set of Earth Observation products and services” to the European Commission and the European Space Agency. That deal comes through its Madrid-based Deimos Imaging subsidiary as part of an Airbus Defence & Space-led consortium, which also includes Planet, IGN-France and space4environment. The VHR IMAGE 2018 contract provides very high resolution imagery to supplement data from the Copernicus programme’s Sentinel satellites. First revenue to UrtheCast is expected in this third quarter.
NOT CLEAR SKIES
But UrtheCast, whose business today is based on the output of the Deimos-1 and -2 satellites and distribution of products from the various PanGeo Alliance satellites, remains in difficulty. For the second quarter, revenue was just C$3.4 million – down from C$11.9 million during the same period last year – and a net loss of C$13.3 million was more than three times as great as the C$3.9 million lost last time.
For the half, revenue was C$7.6 million (C$21.2 million last time) with a net loss of C$24.3 million (C$9 million).
And, while the $142 million UrtheDaily financing has been secured in principle, “first draw” access to the money remains subject to “complicated negotiations”, so while “we are pleased with how things are progressing and we’re confident that the first draw is within reach…final terms and timing cannot be certain”, says Osborne. Chief financial officer Sai Chu describes the UrtheDaily arrangement as an “effective recapitalisation” of the company.
UrtheCast in November contracted Surrey Satellite Technology to build the first of an unspecified number of units for the UrtheDaily constellation, based on the SSTL-250 platform. The company also has customer commitments to purchase some C$100 million of data from the UrtheDaily satellites.
The acquisition of Geosys, for $20 million, comes with $100 million revenue over 13-years, which should start flowing when the deal is closed, possibly in November. About two-thirds of that revenue is from the seller, the Land O’Lakes agribusiness co-operative. Osborne is also optimistic that new business can be secured by bringing Geosys out of Land O’Lakes, as many potential Geosys customers have been reticent to buy analytics from a competitor.
Meanwhile, says chief financial officer Sai Chu: “Our results for the quarter were disappointing and not acceptable. They do reflect unfortunately the extent of the changes taking place at UrtheCast. We are making meaningful progress.”