Digitalglobe Inc. Reports Operating Results (10-Q)

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Aug 03, 2010
Digitalglobe Inc. (DGI, Financial) filed Quarterly Report for the period ended 2010-06-30.

Digitalglobe Inc. has a market cap of $1.26 billion; its shares were traded at around $27.52 with a P/E ratio of 29.3 and P/S ratio of 4.5. DGI is in the portfolios of Lee Ainslie of Maverick Capital, Pioneer Investments, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Revenue from defense and intelligence customers accounted for 83.3% and 78.0% of our total revenue for the three months ended June 30, 2009 and 2010, respectively and 84.3% and 79.5% for the six months ended June 30, 2009 and 2010, respectively. Revenue from commercial customers accounted for 16.7% and 22.0% of our total revenue in the three months ended June 30, 2009 and 2010, respectively and 15.7% and 20.5% for the six months ended June 30, 2009 and 2010, respectively. Growth in defense and intelligence revenue was primarily due to increases related to our DAP customers. We generated approximately 85.1% and 72.8% of our revenue from U.S. and Canadian customers for defense and intelligence and commercial America customers and 14.9% and 27.2% of our revenue from international customers, in the three months ended June 30, 2009 and 2010, respectively, and 85.1% and 74.1% of our revenue from U.S. and Canadian defense and intelligence customers and commercial America customers and 14.9% and 25.9% of our revenue from international customers, in the six months ended June 30, 2009 and 2010, respectively. We generated approximately 73.1% of our revenue from paid tasking and 26.9% from our ImageLibrary for the six months ended June 30, 2010 (treating all of the revenue from the SLA under the NextView agreement as paid tasking and excluding amortized revenue).

For the three and six months ended June 30, 2010, we sold to our defense and intelligence customers both directly and through resellers, with 88.6% and 89.2%, respectively, of our defense and intelligence revenue coming from direct sales and 11.4% and 10.8% from resellers, respectively.

For the three and six months ended June 30, 2010, $51.2 million, or 81.0%, and $103.7 million, or 82.5%, respectively, of our defense and intelligence revenue was generated within the United States and Canada, and $12.0 million, or 19.0%, and $22.0 million, or 17.5%, respectively, was generated from international defense and intelligence customers. For the three and six months ended June 30, 2010, our top five defense and intelligence customers accounted for 96.0% and 95.1%, respectively, of our defense and intelligence revenue. NGA was our only customer that accounted for more than 10% of our revenue in the three and six months ended June 30, 2010. NGA accounted for approximately 75.9% and 62.4%, of our revenue for the three months ended June 30, 2009 and 2010, respectively, and 76.6% and 64.3% for the six months ended June 30, 2009 and 2010, respectively.

Our commercial customers are located throughout the world. We sell to these customers both directly and through resellers, with 56.2% and 60.6%, respectively of our commercial revenue coming from resellers and 43.8% and 39.4%, respectively, coming from direct sales for the three and six months ended June 30, 2010, respectively.

For the three and six months ended June 30, 2010, $7.8 million, or 43.8%, and $13.4 million, or 41.4%, respectively, of our commercial revenue was generated in the Americas and $10.0 million or 56.2% and $19.0 million, or 58.6%, respectively, was generated outside of the Americas. For the three and six months ended June 30, 2010, our top five commercial customers accounted for 50.8% and 45.1%, respectively, of our commercial revenue. None of these customers accounted for more than 10% of our revenue in three and six months ended June 30, 2010. We believe that we will have additional growth opportunities internationally, especially in countries with rapidly developing economies, such as Brazil, China, India and Russia, and, as a result, we expect that long-term sales growth in our commercial segment will be higher outside of the United States.

Second quarter 2010 cost of revenue as a percentage of revenue was 12.5%, a 1.1% increase from 11.4% in the second quarter of 2009. The increase was driven by increased costs associated with the first year maintenance for our direct access facilities and increased labor expenses driven by the expensing of employee labor cost that previously had been capitalized as a part of WorldView-2 development, but have now been reassigned to other operating functions within the Company as well as headcount growth. Both increases are part of our expense base and are expected to be recurring through 2010.

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