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WIKI ANALYSIS
DigitalGlobe (NYSE:DGI) provides high-resolution satellite images to government and defense agencies, and companies like Google and Microsoft for use in their Google Maps and Virtual Earth services respectively. The company's initial public offering (IPO) of stock in 2009 was priced at $19, above the estimated $16 to $18 range set by lead underwriters J P Morgan and Morgan Stanley, and raised $279 million in capital. Of the 14.7 million shares on offer, 1.4 million were offered by DigitalGlobe and the remaining 13.3 million came from its existing investors. These investors include include Morgan Stanley (36.8%), Hitachi (7.6%), Ball Aerospace and Technologies (6.4%) and Telespazio/Eurimage S.p.A. (1.8%).
Business Overview
Formerly known as EarthWatch, DigitalGlobe was founded in 1994 and has launched 4 imaging satellites since inception, of which 2 are currently in orbit. The company's 1st satellite, EarlyBird, was launched on December 24, 1997, but encountered a power failure 4 days later and was declared a loss. Its 2nd satellite, QuickBird-1, was launched November 20, 2000, but also failed to reach orbit. Its 3rd satellite, QuickBird-2, was launched on October 18, 2001 and is well past its lifespan of 5 years. Of its 2 next-generation satellites, WorldView-1 was launched on September 18, 2007 and WorldView-2 was launched on October 8, 2009.[1]
DigitalGlobe's single biggest customer is the Defense Department's National Geospatial-Intelligence Agency (NGA). Other U.S. agencies use the company's images for non-defense purposes, such as disaster response. In addition to Google and Microsoft, agricultural firms use these images to monitor crops, energy firms for exploration, telecom and utilities for infrastructure planning and monitoring, and insurance companies for monitoring claims.
Business & Financial Metrics
In 2009, DigitalGlobe earned $47.4 million on $281.9 million in revenue. This represents an 11.9% decrease in net income on a 2.4% rise in revenue from 2008.[2]
In 2008, DigitalGlobe had revenues of $275 million, up 82% from $152 million in 2007. Of these revenues, 80.2% came from defense and intelligence customers, while 19.8% came from commercial customers. Its net income in the same year was $53.8 million, down 44% from $95.8 million in 2007. The company had cash and cash equivalents of $103 million at the end of 2006, but this figure dropped by 78% to $22.9 million by the end of 2007. As of 31 December 2008, DigitalGlobe had $60.8 milllion in cash and cash equivalents, primarily due to the issuance of $40.0 million in senior subordinated unsecured notes in February 2008.
Business Segments[3][4]
DGI operates through two reportable business segments organized by customer type.
- Defense and Intelligence (81.9% of total revenue): These customers include United States and foreign defense and intelligence agencies.
- Commercial (18.1% of total revenue): These customers include internet portals; companies in the energy, telecommunications, utility, and agricultural industries; and both United States and foreign government agencies.
Competition
The company faces growing competition from Virginia-based GeoEye, France's Spot Image Group and Holland's ImageSat International.
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