[Satellite TODAY Insider 05-14-12] Machine-to-Machine (M2M) satellite communications specialist Orbcomm soundly beat analysts’ performance expectations for its 2012 fiscal first quarter due to continuing growth in its subscriber base, improving ARPUs and benefits reaped form two recent acquisitions, according to its latest financial results issued May 11.
Orbcomm leveraged several business opportunities during the quarter. Besides completing the integration phase of its recent acquisition in PAR LMS, the company renewed its AIS business and generated its fourth consecutive quarter of improving adjusted EBITDA.
Orbcomm’s revenues doubled from the same period in 2011 to $15.9 million in its most recent quarter, while its adjusted EBITDA increased 18 percent sequentially to $3.4 million, which represents a new record high for the company.
Orbcomm also grew its subscriber base 17 percent from the comparative quarter in 2011, adding approximately 42,000 subscribers during in the period ending March 31, including 19,000 from its PAR LMS acquisition and 23,000 organic net additions.
In a research report issued May 11, Raymond James analyst Chris Quilty highlighted Orbcomm’s best subscriber performance since early 2008. “Organic growth was derived primarily from heavy equipment OEMs, but management expressed optimism that newly acquired hardware options will stimulate demand through its partner channel. Looking ahead, we are modeling Orbcomm to add roughly 125,000 net additions during 2012, up 72 percent over 2011.”
Orbcomm’s service revenues leaped 59 percent in 2012 first quarter to a new all-time company record total $11.5 million. Its ARPUs jumped about 32 percent year-over-year to approximately $5.62 – a trend that has continued for the company’s previous six fiscal quarters.
ARPUs were aided by strength in Orbcomm’s OEM channel. Quilty said his firm is not only modeling Obrcomm’s ARPUs to expand at a modest single-digit growth rate, he also stressed that the company’s previously struggling AIS service has regained considerable strength.
“Following a year-long revenue drought, Orbcomm reestablished its AIS business during the first quarter using data gathered from two recently-launched microsatellites,” said Quilty. “Although the first-quarter contribution was minor at approximately $250,000, Orbcomm management expects to achieve a $2 million run rate by year-end with the potential to more than double revenues in 2013.”