SES Revenue Dips in Q3 But Beats Analyst Consensus

Photo: SES

SES reported a slight dip in revenue and flat profit in the third quarter of 2021 compared to the same time last year, yet the operator has seen a strong, 17%  increase in net profits year to date. 

For the third quarter of 2021, SES reported 444 million euro ($513 million) in revenue, down 3% compared to the same quarter in 2020. Net profit for the quarter was 68 million euro ($79 million), in line with the same time period last year. The operator announced its financial results on Nov. 4. 

Year to date, for the nine months to the end of September, overall net profits reached 225 million euros ($260.70 million), an increase of over 17% compared to last year. However, overall revenues for the same period reached 1.32 billion euros ($1.53 billion), a near 3% decrease compared to the same stage last year. 

Right now, Networks represents 40% of SES’s overall business compared to 60% for the Video segment. In Q3, Networks reported $184 million euros ($213 million) in revenue, a 1.3% decline from the same time last year. SES pointed to a recovery in cruise, combined with new revenues generated from aeronautical, cloud, and energy as signs of optimism for this segment.

Within networks, Mobility revenues were down 5% YoY, Fixed Data down 1% YoY, and Government increased 1.2% for Q3 compared to Q3 2021. SES reported new Medium-Earth Orbit (MEO) and Geostationary Orbit (GEO)-enabled network solutions for the U.S. government led to overall strong year-on-year growth. This was partly offset by the cancellation of services during the quarter due to U.S. withdrawal from Afghanistan. Global Government customers also contributed to higher revenue for new capacity services and institutional solutions. 

SES’s Video business has proved to be resilient. For the quarter, SES generated revenues of 259 million euros ($299 million), which was down 4.6% compared to the same stage last year. SES reported lower revenue from mature markets was partially offset by the growth of HD+ in Germany, higher revenues generated across international markets, and a recovery in sports and events. 

SES CEO Steve Collar also reported that the company has completed the first phase of C-band clearing and expects to receive the first $1 billion USD of accelerated relocation payments within the coming months. SES has received $57 million euros ($66 million) in C-band cost reimbursement so far this year.

Roshan Ranjit, a satellite equity analyst at Deutsche Bank said in a research note that the latest results were positive with parts of them ahead of estimates. 

He said, “SES has this morning announced Q3 headline EBITDA 4% above consensus (per vara) and 3% percent ahead of Deutsche Bank estimates. Q3 headline revenues of 444 million euros (-3.2% year-over-year constant FX) were in line with consensus and Deutsche Bank estimates. Within the mix, the core Video business was impacted by the wholesale renewal, although clearly a bigger impact expected in Q4, underlying -4.6% year-over-year came in 1.6% ahead vs consensus and 1.1% ahead of Deutsche Bank estimates.”

It seems if anything, Video was perhaps a stronger performer this time around than Networks. Ranjit added, “In the guidance mix the mid-point of the Video revenue expectation is upped by 2%, suggesting the renewals have gone better. The Networks business delivered a weaker than expected result with revenue growth of -1.3% year-over-year.”

Jakob Bluestone, a satellite equity analyst at Credit Suisse added in a research note that overall it was a positive financial quarter for SES with revenues in line and a strong adjusted EBITDA performance which beat consensus estimates by +2.9%. 

He added, “Government trends weakened due to the loss of revenues from the withdrawal in Afghanistan but this was well flagged by the company. Video was stronger than expected and offset the decline in Government. Cost-cutting from the Simplify & Amplify program continues to benefit EBITDA. The important newsflow was from yesterday regarding the Quetzsat renegotiation which was within company expectations and now means SES has a direct relationship with DISH Mexico, offering a suite of OTT and DTH connectivity as part of a value-added services package.”