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COMPARISON HIGHLIGHTS |
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DGI's gross profit & operating income % are much higher than GEOY's |
DDGI's price to tangible book value is much higher then GEOY's
. DGI's gross profit & operating income % are much higher than GEOY's
. DDGI's price to tangible book value is much higher then GEOY's
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more |
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> There is always hunger for a company with significant visible top line revenue growth with good margins, etc. DGI's gross profit & operating margins are both significantly better than GEOY's
> It's going to be mid-year 2009 pretty soon so people are going to be looking into 2010 for companies whose top line revenue has a chance of popping.
> DGI has only two satellites & last year's comparison included an large apparently non-recurring order. DGI is nearing capacity in any case, depending on the composition of the product/service stream. |
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> The new satellite will double their capacity so it's not like a normal tech 'compare sequential quarter-by-quarter results'. They are heavily dependant on one customer, which is a p/e multiple detraction.
> Yes, most of the proceeds go to selling shareholders. However, in this case it is probably ok because of the positive cash flow, low price to tangible book value, high margins, etc.
> Based on the comparison with GeoEye, GeoEye looks overpriced, but apparently GEOY has some sort of cult following. |
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BUSINESS |
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Currently uses two high resolution imagery satellites. Another launch scheduled for Sept-Oct to provide high resolution earth imagery products & services |
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Applications include defense and intelligence initiatives, mapping and analysis, environmental monitoring, oil and gas exploration, and infrastructure management |
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Customers include U.S. and foreign defense and intelligence agencies and a wide variety of commercial customers, such as internet portals, companies in the energy, telecommunications, utility, and agricultural industries, and U.S. and foreign civil agencies
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GROWTH PLAN |
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Planned launch of WorldView-2, DGI’s third satellite, in September or early October 2009 is expected to nearly double collection capabilities
. To nearly two million square kilometers per day
. Enable intra-day revisits to a specific geographic area
. And enhance DGI’s ability to collect up-to-date imagery in those areas of greatest interest to customers |
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MARKET OPPORTUNITY |
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According to BCC Research, the remote sensing market was $7.3 billion in 2007 and is expected to grow to $9.9 billion by 2012.
. DGI competes today in a segment of this market that includes the sale of earth imagery at a resolution of three meters or better and related products and services
. Which BCC estimates was $1.9 billion in 2007 and is expected to grow to $3.2 billion by 2012. |
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SEGMENT GROWTH DRIVERS |
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• Increasing Reliance on Commercial Products and Services by the U.S. and Foreign Governments. The U.S. and, DGI believes, foreign governments are increasingly relying on commercial remote sensing space capabilities to provide unclassified earth imagery for defense, intelligence, foreign policy, homeland security and civil needs. |
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• Expanding Use of Location-Based Information by Commercial Enterprises and Civil Agencies. Commercial enterprises are using imagery and other location-based information to help plan and manage business infrastructures and supply chains to capture efficiencies across functions. |
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. Business software providers, such as Autodesk, Oracle, SAP and SAS, are enhancing their products and services by incorporating imagery products and services. |
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. U.S. and foreign civil agencies are using satellite imagery for many purposes, including establishing effective police and fire emergency routes, and classifying land use for growth planning and tax assessments. |
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• Growing Use of Imagery to Monitor Economic Development. Developing countries in Asia, Eastern Europe, and Latin and South America are experiencing significant changes as a result of their economic growth and development. These countries are increasingly relying on earth imagery for many purposes, such as building and maintaining current maps that catalogue this development and change. |
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• Increasing Use of Imagery in Consumer Applications. |
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. The introduction of earth imagery overlays to digital maps by major internet portals, such as Google and Microsoft, has increased consumer awareness of, and demand for, location-based applications that utilize earth imagery. |
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. Large-scale mapping capabilities are being combined with up-to-date images and information to create new and more powerful consumer applications and products for use in real-estate applications, GPS-based mobile devices and next generation video games. |
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CUSTOMER CONCENTRATION |
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. 73.9% and 77.4% of DGI’s revenue in 2008 and for the three months ended March 31, 2009, respectively, was derived from NGA (National Geospatial-Intelligence Agency) |
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. Most of which was from DGI’s Service Level Agreement, or SLA, that can be terminated at any time. The loss or significant reduction of the SLA would materially reduce DGI’s revenue. |
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COMPETITIVE STRENGTHS |
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• Leading Imagery Collection Capabilities. DGI currently operates two imagery satellites capable of capturing images at a resolution of 61 centimeters or better. |
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. With the launch of WorldView 2 (the 3rd satellite) DGI will have the only commercial earth imagery provider with 8-band multi-spectral capability, which has a more robust color palette and enables enhanced analysis of non-visible characteristics of the earth’s surface and underwater. |
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• Large and Rapidly Expanding ImageLibrary. DGI believe that our ImageLibrary is the largest, most up-to-date and comprehensive archive of high resolution earth imagery commercially available. |
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• Strong, Strategic Customer Relationships.
. DGI’s largest customer, the U.S. government, has been highly supportive of the development of the commercial earth imagery industry and has purchased imagery from DGI since 2002. |
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. DGI’s relationships with providers of location-based information, such as Google, Microsoft, Nokia, NAVTEQ and Garmin, provide increased awareness of DGI’s products and services, represent a variety of types of commercial uses for DGI’s products and services and, DGI believes, are significant to the growth of its commercial business. |
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• Significant Barriers to Entry. |
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. DGI has made significant capital investments in satellites, ground infrastructure and imagery archive.
. The development and launch of a high resolution satellite typically takes four years or longer. |
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. DGI’s industry is highly regulated due to the sensitive nature of satellite technology and new entrants would need considerable technical expertise and face substantial up-front capital outlays and long lead times due to the time required to secure necessary licenses.
. New entrants into the market would be unable to replicate the historical context provided by DGI’s extensive ImageLibrary without significant expense. |
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• Experienced Management Team |
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COMPETITION |
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> Competes against various private companies, as well as foreign state sponsored entities that provide satellite and aerial imagery and related products and services to the commercial market. |
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. Major existing and potential competitors for high resolution satellite imagery include GeoEye, SPOT Image, ImageSat International N.V. and the National Remote Sensing Agency, Department of Space (Government of India), plus numerous aggregators of imagery and imagery-related products and services, including Google and Microsoft. |
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. Most of these companies offer high resolution imagery commercially from their archives of imagery in competition with our ImageLibrary. |
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> In addition, currently competes against aerial providers of high resolution imagery. Aerial imagery provides certain benefits over satellite-based imagery, most notably better resolution. However, this market is highly fragmented, with a large number of operators that individually lack the global collection, data access and accuracy capabilities that DGI currently provides |
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PEER GROUP COMPANIES |
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used for DGI’s long term compensation planning |
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> The following criteria determined the 13 companies that were used for the peer group analysis: |
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• publicly held companies in the telemetry and telemetric service, cable and satellite service, satellite network and service equipment, internet content provider, and aerospace and defense contractor industries;
• companies with annual revenue of $100.0 million to $400.0 million;
• companies reflecting positive revenue growth; and |
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• companies that had a market value-to-revenue ratio of 2.5 or greater.
> DGO’speer group included: |
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24/7/RealMedia, AeroVironment., C-Cor, CNET Networks, CoStar Group, GeoEye, Globalstar, Globecomm Systems, Harmonic, Intevac, INVESTools, Move, Raven Industries |
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USE OF $17mm in IPO proceeds |
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from sale of 1.4mm shares
(shareholders intent to sell 13.3mm shares)
General corporate purposes |
