The first quarter of 2024 saw a range of revenue performance across the connectivity sector, with government contracts a frequent factor for companies reporting Q1 revenue growth or optimism toward the long-term financial outlook.
Defense primes report annual sales growth
Defense contractors Waltham, Mass.-based Raytheon (NYSE: RTX), Bethesda, Md.-based Lockheed Martin (NYSE: LMT), Falls Church, Va.-based Northrop Grumman (NYSE: NOC) and Melbourne, Fla.-based L3Harris Technologies (NYSE: LHX) each reported year-over-year revenue growth in Q1. Compared with revenues the previous quarter, Raytheon, Lockheed and L3Harris saw slight dips while Northrop saw a 2.8% increase.
Each contractor in their earnings release cited strong growth aided by U.S. Department of Defense contracts as the key to their financial results.
Government investment bolsters Telesat
Commercial satcom companies Telesat (NASDAQ: TSAT / TSX:TSAT), Covington, La.-based Globalstar (NYSE: GSAT) and McLean, Va.-based Iridium (NASDAQ: IRDM), in contrast, recorded quarter-on-quarter revenue growth but a decline in revenue from Q1 2023.
Canadian satellite operator Telesat, on the heels of a $1.6 billion investment from the Government of Canada for its Lightspeed low Earth orbit constellation, reported the strongest quarterly growth among satcom providers, with revenues rising 42.2% QoQ to $111.1 million.
Earth observation companies Spire Global and BlackSky reported annual revenue growth but quarterly dips.
Satellite manufacturing spurs YoY revenue jumps
Companies that include space infrastructure and manufacturing as a major component of their businesses, such as Rocket Lab (NASDAQ: RKLB), MDA Space (TSX: MDA) and Redwire (NYSE: RDW), reported significant YoY revenue hikes.
Richmond, British Columbia-based MDA Space is building Telesat’s government-supported Lightspeed constellation.
Long Beach, Calif.-based Rocket Lab announced two defense contracts in the first four months of the year, including:
- A $32 million contract in April from the U.S. Space Force to design, build, launch and operate two tactical awareness satellites; and
- A $515 million contract in January by the SDA to develop 18 satellites for the SDA’s Tranche 2 Transport Layer-Beta.
Jacksonville, Fla.-based space infrastructure company Redwire, which reported a 38.3% QoQ increase and a 54.2% YoY revenue jump, on May 6 announced it was building antennas for Rocket Lab’s 18 SDA satellites.
Terran, AST look to future
The exception to revenue growth among manufacturers was Boca Raton, Fla.-based Terran Orbital (NYSE: LLAP), which reported quarterly and YoY revenue decreases. However, the company reported a high backlog from government contracts in Q1, which Chief Executive Marc Bell said on Terran’s May 14 earnings call will be converted into revenues within 24 months.
AST SpaceMobile (NASDAQ: ASTS), which is planning a satellite broadband direct-to-device service, attributed its first revenues in seven quarters to a contract from an undisclosed government customer.
The Midland, Texas-based company on May 15 announced that it is planning a commercial service with AT&T after the summer launch of AST’s first five satellites, but Chief Executive Abel Avellan on AST’s May 15 earnings call said that the public sector remains valuable to AST’s business outlook.
