MDA Space projects a big jump in revenue next year, boosted by recent acquisitions and a shift toward a subscription-focused business with more than a third of revenue recurring.
The Canadian space technology company on Friday said it expects revenue to jump 50% in 2027, including the impact of recent acquisitions. Based on the midpoint of its current outlook for the year, the projection puts next year's revenue forecast at $2.78 billion Canadian dollars, or the equivalent of $1.98 billion, ahead of current analyst expectations for C$2.58 billion, according to FactSet.
"MDA Space is emerging into a global full-spectrum space company that is engaged in a growing market along multiple growth vectors," Chief Executive Mike Greenley said on an investor call Friday.
The new direction is an evolution for a business historically reliant on one-off manufacturing contracts, and is driven by recent acquisitions, including French geointelligence company CLS Group and satellite maker Blue Canyon Technologies. Greenley said those deals bolster MDA's offerings, such as in on-orbit defense security and satellite data analytics.
With CLS in particular, in which MDA bought a 70% interest for 567 million euros ($653.5 million) in July, Greenley said the move increases the recurring nature of the company's revenue, helping to stabilize financial performance and fuel future growth.
"Combining our geointelligence business with CLS's profitable, cash-generating business, doubles our recurring revenue base and creates significant strategic benefits," he said.
Shares traded 1.9% lower Friday, at C$47.22. The stock is up 77% year-to-date, and about 6% over the last 52 weeks.
MDA has been capitalizing on surging global demand for space infrastructure across both commercial markets and defense sectors from allied militaries.
The demand has prompted the company to increase its outlook for the current year, now guiding for revenue of C$1.8 billion to C$1.9 billion, up C$100 million at the bottom end. The company noted that on a pro-forma basis, including recent transactions, revenue is expected at C$2.5 billion.
The company also increased its expectations for adjusted earnings before interest, taxes, depreciation and amortization to a range of C$330 million to C$370 million, from a previous range of C$320 million to C$370 million.
The upgrade follows a strong second-quarter, where revenue rose nearly 34% to C$498.6 million, well ahead of analyst forecasts for the period. Net income rose to C$27.9 million from C$27.2 million in the comparable quarter a year ago.
MDA became a dual-listed company in March, going public in the U.S. The move added a second listing on the New York Stock Exchange but also increased the amount of shares in circulation, which drove per-share earnings down, at C$0.20 a share from C$0.21.
On an adjusted basis, which strips out exceptional items and one-off costs, earnings were C$0.36 a share, ahead of analyst forecasts of C$0.35 a share, according to FactSet.
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