(Reuters) - U.S. satellite imagery provider DigitalGlobe Inc DGI.N reported a better-than-expected quarterly profit, helped by lower costs and improved performance in its international defense and intelligence business.
The company, which provides location-based services to Apple AAPL.O and Alphabet GOOGL.O, said it expected 2016 revenue of $670 million-$700 million. Analysts on average were expecting $700.7 million, according to Thomson Reuters I/B/E/S.
The company forecast adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the range of $330 million to $355 million, largely below the average analyst estimate of $353.7 million.
DigitalGlobe, which offers high-resolution imagery with four satellites, said it was on schedule to launch its fifth Worldview-4 satellite in September.
The new satellite is expected to increase annual revenue by $38 million after it is operational, Chief Executive Jeffrey Tarr told Reuters.
The company has signed $335 million in contracts and letters of intent for the new WorldView-4 satellite, he said.
DigitalGlobe said it also renewed two of its three large customer contracts within its location-based services business in the beginning of the current quarter. The business provides satellite imagery to digital mapmakers and is part of the company’s smaller diversified commercial business.
The company's location-based services has been a drag on its results, partly due to a delay in renewing a contract with Microsoft Corp MSFT.O in 2015.
“With those signings, we have meaningfully de-risked our location-based services business going into 2016,” Tarr said.
In January, DigitalGlobe announced it created a joint venture with two Saudi Arabian organizations to develop a network of six small satellites that will be eventually be able to revisit key areas of the globe 40 times a day.
Each of the company’s four existing satellites orbits the earth about 15 times per day currently.
The company said revenue from its international defense and intelligence business, part of its diversified commercial business, grew 31 percent in the quarter due to higher sales in the Middle East.
DigitalGlobe, which reduced its workforce by less than 10 percent in 2015, said selling, general and administrative expenses dropped 13 percent.
DigitalGlobe’s net income available to common shareholders fell to $9.2 million, or 13 cents per share, in the fourth quarter, from $10.7 million, or 14 cents per share, a year earlier.
Revenue fell 2.2 percent to $181.7 million.
Analysts on average had expected earnings of 8 cents, on revenue $173.1 million.
Reporting by Ankit Ajmera in Bengaluru; Editing by Maju Samuel
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