Could you dive into TSAT's recent quarter and provide your opinion in general, and also specifically regarding whether you think anything useful is revealed about the financial aspects of the nascent Telesat/MDA/Spacex arrangement underpinning the Lightspeed LEO deployment.
Thanks!
Peter
In Q3, TSAT recorded a net loss of ($3.3M) which was a significant improvement from the prior year’s loss in this quarter at ($228.3M). EPS recorded a loss in Q3 at ($0.08) but stands at a respectable $12.68 thus far in FY2023 driven by strong Q2 earnings. Total revenue came in at $175.1M, down nearly -3% from the prior year while gross profit conversely saw a +1.19% increase to $125.8M. EBITDA margins remained impressive in Q3 at 71.6% and 114.2% in FY2023. TSAT is currently valued at 1.0x sales and continues to display operational efficiency despite losses. TSAT announced an agreement in early September with SpaceX for 14 launches, each carrying up to 18 LEO satellites per launch, scheduled to launch in 2026. TSAT had a $1.5B contracted backlog at the end of Q3 which excludes contractual backlog for Lightspeed. TSAT has begun ramping up spending for Lightspeed, still awaiting confirmation of the Canadian government’s commitment of $2B, for which TSAT expects to be made definitive by end of 2023/early 2024. This is a positive development for TSAT, but it is likely priced in. We think that there is still long-term potential here, but risks are still evident due to the unpredictable timeline and revenue stream from Lightspeed.