Inmarsat issued its third quarter 2018 results showing double-digit revenue growth for its aviation business, with an improved margin outlook for the full year’s results.
IFC revenues overall, comprising its GX Aviation services for inflight connectivity (IFC) and its L-band-based IFC services for commercial aviation, together grew by $7.6m (40.9%) to $26.2m in Q3 2018, including $3.3m of high-margin GX airtime revenue.
It says it has more than 1,400 aircraft expected under signed contracts for its GX and EAN Aviation IFC services and continues to advance its new business pipeline of around 3,000 aircraft.
Several customers have now selected GX Aviation for their IFC service offering but have not yet signed contracts with Inmarsat or a channel partner. These include Garuda Indonesia, announced last week, SpiceJet in India, as well as other major carriers in Asia, Europe and the Middle East.
Furthermore, going forward, it says a number of its existing customers are expected to expand their aircraft and fleet mandates with Inmarsat.
It has 321 commercial aircraft installed with Inmarsat equipment across several customers (from 286 at the end of Q2), including the first installed aircraft on the European Aviation Network. Inmarsat says it expects the rate of installation to increase over the coming quarters.
It also said that by the end of Q3 2018, 362 aircraft were also installed with Jet ConneX, its GX-based product for the business aviation community (from 109 at the end of Q3 2017).
In fact, at NBAA in October Inmarsat announced that its Jet ConneX (JX) business aviation inflight Wi-Fi solution has now been installed and activated on 400 business jets worldwide.
In the year to date, Jet ConneX grew airtime revenue by a factor of four to $6.1m in the quarter.
SwiftBroadband revenues grew $1.6m, 9.4%, in the quarter to $18.5m, driven by higher usage, with the number of installed aircraft remaining stable at around 4,000.
It said its strategic alliance with Panasonic will help to strengthen its drive for future global market leadership in inflight connectivity (IFC).
Overall, Inmarsat’s aviation business delivered revenue growth of $17.3m, or 34.0%, to $68.2m in Q3 2018, with further progress in both its core business and in rolling out IFC services to commercial aviation customers.
Earnings before interest, tax, depreciation and amortisation (EBITDA) for its aviation business increased by $11.0m (43.1%) to $36.5m, driven by revenue growth across the business and lower marketing expenditure.
It said cash flow from aviation has also continued to improve with the impact of higher EBITDA and lower capex together driving improvements of $30.7m in the quarter and $96.7m year to date.
Overall, EBITDA margins in aviation fell from more than 60% in 2016 to 53% in 2017. It says it expects these margins will fall to no less than 45% in 2018, (an increase from its previous guidance of around 40% in 2018), before returning to at least 2016 margin levels, as a result of higher revenues, improved revenue mix and more stable indirect costs.
Overall, Inmarsat’s group revenue increased 3.7% to $369.3m, but maritime revenues were down 5.7% to $135m, which prompted a 9.3% drop in the share price after the results were announced.