Beam Communications shining bright with record year and further growth expected

Satellite applications and services specialist Beam Communications (ASX: BCC) is confident it will continue its current record run of business success with further growth expected over the current financial year.

The company has revealed record levels of returns across a number of metrics including revenue, net profit and earnings before interest, tax, depreciation and amortisation (EBITDA) in its results for the financial year ended 30 June 2023.

With all of its business arms contributing to its growth as the global market for mobile satellite solutions expands, Beam’s group revenue jumped by 67% to $40 million, while EBITDA leapt by 189% to $4.3 million and net profit after tax (NPAT) increased to $2.1 million, a big turnaround from a net loss of $176,805 in the previous year.

Strong FY24 tipped

Beam’s managing director, Michael Capocchi, is confident that the positive momentum generated in FY23 will continue through the current financial year.

He said recent business activity has highlighted the transformation of Beam’s earnings profile as the business builds significant scale with new offerings and partnerships.

Beam is predicting double digit FY24 EBITDA growth with further margin expansion due to the favourable change in its product mix.

In particular the company is forecasting the value of its Iridium GO! exec contract will well exceed the minimum order value of approximately $18.5 million, while enterprise and government sales and subscriptions of ZOLEO are expected to ramp-up following the launch of ZOLEO Track.

Satellite sector taking off

“The space that Beam operates in has been transformed from what used to be a niche industry to something substantially larger. The evolution brought on by technological changes and improved affordability has dramatically opened the market, and Beam is perfectly placed to benefit from this bullish market trend,” Mr Capocchi said.

“Further, we have passed an earnings inflection point and our profitability and cash flows are expected to keep improving as the investments we have made over the past few years have started to and will continue to generate attractive returns for the company.”

“Increasing recurring revenues, the successful launch of new products and services and a range of exciting growth projects on our immediate horizon will allow us to build on the strong gains we have made over the past year,” he added.

Spending plans accelerated

With the modern business world expanding into newer remote areas and exciting new technologies making remote contact more available and affordable, the satellite communications sector is tipped to achieve significant growth in the coming years and smart companies are investing for the future.

That is reflected in Beam’s growth plans with the company’s forecast capital expenditure of around $3 million in FY24.

That funding will help support the development of two notable projects that Beam is undertaking, a new Iridium Certus offering following the successful launch of the Iridium GO! exec, and the development of a Beam-branded device that will generate both hardware sales and recurring subscriptions for the company.

The benefits of the successful launch of the Iridium GO! exec device were highlighted in Beam’s FY23 results which included an operating cash inflow of $2.4 million in FY23.

Cash flow positive year

The benefits of a strategic capital management program and the strong revenue returns from FY23 have placed Beam in a positive cash position moving ahead.

The company is confident its operating cash flow will remain beneficial from the ongoing unwinding of trade working capital.

Mr Capocchi said cash flows will also be boosted by the long product lifecycle of satellite equipment and Beam’s growing portfolio of products and services, which is transforming the company’s earnings profile.

“Beam’s expanded offering and the accelerating growth of the mobile Satcom market in recent times mean that Beam is not the same company it was from even a few years ago,” he said.

Strong mobile satellite solutions growth forecast

The Beam managing director said the growing demand for mobile satellite solutions worldwide is being felt across all of its business units.

The global satellite solutions market is forecast to grow at a compound annual growth rate (CAGR) of 7% to around $14.2 billion by 2030.

Mr Capocchi also highlighted the fact that Beam’s long-standing partner, Iridium Communications is also reporting strong growth in its business and subscriber numbers.