Proving the Business Case for the Internet of Things

New cold-chain business spurs sales growth at Orbcomm

Iain Morris
May 14, 2014
 
Takeover activity combined with growing sales of its fleet-management and asset-tracking services have spurred impressive revenue gains by satellite player Orbcomm over the first three months of the year.

Orbcomm flagged a 15.7% increase in revenue, to $19.4 million, for the first quarter of 2014, but swung to a net loss of $441,000 – from a profit of $1.09 million in the same period last year – due to a sharp rise in costs.

That was largely related to the acquisition of a number of smaller players over the past 12 months, including Euroscan (Hoensbroek, Netherlands) – a provider of refrigerated transportation solutions – in March this year.

Orbcomm (Rochelle Park, NJ, USA) is also in the process of launching its OG2 next-generation satellites, which it claims will support the delivery more advanced services to customers and “drastically increase” network capacity.

“The Euroscan acquisition completed in the first quarter has the ability to be a key distribution channel driving overall growth in 2014,” said Robert Constantini, Orbcomm’s chief financial officer. “When combined with the positive impact we are expecting from commencement of the OG2 launches, we believe the company is poised to capture significant new revenue opportunities.”

Speaking with analysts during the operator’s earnings call, Marc Eisenberg also cited major cold-chain contract wins with truckload provider Swift Transportation (Phoenix, AZ, USA) and refrigerator trucking company Freymiller (Oklahoma City, OK, USA).

He also claimed that Orbcomm is currently running 20 pilots with large trucking fleets keen to replace their current telematics providers.

“There’s nothing exciting about monitoring your assets just once a day,” he told analysts. “Customers want to know where their cargo is right now and we’re looking to close some of these opportunities in the near term.”

Freight transportation provider Hub Group (Oak Brook, IL, USA), another Orbcomm customer, has also revealed plans to deploy the satellite player’s technology across its entire fleet of 25,000 containers in the next year and a half, indicating it expects to realize savings of between $1.5 million and $2 million over the course of 2015 through its usage of Orbcomm’s asset-tracking services.

Orbcomm has also been working with a variety of cellular service providers – including AT&T (Dallas, TX, USA), Rogers (Toronto, Canada), T-Mobile (Bonn, Germany), Telefonica (Madrid, Spain), Verizon (New York City, NY, USA) and Vodafone (Newbury, UK) – to ensure it can offer dual-mode services to its customers.

“That means a reseller can integrate with Orbcomm and have one point of connectivity,” said Eisenberg. “We’re not aware of anyone else with this capability.”
 
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