DigitalGlobe IPO Could Be Boon for GeoEye

GeoEye's first-quarter numbers released last night were a positive surprise. Quarter revenue of $45 million exceeded analyst estimates of $41 million and was up significantly from a year-ago $35 million. Earnings per share were -9 cents, down from -5 cents a year ago but way ahead of analysts' estimates of -25 cents.

What's most impressive about these numbers is that the NGA only gave the green-light to the new GeoEye-1 satellite in late February. At that point, the previously announced service agreement had NGA committed to purchase at least $12.5 million per month for the next year or $37.5 million per quarter.

However, on the earnings call management indicated that very little revenue from this agreement was recognized in the quarter, suggesting that demand from other customers for GeoEye-1 images - those who didn't have to wait on the NGA's operational approval before purchasing their images -- was high.

It's especially intriguing to speculate how much Google(GOOG Quote) is paying for these images. GeoEye struck a deal with Google last fall prior to the satellite launch and stuck the Google logo on the side of the rocket.

This precluded GeoEye from selling images to Microsoft(MSFT Quote) or Yahoo!(YHOO Quote). GeoEye's management has yet to reveal the financial terms of its deal with Google, but the strong revenue growth gives some hope for continued ramp-up in the coming quarters.

From a cost perspective, some in the media have discussed GeoEye cash situation vs. the large costs of developing new satellites. The latest quarter's loss might make observers wonder if there's a lot to get excited about this business, even with growing revenue.