MDA Space, Advancing Mankind's Frontiers Through Space Technologies

The role of MDA Space in the space market

The recent successes of SpaceX have underscored significant technological advancements in the space industry, creating a wealth of new market opportunities. In recent years, both established and emerging companies have thrived amid the space race.

MDA Space is among these beneficiaries, with its technologies deployed in over 450 space missions. Given its strong market position and vast potential, MDA represents a potentially interesting investment opportunity.

What is MDA's business model? What opportunities does it present for investors? Is the stock overvalued or undervalued? Find all my insights in this article!

Company overview

In the space industry, we often think of major players like Boeing, SpaceX, and Airbus, as well as fast-growing, high-risk new space companies that are frequently unprofitable. MDA occupies a unique position between these two categories. With 55 years of experience and over 3,000 employees, MDA is a profitable company known for its cutting-edge technologies.

The company operates through three divisions:

1. Robotics and space operations. This division, contributing 32% of revenues, focuses on space robotics, on-orbit servicing and assembly, as well as exploration and rovers.

2. Satellite systems. The largest division, accounting for 44% of revenues, manufactures Low Earth Orbit (LEO), Medium Earth Orbit (MEO), and Geosynchronous Orbit (GEO) satellites, along with essential subsystems such as antennas, payloads, and specialized electronics.

3. Geointelligence. Representing 22% of revenues, this division offers services like earth observation missions, ground stations, and geospatial analytics.

Description of the 3 divisions

Geointelligence

Mission: build a comprehensive global Earth information platform.

Staff: 600 people.

Technologies: advanced sensors (e.g., space surveillance), data collection and processing (ground station tasking, storage), intelligence analysis support, and user-facing software for subscription services.

Use cases: climate change monitoring, sea search and rescue, trade optimization (e.g., ship routing), illegal fishing detection, intelligence and surveillance, and agricultural optimization.

MDA’s competitive advantages:

• Industry-leading radar information satellite technology

• World’s largest multi-sensor ground station network (70 stations across 25 countries)

• Extensive earth imagery data archive

• Near real-time satellite imaging capabilities (under 10 minutes)

• Deep expertise in government geointelligence programs

Robotics & space operations

Mission: deliver mission kits and partner for on-orbit operations.

Staff: 1,000 people.

Technologies: on-orbit sensors (cameras, etc.), robotics, on-orbit servicing and assembly (robotic systems, vision and targeting), rovers, and operational support (e.g., robotics on the ISS, control centers).

Use cases: space exploration, space tourism, debris removal, on-orbit servicing, assembly & manufacturing, lunar logistics, and space mining.

MDA’s competitive advantages:

• First 3D scan of an asteroid by an orbiting spacecraft

• Cutting-edge space robotics technology

• First autonomous on-orbit servicing mission

• 12 years of operational experience on Mars

• World’s first commercial robotics operations control center in development

The MDA Skywalker exemplifies this segment, supporting a range of potential missions, including lunar surface rovers and landers, satellite servicing in various orbits, and in-space assembly and manufacturing.

Satellite systems

Mission: deliver digital satellite solutions.

Staff: 1,200 people.

Technologies: LEO and MEO satellites, GEO satellites, and subsystems (antennas, electronics, payloads).

Use cases: broadband internet, 5G backhaul, defense, mobile communications, IoT, and connected vehicles.

MDA’s competitive advantages:

• High-volume manufacturing for LEO constellations

• Over 350 successful satellite missions

• Proven software for reliable space-based communications

The Aurora is MDA’s latest satellite product line, featuring advanced digital capabilities, low power consumption, and cost-effective operation.

A market with a huge potential

The space economy reached $509 billion in 2023, with the space market accounting for $462 billion. Interestingly, government-related segments (both civil and defense) comprised only 15% of this total, while commercial activities made up a substantial 85%.

Here is the breakdown by vertical:

• Service providers. $390 billion (including telecommunications, etc.)

• Manufacturing. $39 billion

• Satellite operators. $17 billion

• Launch services. $12 billion

• Ground segment. $4 billion

By 2032, the overall economy is projected to grow to $822 billion, reflecting a 60% increase or a CAGR of 5.5%.

Several secular trends are driving growth in the end market:

• Reduced launch costs. Lower costs are creating new opportunities and enabling innovative applications, following an experience curve as detailed in this article.

• Global connectivity. The widespread use of satellites is making global connectivity feasible, enhancing communication at sea, in the air, and in remote areas.

• Increased public interest. A renewed fascination with space exploration, particularly Mars as the next frontier, is capturing public imagination.

• Defense sector expansion. The importance of space for national defense continues to grow.

• Space tourism. While remaining a niche market, space tourism has the potential to fund other capital-intensive space programs.

A huge backlog and lot of growth drivers

At the end of Q2 2024, MDA’s backlog surged to CA$4.6 billion… a 318% increase YoY. For perspective, this compares to estimated revenues of CA$1,041 million in 2024, CA$1,380 million in 2025, and CA$1,657 million in 2026. This growth is primarily fueled by the Robotics & Space Operations and Satellite Systems divisions.

MDA’s five-year pipeline now includes CA$20 billion in opportunities:

• CA$13B from Satellite Systems - around 100 opportunities

• CA$4B from Geointelligence - around 200 opportunities

• CA$3B from Robotics & Space Operations - around 100 opportunities

Key growth drivers include program expansions, increased satellite constellation market share, deeper involvement in space missions, international expansion, and M&A. With 45% of revenues already coming from outside Canada, international growth seems highly achievable.

However, this substantial backlog and pipeline should be weighed against certain risks: most revenues are non-recurring, which could lead to potential revenue volatility, reliance on key customers, and exposure to technological disruption.

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