BlackSky Technology Q1 2025 Earnings Call Transcript

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May 8, 2025
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Operator

Good morning, ladies and gentlemen, and welcome to BlackSky Technologies First Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Please note this conference call is being recorded. I would now like to turn the call over to Ali Bonilla, BlackSky Vice President of Investor Relations. Please go ahead, Ali.

Aly Bonilla
Aly Bonilla
VP - Investor Relations at BlackSky

Good morning and thank you for joining us. Today, I'm joined by our Chief Executive Officer, Brian O'Toole and our Chief Financial Officer, Henry Dubois. On today's call, Brian will provide some highlights on the quarter and give a strategic update on the business. Henry will then review the company's first quarter financial results and outlook for 2025. Following our prepared remarks, we will open the line for your questions.

Aly Bonilla
Aly Bonilla
VP - Investor Relations at BlackSky

A replay of this conference call will be available from approximately 12:30 p. M. Eastern Time today through May 22. Information to access the replay can be found in today's press release. Additionally, a webcast of this earnings call will be available in the Investor Relations section of our website at www.blacksky.com.

Aly Bonilla
Aly Bonilla
VP - Investor Relations at BlackSky

In conjunction with today's call, we have posted a quarterly earnings presentation on the Investor Relations website that you may use to follow along with our prepared remarks. Before we begin, let me remind you that certain statements made during today's conference call regarding our future plans, objectives and expected performance, including our financial guidance for 2025, are forward looking statements. Actual results may differ materially as these statements are based on our current expectations as of today and are subject to risks and uncertainties, including those stated in our Form 10 ks. We encourage you to review our press release, Form 10 ks and other recent SEC filings for a full discussion of the risks and uncertainties that pertain to these statements and that may affect future results or the market price of our stock. BlackSky assumes no obligation to update forward looking statements, except as may be required by applicable law.

Aly Bonilla
Aly Bonilla
VP - Investor Relations at BlackSky

In addition, during today's call, we will refer to certain non GAAP financial measures, including adjusted EBITDA and adjusted imagery and software analytical service cost of sales. A reconciliation of these non GAAP financial measures to their most comparable GAAP measures are included in today's accompanying presentation which can be viewed and downloaded from our Investor Relations website. At this point, I'll turn the call over to Brian O'Toole. Brian?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Thanks, Ali, and good morning, everyone. Thank you for joining us on today's call. First off, I'm happy to report that our new Gen three satellite is performing exceptionally well and exceeding our expectations. As you can see on the first few slides, the image quality of this very high resolution satellite is incredible. As we have been formally commissioning the satellite over the past several weeks and putting it through its paces, we have been successfully collecting imagery from all over the world.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

We were happy to announce earlier this week that we have now completed all of our formal tests and are now delivering evaluation imagery to customers. This achievement marks a major technical and business milestone for the company. The initial very high resolution imagery and advanced analytics from our new Gen three satellite is generating a lot of excitement with our customers as they are actively evaluating imaging performance ahead of bringing this capability into their operations. I will share some additional details later, including upcoming plans for the next launch. Now beginning with Slide six, I'm happy to report that we are off to a strong start to 2025 building on our momentum from last year.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

We have continued to expand our customer base and are entering new markets as demand for our space based intelligence solutions remain strong. Now let me share some of the key highlights from the quarter. First, we were awarded over $130,000,000 in new contracts and renewal agreements in the quarter, primarily driven by several multiyear contract wins. These wins demonstrate the growing interest from defense and intelligence agencies worldwide to secure long term contracts for our imaging capacity over the region of interest. We were also happy contract to accelerate the development of India's commercial earth observation capabilities, a new and emerging market for commercial space.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Second, as a result of the strong bookings in the quarter, our backlog grew 50% compared to the prior year quarter. This growth reflects the demand we're seeing for our space based intelligence solutions and provides us with strong out year revenue visibility. Third, we delivered strong year over year revenue growth of 22%, primarily driven by new contract awards. Fourth, we're pleased that our first Gen three satellite is through extensive testing and continues to exceed performance expectations. And finally, our second Gen three satellite is being shipped and is on track to launch in Q2, which will begin a cadence of additional launches throughout the year.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

I'm also happy to report that we continue to improve our liquidity position in the quarter, strengthening our financial profile and our ability to invest in key growth and go to market initiatives. These highlights demonstrate our continued strong execution and laser focus on providing customers with unmatched imagery and analytic insights, while setting the stage for sustained long term profitable growth. I would now like to share some operational highlights from the quarter. Turning to Slide seven. We are pleased that we won $130,000,000 in contracts in the quarter, which included several large multi year agreements.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

The strong bookings performance drove a 50% year over year growth in our backlog to $366,000,000 This significant increase is a clear indicator of the growing demand for our space based intelligence solutions and the desire of our customers to secure long term contracts for our imagery and analytics services to support their mission critical operations for years to come. Our sales pipeline of multiyear subscription opportunities continues to grow as we bring Gen three to market.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

As we convert these opportunities into long term subscription contracts, our multiyear backlog should also grow, providing improving long term revenue visibility.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

As a reminder, the majority of our contracts are with government customers and the timing of these contracts has the potential to introduce quarter to quarter impacts to bookings revenue and EBITDA. The majority of our backlog is for high margin imagery and analytics services from our current Gen2 and future Gen3 constellation. As we launch more Gen3 satellites and get them into operations later this year, we expect to unlock further contract opportunities and recognize additional revenue growth from our existing backlog. Moving to Slide eight, As I just highlighted, I'm excited to share that our Gen three satellite has completed calibration and testing and is delivering exceptional imagery that is achieving up to NIRS-six quality. For those who may not know, NIRS is an industry standard image quality metric used by analysts to characterize the performance of imagery to meet certain mission requirements.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Our Gen three satellite is delivering imagery at a quality equivalent to much larger and more expensive 25 centimeter class satellites. Attaining this class of image quality is a commercial first for a satellite of this size, cost and performance. The Gen three satellite is proving to be an exceptional spacecraft that we expect will be a workhorse for Black Sky and our customers for years to come. But just as exciting is the AI derived information that we are now extracting from these images. Within three weeks after launch, we demonstrated how our advanced fully automated AI capabilities can transform Gen three satellite imagery into actionable insights at machine speed and scale for sites of interest around the world.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

BlackSky is setting a new industry standard using advanced software and AI enabled automation to accelerate space based intelligence capabilities through disruptive speed, economics and insights. While optimizing and validating the performance of this satellite over the past several weeks, we have been providing sample imagery to customers and potential partners around the world. I am proud to report that the customer response to our initial Gen three imagery has been overwhelmingly positive and is driving growth in our sales pipeline. Our customers are very excited about the new mission applications that will be enabled by combining very high resolution imaging with high frequency monitoring and advanced AI analytics. Turning to Slide nine.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

With the superior resolution and image quality of Gen three, we are now able to demonstrate the ability of our AI to extract an incredible amount of information and insights in real time and deliver this actionable intelligence at industry leading speed and scale. In this example, our AI was able to automatically detect and classify over 25,000 individual vehicles and over 700 maritime vessels in just a few minutes, all fully automated and with incredible precision. This type of analysis would typically take teams of analysts hours and days using traditional tools and manual processes. This is a clear example of how proven and disruptive commercial space technologies can support a range of new and advanced applications and provide highly efficient and cost effective solutions to government customers. Moving to slide 10.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Now that we have demonstrated and validated Gen three satellite performance, image quality and AI analytics, we are now set to commence a regular cadence of additional Gen three launches. In fact, our second Gen three satellite is being shipped this week and is on track to launch in Q2. As we look ahead, we are on track to have eight Gen three satellites on orbit by early twenty twenty six, with each launch improving our revisit rates, capacity and the quantity and quality of actionable intelligence we are delivering to customers. We expect to begin providing early access of Gen three imagery and analytics services to major customers over the course of the summer, with general commercial availability anticipated to begin by Q4. As a reminder, many of our existing major contracts such as EOCL with the U.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

S. Government and several large multiyear international contracts are structured to incrementally expand as Gen three capacity comes online. Turning to Slide 11. As we continue to build out the Gen three constellation, we are moving into our next phase of growth, where we can provide our customers with best in class imagery and new and advanced applications that combine very high resolution imagery, high frequency monitoring and AI driven analytics. We believe we are redefining the future of space based intelligence enabled through a best in class space and first of its kind software platform.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Our software first strategy, which leverages over ten years of investment in our Spectra platform, is a unique capability and a key enabler for rapidly developing and deploying new and innovative space based intelligence solutions to customers around the world. The combination of these advanced capabilities provides BlackSky with a powerful competitive advantage in the market and is able to overcome the limitations of legacy solutions that were designed for static mapping applications. We are excited to be entering into a new aerospace based intelligence with new and exciting opportunities emerging on the heels of our successful demonstration of Gen three. We are well positioned to meet the rapidly growing demand for space based insights from an expanding global customer base, especially at a time when governments around the world are seeking to accelerate and expand their space based capabilities, leveraging cost effective and proven commercial space technologies. While we are bullish on this growing market opportunity, we are also cognizant of a very fluid geopolitical and economic environment, both here and abroad, and remain vigilant in monitoring changing policies and budget dynamics that may have near term impacts on our business.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Despite this uncertain time, we are maintaining our full year outlook for 2025 and look forward to progressing ahead with our growth plans. With that, I'll now turn it over to Henry to go through the quarterly financial results. Henry?

Henry Dubois
Henry Dubois
Chief Financial Officer at BlackSky

Thank you, Brian, and good morning, everyone. Before I begin, let me remind you that references to adjusted cost of sales excludes stock based compensation, depreciation and amortization expenses as we believe this measure represents a more accurate picture of our business without having these non cash items obscure the underlying performance. With that, let's go through our first quarter financial results starting with Slide 13. Total revenue for the first quarter of twenty twenty five was $29,500,000 an increase of $5,300,000 or 22% over the prior year quarter, driven by higher professional and engineering services revenue. The primary driver for this increase was related to the recognition of progress to date under a new contract to accelerate the development of India's commercial earth observation program, which we announced in February.

Henry Dubois
Henry Dubois
Chief Financial Officer at BlackSky

These strategic contracts deepen our relationship with these customers and are typically precursors to securing long term subscription contracts for imagery and analytics services. Keep in mind, revenues recognized from these types of contracts, which are largely milestone based, may have quarter over quarter variability. In addition, our high margin imagery and analytics revenue currently comes from our Gen two satellites as we look to begin mixing in initial Gen three imagery later this year. Moving to Slide 14, our adjusted imagery and analytics cost of sales for the first quarter of twenty twenty five was $3,800,000 compared to $3,400,000 in the prior year quarter. The slight year over year increase was primarily due to short term investments to optimize operating efficiencies that will drive margin improvement over time.

Henry Dubois
Henry Dubois
Chief Financial Officer at BlackSky

Now turning to slide 15. Our adjusted EBITDA for the first quarter was a loss of $600,000 compared to an adjusted EBITDA of 1,400,000 in the prior year quarter. The $2,000,000 year over year decrease was primarily due to higher SG and A expenses of $2,600,000 as we absorb the first full quarter of overhead expenses from the recent LEO Seller acquisition. As a result of bringing LEO Seller's production capabilities in house, we are only able to capitalize direct labor and costs associated with the construction of our satellites and not their associated overhead costs. Under the prior structure, we would have reported positive adjusted EBITDA of $2,000,000 or $600,000 better than the prior year.

Henry Dubois
Henry Dubois
Chief Financial Officer at BlackSky

Keep in mind, the strategic acquisition of LEO Stella was to allow us to better control and optimize our satellite manufacturing capabilities and secure advanced space technology and intellectual property to support our long term growth objectives. Going into 2025, we expected to realize some cost savings related to the acquisition, but with the successful launch of Gen three, we decided to make additional investments in innovative space technologies to support our next generation capabilities. Let's move on to our cash and liquidity position as shown on slide 16. We ended the first quarter of twenty twenty five with $77,000,000 of cash, restricted cash and short term investments. This amount includes a $32,000,000 cash prepayment for work related to a new contract awarded with an international defense and intelligence customer in the first quarter.

Henry Dubois
Henry Dubois
Chief Financial Officer at BlackSky

In addition, we have accumulated approximately $39,200,000 in unbilled contract assets, of which $32,400,000 is anticipated to be billed and received over the next twelve months as certain customer milestones are met, with the rest expected to be collected in the following twelve months. These assets together with about $20,000,000 in remaining vendor financing for several Gen three launches brings our total liquidity position to over $136,000,000 This is an increase of $46,000,000 or 51% from the prior year quarter. Given this liquidity profile and our expected performance, we believe we are fully funded to deploy our baseline constellation of 12 satellites and get to free cash flow positive. Now turning to slide 17 and our outlook for the year. With the success of our Gen three satellite, we're seeing additional long term opportunities emerge for commercial space based solutions.

Henry Dubois
Henry Dubois
Chief Financial Officer at BlackSky

We are also keeping a close eye on potential risks, particularly the timing of contract awards and budget allocations that may be associated with a rapidly changing geopolitical environment. While the near term situation remains fluid, we are maintaining our full year 2025 guidance, which consists of revenue between $125,000,000 and $142,000,000 adjusted EBITDA between 14,000,000 and $22,000,000 and capital expenditures between 60,000,000 to $70,000,000 In summary, we're pleased with the strong revenue growth in the first quarter and the continued momentum we're seeing across the business. With that, I will now turn it back over to Brian for some closing remarks. Brian?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Thanks Henry. In closing, we are happy that our first Gen three satellite is now fully operational and delivering exceptional imagery and analytics, which is getting positive feedback from customers around the world. We are making great progress growing our customer base, building our backlog, advancing our technology and strengthening our balance sheet. Our highly efficient and cost effective space and software solutions are well positioned to address national security needs both here and abroad for years to come. As we deploy additional Gen three satellites this year and further expand our constellation in 2026, we believe BlackSky is at the forefront of a new era in real time space based intelligence.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

With new Gen three satellite launches on the horizon, deepening customer engagements and a growing sales pipeline, the foundation we're building today is setting the stage to drive our next phase of growth into 2026 and beyond. This concludes our remarks for the call and we'll now take your questions.

Operator

Thank you. We will now begin the question and answer session. Your first question comes from the line of Edison Yu from Deutsche Bank. Please go ahead.

Edison Yu
Edison Yu
Analyst at Deutsche Bank

Hey, good morning guys. Thank you for taking our questions. So first off, I want to ask you mentioned some of the geopolitics and I guess macro uncertainty. How are you seeing that or are you seeing that impact some of these discussions with the international customers that may have made progress? I guess it's in the context of are they now a little bit more hesitant because they want to see what kind of trade deal yields worked out or something?

Edison Yu
Edison Yu
Analyst at Deutsche Bank

Or is it actually a good thing because now they feel, oh, we want to actually do something because we want to kind of see working with U. S. Customer or U. S. Commercial provider?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Yes. Good morning, Edison. Thanks for the question. I think what we're experiencing right now is continued strong demand worldwide. We had a very strong first quarter.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

And in fact since our demonstration of Gen three we're actually seeing our pipeline grow. I think there is clearly a lot of demand worldwide for space based intelligence solutions. And we're seeing strong interest for our commercial imagery and analytics services, but also governments that are accelerating their investments in their own sovereign capability. So I think everybody's cognizant of the geopolitical dynamics, but I also think national security is first and foremost priority. And we're well positioned to help them address that.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

So despite some of the dynamics right now, we're seeing strong interest in demand and feel we're well positioned.

Edison Yu
Edison Yu
Analyst at Deutsche Bank

Got you. Then I want to come to ask about AI. I know it's a word that gets thrown around a lot these days. How much how many of the customers or how many of the customers are new customers, particularly new customers are you speaking with that this is a kind of big or is the core reason that they are getting involved or getting interested or increasing their business? Is it a deal breaker for a lot of these, whether it's domestic or international customers to really get their hands around?

Edison Yu
Edison Yu
Analyst at Deutsche Bank

Is that increasing the potential of Spectra as a growth driver? How does one kind of view that at the moment?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Yes. I think what we're seeing is now that the and this is what we're seeing particularly as we've been bringing our Gen three imagery around the world to customers where now they're moved. They can see that the very high resolution imaging is there. And then when you start to combine it with the high frequency, low latency collection, the volume and speed of the information they need to deal with is starting to outpace their normal operations. So they are all recognizing they need to introduce AI into their environments and workflows to one, keep up with the rate and volume of information.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

But two, speed up the time to insights from when that data comes in and gets turned into actionable intelligence. So that conversation with customers has to me made a market shift, particularly in the last nine to twelve months. So we're anticipating this to be a really critical capability that customers are going to need to have as they expand their capabilities over the next couple of years.

Edison Yu
Edison Yu
Analyst at Deutsche Bank

Understood. Thank you.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Thanks, Edison.

Operator

Thank you. And your next question comes from the line of Jaeson Schmidt from Lake Street. Please go ahead.

Jaeson Schmidt
Director of Research - Senior Research Analyst at Lake Street Capital

Yes. Thanks for taking my questions. Just looking at your backlog, curious what timeline you expect to recognize that backlog? And then relatedly, how much of that relates to Gen three capacity?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Good morning, Jason. Thanks for the question. As we reported, we grew our backlog very significantly in the first quarter up to $366,000,000 In the near term, there's a reasonable amount of revenue from our imagery and analytics line that we're going to see coming in over the next couple of months. We announced our EOCL extension and a large international deal. And so near term we're going to see that coming into play and stepping up as we get into the second half of the year.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

And then there's quite a bit of strong backlog out there post 2026.

Jaeson Schmidt
Director of Research - Senior Research Analyst at Lake Street Capital

Got you. And then just as a follow-up. Henry, based on your comments on the professional services revenue line, would we expect that to take a step back here in Q2?

Henry Dubois
Henry Dubois
Chief Financial Officer at BlackSky

Thanks for the question, Jason. Yes, I mean, as you may recall, when we have some of these programs where we are taking some hardware and kind of positioning it off for a customer, we already have that sitting on our balance sheet and we're moving that into for sale assets. That's why you get a big catch up right upfront. So we did have a fair bit of that happening in the first quarter there, correct.

Jaeson Schmidt
Director of Research - Senior Research Analyst at Lake Street Capital

Okay. Thanks a lot guys.

Operator

Thank you. And your next question comes from the line of Jeff Van Nui from Craig Hallum. Please go ahead.

Jeff Van Rhee
Partner & Senior Analyst - Equity Research at Craig-Hallum Capital Group LLC

Great, thanks. Thanks for taking the questions. Congrats guys. Real nice progress on Gen three and some great images here. Talk to me maybe about just briefly on the $130,000,000 increase in backlog.

Jeff Van Rhee
Partner & Senior Analyst - Equity Research at Craig-Hallum Capital Group LLC

Can you give a sense of rough proportion how much of that is from new customers versus existing customers?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

I think we announced a very large international deal which was a good portion of that from an existing customer. There are in the mix about 20 new customers in there including the deal we announced in India.

Jeff Van Rhee
Partner & Senior Analyst - Equity Research at Craig-Hallum Capital Group LLC

Okay. That's helpful. And so talk to me then maybe just for a minute on the sovereign interest. Can you give just a little more expanded commentary on the scope and magnitude of the increase in sovereign capabilities and kind of how that's progressed over the last ninety, one hundred and eighty days?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Yes. Think we're seeing growing interest and governments accelerating their programs. If you look at programs we publicly announced in India and Indonesia, we're seeing this growing opportunity for bundling our commercial imagery analytic services with space and software assets. So and we're seeing that pretty much worldwide across multiple regions. I think we're also seeing that those things seem to be those opportunities seem to be accelerating I think as governments are looking to move quicker in building out their capabilities.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

But we are we believe we're pretty well positioned to capitalize on this dynamic in the market.

Jeff Van Rhee
Partner & Senior Analyst - Equity Research at Craig-Hallum Capital Group LLC

It seems like one last if I could in terms of just sort of as you build out the architecture how critical is edge computer on orbit compute and your thoughts on interlinks just forward roadmap how critical are those capabilities? How do you view them?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

I think onboard computing is another tool in the toolbox. We're delivering very high performance and low latency delivery without that capability. As we have mentioned before optical crosslinks is something we're currently developing and investing in. This will be a next level of capability to improve latency in the both on the tasking of the satellites and the delivery of information and analytics to our customers. So all of those things are being addressed in our roadmap.

Jeff Van Rhee
Partner & Senior Analyst - Equity Research at Craig-Hallum Capital Group LLC

Sounds good. Congrats on the progress. Thanks.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Thank you.

Operator

Thank you. And your next question comes from the line of Tim Horan from Oppenheimer. Please go ahead.

Timothy Horan
Managing Director at Oppenheimer & Co. Inc.

Thanks guys. Three questions if I may. The NEAR six congratulations, but can you say what you were expecting and what we were conveying to your customers prior to the actual real life examples? Can you give us also it sounds like you're going to be doing two satellite launches per quarter starting in the second half of the year. Is that pretty accurate and can you maintain that pace? And then I have an AI question.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Yes, think on the image quality, we had designed the system to be in the nearest five, five plus type realm. So, that is aligned with what our customers were. Our expectations, I think, we're seeing some images come out in that near six level, which is indicating the system is performing beyond our expectations. Phenomenally for where we expect it to be, it's meeting and or exceeding where we wanted to be on image quality. The pace of launches, as I mentioned, we're on track to board eight satellites by early twenty twenty six and six on orbit by later this year.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

So we have a regular cadence of satellites coming off the production line and we're aligning launch capacity and are on track to hit that launch cadence.

Timothy Horan
Managing Director at Oppenheimer & Co. Inc.

So any sense by year end 2026, how many satellites you'll have in operation?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

We have a plan our plan is to have 12 that would get us to our baseline constellation.

Timothy Horan
Managing Director at Oppenheimer & Co. Inc.

Great. On AI, can you license out your technology for customers to analyze other images, other data sources out of curiosity?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Yes, we would be able to do that. We don't currently do that, but we do have IP and software capabilities that do analyze other people's other parties' imagery, not only electro optical but radar and other capabilities. And we've been incorporating that into some of our advanced capabilities. I think I may have mentioned on prior calls some of our work in doing broad area search for monitoring large area of interest for change. And we can do that at scale across very large data sets and large areas regional areas of interest.

Timothy Horan
Managing Director at Oppenheimer & Co. Inc.

And so is that something you're planning on pursuing and it could be a pretty large incremental revenue opportunity?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Well, we think the AI delivering AI derived information is certainly part of our core business plan. We're going to see how this market unfolds into what levels of software and other types of capabilities we may or may not license to customers.

Timothy Horan
Managing Director at Oppenheimer & Co. Inc.

Thank you.

Operator

And your next question comes from the line of Josh Sullivan from The Benchmark Company. Please go ahead.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Good morning. Good morning, Josh.

Josh Sullivan
Equity Research Analyst - Industrial Technology, Aerospace & Defense at The Benchmark Company LLC

In prepared remarks, you noted BlackSky is entering the next phase of growth here. Maybe you could expand on that perspective or wax poetically, I guess, just as you enter this next phase, what we should be expecting over the next one to three years versus maybe where you've been?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

I think the main thing that we're excited about is the interest and demand for Gen three imagery and analytics. And so as we continue to deploy those satellites into our constellation, we are seeing a strong step up in imagery and analytics revenue. That's going to be tied to that. We have a significant backlog tied to some of our major programs that begins to get unlocked as we bring that capacity online. So as you look out over the next eighteen to twenty four months, that's the exciting part of our business that's going to be driving very good growth.

Josh Sullivan
Equity Research Analyst - Industrial Technology, Aerospace & Defense at The Benchmark Company LLC

And then just on the full ownership of Leo Stella, how has that evolved since taking full ownership?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Yeah. I think as a reminder that was a strategic acquisition for us. As you can see Gen three is really demonstrating to be a remarkable platform And we wanted to make sure that we had the ability to optimize and control the production supply chain and production of those satellites. So we've got that moving ahead very nicely. There's also some next generation technologies that came along with that, that investing in.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

We're only really a couple of quarters into integrating them into the operations and that's doing well. And we think over the long term having that type of capability vertically integrated into the business on top of the satellite constellation, our AI and software is going to be is going to put us in a very strong competitive position.

Josh Sullivan
Equity Research Analyst - Industrial Technology, Aerospace & Defense at The Benchmark Company LLC

Great. Thank you.

Operator

Thank you. And your next question comes from the line of Chris Wilkie from Wilkie Space. Please go ahead.

Chris Quilty
Co-CEO & President at Quilty Space

Thanks, Brian. Just wanted to follow-up on that LEO Stella discussion. I think you said during the discussion that you're going to invest in Gen three. I was just wondering is that R and D investments to improve the platform? Are we talking CapEx investments in facilities to production or increased flexibility in the design?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Yes. Most of the investments are in the platform side. Facilities in decent shape will make some incremental investments in some of the back office infrastructure and supply chain management. Our investments in next generation capability come the form primarily of R and D. Some of that begins to get capitalized as we those reach certain levels of feasibility.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

And so that's been our normal course and we expect to continue that. And in some cases the acquisition of Leastella helps us move some of that along even faster.

Chris Quilty
Co-CEO & President at Quilty Space

And for Henry, when we look at the Q1 OpEx SG and A, should we look at that as sort of a steady state now that LEO Stella is fully folded in or should that number grow or come down over the course of the year?

Henry Dubois
Henry Dubois
Chief Financial Officer at BlackSky

Chris, now that we've had a full quarter of Leo Stellar in, that does reflect kind of them in there. And we had baked in kind of as we did our forecast assuming that they would be operating in as wholly owned obviously. So I don't expect that to grow. I think that would be kind of the same. Keep in mind, those additional costs and SG and A are things that we would have been covering in the prior world through a CapEx line because it would have been covered by the invoices that we were paying to Leo Stellar on an arm's length basis. So it doesn't change the cash profile.

Chris Quilty
Co-CEO & President at Quilty Space

Okay. And presumably the increased investments are already or in the capital structure is already reflected in your CapEx guidance that you provided?

Henry Dubois
Henry Dubois
Chief Financial Officer at BlackSky

Correct.

Chris Quilty
Co-CEO & President at Quilty Space

Got you. Quick question, the imagery and analytics was down $1,000,000 sequentially. Obviously, you've got EOCL and other things that open up on a go forward basis. Were there other one time items that might have led to the year over year decline there or that just reflective of customer losses or timing of contracts?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Yes. I think keep in mind we still have some quarter to quarter variability in the business related to both the particularly in the imagery and analytics business because there are some projects that have deliverables on a quarterly basis that can surge. We are seeing slower than expected orders coming out of LUNO, for example. But we're also seeing customers anxious to transition to Gen three. But as I mentioned earlier, we have EOCL and backlog from many other international customers already secured for Gen two capacity going well into 2026. So this is really, think, Chris, as you're alluding really timing.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

If you look at the general trend where we are and the direction of the business, We're seeing that backlog growing and the visibility into transitioning that backlog into revenue growth emerging, especially now that we've Gen three operational.

Chris Quilty
Co-CEO & President at Quilty Space

Got it. And speaking of timing, mentioned that you won't start offering Gen three commercially until Q4. Is there any reason that you wouldn't, if you've got a couple of satellites on orbit start selling that at least in a beta mode to customers prior to the end of Q4? Or what's the rationale for waiting until the end of the year?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Yes. We are planning to we have an early access program that will kick in when we just have a couple satellites this summer. And customers will begin acquiring imagery and will begin initial revenue generating operations through data sales and evaluation of the imagery. And then the way we think about the commercial availability is just having enough satellites and the back end infrastructure ready to support a broad range of customers through our Spectra platform. So it's a normal go to market strategy and but of course we will start monetizing those satellites as fast as we can.

Chris Quilty
Co-CEO & President at Quilty Space

Very good. Thank you and good luck with the next launch.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Thanks Chris.

Operator

Thank you. And your next question comes from the line of Scott Buck from H. C. Wainwright. Please go ahead.

Scott Buck
Managing Director & Senior Technology Analyst at H.C. Wainwright & Co., LLC

Hey, good morning, guys. Thanks for taking my questions. Brian, I guess, first, congrats on fully commissioning the first Gen three satellite. I'm curious, having that first one under your belt, does that change the time line or the steps required for commissioning two through 12?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

No, I think we're on plan. I think obviously we wanted to make sure that that satellite was performing as expected before we launched the second one in case we had to make any incremental refinements. But first satellite is performing better than we expected. Functionally, it's really performing well. Image quality is great and the agility is meeting all of our expectations.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

So we're moving out as planned to hit our launch schedule as I outlined earlier.

Scott Buck
Managing Director & Senior Technology Analyst at H.C. Wainwright & Co., LLC

Okay. Appreciate that. And then Henry, I assume the CapEx builds through the year kind of in line with

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Gen three?

Henry Dubois
Henry Dubois
Chief Financial Officer at BlackSky

That is correct. I mean, that's the primary driver behind our CapEx is getting this next batch up and being prepared also for our launches in 2026.

Scott Buck
Managing Director & Senior Technology Analyst at H.C. Wainwright & Co., LLC

Okay, perfect. That's it for me guys. I appreciate it.

Henry Dubois
Henry Dubois
Chief Financial Officer at BlackSky

Thanks, Scott. Thank

Operator

you. And your next question comes from the line of Austin Moeller from Canaccord. Please go ahead.

Austin Moeller
Director - Equity Research at Canaccord Genuity - Global Capital Markets

Hi, good morning, Brian and Henry. Just my first question here. You mentioned the early access program. Are there customers now that are getting that early Gen three TEMS test imagery that are paying a higher subscription premium under their contract? Or does that not occur until you have more customers on the EAP that can actively task a growing fleet of Gen 3s?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Yes. I think the way to think about it is there will be customers that we have contracts with to get imagery under the early program. This will be getting imagery at a lower volume primarily for evaluation purposes and to assess integrating that into their operations. The fully automated commercial operations will be in the fourth quarter.

Austin Moeller
Director - Equity Research at Canaccord Genuity - Global Capital Markets

Okay. And you mentioned there's over 20 new customers added in backlog that you discussed. Are you able to indicate without saying who they are geographically where the bulk of that is located? I'm just trying to understand if the NATO Europe commitment to spend more than 2% of GDP on defense is becoming visible to you?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Yes. First, thanks for the question, Austin. Let me just clarify that the 20,000,000 I was referring to is $20,000,000 as part of that backlog. We have been bringing on new customers as part of our normal sales operations. The customers we're seeing are really all over the world.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

There is growing customers in Europe, Middle East, Asia. So we're seeing particularly now with Gen three, we're seeing a number of new larger customers working with us to acquire Gen three capability. And as I mentioned in my remarks, we've seen a pretty significant increase in our pipeline just over the last few months that are from new customers for Gen three capability. So that's really exciting. And now we're working on how we can move those customers through the pipeline and transition those into contracts.

Austin Moeller
Director - Equity Research at Canaccord Genuity - Global Capital Markets

That's very exciting. Thanks for the insights.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Thank you.

Operator

Thank you. And your last question comes from the line of Steve Stornes from Stonegate. Please go ahead.

Dave Storms
Director of Equity Research at Stonegate Capital Partners

Hey, good morning and thank you for taking my questions. I just wanted to circle back on some of the commercial capabilities that you're expecting later this year and maybe how they compare to the same capabilities that you would expect in late twenty twenty six once you have the full baseline constellation?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

I think functionally the capabilities that we'll have later this year as far as image quality, automated AI, latency and things of those around those aspects will pretty much be in place later this year. What happens as we add more satellites is basically adding more capacity. It improves revisit and in some cases reduces latency because we'll have quicker access locations around the world. The thing that you should keep in mind is, we're introducing Gen three satellites into a very mature software and ground network that is operating our Gen two constellation. So we're not having to go build out new software extensively new software and product capabilities to bring Gen three to market. It's just an extension of the platform that is highly reliable and been serving our customers now for well over five years.

Dave Storms
Director of Equity Research at Stonegate Capital Partners

Understood. That's very helpful. Thank you. And then just curious now that the global data marketplace has been up for a little bit. Are you seeing any differences in the bidding environment or what it takes to win contracts there compared to maybe more traditional routes?

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Yes, it's a good question. We're starting to win more of those. They're still small, but we are seeing a trend toward customers wanting to acquire longer term services. It's a pretty competitive marketplace, but we seem to be doing pretty well. And we're forming some partnerships there with other companies to be able to offer higher value information and insight services.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

So still early and we're excited about where that can go and we're seeing the trends related to that marketplace go in the right direction.

Dave Storms
Director of Equity Research at Stonegate Capital Partners

Understood. Thanks for taking my questions and good luck in Q2.

Brian O’Toole
Brian O’Toole
CEO & Director at BlackSky

Thank you, Dave.

Operator

Thank you. At this time, there are no further questions. This concludes BlackSky's first quarter twenty twenty five earnings conference call. Thank you for joining the call today. You may all disconnect.

Analysts
    • Aly Bonilla
      VP - Investor Relations at BlackSky
    • Brian O’Toole
      CEO & Director at BlackSky
    • Henry Dubois
      Chief Financial Officer at BlackSky
    • Edison Yu
      Analyst at Deutsche Bank
    • Jaeson Schmidt
      Director of Research - Senior Research Analyst at Lake Street Capital
    • Jeff Van Rhee
      Partner & Senior Analyst - Equity Research at Craig-Hallum Capital Group LLC
    • Timothy Horan
      Managing Director at Oppenheimer & Co. Inc.
    • Josh Sullivan
      Equity Research Analyst - Industrial Technology, Aerospace & Defense at The Benchmark Company LLC
    • Chris Quilty
      Co-CEO & President at Quilty Space
    • Scott Buck
      Managing Director & Senior Technology Analyst at H.C. Wainwright & Co., LLC
    • Austin Moeller
      Director - Equity Research at Canaccord Genuity - Global Capital Markets
    • Dave Storms
      Director of Equity Research at Stonegate Capital Partners
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Key Takeaways

  • Gen three satellite exceeded performance expectations, achieving up to near-6 image quality and delivering evaluation imagery, with a second satellite shipping now and eight satellites on orbit planned by early 2026.
  • First-quarter bookings totaled $130 million, driving a 50% year-over-year backlog increase to $366 million and 22% revenue growth, led by multiyear defense and intelligence contracts including support for India’s commercial EO program.
  • Revenue in Q1 was $29.5 million with an adjusted EBITDA loss of $0.6 million—impacted by SG&A from the LEO Stella acquisition—while liquidity rose to over $136 million and full-year 2025 guidance (revenue $125–142 million; adj. EBITDA $14–22 million) was reaffirmed.
  • BlackSky’s software-first Spectra platform and AI analytics demonstrated automated object detection and classification at machine speed, processing tens of thousands of vehicles and vessels in minutes to deliver actionable intelligence.
  • The full integration of the LEO Stella acquisition strengthens vertical control over satellite manufacturing and supports ongoing R&D in next-generation technologies to sustain production and innovation.
AI Generated. May Contain Errors.
Earnings Conference Call
BlackSky Technology Q1 2025
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