Core Insights - BlackSky Technology Inc. (NYSE: BKSY) reported Q2 '25 earnings, revealing a surprising revenue decline of 11.5% year-over-year [1] Financial Performance - The company's revenue for Q2 '25 was disappointing, showing a decrease of 11.5% compared to the same quarter last year [1]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $51.7 million, an increase of $2.6 million or 5.2% compared to the same period last year [25] - Adjusted EBITDA for Q2 2025 was a loss of $3.4 million, compared to an adjusted EBITDA of $3.5 million in the prior year period [27] - Cash position at the end of Q2 2025 was $94.9 million, more than double the cash balance from a year ago [30] Business Line Data and Key Metrics Changes - Revenue growth was primarily driven by higher professional and engineering services, with increased revenues from the high-margin imagery and analytics business [25] - Adjusted imagery and analytics cost of sales for Q2 2025 was $7.2 million, up only $400,000 compared to the same period last year [26] - The company expects advanced services to ramp up once general availability begins in Q4 2025 [25] Market Data and Key Metrics Changes - Approximately 85% of the funded backlog of over $350 million is from international customers for Gen three services [15] - The company is seeing significant demand for Gen three services from a diverse international market, with multiple early access agreements signed [7][14] Company Strategy and Development Direction - The company is focused on capitalizing on the growing global market for real-time space-based intelligence solutions, with a strong emphasis on innovation and vertical integration [6][36] - The recent announcement of the Eros constellation represents a new growth and market expansion opportunity, targeting digital mapping applications [21][24] - The company aims to maintain a strong balance sheet and improved liquidity to unlock future growth opportunities [36] Management's Comments on Operating Environment and Future Outlook - Management noted near-term uncertainty from the U.S. government's fiscal year 2026 budget but remains confident in long-term opportunities [15][17] - The company anticipates a strong second half of the year, driven by the ramp-up of Gen three services and existing contracts [32][47] - Management emphasized the importance of international growth, which is expected to continue outpacing domestic growth [76] Other Important Information - The company successfully raised $185 million in an upsized convertible note offering, enhancing liquidity and financial flexibility [28] - The Eros initiative is expected to address a supply gap in the market starting around 2027, as legacy satellites age out of service [24] Q&A Session Summary Question: When will Gen three satellites be available for general use, and what impact will that have on revenue? - Management indicated that commercial availability in Q4 will lead to incremental revenue growth from existing contracts and new agreements [39][40] Question: What is the current status of U.S. government spending and new orders? - Management acknowledged the effects of the current budget process and anticipated continuing resolution, which have been factored into guidance [41][42] Question: Can you provide insights on the pipeline for new contracts? - Management noted an increase in interest and demand for Gen three services, with a growing pipeline of opportunities [43] Question: How does the image quality and delivery compare to competitors? - Management stated that their offering is highly differentiated in terms of performance and economics compared to competitors [44] Question: What is the significance of the backlog related to Gen three capacity? - A significant portion of the backlog is related to Gen three imagery and analytics, indicating strong demand [46] Question: How is the outlook for U.S. government spending affecting guidance? - Management indicated that while there is uncertainty, they expect demand for Gen three capabilities to remain strong [70] Question: What are the details regarding the Eros constellation? - Management stated that specifics will be shared closer to deployment, but it will leverage compelling economics similar to Gen three [68] Question: How is the international business performing? - Management confirmed that international growth is outpacing domestic growth, creating new opportunities [76]

Financial Performance - BlackSky's first half (1H) revenue for 2025 reached $51.7 million, a 5.2% increase compared to the same period in the prior year[27] - Adjusted imagery and analytics cost of sales for 1H 2025 was $7.2 million, a slight increase of $0.4 million from the prior year period[32] - The company reported an 81% imagery & analytics gross margin in Q2, reflecting healthy economics from recurring imagery and analytics services[32] - Adjusted EBITDA loss for 1H 2025 was $3.4 million, which would have been $2.2 million excluding LeoStella[35] Liquidity and Capital - BlackSky successfully raised $185 million in an upsized convertible note offering, strengthening the balance sheet and increasing liquidity[9, 38] - The company's Q2 2025 cash balance was $94.9 million, a 124% increase year-over-year[41] - Liquidity improved to over $227 million, including net cash raised in July from the convertible debt offering and warrant exercise payments[41] Business Highlights - BlackSky was awarded a facility monitoring delivery order valued at up to $24 million with the NGA Luno A program[9, 10, 11] - The company signed early access agreements for Gen-3 services with multiple international customers[9, 12] - BlackSky launched its second Gen-3 satellite, which began delivering very high resolution (VHR) imagery within 12 hours after launch[9] - The company remains on track to launch 6 Gen-3 satellites this year and have 8 Gen-3 satellites on orbit by early 2026[19] Outlook - BlackSky's full year 2025 guidance includes revenue between $105 million and $130 million, and adjusted EBITDA between $0 million and $10 million[44]

```markdown [Overview of Second Quarter 2025 Results](index=1&type=section&id=BLACKSKY%20REPORTS%20SECOND%20QUARTER%202025%20RESULTS) [Key Highlights](index=1&type=section&id=Second%20Quarter%20Financial%20Highlights) BlackSky reported mixed financial results for Q2 2025, with Imagery & Software services revenue growing to $18.0 million and an improved cost of sales at 19% of revenue. The company strengthened its financial position with a cash balance of $94.9 million and a successful $185 million convertible note offering. Operationally, the company launched its second Gen-3 satellite, secured significant contracts, and is on track to launch six Gen-3 satellites in 2025 Key Financial Metrics | Financial Metric | Value | | :--- | :--- | | Imagery & Software Revenue | $18.0 million | | Imagery & Software Cost of Sales | 19% of revenue | | Backlog | $356 million | | Cash Balance (as of June 30, 2025) | $94.9 million | | Pro Forma Cash (incl. recent transactions) | > $170.0 million | - Operational achievements include the successful launch and commissioning of the second Gen-3 satellite, which delivered imagery within 12 hours. The company is on track to launch a total of six Gen-3 satellites this year[2](index=2&type=chunk)[4](index=4&type=chunk) - Key business developments include a facility monitoring order up to **$24 million** from the NGA, a new multimillion-dollar international customer contract, and multiple early access agreements for Gen-3 services[4](index=4&type=chunk) - The company completed an upsized **$185 million** convertible note offering in July, using the proceeds to pay off existing debt and strengthen its balance sheet[4](index=4&type=chunk)[12](index=12&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Brian E. O'Toole highlighted the successful launch and exceptional performance of the second Gen-3 satellite, which is already providing very-high resolution imagery to customers via early access agreements. He confirmed the plan to launch six Gen-3 satellites in 2025 and noted that the recent $185 million capital raise strengthens the company's balance sheet and validates its long-term business potential - The second Gen-3 satellite is performing exceptionally well and, combined with the first, is now providing very-high resolution imagery and AI-driven analytics to customers[2](index=2&type=chunk) - The company remains on track to launch six Gen-3 satellites in 2025, with general commercial availability expected in the fourth quarter[2](index=2&type=chunk) - A successful capital raise of **$185 million** has strengthened the balance sheet, increased liquidity, and is seen as a validation of the company's long-term potential[2](index=2&type=chunk) [Financial Performance](index=3&type=section&id=Financial%20Performance) [Financial Results (Q2 2025)](index=3&type=section&id=Financial%20Results) In Q2 2025, total revenue decreased to $22.2 million from $24.9 million year-over-year, primarily due to lower professional and engineering services revenue. The company reported a net loss of $41.2 million, a significant increase from a $9.4 million loss in Q2 2024, largely driven by a $24.4 million loss on derivatives. Adjusted EBITDA was a loss of $2.8 million, compared to a $2.1 million profit in the prior-year quarter Q2 2025 Financial Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $22.2M | $24.9M | -10.8% | | Imagery & Software Revenue | $18.0M | $17.5M | +2.9% | | Professional & Engineering Revenue | $4.2M | $7.5M | -44.0% | | Net Loss | ($41.2M) | ($9.4M) | Increased Loss | | Adjusted EBITDA | ($2.8M) | $2.1M | Decreased | - The decline in total revenue was primarily due to a **$3.3 million** decrease in professional and engineering services revenue, attributed to the timing of revenue recognition on long-term, milestone-based contracts[5](index=5&type=chunk) - The year-over-year increase in net loss was mainly caused by a **$24.4 million** loss on derivatives in Q2 2025, compared to a **$5.3 million** gain in Q2 2024[8](index=8&type=chunk) - Cash operating expenses increased by **$3.1 million** year-over-year to **$19.4 million**, primarily due to overhead expenses previously capitalized as satellite assets before the acquisition of LeoStella operations[7](index=7&type=chunk) [Balance Sheet & Capital Expenditures](index=4&type=section&id=Balance%20Sheet%20%26%20Capital%20Expenditures) As of June 30, 2025, BlackSky held $94.9 million in cash and equivalents, bolstered by $35.8 million in net proceeds from an at-the-market equity program. Capital expenditures for the quarter were $10.0 million. Subsequent to the quarter's end, the company raised $185.0 million through a convertible note offering, which was used to pay off existing debt - Cash, cash equivalents, restricted cash, and short-term investments totaled **$94.9 million** as of June 30, 2025[11](index=11&type=chunk) - Capital expenditures for Q2 2025 amounted to **$10.0 million**[11](index=11&type=chunk) - Post-quarter, the company completed a **$185.0 million** offering of an **8.25%** convertible note due 2033, using a portion of the proceeds to pay off its senior secured note and commercial bank line[12](index=12&type=chunk) [2025 Outlook](index=4&type=section&id=2025%20Outlook) The company has adjusted its full-year 2025 outlook due to near-term volatility from the U.S. government budget process and the timing of some international contracts. Revenue guidance is now set between $105 million and $130 million, with Adjusted EBITDA expected to be between break-even and $10 million. The capital expenditure forecast remains unchanged 2025 Full-Year Guidance | 2025 Full-Year Guidance | Range | | :--- | :--- | | Revenue | $105M - $130M | | Adjusted EBITDA | $0M - $10M | | Capital Expenditures | $60M - $70M (Unchanged) | - The guidance adjustment is attributed to near-term volatility from the U.S. government budget process and timing related to some international contracts[13](index=13&type=chunk) [Financial Statements and Reconciliations](index=7&type=section&id=Financial%20Statements%20and%20Reconciliations) [Condensed Consolidated Statements of Operations](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20LOSS) This section provides the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025, and 2024, detailing revenues, costs, operating loss, and net loss Condensed Consolidated Statements of Operations | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Total revenue** | **$22,199** | **$24,938** | | Total costs and expenses | $36,139 | $36,659 | | Operating loss | ($13,940) | ($11,721) | | (Loss) gain on derivatives | ($24,435) | $5,273 | | **Net loss** | **($41,239)** | **($9,397)** | | Net loss per share | ($1.27) | ($0.52) | [Condensed Consolidated Balance Sheets](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section presents the company's unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, outlining assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | **$138,796** | **$106,736** | | **Total assets** | **$310,798** | **$254,146** | | Total current liabilities | $37,400 | $26,022 | | **Total liabilities** | **$224,238** | **$160,157** | | **Total stockholders' equity** | **$86,560** | **$93,989** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section details the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025, and 2024, showing cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $19,965 | ($5,602) | | Net cash used in investing activities | ($49,821) | ($23,048) | | Net cash provided by financing activities | $39,186 | $21,865 | | **Net increase (decrease) in cash** | **$9,330** | **($6,785)** | | **Cash, cash equivalents, and restricted cash – end of period** | **$23,708** | **$26,649** | [Reconciliation of Net Loss to Adjusted EBITDA](index=10&type=section&id=RECONCILIATION%20OF%20NET%20LOSS%20TO%20ADJUSTED%20EBITDA) This table provides a reconciliation of the GAAP measure Net Loss to the non-GAAP measure Adjusted EBITDA for the three and six months ended June 30, 2025, and 2024 Reconciliation of Net Loss to Adjusted EBITDA | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss | ($41,239) | ($9,397) | | Adjustments (Interest, Taxes, D&A, etc.) | $38,422 | $7,252 | | **Adjusted EBITDA** | **($2,817)** | **$2,145** | [Reconciliation of Operating Expenses to Cash Operating Expenses](index=11&type=section&id=RECONCILIATION%20OF%20OPERATING%20EXPENSES%20TO%20CASH%20OPERATING%20EXPENSES) This table reconciles the GAAP measure Operating Expenses to the non-GAAP measure Cash Operating Expenses for the three and six months ended June 30, 2025, and 2024 Reconciliation of Operating Expenses to Cash Operating Expenses | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Operating expenses | $29,892 | $29,777 | | Stock-based compensation | ($3,288) | ($2,222) | | Depreciation and amortization | ($7,208) | ($11,277) | | **Cash operating expenses** | **$19,396** | **$16,278** | ```

Group 1 - BlackSky (BKSY) is gaining attention in the defense sector, but coverage on the company remains limited [1] - The stock has shown significant movement in the past month, indicating potential momentum [1] Group 2 - The author has extensive experience in the technology market, focusing on risk mitigation during various economic events [1]

Group 1: BlackSky Technology Inc. (BKSY) - BlackSky Technology Inc. shares increased by 8.9% to close at $28.29, with a significant trading volume indicating strong investor interest [1] - The stock has experienced a remarkable 104.3% gain over the past four weeks, driven by optimism in global defense spending [1] - The consensus EPS estimate for the upcoming quarterly report is a loss of $0.40 per share, reflecting a year-over-year change of +16.7%, while revenues are expected to reach $27.92 million, up 11.9% from the previous year [2] Group 2: Earnings and Stock Performance - The consensus EPS estimate for BlackSky Technology has remained unchanged over the last 30 days, suggesting that the stock's price movement may not sustain without earnings estimate revisions [3] - The stock currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook [3] - BlackSky Technology is part of the Zacks Technology Services industry, which includes Allot Communications, another company in the same sector that has seen a decline of 5.5% in its last trading session [3] Group 3: Allot Communications - Allot Communications' consensus EPS estimate has decreased by 50% over the past month to $0, representing a year-over-year change of +100% [4] - Allot Communications also holds a Zacks Rank of 3 (Hold), similar to BlackSky Technology [4]

Core Viewpoint - BlackSky Technology's recent stock decline is attributed to its announcement of a convertible debt offering, which investors initially reacted negatively to, despite potential long-term benefits [3][4]. Group 1: Stock Performance - BlackSky's stock experienced a significant increase following a positive analyst prediction, rising from under $22 to over $28 [1]. - Following the announcement of the debt offering, BlackSky's stock fell by 20% within a single day [3]. Group 2: Debt Offering Details - BlackSky announced a convertible debt issuance of $125 million, with potential demand increasing the total to $143.8 million, later raised to $160 million, and possibly $185 million [3]. - The company plans to allocate $113.3 million of the raised funds to refinance existing debt, with the remainder for general corporate purposes [3]. Group 3: Interest Rates and Share Dilution Concerns - The new debt carries an interest rate of 8.25%, which is an improvement compared to the previous rate of approximately 11.5% [5]. - Concerns about share dilution arise from the debt's conversion to equity, which will only occur if the stock price reaches nearly $37, requiring a 60% increase from current levels [5]. Group 4: Market Reaction Analysis - The market's negative reaction to the debt offering may be an overreaction, as the new terms are more favorable than the previous debt [5]. - The potential for stock price appreciation could benefit investors if the company successfully executes its plans [5].

Group 1 - BlackSky Technology, Inc. announced plans to offer $125 million principal amount of convertible senior notes due 2033, leading to a drop in its shares during extended trading [1] - The company plans to grant initial purchasers an option to buy up to an additional $18.75 million principal amount of the notes [1] - Approximately $103.1 million of the proceeds will be used to repay and terminate its secured term loan facility, while about $10.2 million will be used for its secured revolving credit facility [2] Group 2 - Following the announcement, BlackSky Technology stock experienced a significant decline of 222.23%, trading at $23 in Thursday's extended trading [3]

Group 1: BlackSky Technology - BlackSky Technology Inc. has seen a 21% increase in share price due to a $24 million contract with the National Geospatial-Intelligence Agency, which is part of a larger potential business opportunity [4][6] - The company is expanding its satellite project to enhance its high-frequency monitoring capabilities, with initial launches expected in 2027 [5] - BlackSky's subscription-based geospatial intelligence service has a backlog exceeding $350 million and year-over-year sales growth over 20%, although it continues to face quarterly losses [6] Group 2: Core Scientific - Core Scientific Inc. shares surged approximately 49% following renewed acquisition talks with AI hyperscaler CoreWeave, which previously made an unsolicited offer of $5.75 per share in 2024 [7][8] - The company's market capitalization has surpassed $5 billion, indicating strong investor interest and potential for a premium acquisition offer [8] - Core Scientific has established multiple agreements with CoreWeave, enhancing its infrastructure capabilities despite the previous failed acquisition attempt [9] Group 3: Ambarella - Ambarella Inc. experienced a rally amid speculation of a potential sale, although this remains unconfirmed [11] - The company's Edge AI system-on-a-chip solutions are gaining traction in the market, which could support its recovery following a challenging 2024 [12] - Analysts have a consensus rating of eight Buys and four Holds for Ambarella, with a price target suggesting a 28% upside potential [12]

Core Insights - The commercialization of space and national security needs are driving demand for space technology stocks like Rocket Lab Corp. (RKLB) and BlackSky Technology (BKSY) [1][3] - RKLB and BKSY represent distinct yet complementary aspects of the space economy, with RKLB focusing on launch services and BKSY on geospatial intelligence [2] Group 1: Rocket Lab (RKLB) - Recent achievements include the successful launch of its 67th Electron rocket, with a target of over 20 launches in 2025 and a 100% mission success rate year to date [5][10] - Financial stability is indicated by cash and cash equivalents of $428 million, with current debt at $20 million and long-term debt at $419 million, suggesting a moderate solvency position [6] - Challenges include high operating expenses due to investments in innovations, which may offset revenue gains and lead to losses [7][8] Group 2: BlackSky Technology (BKSY) - Recent achievements include securing a $24 million contract from the National Geospatial-Intelligence Agency and signing agreements with international defense customers for real-time monitoring capabilities [9][10] - Financial stability is shown with cash and cash equivalents of $77 million, current debt of $4 million, and long-term debt of $112 million, indicating a solid solvency position [12] - Challenges include intense competition in the satellite imaging sector and high operating expenses leading to a loss of $12.8 million despite a 22% revenue growth year over year [13][14] Group 3: Comparative Analysis - RKLB has seen a stock price increase of 652.9% over the past year, while BKSY has increased by 158.9% in three months [10][20] - BKSY's valuation is more attractive with a forward sales ratio of 4.32X compared to RKLB's 22.96X [20] - Both companies have negative Return on Equity (ROE), indicating inefficiencies in generating profits from their equity base [24] Group 4: Investment Outlook - RKLB is positioned as the more financially sound stock for long-term investors due to consistent launch cadence and low leverage [26] - BKSY's higher leverage and delayed path to profitability diminish its near-term investment appeal [26][27] - Both companies currently hold a Zacks Rank 3 (Hold), reflecting a balanced risk-reward scenario for investors [27]