BlackSky Technology (BKSY) - 2025 Q2 - Quarterly Report

Part I. Financial Information This section presents the company's financial statements, management's analysis, and market risk disclosures Financial Statements This section presents BlackSky Technology Inc.'s unaudited condensed consolidated financial statements and related notes as of June 30, 2025 Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows total assets increased to $310.8 million and total liabilities rose to $224.2 million, driven by cash, investments, and derivative liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $22,555 | $13,056 | | Short-term investments | $71,231 | $39,406 | | Total current assets | $138,796 | $106,736 | | Total assets | $310,798 | $254,146 | | Liabilities & Equity | | | | Total current liabilities | $37,400 | $26,022 | | Derivative liabilities | $40,498 | $17,964 | | Long-term debt - net | $117,271 | $105,736 | | Total liabilities | $224,238 | $160,157 | | Total stockholders' equity | $86,560 | $93,989 | Condensed Consolidated Statements of Operations and Comprehensive Loss Total revenue decreased to $22.2 million for Q2 2025, while net loss widened significantly to $41.2 million, primarily due to derivative losses Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $22,199 | $24,938 | $51,743 | $49,174 | | Operating Loss | $(13,940) | $(11,721) | $(25,919) | $(24,974) | | (Loss) gain on derivatives | $(24,435) | $5,273 | $(22,534) | $5,019 | | Net Loss | $(41,239) | $(9,397) | $(54,052) | $(25,207) | | Net loss per share | $(1.27) | $(0.52) | $(1.71) | $(1.40) | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities significantly improved to $20.0 million for the six months ended June 30, 2025, while investing and financing activities increased Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 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) | Notes to Condensed Consolidated Financial Statements The notes detail significant corporate actions, including the issuance of Convertible Notes, an ATM offering, and the LeoStella acquisition, along with accounting policies and backlog - In July 2025, the Company issued $185.0 million in Convertible Notes due 2033[24] - During the first six months of 2025, the company sold 3.7 million shares through its at-the-market (ATM) offering program, generating gross proceeds of $42.5 million[25] - As of June 30, 2025, the company had a total backlog of $356.3 million, which it expects to recognize over the coming years[68] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, including revenue trends, increased net loss due to derivative losses, and improved liquidity from recent financing activities Results of Operations Total revenue decreased in Q2 2025 but increased for the six-month period, while net loss significantly widened due to non-cash derivative losses Results of Operations Comparison (in thousands) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $22,199 | $24,938 | $51,743 | $49,174 | | Operating Loss | $(13,940) | $(11,721) | $(25,919) | $(24,974) | | Net Loss | $(41,239) | $(9,397) | $(54,052) | $(25,207) | - The decrease in Q2 2025 professional and engineering services revenue was due to the progress of revenue recognition on long-term contracts[143] - The increase for the six-month period was primarily due to a new contract for the delivery of one Earth observation satellite[144] - Selling, general, and administrative expenses increased 19.1% for the six months ended June 30, 2025, primarily due to the workforce acquired from the LeoStella acquisition, higher stock-based compensation, and increased IT and professional fees[149] Non-GAAP Financial Measures The company reports Adjusted EBITDA, a non-GAAP measure, which showed a loss of $3.4 million for the six months ended June 30, 2025 Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(41,239) | $(9,397) | $(54,052) | $(25,207) | | Loss (gain) on derivatives | $24,435 | $(5,273) | $22,534 | $(5,019) | | Depreciation and amortization | $7,208 | $11,277 | $14,444 | $22,461 | | Stock-based compensation | $3,454 | $2,362 | $6,351 | $5,725 | | Adjusted EBITDA | $(2,817) | $2,145 | $(3,434) | $3,521 | Liquidity and Capital Resources The company's liquidity significantly improved with $185.0 million in Convertible Notes and $42.5 million from an ATM offering, supporting future capital needs - In July 2025, the company issued $185.0 million in principal amount of Convertible Notes due 2033, bearing interest at 8.25% per year[164][165] - The company raised $42.5 million in gross proceeds from its at-the-market (ATM) offering during the six months ended June 30, 2025[169] - Following the repayment of loans from related parties and a commercial bank line in July 2025, the company is no longer subject to any financial or non-financial debt covenants[168] Quantitative and Qualitative Disclosures about Market Risk The company has indicated that this section is not applicable for this reporting period - The company states that Quantitative and Qualitative Disclosures About Market Risk are not applicable[205] Controls and Procedures Management concluded that disclosure controls were effective as of June 30, 2025, excluding the recently acquired LeoStella from internal control evaluation - The company's Certifying Officers concluded that as of June 30, 2025, disclosure controls and procedures were effective at a reasonable assurance level[206] - The company acquired LeoStella in November 2024 and excluded it from the evaluation of internal control over financial reporting for the quarter ended June 30, 2025, as it is still in the process of integration[209] Part II. Other Information This section provides additional information, including legal proceedings, updated risk factors, equity sales, and other disclosures Legal Proceedings The company is involved in two putative class action lawsuits related to its 2021 merger, expecting indemnification obligations for former officers - Two putative class action lawsuits, Drulias v. Osprey Sponsor II, LLC and Cheriyala v. Osprey Sponsor II, LLC, were filed in May 2024 concerning the company's 2021 merger[214][215] - The complaints allege breach of fiduciary duty, unjust enrichment, and misleading disclosures in the merger proxy statement against former directors and officers of Osprey[214][215] - Although not named as a defendant in the suits, BlackSky expects to have certain indemnification requirements for the directors and officers involved[217] Risk Factors This section highlights new risks related to the company's indebtedness, potential stock dilution, and stock price volatility, noting its 'smaller reporting company' status - The company's ability to make scheduled payments on its debt, including the new convertible notes, depends on financial performance and economic conditions that are beyond its control[220] - The conversion of the convertible notes may dilute the ownership interest of existing stockholders and could depress the price of the Class A common stock[225][226] - The company benefits from "smaller reporting company" status, which allows for reduced disclosure obligations regarding executive compensation and audited financial statements[232] - This status will be lost for filings beginning January 1, 2026[234] Unregistered Sales of Equity Securities and Use of Proceeds The company reports selling 3.1 million shares through its ATM offering in Q2 2025, generating $37.1 million in gross proceeds for working capital ATM Offering Summary for Q2 2025 | Metric | Value | | :--- | :--- | | Shares Sold | 3.1 million | | Gross Proceeds | $37.1 million | | Average Price Per Share | $11.89 | | Net Proceeds | $35.8 million | Other Information During the quarter ended June 30, 2025, no directors or officers of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[245] Exhibits This section lists key exhibits filed with the Form 10-Q, including the Indenture for Convertible Notes and CEO/CFO certifications - Key exhibits filed include the Indenture for the company's 8.25% Convertible Senior Notes due 2033 and CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906[247]