BlackSky Technology (US:BKSY)2025-11-06 21:21Revenue Generation and Growth - BlackSky's revenue is generated through subscription-based On-Demand and Assured product offerings, with a focus on national security and economic intelligence [128]. - BlackSky expects continued revenue growth year-over-year driven by new customer sales orders and increased demand from existing customers [133]. - Professional and engineering services revenue is expected to contribute significantly, primarily from contracts with defense and intelligence customers [134]. - The company targets U.S. and international defense and intelligence markets, with plans to expand services to various commercial sectors including energy, agriculture, and logistics [127]. Financial Performance - Total revenue for the three months ended September 30, 2025, was $19,618, a decrease of $2,931 or 13.0% compared to $22,549 in 2024 [140]. - Imagery & software analytical services revenue decreased by $1,494 or 8.6% for the three months ended September 30, 2025, compared to the same period in 2024 [140]. - Professional & engineering services revenue decreased by $1,437 or 27.3% for the three months ended September 30, 2025, compared to the same period in 2024 [142]. - Operating loss for the three months ended September 30, 2025, was $16,826, an increase of $3,596 or 27.2% compared to $13,230 in 2024 [140]. - Net loss for the three months ended September 30, 2025, was $15,340, an increase of $2,749 or 21.8% compared to $12,591 in 2024 [140]. Expenses and Costs - Selling, general and administrative expenses increased by $3,774 or 21.0% for the three months ended September 30, 2025, compared to $17,961 in 2024 [148]. - Research and development expenses decreased by $13 or 30.2% for the three months ended September 30, 2025, compared to the same period in 2024 [150]. - Total costs for the three months ended September 30, 2025, were $6,815, an increase of $165 or 2.5% compared to $6,650 in 2024 [144]. - Professional & engineering service costs increased by $4,049 or 40.5% for the nine months ended September 30, 2025, compared to the same period in 2024 [147]. Cash Flow and Liquidity - As of September 30, 2025, cash and cash equivalents totaled $28.8 million, up from $13.1 million as of December 31, 2024, while short-term investments increased to $117.7 million from $39.4 million [167]. - Current assets were $201.0 million, while current liabilities were $51.7 million, indicating sufficient cash and working capital for short-term liquidity needs [177]. - Net cash used in operating activities for the nine months ended September 30, 2025 was $19.0 million, an increase of $14.4 million compared to the same period in 2024 [182]. - Net cash used in investing activities increased to $110.4 million, primarily due to $120.5 million in purchases of short-term investments in government securities [185]. Investments and Future Plans - Upcoming satellite development capital expenditures will focus on expanding the high-frequency monitoring constellation with new multispectral satellites [179]. - The company anticipates ongoing investments in the BlackSky Spectra software platform to enhance product capabilities and operational systems [178]. Debt and Financing - The company issued $185.0 million principal amount of Convertible Notes in July 2025, with an interest rate of 8.25% per year, maturing on August 1, 2033 [169][170]. - The company has financed $18.8 million out of a $27.0 million vendor financing agreement for satellite launches, with an estimated repayment of $5.8 million in the next 12 months [172]. - The company received $185.0 million in proceeds from the issuance of Convertible Notes in July 2025, partially offset by debt repayments of $110.3 million [187]. Stock and Equity - The company issued and sold $42.5 million of newly issued shares as part of its at-the-market offering during the nine months ended September 30, 2025 [173]. - Equity issuances during the nine months ended September 30, 2025 generated $42.5 million in gross proceeds from the sale of 3.7 million shares under the ATM offering program [188]. Depreciation and Interest - Depreciation of satellites decreased by $4,281 thousand (52.1%) for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to the full depreciation of several Gen-2 satellites [151]. - Depreciation expense from all other property and equipment increased by $960 thousand (34.7%) for the three months ended September 30, 2025, driven by investments in internal-use software and infrastructure [152]. - Interest income rose by $1,067 thousand (415.2%) for the three months ended September 30, 2025, due to higher short-term investment balances compared to the same period in 2024 [159]. - Interest expense increased by $895 thousand (28.5%) for the three months ended September 30, 2025, attributed to more debt outstanding despite lower interest rates [160]. Accumulated Deficit and Adjusted EBITDA - The company had an accumulated deficit of $725.6 million as of September 30, 2025 [167]. - Adjusted EBITDA for the three months ended September 30, 2025, was $(4,484) thousand, compared to $741 thousand in the same period of 2024 [166]. Valuation and Fair Value - The expected volatility of Legacy BlackSky and BlackSky Class A common stock was estimated based on the historical share price volatility of comparable companies due to a lack of observable volatility [203]. - The risk-free interest rate was extrapolated from the yield on actively traded, non-inflation indexed U.S. Treasury notes, reflecting the expected term of the underlying grants [204]. - Private Placement Warrants and Sponsor Shares are classified as long-term liabilities, recorded at fair value using Black-Scholes and Monte Carlo models, and re-measured at each reporting date [206]. - The fair value models require inputs such as the fair value of Class A common stock, risk-free interest rate, expected term, expected dividend yield, and expected volatility, which can materially affect the fair value estimates [207]. - Business combinations are accounted for using the acquisition method, where assets and liabilities are recorded at fair value upon control acquisition [208]. - Significant estimates in business combinations include determining enterprise value based on projected cash flows, which involve assumptions about revenue growth rates and operating margins [209]. - Measurement period adjustments for fair value of acquired assets and liabilities can be recorded up to one year from the acquisition date, impacting goodwill [210].