BlackSky Technology (US:BKSY)2023-03-22 16:00Company Operations - BlackSky operates a high-performance low earth orbit satellite constellation with 14 satellites, capable of imaging critical locations every 60 to 90 minutes[244]. - BlackSky's customer base is primarily focused on U.S. and international defense and intelligence markets, with opportunities to expand into various commercial sectors[246]. - The company’s Spectra AI platform processes millions of observations daily, providing automated insights and analytics to customers[244]. - BlackSky's operating strategy includes enhancing satellite capabilities and expanding third-party data sources processed by the Spectra AI platform[244]. - BlackSky's next generation satellites (Gen-3), expected to launch in 2024, will enhance imaging resolution and include short wave infrared technology for improved performance in low-light conditions[244]. Financial Performance - Total revenue for the year ended December 31, 2022, was $65,350,000, representing a 91.7% increase from $34,085,000 in 2021[257]. - Imagery & software analytical services revenue increased to $47,415,000, a 208.6% rise from $15,365,000 in 2021[257]. - Operating loss improved to $(86,549,000) from $(120,143,000), a 28.0% reduction[257]. - Net loss for the year was $(74,172,000), a 69.8% improvement from $(245,643,000) in 2021[257]. - Other income (expense), net improved significantly to $2,081,000 from $(147,656,000) in 2021, marking a 101.4% change[257]. - Free cash flow for 2022 was $(88,518) thousand, an improvement from $(117,781) thousand in 2021[292]. - Adjusted EBITDA for 2022 was $(29,480) thousand, compared to $(44,438) thousand in 2021, indicating a reduction in losses[289]. Revenue Sources - The company expects revenue growth in imagery and software analytical services for the year ending December 31, 2023, driven by increased sales orders and customer demand[250]. - Professional and engineering services revenue is expected to contribute meaningfully, supporting government customers under fixed price contracts[250]. - Professional and engineering services revenue slightly decreased to $17,935,000, a 4.2% decline from $18,720,000[265]. - The company secured a subscription contract in May 2022 valued at $85.8 million over five years, with potential future value exceeding $1.0 billion[295]. Costs and Expenses - Selling, general, and administrative expenses decreased to $79,672,000, down 8.1% from $86,655,000 in 2021[270]. - Research and development expenses surged to $739,000, a 559.8% increase from $112,000 in 2021[273]. - Total costs for the year were $35,827,000, a 3.1% increase from $34,748,000 in 2021[266]. - Depreciation of satellites increased to $33,053 thousand in 2022 from $12,493 thousand in 2021, a change of 164.6%[274]. - Total depreciation and amortization rose to $35,661 thousand in 2022, up from $14,306 thousand in 2021, reflecting a 149.3% increase[274]. Cash and Liquidity - As of December 31, 2022, the company had cash and cash equivalents totaling $34.2 million, down from $165.6 million in 2021, and short-term investments of $38.0 million, compared to $0 in 2021[297]. - The company reported a net cash used in operating activities of approximately $44.5 million for the year ended December 31, 2022, an improvement from $53.9 million in 2021, primarily due to increased imagery and analytics revenue[306]. - The total accumulated deficit as of December 31, 2022, was $545.1 million, indicating ongoing financial challenges since inception[297]. - The company anticipates that its cash and cash equivalents, along with cash generated from operating activities, will be sufficient to meet working capital and capital expenditure needs for the foreseeable future[298]. - As of December 31, 2022, the company had current assets of approximately $88.5 million and current liabilities of approximately $26.9 million, indicating sufficient working capital for short-term liquidity requirements[302]. Financing and Capital Expenditures - The company completed a private placement on March 8, 2023, raising approximately $29.5 million by issuing 16,403,677 shares at a price of $1.79 each[298]. - The company expects to continue incurring capital expenditures for satellite development and the Spectra AI platform to enhance product capabilities[301]. - The company has a debt facility with an outstanding principal amount of $77.1 million, maturing in October 2024, along with operational commitments totaling $9.8 million[311]. - The company may seek additional equity or debt financing to fund capital expenditures and strategic initiatives, but there is no guarantee of raising funds on acceptable terms[300]. Equity and Stock Valuation - Legacy BlackSky issued equity-based awards under the 2021 Equity Incentive Plan, 2014 stock incentive plan, and 2011 stock incentive plan, including stock options, RSAs, and RSUs[319]. - The fair value of Class A common stock is determined using the Black-Scholes option-pricing model, with significant assumptions including expected volatility and risk-free interest rates[321]. - The expected term for options granted in 2021 and 2022 was estimated based on vesting terms and demographics of holders, due to the lack of historical option exercises[321]. - The company has largely transitioned to granting RSAs and RSUs, with grant date fair value equal to the trading price of Class A common stock[321]. - The company will continue to adjust the liability for changes in fair value of financial instruments until they are exercised or redeemed[322]. Impairment and Valuation - As of October 1, 2022, the fair value of the BlackSky reporting unit exceeded its carrying value by more than 34%, indicating no goodwill impairment risk[325]. - The fair value of long-lived assets is evaluated for impairment based on undiscounted cash flows compared to net book values[326]. - The company has classified Private Placement Warrants and Sponsor Shares as long-term liabilities, recorded at fair value using Black-Scholes and Monte Carlo simulation models[322]. - The expected volatility for stock options is based on historical share price volatility of comparable companies due to insufficient company-specific data[321].