BlackSky Technology (BKSY) - 2024 Q1 - Quarterly Report

Part I. Financial Information Financial Statements Unaudited condensed consolidated financial statements for Q1 2024 show increased revenue, a narrowed net loss, and changes in balance sheet accounts Condensed Consolidated Balance Sheet (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $14,965 | $32,815 | | Contract assets | $24,134 | $15,213 | | Total current assets | $69,358 | $79,331 | | Total assets | $210,113 | $224,066 | | Liabilities & Equity | | | | Total current liabilities | $17,263 | $27,491 | | Total liabilities | $128,400 | $130,907 | | Total stockholders' equity | $81,713 | $93,159 | Condensed Consolidated Statement of Operations (in thousands) | Account | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Total revenue | $24,236 | $18,397 | | Operating loss | $(13,253) | $(16,901) | | Net loss | $(15,810) | $(17,315) | | Net loss per share | $(0.11) | $(0.14) | Condensed Consolidated Statement of Cash Flows (in thousands) | Activity | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,810) | $(16,602) | | Net cash (used in) provided by investing activities | $(15,108) | $10,518 | | Net cash provided by financing activities | $862 | $28,867 | | Net decrease in cash | $(18,056) | $22,783 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Q1 2024 revenue increased by 31.7%, operating loss narrowed, and Adjusted EBITDA turned positive, with liquidity bolstered by a new $20 million credit facility Company Overview BlackSky leverages its LEO satellite constellation and AI-enabled BlackSky Spectra platform for real-time imagery and analytics, with future growth driven by Gen-3 satellite launches - The company's core assets are its satellite constellation and the BlackSky Spectra software platform, which processes millions of daily observations from proprietary and third-party sensors using AI and ML[161] - Next-generation Gen-3 satellites, expected to launch in 2024, will feature improved resolution and short-wave infrared imaging for nighttime and low-light conditions, expanding analytical capabilities[161] Results of Operations Q1 2024 total revenue grew 31.7% to $24.2 million, driven by Professional & Engineering services, leading to narrowed operating and net losses Comparison of Results of Operations (in thousands) | Line Item | Q1 2024 | Q1 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $24,236 | $18,397 | $5,839 | 31.7% | | Imagery & software analytical services | $17,833 | $15,760 | $2,073 | 13.2% | | Professional & engineering services | $6,403 | $2,637 | $3,766 | 142.8% | | Operating Loss | $(13,253) | $(16,901) | $3,648 | 21.6% | | Net Loss | $(15,810) | $(17,315) | $1,505 | 8.7% | - Professional and engineering services revenue saw a significant increase due to two new major engineering contracts that started after the comparable prior period[10] - Selling, general, and administrative expenses decreased slightly by 0.7% to $18.8 million, mainly due to lower corporate insurance premiums and reduced office space costs[296][201] - Depreciation and amortization expense increased by 15.8% to $11.2 million, driven by new satellites placed into service in March 2023 and capitalization of software and new office space[11][231] Non-GAAP Financial Measures Adjusted EBITDA, a key non-GAAP measure, turned positive at $1.4 million in Q1 2024, marking the second consecutive quarter of profitability Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net loss | $(15,810) | $(17,315) | | Depreciation and amortization | $11,184 | $9,655 | | Stock-based compensation expense | $3,363 | $3,012 | | Loss (gain) on derivatives | $254 | $(1,531) | | Other adjustments | $485 | $1,057 | | Adjusted EBITDA | $1,376 | $(4,129) | - The company has achieved two consecutive quarters of positive Adjusted EBITDA but cautions that revenues may not continue to exceed expenses in the near term due to ongoing investments in sales, marketing, and products[213] Liquidity and Capital Resources Short-term liquidity was $35.8 million as of March 31, 2024, supplemented by a new $20.0 million revolving credit facility, ensuring sufficient capital for future needs - As of March 31, 2024, short-term liquidity was $35.8 million, consisting of $15.0 million in cash and cash equivalents, $0.4 million in restricted cash, and $20.4 million in short-term investments[236][210] - In April 2024, the company entered into a new $20.0 million commercial bank line with Stifel Bank, maturing in June 2026, and immediately borrowed $10.0 million[237][117] - Long-term liquidity needs will primarily relate to funding operations, satellite development and launch capital expenditures, and investments in the BlackSky Spectra software platform[240] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - The Certifying Officers concluded that as of March 31, 2024, the company's disclosure controls and procedures were effective[253] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls[292] Part II. Other Information Legal Proceedings Two class action lawsuits were filed in May 2024 concerning the 2021 merger, with BlackSky evaluating potential indemnification obligations - Two class action lawsuits, Drulias v. Osprey Sponsor II, LLC and Cheriyala v. Osprey Sponsor II, LLC, were filed in May 2024 concerning the 2021 merger[155] - The complaints assert claims such as breach of fiduciary duty and unjust enrichment against former directors, officers, and the sponsor of Osprey; BlackSky expects to have certain indemnification requirements[155] Risk Factors The company refers investors to its Annual Report on Form 10-K for a comprehensive discussion of factors that could adversely affect its business and financial results - For information on risk factors, the report refers to the company's Annual Report on Form 10-K for the year ended December 31, 2023[303] Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2024, the company sold 953,153 common shares via an ATM offering, generating $1.3 million in net proceeds for working capital - Under its ATM offering, the company sold 953,153 shares during Q1 2024 at an average price of $1.43 per share[276] - The sales resulted in gross proceeds of $1.4 million and net proceeds of $1.3 million, intended for working capital and general corporate purposes[276]