BlackSky Technology (BKSY) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Year-to-date revenue for 2024 was $71.7 million, an increase of$12.7 million or 22% over the prior year period [42] - Year-to-date imagery and analytics revenue was $52.6 million, an increase of$6.2 million or 13% over the prior year period [44] - Year-to-date professional and engineering services revenue was $19.1 million, an increase of$6.5 million or 52% over the prior year period [45] - Adjusted EBITDA for year-to-date 2024 was $4.3 million compared to an adjusted EBITDA loss of$10.3 million in the prior year period, a strong year-over-year improvement of $14.6 million [52] - The company ended Q3 2024 with$64.4 million of cash, restricted cash, and short-term investments [54] Business Line Performance - The company delivered its fourth consecutive quarter of positive adjusted EBITDA, driven by high-margin imagery and analytics revenue [12] - The Luno A contract, valued up to $290 million, was awarded by the National Geospatial Intelligence Agency (NGA) [15] - A$476 million multi-year IDIQ contract was awarded by NASA to support their commercial small-sat data acquisition program [19] - A $6 million contract expansion was signed with a long-time international defense sector customer, increasing their total annual contract value to nearly$18 million [21] - Seven-figure contracts were awarded for the new non-Earth imaging services offering [30] Market Performance - Strong growth from U.S. defense and intelligence agencies, with demand for high-frequency imagery and advanced analytics [15] - Increasing opportunities through the Global Data Marketplace (GDMP), which is becoming a long-term, viable sales distribution channel [25] - Contracts awarded with multiple U.S. government customers for integrating optical inter-satellite link terminals (OISL) into Gen 3 satellites [25] - New non-Earth imaging services offering launched, with contracts awarded to government and commercial customers [29][30] Company Strategy and Industry Competition - The company is focused on scaling production of Gen 3 satellites to support a regular launch cadence beginning in 2025 [39] - The acquisition of the partner stake in LeoStella aims to optimize the Gen 3 supply chain and production operations [40] - The company is leveraging its advanced AI technology and multi-inch Spectra software platform to deliver real-time and mission-critical insights [18] - The new non-Earth imaging services offering is expected to expand over time, with increasing demand for data services to support space domain awareness (SDA) missions [34] Management Commentary on Operating Environment and Future Outlook - The company expects to deliver strong Q4 results and remain on track to meet full-year revenue and adjusted EBITDA goals [12] - The company is maintaining its full-year 2024 guidance of revenue between $102 to$118 million, adjusted EBITDA of between $8 to$16 million, and capital expenses of between $55 to$65 million [58] - The company is excited about the transformative solutions that the Gen 3 satellite constellation will deliver, unlocking the next phase of growth [38] - The company is seeing growing demand for its space-based intelligence solutions, with near-record multi-year contract bookings in Q3 [59] Other Important Information - The company won the 2024 Leading Earth Observation Business Award by Nova Space [13] - The first very high-resolution Gen 3 satellite is in the final testing phase and is expected to ship to the launch site in the next few weeks [35] - The company successfully completed an equity capital raise in late September, generating $46 million in gross proceeds [53] Q&A Session Summary Question: Revenue Push from Q3 to Q4 - Some revenue was pushed from Q3 to Q4 due to timing delays related to new customer contract wins and the associated ramp-up of imagery and analytic revenues [62] Question: Bookings Activity in Q3 and Q4 - The strong bookings activity in Q3 was primarily driven by existing capabilities, not specifically related to Gen 3 [63] - The company is seeing growing demand, with typical government contract cycles remaining consistent [69] Question: Milestone Payments and Gen 3 Launch Costs - Milestone payments are expected to be somewhat lumpy over the next 12 months [67] - No significant changes in OpEx are expected with the Gen 3 launches, as the same ground network and infrastructure will be used [68] Question: Operating Leverage in 2025 - The company expects to see smoother and growing imagery and analytics revenues as Gen 3 capability comes online, though some lumpiness will remain due to professional engineering projects [71][72] Question: OISL Design in Gen 3 - The OISL design is being integrated into Gen 3, with a focus on delivering high-frequency, low-latency intelligence solutions [74][75] Question: Q4 Revenue Ramp - The Q4 revenue ramp is expected to be driven by long-term customer renewals and the closing of larger deals [79] Question: Gen 2 Satellite Life and Decommissioning Costs - Gen 2 satellites are expected to continue performing well through 2025 and into 2026, with no material incremental decommissioning costs [85] Question: Non-Earth Imaging Offerings - The new non-Earth imaging offerings leverage existing satellite capacity and are expected to generate incremental high-margin imagery and analytics revenues [86][87] Question: Baseline Gen 3 Constellation - The baseline Gen 3 constellation is expected to maintain 12 to 14 satellites, with potential expansion based on demand [90] Question: LeoStella Partnership - The company acquired its partner's stake in LeoStella to optimize Gen 3 production, with BlackSky remaining the primary customer [91][93] Question: Luno A Contract and NEI SSA Market - The Luno A contract includes a mix of imagery and analytics providers, with BlackSky well-positioned to capitalize on the program [95] - The NEI SSA market is seeing significant demand, with the company already winning seven-figure contracts and expecting continued growth [97][98]