BlackSky Technology (BKSY) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for the first nine months of 2025 was $71.4 million, consistent with the prior year period [15] - Cash operating expenses for the first nine months of 2025 were $56.6 million, compared to $48 million in the prior year period, driven by $9 million of overhead expenses from the integration of LeoStella [16][18] - Adjusted EBITDA for the first nine months of 2025 was a loss of $7.9 million, compared to an adjusted EBITDA of $4.3 million in the prior year period [17] Business Line Data and Key Metrics Changes - Professional and engineering services revenue for the first nine months of 2025 grew to $20.8 million, a 9% increase over the same period in the prior year [16] - Revenues from international customers now represent about half of total revenues, driven by new contracts and expanded service agreements [9] - Over 90% of the backlog is related to international contracts for Gen-3 capabilities [9] Market Data and Key Metrics Changes - Strong international demand is outpacing near-term U.S. government business, with significant new contract awards primarily with international customers [6][9] - The company was awarded more than $60 million in new contracts, predominantly for the delivery of Gen-3 services [6] - The cash balance increased more than 50% from last year, bringing total liquidity to over $200 million [8][18] Company Strategy and Development Direction - The company is focused on leveraging a full technology stack that includes real-time software, advanced AI, and vertically integrated satellite production capabilities [5] - The EROS initiative is in the design phase, aimed at providing wide-area mapping and monitoring capabilities by 2028 [15] - The company is well-positioned to capitalize on the growing global market for space-based intelligence solutions [20] Management Comments on Operating Environment and Future Outlook - Management expects a strong finish to 2025 and significant growth visibility in 2026, anchored by a strong backlog of international contracts [20] - The company is seeing positive activity from Congress regarding budget restoration for the EOCL program, which could provide upside next year [29] - Management remains committed to achieving adjusted EBITDA growth and margin expansion despite recent challenges [17] Other Important Information - The next Gen-3 satellite is at the launch site, with expectations for deployment in the coming weeks [12] - The company has a strong track record of supporting non-traditional acquisition models and rapid deployment of technology for government programs [14] Q&A Session Summary Question: Update on Gen-3 deployment cadence - Management confirmed that the deployment is progressing, with the next satellite at the launch site and expected to be deployed soon, despite some delays due to a faulty component [21] Question: Factors affecting Q4 revenue range - The wide range reflects the timing of large deals in play, with strong Q4 performance expected based on existing contracts [22] Question: Progress of early access agreements for Gen-3 - The early access program is progressing well, with customers testing Gen-3 performance and transitioning to larger contracts [23] Question: Impact of EOCL contract reductions - The reductions are not a pause but adjustments reflecting potential budget changes, with expectations for restoration of funding [24] Question: Pipeline for dedicated Gen-3 capacity - Demand for dedicated capacity solutions is growing rapidly, with a significant pipeline for such arrangements [25] Question: Number of satellites in operation - The company has two Gen-3 and eleven Gen-2 satellites operational, with plans for regular Gen-3 launches into 2026 [27] Question: Professional engineering services revenue expectations - A similar rebound in professional engineering services revenue is expected in Q4, with revenue recognition from contracts in Indonesia and India as they progress [28] Question: International revenue contribution - International revenues are expected to continue growing, with a current balance of approximately 50/50 between international and domestic [37] Question: Attracting AI talent - The company has been successful in attracting AI talent and has built a proprietary capability that serves as a competitive advantage [38][39] Question: Average contract value for Gen-3 - The average contract value for Gen-3 is significantly higher than for Gen-2, with larger and multi-year arrangements being common [40]