Q3 2022 Blacksky Technology Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to Black Sky Technologies third quarter 2022 earnings conference call. All bonds have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there'll be a question and answer session to ask a question you must press Star then one on your telephone keypad.
To withdraw your question Press Star then two please note. This conference call is being recorded I would now.
I'd like to turn the conference over to ally Borneo, Black Sky as Vice President of Investor Relations. Please go ahead Ali.
Good morning, and thank you for joining us today I'm joined by our Chief Executive Officer, Brian No tool and our Chief Financial Officer, Henry Dubois on today's call, Brian will provide some highlights on the quarter and give a strategic update on the business. Henry will then review the company's third quarter financial results and <unk>.
Outlook for 2022, following our prepared remarks, we will open the line for your questions.
A replay of this conference call will be available from approximately 12 30 PM Eastern time today through November 22nd information to access the replay can be found in today's press release. Additionally, a webcast of this earnings call will be available in the Investor Relations section of our website at www.
W. Dot Black's guide Dot com in conjunction with today's call. We have posted a quarterly earnings presentation on the Investor Relations website or you may use to follow along with our prepared remarks.
Before we begin let me remind you that today's conference call includes forward looking statements, including financial performance and guidance for the full year 2022 and that actual results may differ from the expectations reflected in these statements due to factors such as long sales cycles customer demand and our ability to estimate <unk>.
Spence operational and liquidity needs. We encourage you to review our press release and most recent SEC filings for a full discussion of the risks and uncertainties that pertain to these statements and that may affect future results or the market price of our stock.
Black Sky assumes no obligation to update forward looking statements, except as may be required under applicable securities laws.
In addition, during today's call, we will refer to certain non-GAAP financial measures.
Including adjusted EBITDA, non-GAAP imagery and software analytical services cost of sales and adjusted operating expenses.
A reconciliation of these non-GAAP financial measures to their most comparable GAAP measures are included in the accompanying earnings presentation, which can be viewed and downloaded from our investor Relations website.
At this point I'll turn the call over to Brian No tool Brian .
Thanks, Kelly and good morning, everyone.
Thank you for joining us on today's call.
Let's begin with slide four.
I'm pleased to report that Q3 was another strong quarter as we continued strong execution across all aspects of our business.
Building on the momentum from the first half of the year.
Let me start with a few highlights from the quarter.
First our third quarter revenues set a quarterly revenue record driven by a first full quarter of subscription imagery revenue.
From a recent $1 billion 10 year <unk> contract.
With the National Reconnaissance office.
We have successfully ramped our operations and are achieving required daily delivery rates of our advanced imaging subscription services under this contract.
Second.
International revenues more than doubled over the last year as investments in the expansion of our international sales team.
And strong global demand continue to pay dividends.
This resulted in an expanding international customer base, which includes the award of a new 10 million dollar one year subscription.
Follow on contract with.
With an existing government customer in Asia.
This is the largest one year subscription contract in that region to date.
Reinforcing strong global demand for our high frequency imagery and analytics services.
And as ongoing validation of our land and expand strategy.
Third.
We received multiple task order awards for our analytics services.
From the National Geospatial Intelligence agency or N G E.
Under our economic indicator monitoring contract.
These awards bring our total orders received a $14 million in just the first year of the five year 30 million dollar contract.
Demonstrating growing demand from the NGA.
To procure black skies commercial analytics services.
Fourth.
We generated significant revenues this year through our software platform.
Where our integration with strategic partner platforms like talents here in <unk>.
Our enabling on demand access for new customers.
And we're really just getting started on this go to market strategy.
And finally <unk>.
All of these contract wins are behind the growth in our high margin imagery and analytics revenue.
Which drove strong incremental contribution margins of 89% this year.
Demonstrating the strong operating leverage of our space and software platforms.
And the validation of our business model.
Henry will go into further details on our margin growth later in this call.
We're pleased with the strong results from the quarter and our performance year to date.
And are excited with the growing momentum in our business driven by increasing customer demand for black skies high revisit imagery dynamic monitoring and advanced analytics.
Turning to slide five.
As you all know our world needs real time Geospatial intelligence.
Now more than ever.
And our unique dawn to dusk imaging and analytics solutions are driving strong adoption as our capabilities are now relied upon.
By some of the most important customers in the world.
For critical intelligence that they need to support.
Their day to day operations.
Events around the world like the war in Ukraine protests in Baghdad, and the destruction in Florida caused by Hurricane Ian remind us all of the vital need for geospatial intelligence.
Not only is black sky well positioned to meet this growing demand.
But because our core customer base supports the government sector. Our business is insulated from many of the macroeconomic impacts you hear about in the news today.
Further we have taken steps going back over a year now to secure multiyear contracts address supply chain risks.
And through prudent cost management have the company positioned to execute against our growth strategy.
Okay.
Capitalizing on the growing market opportunity for space based data and analytics.
Okay.
As illustrated on slide six and as we outlined last quarter.
Black Sky is well positioned to capitalize on growing and shifting investments in.
Space based defense by U S and international government agencies.
These trends further reinforce our long term government strategy.
Our capabilities were designed to address these evolving mission needs and as such.
We have captured early stage contracts with leading organizations.
These programs are driving future space architectures, and we're excited for the opportunities.
That lie ahead as these initiatives transition into long term programs of record.
Moving on to slide seven.
I am excited to report that the momentum we demonstrated in the first half of this year continued into Q3.
Global demand and adoption of black Sky high frequency imagery dynamic monitoring.
And AI driven analytics solutions drove new revenue records in the quarter.
Third quarter revenue grew to 16 nine.
$9 million.
113% revenue growth over last year's Q3 revenues.
With both of these revenue metrics, reaching new records for the company.
Our revenue growth is being driven by high margin imagery and software analytical services.
Which rose to 89% of total revenues.
Henri will provide more details on the third quarter financial results later.
Now I would like to provide an update on the progress we made in our U S government <unk>.
International and commercial businesses.
Starting with the U S government business on slide eight.
As you May recall last quarter, we announced that we won the electro optical commercial layer or <unk> contract.
With the National Reconnaissance office, our NRO.
This was our company's largest contract award to date.
With a total value of just over $1 billion spanning over a 10 year service period.
Since the start of this historic contract I am happy to report that we have successfully ramped our operations and are now delivering.
The required high volume imagery.
Required under the contract service level agreement.
Our third quarter revenues include a full quarter's worth of subscription imagery services provided under does EOC contract.
Since the NRO as allocated nearly $72 million in funding to the first two years of our contract.
We anticipate this amount to be recognized evenly over this time period.
This gives black skies black sky, great revenue visibility from this customer over the next couple of years.
We anticipate the <unk> requirements for other imagery services under the <unk> contract.
To expand over time Reis.
Resulting in additional funding updates throughout the 10 year contract period.
These expanded imagery requirements for high frequency.
And advanced imaging will not only be serviced with our existing gen. Two satellite constellation.
But we will also leverage the capabilities provided by our advance Gen three satellites.
Which I'll talk more about later.
We look forward to continuing to support the <unk> advanced imagery needs over the years to come.
We continue to see strong demand for our software and AI enabled analytic services.
The economic indicator monitoring or <unk> contract.
With the National Geospatial Intelligence agency or NGA.
Multiple task orders in the third quarter and in fact, we've received $14 million in orders within the first year of our five year $30 million contract.
The NGA is using our advanced AI and multi sensor analytics to monitor global activity.
And understand changing conditions at important locations of interest.
It's important to note we are not delivering imagery under this contract just the analytic products better.
Better than integrated.
And to <unk> operations.
The growth we are experiencing as a result of the customers' confidence in the timeliness and quality of our software driven AI capabilities.
Pleased to continue to support the NGA with this program.
And are excited about the growth potential is NGA begins to expand its use of commercial analytic services.
In Q3, we also received the first order for $1 $7 million.
Under the commercial small sat data acquisition or CST a program with NASA.
You May recall, we won a five year $50 million purchase agreement with NASA are about a year ago.
To provide Heidi revisit imaging data in support of the agency's existing Earth observation research.
We look forward to helping NASA funded researchers broaden their understanding.
Around critical changes in the Earth's ecosystems through black skies dawn to dusk imaging data.
And AI enabled analytics.
Moving onto our international business on slide nine.
The strong international momentum we experienced in the first half of this year continued in Q3 as.
As demand for our products and services remained strong globally.
We continue to support various international governments and Allied partners.
And their efforts and regions around the world.
With our advanced imagery and mission critical intelligence capabilities.
We're seeing more and more demand from international governments that need vital geospatial information.
Related to strategic assets and locations within their country's borders and within their regions of interest.
One example is a follow on subscription contract we received in Q3.
With an international Ministry of defense customer in Asia.
We have been servicing this government customer for some time.
And now received a one year $10 million contract.
To provide on demand high resolution imagery services.
This contract represents a five fold increase in capacity use over the last year.
And demonstrates the strong global demand, we're seeing for black Sky high frequency.
Got a dust imagery and analytics.
We look forward to servicing those customers incremental needs and further integrating our technology into their daily operations.
Since the summer of last year, we've seen phenomenal growth in market demand for black skies capability, we continue to see strong market demand for blacks guys capabilities internationally.
Within the past year.
Our international revenues have more than doubled which can be attributed to the strong demand in the market.
And the growth and expansion of our international sales team.
As we've been successful in converting customer demand.
Into new and expanded contracts.
Now, let's turn to our commercial business on slide 10.
Over the last year, we have entered into multiple strategic partnerships.
To expand <unk> product offerings and reach a broader customer base.
I am pleased to say that we made great progress working with these partners and are now generating seven figure revenues.
Through these partner platform relationships.
We continue to integrate new data into our spectra AI platform, including 30 centimeter imagery and synthetic aperture radar imagery.
This augments black skies existing products suite with the addition of all weather.
Nighttime imagery and advanced analytics.
As we further strengthen our platform through partnerships, we look forward to engaging with more commercial enterprises to deliver the value of <unk> products and services to meet their critical business needs.
To further accelerate our go to market strategy.
I am pleased to announce the appointment of John Kirshner as Chief product Officer.
John will lead the development and execution of our product strategy to help customers experience.
The full value of our spectrum, AI analytics platform and high revisit constellation.
John brings over 30 years of experience working in product development and management software sales and marketing and business operations.
Prior to Black Sky, John held multiple executive leadership positions.
At several companies in the satellite remote sensing and industrial Iot industries.
We welcome John to the Black Sky team and look forward to his contributions to strengthen our product portfolio.
To address increasing global demand for black Sky's products and services.
Now, let's discuss our constellation beginning with our Gen two satellites.
Earlier this year, we completed a major milestone for the company having achieved a.
The 14th satellite baseline constellation.
With this constellation we have achieved a first of its kind platform.
That can provide customers wide with dynamic and reliable hourly monitoring of.
The most important and strategic economic assets and locations in the world.
Right now we can collect imagery of a specific location up to 15 times a day from dawn to dusk.
This differentiated capability is a big driver.
Of the increased demand, we're seeing for black sky's capabilities across the globe.
Our baseline constellation currently provides us with sufficient capacity.
To meet existing customer requirements and support our growth for the next couple of years, we expect to maintain this constellation and deploy replacement satellites as needed.
Turning to our Gen three satellite constellation as shown on slide 10.
We remain on track with the production of these new satellites and anticipate launching the first of these in late 2023.
Gen. Three satellites are designed and built off the proven Gen two architecture.
<unk> will bring significant new capabilities.
That include improved imaging resolution of 35% to 50 centimeters and adding shortwave IR imaging technology.
To enable a broad set of imaging conditions during low light and at night.
The design architecture of our Gen. Three satellites has already been validated by several important customers within the U S government.
Who are looking to utilize our technology for National security.
And defense programs.
So seeing very strong demand and interest globally for these new capabilities.
In summary, we had a very strong third quarter, having reached new revenue records.
And achieving other major milestones in our business.
I'll now turn it over to Henry to go through the quarterly financial results in more detail Henri.
Thank you, Brian and good morning, everyone.
I am pleased with our strong third quarter results and the traction we are gaining robo.
Robust customer demand for our imagery and analytics solutions delivered another record revenue performance as shown on slide 12.
Revenues reached $16 9 million in the third quarter of 2022, or a 113% increase over the prior year period, and our largest year over year growth rate to date.
Consistent and growing demand for <unk> products and services has led to eight consecutive quarters of revenue growth in fact revenues for the first nine months of 2022 have already surpassed revenue for all of last year.
Our revenue mix for imagery and software analytics services rose to 89% of total revenues demonstrate the continued value customers place in our high frequency imagery and spectrum AI software platform capabilities.
Imagery and software analytical services.
Revenue grew to $15 million.
130% increase over the prior year period, primarily driven by the greater volume of imagery delivered to new and existing customers.
As you May recall, the recent iOS CL contract win began on June 15th. So Q3 was the first quarter, whereby we recognized a full quarter's worth of subscription revenues from this contract.
Keep in mind, we've been generating revenues with the NRO through our previous three year steady contract that ended this June and was replaced by our new iOS CL contract. Thus the revenues from this new contract are not entirely incremental to what we recognized in the past from this customer, but do represent a significant increase.
From the earlier study contract.
Engineering and systems integration revenue contributed $1 9 million in the third quarter of 2022, an increase of $500000 from the same quarter last year.
Keep in mind revenues from these types of projects can vary from quarter to quarter, depending on the projects estimated cost in percentage of completion, so you'll likely see some variability over time.
Moving onto costs, our total cost of sales as a percent of revenue continue to improve but more importantly, we saw strong improvement in our imagery and software analytics services cost of sales on a non-GAAP basis.
As shown on slide 13 year to date imagery and software analytical services cost of sales was $15 1 million compared to $12 9 million in the prior year period, excluding stock based compensation and depreciation and amortization expenses in both years.
This is a small increase of $2 $2 million year over year, primarily due to the fixed cost structure of our business with limited marginal cost for incremental revenue deliveries.
On the other hand revenues increased significantly year over year by $25 million.
The small increase in cost of sales on a large increase in revenues translate place into a high incremental contribution margin improvement of 89%.
Validating the high margin nature of our imagery and analytics business.
These high incremental contribution margins are the prime drivers for black Sky to scale this business and achieve long term profitability.
Turning to slide 14, I'll briefly touch on adjusted operating expenses, which excludes stock based compensation and depreciation and amortization expenses as I believe this is a better way to compare our year over year expenses and run rates run rates for the business.
Adjusted operating expenses for the third quarter of 2022 were $16 million compared to $15 2 million in Q3 of last year.
The roughly $800000 increase was primarily due to public company operating costs.
We're keeping a close eye on managing expenses and anticipate our investments in the business to grow substantially slower than the high rate of growth expected for our revenues.
Moving on to adjusted EBITDA for.
For the third quarter of 2022, we reported an adjusted EBITDA loss of $6 5 million an improvement over the $16 3 million loss in the prior year period and sequentially better than the $8 8 million loss reported in Q2 this year.
As you can see on slide 14, adjusted EBITDA has sequentially improved over the last several quarters the.
Improvements are driven by greater volumes of our high margin imagery and software analytical services revenue and prudent cost management, we anticipate strong global customer customer demand for <unk> products and services to continue fueling greater revenues and delivering additional operating leverage.
I want to briefly mentioned that our third quarter capital expenditures were $8 $8 million with $34 3 million spent in the first nine months of this year.
We ended the third quarter of 2022 with $97 million of cash restricted cash and short term investments and believe this amount provides us with sufficient cash and liquidity for our needs in the foreseeable future.
You may have noticed a few weeks ago that we filed an S. Three shelf registration with the SEC.
This statement is primarily a matter of good corporate governance and provides the company with the flexibility to access the capital markets should we decide to do so in the future.
Now, let's move on to our 2022 outlook as shown on slide 15.
With the momentum we're seeing we expect our full year revenue will come in at the upper end of the guidance range of $62 million to $66 million that we provided in August .
This represents a strong 88% to 94% growth over 2021, taking the upper end of this range.
We continue to expect capital expenditures for 2022 to be between 52 and $56 million as previously guided.
Finally, we will be filing our 10-Q later today post market close.
With that I'll now turn it back over to Brian personal closing remarks, Brian .
Thank you Henry in closing, we're very happy with the strong third quarter results and our continued strong execution across all aspects of our business.
More customers are realizing the value of our differentiated offerings and are choosing black sky as a trusted mission partner.
For delivering actionable intelligence.
As a result, we are expanding our customer base bill.
Building, a strong sales pipeline and growing our contracted backlog.
Which gives us strong revenue visibility.
We're looking forward to a strong finish to 2022.
And carrying this momentum into 2023.
This concludes our remarks for the call and we'll now take your questions.
Thank you, we'll now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue. Once again Thats star one to be placed in the question queue.
Our first question today is coming from Usher Sullivan from the benchmark Company. Your line is now live.
Hey, good morning.
Congratulations on the results and the momentum.
Hey, good morning, Thanks for joining.
Yeah.
As far as the iOS CL contract can you give us some color on early adoption, maybe areas, where the customers are using the vehicle more aggressively than you first anticipated.
Yeah Osten, we're as I mentioned in our remarks.
We are executing exceptionally well on the program we fully ramped.
Our operations in our meeting all of the requirements for imaging capacity that we need to deliver under this under this contract. So we're.
We're seeing strong integration of strong operations and the customer.
<unk> is showing extremely strong demand for what we're delivering across the globe.
Got it got it.
And then as far as the international interest what is sales cycles look like at this point just given the options on the market or international customers still in discovery mode, or the allocating funding and moving forward.
Sales cycles are typically 12 to 18 months, but we started several years ago.
With customers around the world.
Have expanded significantly our.
<unk> global or international sales teams last year.
And so we have.
Customers.
Summit early pilot phases, but as we just announced others that are are fully using our services like the $10 million one.
One year subscription contract, we just announced with a ministry of defense in Asia. So.
Strong demand globally.
Building traction and these are converting into long term.
Long term contracts, giving us good revenue good revenue visibility.
Okay, and then just one last one on the Gen three satellites.
What are the risk points any new Gen technology comes with different needs. What do you see as the gating factors to successful on time deployment.
Well actually we have been in development on these satellites now for a couple of years and we're now entering into full rate of production.
The strength of our strategy here is it builds off the success of our Gen, two architecture, and and our production and manufacturing and supply chain capabilities.
Capabilities.
We've also.
Then prudent and securing long lead item parts from the supply chain and all of that is coming together and on track. So we will begin launching those satellites second half of next year.
Great. Thank you for the time.
Thank you.
Thank you next question today is coming from Scott Deutschland from Credit Suisse. Your line is now live.
Hey, good morning, Thank you for taking my questions.
Brian Gotcha.
How much growth is on that $10 million International contract I think you said it was a five times increase in usage just curious if the value increase was kind of in line with usage increase.
Yes, you can assume the value increase was in line with the was proportional to the increase in revenues.
Okay got it and then Henry the working capital its been a bit of a headwind over the past several quarters and obviously, that's typical for a growing business, but it just <unk>.
Curious do you expect any kind of unwind here in Q4 or should we look for that to continue to build as the business grows.
Thank you Scott I mean, as you take a look at our working capital one thing that you really want to think through it.
The fact is our <unk> contract.
We received those payments on a very routine basis. So we aren't building our AR accounts receivable very high at all so I think overtime, we will start moving more towards a steady state, but I know we had some headwinds guys. We came into this year.
Okay got it and then the last one just.
You kind of alluded to this earlier Henry you know talking about growing revenue and keeping a tight rein on expenses, but.
I guess, just any kind of rough sense for how you are budgeting SG&A as you go into next year, just kind of like high teens number and saying in the past few quarters is that sustainable here is even as you continue to grow the business or or do you see a little bit of pressure there as you build out the international sales pipeline.
And while we're not providing a guidance at the moment.
We are going through our annual budgeting process. However, I think as you kind of as we've alluded to in our conversations.
And even just in this presentation a lot of our operating expenses tend to be fixed.
So I would expect we expecting them to be fairly consistent as we go forward I Wouldnt expect any significant growth on that line.
Okay. Thank you guys congratulations on the progress.
Thanks Scott.
Yeah.
Thank you as a reminder, that star one to be placed in the question queue. Our next question is coming from Edison Chu from Deutsche Bank. Your line is now live.
Hey, Thanks, and congrats on the quarter just two questions on my end first can you give us a sense of it.
Cadence for the Gen III deployment, maybe over a couple of years, how that could look like.
And then secondly, I know youre, not giving guidance on 2023, but how are you feeling about the visibility that book of business any sort of color there would be would be helpful. Thanks.
Yes, Allison as I mentioned, we'll start launching and.
And deploying Gen three satellites in the second half of next year.
Those satellites will launch at a cadence.
Initially begin to maintain the current constellation where gen. Three satellites will replenish aging Gen two satellites.
And then that constellation will grow over time.
To align with demand that we're seeing from the <unk> contract and other opportunities other opportunities internationally.
With respect to the.
So the visibility.
Obviously been building strong contracted backlog.
And as we outlined we've been we've been.
Focused on closing multiyear contract vehicles, which enable us to have strong visibility into expansion of current contracts building off of that contract base in the back and the backlog that we're experiencing from a lot of different customers. So feeling really strong about our visibility going into next year.
Great. Thanks.
Thanks Edison.
Thank you next question today is coming from Colin Canfield from Barclays. Your line is now live.
Hey, good morning, and thanks for the question can you just maybe discuss it.
International customer appetite.
So you guys are thinking about kind of the market opportunity, but what I would call countries that can afford their own constellations versus countries that can and maybe just talk about the mix of interest.
Given the sort of national security environment that we're contemplating.
Mix being between.
<unk> commercial services versus building and operating your own constellations.
Yes.
Good morning, Collin well, what we're seeing.
Internationally as demand is definitely outpacing supply.
And when you look at our capabilities, which we're bringing a differentiated offering.
Of this unique dusted dawn high frequency capability.
That is really driving the growth were seeing.
We're also.
Through <unk>.
Compelling economics of our offering and ease of access.
See the Tam expanding.
A few years ago was just larger governments that could afford this now we're seeing tier one and tier.
Tier two and tier three type.
Governments acquiring these acquiring these services. So that's that's a trend that we're excited about and then finally.
On your.
I'll call it.
What we're seeing in terms of demand for commercial services versus sovereign.
Systems, we're seeing a growing demand for both and.
Sure.
We anticipate that these markets are going to continue to buy an expanded commercial services with analytics.
But also <unk>.
Move toward what I'll call hybrid architectures, where sovereign systems will begin.
We began being tightly integrated with commercial capabilities.
Got it and then you mentioned that kind of national security betting on the Gen three architecture.
As well as kind of a customer interest can you just maybe update us on the <unk> intelligence program with the Army and how you guys are thinking about the tradeoff between.
Selling services and products into the domestic national security customer.
Yes, Colin is as I outlined in my remarks.
The U S government and other international governments are shifting a significant amount of dollars into what we'll call tactical ISR space.
And and so we've positioned the company with the number of early contracts, including the Tech Geo.
Contract.
So when we launched Gen three next year.
We will be working with that customer.
In.
Their studies and analysis of that capability to support their long term.
Architecture from a market perspective, we see that that whole shift in dollars and.
The move toward small satellites for space based defense.
Is quite a big opportunity in the out years.
Got it and then if you can just maybe within the kind of that contract that you are considering can you maybe discuss.
What Lille Stella as capacity is too from a production standpoint, and how you guys thinking about incremental capital investment there.
Yes, Leo stellar has a.
An annual production capacity of 40 satellites per year, so you've got plenty of capacity to.
Produce our satellites as well as satellites.
For other.
Businesses capitalized in.
We're.
Obviously, the capex elements of our plan are whats.
Funding the satellite production that we see at least Stella.
Got it I appreciate the color.
Thanks, Tom.
Thank you next question today is coming from Austin Moeller from Canaccord. Your line is now live.
Hi, Good morning, Brian and Henry.
Good morning, Austin, how are you doing.
Great.
So how are you differentiating your your AI software and <unk> analytics from companies like Max are clearly picked their sort of corner of the market, where they are aggressively moving into G. Three D geospatial and mapping products.
Well Austin as you know we've been.
Our differentiation is in real time.
<unk>.
As you know what's critical.
These days is the delivery of timely ACH.
<unk> intelligence.
And so our system can collect and produce AI enabled analytics.
In real time and deliver that to customers.
We're seeing.
That come to life in the Iam contract with NGA Ware.
We've won a majority of those task orders as we said we have $114 million.
Out of the $30 million of that contract over five years.
Under that contract, we're not delivering imagery.
Its information and analytics.
Monitoring locations all over the world and.
And this real time delivery, we feel is where we're differentiated.
Really driven by the world need to get information on demand to us.
Stand what is changing.
And meet their critical intelligence needs.
Okay, that's very helpful.
The $91 million in cash do you anticipate that that'll be sufficient to get the company through black Skype Gen III development and launch.
Austin. This is Henry Thank you for the question I mean in terms of liquidity, yes, we have $91 million of cash on the balance sheet.
And as you can see we are executing to plan quite well.
I think when you couple that with our strong intimate the strong incremental margins.
We're experiencing and anticipate on our revenue streams, we do have sufficient cash to get ourselves through the foreseeable future.
Excellent thanks for the updates.
Thank you. Your next question today is coming from Caleb Henry from quality analytics provided by law.
Hi, Thank you.
Question about the Gen. Three satellites, you mentioned that theyre going to be 35 to 50 centimeter imagery.
Is that neither us or is that.
After processing.
That's native.
So that's the resolution that we get off of the offer the camera and the processing that we do.
To generate the imagery, but its you can consider it native it's not just <unk>.
Not employing type of Super resolution processing is others too.
Okay, and then that means that you have the potential like a <unk>.
Rather than 35 centimeters with with processing later.
There's always opportunity to improve with processing.
Okay.
<unk> you mentioned a lot the similarities theyre going to have with Gen. Two.
Redundancy and reliability, but what are some of the changes that youre doing to make sure that they are to enable them to reach those reservations are you lowering the orbit or giving them bigger cameras can you give a sense of what youre doing there yes.
The primary differences.
As a larger payload so we have larger optics.
Which are enabling us to improve our resolution.
Alright.
Okay, and then just last question.
We're going to increase the number of remote sensing companies plan to cross link their constellation from to the phase two development agencies National Defense base architecture is that something that lexicon has plan for gen. Three.
Yes, we've built a very flexible vehicle, which enables us to.
So the plug and play different types of capabilities, such as cross optical cross links and other other means of communication.
Alright, thank you.
Thank you.
Thank you we reached end of our question and answer session I'd like to turn the floor back over to al <unk> for any further or closing comments.
I want to thank everyone for joining us on the call we will be participating in several investor conferences over the coming weeks and we look forward to speaking to you at one of these or sometime soon have a great day.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.