Q4 2023 BlackSky Technology Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to BlackSky Technologies' fourth quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise.

Good morning, ladies and gentlemen, and welcome to Black Sky Technologies fourth quarter 2023 earnings Conference call.

All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. To ask a question, you may press star then 1 on your touchtone phone. To withdraw your question, please press star then 2. Please note that this conference call is being recorded. I would now like to turn the call over to Ali Bonilla, Blacksky's Vice President of Investor Relations. Please go ahead, Ali.

After the Speakers' remarks, there will be a question and answer session.

To ask a question you May Press Star then one on your Touchtone phone.

To withdraw your question. Please press Star then two.

Please note that this conference call is being recorded.

I would now like to turn the call over to Ali Bonita.

Blacks guys 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 O 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 <unk>.

Ali Bonilla: Good morning, and thank you for joining us. Today, I'm joined by our Chief Executive Officer, Brian O'Toole, and our Chief Financial Officer, Henry Dubois. On today's call, Brian will provide some highlights from the quarter and give a strategic update on the business. Henry will then review the company's fourth quarter and full year financial results and outlook for 2024. 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 p.m. Eastern Time today through March 13. Information on how to access the replay can be found in today's press release.

<unk> fourth quarter and full year financial results and outlook for 2024, 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 P M eastern time today through.

Through March 13th 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 Dot Black Sky Dotcom and.

Ali Bonilla: Additionally, a webcast of this earnings call will be available in the investor relations section of our website at www.blacksky.com. In conjunction with today's call, we have posted a quarterly earnings presentation on the Investor Relations website that you may use to follow along with our prepared remarks. Before we begin, let me remind you that certain statements made during today's conference call regarding our future plans, objectives, and expected performance, including our financial guidance for 2024, are forward-looking statements. Actual results may differ materially as these statements are based on our current expectations as of today and are subject to risks and uncertainties, including those stated in our Form 10-K. We encourage you to review our press release, Form 10-K, and other recent SEC filings for Blacksky assumes no obligation to update forward-looking statements, except as may be required by applicable law.

In conjunction with today's call we have posted a quarterly earnings presentation on the Investor Relations website that you may use to follow along with our prepared remarks.

Before we begin let me remind you that certain statements made during today's conference call regarding our future plans objectives and expected performance.

Including our financial guidance for 2020 for our forward looking statements actual results may differ materially. These statements are based on our current expectations as of today and are subject to risks and uncertainties, including those stated in our Form 10-K, we encourage you to review our press release Form 10-K.

And other 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 Guy assumes no obligation to update forward looking statements, except as may be required by applicable law.

Brian O'Toole: In addition, during today's call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA, adjusted imagery and software analytical services cost of sales, and cash operating expenses. A reconciliation of these non-GAAP financial measures to their most comparable GAAP measures is included in today's accompanying presentation, which can be viewed or downloaded from our Investor Relations website. At this point, I'll turn the call over to Brian O'Toole.

In addition, during today's call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA adjusted imagery and software analytical services cost of sales and cash operating expenses. A reconciliation of these non-GAAP financial measures to their most comparable GAAP measures are included.

<unk> in today's accompanying 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.

Brian O'Toole: Thanks, Ali, and good morning, everyone. Thank you for joining us on today's call. Beginning with slide three, I'm pleased to report that 2023 was an exceptional year for Blacksky, with strong and growing demand for our space-based intelligence solutions. We executed across all aspects of our business, and delivered strong operating results against our major goals for 2023. Here are some of the highlights, first.

Thanks, Sally and good morning, everyone. Thank you for joining us on today's call.

Beginning with slide three I am pleased to report that 2023 was an exceptional year for black Sky.

With strong and growing demand for our space based intelligence solutions, we executed across all aspects of our business and.

And delivered strong operating results against our major goals for 2023.

Here are some of the highlights.

First for the full year 2023, we achieved record revenues of over $94 million, a 45% growth over 2022.

Brian O'Toole: For the full year 2023, we achieved record revenues of over $94 million, a 45% growth over 2022. We had an exceptionally strong fourth quarter that delivered revenues of over $35 million, an 83% increase over the prior year quarter. This was driven by strong quarter-over-quarter growth in our imagery and analytics revenue and progress toward deliverables on the recently awarded contract for the Government of Indonesia.

We had an exceptionally strong fourth quarter that delivered revenues over $35 million and 83% increase over the prior year quarter.

This was driven by strong quarter over quarter growth.

In our imagery and analytics revenues and.

And progress toward deliverables on the recently awarded contract for the government of Indonesia.

Second.

Brian O'Toole: In 2023, we closed over $265 million in the contracted book, including over $55 million of new contracts and renewal agreements in Q4. The majority of these bookings came from international customers, reflecting the growing demand from customers around the world for our current and future space-based intelligence solutions. With these key wins, we increased our year-end contracted backlog to over $260 million, providing strong out-year revenue visibility from an expanding anchor customer base that has signed long-term, multi-year commitments. Fourth, we successfully delivered positive adjusted EBITDA of over $9 million in Q4, achieving one of our major objectives for 2023. In fact, for the full year, we were nearly adjusted EBITDA breakeven.

In 2023, we closed over $265 million in contracted bookings, including over $55 million of new contracts and renewal agreements in Q4.

A majority of these bookings came from international customers.

Reflecting the growing demand from customers around the world for our current and future space space Intelligence solutions.

Third with.

With these key wins, we increased our year end contracted backlog to over $260 million provides.

Providing strong out year revenue visibility from an expanding anchor customer base that is signed long term multi year commitments.

Fourth we successfully delivered positive adjusted EBITDA of over $9 million in Q4 achieved.

Achieving one of our major objectives for 2023.

In fact for the full year, we were nearly adjusted EBITDA breakeven.

Brian O'Toole: This significant operating achievement is attributed to the combination of strong revenue growth for our high-margin imagery and analytics services, which are focused on discipline, cost management, continued streamlining of our operations, and the strong operating leverage of our business. This strong execution is anchored by the hard work and dedication of our team, who work tirelessly to meet our customer commitments and deliver timely and reliable intelligence that our customers rely on every day for critical decision making. Blacksky's dynamic hourly monitoring capabilities are becoming an essential capability for customers around the world, as evidenced by a strong and growing sales pipeline and the continued growth of our customer base, which increased by over 50% last year.

This significant operating achievement is attributed to the combination of strong revenue growth.

Of our high margin imagery and analytics services, our focus on disciplined cost management.

Continued streamlining of our operations and.

And the strong operating leverage of our business model.

This strong execution is anchored by the hard work and dedication of our team who worked tirelessly to meet our customer commitments.

Through the delivery of timely and reliable intelligence.

That our customers rely on every day for critical decision, making.

Black Sky dynamic early monitoring capabilities are becoming an essential capability for customers around the world.

As evidenced by a strong and growing sales pipeline.

And the continued growth of our customer base.

Which increased by over 50% last year.

Demand remains high for our current high frequency imagery and analytics services.

Brian O'Toole: Demand remains high for our current high-frequency imagery and analytics services as new customers adopt these capabilities as part of their day-to-day operations, and existing customers expand their commitments through long-term, multi-year subscription contracts. We are also seeing strong demand for our Gen 3 capabilities, as these advanced satellites are now in production and on track for launch this year. The unique combination of high-frequency hourly monitoring, with very high-resolution imagery and advanced AI-enabled analytics, offers customers unprecedented real-time and Space-Based Intelligence. The ability to see, understand, and act first is critical to strategic advantage, and the rapid advancements of Black Sky's commercial space technology now offer solutions to support growing national security and economic development imperatives of governments around the world.

As new customers adopt these capabilities as part of their day to day operations.

And existing customers expand their commitments through long term multiyear subscription contracts.

We are seeing strong demand for our gen. Three capabilities as these advanced satellites are now in production and on track for launch this year.

The unique combination of high frequency hourly monitoring.

With very high resolution imagery and advanced AI enabled analytics.

Offers customers with unprecedented real time space based intelligence.

The ability to see understand and act first.

It's critical to strategic advantage.

And the rapid advancements of Black skies commercial space technology now offer solutions to support growing national security and economic development imperatives of governments around the world.

Brian O'Toole: 2023 was another strong year of focused execution and another major step forward in the growth of our business, which has us well-positioned to address this large and growing market opportunity. The operational achievements of 2023 have us on a path toward long-term profitable growth and demonstrate our commitment to building shareholder value. I would now like to share some operational highlights from the Corps, turning to slide four.

2023 was another strong year of focused execution and another major step forward in the growth of our business.

Which has us well positioned to address this large and growing market opportunity.

The operational achievements of 2023.

Have us on a path towards long term profitable growth and demonstrate our commitment to building shareholder value.

I would now like to share some operational highlights from the quarter.

Turning to slide four.

Brian O'Toole: We're continuing to see global demand for Blacksky's products and services remain very strong around the world, especially in markets where governments are increasing their investments and accelerating programs to acquire space-based intelligence capability. This increased demand is driven by geopolitical, economic, and national security concerns that governments around the world are facing now more than ever. Our decision to focus on and invest in this growing market opportunity is now paying off, as is evidenced by the capture of large multi-year contracts with long-term anchor customers. In 2023, these wins totaled over $240 million.

We're continuing to see global demand for Black Sky's products and services remained very strong around the world.

Especially in markets, where governments are increasing their investments and accelerating programs to acquire space based intelligence capabilities.

This increased demand is driven by geopolitical economic and national security concerns.

That governments around the world are facing now more than ever.

Our decision to focus and invest.

On this growing market opportunity is now paying off.

As is evidenced by the capture of large multi year contracts with long term anchor customers.

In 2023, these wins totaled over $240 million.

Brian O'Toole: In fact, during the past year, the revenue contribution from our international business grew from 17% in 2022 to now over 37% this past year, as we are successfully building out a diverse global customer base. Earlier in the year, we won a contract valued at over $150 million with a major international ministry of defense. This multi-year subscription contract is a long-term commitment for our next generation of real-time monitoring and AI-enabled analytic services for Space-Based Tactical Operations. We are currently in the development phase of this contract and look forward to entering into the subscription phase of the contract as our Gen 3 satellites come online. This customer is already under a multi-year subscription contract for Imagery and Analytics Services from our current Gen 2 constellation.

In fact during the past year the revenue contribution from our international business grew from 17% in 2022 to now over 37% this past year.

As we are successfully building out a diverse global customer base.

Earlier in the year, we won a contract valued at over $150 million with a major international Ministry of defense.

This multi year subscription contract.

A long term commitment.

For our next generation of real time monitoring and AI enabled analytics services for space based tactical operations.

We are currently underway in the development phase of this contract.

And look forward to entering into the subscription phase of the contract as our Gen. Three satellites come online.

This customer is already under a multiyear subscription contract for imagery and analytics services.

From our current Gen two constellation.

In Q2 of last year, we were awarded a 30 million dollar contract renewal with another major international defense customer.

This multi year renewal agreement expanded our existing contract threefold over the prior year contract and.

Brian O'Toole: In Q2 of last year, we were awarded a $30 million contract renewal with another major international defense customer. This multi-year renewal agreement expanded our existing contract three-fold over the prior year's contract and demonstrates the customer's long-term commitment to secure assured access to our high-frequency monitoring and analytics capability. This is another validation that our land and expanse strategy is working. In the fourth quarter, we signed multi-year contracts valued at about $50 million to deliver subscription-based imagery and analytics and Advanced Gen 3 Space and Ground Capabilities to the Indonesian government in support of their long-term plans to build sovereign space capability. I'll share more details on this contract win in a few minutes.

And demonstrates that customers long term commitment to secure assured access to our high frequency monitoring and analytics capabilities.

This is another validation that our land and expand strategy is working.

In the fourth quarter, we signed multi year contracts valued at about $50 million.

To deliver subscription based imagery and analytics and.

In advanced Gen III space and ground capabilities.

To the Indonesian government in support of their long term plans to build sovereign space capabilities.

I'll share more details on this contract win in a few minutes.

Also in 2023.

We've secured a number of new customers that are now in the initial phases of using our high frequency monitoring and analytics services.

As these customers integrate our services into their day to day operations.

We expect these services will expand over time.

Growing these relationships into long term anchor customers.

Brian O'Toole: Also in 2023, we secured a number of new customers that are now in the initial phases of using our high-frequency monitoring and analytic services, as these customers integrate our services into their day-to-day operations. We expect these services will expand over time, growing these relationships into long-term anchor customers. In 2023, we successfully grew our international customer base by 50%, and we are proud to be providing them with advanced intelligence solutions now and in the future. Moving to slide 5.

In 2023, we successfully grew our international customer base by 50% and.

And are proud to be providing them with advanced intelligence solutions now and in the future.

Moving to slide five.

Our international success illustrates that space is now and will be an essential element of national defense and.

And long term economic development for governments around the world.

We are in an era today, where speed to insight matters.

Key government decision makers require up to the minute information.

To secure their homelands and protect our economic interests.

The ability to see understand and act first.

Brian O'Toole: Our international success illustrates that space is now and will be an essential element of national defense and long-term economic development for governments around the world. We are in an era today where speed to insight matters, and key government decision makers require up-to-the-minute information to secure their homelands and protect their economic interests. The ability to see, understand, and act first provides a strategic advantage, an advantage that can now be achieved through the rapid advancements of commercial space technology. We are delivering these advanced capabilities through a new adoption and acquisition model, whereby customers no longer need to invest billions of dollars or wait five to ten years to establish and build operational space capability. Through our software-first strategy, we've lowered the barrier to entry for customers looking to immediately access and rapidly expand their space-based intelligence capability. An example of this strategy in action, was recently announced contracts for approximately $50 million supporting the Indonesian Ministry of Defense in their efforts to develop and accelerate sovereign-based space capabilities.

<unk> strategic advantage.

An advantage that can now be achieved through the rapid advancements of commercial space technology.

We are delivering these advanced capabilities through our new adoption and acquisition model.

Goodbye customers no longer need to invest billions of dollars or wait five years to 10 years.

To establish and build operational space capabilities.

Through our software for our strategy, we've lowered the barrier to entry for customers looking to immediately access and rapidly expand our space based intelligence capabilities.

An example of this strategy in action.

As our recently announced contracts for approximately $50 million supporting the Indonesian Ministry of defense.

With their efforts to develop and accelerate sovereign based space capabilities.

The Indonesian government is looking to modernize their satellite infrastructure to address defense National security and other economic needs.

This holistic approach enables sovereign nations to easily take advantage of and receive real time intelligence using our software first AI approach.

While also providing a platform.

They can use to build their sovereign capabilities over time.

Through these recently won contracts the Indonesian government will receive immediate and guaranteed access to our high frequency imagery and real time, AI driven analytics utilizing our gen two satellite constellation and our spectra software platform.

Brian O'Toole: The Indonesian government is looking to modernize their satellite infrastructure to address defense, national security, and other economic needs. This holistic approach enables sovereign nations to easily take advantage of and receive real-time intelligence using our software-first AI approach, while also providing a platform they can use to build their sovereign capabilities over time through these recently won contracts. The Indonesian government will receive immediate and guaranteed access to our high-frequency imagery and real-time AI-driven analytics, utilizing our Gen 2 satellite constellation and our Spectra software platform. These subscription-based services will provide them with early intelligence, surveillance, and reconnaissance capabilities over their area of interest. In fact, in less than 30 days since signing the contract, we had a Black Sky team in Indonesia who are actively training personnel and teaching them how to task our Constellation and access our AI-enabled service, and are now actively using our platform. In addition to providing the Indonesian M.O.D. with assured subscription-based services, our contracts provide for the delivery of Gen 3 satellites, advanced ground station capabilities, and flight operations support over the next few Moving on to slide six.

The subscription based services will provide them with early intelligence surveillance and reconnaissance capabilities over their area of interest.

In fact in less than 30 days from signing the contracts, we had a black sky team in Indonesia.

We're actively training personnel on teaching them how to task our constellation.

And access our AI enabled services.

And are now actively using our platform.

In addition to providing the Indonesian mode.

With assured subscription based services our contracts provide for the delivery of Gen three satellites.

Advanced ground station capabilities and flight operation support.

Over the next few years.

These gen three commercial satellites.

<unk>, which will provide very high resolution 35 centimeter imagery.

It will be integrated into the customer's environment and are expected to be part of Indonesia defense satellite system as the government develops its capabilities over time.

Moving on to slide six.

During 2023, we continue to see strong growth from the U S government driven by the government's adoption of Black Sky high frequency imagery monitoring and advanced AI capabilities.

We've expanded our footprint within the U S government, winning many new contracts and expanding existing agreements with a number of defense and intelligence agencies.

Many of these contracts are.

For access to our advanced AI capabilities.

These customers are not just looking for static satellite imagery.

Over certain locations, but have a need for information intelligence.

Drive from Black skies dynamic monitoring object detection and other AI driven capabilities.

Let me touch on a few of these wins and highlights during the year.

First we continue strong execution on our <unk> contract with the NRO.

We continue to meet daily service requirements and we're the first company to achieve integration with the governments commercial integration platform.

Brian O'Toole: During 2023, we continue to see strong growth from the U.S. government driven by the government's adoption of BlackSky's high-frequency imagery, monitoring, and advanced AI capabilities. We've expanded our footprint within the U.S. government, winning many new contracts and expanding existing agreements with a number of defense and intelligence agencies; many of these contracts are for access to our advanced AI. capabilities, as these customers are not just looking for static satellite imagery over certain locations but have a need for information intelligence derived from Black Sky's dynamic monitoring, object detection, and other AI-driven capabilities. Let me touch on a few of these wins and highlights during the year.

This strong operating performance led to the expansion of our base subscription contract.

And the award of multiple studies for our advanced Gen three capabilities.

Second we continued to receive multiple orders under the economic indicator monitoring or EAM program with NGA.

Throughout the course of this program Black Sky has delivered against a range of advanced AI enabled monitoring task orders.

Which has us well positioned to compete for the lunar contract.

Which is a $290 million multi year follow on program.

Which is expected to be awarded later this year.

Third we captured multiple contracts with various department of defense customers, leveraging our AI capabilities to.

To demonstrate advanced tactical intelligence solutions in support of emerging mission requirements.

A recent example is the new contract we won in the fourth quarter that will leverage our satellites multi frame collection capabilities and when combined with advanced AI processing techniques.

Brian O'Toole: First, we continue strong execution on our EOCL contract with the NRO, as we continue to meet daily service requirements, and we're the first company to achieve integration with the government's commercial integration platform. This strong operating performance led to the expansion of our base subscription contract and the award of multiple studies for our advanced Gen 3 capabilities.

Enable users to track moving target projects on the ground and discern activity patterns.

And fourth.

We continued to win additional contract awards with the intelligence advanced research projects activity, our IR App.

To deliver AI based broad area of search capability.

Which I will discuss in more detail as we turn to slide seven.

A major contract win in the fourth quarter was for the next phase of the IR for Smart program.

Brian O'Toole: We continue to receive multiple orders under the Economic Indicator Monitoring, or EIM, program with NGA. Throughout the course of this program, Blacksky has delivered against a range of advanced AI-enabled monitoring task orders, which has us well positioned to compete for the Luno contract, which is a $290 million multi-year follow-on program, which is expected to be awarded later this year. Third, we captured multiple contracts with various Department of Defense customers leveraging our AI capabilities to demonstrate advanced tactical intelligence solutions in support of emerging mission requirements. A recent example is the new contract we won in the fourth quarter that will leverage our satellite's multi-frame collection capability and, when combined with advanced AI processing techniques, enable users to track moving target objects on the ground and discern activity, and forth.

This award is another example of how the U S government is leveraging black skies advanced AI capabilities in support of emerging mission needs and demonstrates how we're expanding our services within the U S government beyond satellite imagery.

This latest award brings total contracts awarded to Black Sky under this program to over $10 million.

We've been able to leverage this research and development funding to build a proprietary AI based performance platform.

That can power applications for searching the world for critical economic activities.

Under this effort Black Sky was selected as the leading space based AI system.

For bringing speed and scalability to the broad area of search mission.

For those who may not know.

Broad area search techniques with scan large areas of the Earth's surface help intelligence organization.

Dynamic changes.

And gain early insights into important activities.

We are first to act advantage is essential.

With our fully automated and scalable approach to AI processing and analytics.

Brian O'Toole: We continue to win additional contract awards with the Intelligence Advanced Research Projects Activity, or IARPA, to deliver AI-based broad area search capability, which I will discuss in more detail as we turn to slide seven. A major contract win in the fourth quarter was for the next phase of the IARPA SMART program. This award is another example of how the U.S. government is leveraging Blacksky's advanced AI capabilities in support of emerging mission needs and demonstrates how we're expanding our services within the U.S. government beyond satellite imagery. This latest award brings total contracts awarded to Blacksky under this program to over $10 million. We've been able to leverage this research and development funding to build a proprietary AI-based performance platform that can power applications for searching the world for critical economic activity.

Customers can run data intensive broad area search queries, more frequently and faster as compared to traditional solutions.

The AI tools, we built under the Smart program are now being leveraged by other U S government programs.

Helping them to minimize the burden placed on geospatial analysts.

That traditionally had to manually monitor large areas of interest.

This technology enables users to increase their operational capabilities.

While reducing the need for additional resources.

For example, the analysis of your regional multiyear imagery dataset.

Would have taken an analyst months to process and analyze.

But black Sky's broad area search platform. The analysis of imagery from any satellite provider can be accomplished in just a few hours at a fraction of the cost and time.

This is another example, demonstrating how black sky AI, driven analytics are driving greater insights and intelligence to a diverse group of government agencies.

Brian O'Toole: Under this effort, Blacksky was selected as the leading space-based AI system for bringing speed and scalability to the Broad Area Search mission. For those who may not know, broad area search techniques, which scan large areas of the Earth's surface, health intelligence organizations see dynamic changes and gain early insights into important activities where a first-to-act advantage is essential. With our fully automated and scalable approach to AI processing and analytics, customers can run data-intensive broad area search queries more frequently and faster as compared to traditional solutions.

Moving to slide eight.

We continue to make significant progress on our Gen. Three satellite program.

Our first Gen. Three satellites are currently in the integration phase and are being assembled on the production line.

We are now ramping production and remain on track to begin launching Gen. Three satellites later this year.

We will provide more details on the timing of upcoming launches as we get closer to those dates.

As a reminder to support our Gen. Three deployment plan, we entered into an agreement last year with rocket lab to secure a number of dedicated launches.

This agreement secured the near term capacity we need.

To begin to support our Gen three constellation deployment plan.

Brian O'Toole: The AI tools we built under the SMART program are now being leveraged by other U.S. government programs, helping them to minimize the burden placed on geospatial analysts that traditionally had to manually monitor large areas of interest. This technology enables users to increase their operational capability while reducing the need for additional resources. For example, the analysis of a regional multi-year imagery data set would have taken an analyst months to process and analyze.

Many of our new contract wins include access to Gen three capacity and capabilities.

Demonstrating the strong demand we are experiencing for this next evolution of our constellation.

We are excited about our progress and the capabilities of these new satellites will bring to market.

In summary, we're pleased with the strong operational and financial performance that we delivered in 2023.

Highlighted by record revenues in both Q4 and the full year strong operating leverage significant backlog and positive adjusted EBITDA in the fourth quarter.

Brian O'Toole: Moving to slide 8, Black Sky's broad area search platform, the analysis of imagery from any satellite can be accomplished in just a few hours at a fraction of the cost and time. This is another example demonstrating how Blacksky's AI-driven analytics are driving greater insights and intelligence to a diverse group of government agencies.

I'll now turn it over to Henry to go through the quarterly and full year financial results in more detail Henri.

Thank you, Brian and good morning, everyone.

Im pleased with our fourth quarter financial results ending the year on a high note as momentum for our space based capabilities continues bigger.

Henry Dubois: We continue to make significant progress on our Gen 3 satellite program. Our first Gen 3 satellites are currently in the integration phase and are being assembled on the production line. We are now ramping production and remain on track to begin launching Gen 3 satellites later this year. We will provide more details on the timing of upcoming launches as we get closer to those dates. As a reminder, to support our Gen III deployment plan, we entered into an agreement last year with Rocket Lab to secure a number of dedicated launches. This agreement secured the near-term capacity we need to begin to support our Gen III Constellation deployment. Many of our new contract wins include access to Gen 3 capacity and capability, demonstrating the strong demand we are experiencing for this next evolution of our constellation.

Beginning with slide 10 in Q4, our revenues were $35 $5 million driven.

Driven by growth across the entire business and a new quarterly record for the company.

This was an increase of $16 1 million or 83% over the prior year quarter.

Imagery and analytics revenue grew to $19 million in the quarter, an 18% increase over the prior year period, primarily driven by greater volumes of imagery delivered to new and existing U S and international government customers.

Professional engineering services revenues increased to $16 5 million in the fourth quarter of 2023 compared to $3 $3 million in Q4 of 2022.

We recognized $7 million more revenue in Q4 than we had anticipated when we're making our final forecast due to the final terms and conditions of our Indonesian contract.

Yes.

Turning to slide 11, I'm happy to report that we successfully met our company's goal of reaching positive adjusted EBITDA in Q4 and accomplishment very few space companies have done on their first constellation.

Henry Dubois: We are excited about our progress and the capabilities that these new satellites will bring to the market. In summary, we're pleased with the strong operational and financial performance that we delivered in 2023, highlighted by record revenues in both Q4 and the full year. Strong operating leverage, significant backlog, and positive adjusted EBITDA in the fourth quarter. I'll now turn it over to Henry to go through the quarterly and full year financial results in more detail. Henry?

For the fourth quarter of 2023, we reported an adjusted EBITDA of $9 3 million, an improvement of $13 9 million from the prior year quarter.

This year over year increase was primarily driven by strong revenue growth margin improvement across our business and disciplined cost management.

In fact, our Q4 SG&A costs, excluding stock based compensation expense.

Henry Dubois: Thank you, Brian, and good morning, everyone. I, too, am pleased with our fourth quarter financial results, ending the year on a high note as momentum for our space-based capabilities continues. Beginning with slide 10, in Q4, our revenues were $35.5 million, driven by growth across the entire business and a new quarterly record for the company. This was an increase of $16.1 million, or 83% over the prior year quarter.

Down 17% year over year on revenue growth of 83%. This.

This result demonstrates our focus on managing cost effectively and streamlining operations, while we grow our business.

Of the $9 3 million reported for adjusted EBITDA in Q4.

Approximately $6 $5 million came from specific progress base revenue and operating expense savings, while the remainder came from our steady state operations.

Now let me provide some details on our full year financial results, starting with slide 13.

Following the strong revenue performance in Q4, we ended 2023 with revenue of $94 $5 million up 45% over 2022, and achieving another record year for the company.

Henry Dubois: Imagery and Analytics revenue grew to $19 million in the quarter, an 18% increase over the prior year period, primarily driven by greater volumes of imagery delivered to new and existing U.S. and international government customers. Professional and Engineering Services revenues increased to $16.5 million in the fourth quarter of 2023 compared to $3.3 million in Q4 of 2022. We recognized $7 million more revenue in Q4 than we had anticipated when we were making our final forecast due to the final terms and conditions of our Indonesian contract. Turning to slide 11, I'm happy to report that we successfully met our company's goal of reaching positive adjusted EBITDA in Q4, an accomplishment very few space companies have achieved on their first constellation. For the fourth quarter of 2023, we reported an adjusted EBITDA of $9.3 million, an improvement of $13.9 million from the prior year quarter. This year-over-year increase was primarily driven by strong revenue growth, margin improvement across our business, and disciplined cost management. In fact, our Q4 SG&A costs, excluding stock-based compensation expense, were down 17% year-over-year on revenue growth of 83%.

Our significant revenue growth can be attributed to increased ordering from existing customers as well as services delivered to a number of new customers in 2023.

The full year revenue increase demonstrates the growing demand we're seeing from customers around the world, who are taking advantage of our unique and differentiated solutions.

Turning to cost of sales, we continued to demonstrate strong operating leverage in our imagery and analytics business as shown on slide 14.

Excluding stock based compensation depreciation and amortization expenses imagery and analytics cost of sales for the full year 2023 was $13 6 million compared to $13 $9 million in 2022.

The decrease of $300000 or 3% was primarily driven by cost savings and our satellite and software operations.

As a result of these cost savings the revenue increase of our imagery and analytics products in 2023 of $18 million was able to have a direct impact to the bottom line contributing significantly to our adjusted EBITDA performance.

Let's move to slide 15, and talk about cash operating expenses, which excludes stock based compensation and depreciation and amortization expenses.

For the full year 2023 cash operating expenses were $63 2 million essentially in line with cash operating expenses in 2022 of $62 $3 million we.

Henry Dubois: This result demonstrates our focus on managing costs effectively and streamlining operations while we grow our business. Of the $9.3 million reported for adjusted EBITDA in Q4, approximately $6.5 million came from specific progress-based revenue and operating expense savings, while the remainder came from our steady-state operations. Now, let me provide some details on our full-year financial results, starting with slide 13. Following the strong revenue performance in Q4, we ended 2023 with revenue of $94.5 million, up 45% over 2022 and achieving another record year for the company. Our significant revenue growth can be attributed to increased ordering from existing customers as well as services delivered to a number of new customers in 2023. The full year revenue increase demonstrates the growing demand we're seeing from customers around the world who are taking advantage of our unique and differentiated solutions.

<unk> streamlined our corporate expenses for example, generate savings and insurance premiums professional fees and rental expenses. So we can increase our investments in our go to market initiatives, while keeping total costs roughly the same as the prior year.

This performance demonstrates our disciplined approach to cost management, while continuing to make key strategic investments across many areas of our business to support our growth objectives.

Our responsible cost management is another key contributor driving our improving adjusted EBITDA performance.

Turning to slide 16.

Our full year 2023, adjusted EBITDA loss was $1 1 million compared to a loss of $29 $5 million in 2022.

This significant year over year improvement of $28 4 million was primarily driven by a few key factors first strong revenue growth second improving margin performance across the entire business and third disciplined cost management that essentially held our annual cash expenses flat year over year.

We're very pleased with the progress we've made in adjusted EBITDA last year and look forward to building on this strong performance in 2024.

Moving onto our balance sheet, we ended 2023 with $53 $1 million of cash restricted cash and short term investments.

Henry Dubois: Turning to cost of sales, we continue to demonstrate strong operating leverage in our imagery and analytics business, as shown on slide 14. Excluding stock-based compensation, depreciation, and amortization expenses, imagery and analytics cost of sales for the full year 2023 was $13.6 million compared to $13.9 million in 2022. The decrease of $300,000, or 3%, was primarily driven by cost savings in our satellite and software operations.

The increase in cash from the end of Q3 was primarily driven by the sale of our investment and crossbow for $9 $5 million and the strong adjusted EBITDA performance in Q4, which helped offset general cash uses.

With $53 million of cash on our books routine collection of our outstanding receivables vendor financing and continued adjusted EBITDA improvements as expected. We believe we have sufficient cash and liquidity to meet our needs for the foreseeable future.

Capital expenditures for the full year, 2023, or $43 $7 million, primarily associated with our Gen. Three satellite program and spectra AI software development.

Henry Dubois: As a result of these cost savings, the revenue increase of our imagery and analytics products in 2023 of $18 million was able to have a direct impact on the bottom line, contributing significantly to our adjusted EBITDA performance. Now, let's move to slide 15 and talk about cash operating expenses, which excludes stock-based compensation and depreciation and amortization expenses. For the full year of 2023, cash operating expenses were $63.2 million dollars, essentially in line with cash operating expenses in 2022 of $62.3 million dollars. We continuously streamline our corporate expenses, for example, generating savings in insurance premiums, professional fees, and rental expenses, so we can increase our investments in our go-to-market initiatives while keeping total costs roughly the same as the prior year. This performance demonstrates our disciplined approach to cost management while continuing to make key strategic investments across many areas of our business to support our growth objectives. Our responsible cost management is another key contributor driving our improving adjusted EBITDA performance. Turning to slide 16.

Now, let's move on to our 2024 outlook as shown on slide 17.

We expect to continue the strong momentum of 2023 into 2024 as global demand for our space based intelligence solutions continues to attract new customers, while contracts with existing customers continue to expand.

We are forecasting another strong year of execution across all aspects of our business driven by first continued revenue growth from new and existing customers.

Growing operating margins from continued growth in our high margin imagery and analytics services third continued disciplined cost management and streamlining of our operations and fourth sustaining and improving positive adjusted EBITDA throughout the year.

For 2024, we are forecasting full year revenues between $102 million to $118 million.

As in 2023, we are actively working on a significant number of qualified sales opportunities for major multi year, new and expansion contracts, which we expect will continue to build backlog of out year revenue to support our sustained long term growth trajectory.

We remain conscious of the uncertainty of the timing of these awards and the ramp of services to recognize revenue, particularly related to the award of new large government contracts such as what we experienced with Indonesia.

If we were to normalize our 2023 revenue to account for the final terms and conditions on the Indonesian contract as previously discussed our 2020 for revenue guidance would represent a more than 25% year over year growth on our business to the midpoint of our 2024 guidance range.

Henry Dubois: Our full-year 2023 adjusted EBITDA loss was $1.1 million, compared to a loss of $29.5 million in 2022. This significant year-over-year improvement of $28.4 million was primarily driven by a few key factors. First, strong revenue growth. Second, improving margin performance across the entire business. And third, disciplined cost management that essentially held our annual cash expenses flat year-over-year. We're very pleased with the progress we made in adjusted EBITDA last year and look forward to building on this strong performance in 2024. Moving on to our balance sheet, we ended 2023 with $53.1 million of cash, restricted cash, and short-term investments.

We are also mindful of potential impacts of a continuing resolution of U S defense budgets. These.

These factors are reflected in our guidance range.

With continuing revenue growth and disciplined cost management, we anticipate full year adjusted EBITDA in 2024 to be between $8 million to $16 million.

In addition, we expect capital expenditures for 2024 to be between $55 to $65 million.

Primarily driven by investments in our Gen three satellites and AI software capabilities.

In summary, we're pleased with our financial performance in both the full quarter and full year 2023, we are proud to have delivered on our goal of positive adjusted EBITDA. As this reflects a new level of operational performance and illustrates the leverage of our long term business model.

Henry Dubois: The increase in cash from the end of Q3 was primarily driven by the sale of our investment in Crossbow for $9.5 million and the strong adjusted EBITDA performance in Q4, which helped offset general cash usage. With $53 million of cash on our books, routine collection of our outstanding receivables, vendor financing, and continued adjusted EBITDA improvements as expected, we believe we have sufficient cash and liquidity to meet our needs for the foreseeable future. Capital expenditures for the full year 2023 were $43.7 million, primarily associated with our Gen 3 satellite program and Spectra AI software development.

We look forward to carrying this strong momentum into 2024.

With that I'll now turn it back over to Brian for some closing remarks, Brian.

Henry and closing 2023 was an exceptional year for black Sky.

We're pleased with the strong execution and finish to the year.

Leading to record revenues in both the quarter and full year.

And achieving a major company milestone of positive adjusted EBITDA in Q4.

We won over a quarter billion dollars of New awards and expansion agreements.

And increased our contracted backlog.

Henry Dubois: Now let's move on to our 2024 outlook, as shown on slide 17. We expect to continue the strong momentum of 2023 into 2024 as global demand for our space-based intelligence solutions continues to attract new customers while contracts with existing customers continue to expand. We are forecasting another strong year of execution across all aspects of our business driven by, first, continued revenue growth from new and existing customers, second, growing operating margins from continued growth in our high-margin imagery and analytics services, third, continued disciplined cost management and streamlining of our operations, and fourth, sustaining and improving positive adjusted EBITDA throughout the year. For 2024, we're forecasting full-year revenues between $102 to $118 million

Laying a solid foundation for recognizing future revenues.

Demand for Black Sky space based capabilities continues to increase.

And we look forward to continuing to grow our global customer base.

In 2024 and beyond.

2024 is expected to be another strong year of performance as we continue to expand our leadership in space based intelligence.

We are set to deliver long term profitable growth.

And drive value for our shareholders building on the key attributes of our business.

We now have a first of its kind real time space, an AI platform that is delivering a first advantage in support of critical national security and economic development imperatives around the world.

This capability has been validated through long term contracts with the most important defense and intelligence agencies, both here and abroad.

We're demonstrating and delivering a high growth revenue profile.

Building on a track record and a greater than 50% compound annual growth rate over the past few years.

Our industry, leading technology and credentials have us well positioned to serve a large and expanding global market for.

Henry Dubois: As in 2023, we are actively working on a significant number of qualified sales opportunities for major multi-year new and expansion contracts, which we expect will continue to build a backlog of out-year revenue to support our sustained long-term growth trajectory. We remain conscious of the uncertainty of the timing of these awards and the ramp-up of services to recognize revenue, particularly related to the award of new large government contracts such as what we experienced with Indonesia. If we were to normalize our 2023 revenue to account for the final terms and conditions on the Indonesian contract, as previously discussed, our 2024 revenue guidance would represent a more than 25% year-over-year growth on our business at the midpoint of our 2024 guidance range. We are also mindful of the potential impact of a continuing resolution on the U.S. defense budget. These factors are reflected in our guidance range.

For space based intelligence solutions.

Our investments in advanced space and AI capabilities.

US on track to launch next generation satellites in 2024.

Serving a large contract backlog and addressing significant customer demand.

The strong operating leverage of our business model is delivering an attractive financial profile that is transitioning towards long term profitable growth.

Had attractive adjusted EBITDA margin performance.

And finally, our vertically integrated and fully operational space and software platforms are.

By providing differentiated solutions in the market, while enabling our long term competitive advantage.

We believe our accomplishments in 2023 has set the stage for us to deliver another year of strong performance in 2024.

Sets us on a path for long term leadership in space based intelligence.

We look forward to another exceptional year.

This concludes our remarks for the call and we will now take your questions.

Thank you.

We will now begin the question and answer session.

Ask a question you May press Star then one on your Touchtone phone.

Youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

Henry Dubois: With continuing revenue growth and disciplined cost management, we anticipate full-year adjusted EBITDA in 2024 to be between $8 to $16 million. In addition, we expect capital expenditures for 2024 to be between $55 to $65 million, primarily driven by investments in our Gen 3 satellites and AI software capabilities. In summary, we're pleased with our financial performance for both the full quarter and full year 2023. We are proud to have delivered on our goal of positive adjusted EBITDA as this reflects a new level of operational performance and illustrates the leverage of our long-term business model. We look forward to carrying the strong momentum into 2024. With that, I'll now turn it back over to Brian for some closing remarks. Brian?

At this time, we will pause momentarily to assemble our roster.

Yeah.

Thank you.

Your first question comes from the line of Jason Smith with Lake Street. Please proceed with your question.

Hey, guys. Thanks for taking my questions I just wanted to start with the Indonesia contract. You noted that the terms and conditions of that contract really drove that Q4 outperformance was this primarily related to the timing or with a more related to the overall size of the contract.

Hi, Good morning, Jason Thanks for the question.

Yes, it was related more towards the timing the scope of the contract and the nature of the contract we have been working on for quite a while.

I will say that.

This contract does illustrate.

It is a milestone contract and it really illustrates the shift.

Brian O'Toole: Thank you, Henry. In closing, 2023 was an exceptional year for Blacksky. We're pleased with the strong execution and finish to the year, leading to record revenues in both the quarter and full year, and achieving a major company milestone of positive adjusted EBITDA in Q4. We won over a quarter billion dollars in new awards and expansion agreements and increased our contracted backlog, laying a solid foundation for recognizing future revenue. Demand for Blacksky's space-based capabilities continues to increase, and we look forward to continuing to grow our global customer base in 2024 and beyond. 2024 is expected to be another strong year of performance as we continue to expand our leadership in space-based intelligence. We are set to deliver long-term profitable growth and drive value for our shareholders, building on the key attributes of our business. We now have a first-of-its-kind real-time space and AI platform that is delivering a first-to-act advantage in support of critical national security and economic development imperatives around the world.

That we're seeing in the market from customers, taking a hardware first approach toward our solutions model.

And we see this as.

A pretty significant accomplishment.

Last year, but.

As you know these large contracts tend to the quarter over quarter timing tends to be.

Variable.

That makes sense and I guess following up on that how long have you guys been in discussions with Indonesia before signing and I guess Relatedly are you seeing any change in the late sales cycles.

No I think it's safe to say, Jason that these types of <unk>.

A large multi year contracts take.

Take a significant amount of time and that's.

Thats consistent.

What we've seen with this customer and across other opportunities youre seeing around the world and we factored.

We factored that timing into our forecast.

Gotcha, alright, thanks, a lot guys.

Thanks, Jason.

Okay.

Our next question comes from the line of Edison Chu with Deutsche Bank. Please proceed with your question.

Hey, Thanks for taking our questions wanted to ask in terms of the backlog can you maybe break down how much of that is related to unlocking gen. Three.

Brian O'Toole: This capability has been validated through long-term contracts with the most important defense and intelligence agencies both here and abroad, for demonstrating and delivering a high growth revenue profile, building on a track record of greater than 50 percent compound annual growth rate over the past few years. Our industry-leading technology and credentials have us well positioned to serve a large and expanding global market for Space-Based Intelligence Solutions. Our investments in advanced space and AI capabilities have us on track The strong operating leverage of our business model is delivering an attractive financial profile that is transitioning toward long-term profitable growth and has an attractive adjusted EBITDA margin performance.

And that when J P goes up do you need all of them up you need just some satellites up to unlock that piece.

Yes, I think Edison first I'll say that.

This quarter $1 billion in wins this year.

Because we mentioned was driven.

Significantly by the international market.

With the majority of that backlog being tied too.

Long term subscription contracts for our imagery and analytic.

Services from both our Gen two constellation and our Gen three constellation.

And as you can imagine.

I'll refer you back to our iOS CL contract.

These things.

These subscriptions will evolve over time transitioning from Gen two into Gen three and so.

We feel really good about.

How the ramp of those contracts will tie to the deployment of our constellation.

Brian O'Toole: And finally, our vertically integrated and fully operational space and software platforms are providing differentiated solutions in the market while enabling a long-term competitive advantage. We believe our accomplishments in 2023 have set the stage for us to deliver another year of strong performance in 2024, setting us on a path for long-term leadership in space-based intelligence. We look forward to another exceptional year.

Yes.

Understood and then I know you briefly mentioned.

No.

<unk>, the kind of competitive dynamics, there and how you know how many how many vendors ultimately get it.

A good piece of that.

It's.

I'll say it this way medicine.

The predecessor contract Pim.

Oh.

Went to just a handful of companies I think lesson six six or less.

<unk> won the lion's share.

Operator: This concludes our remarks for the call, and we'll now take your questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone.

Of that business through our advanced monitoring and AI.

Capabilities.

So we are extremely well positioned.

To go compete for the $290 million of work orders that will come through the Illumina.

Operator: If you are using a speakerphone, please pick up your handset before pressing. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from the line of Jaeson Schmidt with Lake Street. Please proceed with your question. Hey guys, thanks for taking my questions. I just want to start with the Indonesian contract.

Contract, obviously, a contract of that size is drawing.

A lot of attention, but we feel that we're bringing the technology in the credentials that have us well positioned.

Great. Thank you.

Our next question comes from the line of Josh Sullivan with Benchmark Company. Please proceed with your question.

Jaeson Allen Min Schmidt: You noted that the terms and conditions of that contract early drove the Q4 outperformance. Was this primarily related to the timing, or was it more related to the overall size of the contract? Good morning, Jason.

Hey, good morning.

Good morning, Josh.

As far as the structure of the Indonesian contract and potentially becoming a model.

What's been the inbound interest from other international intelligence agencies.

Brian O'Toole: Thanks for the question. Yes, it was related more to the timing, the scope of the contract, and the nature of the contract we've been working on for quite a while. I will say that.

Has it been immediate or there maybe milestones within the contract which might eventually unlock a little more inbound demand signal.

Alright, the demand signal that we're seeing globally is really strong in fact, it's accelerating I think.

Brian O'Toole: This contract does illustrate... It is a milestone contract, and it really illustrates the shift that we're seeing in the market from customers taking a hardware-first approach toward a solutions model, and we see this as a pretty significant accomplishment last year. But as you know, these large contracts tend to... Quarter over quarter timing tends to be variable. That makes sense.

We're seeing generally in the market that.

Having a space based capability is now essential to most governments almost all governments.

Around the world.

What's interesting about this Indonesian deal.

As you know now you are seeing how these governments can leverage not only commercial Tim.

Imaging and analytics capabilities, but also commercial space software and AI technologies that are going to accelerate their aspirations to.

Brian O'Toole: And I guess following up on that, how long had you guys been in discussions with Indonesia before signing? And, relatedly, are you seeing any change in the late sales cycle? No, I think it's safe to say Jason that these types of large, multi-year contracts take a significant amount of time, and you know that's consistent with what we've seen with this customer and across other opportunities we're seeing around the world, and we factored that timing into our forecast. Gotcha. All right. Thanks a lot, guys. Thanks, Jaeson.

Advanced their space based intelligence solutions and so this is an extremely positive.

Signal.

<unk>.

And for US it really represents how we're expanding our product and services offerings to address this growing market opportunity.

And then just as far as the smart program and the balance of kind of that higher usage of AI. I think you reported you can scan over 20% of your surface in pretty short amount of time, but.

Edison Yu: Our next question comes from Edison Yu with Deutsche Bank. Please proceed with our question. Wanted to ask, in terms of the backlog, can you maybe break down how much of that is related to unlocking Gen 3? And when Gen 3 goes up, do you need all of them up? Do you need just some satellites up to unlock that?

But how do we think about that balance between the market need for satellite time.

It makes it makes those assets ever more efficient is that playing out in the marketplace does it make your high.

Revisit rates that much more valuable.

It does I think youre seeing a.

Couple of aspects of our of our offerings that are.

Brian O'Toole: Yeah, I think Edison, you know, first I'll say that this quarter billion dollars in wins this year, as we mentioned, was driven significantly by the international market, with a majority of that backlog being tied to... long-term subscription contracts for our imagery and analytics services from both our Gen 2 constellation and our Gen 3 constellation. And as you can imagine, I'll refer you back to our EOCL contract. These things are important.

Really driving the adoption of our capabilities by customers, it's the high frequency monitoring.

Which is giving them hourly ability to see what's happening on the ground and when you are.

Apply AI to that Youre, now able to get patterns and insights that they weren't able to get before.

But when you look at.

What we're doing on the smart program.

Not just our satellite imagery, but its satellite imagery and data from from a whole host of.

Sensors and capabilities and that ability.

Over time to process analyze.

Brian O'Toole: These subscriptions will evolve over time, transitioning from Gen 2 into Gen 3. We feel really good about how the ramp of those contracts will tie to the deployment of our constellation. And then I know you briefly mentioned the kind of competitive dynamics there and how, you know, how many vendors ultimately get a piece of that. It's, I'll say it this way, Edison, you know, the predecessor contract EIM, That went to just a handful of companies. I think less than six, six or less.

In turn that information into actionable intelligence that used to take months and now can be hours or minutes.

Is is really an exciting development and what we see driving a lot more growth and adoption over the coming years.

Got it thank you for the time.

Our next question comes from the line of Greg Burns with Sidoti. Please proceed with your question.

Good morning.

With your guidance revenue guidance for next year what.

What level of.

Imagery and analytics growth have you.

Baking into that projection.

Okay.

Okay.

Greg This is Henry I'm talking as you know we're targeting between 102 to 118.

Brian O'Toole: Blacksky won the lion's share of that business through our advanced monitoring and AI capabilities, so we are extremely well positioned to compete for the $290 million in work orders that will come through the Luno contract. Obviously, a contract of that size is drawing a lot of attention, but we feel that we're bringing the technology and the credentials that have us well positioned. Great, thank you.

When we look at the overall growth in the marketplace are from this prior year as I said in my remarks, and you can kind of normalize what we were expecting for full year. This past year absent the final Ts and CS on the Indonesian contract.

Overall, it's about a 25% growth rate.

We would expect kind of.

Josh Sullivan: Our next question comes from the line of Josh Sullivan with Benchmark. Please proceed with your question. Thank you, Bonnie. Good morning, Josh.

The professional engineering services to kind of be kind of chug along at the current levels for most of that growth would be showing up in the imagery and analytics.

Brian O'Toole: As far as the structure of the Indonesian contract and potentially becoming a model, what's been the inbound interest from other international intelligence agencies? Has it been immediate, or are there maybe milestones within the contract which might eventually unlock a little more inbound demand signals? The demand signal that we're seeing globally is really strong; we are seeing generally in the market that having a space-based capability is now essential to most governments, almost all governments around the world. I think what's interesting about this Indonesian deal is that now you're seeing how these governments can leverage not only commercial imaging and analytics capabilities but also commercial space software and AI technologies that are going to accelerate their aspirations to improve their space-based intelligence solutions, and so this is an extremely positive signal.

Okay.

Some of the.

The <unk> contract I think that first two year funded portion is coming to an end.

And the next couple of months.

What's your view on that may be funding additional packages or do you see them just extending you know how do you see that playing out this year and what's baked into your guidance for next year in terms of the <unk> contract. Thank you.

Yes, so we have been performing extremely well on that contract for the past two years. It does renew in June.

Last year, we saw an expansion of that contract and we were also.

The first commercial company to complete integration with the governments commercial platform.

Which has driven.

More usage within the in the government just through that interface. So we're we're in great shape with that customer and we are anticipating.

A renewal of that subscription agreement.

Brian O'Toole: And for us, you know, it really represents how we're expanding our product and services offerings to address this growing market opportunity. And then, just as far as the SMART program and the balance of kind of that higher usage of AI, as you reported, you can scan over 20% of the Earth's surface in a pretty short amount of time.

Sometime in the second quarter.

Okay do you have a view on maybe.

Beyond the renewal like an increase.

And funding for other packages under that program.

We're looking at it kind of in two aspects.

Renewal of what they are currently getting from our Gen. Two capability and then as Gen. Three comes online.

Brian O'Toole: But how do we think about that balance between the market need for satellite time, you know, while AI makes those assets ever more efficient? Is that playing out in the marketplace? Does it make your high revisit rates, you know, that much more valuable? It does.

We expect it to increase from there.

Okay.

Alright, thank you.

Okay.

Our next question comes from the line of Jeff Van <unk> with Craig Hallum Capital Group. Please proceed with your question.

Great. Thanks for taking the questions. Congrats on the positive EBITDA lot of progress here.

Brian O'Toole: I think you're seeing, you know, two aspects of our offerings that are, you know, really driving the adoption of our capabilities by customers. It's the high-frequency monitoring, which is giving them the ability to see what's happening on the ground hourly. And when you apply AI to that, you're now able to get patterns and insights that they weren't able to get before. But when you look at what we're doing in the SMART program, It's not just our satellite imagery, but satellite imagery and data from a whole host of sensors and capabilities, and that ability over time to process, analyze, and turn that information into actionable intelligence that used to take months but now can be hours and minutes is really an exciting development and what we see driving a lot more growth and adoption over the coming years. Thank you for your time.

Maybe if you could touch on the Capex last several quarters, we've gone from I think a guide midpoint of $43 million to 51 does now 60 million can you put a little finer point on the expansion from $43 million, a few quarters ago to $60 million now what exactly the incremental call. It 17 million gets you what are you pulling forward or you see.

More expensive units just talk about what what what Youre doing there.

Sure. Jeff This is Henry I mean, what youre looking at on that Capex as we kind of are ramping up and you're right over the last two years, we've been roughly kind of around that $44 million a year. So as we start ramping up and start getting a gen. Three satellites are closer to launch and then getting them up there you're gonna have timing as you get into that large time period final payments et cetera.

So it's more about getting closer to when we start getting our gen three satellites up.

Okay, I mean, I get Youre getting closer I guess, you've changed your expectations of Gen. Three in the last several quarters are you are you are you pulling forward the quantity the timing within the year or are you seeing expense increases per unit, maybe just a little more color there.

Greg Burns: Our next question comes from the line of Greg Burns with Sidoti. Please proceed with your question. Good morning.

Henry Dubois: With your guidance, revenue guidance for next year, what level of imagery and analytics growth are you baking into that projection? Greg, this is Henry talking. As you know, we're targeting between 102 and 118. When we look at the overall growth in the marketplace, or from this prior year, as I said in my remarks, and you kind of normalize what we were expecting for a full year this past year, absent the final Ts and Cs on the Indonesian contract. Overall, it's about a 25% growth rate. We'd expect kind of the professional and engineering services to kind of chug along at their current level, so most of that growth would be showing up in the imagery and analytics. Okay.

Yes, Geoff it's Brian no, we're not seeing any increase in the cost of these satellites what your.

What youre seeing is the timing of payments against the production contracts.

And.

We have a well defined as I outlined in my comments deployment schedule to begin deploying these satellites later this year so.

No change at all to our plan.

Okay.

Right and.

A few others than just an interesting comments on the broad area of scanning maybe a little more emphasis there than I've heard in the past talk about maybe what's changed there and specifically on broad area scan maybe on a couple of the recent wins.

Theres. Other result, there with broad area scan why did you win and why are you winning maybe increasingly it sounds like.

Brian O'Toole: Thank you. And with the EOCL contract, I think the first two years' funded portion is coming to an end in the next couple of months. What's your view on them maybe funding additional packages, or do you see them just extending? You know, how do you see that playing out this year, and what's baked into your guidance for next year in terms of the EOCL contract? Yeah, so we've been performing extremely well on that contract for the past two years. It will renew in June.

We're winning because of our technology and our AI capabilities.

As I've.

You said in the past we've been developing a multi source software first platform now for almost 10 years. So this strategy is not new to.

Black Sky, what Youre seeing happen now is this to come to fruition with some pretty significant technical.

Capabilities that are now being adopted by the government and so.

We think this is there's a lot more of this to come.

Brian O'Toole: Last year we saw an expansion of that contract, and we were also the first commercial company to complete integration with the government's commercial platform, which has driven more usage within the government just through that interface. So we're in great shape with that customer, and we're anticipating a renewal of that subscription agreement sometime in the second quarter. Okay, do you have a view on, you know, maybe, beyond the renewal, like an increase in funding for other packages under that program? We're looking at it kind of from two aspects. Renewal of what they're currently getting from our Gen 2 capability, and then as Gen 3 comes on.

But it reflects our long term software first approach.

Using AI and advanced scalable processing techniques to take raw data and turn it into actionable intelligence.

If theres a primary reason you win those is it the AI is at the higher resolution is the higher higher revisit rate I'm sure. They all play a role I'm curious if there's kind of one defining difference.

In the case of the Smart program it's.

It is 100% our AI software capabilities, we are not providing software.

I am sorry imagery as part of that contract, it's using imagery from lots of other.

Providers, so it's primarily driven by two aspects.

One is our AI processing techniques and two is our AI infrastructure.

Brian O'Toole: We expect it to increase from... All right, thank you. Our next question comes from the line of Jeff Van Ree with Craig Hallam Capital Group. Please proceed with your question. Great, thanks for taking the questions.

That is able to cost effectively process scale and deliver results.

At.

Massive scale.

Okay.

Maybe last for me then.

There's long been lots of discussion and particularly in the U S government about the shift to commercial providers.

Jeff Van Ree: Congratulations on the positive EBITDA, a lot of progress here. Maybe if you could touch on the CapEx, the last several quarters we've gone from, I think, a guide midpoint of $43 million to $51 million. There's now $60 million.

Obviously in most cases has been a lot of talk but it's been much much slower I think than everybody, including maybe yourselves your expected.

Is there any change in the momentum that you've seen there or are we kind of still on the trajectory. Maybe we were on the last two quarters of of gradual improvement as opposed to I don't know if it's exponential what may be a steeper curve.

Henry Dubois: Can you put a little finer point on the expansion from $43 million a few quarters ago to $60 million now? What exactly does the incremental, call it $17 million, get you? What are you pulling forward? Are you seeing more expensive units? Just talk about what you're doing there. Sure, Jeff. This is Henry.

I think youre seeing us continue to grow our footprint as we outlined in our remarks.

Keep in mind.

Organizations like the space Force are still in early days and.

Henry Dubois: I mean, what you're looking at on that CapEx is we're kind of ramping up, and you're right, over the last two years, we've been roughly kind of around that $44 million a year. So as we start ramping up and start getting our Gen 3 satellites closer to launch and then getting them up there, you're going to have timing as you get into that launch time period, final payments, etc. So it's more about getting closer to when we start getting our Gen 3 satellites up. Okay, I mean, I understand you're getting close. I just, I guess, you've changed your expectations of Gen 3 in the last several quarters. Are you, are you, are you pulling forward the quantity, the timing within the year, and are you seeing expense increases per unit? Maybe just a little more color there. Yeah, Jeff, it's Brian.

They are expected to come out with.

They're published their commercial strategy here shortly.

So we're looking toward all of that in the long term, but as you know we've been heavily focused on the international markets.

As we are seeing significant demand there and the demand the trend.

Transitioning that demand into revenue and bookings as evidenced by what we did in anemia and the other large contracts. We won this year.

Okay got it got it congrats.

Thank you.

Thank you. Our next question comes from the line of Chris Quilty with Quilty space. Please proceed with your question.

Alright. Thank you just a quick quick a couple of housecleaning items.

One with Indonesia contract.

Can you remind us of how you book backlog is that the entire contract or a portion of it.

That's the entire contract.

Leslie will be recognized.

Right and Henry It sounds like I mean, you had $7 million that you booked early on that contract that wasn't expected. If it had landed in 24 you've got.

Brian O'Toole: No, we're not seeing any increase in the cost of these satellites; what you're seeing is the timing of payments against the production contracts, and We have a well-defined, as I outline in my comments, deployment schedule to begin deploying these satellites later this year. So, no change at all to our plan. Alright, and a few others then, just on the interesting comments on broad area scanning, maybe a little more emphasis there than I've heard in the past. Talk about maybe what's changed there, and specifically on broad area scan, maybe on a couple of recent wins, you know, there's others out there with broad area scan, why did you win, and why are you winning, maybe, increasingly, it sounds like.

25% growth rate.

What was it about it that caused that and I don't want get too much into accounting, though what caused that chunk of revenue, we get booked what activity.

And can you give us a sense of what the mix might be between imagery in and ground because there's obviously have different margin potential.

Chris when you take a look at the Indonesian contract really is based on the final terms and conditions and the progress we've already made into kind of getting to that point.

And we will able to.

Recognize we have to recognize the progress to date.

On work, we've been doing that we were able to transfer over to that to that contract and margins are similar across the contract because it's one of these things where we look at is the total total value add to the customer.

Great.

You mentioned that.

Indonesia is looking to kind of build their own organic capability or at least that's what I implied from the language.

Brian O'Toole: We're winning because of our technology and our A.I. capabilities, and, you know, as I said in the past, we've been developing a multisource software-first platform now for almost 10 years. So this strategy is not new.

That mean that there's the possibility of doing a constellation as a service or satellite as a service and if so would that qualify as vendor financing.

When you talk you've mentioned vendor finance, yes, I think it's a good question, Chris I think.

Brian O'Toole: What you're seeing now is this come to fruition with some pretty significant technical capabilities that are now being adopted by the government. We think there's a lot more of this to come, but it reflects our long-term software-first approach, using AI and advanced scalable processing techniques to take raw data and turn it into actionable intelligence. If there's a primary reason you win those, is it the AI? Is it the higher resolution?

Yes, what we're seeing is.

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The.

The demand in the market to accelerate the build out of sovereign.

Capability, what we have offered here.

As a solution model that enables them to <unk>.

Leverage our current and future.

Subscription services off of our constellation and <unk>.

Brian O'Toole: Is it the higher revisit rate? I'm sure they all play a role, but I'm curious if there's kind of one defining difference.

To integrate.

Gen three space ground and software technologies into their long term.

Brian O'Toole: In the case of the SMART program, it's... It is 100% our AI software capabilities. We are not providing software, or I'm sorry, but imagery is part of that contract.

Space.

Platforms. So we'd see this is an exciting development and we are seeing.

Brian O'Toole: It's using imagery from lots of other providers. So it's primarily driven by two aspects. One is our AI processing techniques, and two is our AI infrastructure that is able to cost-effectively process, scale, and deliver results at a massive scale.

Really the interest in this type of model.

Accelerate around the world.

Got you and just a clarification on <unk> should we expect that to be sort of flattish with what was done in 2023 or is it contingent on what the renewal looks like because it sounds like it's mostly yes. The uptick is tied to gen III coming online.

Well I think yes, as I said, we're expecting renewal in the second quarter.

Brian O'Toole: Maybe last for me then, you know, there's long been lots of discussion, in particular in the U.S. government, about the shift to commercial providers. You know, obviously, in most cases, there's been a lot of talk, but it's been much, much slower, I think, than everybody, including maybe yourselves, here, expected. Is there any change in the momentum that you've seen there, or are we kind of still on the trajectory? Maybe we were in the last few quarters of gradual improvement as opposed to, I don't know if I'd say exponential, but maybe a steeper curve. I think you're seeing us continue to grow our footprint, as we outlined in our remarks. But keep in mind, um..., organizations like the Space Force are still in the early days.

On the products on the services, we're providing today and then we do expect.

We further expansion.

As Gen III comes online.

Great.

Henry can you remind us I mean as you take in multi and.

Imagery and other data sources from other partners into the platform how is that accounted for from a revenue and margin impact.

And can you give us a sense of are you seeing growth.

And that sort of multiyear.

<unk> ability.

You know either at or.

Faster or slower than the core imagery.

Well, Chris as Brian said, our car capabilities allow us to take a multi source and we do get that from certain customers thats, usually delivered to us by the customers. So our margins on our AI deliveries our imagery and analytics are are very similar to the inventories I mean integrate incremental contribution margins are.

Brian O'Toole: They are expected to come out with, publish their commercial strategy here shortly. So we're looking toward all that in the long term. But as you know, we've been heavily focused on the international market. As we see significant demand there, the trans, Transitioning that demand into revenue and bookings is evidenced by what we did in Amnesia and the other large contracts we won. Yeah, got it. Got it. Congratulations.

And the 90 plus percent.

Very good.

And also can you give us a sense of.

I think you said the customer base increased by over 50% last year is that the number of customers that you had or.

Brian O'Toole: Thank you. Thank you. Our next question comes from the line of Chris Quilty with Quilty Space. Please proceed with your question, the back.

Revenue contribution from new customers.

So a number of new customer contracts.

And customers.

Alright, very good that Chris that's an important just to.

Chris Quilty: That's the entire contract. That's what we've heard. And Henry, it sounds like, I mean, you had 7 million.

Put stopped that right.

What youre seeing in these announcements of these larger deals is the <unk>.

Henry Dubois: What was it about it that... What caused that? Chris, yeah, when you take a look at the Indonesian contract, it really is based on the final terms and conditions and the progress we had already made in kind of getting to that point. And we were able to recognize we had to recognize the progress to date on work we've been doing that we're able to transfer over to that contract. And margins are similar across the contract because it's one of these things where we look at the total total value added to the customer and that, uh.., that. You've mentioned vendor financing. Yeah, I think that's a good question, Chris. I think. Yes, what we're seeing is the demand in the market to accelerate the build out of sovereign capability. What we have offered here is a solution model that enables them to leverage our current and future subscription services off of our constellation and integrate them. Gen 3 space, ground, and software technologies into their long-term space platform.

The building of a long term anchor customer base. These new these new customers we're winning.

Their initial phases, and we expect to transition into these long term.

Multi year subscription agreements over time, so that's a.

Another strong development coming out of 'twenty three as we expected.

Great Congrats on the quarter and the wind.

Thanks, Chris.

Okay.

Thank you at this time there are no further questions with that this concludes blacks blacker guys fourth quarter 2023 earnings conference call.

Thank you for joining the call today.

Yes.

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Brian O'Toole: So we see this as an exciting development, and we're seeing, um.., really interest in this type of model and Accelerator around the world. Yeah, I think it's mostly because the uptick is tied... Well, I think, yeah, as I said, we're expecting renewal in the second quarter on the products, on the services we're providing today, and then we do expect a further expansion as Gen 3 comes on. Well, Chris, as Brian said, our capabilities allow us to take multi-source, and we do get that from certain customers; that's usually delivered to us by the customer, so our margins on our AI deliveries, our imagery, and analytics are very similar to the imagery. So, I mean, incremental contribution margins are in the 90 plus percent of Oh.

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Brian O'Toole: That's the number of new customer contracts and customers. All right, very good. Yeah, Chris, that's important. But let's stop that, right?

Brian O'Toole: What you're seeing in these announcements of these larger deals is the building of a long-term anchor customer base. These new customers are winning, are in their initial phases, and we expect a transition into these long-term, um, multi-year subscription agreements over time. Another strong development coming out of 23, as we expected.

Yeah.

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Operator: Thanks, Chris. Thank you. At this time, there are no further questions. With that, this concludes Blacksky's fourth quarter 2023 earnings conference call. Thank you for joining the call today. Thank you. Master Keywords 1. Turner Thanks for watching!

Yes.

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