Q2 2024 BlackSky Technology Inc Earnings Call

August 8, 2024

Operator: Good morning, ladies and gentlemen, and welcome to Black Sky Technology's second quarter 2024 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 Technology's second quarter 2024 earnings conference call.

Operator: Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Speaker Change: 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. So to ask a question, you may press star, then 1 on your touchstone phone. To withdraw your question, please press star, then 2. Please note, this conference call is being recorded. I would now like to turn the call over to Aly Bonilla, Blacksky's Vice President of Investor Relations. Please go ahead.

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, this conference call is being recorded. I would now like to turn the call over to Aly Bonilla, Blacksky's Vice President of Investor Relations. Please, go ahead now.

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 know this conference call is being recorded

albanlla vsk: i would now like to turn the call over to albanlla vsk' vice president of investor relations

Aly Bonilla: Good morning, and thank you for joining us. Today, I'm joined by our Chief Executive Officer, Brian OToole, 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 second quarter financial results and outlook for 2024. Following our prepared remarks, we will open the line for your questions. Information on how to access the replay can be found in today's press release.

Aly Bonilla: Good morning, and thank you for joining us. Today, I'm joined by our chief executive officer, Brian OToole, 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 second quarter 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 August 22nd. Information on how to access the replay can be found in today's press release.

Speaker Change: Good morning and thank you for joining us.

Speaker Change: Today, I'm joined by our Chief Executive Officer, Brian OToole, and our Chief Financial Officer, Henry Dubois.

Speaker Change: On today's call, Brian will provide some highlights on the quarter and give a strategic update on the business.

Henry Dubois: Henry will then review the company's second quarter financial results and outlook for 2024.

Speaker Change: Following our prepared remarks, we will open the line for your questions.

Speaker Change: a replay of this conference call will be available from approximately twelve thirty pm eastern time today through august twenty second information to access the replay can be found in today's press release

Aly 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.

Speaker Change: additionally a webcast of this earnings call will be available in the investor relation section of our website a w do black sky 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.

Aly Bonilla: 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 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. Blacksky assumes no obligation to update forward-looking statements, except as may be required by applicable law.

Speaker Change: Before we begin,

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: We encourage you to review our press release, Forum 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.

Aly Bonilla: 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 and downloaded from our Investor Relations website. At this point, I'll turn the call over to Brian OToole.

Speaker Change: black sky assumes no obligation to update forward-looking statements except as may be required by applicable law

Aly Bonilla: 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 OToole.

Speaker Change: 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.

Speaker Change: The reconciliation of these non-GAAP financial measures to their most comparable GAAP measures are included 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 OToole. Brian ?

Brian OToole: Thanks, Aly, and good morning, everyone. Thank you for joining us on today's call. Let's begin with slide three. I'm pleased to report that Blacksky delivered another strong quarter, as we continue to demonstrate revenue growth. The strong operating leverage of our business and positive adjusted EBITDA operation. Our performance in Q2 was primarily driven by the ongoing demand we're seeing for our differentiated Space-Based Intelligence Solutions from new and existing government customers around the world. Let me share some of the quarter's key highlights. First,

Brian OToole: Thanks, Aly, and good morning, everyone. Thank you for joining us on today's call.

Brian OToole: Let's begin with slide 3. I'm pleased to report that Blacksky delivered another strong quarter as we continue to demonstrate revenue growth, the strong operating leverage of our business, and positive adjusted EBITDA operations.

Brian OToole: Our performance in Q2 was primarily driven by the ongoing demand we're seeing for our differentiated space-based intelligence solutions from new and existing government customers around the world.

Speaker Change: Let me share some of the quarter's key highlights.

Brian OToole: We delivered strong, year-over-year revenue growth in Q2 of 29%. Demand for our imagery and analytics services continues to grow, as customers incorporate high-frequency, low-latency Blacksky data into their daily workflows.

Brian OToole: First.

Brian OToole: We delivered strong year-over-year revenue growth in Q2 of 29%.

Speaker Change: Demand for our imagery and analytics services continues to grow as customers incorporate high-frequency, low-latency BlackSky data into their daily workflows.

Brian OToole: as customers incorporate high-frequency, low-latency BlackSky data into their daily workflows.

Brian OToole: We were awarded $40 million in new awards and extensions in the quarter, supporting U.S. and international government agencies, demonstrating strong customer demand for Black Sky's capabilities. Third, we delivered another quarter of positive adjusted EBITDA, driven by our strong revenue growth and operating leverage. This was our third consecutive quarter of positive adjusted EBITDA and four.

Brian OToole: We were awarded $40 million in new awards and extensions in the quarter, demonstrating strong customer demand for Blacksky's capabilities. We delivered another quarter of positive adjusted EBITDA, driven by our strong revenue growth and operating leverage. We are in the final stages of assembly, integration, and test. I will talk more about our Gen 3 constellation and our progress. These highlights demonstrate how we're executing well on our business plan and meeting the growing global demand for space-based intelligence. We continue to deliver strong operating leverage through our high-margin imagery and analytics services, and our ability to deliver strong quarterly performance. I would now like to share some operational highlights from the quarter. Turning to slide four.

Brian OToole: Second.

Brian OToole: We were awarded $40 million in new awards and extensions in the quarter, supporting U.S. and international government agencies.

Brian OToole: demonstrating strong customer demand for BlackSky's capabilities.

Brian OToole: third

Brian OToole: We delivered another quarter of positive adjusted EBITDA.

Brian OToole: driven by our strong revenue growth and operating leverage.

Brian OToole: This was our third consecutive quarter of positive adjusted EBITDA.

Brian OToole: Our next generation, very high resolution Gen 3 satellite is in the final stages of assembly, integration, and test. Our team is actively preparing for launch and commissioning operations, and we are excited that our first 35 centimeter resolution satellite remains on track for a planned launch in late Q4. I will talk more about our Gen 3 constellation and our progress and Ramping Satellite Production at Leostella in a few minutes. These highlights demonstrate how we're executing well on our business plan and meeting the growing global demand for space-based intelligence. We continue to deliver strong operating leverage through our high-margin imagery and analytic services, while we remain focused on responsible cost management.

Brian OToole: and forth

Brian OToole: our next generation very high resolution gent three satellites are in the final stages of assembly integration and test

Brian OToole: Our team is actively preparing for launch and commissioning operations and are excited that our first 35 centimeter resolution satellite

Brian OToole: remains on track for a plan launch in late q four

Brian OToole: I will talk more about our Gen 3 constellation and our progress.

Brian OToole: and Ramping Satellite Production at Leostella in a few minutes.

Brian OToole: ay

Brian OToole: These highlights demonstrate how we're executing well on our business plan and meeting the growing global demand for space-based intelligence.

Brian OToole: We continue to deliver strong operating leverage.

Brian OToole: through our high-margin imagery and analytics services.

Brian OToole: while we remain focused on responsible cost management.

Brian OToole: Our ability to deliver strong quarterly performance has us on the right path toward long-term profitable growth. I would now like to share some operational highlights from the quarter. Turning to slide four.

Brian OToole: our ability to deliver strong quarterly performance has us on the right path toward long-term profitable growth

Brian OToole: During the quarter, we won several new and follow-on contracts across various U.S. agencies, demonstrating the ongoing demand for our imagery and analytic services across the U.S. government. I'm pleased to report that the NRO extended its subscription to our high-frequency Gen 2 imagery services under the electro-optical commercial layer, or EOCL contract. This extension represents continued confidence in Blacksky as a trusted mission partner as the NRO leverages commercial space to support national security needs. We look forward to unlocking future EOCL subscription services as our Gen 3 capacity comes online. During the second quarter, we want to negotiate a new task order with the U.S. Air Force Research Laboratory.

Brian OToole: During the quarter, we won several new and follow-on contracts across various U.S. agencies, demonstrating the ongoing demand for our imagery and analytic services across the U.S. government. I'm pleased to report that the NRO extended its subscription to our high-frequency Gen2 imagery services under the Electro-Optical Commercial Layer, or EOCL, contract. This extension represents continued confidence in Blacksky as a trusted mission partner as the NRO leverages commercial space to support national security needs. We look forward to unlocking future EOCL subscription services as our Gen 3 capacity comes online.

Speaker Change: I would now like to share some operational highlights from the quarter. Turning to slide four.

Speaker Change: During the quarter, we won several new and follow-on contracts across various U.S. agencies.

Brian OToole: Demonstrating the ongoing demand for our imagery and analytic services across the U.S. government.

Brian OToole: I'm pleased to report that the NRO extended its subscription to our high-frequency Gen2 imagery services.

Brian OToole: under the electrooptical commercial layer or eol contract this extension represents continued confidence in black sky as a trusted mission partner as the nl leverages commercial space to support national security needs

Brian OToole: we look forward to unlocking future ecll subscription services as our gend three capacity comes online

Brian OToole: During the second quarter, we want a new task order with the U.S. Air Force Research Laboratory, using multiple government and commercial data sources, can connect with commercial providers to contract for a broad range of data and analytic services in support of various mission needs. This service enables government end users to quickly request and get delivery of unclassified intelligence through a streamlined acquisition process. Blacksky has been successful in reaching new customers through this marketplace who are looking to quickly access our advanced high-frequency imagery and AI-enabled analytic services.

Brian OToole: During the second quarter, we want a new task order with the U.S. Air Force Research Laboratory.

Brian OToole: This new order continues the advanced development of AI-enabled moving target detection service. Under this contract, the government is leveraging our advanced AI capabilities to detect, track, and identify moving targets using multiple government and commercial data sources. We've also won several contracts and options with new customers, acquired through the Global Data Marketplace, or GDMP. For those who may not know, the GDMP is a new online marketplace where U.S. government agencies can connect with commercial providers to contract for a broad range of data and analytic services and support of various mission needs.

Brian OToole: This new order continues advanced development of AI-enabled moving target detection services.

Brian OToole: Under this contract, the government is leveraging our advanced AI capabilities to detect, track, and identify moving targets

Brian OToole: using multiple government and commercial data sources

Brian OToole: We've also won several contracts and options with new customers.

Brian OToole: acquired through the global data marketplace or gd mp

Speaker Change: For those who may not know, the GDMP is a new online marketplace.

Brian OToole: whereby u s government agencies can connect with commercial providers to contract for a broad range of data and analytic services and support a various mission needs

Brian OToole: This service enables government end users to quickly request and get delivery of unclassified intelligence through a streamlined acquisition process. Blacksky has been successful in reaching new customers through this marketplace, who are looking to quickly access our advanced high-frequency imagery and AI-enabled analytic services. The contracts we've won through the GDMP are rapid, quick turnaround services that provide a new channel that puts the power of real-time space-based intelligence in the hands of many more government and users.

Brian OToole: to

Brian OToole: this service enables government and users to quickly request and get delivery of unclassified intelligence through a streamined acquisition process

Blacksky: Blacksky has been successful in reaching new customers through this marketplace.

Blacksky: who are looking to quickly access our advanced high-frequency imagery in AI-enabled analytic services.

Brian OToole: The contracts we've won through the GDMP are rapid, quick turnaround services, providing a new channel that puts the power of real-time space-based intelligence in the hands of many more government end users, although GDMP is still in its early stages. We look forward to winning a growing number of similar contracts over time and using this marketplace as a new sales tool that's part of our land and expand strategy.

Brian OToole: the contracts we've won through the gdmp are rapid quick turnaround services

Brian OToole: providing a new channel that puts the power of real-time space-based intelligence

Operator: Good morning ladies and gentlemen and welcome to Blacksky Technology's second quarter of 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there'll be a question in answer session. So as a question, you may press star then one on your touch tone phone. Do we draw your question? Please press star then two. Please note, this conference call is being recorded.

Brian OToole: in the hands of many more government end-users.

Brian OToole: although gdmp is still in its early stages we look forward to winning a growing number of similar contracts over time and using this marketplace as a new sales tool as's part of our land and expand strategy

Brian OToole: The need for real-time intelligence continues to expand across many international markets due to an ever-changing geopolitical and economic environment. More and more international governments are looking to invest in space-based capabilities in support of their National Security and Economic Growth Initiative. In the second quarter, we announced a $7 million contract renewal with one of our long-term international government customers.

Brian OToole: The need for real-time intelligence continues to expand across many international markets due to an ever-changing geopolitical and economic environment. More and more international governments are looking to invest in space-based capabilities in support of their national security and economic growth initiatives. In the second quarter, we announced a $7 million contract renewal with one of our long-term international government customers.

Brian OToole: turning to slide five

Brian OToole: the need for real-time intelligence continues to expand across many international markets

Aly Bonilla: I would now like to turn the call over to Aly Bonilla, Blacksky's Vice-President of Investor Relations. Please go ahead, Aly. Good morning and thank you for joining us. Today I'm joined by our chief executive officer, Brian OToole, 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 second quarter financial results and outlook for 2024.

Brian OToole: due to an ever-changing geopolitical and economic environment

Brian OToole: More and more international governments are looking to invest in space-based capabilities in support of their national security and economic growth initiatives.

Brian OToole: In the second quarter, we announced a $7 million contract renewal with one of our long-term international government customers.

Brian OToole: This customer will continue to access our high-frequency imaging services, as well as task multiple third-party data sources, through the Black Sky Spectra platform. This offering provides this customer with a single easy-to-use platform to access Black Sky and a constellation of partner satellites to provide comprehensive high-frequency All weather, day and night imaging and analytic services to meet their daily mission requirements. During the quarter, we were also awarded multiple six-figure subscription contracts in support of various international government agencies.

Brian OToole: This customer will continue to access our high-frequency imaging services, as well as task multiple third-party data sources, through the Black Sky Spectra platform. This offering provides this customer with a single, easy-to-use platform to access Black Sky and a constellation of partner satellites to provide comprehensive high-frequency All weather, day and night imaging and analytic services to meet their daily mission requirements. During the quarter, we were also awarded multiple six-figure subscription contracts in support of various international government agencies.

Brian OToole: This customer will continue to access our high-frequency imaging services, as well as task multiple third-party data sources.

Brian OToole: through the black sky spectr a platform

Aly Bonilla: 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 August 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.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.

Brian OToole: This offering provides this customer with a single, easy-to-use platform to access BlackSky and a constellation of partner satellites.

Brian OToole: to provide comprehensive high frequency however wether day and night imaging and analyt services

Brian OToole: to meet their daily mission requirements.

Brian OToole: During the quarter, we were also awarded multiple six-figure subscription contracts in support of various international government agencies.

Brian OToole: We're making great progress expanding our international customer base, as we continue to execute and deliver on our land and expand strategy. In fact, revenues from international customers in the second quarter more than doubled over the prior year, with revenues from international customers now representing 40% of our business.

Brian OToole: We're making great progress expanding our international customer base, as we continue to execute and deliver on our land and expand strategy. In fact, revenues from international customers in the second quarter more than doubled over the prior year quarter, with revenues from international customers now representing 40% of our business.

Brian OToole: we're making great progress expanding our international customer base as we continue to execute and deliver on our land and expand strategy in fact revenues from international customers in the second quarter more than doubled over the prior year quarter

Aly Bonilla: 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, our 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 forum 10K. We encourage you to review our press release, forum 10K, 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 with a market price of our stock.

Brian OToole: with revenues from international customers now representing forty percent of our business

Brian OToole: Building a diverse customer base with high-visibility subscription revenue is a key element of our plan toward long-term, sustainable, profitable growth. I'm pleased that we continue to make progress in many markets around the world and believe we are well positioned to expand these accounts over time when our 35 centimeter Gen 3 constellation comes online. Turning to slide six.

Brian OToole: Building a Diverse Customer Base with High-Visibility Subscription Revenue is a key element of our plan toward long-term, sustainable, profitable growth. I'm pleased that we continue to make progress in many markets around the world and believe we are well positioned to expand these accounts over time when our 35 centimeter Gen 3 constellation comes online.

Brian OToole: Building a diverse customer base with high visibility subscription revenue is a key element of our plan toward long-term sustainable profitable growth.

Brian OToole: i'm pleased that we continue to make progress in many markets around the world

Brian OToole: and believe we are well positioned to expand these accounts over time when our thirty-five centimeter gen three constellation comes online

Brian OToole: I'd now like to share a customer use case that highlights the power of our space-based intelligence capabilities and how our on-demand Spectra platform enables end users to rapidly respond to important events that may impact their security or economic interests. In this case, our dynamic monitoring services, accessible through our Spectra software, played a key role in a counter-drug operation in Latin America. About six weeks ago, an international defense organization detected a suspicious aircraft entering their country's airspace, which they believed was carrying illegal narcotics. After assessing the situation, this customer ultimately decided to take down the aircraft to intercept the illegal transport of drugs, as part of this mission.

Brian OToole: I'd now like to share a customer use case that highlights the power of our space-based intelligence capabilities and how our on-demand Spectre platform enables end-users to rapidly respond to important events that may impact their security or economic interests. In this case, our dynamic monitoring services, accessible through our Spectra software, played a key role in a counter-drug operation in Latin America. About six weeks ago, an international defense organization detected a suspicious aircraft entering their country's airspace, which they believed was carrying illegal narcotics. After assessing the situation, this customer ultimately decided to take down the aircraft to intercept the illegal transport of drugs.

Aly Bonilla: Black sky assumes no obligation to update forward-looking statements, except as may be required by applicable law. In addition, during today's call, we will refer to certain non-gap financial measures, including adjusted EBITDA, adjusted imagery, and software analytical services cost the sales, and cash operating expenses. A reconciliation of these non-gap financial measures to their most comparable gap measures are included in today's accompanying presentation, which can be viewed and downloaded from our Investor Relations website.

Brian OToole: Turning to slide 6, I'd now like to share a customer use case that highlights the power of our space-based intelligence capabilities.

Brian OToole: and how our on-demand Spectre platform enables end-users to rapidly respond to important events that may impact their security or economic interests.

Brian OToole: in this case our dynamic monitoring services accessible through our spectro software

Brian OToole: played a key role in a counter drug operation in Latin America.

Brian OToole: to

Brian OToole: About six weeks ago, an international defense organization detected a suspicious aircraft entering their country's airspace.

Brian OToole: His point, I'll turn the call over to Brian O'Toole. Brian? Thanks, Ellie, and good morning, everyone. Thank you for joining us on today's call. Let's begin with slide three. I'm pleased to report that Black sky delivered another strong quarter as we continue to demonstrate revenue growth, the strong operating leverage of our business, and positive adjusted EBITDA operations. Our performance in Q2 was primarily driven by the ongoing demand we're seeing for our differentiated space-based intelligence solutions from new and existing government customers around the world.

Brian OToole: which they believed was carrying illegal narcotics

Speaker Change: After assessing the situation, this customer ultimately decided to take down the aircraft to intercept the illegal transport of drugs.

Brian OToole: As part of this mission... Their operations team used Blacksky's Spectra self-service platform to task our high-frequency constellation to obtain real-time imagery of the area where the plane was shot down. Because of our real-time service We were able to successfully capture high-resolution imagery of a specific location and deliver timely and actionable intelligence during their active mission. This is just one example of how Blacksky is changing the user experience and putting the power of space-based intelligence directly in the hands of users, through a fully automated AI-enabled Spectra platform, and through subscription-based access to our imagery and analytics service. Government agencies around the world can rapidly respond to and receive space-based intelligence to meet their needs for timely and accurate mission-critical intelligence. Moving on to slide seven.

Brian OToole: Their operations team used Blacksky's Spectra self-service platform to task our high-frequency constellation to obtain real-time imagery of the area where the plane was shot down. Because of our real-time service. We were able to successfully capture high-resolution imagery of a specific location and deliver timely and actionable intelligence during their active mission. This is just one example of how Blacksky is changing the user experience and putting the power of space-based intelligence directly in the hands of users. Through a fully automated AI-enabled spectro platform.

Speaker Change: As part of this mission, their operations team used BlackSky's Spectra self-service platform to task our high-frequency constellation.

Brian OToole: to obtain real-time imagery of the area where the plane was shot down.

Speaker Change: because of our real-time service we were able to successfully capture high resolution imagery of a specific location and deliver timely inactionable intelligence during their active mission

Brian OToole: Let me share some of the quarters key highlights. The analytic services continues to grow as customers incorporate high-frequency low-latency Blacksky data into their daily workflows. Second, we were awarded $40 million in new awards and extensions in the quarter, supporting US and international government agencies demonstrating strong customer demand for Blacksky's capabilities. Third, we delivered another quarter of positive adjusted EBITDA driven by our strong revenue growth and operating leverage. This was our third consecutive quarter of positive adjusted EBITDA.

Brian OToole: this is just one example of how black sky is changing the user experience and putting the power space-based intelligence directly in the hands of users

Brian OToole: through a fully automated AI-enabled Spectra platform.

Brian OToole: Through subscription-based access to our imagery and analytics service, government agencies around the world can rapidly respond to and receive space-based intelligence to meet their needs for timely and accurate mission-critical intelligence. Moving on to slide seven.

Brian OToole: Through subscription-based access to our imagery and analytics services,

Brian OToole: government agencies around the world can rapidly respond and receive space-based intelligence to meet their needs for timely and accurate mission critical intelligence

Brian OToole: I'm pleased to report that the production of our Gen 3 satellite is going to be in the next video, is on track, and the first units are in the final phases of assembly, integration, and test. Our team has already begun mission dress rehearsals and is planning for the launch of our first Gen 3 satellite in Lake Q4. Our Gen III satellites will add very high-resolution, 35-centimeter imagery to our existing Dynamic Hourly Monitoring Constellation.

Brian OToole: We're pleased to report that the production of our Gen 3 satellite is on track, and the first units are in the final phases of assembly, integration, and test. Our team has already begun mission dress rehearsals, and they are planning for the launch of our first Gen 3 satellite in Lake Q4. Our Gen III satellites will add very high-resolution, 35-centimeter imagery to our existing Dynamic Hourly Monitoring Constellation. When combined with our Spectre AI platform, our Gen 3 Constellation will provide our customers with Transformative Space-Based Intelligence that will deliver a next level of speed, performance, and AI-enabled insight for a First Act Advantage.

Brian OToole: moving on to slide seven

Brian OToole: we're pleased to report that the production of our gen three satellites to on track and the first units are in the final phases of assembly integration and test

Brian OToole: Our team has already begun mission dress rehearsals and are planning for the launch of our first Gen 3 satellite in late Q4.

Brian OToole: In fourth, our next generation, very high-resolution Gen 3 satellites, are in the final stages of assembly, integration, and test. Our team is actively preparing for launch and commissioning operations and are excited that our first 35-centimeter resolution satellite remains on track for a plan launch in late Q4. I will talk more about our Gen 3 constellation and our progress in ramping satellite production at Leastella in a few minutes. These highlights demonstrate how we're executing well on our business plan and meeting the growing global demand for space-based intelligence.

Brian OToole: Our Gen III satellites will add very high-resolution, 35-centimeter imagery to our existing Dynamic Hourly Monitoring Constellation.

Brian OToole: When combined with our Spectre AI platform, our Gen 3 Constellation will provide our customers with Transformative Space-Based Intelligence that will deliver a next level of speed, performance, and AI-enabled insights for a First Act Advantage. Our Gen 3 constellation remains on track to unlock our next phase of growth. The improved resolution combined with high frequency imaging and automated AI analytics will enable new timely insights that are not achievable using traditional mapping concepts.

Brian OToole: When combined with our Spectre AI platform,

Brian OToole: our g three constellation will provide our customers with transformative space based intelligence

Brian OToole: that will deliver a next level of speed, performance, and AI-enabled insights for a first-to-act advantage.

Brian OToole: Our Gen 3 constellation remains on track to unlock our next phase of growth. The improved resolution, combined with high frequency imaging and automated AI analytics, will enable new, timely insight. The demand for this capability is evidenced by the significant contracted backlog we've been able to secure over the past few years from major U.S. and international customers through multi-year subscription-based contracts. As we start a deployment cadence of Gen 3 satellites in 2025, We expect to start unlocking our next phase of growth through the delivery of services from this contracted backlog and through the expansion of existing land and expanding contracts.

Brian OToole: Our Gen III constellation remains on track to unlock our next phase of growth.

Brian OToole: The improved resolution combined with high-frequency imaging and automated AI analytics will enable new, timely insights.

Brian OToole: We continue to deliver strong operating leverage through our high-margined imagery and analytic services while we remain focused on responsible cost management. Our ability to deliver strong quarterly performance has us on the right path toward long-term, profitable growth. I would now like to share some operational highlights from the quarter. Turning to slide 4, during the quarter, we won several new and follow-on contracts across various US agencies demonstrating the ongoing demand for our imagery and analytic services across the US government.

Brian OToole: that are not achievable using traditional mapping constellations

Brian OToole: The demand for this capability is evidenced by the significant contracted backlog we've been able to secure over the past few years from major U.S. and international customers through multi-year subscription-based contracts. As we start a deployment cadence of Gen 3 satellites in 2025, We expect to start unlocking our next phase of growth through the delivery of services from this contracted backlog and through the expansion of existing land and expanding contracts. Turning to slide 8.

Brian OToole: The demand for this capability is evidenced by the significant contracted backlog we have been able to secure over the past few years from major U.S. and international customers through multi-year subscription-based contracts.

Brian OToole: As we start a deployment cadence of Gen 3 satellites in 2025,

Brian OToole: We expect to start unlocking our next phase of growth through the delivery of services from this contracted backlog and through the expansion of existing land and expand contracts.

Brian OToole: I'm pleased to report that the NRO extended its subscription to our high-frequency Gen 2 imagery services under the electro-optical commercial layer or EOCL contract. This extension represents continued confidence in Black Sky as a trusted mission partner as the NRO leverages commercial space to support national security needs. We look forward to unlocking future EOCL subscription services as our Gen 3 capacity comes online. During the second quarter, we won a new task order with the US Air Force Research Laboratory.

Brian OToole: As a reminder, our Gen 3 satellites are being produced by Leostella, our satellite manufacturing joint venture. This state-of-the-art manufacturing capability was built from the ground up to support agile and rapid small satellite production. Leostell has an exceptional track record of producing highly reliable, high-performing small satellites, as evidenced by the deployment of our Gen 2 constellation over the past several years. The Gen 2 constellation continues to perform well and is meeting or exceeding all of our performance and expected mission life objectives.

Henry Dubois: As a reminder, our Gen 3 satellites are being produced by Leostella, our satellite manufacturing joint venture. Leostella has an exceptional track record of producing highly reliable, high-performance small satellites, as evidenced by the deployment of our Gen 2 constellation over the past several years. The Gen 2 Constellation continues to perform well and is meeting or exceeding all of our performance and expected mission life objectives. This level of performance and on-orbit heritage has been incorporated into our Gen 3 design and satellite production line.

Brian OToole: turning to slide eight

Brian OToole: As a reminder, our Gen 3 satellites are being produced by Leostella, our satellite manufacturing joint venture.

Brian OToole: this state of the art manufacturing capability was built from the ground up to support agile and rapid small satellite production

Brian OToole: Leostell has an exceptional track record of producing highly reliable, high-performing small satellites.

Brian OToole: as evidenced by the deployment of our genttwo constellation over the past several years

Brian OToole: The Gen 2 Constellation continues to perform well and is meeting or exceeding all of our performance and expected mission life objectives.

Brian OToole: This new order continues advanced development of AI-enabled moving target detection services. Under this contract, the government is leveraging our advanced AI capabilities to detect, track, and identify moving targets using multiple government and commercial data sources. We've also won several contracts and options with new customers, acquired through the global data marketplace or GDMP. For those who may not know, the GDMP is a new online marketplace where by US government agencies can connect with commercial providers to contract for a broad range of data in analytic services and support a various mission needs.

Brian OToole: This level of performance and on-orbit heritage has been incorporated into our Gen 3 design and satellite production line. In addition to the production of our first Gen 3 satellite, Leostell has been ramping up supply chain and production operations to support a sustained rate of production of these satellites to meet our Constellation Deployment objective. The fact that we are beginning to launch our next generation of satellites in less than two years from the completion of our Gen 2 constellation.

Brian OToole: This level of performance and on-orbit heritage

Brian OToole: has been incorporated into our threat genen three design and satellite production line in addition to the production of our first gen three satellites

Henry Dubois: In addition to the production of our first Gen 3 satellite, Leostel has been ramping up supply chain and production operations to support a sustained rate of production of these satellites to meet our Constellation Deployment objective. The fact that we are beginning to launch our next generation of satellites in less than two years from the completion of our Gen 2 constellation shows how Black Sky is changing the industry by demonstrating the agility and speed of a new space architecture with a real-time and fully automated AI-enabled software platform.

Brian OToole: Leosfella has been ramping up supply chain and production operations to support a sustained rate of production of these satellites.

Brian OToole: to meet our Constellation deployment objectives.

Brian OToole: The fact that we are beginning to launch our next generation of satellites in less than two years from the completion of our Gen 2 constellation

Brian OToole: Demonstrates how Black Sky is changing the industry by finding the agility and speed of a new space architecture with a real-time and fully automated AI-enabled software platform. Leah Stella further enhances this competitive advantage through vertical integration, that enables us to bring responsive solutions to market at disruptive speed and economics, enabling customers to accelerate their space based intelligence initiatives. In summary, we're pleased that our Gen 3 satellites remain on track and that Q2 was another strong quarter, highlighted by strong bookings, continued revenue growth, operating leverage, and positive adjusted EBITDA operations. I'm now turning it over to Henry to go through the quarterly financial results. Henry. Thank you, Brian.

Brian OToole: Demonstrates how Blacksky is changing the industry.

Brian OToole: By combining the agility and speed of a new space architecture with a real-time and fully automated AI-enabled software platform.

Henry Dubois: Leostella further enhances this competitive advantage through vertical integration that enables us to bring responsive solutions to market at disruptive speed and economics, enabling customers to accelerate their space-based intelligence initiatives. In summary, we're pleased that our Gen 3 satellites remain on track and that Q2 was another strong quarter, highlighted by strong bookings. Continued Revenue Growth, Operating Leverage, and Positive Adjusted EBITDA Operations. I'll now turn it over to Henry to go through the quarterly financial results. Henry? Thank you, Brian.

Brian OToole: This service enables government and users to quickly request and get delivery of unclassified intelligence through a streamlined acquisition process. Blacksky has been successful in reaching new customers through this marketplace who are looking to quickly access our advanced high frequency imagery and AI-enabled analytic services. The contracts we've won through the GDMP are rapid, quick turnaround services, providing a new channel that puts the power of real-time space-based intelligence in the hands of many more government and users.

Brian OToole: leisstella further enhances this competitive advantage

Brian OToole: through vertical integration.

Brian OToole: that enables us to bring responsive solutions to market at disruptive speed and economics.

Brian OToole: enabling customers to accelerate their space-based intelligence initiatives

Speaker Change: In summary, we're pleased that our Gen 3 satellites remain on track and that Q2 is another strong quarter, highlighted by strong bookings, continued revenue growth, operating leverage, and positive adjusted EBITDA operations.

Henry Dubois: i'll now turn it over to henry to go through the quarterly financial results henry

Henry Dubois: Thank you, Brian, and good morning, everyone. I'm pleased with the execution we've made across many aspects of our business and with our second quarter financial results. Beginning with slide 10, total revenue for the second quarter of 2024 was $24.9 million, an increase of $5.6 million, or 29% over the prior year quarter. Imagery and analytics revenue grew to $17.5 million, an increase of $2.2 million, or 14% over the prior year period. The year-over-year increase was primarily driven by incremental customer orders for Blacksky's imagery services.

Brian OToole: Although GDMP is still in its early stages, we look forward to winning a growing number of similar contracts over time and using this marketplace as a new sales tool as part of our land and expand strategy. Turning to slide five, the need for real-time intelligence continues to expand across many international markets due to an ever-changing geopolitical and economic environment. More and more international governments are looking to invest in space-based capabilities in support of their national security and economic growth initiatives.

Henry Dubois: thank you brian and good morning everyone i'm pleased with the execution we've made across many aspects of our business and with our second quarter financial results

Henry Dubois: Professional and Engineering Services revenue grew to $7.4 million in the second quarter of 2024 compared to $4 million in the prior year quarter. The 87% year-over-year increase was primarily driven by the step-up in the execution of multiple major international contracts we won last year. Keep in mind that revenues recognized from these types of contracts, which are largely milestone-based, may have quarter-over-quarter revenue variability depending on a project's estimated cost and percentage of completion.

Henry Dubois: Beginning with slide 10, total revenue for the second quarter of 2024 was $24.9 million, an increase of $5.6 million, or 29% over the prior year quarter.

Speaker Change: Imagery and analytics revenue grew to $17.5 million, an increase of $2.2 million, or 14% over the prior year period.

Speaker Change: the year-over-year increase was primarily driven by incremental customer orders for black sky's imagery services

Brian OToole: In the second quarter, we announced a $7 million contract renewal with one of our long-term international government customers. This customer will continue to access our high-frequency imaging services as well as task multiple third-party data sources through the Blacksky Spectra platform. This offering provides this customer with a single, easy-to-use platform to access Blacksky and a constellation of partner satellites to provide comprehensive, high-frequency, all-weather, day-in-night imaging and analytic services to meet their daily mission requirements.

Speaker Change: professional and engineering services revenue grew to seven point four million dollars in the second quarter of two thousand and twenty four compared to four million dollars in the prior year quarter

Speaker Change: The 87% year-over-year increase was primarily driven by the step-up in the execution of multiple major international contracts we won last year. Keep in mind.

Henry Dubois: Revenues recognized from these types of contracts, which are largely milestone-based, may have quarter-over-quarter revenue variability depending on a project's estimated cost and percentage of completion. Turning to cost of sales, we continue to demonstrate strong operating leverage in our imagery and analytics business, as shown on slide 11. For the first half of 2024, imagery and analytics cost of sales, excluding stock-based compensation, depreciation, and amortization expenses, was $6.8 million, compared to $7 million in the same period last year. The $200,000 year-over-year decrease was primarily driven by cost savings in our satellite and software operations.

Speaker Change: revenues recognized from these types of contracts which are largely milestone days may have quarter-over-quarter revenue variability depending on a project's estimated costs and percentage of completion

Henry Dubois: Turning to cost of sales, we continue to demonstrate strong operating leverage in our imagery and analytics business, as shown on slide 11. For the first half of 2024, imagery and analytics cost of sales, excluding stock-based compensation, depreciation, and amortization expenses, was $6.8 million, compared to $7 million in the same period last year. The $200,000 year-over-year decrease was primarily driven by cost savings in our satellite and software to operate.

Speaker Change: Turning to cost of sales, we continue to demonstrate strong operating leverage in our imagery and analytics business as shown on slide 11.

Brian OToole: During the quarter, we were also awarded multiple six-figure subscription contracts in support of various international government agencies. We're making great progress expanding our international customer base as we continue to execute and deliver on our land and expand strategy. In fact, revenues from international customers in the second quarter more than doubled over the prior year quarter. With revenues from international customers now representing 40 percent of our business. Billing at averse customer base with high visibility subscription revenue is a key element of our plan toward long-term, sustainable, profitable growth.

Speaker Change: For the first half of 2024, imagery and analytics cost of sales, excluding stock-based compensation, depreciation, and amortization expenses, was $6.8 million, compared to $7 million at the same period last year.

Speaker Change: the two hundred thousand dollars year-over-year decrease was primarily driven by cost savings in our satellite andsoftware operations

Henry Dubois: With imagery and analytics revenues for the first half of 2024 increasing nearly 14% and the respective cost of sales decreasing 3% over the prior year period, we continue to demonstrate how incremental high-margin revenues flow directly to the bottom line, which is a key driver of our long-term profitable growth. Let's move to slide 12 and talk about cash operating expenses, which excludes stock-based compensation and depreciation and amortization expenses, as we believe these non-GAAP financial measures enable us to better manage our expenses without having non-cash items obscuring the underlying performance.

Speaker Change: With imagery and analytics revenues for the first half of 2024 increasing nearly 14 percent and the respective cost of sales decreasing 3 percent over the prior year period,

Speaker Change: we continue to demonstrate how incremental the high-margin revenues flow directly to the bottom line which is a key driver to our long-term profitable growth

Brian OToole: I'm pleased that we continue to make progress in many markets around the world and believe we are well positioned to expand these accounts over time when our 35 centimeter Gen 3 constellation comes online. Turning to slide 6, I'd now like to share a customer use case that highlights the power of our space-based intelligence capabilities and how our on-demand spectrum platform enables end users to rapidly respond to important events that may impact their security or economic interests.

Speaker Change: Let's move to slide 12 and talk about cash operating expenses, which excludes stock-based compensation and depreciation and amortization expenses, as we believe these non-GAAP financial measures enable us to better manage our expenses without having non-cash items obscuring the underlying performance.

Henry Dubois: For the second quarter of 2024, cash operating expenses were $16.3 million, a $500,000 improvement compared to our prior year quarter. This year-over-year improvement was primarily driven by ongoing reductions in general corporate costs, which more than offset investments we've been making in our go-to-market initiatives. Over the last four quarters, we've reported year-over-year reductions in cash operating expenses, which further demonstrates our laser focus on managing costs responsibly and our success in running an efficient business model. Turn to slide 13.

Speaker Change: For the second quarter of 2024, cash operating expenses were $16.3 million, a $500,000 improvement compared to our prior year quarter.

Brian OToole: In this case, our dynamic monitoring services accessible through our spectrosoftware played a key role in a counter-drug operation in Latin America. About six weeks ago, an international defense organization detected a suspicious aircraft entering their country's airspace, which they believed was carrying illegal narcotics. After assessing the situation, this customer ultimately decided to take down the aircraft to intercept the illegal transport of drugs. As part of this mission, their operations team used BlackSky Spectra's self-service platform to task our high-frequency constellation to obtain real-time imagery of the area where the plane was shot down.

Speaker Change: This year-over-year improvement was primarily driven by ongoing reductions in general corporate costs, which more than offset investments we've been making in our go-to-market initiatives.

Speaker Change: over the last four quarters we've reported year-over-year reductions in cash operating expenses which further demonstrates our laser focus on managing costs responsibly and our success in running an efficient business model

Henry Dubois: Our adjusted EBITDA for the second quarter of 2024 was $2.1 million, an increase of $7.9 million compared to the prior year period. Not only was this a strong performance over the prior year, but we're pleased that we delivered our third consecutive quarter of positive adjusted EBITDA. The year-over-year improvement in adjusted EBITDA that we continue to realize on a quarterly basis is primarily driven by increased revenues from new and expanded customer contracts.

Speaker Change: Turning to slide 13.

Speaker Change: our adjusted ebitda for the second quarter of two thousand and twenty four was two point one million dollars

Henry Dubois: This was an increase of $7.9 million compared to the prior year period. Not only was this a strong performance over the prior year, but we're pleased that we delivered our third consecutive quarter of positive adjusted EBITDA. The year-over-year improvement in adjusted EBITDA that we continue to realize on a quarterly basis is primarily driven by increased revenues from new and expanded customer contracts, improved margin performance, especially in our core imagery and analytics business, and cost savings and efficiencies in our cash operating system.

Speaker Change: This was an increase of $7.9 million compared to the prior year period.

Speaker Change: Not only was this a strong performance over the prior year, but we're pleased that we delivered our third consecutive quarter a positive adjusted EBITDA.

Speaker Change: The year-over-year improvement in adjusted EBITDA that we continue to realize on a quarterly basis is primarily driven by increased revenues from new and expanded customer contracts.

Brian OToole: Because of our real-time service, we were able to successfully capture high resolution imagery of a specific location and deliver timely and actionable intelligence during their active mission. This is just one example of how BlackSky is changing the user experience and putting the power of space-based intelligence directly in the hands of users through a fully automated AI-enabled spectro-platform. Through subscription-based access to our imagery and analytic services, government agencies around the world can rapidly respond and receive space-based intelligence to meet their needs for timely and accurate mission-critical intelligence.

Henry Dubois: Improved margin performance, especially in our core imagery and analytics business and cost savings and efficiencies in our cash operating system. Moving on to our balance sheet, we ended the second quarter of 2024 with $42.3 million of cash, restricted cash, and short-term investments, which included $20 million we received in the quarter from a commercial bank loan. As of the end of June, we had over $28 million in contract assets, which we expect to receive in payments over the next 12 months as interim milestones on a few major customer contracts are met and expected to be billed.

Speaker Change: Improved margin performance, especially in our core imagery and analytics business, and cost savings and efficiencies in our cash operating expenses.

Henry Dubois: Moving on to our balance sheet, we ended the second quarter of 2024 with $42.3 million of cash, restricted cash, and short-term investments, which included $20 million we received in the quarter from a commercial bank loan. As of the end of June, we had over $28 million in contract assets, which we expect to receive in payments over the next 12 months as interim milestones on a few major customer contracts are met and expected to be built.

Speaker Change: Moving on to our balance sheet, we ended the second quarter of 2024 with $42.3 million of cash, restricted cash, and short-term investments, which included $20 million we received in the quarter from a commercial bank line.

Speaker Change: As of the end of June , we had over $28 million in contract assets, which we expect to receive in payments over the next 12 months as interim milestones on a few major customer contracts are met and expected to be billed.

Henry Dubois: Together with the vendor financing we have in place for our upcoming Gen 3 launches and the adjusted EBITDA improvements we expect to continue delivering, we believe we have sufficient liquidity for the foreseeable future. Now, let's move on to our 2024 outlook, as shown on slide 14. We're pleased with our first half operating results and are anticipating a strong second half of the year. As a result, we are maintaining our full year 2024 guidance of revenue between $102 to $118 million, adjusted EBITDA of between $8 to $16 million, and capital expenditures of between $55 and $65 million. In summary, we're pleased with our financial performance in the second quarter and the progress we've made across many aspects of our business. With that, I'll turn it back over to Brian for some closing remarks. Brian?

Speaker Change: together with the vendor financing we had in place for our upcoming deent three launches in the adjusted ebitda improvements we expect to continue delivering we believe we have sufficient liquidity for the foreseeable future

Brian OToole: Moving on to slide seven, we're pleased to report that the production of our Gen 3 satellites is on track and the first units are in the final phases of assembly, integration, and test. Our team has already begun mission-dress rehearsals and are planning for the launch of our Gen 3 satellites. We'll add very high resolution 35 centimeter imagery to our existing dynamic hourly monitoring constellation. When combined with our spectro-AI platform, our Gen 3 constellation will provide our customers with transformative space-based intelligence that will deliver a next level of speed, performance, and AI-enabled insights for a first-to-act advantage.

Speaker Change: now let's move on to our two thousand and twenty-four outlook at shownon slide fourteen

Speaker Change: We're pleased with our first half operating results and are anticipating a strong second half of the year.

Speaker Change: As a result, we are maintaining our full year 2024 guidance of revenue between $102 to $118 million, adjusted EBITDA of between $8 to $16 million, and capital expenditures of between $55 and $65 million.

Speaker Change: In summary, we're pleased with our financial performance in the second quarter and the progress we've made across many aspects of our business.

Speaker Change: to

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

Brian OToole: Mr. Henry, in closing, we're pleased with the strong second quarter performance and the momentum we are carrying into the second half of the year. We're continuing to see growing demand for BlackSky's differentiated space-based intelligence solution to deliver the transformative solutions our customers are demanding, using the power of our very high-resolution imagery, combined with high-frequency monitoring, and Automated AI Analytics to help some of the most important organizations in the world, as we begin to introduce Gen 3 capabilities later this year. This concludes our remarks for the call, and we'll now take your questions.

Brian OToole: Mr. Henry, in closing, we're pleased with the strong second quarter performance and the momentum we are carrying into the second half of the year. We're continuing to see growing demand for BlackSky's differentiated space-based intelligence solution. Our Gen 3 constellation remains on track to deliver the transformative solutions our customers are demanding. Using the power of our very high-resolution imagery, combined with high-frequency monitoring, and AI Analytics. We built and continue to grow a strong customer base, some of the most important organizations in the world, and are getting ready to unlock our next phase of growth as we begin to introduce Gen 3 capabilities later this year. This concludes our remarks for the call, and we'll now take your questions.

Brian OToole: Our Gen 3 constellation remains on track to unlock our next phase of growth. The improved resolution combined with high frequency imaging and automated AI analytics will enable new timely insights that are not achievable using traditional mapping constellations. As we start a deployment cadence of Gen 3 satellites in 2025, we expect to start unlocking our next phase of growth through the delivery of services from this contracted backlog and through the expansion of existing land and expand contracts.

Brian OToole: Thank you, Henry. In closing, we're pleased with the strong second quarter performance and the momentum we are carrying into the second half of the year.

Speaker Change: We're continuing to see growing demand for BlackSky's differentiated space-based intelligence solutions.

Speaker Change: Our Gen 3 Constellation remains on track to deliver the transformative solutions our customers are demanding.

Speaker Change: Using the power of our very high-resolution imagery.

Speaker Change: combined with high frequency monitoring

Speaker Change: and Automated AI Analytics.

Speaker Change: We built and continue to grow a strong customer base with some of the most important organizations in the world and are getting ready to unlock our next phase of growth as we begin to introduce Gen 3 capabilities later this year.

Speaker Change: This concludes our remarks for the call and we'll now take your questions.

Brian OToole: Turning to slide 8. As a reminder, our Gen 3 satellites are being produced by Lea Stella, our satellite manufacturing joint venture. This state-of-the-art manufacturing capability was built from the ground up to support agile and rapid small satellite production. Lea Stella has an exceptional track record of producing highly reliable, high-performing small satellites as evidenced by the deployment of our Gen 2 constellation over the past several years. The Gen 2 constellation continues to perform well and is meeting or exceeding all of our performance and expected mission life objectives.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star, then 2. At this time, we'll pause momentarily to assemble a roster.

Speaker Change: we will now begin to question-and-answer session to ask a question you may press are then one on your touchstone phone

Speaker Change: if you're using a speaker phone please pick up your hands it before pressing the keys

Speaker Change: To withdraw your question, please press star then 2.

Speaker Change: At this time, we'll pause momentarily to assemble a roster.

Greg Burns: Your first question comes from the line of Greg Burns with Tidoti & Co.

Speaker Change: your first question comes from the line of ragburns withichedodian co please go ahead

Henry Dubois: Morning. I'm just hoping to get a little bit more color on the imagery and software growth that you saw this quarter. It was down a little bit sequentially, so I just wanted to get a better understanding of... and maybe how much of that revenue is taken or pay versus... a more variable consumption base like why would it decline sequentially? And then how should we think about maybe the cadence of growth? For the balance of the remainder of the year. Thank you.

Greg Burns: Morning. I'm just hoping to get a little bit more color on the imagery and software growth that you saw this quarter. It was down a little bit sequentially, so I just wanted to get a better understanding of... and maybe how much that revenue is take or pay versus. More variable, consumption-based, like why would it be? decline sequentially? And then how should we think about, perhaps, the cadence of growth? For the balance of the remainder of the year. Thank you.

Speaker Change: Morning.

Speaker Change: I'm just hoping to get a little bit more color on the imagery and software growth that you saw this quarter. It was down a little bit sequentially, so I just wanted to get a better understanding of...

Brian OToole: This level of performance and on-orbit heritage has been incorporated into our Gen 3 design and satellite production line. In addition to the production of our first Gen 3 satellites, Lea Stella has been ramping up supply chain and production operations to support a sustained rate of production of these satellites to meet our constellation deployment objectives. The fact that we are beginning to launch our next generation of satellites in less than two years from the completion of our Gen 2 constellation demonstrates how black sky is changing the industry by finding the agility and speed of a new space architecture with a real time and fully automated AI-enabled software platform.

Speaker Change: You know maybe how much that revenue is take or pay versus more variable consumption base like why would it

Speaker Change: decline sequentially and then how should we think about that maybe the cadence of growth

Speaker Change: over the balance of the remainder of the year. Thank you.

Henry Dubois: Yeah, thanks, Greg, for your question. I think if you look back historically, you've seen a step up in imagery and analytics revenues, typically in the second half of the year. That's primarily been driven by the timing of budget cycles and renewals, and so that's why you're still seeing the strong year-over-year growth, but some of the flatter performance in the first couple quarters. I will note that another key aspect of this is that we continue to add more customers; they tend to start out with smaller pilot projects and grow over time.

Brian OToole: Yeah, thanks, Greg, for your question. I think if you look back historically, you've seen a step up in imagery and analytics revenues, typically in the second half of the year. That's primarily been driven by the timing of budget cycles and renewals, and so that's why you're still seeing the strong year-over-year growth but some of the flatter performance in the first couple quarters.

Speaker Change: Yeah, thanks, Greg, for your question.

Speaker Change: I think if you look back historically...

Speaker Change: you've seen a step up in imagering analytics revenues typically in the second half of the year that's primarily

Speaker Change: been driven by

Speaker Change: The timing of budget cycles and renewals and so that's why you're still seeing the strong year-over-year growth but some of the some of the flatter performance in the in the first couple quarters. I will note that

Brian OToole: Lea Stella further enhances this competitive advantage through vertical integration that enables us to bring responsive solutions to market at disruptive speed and economics, enabling customers to accelerate their space-based intelligence initiatives. In summary, we are pleased that our Gen 3 satellites remain on track and that Q2 was another strong quarter, highlighted by strong bookings, continued revenue growth, operating leverage and positive adjusted even our operations.

Brian OToole: I will note that another key aspect of this is we continue to add more customers; they tend to start out with smaller pilot projects and grow over time. So that's historically how we performed, and we're, As you can see, year-over-year, we're continuing to grow that line, and that's what's driving our... High Margin Business and driving the EBITDA performance right through the bottom line.

Speaker Change: another key aspect of this as we continue to add

Speaker Change: more customers they tend to start out with smaller pilot projects and grow over time so that's historically how we performed and

Henry Dubois: So that's historically how we performed, and we're, As you can see, year over year, we're continuing to grow that line, and that's what's driving our... High Margin business and driving the EBITDA performance right through the bottom line.

Speaker Change: As you can see, year over year, we're continuing to grow that line, and that's what's driving our high-margin

Henry Dubois: I will now turn it over to Henry to go through the quarterly financial results. Henry? Thank you, Brian, and good morning everyone. I am pleased with the execution we have made across many aspects of our business and with our second quarter financial results. Beginning with slide 10, total revenue for the second quarter of 2024 was $24.9 million in increase of $5.6 million or 29% over the prior year quarter. Imadrian Analytics Revenue grew to $17.5 million in increase of $2.2 million or 14% over the prior year period.

Speaker Change: Business, and driving the EBITDA performance right through the bottom line.

Brian OToole: Um, and then with the GDMP vehicle that you mentioned, is that? Incremental. I always thought that your contracts with the NRO were kind of an umbrella for the government, for Government Agencies to procure through that. Is this? Separate and incremental or part of that, an extension of that? How does that work?

Brian OToole: Um, and then with the GDMP vehicle that you mentioned, is that? incremental. I always thought that your contracts with the NRO were kind of an umbrella for the government, for Government Agencies to procure through that. Is this? separate and incremental or part of that, an extension of that? How does that work?

Speaker Change: and then with the

Speaker Change: the gdmp vehicle that you mentioned is that incremental i i always thought that

Your contracts with the NRO were kind of an umbrella for the government and...

Speaker Change: For government agencies to procure through that, is this separate and incremental or part of that, an extension of that? How does that work?

Brian OToole: Yeah, it is separate and incremental. The one thing to note is that the EOCL contract is for imagery.

Brian OToole: Yeah, it is separate and incremental. The one thing to note is the EOCL contract is for imagery, and the marketplace can be for a broad set of services, which include analytics. Delivery of capability to a whole new set of customers. So, as I mentioned in my remarks, this is in the early days.

Henry Dubois: The year-over-year increase was primarily driven by incremental customer orders for Blacksky's imagery services. Professional and engineering services revenue grew to $7.4 million in the second quarter of 2024 compared to $4 million in the prior year quarter. The 87% year-over-year increase was primarily driven by the step-up in the execution of multiple major international contracts we won last year. Keep in mind, revenues recognized from these types of contracts which are largely milestone-based may have quarter-over-quarter revenue variability depending on a project's estimated cost and percentage of completion.

Speaker Change: Yeah, it is separate and incremental.

Speaker Change: The one thing to note is the EOCL contract is for imagery. The marketplace can be for a broad set of services which include analytics.

Brian OToole: The marketplace can be for a broad set of services, which include analytics and other services. So it's a new sales channel for us. We're excited that this marketplace is providing a fast and flexible platform to streamline delivery of capability to a whole new set of customers. So, as I mentioned in my remarks, this is in the early days of this type of marketplace. So we're excited about the potential where that can go.

Brian OToole: and other services. So it's a new sales channel for us. We're excited that this marketplace is providing a fast and flexible.

Speaker Change: platform to streamline

Speaker Change: delivery of capability to a whole new set of customers. So as I mentioned in my remarks, this is in the early days.

Brian OToole: of this type of marketplace so we're excited in the potential where that can go

Henry Dubois: Turning to cost of sales, we continue to demonstrate strong operating leverage in our Imadrian Analytics business as shown on slide 11. For the first half of 2024, Imadrian Analytics cost of sales, excluding stock-based compensation, depreciation, and amortization expenses, was $6.8 million compared to $7 million the same period last year. The $200,000 year-over-year decrease was primarily driven by cost savings in our satellite and software operations. With Imadrian Analytics revenues for the first half of 2024 increasing nearly 14% in the respective cost of sales decreasing 3% over the prior year period, we continue to demonstrate how incremental high margin revenues flow directly to the bottom line which is a key driver to our long-term profitable growth.

Brian OToole: All right, and then when we're thinking about the launch cadence for the Gen 3s, is it going to be one satellite that's launched, or is it going to be multiple satellites launched at one time? And can you just remind us about the, you know, the cadence to getting the satellite tested and operational. What's the time frame between launch and maybe it's starting to generate revenue? Yeah, the first.

Speaker Change: All right, and then when we're thinking about the launch cadence for the Gen 3s,

Speaker Change: Is it going to be one satellite that's launched, or is it going to be multiple satellites launched at one time? And can you just remind us about the, you know...

Speaker Change: cadence to getting the

Speaker Change: The satellite tested and operational. What's the time frame between launch and maybe it's starting to generate revenue?

Brian OToole: Yeah, the first few satellites will go up on separate launches. Typically, for a new satellite like this, the commissioning time is about 60 days. As we get through that, then we'll move into a steady cadence of launches from there. As a reminder, If you look at our performance in deploying our Gen 2 constellations... You know, after we got the first couple up there and operational. We were doing multiple satellites per launch, and we reduced the commissioning time down to under 24 hours to bring those satellites into operation. So we're anticipating the same type of outcome. Cadence, and Commissioning Performance with Gen 3s

Brian OToole: of launches from there as a reminder if you look at our performance and deploying our gend two constellation after we got the first couple up there an operational

Henry Dubois: Let's move to slide 12 and talk about cash operating expenses which excludes stock-based compensation and depreciation and amortization expenses as we believe these non-gap financial measures enable us to better manage our expenses without having non-cash items obscuring the underlying performance. For the second quarter of 2024, cash operating expenses were $16.3 million, a $500,000 improvement compared to our prior year quarter. This year-over-year improvement was primarily driven by ongoing reductions in general corporate costs which more than offset investments we've been making in our go-to-market initiatives.

Brian OToole: We were doing multiple satellites per launch, and we reduced the commissioning time down to

Brian OToole: to under twenty-four hours to bring no satellites and operations so we're participating in the same type of cadence and commissioning performance with jemriies

Edison Yu: Your next question comes from the line of Edison Yu with Deutsche Bank. Please go ahead.

Edison Yu: Thank you.

Speaker Change: Your next question comes from the line of Edison Yu with Deutsche Bank. Please go ahead.

Brian OToole: Hey, good morning. Thanks for taking our questions. First of all, I just wanted to follow up on the third gen. Do you have any sense of how much of the backlog is tied to any sort of capabilities on gen three? I think the backlog is 200 million plus, at least as of the last quarter. Thank you.

Speaker Change: good morning thanks for taking your questions

Brian OToole: First of all, I just wanted to follow up on the 3rd Gen. Do you have any sense of how much of the backlog is tied to any sort of capabilities on Gen 3? I think the backlog is 200 plus million, at least as of the last quarter.

Henry Dubois: Over the last four quarters we've reported year-over-year reductions in cash operating expenses which further demonstrates our laser focus on managing costs responsibly and our success in running an efficient business model. Turning to slide 13, our adjusted EBITDA for the second quarter of 2024 was $2.1 million. This was an increase of $7.9 million compared to the prior year period. Not only was this a strong performance over the prior year, but we're pleased that we delivered our third consecutive quarter of positive adjusted EBITDA.

Brian OToole: Edison, thanks for your question. Yeah, a significant amount of that backlog is tied to Gen 3. Also, as a reminder. You know, our EOCL contract, which is a $1 billion, ten-year contract, is heavily backloaded on Gen 3. Services as well. But also, you know, we continue to close subscription deals and, you know, actually just renewed another year under EOCL for our Gen 2 capability. So, we're excited about what Gen 3 will unlock, but we're also on a nice trajectory and continuing our growth through Gen 2.

Brian OToole: Edison, thanks for your question. Yeah, a significant amount of that backlog is tied to... It's tied to Gen 3. Also, as a reminder. You know, our EOCL contract, which is a $1 billion, ten-year contract, is heavily backloaded on Gen 3 services, as well. But also, you know, we continue to close subscription deals and, you know, actually just renewed another year under EOCL of our Gen 2 capability. So, we're excited about what Gen 3 will unlock, but we're also on a nice trajectory and continuing our growth through Gen 2.

Brian OToole: Edison, thanks for your question. Yeah, a significant amount of that backlog is tied to

Brian OToole: It's tied to Gen 3. Also, as a reminder, you know, our EOCL contract, which is a $1 billion ten-year contract, is heavily backloaded on Gen 3.

Henry Dubois: The year-over-year improvement in adjusted EBITDA that we continue to realize on a quarterly basis is primarily driven by increased revenues from new and expanded customer contracts, improved margin performance especially in our core imagery and analytics business, in cost savings and efficiencies in our cash operating. Expenses. Moving on to our balance sheet, we ended the second quarter of 2024 with $42.3 million of cash, restricted cash and short term investments, which included $20 million we received in the quarter from a commercial bank line.

Brian OToole: services as well, but also, you know, we continue to

Brian OToole: closed subscription deals and you know actually just renewed another year under EOCL of our Gen 2 capability so

Brian OToole: we're excited about what jen three will unlock but we're also on a nice trajectory and continuing our growth through genttwo

Brian OToole: Understandable. Any updates on when you think the NGA and the LUNO-A could get awarded?

Speaker Change: Understood. Any updates on when you think the NGA, the LUNO-A could get awarded?

Henry Dubois: As of the end of June, we had over $28 million in contract assets, which we expect to receive in payments over the next 12 months as interim milestones on a few major customer contracts are met and expected to be built. Together with the vendor financing, we have in place for our upcoming Gen 3 launches in the adjusted EBITDA improvements we expect to continue delivering. We believe we have sufficient liquidity for the foreseeable future.

Brian OToole: We're carefully watching that, Edison. Of course, as you know, we feel we're well positioned for that given our performance under the predecessor contract EIM. So we're anxiously waiting, but I don't have a specific government estimate of when we can anticipate those awards. Um, it'll be sometime later this year.

Brian OToole: We're carefully watching that, Edison. Of course, as you know, we feel we're well positioned for that given our performance under the predecessor contract, EIM. So we're anxiously waiting, but I don't have a specific time frame of when we can anticipate those awards. It'll be sometime later this year.

Brian OToole: We're carefully watching that, Edison. Of course, as you know, we feel we're well positioned for that given our performance.

Brian OToole: Under the predecessor contract EIM. So we're anxiously waiting, but I don't have a specific...

Speaker Change: timeline from the government of when we can anticipate those awards. We expect...

Henry Dubois: Now let's move on to our 2024 outlook as shown on slide 14. We're pleased with our first half operating results in our anticipating a strong second half of the year. As a result, we are maintaining our full year 2024 guidance of revenue between $102 to $118 million, adjusted EBITDA of between $8 to $16 million and capital expenditures of between $55 and $65 million.

Brian OToole: Um

Brian OToole: It'll be sometime later this year.

Henry Dubois: Got it. It just went down in the financials. I know you mentioned something like $28 million in the contract assets. Can you just remind us how we should kind of model the cash flow trajectory perhaps for the rest of the year or anything to keep in mind about our working capital?

Henry Dubois: Got it. It just went down in financials.

Henry Dubois: I know you mentioned something like $28 million in the contract assets. Can you just remind us how we should kind of model the cash flow trajectory perhaps for the rest of the year or anything to keep in mind on our working capital?

Henry Dubois: Sure Edison, happy to. I mean that 28 million is contracted assets or unbilled receivables. That's tied to milestones as we achieve our Gen 3 program, and we've got those in our current assets. We expect to be collecting that over the next 12 months, and it does provide some significant liquidity to us as well.

Henry Dubois: In summary, we're pleased with our financial reforms in the same quarter and the progress we've made across many aspects of our business.

Henry Dubois: Sure Edison, happy to. I mean that $28 million is contracted assets or unbilled receivables. That's tied to milestones as we achieve our Gen 3 program, and we've got those in our current assets. We expect to be collecting that over the next

Brian OToole: With that, I'll turn it back over to Brian for some closing remarks. Brian? Thank you, Henry.

Brian OToole: In closing, we're pleased with the strong second quarter performance and the momentum we are carrying into the second half of the year. We're continuing to see growing demand for black skies differentiated space-based intelligence solutions. Our Gen 3 constellation remains on track to deliver the transformative solutions our customers are demanding using the power of our very high-resolution imagery, combined with high-frequency monitoring and automated AI analytics. We built and continued to grow a strong customer base with some of the most important organizations in the world and are getting ready to unlock our next phase of growth as we begin to introduce Gen 3 capabilities later this year.

Henry Dubois: twelve months and it does provide us some significant liquidity to us as well

Henry Dubois: Anything else on working capital to take note of? Dynamics, and everything else.

Henry Dubois: Anything else on the working capital to take note of?

Henry Dubois: Dynamics Everything else is pretty steady state. I mean, we've got a fair bit of cash, and the contract assets give us a fair bit of liquidity. So we feel pretty good at the moment.

Henry Dubois: Dynamics. Everything else is pretty steady state. I mean, we've got a fair bit of cash, and the contract assets give us a fair bit of liquidity, so we feel pretty good at the moment.

Henry Dubois: Dynamics. Everything else is pretty steady state. I mean, we've got a fair bit of cash and the contract assets gives a fair bit of liquidity, so we feel pretty good at the moment.

Max Michaelis: Your next question comes from the line of Max Michaelis with Lake Street.

Speaker Change: Okay, thank you.

Speaker Change: Your next question comes from the line of Max Michaelis with Lake Street.

Max Michaelis: Hey guys, thanks for tuning in. Hey guys, thanks for taking my questions.

Max Michaelis: thank you guys guys think it

Henry Dubois: You know, when we look at the full year guide and orders the way through the year, so if we're still sticking with that $102 to $118 million guidance, what's really driving the difference between the low end and the high end here? I mean, is this just a few deals that we're waiting on? Or is this one large, chunky deal? I was wondering if you could get some more color on that.

Brian OToole: You know, when we look at the full year guide and orders halfway through the year, so if we're still sticking with that $102 to $118 million guidance, what's really driving the difference between the low end and the high end here? I mean, is this just a few deals that we're waiting on? Or is this one large, chunky deal? I was wondering if you could get some more color on that.

Speaker Change: Hey guys, thanks for taking my questions. You know, when we look at the full year guidance...

Henry Dubois: quarters of the way through the year so if we're still sticking with that 102 to believe 118 million dollar guidance what's really driving the difference between the low end and the high end here I mean is this a few deals that we're waiting on or is this one large chunky deal I was wondering if he gets more color on that

Operator: This concludes our remarks for the call and we'll now take your questions. We will now begin the question and answer session to ask a question you may press star then one on your touch stone phone. If you're using a speaker phone, please pick up your hands before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble a roster.

Henry Dubois: Yeah, thanks for the question, Max. As we stated in our remarks, we were maintaining full-year guidance. We typically have had stronger back halves of the year. It's tied to renewables and expansions of existing contracts, obviously. We have a pretty robust pipeline of. We look at those opportunities on a weighted basis, and that's how we arrive at the range at the midpoint.

Brian OToole: Yeah, thanks for the question, Max. As we stated in our remarks, we were maintaining full-year guidance, we typically have, of the year, it's tied to renewables and expansions of the existing contracts, obviously. We have a pretty robust pipeline of, We look at those opportunities on a weighted basis. You know that's how we arrive at really the range in the midpoint.

Henry Dubois: Yeah, thanks for the question, Max.

Henry Dubois: Yeah, as we stated in our remarks, you know, we're maintaining full year guidance. We typically have.

Henry Dubois: had stronger back halves of the year that's tied to renewables and expansions of

Henry Dubois: Existing contracts, obviously.

Gregory Burns: Your first question comes from the line of grad burns with Tudori and Co. Please go ahead.

Henry Dubois: We have a pretty robust pipeline of opportunities we're working on. And so, we look at those opportunities on a weighted basis. And, you know, that's how we arrive at really the range and the midpoint.

Brian OToole: Morning. I'm just hoping to get a little bit more color on the the imagery and software growth that you saw this quarter. It was down a little bit sequentially so I just wanted to get a better understanding of how much of that revenue is take or pay versus more variable consumption-based like why would it decline sequentially and then how should we think about maybe the cadence of growth? over the balance of the remainder of the year.

Brian OToole: More new business is coming online.

Henry Dubois: More new business is coming online.

Henry Dubois: More new business coming online.

Henry Dubois: Yeah, you could; there's a blend of new business and renewals that are actively being worked on.

Brian OToole: Yeah, you could; there's a blend of new business and renewals that are actively being worked on.

Henry Dubois: Yeah, there's a blend of new business and renewals that are actively being worked.

Brian OToole: And then I guess if we look at that $40 million in new contracts or new awards signed in the quarter, can you help me out with the mix between new customers versus renewals?

Brian OToole: Okay, and then I guess if we look at that 40 million dollars in new contracts or new awards signed in the quarter I mean, can you help me out with like the mix between new customers versus extensions?

Brian OToole: Thank you. Yeah, thanks, Greg, for your question. I think if you look back historically, you've seen a step up in imagery analytics revenues typically in the second half of the year. That's primarily been driven by the timing of budget cycles and renewals. And so that's why you're still seeing the strong year-over-year growth, but some of the some of the flatter performance in the first couple quarters. I will note that another key aspect of this is we continue to add more customers.

Brian OToole: As I mentioned in my remarks, the two primary ones were tied to our EOCL renewal and a renewal from one of our long-term existing international customers, but we also had a number of new customers enter into six-figure level subscription services.

Max Michaelis: So it was a blend. All right. Thanks. That's it for me.

Max Michaelis: a six figure level subscription services so gowas a blend

Max Michaelis: All right, thanks. That's it for me.

Scott Buck: Thank you, Max. Your next question comes from the line of Scott Buck with HC Wainwright. Please go ahead.

Scott Buck: Your next question comes from the line of Scott Buck with H.C. Wainwright. Please go ahead.

Scott Buck: All right, thanks. That's it for me.

Speaker Change: Your next question comes from the line of Scott Buck with H.C. Wainwright. Please go ahead.

Scott Buck: Hi, good morning, guys. Thanks for taking the time to answer my questions.

Scott Buck: Hi, good morning guys. Thanks for taking the time to answer my questions.

Henry Dubois: I'm curious about the professional engineering services gross margin. You know, you've seen a nice uptick there in the last few quarters. Is that just a representative of the mix of assignments you're currently working on, or have you guys done something internally to, you know, create some additional efficiency there?

Brian OToole: They tend to start out with smaller pilot projects and grow over time. So that's historically how we performed. And we're, as you can see year-over-year we're continuing to grow that line and that's what's driving our high-margin business and driving the EBITDA performance right through the bottom line. And then with the GDMP vehicle that you mentioned, is that incremental? I always thought that your contracts with the NRL were kind of umbrella for the government and for government agencies to procure through that.

Speaker Change: Hi, good morning guys. Thanks for taking my questions

Henry Dubois: I'm curious on the professional engineering services gross margin. You've seen a nice uptick there the last few quarters. Is that just a representative of the mix of assignments you're currently working on, or have you guys done something internally to create some additional efficiency there?

Henry Dubois: Hey, Scott, this is Henry. That's a function of the work that we're doing with a couple of our large customers. As I mentioned in our script, we had a step up in some of the activity. So various aspects of these programs kind of allow us to have higher margins as we produce. So it's a kind of revenue mix. And we expect those margins to kind of stay in this sort of category, although, as you know, that variability; there could be some variability on professional and engineering services based on milestones.

Henry Dubois: I'm curious about the professional engineering services gross margin. You've seen a nice uptick there in the last few quarters. Is that just a representative of the mix of assignments you're currently working on, or have you guys done something internally to create some additional efficiency there?

Henry Dubois: Hey, Scott, this is Henry. That's a function of the work that we're doing with a couple of our large customers. As I mentioned in our script, we had a step up in some of the activity. So various aspects of these programs kind of allow us to have higher margins as we produce. So it's a kind of revenue mix. And we expect those margins to kind of stay in this sort of category, although, as you know, that variability, there could be some variability on professional and engineering services based on milestone.

Henry Dubois: Hey Scott, this is Henry. That's a function of the the work that we're doing with a couple of our large customers. As I mentioned in our script, we had a step-up in some of the activity, so various

Henry Dubois: Various aspects of these programs kind of allow us to have higher margins as we produce, so it's kind of a revenue mix.

Henry Dubois: And we expect those margins to kind of stay in this sort of category, although, as you know, that variability, there could be some variability on professional and engineering services based on milestones.

Brian OToole: Is this separate and incremental or part of that and extension of that? How does that work? Yeah, it is separate and incremental. The one thing to note is the EOCL contract is for imagery. The marketplace can be for a broad set of services which include analytics and other services. So it's a new sales channel for us. We're excited that this marketplace is providing a fast and flexible platform. The stream line delivery of capability to all new set of customers. So as I mentioned in my remarks, this is in the early days of this type of marketplace. So we're excited and the potential where that can go.

Henry Dubois: Sure, that's helpful, Henry. Thank you. And then it sounds like Gen 3 launch activity becomes a bit more meaningful in 25. I'm curious if you can give us any early color on CAPEX expectations for 25 versus 24.

Scott Buck: Sure, that's helpful, Henry, thank you. And then it sounds like Gen 3 launch activity becomes a bit more meaningful in 25. I'm curious if you can give us any early color on CAPEX expectations for 25 versus 24.

Henry Dubois: Yeah, Scott, we're not guiding the $25 million capex yet. We'll do that later.

Henry Dubois: Yeah, Scott, we're not guiding the 25 capex yet. We'll do that later.

Brian OToole: That's fair, guys. And then lastly, I just want to ask about, you know, now that it seems like we have our horses for the election, whether or not you guys are doing any handicapping or whether or not any potential outcome could be more positive or less positive. I think I'll just say, generally.

Brian OToole: that's fair guys and then last i just to ask about you know it seems like we have our horses for the election whether or not you guys are doing any handicappping or any potential outcomes could be more positive or less positive

Brian OToole: I think I'll just say, generally, kind of independent of the election outcome. There's strong support both in the U.S. government as well as in the And we're seeing internationally as well increased investments in defense and space. Space being a strategic area of investment going forward, we continue to see strong support in Congress. For the commercial industry, you know, last quarter, we reported Space Force coming out with a commercial strategy that we're excited to pursue, and so I think you know, independent of the outcome, we're seeing strong support and good visibility going forward.

Brian OToole: I think I'll just say, generally, kind of independent of the election outcome. There's strong support both in the U.S. government as well as in the And we're seeing internationally as well increased investments in defense and space. The space being a strategic area of investment going forward. We continue to see strong support in Congress. For the commercial industry, you know, last quarter, we reported Space Force coming out with a commercial strategy that we're excited to pursue, and so I think you know, independent of the outcome, we're seeing strong support and good visibility going forward.

Brian OToole: I think I'll just say generally kind of independent of

Brian OToole: All right. And then when we're thinking about the launch cadence for the Gen 3s, is it going to be one satellite that's launched or is it going to be multiple satellites launched at one time? And can you just remind us about the, you know, the cadence to getting the satellite tested and operational. What's the timeframe between launch and maybe start it's starting to generate revenue? Yeah, the first few satellites will go up on separate launches.

Brian OToole: of the election outcome. There's strong support both in the U.S. government as

Brian OToole: And we're seeing internationally as well to increase investments in defense and space.

Brian OToole: Space being a strategic area of investment going forward.

Brian OToole: We continue to see strong support in Congress.

Brian OToole: for the commercial industry.

Brian OToole: Last quarter we reported Space Force coming out with a commercial strategy that we're excited to pursue.

Brian OToole: Typically for a new satellite like this, the commissioning time is about 60 days. As we get through that, then we'll move into a steady cadence of launches from there as a reminder. If you look at our performance in deploying our Gen 2 constellation, you know, after we got the first couple up there and operational. We were doing multiple satellites per launch, and we reduced the commissioning time down to under 24 hours to bring those satellites into operation. So, we're participating in the same type of cadence and commissioning performance with Gen 3s. Thank you.

Dave Storms: And your next question comes from the line of Dave Storms with Stonegate. Please go ahead.

Speaker Change: And your next question comes from the line of Dave Storms with Stonegate. Please go ahead.

Brian OToole: Good morning. Thank you for taking my questions. My first one is if you could help us understand what the current environment is like for acquiring and retaining AI talent.

Dave Storms: Good morning. Thank you for taking my questions. My first one is just if you could help us understand what the current environment is like for acquiring and retaining AI talent.

Brian OToole: That's a good question. As you know, we've been developing AI capabilities for years now in our Spectra platform and have been winning significant contracts there, primarily due to our AI technology and our AI talent. We actually have had pretty good, um, pretty good performance in recruiting and retaining AI talent. I think that's primarily driven by the fact that when you combine what we're doing in space with high-frequency monitoring, with a proprietary constellation, with..., with the Spectre platform and how you can translate that into actionable intelligence, that is, it's exciting and meaningful work.

Brian OToole: That's a good question. As you know, we've been developing AI capabilities for years now in our spectra platform and have been winning significant contracts there, primarily due to our AI technology and our AI talent. We actually have had pretty good, um, pretty good performance in recruiting and retaining AI talent. I think that's primarily driven by the fact that when you combine what we're doing in space with high-frequency monitoring, with a proprietary constellation, with... With the Spectre platform and how you can translate that into actionable intelligence, that is, it's exciting and meaningful work.

Brian OToole: That's a good question. As you know, you know, we've been developing AI capabilities for years now in our Spectra platform and been winning significant contracts there.

Edison Yu: Your next question comes from the line of Edison Yu with Deutsche Bank. Please go ahead.

Brian OToole: Good morning. Thanks for taking our questions. First of all, I just wanted to follow up on the third gen. Do you have any sense of how much of the backlog is tied to any sort of capabilities on Gen 3? I think the backlog is 200 plus million, at least as of the last quarter. Edison, thanks for your question. Yes, significant amount of that backlog is tied to Gen 3. Also, as a reminder, our EOCL contract, which is a $1 billion 10-year contract, is heavily backloaded on Gen 3 services as well. But also, we continue to close subscription deals, and have actually just renewed another year under EOCL of our Gen 2 capability.

Brian OToole: pu

Brian OToole: Pretty good performance in recruiting and retaining AI talent. I think that's primarily driven by the fact that, you know,

Brian OToole: When you combine what we're doing in space with high-frequency monitoring, with a proprietary constellation, with

Brian OToole: With the Spectre platform and how you can translate that into actionable intelligence that is, it's exciting and

Brian OToole: And so we've been very fortunate in retaining the talent we have and, you know, the mission around what we're doing with our capabilities to support a safer and secure world is also an attractive aspect of what we do. So we have not had any real challenges there.

Brian OToole: And so we've been very fortunate in retaining the talent we have and, you know, the mission around what we're doing with our capabilities to support. A safer and secure world is also an attractive aspect of what we do, so we have not had any real challenges there.

Brian OToole: and meaningful work. And so we've been very fortunate in retaining the talent we have. And

Brian OToole: the mission around what we're doing with our capabilities to support

Brian OToole: So, we're excited about what Gen 3 will unlock, but we're also on a nice trajectory and continuing our growth through Gen 2. I just said, any updates on when you think the NGA, the Luno A, could you get awarded? We're carefully watching that, Edison. Of course, as you know, we feel we're well positioned for that, given our performance under the predecessor contract EIM. So, we're anxiously waiting, but I don't have a specific timeline from the government on when we can anticipate those awards. We expect it'll be sometime later this year.

Brian OToole: A more safer and secure world is also an attractive aspect of what we do, so we have not had any real challenges there.

Henry Dubois: understood. Thank you. We understand that CapEx guidance is up this year due to the significant Gen 3 investments. Following the completion of those investments, do you believe that CapEx will return to a more normalized level, or should we anticipate that it will be higher than the historical rate due to increased maintenance CapEx for the Gen 3 satellite?

Henry Dubois: And then... We understand that CapEx guidance is up this year due to the significant Gen 3 investments. Following the completion of those investments, do you believe that CapEx will return to a more normalized level, or should we anticipate that it will be higher than the historical rate due to increased maintenance CapEx for the Gen 3 satellites?

Speaker Change: Understood. Thank you. And then.

Speaker Change: We understand that CapEx guidance is up this year due to the significant Gen 3 investments.

Speaker Change: Following the completion of those investments, do you think, do you believe that CapEx will return to a more normalized level?

Speaker Change: Or should we anticipate that it will be...

Speaker Change: Higher than the historical rate due to, you know, increased maintenance capex for the Gen 3 satellites.

Henry Dubois: Dave, this is Henry. Thanks for that question. I mean,

Henry Dubois: Dave, this is Henry. Thanks for that question. I mean, when we take a look at our CapEx, we are guiding for that $55 to $65 million of cash CapEx this year as we are preparing to get launches going. We have discussed how, when we get into a steady state, our CAPEX could be in the neighborhood of the replenishment rate of a 16-satellite constellation, which, when you do the math, using about 13 million or so per satellite times 16 satellites, and divide that by about a five-year life, you're looking at, probably, in that 40 to 50 million range for the satellite constellation, and then a little bit for our So you're probably in that without giving guidance, you can do the math on that one.

Henry Dubois: Dave, this is Henry. Thanks for that question. I mean, when we take a look at our CapEx, we are guiding to 55 to 65 million dollars of cash CapEx this year as we are preparing to get launches going. We have discussed how, when we get into a steady state, our CAPEX could be in the neighborhood of the replenishment rate of a 16-satellite constellation, which, when you do the math, using about 13 million or so per satellite times 16 satellites, and divide that by about a five-year life, you're looking at, probably, at a steady state in that 40 to 50 million range for the satellite constellation, and then So it's probably in that without giving guidance, you can do the math on that one.

Henry Dubois: Dave, this is Henry. Thanks for that question. I mean, when we take a look at our CapEx, we are guiding to that $55 to $65 million of cash CapEx this year as we are preparing to get launches going.

Henry Dubois: We have discussed how when we get into a steady state, our CAPEX could be in the neighborhood of the replenishment rate of a 16 constellation.

Henry Dubois: Got it. I just went on financials. I know you mentioned something like $28 million in the contract assets. Can you just remind us how we should or anything to keep in mind on our working capital? Sure, Edison, happy to. I mean, that $28 million is a contracted asset or our rebuild receivables. That's tied to milestones as we achieve our our Gen 3 program, and we've got those in our current assets. We expect to be collecting that over the next 12 months, and it does provide some significant liquidity to us as well.

Henry Dubois: A 16th Satellite Constellation, which, when you do the math...

Henry Dubois: Using about 13 million or so per satellite, times 16 satellites, and divide that by about a five-year life, you're looking at probably on a steady state in that 40 to 50 million range for the satellite constellation, and then a little bit for our AI capability. So it's probably in that range.

Henry Dubois: Without giving guidance, you can do the math on that one.

Josh Sullivan: Your next question comes from the line of Josh Sullivan with the Benchmark Company. Please go ahead.

Speaker Change: Your next question comes from the line of Josh Sullivan with the Benchmark Company. Please go ahead.

Henry Dubois: Anything else on the working capital to take notice? Dynamics. Everything else is pretty steady state. I mean, we've got a fair bit of cash, and the contract assets gives a fair bit of liquidity, so we feel pretty good at the moment.

Henry Dubois: Thank you.

Speaker Change: BDMP. How does pricing work? You know, does the customer set the price or value or do you as Blacksky? Just interested to hear how the mechanics of the market work.

Brian OToole: Yeah, good morning, Josh. Thanks for the question. Yeah, it's a pretty exciting opportunity. Basically, it's a platform through which customers can put out requests for proposals for certain capabilities, and commercial companies can submit bids to provide that capability. And it's a so it's uh.

Brian OToole: Yeah, good morning, Josh. Thanks for the question. Yeah, it's a pretty exciting opportunity to. Basically, it's a platform through which customers can put out requests. Requests for certain capabilities, and commercial companies can submit bids to provide that capability, and it's a though it's competitive, but it's also a streamlined acquisition model that allows customers to quickly get Data and Analytic Services through this type of vehicle, so It's a really nice platform for the government because it is competitive, but it's also streamlined.

Brian OToole: Yeah, good morning, Josh. Thanks for the question. Yeah, it's a pretty exciting opportunity. Basically, it's a platform through which customers can put out requests.

Max Michaelis: Your next question comes from the line of Max Michaelis with Lake Speed. Hey guys, thanks for taking my questions. You know, when we look at the full year guide and orders of the way through the year, so we're still sticking with that 102 to, I believe, 118 million dollar guides, what's really driving the difference between the low end and the high end here? I mean, is this a few deals that we're waiting on or is this one large chunky deal?

Brian OToole: for proposals for certain capabilities and commercial companies can submit bids to provide that capability and it's a though it's

Brian OToole: It's competitive, but it's also a streamlined acquisition model that allows customers to quickly get Data and Analytics Services through this type of vehicle. So it's a really nice platform for the government because it is competitive, but it's also streamlined. So it's a win-win for the government and commercial enterprises. And what's your sense of how large of a sales channel it could be? Or what do you think the total value of the market could potentially be over time?

Brian OToole: It's competitive, but it's also a streamlined acquisition.

Brian OToole: model that allows customers to quickly get

Max Michaelis: I was wondering if he gets more color on that. Yeah, thanks for the question, Max. Yeah, as we stated in our remarks, we're maintaining full year guidance. We typically have had stronger back halfs of the year. It's tied to renewals and expansions of existing contracts. Obviously, we have a pretty robust pipeline of opportunities we're working on. And so, we look at those opportunities on a weighted basis. And, you know, that's that's how we arrive at really the range in the midpoint.

Brian OToole: data and analytic services.

Brian OToole: through through this type of vehicle so

Brian OToole: It's a really nice platform for the government because it is competitive, but it's also streamlined. So it's a win-win for the government and commercial.

Brian OToole: So it's a win-win for the government and businesses. And what's your sense of how large of a sales channel it could be? Or what do you think the total value of the market could potentially be over time? I, I can't.

Speaker Change: And what's your sense of how large of a sales channel it could be or what do you think the total value of the market could potentially be over time?

Brian OToole: It's starting out with some initial... It's early days, I will say, an interest in growing the budget for that, but also a strong partnership with the government to continue to refine. The model and the types of services that can be acquired through this type of marketplace. So it's early days, but we're excited about it. Where it is and where it's going, and the fact that we've been able to secure a number of these types of contracts.

Brian OToole: I can't, It's starting out with some initial, It's early days, I will say, an interest in growing the budget for that, but also a strong partnership with the government to continue to refine the model and the types of services that can be acquired through this type of marketplace. So it's early days, but we're excited about where it is and where it's going and the fact that we've been able to secure a number of these types of contracts.

Brian OToole: I, I can't.

Brian OToole: It's starting out with some initial...

Brian OToole: Budget. It's early days. I will say that what we've been seeing is an interest in growing the budget for that.

Max Michaelis: More new business coming online. Yeah, you could there's a blend of new business and renewals that are actively being worked. Okay, and then I guess if we look at that $40 million in new contracts or new awards signed in the quarter, I mean, can you help me out with like the mix between new customers versus extensions? As I mentioned in my remarks, you know, the two primary ones were tied to our eocl renewal and a renewal from one of our long term existing international customers, but we also had a number of new customers enter into six figure level subscription services. So it was a blend. Thanks.

Brian OToole: but also a strong partnership with the government to continue to refine.

Brian OToole: The model and the types of services that can be acquired through this type of marketplace, so it's early days.

Brian OToole: But we're excited about...

Brian OToole: where it is and where it's going and the fact that we've been able to secure a number of these types of contracts.

David: great david son

Jeff Van Ree: Your next question comes from the line of Jeff Van Ree with Craig Hallam Capital Group. Please go ahead.

Speaker Change: Your next question comes from the line of Jeff Van Ree with Craig Hallam Capital Group. Please go ahead.

Daniel Hibshman: Hey, thanks for taking my question. This is Daniel Hibshman on behalf of Jeff.

Daniel Hibschman: Hey, thanks for taking my question. This is Daniel Hibschman on behalf of Jeff.

Daniel Hibschman: Hey, thanks for taking my question. This is Daniel Hibschman on for Jeff.

Daniel Hibschman: In terms of the pipeline, if maybe you could give us a little better color on just what you're seeing come down, you know, the presentation mentioned,

Brian OToole: In terms of the pipeline, if maybe you could give us a little better color on just what you're seeing come down. The presentation mentioned a few, quote, sizable multi-year sales opportunities. I assume that's referencing EOCL, the 150 million Asian ally, and 50 million Indonesian contract. But just anything else you can call out in terms of the sorts of things that are coming down the line, whether in terms of what kinds of imagery or what kinds of object detections, just what the biggest sorts of opportunities in the pipeline are and where we should be focused.

Brian OToole: Just in terms of the pipeline, if maybe you could give us a little better color on just what you're seeing come down. You know, the presentation mentioned a few, quote, sizable multiyear sales opportunities. I assume that's referencing EOCL, the $150 million Asian ally, and $50 million Indonesian contract. But just anything else you can call out in terms of the sorts of things that are coming down the line, whether in terms of what kinds of imagery or what kinds of object detections, just what the biggest sorts of opportunities in the pipeline are and where we should be focused.

Max Michaelis: That's it from me. Thank you, Max.

Speaker Change: A few quote sizable multi-year sales opportunities.

Scott Valk: Your next question comes from the line of Scott Valk with HC Wayne, right? Please go ahead.

Brian OToole: I assume that's referencing EOCL, the $150 million Asian ally, and the $50 million Indonesia contract. But just anything else you can call out in terms of the sorts of things that are coming down the line, whether in terms of what kinds of imagery or what kinds of object detections.

Henry Dubois: Good morning, guys. Thanks for taking my questions. I'm curious on the professional engineering services, gross margin. You can see a nice uptake there are last few quarters. Is that just a representative of the mix of assignments you're currently working on or have you guys done something internally to create some additional efficiency there?

Brian OToole: Just what the biggest sorts of opportunities in the pipeline are and where we should be focused.

Brian OToole: Yeah, Daniel, thanks for the question. I think just to reiterate EOCL, Indonesia, those types of other larger international, those are all contracts we have. So as far as backlog and those revenues will unlock over time, continued demand for high-frequency monitoring with integrated AI capability through an assured access subscription. We're seeing interest in our Gen 3 technology as evidenced by the contract we announced earlier this year in Indonesia. And then, of course, when we bring 35-centimeter imagery into our high-frequency monitoring capability, that will be a transformative service. Patico.

Brian OToole: Yeah, Daniel, thanks for the question. I think just to reiterate, EOCL, Indonesia, those types of other larger international companies, those are all contracts we have. So as far as

Scott Valk: Hey Scott, this is Henry. That's a function of the work that we're doing with a couple of our large customers as we, as I mentioned in our script, we had a step up in some of the activity. So various various aspects of these programs kind of allow us to have higher margins as we produce. So it's a kind of a revenue mix. And we expect those margins to kind of stay in this sort of category, although as you know that that variability, there could be some variability on professional engineering services based on milestones. Sure, that's that's helpful, Henry. Thank you.

Brian OToole: Those are in our contracted backlog and those revenues will unlock over time. The other things we're seeing in the market are continued demand for our high-frequency monitoring with integrated AI capability.

Brian OToole: through an assured access subscription.

Brian OToole: A strong interest in our Gen 3 technology, as evidenced by the contract we announced earlier this year in Indonesia. And then, of course, when we bring 35 centimeter imagery into our high frequency monitoring capability, that will be a transformative service. Microsoft Office Word Microsoft, Inc. It's a wonderful day to be here; the first time can bring very high resolution with high frequency combined with AI delivered in a single service platform.

Brian OToole: We're seeing...

Brian OToole: Strong interest in our Gen 3 technology as

Scott Valk: And then it sounds like Gen 3 launch activity becomes a bit more meaningful in 25. I'm curious if you can give us any early color on CAPEX expectations for 25 versus 24. Yeah, Scott, we're not guiding the 25 capex yet. We'll do that later. That's fair guys.

Brian OToole: evidenced by the contract we announced earlier this year in Indonesia.

Brian OToole: And then, of course, when we bring 35-centimeter imagery into our high-frequency monitoring capability,

Brian OToole: That will be a transformative service for customers that, for the first time, can bring

Brian OToole: The first time can bring very high resolution with high frequency combined with AI delivered in a single service platform. So all of those things are. We're seeing strong demand both in the U.S. and abroad for those capabilities, and you know. We expect as we bring Gen 3 into the market that demand will continue to grow.

Brian OToole: And then last year, I just want to ask about, you know, now it seems like we have our horses for the election, whether or not you guys are doing any handicapping or, you know, any potential outcomes could be more positive or less positive. I think I'll just say generally kind of independent of of the election outcome. There's strong support both in the US government as and we're seeing internationally as well to increase investments in defense and space space being a strategic area of investment going forward.

Brian OToole: Very high resolution with high frequency combined with the AI delivered in a single service platform.

Brian OToole: So all of those things are. We're seeing strong demand both in the U.S. and abroad for those capabilities, and you know, we expect as we bring Gen 3 into the market that demand will continue to grow.

Brian OToole: So, all of those things are...

Brian OToole: We're seeing strong demand.

Brian OToole: Both in the U.S. and abroad for those capabilities and, you know, we expect as we bring Gen 3 into the market that demand will continue to grow.

Brian OToole: And then just kind of one sort of broader question, I don't know if you want to call this a macro question, but how is revenue generally connected or correlated with conflict in terms of, are your customers highly flexible in terms of their task orders and volumes where, depending on what's going on globally, they're going to flex what they're buying, or do they typically have pretty set amounts contracted annually?

Brian OToole: Thanks for that. And then just kind of one sort of broader, I don't know if you want to call this a macro question, but how is revenue generally connected?

Brian OToole: Are your customers highly flexible in terms of their task orders and volumes where, depending on what's going on globally, they're going to flex what they're buying? Or do they typically have pretty set amounts contracted annually?

Brian OToole: So we continue to see strong support in Congress for the commercial industry. You know, last quarter we reported the space force coming out with a commercial strategy that we're excited to pursue. And so I think, you know, independent of the outcome, we're seeing strong support and good visibility going forward.

Brian OToole: That's a good question. I think the misnomer out there is that a lot of the industry and the revenue are driven by crisis events, and that's just not the case. We're dealing with organizations that plan years ahead for access to capacity to meet their day-to-day mission requirements now and what they're forecasting. But, as you know, we typically offer those capabilities through long-term, multi-year subscription contracts because they're

Brian OToole: That's a good question. I think the misnomer out there is that a lot of the industry and the revenue are driven by crisis events, and that's just not the case. We're dealing with organizations that plan years ahead for access to capacity to meet their day-to-day mission requirements that they have now and what they're forecasting in the future. We support them by providing flexible mechanisms to... where they deploy and when to be responsive to whatever.

Brian OToole: It's a good question. I, you know, I think...

Brian OToole: The misnomer out there is that a lot of the industry and the revenue is driven by crisis events, and that's just not the case.

Brian OToole: We're dealing with organizations that plan years ahead for access to capacity to meet their day-to-day mission requirements that they have now and what they're forecasting.

David Storms: And your next question comes from the line of Dave Storms with Stonegate. Please go ahead. Good morning. Thank you for taking my questions. My first one is just if you could help us understand what the current environment is like for acquiring and retaining AI talent. That's a good question. As you know, you know, we've been developing AI capabilities for years now in our spectra platform and then winning significant contracts there primarily due to our AI technology and our AI talent.

Brian OToole: in the future we we support them by providing flexible mechanisms to

Brian OToole: Where they task and when, to be responsive to whatever

Brian OToole: They're dealing with in their day-to-day operations. We provide them with that, with that assured access flexibility. But, as you know, we typically offer those capabilities through long-term, multi-year subscription contracts because they want that capacity, and they want to ensure that it's going to be there for years.

Brian OToole: They're dealing with in their day-to-day operations.

Brian OToole: We provide them with that assured access, flexibility, but as you know, we typically offer those capabilities through long-term, multi-year subscription contracts because they're...

Brian OToole: They want that capacity and they want to ensure that it's going to be there for years.

Henry Dubois: makes sense. And then, just one last one for me and Henry, just maybe one other way of looking at that contract asset balance. Where would you see that being sort of a year from now? I understand that they expect to collect the current balance over the coming year, but I assume also new signings and renewals would be adding to that balance. Just to visualize that balance being roughly where it is at, significantly higher, significantly lower, any color there would be

David Storms: We actually had pretty good, pretty good performance in recruiting and retaining AI talent. I think that's primarily driven by the fact that, you know, when you combine what we're doing in space with high frequency monitoring with a proprietary constellation with the spectra platform and how you can translate that into actionable intelligence that is it's exciting and meaningful work. And so we've been very fortunate in retaining the talent we have and you know, the mission around what we're doing with our capabilities to support a more safer and secure world. It's also an attractive aspect of what we do.

Henry Dubois: And then just one last one for me for Henry, just maybe one other way of looking at that contract asset balance.

Henry Dubois: Where would you see that being sort of a year from now? I understand that you're expecting to collect the current balance over the coming year, but I assume also new signings and renewals would be adding to that balance. Do you envision that balance being roughly where it's at? Significantly higher? Significantly lower? Any color there would be helpful.

Henry Dubois: Sure, what I would point out, the way I would take a look at that one is that a lot of these are tied to milestones as we complete our Gen 3, start getting our Gen 3 satellites up, and work towards completing that program. And some of the work that we've talked about on the international projects that we need to complete prior to being tied into their work streams.

Speaker Change: Sure what I would point, what I would the way I would take a look at that one is a lot of these are tied to milestones as we complete our gen III.

Speaker Change: Start getting our Gen three satellites up and work towards completing that program.

Speaker Change: And some of the work that we've talked about on the international projects that we need to complete prior to <unk>.

Speaker Change: Being tied into their with their work streams.

Henry Dubois: So over time, that number should be coming back down. If you look at where we've been historically, it would be a good way to look at that. And so I think I don't think it will stay up at that 28, but we're not providing guidance on next year's numbers yet.

Speaker Change: So over time that number should be coming back down if you look at where we've been historically with vehicle good way to look at that.

Speaker Change: So I think.

Speaker Change: I don't think it will stay up at that 28, but we're not providing guidance on next year's numbers yet.

Henry Dubois: So we have not had any real challenges there. Understood. Thank you. And then we understand that CAPEX guidance is up to sear due to the significant gen 3 investments. Following the completion of those investments, do you think do you believe that CAPEX will return to a more normalized level or should we anticipate that will be higher than the historical rate? due to, you know, increased maintenance catbacks for the gender satellites. Dave, this is Henry.

Henry Dubois: Okay, that's helpful. Thanks for all the help.

Henry Dubois: Okay. That's helpful. Thanks for all the help.

Chris Quilty: Again, if you would like to ask a question, press star 1 on your telephone keypad. And your next question comes from the line of Chris Quilty with Quilty Space. Please go ahead.

Speaker Change: Again, if you would like to ask a question press star one on your telephone keypad and.

Speaker Change: And your next question comes from the line of Chris Quilty with Quilty space. Please go ahead.

Chris Quilty: Thanks; I just wanted to do a follow-up on the GDMP program. Is there a cap on the size of contracts that customers can negotiate through that vehicle? And the second question is, like, is there a graduation path? I mean, should we think of this as sort of like, you know, a Sibbers-type program that allows more small contracts and then, eventually, if those customers want to engage in a larger, long-term contract, they're going to have to go out and find, you know, separate funding for it, and I know it's early days within the program, but what's your expectation? Yeah,

Speaker Change: Hi, Thanks, I just wanted to do a follow up on the GBM program is there a cap on the size of contracts that customers can and contract through that vehicle.

Henry Dubois: Thanks for that question. I mean, when we take a look at our catbacks, we are guiding to 55 to 65 million of cash catbacks this year as we are preparing to get launches going. We do the math using about 13 million or so per satellite, time 16 satellites, and divide that by about a five year life. You are looking at probably on a steady state in that 40 to 50 million range for the satellite constellation, and then a little bit for our AI capabilities.

Speaker Change: And second question is like is there a graduation path I mean should we think of this as sort of like a <unk> type program that allows for more contracts and then eventually if those customers.

Speaker Change: Want to engage in a larger long term contracts theyre going to have to go out and find.

Speaker Change: Separate funding for it and I know it's early days.

Henry Dubois: Within the program.

Speaker Change: Is your expectation.

Brian OToole: Yeah, it's a good question, Chris. I think what we're seeing now, you're right, it is early days. Right now, they're starting out with small kind of five-figure services; they get delivered really quickly, and quickly within like weeks and months. They typically start with that base kind of service, but they can also attach options to them to extend them over time. So, and this is because it is the early days, I think the, the, government end users are still.

Speaker Change: Yes, it's a good question Chris.

Speaker Change: I think what we're seeing now you are right. It is early days.

Henry Dubois: Right now they are starting out with.

Speaker Change: Small kind of five figure.

Henry Dubois: So it's probably in that without giving guidance that you can do the math on that one.

Speaker Change: Type services, they get delivered really quickly.

Henry Dubois: and quickly within weeks and months.

Speaker Change: And quickly within.

Speaker Change: Weeks and months.

Speaker Change: They typically start with that base kind of service, but they also can attach options to them.

Joshua Sullivan: Your next question comes from the line of Josh Sullivan with the benchmark company. Please go ahead.

Henry Dubois: To extend them over time.

Speaker Change: And it is because it is early days I think the government end users are still.

Joshua Sullivan: PDMP, how does pricing work? You know, does the customer set the price or value or do you as Blacksky? Just interested to hear how the mechanics of the market work. Yeah, good morning, Josh. Thanks for the question. Yeah, it's a pretty exciting opportunity. The basically, it's a platform through which customers can put out requests for proposals for certain capabilities and commercial companies can submit this to provide that capability. And it's a, though, it's competitive, but it's also a streamlined acquisition model that allows customers to quickly get data and analytic services through this type of vehicle. So it's a really nice platform for the government because it is competitive, but it's also streamlined. So it's a win-win for the government and commercial.

Brian OToole: Working through, you know, the potential of this and how they can take advantage of it. I think the general thing that we're seeing is that this is a really efficient, has the potential to be a really efficient marketplace that can drive incremental revenue and drive a whole range of new customers through a streamlined acquisition process.

Speaker Change: Working through the potential of this and how they can take advantage of it but.

Speaker Change: I think the general thing that we're seeing is.

Speaker Change: This is a really efficient has the potential to be a really efficient marketplace.

Henry Dubois: That that can drive incremental revenue and drive incremental.

Henry Dubois: Capture of a whole range of new customers.

Henry Dubois: Through a street streamlined acquisition process.

Henry Dubois: Gotcha.

Chris Quilty: Question on Gen 3, obviously the first one going up in December time frame, just based upon the CapEx to date on the program, is it fair to assume you've got half dozen to a dozen satellites in some stage of production, and no, you're not providing guidance for next year, but it sounded like After the first satellite, you may do single satellite launches before eventually doing multiple. Is that a fair assumption? Yeah, Chris, I think...

Speaker Change: Question on Gen three.

Speaker Change: Obviously, the first one going up.

Henry Dubois: In December time frame.

Speaker Change: Just based upon.

Speaker Change: The Capex to date on the program is it fair to assume you've got half doesn't do a dozen satellites in some stage of production and know youre not providing guidance for next year, but.

Speaker Change: Sounded like you know after.

Speaker Change: After the first satellite you may do single satellite launches before.

Joshua Sullivan: And what's your sense of how large of a sales channel it could be or what do you think the total value of the market could potentially be over time? I can't, it's starting out with some initial budget. It's early days. I will say that what we've been seeing is an interest in growing the budget for that, but also a strong partnership with the government to continue to refine the model and the types of services that can be acquired through this type of marketplace. So it's early days, but we're excited about where it is and where it's going and the fact that we've been able to secure a number of these types of contracts. Great.

Henry Dubois: Eventually, doing multiple, is that a fair assumption?

Henry Dubois: Eventually doing multiple is that a fair assumption.

Henry Dubois: And when you Chris I think.

Speaker Change: Go ahead sorry.

Henry Dubois: Yes.

Brian OToole: No, I think, as I said, you know, we'll launch the first couple; a single launch is... You can assume that we have been investing in the long-lead components for a number of Gen 3 satellites. And as I mentioned in my remarks, that production line is ramping up, and that will enable us to get into a cadence of launches next year. On the single launch element of this, just as a reminder... We have secured the first four launches with Rocket Lab through vendor financing.

Joshua Sullivan: Thank you for that.

Speaker Change: No I think I think as I said, we'll we'll launch the first couple.

Speaker Change: A single launches.

Speaker Change: You can assume that.

Henry Dubois: That.

Speaker Change: That we have been <unk>.

Speaker Change: Investing in the long lead components for a number of Gen three satellites.

Speaker Change: And as I mentioned in my remarks that production line is ramping up and that will enable us to <unk>.

Speaker Change: Get into a cadence of launches.

Henry Dubois: Next year. On the single launch element of this, just as a reminder... So.

Speaker Change: Next year on the single launch element of this just as a reminder, we have secured the first four launches with rocket lab through a vendor finance deal.

Daniel Hibshman: Your next question comes from the line of Jeff Van Riewitt, Craig Hallem, capital group. Please go ahead. Hey, thanks for taking my question. This is Daniel Hibisman on for Jeff. Just in terms of the pipeline, if maybe you give us a little better color on just what you're seeing come down, you know, the presentation mentioned a few quote sizeable multi-year sales opportunities. I assume that's referencing the OCL, the 150 million Asian ally and 50 million Indonesia contract, but just anything else you can call out in terms of the sorts of things that are coming down the line, whether in terms of what kinds of imagery or what kinds of object detections, just what the biggest sorts of opportunities in the pipeline are and where we should be focused.

Henry Dubois: So.

Henry Dubois: <unk>.

Brian OToole: Overall, we're on track to get the first units up later this year. We've got the supply chain and the production line up and running. That puts us in a position to get to regular delivery of satellites and deployment of those in 2025.

Henry Dubois: Overall.

Speaker Change: We're on we're on track to get the first units up later this year.

Speaker Change: We got the supply chain in their production line up and running that puts us in a position to.

Speaker Change: Get to a regular delivery of satellites and deployment of those in 2025.

Brian OToole: I understand. And how should we think about the revenue contribution from Gen 3? From the perspective that you're going to be tapering in, you know, as you launch new satellites, with more and more capability, are the contracts that you sign with customers, including EOCL, structured in such a way that there are incremental step-ups? Or do you have to get to a certain volume of imagery before there is a step-up in the contract?

Speaker Change: I understand.

Speaker Change: Should we think about the revenue contribution from Gen. Three.

Speaker Change: The perspective that youre going to be tapering in as you launch new satellites more and more capability or the contracts that you signed with customers, including iOS.

Daniel Hibshman: Yeah, Daniel, thanks for the question. I think just to reiterate, EOCL, Indonesia, those types of, the other larger international, those are all contracts we have. So, as far as those around our contracted backlog and those revenues will unlock over time, the other things we're seeing in the market are continued demand for our high frequency to be monitoring within a graded AI capability through an assured access subscription. We're seeing strong interest in our Gen 3 technology as, as evidence by the contract we announced earlier this year in Indonesia, and then, of course, when we bring 35 centimeter imagery into our high frequency monitoring capability.

Speaker Change: Structured in such a way that there are incremental step ups or do you have to get to like a certain volume.

Speaker Change: The imagery before there is a step up in the contract.

Henry Dubois: I think you'll see a little bit of both, Chris. I think the way we think about it, there'll be a steady ramp in revenues. You're not going to see, And in some cases, some contracts will have step-ups, but when you look at it year over year, you should see steady growth in that line as we bring that capacity online.

Brian OToole: I think you'll see a little bit of both, Chris. I think the way we think about it, there will be a steady ramp in revenues. You're not going to see, And in some cases, some contracts will have step-ups, but when you look at it year over year, you should see steady growth in that line as we bring that capacity online.

Speaker Change: I think youll see a little bit of both Chris.

Henry Dubois: I think the way, we think about it there'll be a steady ramp in revenues youre not going to see.

Henry Dubois: And in some cases, some contracts will have step ups, but when you look at it year over year, you should see steady growth in that line.

Henry Dubois: As we as we bring that capacity online.

Henry Dubois: Great. And Henry, what should we think in terms of contract advances? You've got, you know, large contracts with Indonesia and the IMOD contract. Should we be modeling in some sort of step-up, for those customers sort of fronting your capex and working capital, or is that something that you have to shoulder?

Henry Dubois: Great.

Henry Dubois: Henry what should we think in terms of contract advances you've got.

Speaker Change: Large contracts with.

Henry Dubois: Indonesia and <unk> contract.

Henry Dubois:

Chris: Should we be modeling in some sort of step up.

Speaker Change: For those customers sort of fronting your capex and working capital or is that something that you have to shoulder.

Daniel Hibshman: That will be a transformative service for customers that for the first time can bring very high resolution with high frequency combined with the AI delivered in a single service platform. So, all of those things are, we're seeing strong demand, both in the U.S, and abroad for those capabilities. And, you know, we expect as we bring Gen 3 into the market, that demand will continue to grow.

Henry Dubois: Well, each contract tends to be unique. Some of them have some early prepayments, which help with the CapEx programs. Some of them tail off a little bit, and we build up a little bit of some contract assets as we work our way through them. But overall, we prize those large contracts. We've got a couple in the pipeline, and that's the variability on where we think the year-end guidance could just be due to timing.

Henry Dubois: By each contract tends to be unique some of them have some early prepayments, which I'll help with their capex programs.

Henry Dubois: So then the tail off a little bit and we build up a little bit about some contract assets as we work our way through it.

Henry Dubois: But overall we.

Henry Dubois: We price those large contracts, we've got a couple in the pipeline and the MCA the variability on on where we think the.

Henry Dubois: The year end guidance could be just be due to timing.

Henry Dubois: and with those two specific contracts I mentioned, obviously, there's a development phase, and I think you've got, well, maybe even 24 months under the IMOD contract. You know when that thing starts to kick in in a more material way?

Daniel Hibshman: Thanks for that.

Henry Dubois: And with those two specific contracts I mentioned.

Brian OToole: And then, just kind of wanted to sort of broader, I don't know if you want to call this macro question, but how is revenue generally connected or correlated with conflict in terms of, are your customers highly flexible in terms of their task orders and volumes, where, depending on what's going on globally, they're going to flex with their buying, or do they typically have pretty set amounts contracted annually? Yeah, it's a good question.

Speaker Change: Obviously, there is a development phase and I think you've got 12.

Speaker Change: Maybe even 24 months under behind.

Henry Dubois: The <unk> contract.

Speaker Change: When does that thing start to kick in in a more material way.

Henry Dubois: Okay.

Henry Dubois: Well, we don't discuss individual customers. We've never even identified who our customers are.

Brian OToole: Well, we don't discuss individual customers. We've never identified who our customers are internationally. So we expect our various international customers will ramp up as we get our Gen 3 capabilities online.

Henry Dubois: Well, we don't discuss individual customers, we've never identified who our customers are.

Brian OToole: I think the misnomer out there is that a lot of the industry in the revenue is driven by crisis events, and that's just not the case. We're dealing with organizations that plan years ahead for access to capacity to meet their day-to-day mission requirements that they have now and what they're forecasting in the future. We support them by providing flexible mechanisms to where they task and when to be responsive to whatever they're dealing with in their day-to-day operations.

Speaker Change: And internationally.

Henry Dubois: So we.

Henry Dubois: Our various international customers will ramp up as we get our gen three capabilities online.

Brian OToole: So, we provide them with that assured access, flexibility, but as you know, we typically offer those capabilities through long-term multi-year subscription contracts because they want that capacity and they want to ensure that it's going to be there for years.

Brian OToole: And so are both. Is it fair to assume both of those contracts are based on Gen 3 entirely, or is there also a component of Gen 2?

Henry Dubois: And so are both. Is it fair to assume that both of those contracts are based on Gen 3 entirely, or is there also a component of Gen 2?

Speaker Change: And so our belief is it fair to assume both of those contracts are based on Gen. Three entirely or is there also a component of gen. Two.

Henry Dubois: There's work through across all our product lines.

Brian OToole: There's work through across all our product lines.

Speaker Change: This worked through across all our product lines.

Brian OToole: Great. And, you know, the final question on cost savings. Was that primarily due to headcount reductions that were done within the past year? Or is that more just operational cost savings within the business? And I guess part two of that is, as you ramp up Gen 3, which is a new capability, are there any, you know, incremental costs or is operating those satellites, you know, seamless within the NOC, you know? number of personnel and whatnot to bring those online.

Brian OToole: Great. And, you know, the final question on cost savings. Was that primarily due to headcount reductions that were done within the past year? Or is that more just operational cost savings within the business? And I guess part two of that is, as you ramp up Gen 3, which is a new capability, are there any, you know, incremental costs or, or is operating those satellites, you know, seamless within the NOC, you know, number of personnel and whatnot to bring those online.

Henry Dubois: Great.

Henry Dubois: And final question on the cost savings.

Brian OToole: Was that primarily due to head count reductions that were done within the past year or is that more just operational cost savings within the business and I guess part two of that is as you ramp up Gen. Three which is a new capability are there any.

Speaker Change: Incremental costs or four is operating those satellites seamless within the knowledge.

Brian OToole: Number of personnel and whatnot.

Brian OToole: Bring those online.

Brian OToole: Yeah, Chris, it's Brian. I think, you know, first off, we're continuing to hire. So, you know, we haven't had to do any major structural headcount reductions in the company. The savings you're seeing are just improving our business operations, back office, and other things. So, we are actually, As we achieve those savings, we're actually reinvesting some of that OPEX into things like sales and marketing to support our growth. But I think what you're seeing is that we're aligning our growth with our revenue. Um.., and we're managing our expenses extremely well and are highly focused on that.

Brian OToole: Yeah, Chris, it's Brian. I think, you know, first off, we're continuing to hire, and other things. So, as we achieve those savings, we're actually reinvesting to support our growth. But I think what you're seeing is that we're aligning our growth with our revenue, and we're managing our expenses extremely well and are highly focused on that.

Brian OToole: Yes, Chris it's Brian I think.

Speaker Change: First off we're continuing to hire.

Henry Dubois: Makes sense, and then just one last one for me for Henry. Maybe one other way of looking at that contract asset balance, where would you see that being sort of a year from now? I understand that expecting to collect the current balance over the coming year, but I assume also new signings and renewals would be adding to that balance. Just to envision that balance being roughly where it's at significantly higher, significantly lower, any color that would be helpful.

Brian OToole: So.

Brian OToole: We haven't had to do any major structural head count reductions in the company.

Brian OToole: The savings, you're seeing or just improving our business operations back office.

Brian OToole: And other things so.

Brian OToole: We are actually.

Brian OToole: <unk>.

Brian OToole: As we achieve those savings are actually reinvesting.

Brian OToole: Some of that Opex in things like sales and marketing.

Henry Dubois: Sure. What I would point, what I would, the way I would take a look at that one is a lot of these are tied to milestones as we complete our Gen 3 program, start getting our Gen 3 satellites up and work towards completing that program. And some of the work that we've talked about on the international projects that we need to complete prior to being tied into their work streams. So over time, that number should be coming back down.

Brian OToole: To support our growth, but I think what youre seeing is.

Brian OToole: We're aligning our growth with our revenue.

Brian OToole: And we're managing our expenses.

Brian OToole: It's extremely well and are highly focused on that.

Brian OToole: Okay.

Chris: Great. Thanks, guys.

Chris: Thank you Chris.

Henry Dubois: If you look at it where we've been historically, it would be a good way to look at that. And so I think I don't think it will stay up at that 28th, but we're not providing guidance on next year's number yet. Okay, that's helpful.

Operator: Thank you, Chris. At this time, there are no further questions. This concludes Black Sky's second quarter 2024 earnings conference. Thank you for joining the call. Thanks for watching!

Operator: At this time, there are no further questions. This concludes BlackSky's second quarter 2024 earnings conference call. Thank you for joining the call today.

Speaker Change: At this time there are no further questions. This concludes <unk> second quarter 2024 earnings conference call. Thank you for joining the call today.

Operator: Thanks for all the help. Again, if you would like to ask a question, press star one in your telephone keypad.

Operator: [music].

Christopher Quilty: And your next question comes from the line of Chris Quilty with Quilty Space. Please go ahead. Thanks. Just wanted to do a follow up on the GDMP program. Is there a cap on the size of contracts that customers can contract through that vehicle. And the second question is, like, is there a graduation path? I mean, should we think of this as sort of like a cyber type program that allows more contracts and eventually, if those customers, you know, want to engage in a larger long term contract, they're going to have to go out and find, you know, separate funding for it. And I know it's early days. Within the program, both, you know, what's your expectation?

Operator: Yes.

Operator: [music].

Christopher Quilty: Yeah, that's a good question, Chris. I think what we're seeing now, you're right, it is early days. Right now, they're starting out with a small kind of five figure type services. They get delivered really quickly and quickly within like weeks and months. They typically start with that base kind of service, but they also can attach options to them to extend them over time. So and it is because it is early days, I think the government and users are still working through, you know, the potential of this and how they can take advantage of it.

Operator: Okay.

Operator: Yes.

Operator: and more. Thank you for watching. Please subscribe to our channel. See you next time. Bye-bye.

Christopher Quilty: But I think the general thing that we're seeing is. This is a really efficient as the potential to be a really efficient marketplace that can drive incremental revenue and drive incremental capture of a whole range of new customers through a street streamlined acquisition process. Gotcha.

Christopher Quilty: Question on Gen 3. Obviously, first one going up in December time frame. Just based upon, you know, the capex to date on the program, is it fair to assume you've got, you know, half dozen to a dozen satellites and some stage of production. And no, you're not providing guidance for next year, but it sounded like, you know, after the first satellite, you may do single satellite launches before it's eventually doing multiple, is that a fair assumption?

Christopher Quilty: And when you, of course, I think, sorry. Yeah, no, I think, I think as I said, you know, we'll launch the first couple, a single launches. You can assume that we have been investing in the long-lead components for a number of Gen 3 satellites. And as I mentioned in my remarks, that production line is ramping up and that will enable us to get into a cadence of launches next year. On the single launch element of this, just as a reminder, we have secured the first four launches with Rocket Lab through a vendor finance deal.

Christopher Quilty: So overall, we're on track to get the first units up later this year. We've got the supply chain and the production line up and running that puts us in a position to get to a regular delivery of satellites and deployment of those in 2025. Understand. And how should we think about the revenue contribution from Gen 3, from the perspective that you're going to be tapering in, you know, as you launch new satellites, more and more capability, are the contracts that you sign with customers, including E O C L, structured in such a way that there are incremental step ups, or do you have to get to like a certain volume of imagery before there is a step up.

Christopher Quilty: In the contract. I think you'll see a little bit of both, Chris. You know, I think the way we think about it, there'll be a steady ramp in revenues. You're not going to see. And in some cases, some contracts will have step ups. But when you look at it year over year, you should see steady growth in that line as we, as we ring that capacity online. Great.

Christopher Quilty: And Henry, what should we think in terms of contract advances? You've got, you know, large contracts with Indonesia and the IMOD contract. Should we be modeling in some sort of step up for those customers, sort of, fronting your, your capex and working capital, or is that something that you have to shoulder? Well, each contract tends to be unique. Some of them have some early prepayments, which help with the capex programs. Some of them tail off a little bit and we build up a little bit of some contract assets as we work our way through it.

Christopher Quilty: But overall, we, we, we, we prize those large contracts. We've got a couple in the pipeline, and that's the variability on where we think the year end guidance could be, just be due to timing. And with those two specific contracts, I mentioned obviously there's a development phase and I think you've got 12, maybe even 24 months under behind the IMOD contract. You know, when does that thing start to kick in in a more material way?

Christopher Quilty: Well, we don't discuss individual customers. We've never identified who our customers are internationally. So we did, our various international customers will ramp up as we get our Gen 3 capabilities online. And so are both, is it fair to assume both of those contracts are based on Gen 3 entirely or is there also a component of Gen 2? There's work through across all our product lines.

Brian OToole: Great.

Brian OToole: And you know, final question on the cost savings that was that primarily due to headcount reductions that were done within the past year, or is that more just operational cost savings within the business? And I guess part two of that is, as you ramp up Gen 3, which is a new capability, are there any incremental costs or is operating those satellites seamless within the NOC, number of personnel and what not to bring those on on?

Q2 2024 BlackSky Technology Inc Earnings Call

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