Q4 2024 BlackSky Technology Inc Earnings Call
Our faith. Our imagination. This world needs change.
Speaker Change: Greetings and welcome to the Blacksky Technology Q4 2024 Earnings Conference call and webcasts. At this time, all participants are listening, listening, and mode. If anyone should require operator assistance, please press star zero on your telephone
Speaker Change: A question and answer session will follow the formal presentation. You may be placing the question cue at any time by pressing star 1 on your telephone keypad.
As a reminder, this conference is being recorded.
Speaker Change: It's now my pleasure to turn the call over to Aly Bonilla, vice president of this relations. Aly, please go ahead.
Allie 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.
Brian OToole: On today's call, Brian will provide some highlights on recent activities and give a strategic update on the business. Henry will then review the company's full-year financial results and outlook for 2025.
Allie Bonilla: Following our prepared remarks, we will open the line for your questions.
Allie Bonilla: A replay of this conference call will be available from approximately 12.30pm Eastern time today through March 20th. Information to access the replay can be found in today's press release.
Allie Bonilla: 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.
Allie 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 2025, are forward-looking statements.
I don't know, I don't know. I don't know. I don't know. I don't know.
Allie 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 forum 10K.
Allie Bonilla: We encourage you to review our press release, form 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.
Allie Bonilla: Blacksky assumes no obligation to update forward-looking statements, except as may be required by applicable law.
Allie Bonilla: In addition, during today's call, we will refer to certain non-GAAP financial measures, including adjusted EBIDA, adjusted imagery and software analytical service cost of sales, and cash operating expenses.
Allie Bonilla: A 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.
Allie Bonilla: At this point, I'll turn the call over to Brian OToole. Brian ?
Brian OToole: Thanks, Allie, and good morning, everyone. Thank you for joining us on today's call.
Beginning with Slide 3 [inaudible]
Speaker Change: I'm happy to report that the future of real-time space-based intelligence is now here with Gen 3.
Speaker Change: On February 18th, our first Gen 3 satellite was successfully launched into orbit.
and within five days entered into initial imaging operations.
Initial images from this advanced spacecraft.
are already with unexpected quality specifications.
Speaker Change: This significant achievement represents a profound advancement for Blacksky and our industry.
Speaker Change: and marks a pivotal step forward in the evolution of our space architecture.
by introducing very high resolution imaging to our high frequency monitoring constellation.
Speaker Change: This new class of satellite with its 35 centimeter resolution and other features [inaudible]
Such as shortwave IR imaging, improved agility, and advanced communications.
Speaker Change: will deliver image quality comparable to the best in the market.
Speaker Change: This exceptional image quality now enables us to deliver new AI-derived insights.
Speaker Change: delivered at the speed of conflict, providing our customers with new and advanced forms of space-based intelligence.
with this major milestone behind us.
Speaker Change: We are confident that this spacecraft will deliver the level of performance required to meet the needs of a rapidly evolving market.
Speaker Change: We are now ready to move forward with a regular cadence of launches to rapidly build out and expand the Gen 3 Constellation over the coming months and years.
Speaker Change: We are on track to make this new capability available to our customers shortly.
adding very high resolution imagery for best-in-class space-based intelligence.
Speaker Change: Our global customer base has been looking forward to this capability.
as evidenced by the significant multi-year contracts.
Moving to slide four
Speaker Change: The speed of deployment and commissioning of the first satellite marks a new standard for the industry.
Reducing these operational timelines from months to days.
Speaker Change: This achievement is especially impressive for a new spacecraft of this caliber.
which is a testament to Blacksky's technical expertise.
Architecture, Space Technology, and Proven Flight Experience.
Speaker Change: The fact that we successfully moved from launch to first image in five days.
Speaker Change: Even with this first vehicle, demonstrates an architectural readiness, maturity and resilience that will serve our customers with high performance and cost-effective space-based intelligence solutions for years to come.
Speaker Change: The imagery that we are now producing is well within our expected performance specifications.
Speaker Change: One of our key strengths is our software architecture and our ability to use automation to efficiently operate our constellation.
Speaker Change: This capability was instrumental in a critical factor that enabled us to already have the vehicle in fully automated operations.
Speaker Change: which sets us up to efficiently continue additional testing and complete commissioning operations over the next 30 days.
Speaker Change: We've already begun providing sample imagery to our customers, which is ahead of our plan schedule.
We will continue to improve the already exceptional
Speaker Change: Imaging Performance of Gen 3 as we further tune the payload in processing and ultimately lower the satellite to its final orbit.
Turning to slide five [inaudible]
Speaker Change: The imaging performance of the Gen 3 satellite is comparable to that of recently launched satellites from legacy providers.
We are redefining the economics of space-based intelligence.
Speaker Change: by producing our Gen 3 satellites at a fraction of the cost of traditional satellites.
while delivering new mission critical insights.
Leveraging a proliferated constellation approach. [inaudible]
Two dynamic, hourly monitoring, and automated AI.
Speaker Change: We believe the on-orbit costs of a Gen 3 satellite are between 10-15% of on-orbit costs of recently launched satellites from legacy providers.
Speaker Change: These new economics represent an efficient use of capital while providing high-value solutions to our customers through a proliferated constellation.
Speaker Change: With this low cost high performance model, we can eliminate the trade-off between affordability and capability.
Speaker Change: allowing customers to access very high-resolution low-latency data without the prohibitive of experts of traditional systems.
Speaker Change: This efficiency, combined with our high-frequency monitoring capability, is what's driving increased global demand for our services and giving us a significant competitive advantage in the market.
Moving to slide six [inaudible]
Speaker Change: with our first Gen 3 satellite now on orbit and into initial operations.
Speaker Change: We are on track to begin a regular cadence of launches of additional Gen 3 satellites.
Speaker Change: Our next Gen 3 satellite is currently in the final assembly, integration and testing, but plans to ship this satellite for launching Q2.
Speaker Change: As we have mentioned before, we have a full production line of Gen 3 satellites underway at our production facility in Seattle and are set to significantly expand our constellation
with five additional Gen 3 satellites in 2025.
Speaker Change: In addition, we are launching another Gen 3 satellite that is for a US government customer.
Speaker Change: We expect to enter revenue-generating operations and begin offering greater imaging resolution
to our global defense and intelligence customers by mid-year.
Speaker Change: Within the next 12 months, we plan to have a fleet of at least 8 Gen 3 satellites.
Speaker Change: These new satellites will integrate seamlessly into our existing constellation, Global Ground Network, and Spectra Software platform.
Speaker Change: Dramatically increasing our revisit rates, reducing delivery latency, enhancing our image quality and capacity, and enabling new AI derived insights.
Speaker Change: With each new deployment, we are scaling our ability to constantly improve the value we are bringing to our customers.
Speaker Change: Now let's move on to some recent contract wins that illustrate the ongoing demand for our imaging services
As more and more customers side long-term subscription agreements,
to secure our capacity now and in the future.
Turning to slide seven [inaudible]
Speaker Change: I'm happy to report that we recently won a seven-year contract value at over $100 million with an existing strategic international customer.
Speaker Change: This contract is a prime example of how our mission critical services.
Speaker Change: are becoming an essential element of national and homeland security for customers worldwide.
to meet their near-term and future needs for space-based intelligence.
Speaker Change: Major customers are entering into long-term contracts to secure these services and guarantee their priority tasking rights in their region.
This new subscription agreement guarantees the customer a sure priority access . . . .
Speaker Change: to our high resolution imagery over their region of interest for the next seven years.
Speaker Change: Leveraging our entire constellation of Gen 2 and Gen 3 satellites.
by securing annual capacity minimums through 2032.
Speaker Change: This contract allows the customer to lock in high cadence monitoring services today.
Speaker Change: with the flexibility to adopt new advancements as their requirements evolve over time.
while providing Blacksky with good long-term revenue visibility.
to secure priority access to the constellation.
The contract included an up-front prepayment of $32 million.
Speaker Change: We are excited to sign this agreement and continue to build on our long term relationship with this important customer.
Moving to slide eight
Speaker Change: We recently announced that we won contracts totaling approximately $20 million dollars.
to support India's cutting-edge Earth observation space capabilities.
This is a major new customer.
Speaker Change: and is our initial entry into a growing market in India.
Speaker Change: These agreements include immediate subscription-based access to our Spectras real-time AI-powered imagery and analytic services.
Plus the delivery and support of a high-resolution satellite.
Speaker Change: One's operational. The dedicated satellite will work with our dynamic monitoring constellation to deliver mission critical insights at industry leading speeds.
Speaker Change: We are honored to be part of India's space development efforts and look forward to a long-term and growing partnership.
Turning to Slide 9
Speaker Change: Over the past year, we continue to make significant strides expanding our customer footprint with the U.S. government and securing major contracts with key government agencies.
Speaker Change: One of the most notable is the strong execution we continue to demonstrate supporting the NRO under the Electrooptical Commercial Layer or EOCL contract. As we finish 2024, the NRO awarded us an additional extension to their subscription service.
Speaker Change: to continue giving them access to our Gen 2 high frequency imagery services through mid-2026.
The contract also included some feature enhancements.
Speaker Change: to the current service-level agreement and interfaces to the U.S. government systems.
Speaker Change: This extension does not include access to our Gen 3 imaging services.
Speaker Change: which we expect will be added later this year as Gen 3 capacity comes online.
[inaudible]
Moving to slide 10 [inaudible]
Speaker Change: We were awarded a multi-million dollar contract extension to our Tech Geo contract with the U.S. Government's Defense Innovation Unit.
Speaker Change: The TACGEO program includes a dedicated Gen 3 satellite as an advanced technology demonstrator to inform future space-based tactical intelligence, surveillance, and reconnaissance.
or ISR capabilities.
Speaker Change: This contract extension expands on earlier government funded R&D work and now includes the launch and management of a customer owned Gen 3 satellite.
Speaker Change: This contract complements our recent announcements for customer-funded research and development projects.
Speaker Change: such as the integration of OISL or optical intersatellite links to our Gen 3 architecture.
R. Portfolio Strategic R&D Programs
enables us to partner early with US government agencies.
to deliver and deploy cost-effective cutting edge.
Speaker Change: Space-based intelligence solutions for a range of defense and intelligence mission needs.
Speaker Change: We believe the economics of our satellites combine with these advanced technology programs.
Speaker Change: are highly aligned to support the government's objectives to leverage new advanced commercial technologies under agile and fixed-priced acquisition models.
Turning to slide 11.
Speaker Change: We've made great strides over the past year, achieving key financial and operational milestones, and are now well on our way toward our next phase of growth, building off several major recent achievements.
Speaker Change: First, the successful launch and deployment of our first Gen III very high resolution satellite marks a major technological accomplishment and a key business milestone.
Speaker Change: This next-generation satellite represents a leap forward in imaging capabilities and sets us on a path for unlocking our next phase of growth.
Speaker Change: Second, in the past few months, we secured multi-year contracts valued at over $150 million.
Speaker Change: These recent awards demonstrate ongoing demand and underscores our expanding role, delivering mission-critical capabilities, supporting customers around the world.
Speaker Change: Third, in 2024, we achieved our first full year of positive adjusted EBITDA.
Speaker Change: This significant financial milestone underscores the strong operating leverage inherent in our business and demonstrates our ability to scale efficiently while driving towards sustained long-term profitability.
Speaker Change: And finally, with these major achievements, we look forward to delivering a strong year of revenues in 2025.
Speaker Change: as we forecast total revenue growth of 30% over last year.
[inaudible]
Speaker Change: This forecast reflects the strength of our existing contracts and the continued expansion of our capabilities and service offerings.
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Speaker Change: With that, I'll now turn it over to Henry to go through the full-year financial results. Henry?
Henry: Thank you, Brian , and good morning, everyone. In 2024, we continue to make strong progress toward our financial and strategic objectives.
Henry: and Cash Operating Expenses excludes stock-based compensation, depreciation and amortization expenses as we believe these measures represent a more accurate picture of our business without having these non-cash items obscuring the underlying performance.
Henry: With that, let's go through our full year 2024 financial results starting with slide 13.
In 2024, we generated total revenue of $102.1 million $102.1 million.
Henry: Our imagery and software analytical services revenue grew to $70.1 million driven by continued demand from U.S. and international government customers.
Henry: Professional and engineering services revenue increased to $32 million, driven by support provided to strategic imagery and analytics customer programs.
Henry: Turning to cost of sales, we continue to demonstrate our strong operating leverage in our imagery and analytics business as shown on slide 14.
Henry: Adjusted imagery and analytics costs or sales for the full year 2024 remained flat at $13.7 million.
Henry: As such, we were able to grow our imagery and analytics revenue by nearly $5 million with minimal
Henry: This offering leverage continues to validate our compelling business model for delivering long-term profitability.
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Henry: Let's move to slide 15 and talk about cash operating expenses.
Henry: The small year-over-year increase of $1.8 million was due primarily to the integration of Leo Sella, which I will speak to on the next slide.
Henry: Our disciplined cost management approach has us continually looking at ways to further streamline our operations and drive additional efficiencies in our business.
Henry: This enables us to make strategic investments in our go-to-market initiatives without necessarily impacting our adjusted EBITDA or long-term growth objectives.
Moving on to Slide 16 [inaudible]
Henry: As we announced in the fourth quarter of last year, we acquired the full ownership sake in Leo Stella from our JB partner and now own 100% of the company.
Henry: This was a strategic acquisition that enables us to have full control over current and future satellite manufacturing capabilities, providing better visibility into our supply chain, production processes, deployment schedules, and long-term technology roadmap.
Henry: This control is important as we embark on the rapid deployment of our Gen 3 constellation with a target of having 8 Gen 3 satellites on orbit by the end of the first quarter in 2026.
Henry: By bringing Leo Stellar in house and vertically integrating their operations, some costs that would have been capitalized if Leo Stellar was still treated as a third party manufacturer now needs to be recorded as operating expense.
Henry: In the past, Leo Sellers overhead expenses such as back office support, management oversight, employee fringe benefits, etc. were paid for by Leo Sellers from payments made primarily by Blacksky to Leo Sellers against satellite production invoices.
Henry: The entire invoice payment by Blacksky was capitalized on Blacksky's books.
Henry: Now, however, as we incur these costs, they are no longer being capitalized and instead must be
Now, Turning to Slide 17 [inaudible]
Henry: Our full year 2024 adjusted EBITDA with $11.6 million compared to a loss of $1 million in 2023.
Henry: This was a significant milestone for us as we achieved our first full year of positive
Henry: It should be noted that had we continued to maintain Leo Stella as a third party manufacturer for November and December , we would have reported an adjusted EBITDA of $13.4 million for the year.
Henry: The significant year-over-year improvement of $12.6 million reported was primarily driven by a few key factors. First, continued revenue growth, second, improved margin performance, and third, responsible cost management.
Henry: We're very pleased with the progress we've made in Adjusted Avatar and look forward to building on the strong performance in 2025.
Moving on to our balance sheet. [inaudible]
Henry: We ended 2024 with $53.8 million of cash, restricted cash, and short-term investments in line with our ending cash battles in 2023.
Henry: Over the next 12 months, we anticipate receiving approximately $28 million in payments as interim milestones on a few major customer contracts are met and expected to be built.
Henry: In addition, last month we received a $32 million cash prepayment related to a recent contract bringing our cash balance at the beginning of March to over $80 million.
Henry: Together with the vendor financing agreement in place to cover several upcoming Gen 3 launches and continue to adjust and imitate our performance, we believe we have sufficient cash and liquidity to deploy a baseline constellation of 12 Gen 3 satellites and drive deposits of free cash loans.
Henry: The capital expenditures for the full year were $50.2 million, slightly below our guidance for the year, primarily due to timing of payments related to our Gen 3 satellite in launch.
Henry: Moving on to our 2025 Outlook, please turn to Slide 18.
Henry: For 2025, we are forecasting full year revenues to be between $125 and $142 million, representing a 30% year over year growth at the midpoint of our guidance range.
Henry: This growth is supported by the strong momentum we saw in 2024, coupled with the recent contract wins in early 2025, which provides us with a significant backlog.
Henry: As of December 31, our multi-year backlog was approximately 261 million dollars.
Henry: and the contract wins an early 2025, grows that backlog to approximately $390 million.
Henry: With continuing revenue growth, discipline cost management, and a full-year inclusive of Leo Stellar operations, we anticipate full-year adjusted EBITDA in 2025 to be between fourteen and twenty-two million dollars.
Henry: In addition, we expect capital expenditures for 2025 to be between 60 to $70 million as we ramp up production and launch additional Gen 3 satellites.
Henry: In summary, we delivered a strong year of financial reforms in 2024. We're proud to have achieved our first year of positive adjusted at all and look forward to unlocking new revenue opportunities as our Gen 3 constellation comes online this year.
Henry: With that, I'll now turn it back over to Brian for some closing remarks. Brian ?
Thank you, Henry Great.
Speaker Change: with our first Gen 3 satellite on orbit and exceeding customer expectations.
Speaker Change: We are excited to be charging ahead to drive our next phase of growth with a focus on three major initiatives.
Speaker Change: First, immediately commencing a cadence of Gen 3 satellite launches to build out the constellation and get this capability in the hands of our customers by mid-year.
Second.
expanding contracts with existing customers.
to unlock new revenue growth. [inaudible]
Speaker Change: And third, aggressively going to market to capture new major customers as part of our land and expand strategy.
Speaker Change: With Gen 3, Blacksky is at the forefront of a new era of space-based intelligence.
Speaker Change: Combining very high resolution imagery with our high frequency monitoring and our industry leading software and AI capabilities.
We are bringing destructive speed, economics and insights.
Speaker Change: to customers that will deliver new and advanced mission-critical capabilities in real time.
Speaker Change: We are excited with the strong start to 2025 and look forward to an exciting year ahead.
Speaker Change: This concludes our remarks for the call and we'll now take your questions.
Speaker Change: Thank you, and now the conducting of question and answer session. If you'd like to be placed into question Q, please press star one under telephone keypad. A confirmation tone will indicate your line is in the question Q.
Speaker Change: You may press star 2 if you'd like to move your question from the queue.
Speaker Change: For participants using speaker equipment, maybe necessary to pick up your handset before
One moment please, what we pull for questions. [inaudible]
Speaker Change: Our first question is coming from Jeff Van Rhee, from Craig Hallum. The light is now light.
Hey, good morning, team. This is Daniel on for Jeff.
Speaker Change: Really exciting on the Gen 3 commissioning, going up live and quicker than expected. Maybe just talk through any implications of that, you know, going up faster than expected in terms of the commissioning and validation. And just anything you can expand on in terms of it exceeding expectations in quality, just in terms of...
Speaker Change: Is that in relation to the resolution or agility, just any other color you have on that?
Speaker Change: Yeah, thanks, Daniel. Good morning. Yeah, as we outlined, just five days in.
Speaker Change: From what we're seeing so far, the image quality is exceptional.
Speaker Change: and exceeding customer expectations. Also keep in mind, really on, we still have more work to do in terms of tuning the payload, the processing.
Speaker Change: Further improved imaging resolution over the course of the next weeks and months.
Speaker Change: The vehicle is performing exceptionally well, the agility is great, that means it's going to be an exceptional collector for our customers and I think Daniel this is really a testament to a very mature
Architecture that we have.
Speaker Change: and we're because of the significant achievements we've already been able to meet on this timeline. We are moving ahead. Our next gen 3 satellite is...
Speaker Change: Final phases of testing and, you know, we'll expect a launch pad in the second quarter. So everything's looking great and we're moving full speed ahead.
Brian OToole: Yeah, yeah, that's a great segue, Brian , to what I was going to ask next is just in terms of the presumably in acceleration and large cadence with that validation with the 60 to 70 million in cat backs.
Speaker Change: Should we interpret that as that was sort of the plan all along? Or is that really sort of stopping on the gas here with the validation that it's working? That's sort of an acceleration and getting the consolation out as opposed to previously planned?
Yeah, that was the plan all along.
You know, obviously we were
Speaker Change: As I mentioned, we've got a full line of these in production and we've lined up launches through…
Arbender Financing B.
Speaker Change: elements of this, but this this level of CapEx for this year was our plan all along. Henry, I don't know if you want to add to that.
Henry: Yeah, Daniel, as you know, we've always been saying we're going to get to six by the end of this year. We are pulling two a little bit faster into this first quarter of next year, which does have some CAPX this year, but it's all generally part of our plan.
Speaker Change: Okay, that's helpful. And then just one last question on the Gen 3 in terms of you mentioned optical interlinks. I think I had been just maybe clarify are you ultimately pursuing optical or radio interlinks for Gen 3 and then I take it that neither of those functionalities is on Gen 3 now, but that's in the roadmap for the coming ones.
Yeah, the current Gen 3 has, already has some...
communication capabilities.
Speaker Change: for Onorbit. It does not currently have optical. We are, as we've mentioned in prior calls.
being funded under number of R&D programs to explore. [inaudible]
Speaker Change: that type of communication capability will likely be integrated into a future tranche of Gen 3 satellites.
Speaker Change: Okay, and then just the last question for me, just on, jump them back to Luno A, is there any sense at this point of how that will ramp in terms of the task orders that you're starting to see come through, or is it still too early to gauge the magnitude of that?
Speaker Change: It's still a little early. We are encouraged. We're starting to see task orders move.
Speaker Change: and you know, through the system. So it is a new program. So sometimes they, those new programs take a few, a little bit of time to ramp up, but we're starting to see some movement. [inaudible]
Thanks and congrats on the launch, guys.
Thanks, Daniel.
Speaker Change: Bacon, next question is coming from Greg Burns from Siddodeon Company, your line is now live.
Morning.
Greg Burns: Well, we look at the mix of revenue in this quarter. The imagery piece is a little bit lighter than we were expecting. And on the, I guess, the flip side, the professional and engineering services was, was higher. Well, why, what was holding back imagery revenue growth?
Greg Burns: This quarter, and when we look into the guidance for next year, what does that consider in terms of the mix of revenue and that 30% revenue growth?
Speaker Change: Yeah, thank you, Greg. That's a good question. I think the largest impact to imagery and analytics last year.
Speaker Change: was the transition of the NGA EIM contract into Luno. We had been performing extremely well in the years prior to that in driving revenue growth through that contract.
Speaker Change: It took longer than expected, and that transition from EIM had a slight impact. That's the largest.
Impact to that line last year.
Speaker Change: And in terms of the guidance, how should we think about what is the mix of revenue that you're expecting next year, like what are the growth rates you're looking for on imagery versus engineering?
Speaker Change: I think just as a reminder, some of these engineering projects tend to have quarter to quarter variability, so you know you've seen that consistently over less.
A couple of years, we still have a very strong...
Speaker Change: I'm on a revenue coming from that professional services line. I think as you see Luno ramping.
Speaker Change: improving performance in that part of our business. It's also important to point out that
Speaker Change: Those professional and engineering services are tied to our imagery analytics customers, which have subscription agreements, so these things are linked.
Speaker Change: and early professional engineering activities generally tend to be driving towards later imagery
Revenues, and these are long-term, very sticky contracts.
Josh Sullivan: The next question is coming from Josh Sullivan for the Benchbar Company Align is now live.
Thank you very much.
Morning Josh. Morning Josh.
Josh Sullivan: Just as far as the Leo Stella overhead impact, just how do we think of that margin impact long-term or maybe what should the ramp look like over the next two years?
Yeah, I think.
Speaker Change: Josh, I'll throw it over to Henry, but we've really only been operating that company now for a few months. We expect to gain some operational efficiencies there over time as well as continued improvement in our overall cost and economics related to our.
to our satellites.
and so...
Speaker Change: It was a very strategic acquisition in the sense that we now have...
Uh...
Speaker Change: Control over the entire operation and high visibility into supply chain, and also is important importantly is the technology roadmap that's driving our future.
Space Capability, so Nat, you know, you're seeing some near term.
and impacts as we absorb expenses.
Speaker Change: But, you know, long-term, this was a really good move, so I don't know. Henry, do you want to add any more color?
Henry: Yeah, just kind of getting to the specifics, Josh, as you kind of map it out, as I said in the remarks, the primary difference in the growth and expenses in 2024 versus 23 of about 1.8 related to the integration of Leo Stellar in the last two months of the year.
Henry: Leo Stellas would have incurred those costs, but they would have recouped those costs in the invoices they sent to us, so we've got a little bit of a geography difference on the financial statements.
Brian OToole: going from op-x to capex. Now with that said, as we go through the full integration we do expect to be able to kind of optimize our operations and streamline and kind of bring those things back in line so we end up do getting some real synergistic savings in here as well as the obviously the strategic benefits that Brian was just mentioning. [inaudible]
I don't know. I don't know. I don't know. I don't know.
Brian OToole: Got it. Okay, and then maybe just switching over to kind of some headlines just around intelligence sharing, you know, does that impact any contracts and in your view?
Right.
Brian OToole: We're not seeing that. I think we're just seeing growing demand both in the U.S. and internationally.
Brian OToole: You know, as a reminder, you know, we, these are long-term subscription contracts which reflects the needs for our customers to...
Brian OToole: have access to our capability on a daily basis and so you know that's the nature of this industry.
Brian OToole: And, you know, this is an exciting time for us, and we're seeing that demand reflected in the—
in the large number of contracts, these multi-air agreements. [inaudible]
and the continued expansion with these important customers.
Brian OToole: Yeah, and maybe I'll just ask a different way. You know, are you seeing any difference in contracting since the new administration is coming in January ? Obviously, you know, more an emphasis on commercial-based models. Just curious, you know, what you've seen since, you know, since January in the market.
Brian OToole: Well, it's pretty early. I think we secured a lot of long-term contracts, which has a great position. We are very excited.
and that Blacksky is really ideally suited.
Brian OToole: for where the government wants to go to long-term, and that's leveraging...
Brian OToole: Cost-effective solutions that are delivering significant value, leveraging technology and other capabilities, and we are really well positioned.
to capitalize on that as that moves out over time.
Thank you for the time.
Speaker Change: Thank you. That's a question today is coming from Chris Quilty, from Quilty Spatier Blinders
Chris Quilty: Thank you. Brian , I guess first, you were right. I was wrong. Five days is impressive, so congratulations.
Speaker Change: Henry, I know the guy next year. I know. You know, your guidance for next year obviously implies whatever step up you may be seeing from the EOCL contract as you bring more Gen 3 online.
But can you remind us, like, is that contract-
Speaker Change: and I know we don't know the details of it, but as we model out, is it…
Speaker Change: Did the revenues step up associated with Gen 3 sort of a crew on a satellite by satellite bases?
Speaker Change: By the end of the twenty five. How much of the contract value might we have step up value might we have? [inaudible]
captured.
Yeah, Chris, Brian , so I think-
Speaker Change: There's a couple of things we've talked about this in the past. We are selling our services under a service level agreement for the entire constellation, so it's not on a satellite by satellite.
basis, and then the way to contract a structured. [inaudible]
Speaker Change: Think of it as a set of layered subscription services. And so right now we have a base subscription with the US government that as we announced, just got renewed out into 2026 for Gen 2. That's going to continue through 26.
Speaker Change: The government can award us additional subscription packages that are already in the contract that layer on top of that and so that's where you begin to see a step up as those additional layered services.
Speaker Change: Come online, and as we bring, as we mentioned, as we bring Gen 3 capacity.
Speaker Change: Online, we are expecting to see that a step up of additional packages later this year.
Great.
Speaker Change: I have to ask the question, I mean, with doge cuts going around and you've got some, you know, at least exposure on the NASA side, where do you think you might have any exposure from or your customers might have exposure?
Speaker Change: All right. Now from a regulatory perspective, you know, we have everything we need.
Obviously, it's a fluid situation, so we're monitoring that.
very, very carefully as normal, as normal course.
Speaker Change: Gotcha and I guess final question just on the the margin profile looking at 2025 obviously there's an assumption of
Boat Coss, [inaudible]
Speaker Change: Rolling off or rolling out of CapEx in the OPEX as satellites are brought on on line, but are there any other large step-ups and costs we should model for 25?
Speaker Change: No, Chris, we've been consistently holding our costs fairly flat as a relative to our revenue growth and so you can expect that going forward.
this year, and next as we move forward. So, um...
We're just at this point.
Speaker Change: I'm going to continue against that model and the operating leverage we have and driving higher revenues and delivering that to the bottom line through increased EBITDA performance.
Thank you.
Speaker Change: Great and thanks for the higher granularity on the launch plans that that's helpful for modeling purposes appreciate it.
Yeah, thank you, Chris.
Speaker Change: Thank you. Next question, today is coming from Edison Euphan, don't you bank your line as well, right?
Edison Yu: Hey, good morning. Thanks for taking our questions. Just first on the growth 30% for 25%, obviously a acceleration, any way to dimension how much of that is new contracts versus existing?
I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Edison, good morning. Thanks for the question.
Speaker Change: Yeah, a lot of the growth this year is coming from expansion of existing contracts.
We are expecting to begin to ramp new customers.
Speaker Change: Later in the year as Gen 3 comes online, but if you think about our recent contract wins, you know, winning Luno is yet to really ramp.
We built significant backlog class here and over the...
Speaker Change: over the course last few months, which, you know, there's well over 100 million in backlog.
Speaker Change: So, that gives us very strong visibility into this growth for forecasting for 25.
[inaudible]
Understood.
Speaker Change: And then, separately, on the capital needs, if I kind of do some rough math, I guess the liquidity and some of these payments you're getting to maybe over 110 million, do we need to raise any more money to ensure some type of cushion going forward on Gen 3?
Speaker Change: As we said in the remarks, when you take a look at the liquidity we have available to us, the cash on the balance sheet, and as I said, as of early March it was over $80 million.
Speaker Change: The financing we have for some of our launches, from our vendor, and also from the assets we expect to collect, and in addition to that positive adjust to David's performance, we believe we've got sufficient.
Speaker Change: Liquidity to get to our baseline constellation of 12 satellites. So I think we're in pretty good shape right now. I believe we're able to execute against our plan with what we have. We could always be opportunistic, but I think we're in a good shape.
Speaker Change: Got it. And just one long-term one. As you think about Gen 3, it seems to be coming on a bit faster.
Speaker Change: Do we have any sort of confidence, or do we have a maybe a line of sight into maybe the phasing of how fast we can recognize the contribution from from Gentry?
[inaudible]
Edison Yu: Well, I think we're seeing a significant demand Edison and so you know it's kind of reflected in what you're seeing with these long-term contracts with the OCL, the International.
Edison Yu: We just signed, remember we signed a very large international agreement last year, or the year before, which is worth north of $150 million, so I think we're excited that as we add more and more of those customers.
Over time, you know, we're going to begin you, begin to...
Edison Yu: to increase that backlog, those multi-year agreements, and a lot of that future growth is...
Edison Yu: is ready to be unlocked as we get these Gen 3 satellites online.
Good. Thank you.
Speaker Change: Thank you. Next question is coming from Jaeson Schmidt from Lake Street, Capital Market, and Triline is their life.
Jason Schmidt: Hey guys, thanks for your time, my questions. Just curious, with Gen 3 contracts, if you're seeing sort of that price lift or lift in overall contract size that you had expected to see kind of with this new capacity.
Jason Schmidt: Yeah, I think the growth we're seeing is in line with what we expected. This is a significant new capability.
Jason Schmidt: when you're combining very high-resolution with high-frequency and low-latency-delivering of AI-enabled insights. This is exactly what the market is looking for right now as real-time intelligence is critical.
and so this new capability...
Jason Schmidt: is very significant to our customers and we're seeing them sign up for long-term agreements to ensure they have access to it for years to come.
Speaker Change: Okay, and then just to follow up along what you just said, or most of your conversations today with customers for Gen 3 capacity, could you still have a lot of Gen 2 capabilities
Speaker Change: Oh, the Gen 2 is obviously you've seen our growth from Gen 2 over the last couple of years and so
Speaker Change: There, there is significant value in Gen 2 and they're continuing to buy that. You know, that's reflected in the US government's extension of our EOCL contract into 2026.
for that capability, the high frequency low latency... [inaudible]
Speaker Change: that we can offer through that constellation is an extremely important capability and so we're seeing customers continue to buy that but are also excited about what happens when Gen 3 gets integrated over time.
Speaker Change: Understood. And then just a final question, I'll jump back into cute. Going back to when the previous questions on kind of professional services and sort of that big jump in Q4, when we start to think about 2025, do you expect professional service is revenue to be up from 2024?
Speaker Change: Jason, this is Henry, and in the Q4 of 2024, we had the delivery of a feature set, if you will, that's going to enable one of our subscription customers to utilize their imagery more effectively as they go forward. So that actually is highly supported.
Speaker Change: A long-term customer base there. So I mean, that's the reason why we had that for some work that we've been doing and been able to leverage.
Speaker Change: As we go forward, we've always said that we would expect to maintain some professional services and engineering services because that helps us get the long term subscription contracts Thanks.
Speaker Change: and we would expect to be able to have some growth and a little bit of growth in that as well. We would expect that imagery and analytics will grow faster in the long term, but in 2025 we're going to kind of maintain a mix here. [inaudible]
https://otoole.com
All right. Perfect. Thanks a lot, guys.
Speaker Change: Thank you. Next question today is coming from Tim Horan from Oppenheimer, New Orleans. How much more can the imagery improve from where it's at now and in the orbit? Can you just update us how much faster you're delivering the images now and...
Speaker Change: Maybe just on the AI front, are you seeing major improvements in your ability to analyze these images?
Yeah, Tim, as I mentioned, you know, it's-
Speaker Change: It's pretty amazing that within five days we're producing images of this quality. We will continue to tune
The payload in the processing over the coming weeks.
and we...
Speaker Change: We will lower this a little further to improve the resolution so it's already exceptional and it will just get better from here.
Speaker Change: Outline in my remarks that the Gen 3 satellites integrate seamlessly into our existing ground and software capability, so the speed of delivery, latency and the exceptional customer experience.
We begin to deliver right out of the box.
So...
Speaker Change: We're in great shape there. And then the AI capabilities as we're just still early in evaluating these images.
Speaker Change: A really important capability for our customers, so we're really excited for what we're seeing already there.
and if the demand is there… [inaudible]
Speaker Change: Will you go beyond 12 satellites? You know, I have to mention how many can you go to longer term and are you starting the work on generation 4 satellites at this point?
Speaker Change: I think we, you know, our model is we would expand the constellation over time as the market to demand.
Speaker Change: Meats, we've always been targeting about an hourly revisit frequency capability.
and so that's dictated the size of this constellation.
Speaker Change: But as customer, demand increases, that's a great part of our model is that we can add incremental capacity.
as we need it without having to overbuild.
Speaker Change: So we're excited about that and of course, you know, we are a space technology company so we are continually always investing and looking ahead and software AI and our space capabilities.
Speaker Change: Henry, just two financial questions for you. So, what do you expect from Leo Stella Impact to be for 25? Sorry, I got lost there with the numbers a little bit. And then can you give us a sense of how revenue paces throughout the year or what do we expect in the first half for a second half?
Speaker Change: Sure Tim, I mean regarding Leo Seller as I've as I've said with in 2024 we had about a 1.4 I'm sorry, about 1.8 million dollar increase [inaudible]
Speaker Change: in cost over 2023, primarily driven by the integration. And that is movement from a kind of a cap, what would have been a cap X to what is now in opera X because of the ownership structure.
Speaker Change: That was for the time period and the November December time period. We would expect over time that would be able to kind of continue to kind of get efficiencies out of that and hopefully bring that in line so we don't have as big a hit as we become more efficient. Thank you very much.
Speaker Change: but the strategic nature also is quite important to us. But again, from a cash perspective, it's more of a...
Speaker Change: Geography Place is where it shows up on our financial statements as opposed to an impact on cash.
Speaker Change: So that's kind of on that one. On kind of the revenue ramp. Yes, we would expect
Speaker Change: imagery and analytics to ramp more in the second half of the year as we get more Gen 3's up. This first Gen 1 3 is great and kind of shows the capabilities but when we need to be able to get to kind of a minimum viable offering was about four or four satellites which would be expected to start sometime in the second half of the year, early second half of the
and so that would be expected to see that ramping then.
Thank you.
Speaker Change: Thank you. Next question today is coming from Scott Buck from Each T-Way Right. Your mind is in our line.
Scott Buck: Good morning guys, thanks for the time. Brian , I guess a bit of a follow up on one of the earlier questions as some of your customers lock in this longer term capacity.
Scott Buck: Do you have the ability to start raising prices on those that are a little longer to wait, or do you go straight to trying to build out more capacity?
Well, I think, I think, uh,
Scott Buck: We're able to deliver, Gen 3 delivers a lot more value to customers with the improved resolution also.
The economics are compelling, but also are…
Scott Buck: in line with our business model. So, where we're excited is…
Scott Buck: Our ability to deliver higher value services cost-effectively to customers that are interested in long-term engagements.
[inaudible]
Speaker Change: Okay, that's helpful. And then just my second one, in terms of CapEx and...
Speaker Change: Satellite or Gentry Satellite production, any risk that the potential tariff talk could have increased the CAPEX requirements? I mean, are you sourcing from any?
We don't want to study your own.
Speaker Change: We understand our bill materials on these satellites. We have long lead capability already in place and so we're not seeing
There there will be an impact. [inaudible]
Okay, that's it from me guys, thanks a lot.
Thanks, Scott.
Speaker Change: The next question is coming from Dave Storms from Stonegate, your line is not live [inaudible]
Arnan, and thank you for taking my questions.
Dave Starnes: I just want to start with the impressive backlog in the crease. Would we expect to see a rapid burn of that backlog once you hit, you know, any early-gen 3 milestones, you know, is there a critical mass that we should have in mind of satellites up, but maybe start a burn of that backlog?
I don't I don't
Speaker Change: We're not seeing that there'll be a critical mass of satellites that drive a significant
Speaker Change: Step up, but maybe I think I'll throw it over to Henry because there is a positive implication and relative to some of the...
Henry: the unbuild aspects of our balance sheet. Yeah, sure Dave, when you take a look at our backlog
Henry: With the, what we had at year-end and with the contracts that we just were awarded here in the first two months of this year, our backlog would stand at around $390 million in total.
Henry: of that 390, about 100 million of that would be expected to be realized here in 2025, so that gives us a pretty good base to be working off of. And then the rest of that backlog will go out in 26, 27, etc.
Henry: So we're feeling pretty good about where that is and how that ramps up. And the revenue recognition I was mentioning is based on where we expect to be in terms of satellite deployments.
Speaker Change: on this note. That's great color. Thank you. And then just one more for me, with the contracts that you've been on with your Gen 3 satellites, aside from pricing, do they have any favorable milestones or terms that you can request compared to some of the Gen 2 satellites contracts?
Well, I think the
Speaker Change: Well, I think first off, we are seeing customers wanting to lock in long-term.
the $100 million contract.
Speaker Change: We just want to reflect that, our customers are also willing to sign up for guarantee annual minimums related to that.
Speaker Change: and then in that case, particularly in regions of high demand, you saw under that contract that customer is willing to pay upfront to secure their priority rights.
and Tasking Rights in those regions. So I think what you're seeing reflects the...
Speaker Change: The demand for Gen 3 and the interest of customer signing up for that long term.
Speaker Change: I'll also say we view relationships that we have with these customers as part of a long-term relationship.
Speaker Change: And things that we're doing in places like Indonesia and now India tied to hybrid solutions is an a very exciting opportunity for us and so.
Speaker Change: We, the way to think about this is we are aligned with these customers for a very long journey to grow there and grow and accelerate their space-based intelligence capabilities over time.
So, thank you and good luck in 20 minutes.
Thank you.
Speaker Change: Thank you. Our final question today is coming from Austin Molar from Canacorder, line is now live.
Austin Muller: Hi, good morning, Brian and Henry. So, just my first question here, if we were to compare and contrast the Leo Stell acquisition and integration to Max R's acquisition of SSL, would you consider the key differences there to be your primarily building your own satellites at cost, and the satellites will be much less complex and time consuming to build, kind of similar to Spire's vertical integration.
Austin Muller: Yeah, I think the way we look at Leastella is it's not an acquisition to get into the hardware business.
Gen 3, as you can see, is a...
Austin Muller: as a strategic capability in having the ability to control cost.
Austin Muller: drive efficiencies and produce those at scale is really the main driver behind that. We did not acquire that business to go and into the lower margin hardware business. This is about driving high margin imagery and analytic services.
Austin Muller: through a disruptive space capability that we are seeing in Gen 3.
Speaker Change: Great. And just to follow up, if we think about what you might do for Gen 4, do you have any thoughts on very low ortho orbit satellites and sort of the puts and takes of that in terms of how long the satellites are able to last versus the performance?
Speaker Change: That's a good question. I'll say a couple things. I think, you know, we have a lot of experience and kind of where you want to ideally operate up there and you're seeing that reflected.
Speaker Change: In Gen 3, when you balance performance versus risk, we are continuing to invest and look at where we're going in the future. But right now, you know, we've got the first satellite up, we're going to focus on getting more and getting that into service.
Thanks, Owen, thanks for the details.
Thank you.
Speaker Change: Thank you. We reached out to our question and answer session. And ladies and gentlemen, that does conclude today's Blacksky Technology Q4 2024 earnings conference called Webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.