Q1 2025 BlackSky Technology Inc Earnings Call
Speaker Change: Antonio Lombardo, from cultures far and wide Victor Gatto, from Tigrissa, Florida Antonio Building, company Gatto Anthony Benedict-LaBoutier, from Saint Lucia Thank you for watching!
Speaker Change: Good morning, ladies and gentlemen, and welcome to Blacksky Technologies, 1st quarter, 2025, Earnings Consumption School.
Speaker Change: Online Submplaced Unmute to prevent any background noise. After the speaker's remarks, there will be a question in answer session. To ask a question, you may press star then one on your touchstone phone. To withdraw your question, please press star then the number two.
Speaker Change: Please note this confidence ball is being recorded. I would like to turn the call over to Aly Bonilla, Blacksky by President of Investor Relations, please go ahead, Aly.
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 will then review the company's first quarter financial results and outlook for 2025.
Speaker Change: Following our prepared remarks, we will open the line for your questions [inaudible]
Speaker Change: A replay of this conference call will be available from approximately 12.30 p.m. Eastern time today through May 22nd.
Speaker Change: Information to access the replay can be found in today's press release.
Speaker Change: Additionally, a webcast of the earnings call will be available in the Investor Relations section of our website at www.blacksky.com
Speaker Change: 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.
Speaker Change: Before we begin, let me remind you that certain statements made during today's conference called regarding our future plans, objectives, and expected performance, including our financial guidance for 2025 are forward-looking statements.
Speaker Change: Actual results may differ materially, as these statements are based on our current expectations as of today and our subject to risks and uncertainties, including those stated in our form 10k.
Speaker Change: 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 for the market price of our stock.
Speaker Change: Blacksky assumes no obligation to update forward-looking statements, except as may be required by Affleck of the Law.
Speaker Change: In addition, during today's call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA and adjusted imagery and software analytical service cost of sales.
Speaker Change: 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.
Speaker Change: 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.
Brian OToole: First off, I'm happy to report that our new Gen 3 satellite is performing exceptionally well in exceeding our expectations.
Brian OToole: As you can see on the first few slides, the image quality of this very high resolution satellite is incredible.
Brian OToole: As we have been formally commissioning the satellite over the past several weeks,
and putting it through its paces. [inaudible]
Brian OToole: We have been successfully collecting imagery from all over the world.
Brian OToole: We were happy to announce earlier this week that we have now completed all of our formal tests.
and are now delivering evaluation imagery to customers.
Brian OToole: This achievement marks a major technical and business milestone for the company.
Brian OToole: The initial very high resolution imagery and advanced analytics from our new Gen 3 satellite is generating a lot of excitement with our customers.
Brian OToole: As they are actively evaluating imaging performance, I had to bring this capability into their operations.
Brian OToole: I will share some additional details later, including upcoming plans for the next launch.
Now, beginning with slide six [inaudible]
Brian OToole: I'm happy to report that we are off to a strong start to 2025, building on our momentum from last year.
Brian OToole: We have continued to expand our customer base and are entering new markets as demand for our space-based intelligence solutions remains strong.
Brian OToole: Now let me share some of the key highlights from the quarter.
Brian OToole: First, we were awarded over $130 million in new contracts and renewal agreements in the quarter.
Primarily driven by several multi-year contract wins.
Brian OToole: These wins demonstrate the growing interest from defense and intelligence agencies worldwide to secure long-term contracts for our imaging capacity over the region of interest.
Brian OToole: We were also happy to announce a new contract to accelerate the development of India's commercial earth observation capabilities.
A New and Emerging Market for Commercial Space [inaudible]
Second
Brian OToole: As a result of the strong bookings in the quarter, our backlog grew 50% compared to the prior year quarter.
Brian OToole: This growth reflects the demand we're seeing for our space-based intelligence solutions and provides us with strong out-year revenue visibility.
Brian OToole: Third, we delivered strong year-over-year revenue growth of 22%, primarily driven by new contract awards.
Brian OToole: Fourth, we're pleased that our first Gen 3 satellite is through extensive testing and continues to exceed performance expectations.
Brian OToole: And finally, our second-genre satellite is being shipped and is on track to launch in Q2.
Brian OToole: which will begin a cadence of additional launches throughout the year.
Brian OToole: I'm also happy to report that we continue to improve our liquidity position in the quarter.
Brian OToole: Strengthening our financial profile and our ability to invest in key growth and go-to-market initiatives.
Brian OToole: These highlights demonstrate our continued strong execution and laser focus on providing customers with unmatched imagery and analytic insights.
while setting the stage for sustained long-term, profitable growth.
Brian OToole: I would now like to share some operational highlights from the quarter.
Turning to slide seven
Brian OToole: We're pleased that we won $130 million in contracts in the quarter.
which included several large multi-year agreements.
Brian OToole: The strong bookings performance drove a 50% year-over-year growth in our backlog.
to $366 million.
Brian OToole: This significant increase is a clear indicator of the growing demand for our space-based intelligence solutions.
Brian OToole: and the desire of our customers to secure long-term contracts for our imagery and analytic services.
to support their mission-critical operations for years to come.
Brian OToole: Our sales pipeline of multi-year subscription opportunities continues to grow as we bring Gen 3 to market.
as we convert these opportunities into long-term subscription contracts.
Brian OToole: Our multi-er backlog should also grow, providing improving long-term revenue visibility.
Brian OToole: As a reminder, the majority of our contracts are with government customers and the timing of these contracts has the potential to introduce quarter to quarter impacts.
The bookings revenue and EBITDA [inaudible]
Brian OToole: The majority of our backlog is for high margin imagery and analytic services.
from our current Gen 2 and future Gen 3 constellations.
Brian OToole: as we launch more Gen 3 satellites and get them into operations later this year.
Brian OToole: We expect to unlock further contract opportunities and recognize additional revenue growth from our existing backlog.
Moving to swi-day [inaudible]
Brian OToole: As I just highlighted, I'm excited to share that our Gen 3 satellite has completed calibration and testing.
Brian OToole: and a delivery exceptional imagery that is achieving up to near-six quality.
Brian OToole: For those who may not know, NEERS is an industry standard image quality metric used by analysts to characterize the performance of imagery to meet certain mission requirements.
Brian OToole: Power Gen 3 satellite is delivering imagery at a quality equivalent.
To much larger and more expensive 25 centimeter class satellites.
Pataining this class of image quality is a commercial first.
for a satellite of the size, cost, and performance.
Brian OToole: The Gen 3 satellite is proving to be an exceptional spacecraft that we expect will be a work course for Blacksky and our customers for years to come.
Brian OToole: But just as exciting is the AI-derived information that we are now extracting from these images.
Brian OToole: Within three weeks after launch, we demonstrated how our advanced fully automated AI capabilities can transform Gen 3 satellite imagery into actionable insights.
Brian OToole: at machine speed and scale, for sites of interest around the world.
Brian OToole: Blacksky is setting a new industry standard using advanced software and AI-enabled automation.
Brian OToole: to accelerate space-based intelligence capabilities through destructive speed, economics, and insights.
Brian OToole: while optimizing and validating the performance of this satellite over the past several weeks.
Brian OToole: We have been providing sample imagery to customers and potential partners around the world.
Brian OToole: I'm proud to report that the customer response to our initial Gen 3 imagery has been overwhelmingly positive and is driving growth in our sales pipeline.
Brian OToole: Our customers are very excited about the new mission applications that will be enabled by combining very high resolution imaging.
with high frequency monitoring and advanced AI analytics.
Turning to slide nine.
Brian OToole: With the superior resolution and image quality of Gen 3, we are now able to demonstrate the ability of our AI to extract an incredible amount of information and insights.
Brian OToole: In real time, and deliver this actionable intelligence to industry-leading speed and scale.
Brian OToole: In this example, our AI was able to automatically detect and classify over 25,000 individual vehicles in over 700 maritime vessels in just a few minutes.
All fully automated and with incredible precision.
Brian OToole: This type of analysis would typically take teams of analysts hours and days using traditional tools and manual processes.
Brian OToole: This is a clear example of how proven and disruptive commercial space technologies.
Brian OToole: can support a range of new and advanced applications and provide highly efficient and cost-effective solutions to government customers.
Moving to slide ten
Brian OToole: Now that we have demonstrated and validated Gen 3 satellite performance,
Image Quality and AI Analytics [inaudible]
Brian OToole: We're now set to commence a regular cadence of additional Gen 3 launches.
Brian OToole: In fact, our second Gen 3 satellite is being shipped this week and is on track to launch in Q2.
as we look ahead.
Brian OToole: We are on track to have 8 Gen 3 satellites on orbit by early 2026.
and the quantity and quality of actionable intelligence.
We are delivering to customers.
Brian OToole: We expect to begin providing early access to Gen 3 imagery and analytic services.
to major customers over the course of the summer.
with General Commercial Availability, anticipated to begin by Q4. .
Brian OToole: As a reminder, many of our existing major contracts, such as EOCL with the OS government,
Brian OToole: and several large multi-year international contracts, are structured to incrementally expand as Gen III capacity comes on line.
Starting to slide 11.
as we continue to build out the Gen III constellation.
We are moving into our next phase of growth.
Brian OToole: where we can provide our customers with best-in-class imagery and new and advanced applications.
That combined very high resolution imagery, high frequency monitoring, and AI driven analytics.
Brian OToole: We believe we are redefining the future of space-based intelligence, enabled through a best-in-class space and first of its kind software platform.
Brian OToole: Our software first strategy, which leverages over 10 years of investment in our spectra platform, is a unique capability and a key enabler for rapidly developing and deploying new and innovative space-based intelligence solutions to customers around the world.
The combination of these advanced capabilities.
Brian OToole: provides Blacksky with a powerful competitive advantage in the market.
Brian OToole: and is able to overcome the limitations of legacy solutions that were designed for static mapping applications.
Brian OToole: We are excited to be entering into a new aerospace intelligence with new and exciting opportunities emerging on the heels of our successful demonstration of Gen 3.
Brian OToole: We are well positioned to meet the rapidly growing demand for space-based insights from an expanding global customer base.
Brian OToole: especially at a time when governments around the world are seeking to accelerate and expand their space-based capabilities.
Brian OToole: But we are bullish on this growing market opportunity. We are also cognizant of a very fluid geopolitical and economic environment.
both here and abroad.
Brian OToole: and remain vigilant in monitoring chain policies and budget dynamics that may have near-term impacts on our business.
Brian OToole: Despite this uncertain time, we are maintaining our full-year outlook for 2025 and look forward to seeing ahead with our growth plans.
Brian OToole: With that, I'll now turn it over to Henry to go through the quarterly financial results, Henry.
Thank you, Brian , and good morning, everyone.
Brian OToole: Before I begin, let me remind you that references to adjusted cost of sales, excludes stock-based compensation, depreciation, and amortization expenses as we believe this measure represents a more accurate picture of our business without having these non-cash items obscure the underlying performance.
Brian OToole: With that, let's go through our first quarter financial result, starting with slide 13
Brian OToole: Total revenue for the first quarter of 2025 was $29.5 million in increase of $5.3 million or 22% over the prior year quarter driven by higher professional and engineering services revenue.
Brian OToole: The primary driver for this increase was related to the recognition of progress to date under a new contract to accelerate the development of India's Commercial Earth Observation Program which we announced in February .
Brian OToole: These strategic contracts deepen our relationship with these customers and are typically precursors to securing long-term subscription contracts for imagery and analytic services.
Brian OToole: Keep in mind, revenues recognized from these types of contracts which are largely milestone-based may have quarter-over-quarter variability.
Brian OToole: In addition, our high margin imagery and analytics revenue currently comes from our Gen 2 satellites as we look to begin mixing in initial Gen 3 imagery later this year.
Brian OToole: Moving to slide 14, our adjusted imagery and analytics cost of sales for the first quarter of 2025 was 3.8 million dollars compared to 3.4 million dollars in the prior year of quarter.
Brian OToole: The slight year-over-year increase was primarily due to short-term investments to optimize operating efficiencies that will drive margin improvement over time.
Now turn to slide 15.
Brian OToole: Our Adjusted Ivita for the first quarter was a loss of $600,000 compared to an Adjusted Ivita of $1.4 million in the prior year quarter.
Brian OToole: The $2 million year-over-year decrease was primarily due to higher SGNA expenses of $2.6 million as we absorb the first full quarter of overhead expenses from the recent Leo seller acquisition.
Brian OToole: As a result of bringing Leo Stella's production capabilities in-house, we are only able to capitalize direct labor and cost associated with the construction of our satellites and not their associated overhead costs.
Brian OToole: Under the prior structure, we would have reported positive adjustment if it took $2 million or $600,000 better than the prior year.
Brian OToole: Even mind, the strategic acquisition of Leo Stella was to allow us to better control and optimize our satellite manufacturing capabilities and secure advanced space technology and intellectual property to support our long-term growth objectives.
Brian OToole: Going into 2025, we expected to realize some cost savings related to the acquisition, but with the successful launch of Gen 3, we decided to make additional investments in the innovative space technologies to support our next-generation capabilities.
Brian OToole: Let's move on to our cash and liquidity position, as shown on slide 16.
Brian OToole: We ended the first quarter of 2025 with $77 million of cash or strictly cash and short term investments.
Brian OToole: This amount includes a $32 million cash prepayment for work related to a new contract awarded with an international defense and intelligence customer in the first quarter.
Brian OToole: In addition, we have accumulated approximately $39.2 million in unbuilt contract assets of which $32.4 million is anticipated to be billed and received over the next 12 months as certain customer milestones are met with the rest expected to be collected in the following 12 months.
These assets...
Brian OToole: Together with about $20 million in remaining vendor financing for several Gen 3 launches, brings our total liquidity position to over $136 million.
Brian OToole: This is an increase of $46 million or 51% from the prior year quarter.
Brian OToole: Given this liquidity profile and our expected performance, we believe we are fully funded to deploy our baseline constellation of 12 satellites and get to free catchable positive.
Brian OToole: Now, turning to slide 17 and our outlook for the year.
Brian OToole: With the success of our Gen 3 satellite, we're seeing additional long-term opportunities emerge for commercial space-based solutions.
Brian OToole: We are also keeping a close eye on potential risks, particularly the timing of contract awards and budget allocations that may be associated with a rapidly changing geopolitical environment.
Brian OToole: While the near term situation remains fluid, we are maintaining our full year 2025 guidance, which consists of revenue between $125 and $142 million, adjusted EBITDA between $14 and $22 million, and capital expenditures between $60 to $70 million.
Brian OToole: In summary, we're pleased with the strong revenue growth in the first quarter and the continued momentum we're seeing across the business.
Brian OToole: What's that? I'll now turn it back over to Brian for some closing remarks
Brian ?
Brian OToole: Thanks, Henry. In closing, we're happy that our first Gen 3 satellite is now fully operational and delivering exceptional imagery and analytics.
which is getting positive feedback from customers around the world.
We're making great progress growing our customer base.
Brian OToole: Building our backlog, advancing our technology, and strengthening our balance sheet.
Brian OToole: Our highly efficient and cost-effective space and software solutions are well positioned to address national security needs, both here and abroad for years to come.
Brian OToole: because we deploy additional Gen 3 satellites this year and further expand our constellation in 2026.
Brian OToole: We believe Blacksky is at the forefront of a new era in real-time space-based intelligence.
with new Gen 3 satellite launches on the horizon.
Brian OToole: Deepening customer engagement and a growing sales pipeline, the foundation we're building today is setting the stage to drive our next phase of growth into 2026 and beyond.
Brian OToole: This concludes our remarks with the call, and we'll now take your questions.
[inaudible]
Speaker Change: Thank you. We will now begin the question-in-answer session. To ask a question, you may press start and the number one on your dad's stone phone. If you're using his picker phone, please lift the hand set before pressing any keys.
Speaker Change: To withdraw your question, please first start and the number two. At this time, we will pause momentarily to assemble our roster.
Thank you very much.
Hey, good morning guys. Thank you for taking our questions.
Speaker Change: So, first off, I want to ask you mentioned some of the geopolitics and I guess macro uncertainty.
Speaker Change: Are they now a little bit more hesitant because they want to see what kind of trade unions worked out or something or is it actually a good thing because now they feel oh we want to actually do something because you want to kind of see working with a US commercial customer.
Are you asking for your provider? [inaudible]
Speaker Change: Good morning, Edison. Thanks for the question. I think, you know, what we're experiencing right now is continued.
Speaker Change: Strong Demand, worldwide. You know, we had a very strong first quarter.
Speaker Change: And in fact, since our demonstration of Gen 3, we're actually seeing our pipeline on. [inaudible]
Gray, I think.
There is. [inaudible]
A lot of demand worldwide for space-based intelligence solutions.
Speaker Change: and we're seeing strong interest for commercial imagery and analog services, but also governments that are accelerating their investments in their own sovereign.
Speaker Change: Ability, so I think everybody's cognizant of the geopolitical dynamics, but I also think national security is
First and foremost, priority.
Speaker Change: and we're well positioned to help them address that. So, despite some of the...
Speaker Change: Dynamics right now. We're seeing strong interest in demand and feel well positioned.
Speaker Change: Patrick, they want to come to ask about AI. I know it's a word that gets thrown around a lot these days.
Speaker Change: How many of the customers are new customers? Are you speaking with that? This is a kind of big or it's the core reason that they are getting involved, or getting interested or increasing their business? [inaudible]
Speaker Change: Is it a deal breaker for a lot of these, whether it's domestic or international customers to really get their hands around? Is that?
Speaker Change: including the potential of spectra as a growth driver. How does one kind of view that at the moment?
Jaeson, I think what we're seeing is…
Speaker Change: by bringing our Gen 3 imagery around the world, the customers, where now they're moved, they can see that the...
Speaker Change: The very high resolution imaging is there and then when you start to combine it with the high frequency low latency collection
Speaker Change: The volume and speed of the information they need to deal with is starting to outpace their normal.
to, you know, one, keep up.
with the rate and volume of information, but two.
Speaker Change: Speed up the time to insights from when that data comes in and gets turned into actionable intelligence. So that conversation with customers has to me made a market market shift.
Speaker Change: Particularly the last nine to twelve months, so we're anticipating this to be a really critical capability that customers are going to need to have.
Um.
as they expand their capabilities over the next couple of years.
and Stuart, thank you.
Thanks, Jaeson.
Speaker Change: Thank you, and your next question comes in the line of Jason Smith from Lake Street, please go ahead.
Jason Smith: Yeah, so make sure you take my questions. Just looking at your backlog, curious what timeline you expect to recognize that backlog and then relatedly, how much of that relates to Gen 3 capacity.
Yep, good morning, Jason. Thanks for the question.
Speaker Change: Yes, as we reported, we grew our backlog very significantly in the first quarter, up to $366 million, and then in your term
Speaker Change: There's a reasonable amount of revenue from our imagery and analytics line that we're going to see.
Speaker Change: You know, coming in over the next couple of months, you know, we announced our EOCL extension.
and a large international deal. And so, um,
Your turn. You know, we're gonna see that.
as we get into the second half. [inaudible]
Speaker Change: of the year. And then, you know, there's quite a bit of strong backlog out there post 2026.
Speaker Change: And then just as a follow up, Henry, based on your comments on the professional services, revenue line, would we expect that to take a step back here in Q2?
Speaker Change: Thanks for the question, Jaeson. Yes, I mean, as you may recall, when we have some of these...
Speaker Change: programs where we are taking some hardware and kind of positioning it off for our customer. We already have that sitting on our balance sheet and we're moving that into four sale assets. That's why you get a big catch up right up front. So we did have a fair bit of that happening in the first quarter there, correct?
Okay. Thanks a lot, guys.
Speaker Change: Thank you, and your next question comes in the line of Jeff Van Nui from Craig Hallem, please go ahead.
Speaker Change: Great. Thanks for taking the questions. Congrats guys, net real nice progress on Gen 3 and some great images here. Talk to me maybe about just briefly on the 130 million increase in backlog. Can you give a sense of rough report? How much of that is from new customers versus existing customers?
Um...
Speaker Change: I think, you know, we announced a very large international
Speaker Change: Deal, which was a good portion of that from an existing customer. There are in the mix.
Speaker Change: about 20 new customers in there, including the deal we announced in India.
Speaker Change: Yeah, I think, you know, we're seeing growing interest and governments accelerating.
Their programs, you know, we're...
Speaker Change: You know, if you look at programs we publicly announced in India and Indonesia,
We're seeing this growing opportunity for…
Bundelang, our commercial imagery analytic services with.
Speaker Change: with space and software assets. So, and we're seeing that pretty much.
Worldwide Across Multiple Old
Speaker Change: Regions. I think we're also seeing that those things seem to be those opportunities seem to be accelerating, I think, as governments are.
Speaker Change: Looking to move quicker and building out their capabilities. We were pretty well positioned.
to capitalize on this dynamic in the market.
Speaker Change: Yeah, it seems like one last, if I could, in terms of just sort of as you build out the architecture, how critical is that as you computer on orbit, compute, and your thoughts on optical interlinks, just forward road map, how critical are those capabilities, how do you view them?
Speaker Change: I think on board computing is another tool in the toolbox. We're delivering
Very high performance in low latency delivery without that capability.
Speaker Change: As we have mentioned before, optical cross links is something we're currently developing and investing in. This will be a next level capability to improve.
Speaker Change: Latency in the, both on the tasking of the satellites and the delivery of information.
Speaker Change: and analytics to our customers. So all of those things are being addressed in our roadmap.
Sounds good, congrats on the progress, thanks [inaudible]
Thank you.
Speaker Change: Thank you, and your next question comes from the line of theme Horan. From Oppenheimer, please go ahead.
Tim Horan: Thanks, guys. Three questions if I may. The near six congratulations, but can you say what you were expecting and what we were conveying to your customers prior to?
Tim Horan: The actual real life examples. It sounds like you're going to be doing two satellite launches per quarter, starting the second half of the year. Is that pretty accurate and can you maintain that pace? Then I have that NEI question.
Tim Horan: I think, yeah, on the image quality, we had designed the system to be in the, in yours, five, five plus type realm, and that is aligned with what our customers were.
Um, um,
Tim Horan: Are expectations? I think, you know, we're seeing some images come out in that near six.
Tim Horan: Level, which is indicating the system is performing beyond our expectations, but for phenomenally, or where we expected to be, you know, it's meeting and or exceeding where we wanted to be on image quality.
So, a piece of launches, as I mentioned.
We're on track to-
Toward heat satellites.
by early 2026 and six
on orbit, you know, by later this year. So,
Tim Horan: We have a regular cadence of satellites coming off the production line and we're aligning launch.
launch capacity and are in track to hit that.
Launch Keynes.
Tim Horan: So any sense by year-end, year-end 26, how many satellites you'll have in operation?
Tim Horan: We have a plan, our plan is to have 12 that would get us to our baseline.
Constellation
Speaker Change: Great. On AI, can you license out your technology for customers to analyze other images, other data sources out of curiosity?
Speaker Change: Yeah, we would be able to do that. We don't currently do that, but we do have...
Speaker Change: IP and software code is that do analyze other people's other parties.
Dimitri, that only led to optical, but a radar.
Speaker Change: and other capabilities, and we've been incorporating that into some of our advanced.
capabilities. I think I may have.
Speaker Change: mentioned on prior call some of our work in doing broad area, broad area search.
Speaker Change: for, from our monitoring, large area of interests for change. And we can do that at scale.
Um...
Speaker Change: across very large data sets and large areas with regional areas of interest.
Speaker Change: And so is that something you're planning on pursuing and it could be a pretty large incremental revenue opportunity?
Speaker Change: Well, I think the AI, delivering AI derived information is certainly part of our core business plan.
Speaker Change: We're going to see how this market unfolds into levels of software and other types of capabilities we may or may not license the customers.
Speaker Change: Thank you, and your next question, class on the line of Joshua Sullivan from the Benchmark company, please go ahead.
Thank you, morning.
Speaker Change: On the prepared remarks, you know, you noted Blacksky's entering the next phase of growth here. You know, maybe you could expand on that perspective, or Blackspotically I guess just, you know, as you enter this next phase, you know, what we should be expecting over the next one to three years versus maybe where he's done.
Speaker Change: I think the the main thing that we're excited about is
Speaker Change: The interesting demand for Gen 3 imagery and analytics, and so as we continue to deploy...
Those satellites into our constellation, we are seeing...
Speaker Change: A strong step up in imagery and analytics revenue. That's going to be tied to that.
Speaker Change: We have a significant backlog, try to some of our major programs that begins to get unlocked.
as we bring that capacity online.
Speaker Change: So, you know, as you look out over the next 18 to 24 months,
Speaker Change: And then just on the full ownership of Leo Stellar, you know, how is that involved since
Yeah, I think it, you know, as a reminder, you know,
Speaker Change: That was a strategic acquisition for us. As you can see, Gen 3 is...
Really demonstrated to be a remarkable platform.
and we wanted to make sure that we had…
the ability to optimize and control.
The supply chain and production of those satellites.
Speaker Change: So we've got that moving ahead very nicely. There's also some some next generation technologies that that came along with that that that were that were investing in. We're only really a couple quarters into, you know, integrating them into the operations and that's.
Speaker Change: doing well and you know we think over the long term having that type of capability vertically integrated.
Great. Thank you.
Speaker Change: Thank you, and your next question comes to the line of Chris Wilkie from Wilkie Space. Let's go ahead.
Speaker Change: Thanks, Brian . I just want to follow up on that video's fellow discussion. I think you said during the discussion that you're going to invest in Gen 3. I was just wondering is that?
in the facilities to...
of increased production or increased production.
and designs.
Speaker Change: Yeah, most of the investments are in the platform side. Facilities in decent shape will make something from an all investments in some of the.
Speaker Change: Back office infrastructure and supply chain management. Our investments in next generation capability come in the form, primarily of R&D.
Speaker Change: Some of that begins to get capitalized as we those reach certain levels of feasibility and so that's been our normal course and we expect to continue that and in some cases the acquisition of the Estella helps.
Helps us move some of that along even faster. [inaudible]
Great. And for Henry, when we look at the Q1,
OpEx.
Floyd.
Speaker Change: Okay, and presumably the increased investments are already.
Speaker Change: The capital structure was already reflected in your Capex guidance that you've provided.
Speaker Change: Correct.
Speaker Change: Got you.
Speaker Change: Quick question, the imagery and analytics with a million.
Speaker Change: Oh.
Speaker Change: Obviously, you've got.
Speaker Change: <unk> and other things that open up on that on a go forward basis, where there other.
Speaker Change: One time items that might have led to the year over year.
Speaker Change: Decline there or.
Speaker Change: Is that just reflective of customer losses or timing of contracts.
Speaker Change: Yes, I think.
Speaker Change: You know.
Speaker Change: You know keep in mind, we still have.
Speaker Change: Some quarter to quarter variability in the business related to.
Speaker Change: Both.
Speaker Change: Particularly in the imagery and analytics business because there are some projects that.
Speaker Change: Have deliverables on a quarterly basis that can surge.
Speaker Change: We are seeing.
Speaker Change: Slower than expected.
Speaker Change: Orders coming out of lunar one for example.
Speaker Change: But we're also seeing customers anxious to transition to Gen. Three.
Speaker Change:
Speaker Change: But as I mentioned earlier, we have.
Speaker Change: <unk> in backlog for many other international customers already secured for Gen two capacity going.
Speaker Change: Going well into 2026 so.
Speaker Change: <unk>.
Speaker Change: This is really.
Speaker Change: I think.
Speaker Change: Chris as you are alluding really timing.
Speaker Change: And if you look at the general Gen.
Speaker Change: General trend, where we are in the direction of the business.
Speaker Change: We're seeing we're seeing that.
Speaker Change: Backlog growing in the.
Speaker Change: And the visibility into transitioning that backlog into revenue growth.
Speaker Change: Emerging, especially now that we've got a gen three operational.
Speaker Change: Got it.
Speaker Change: Speaking of timing you mentioned that.
Speaker Change: You won't start offering Gen. Three commercially until Q4 is there any reason that you wouldn't.
Speaker Change: Got a couple of satellites on orbit start.
Speaker Change: Selling that at least in a beta mode.
Speaker Change: Customers prior to the end of Q4 or what's the rationale for waiting until the end of the year.
Speaker Change: Yes.
Speaker Change: We are planning to.
Speaker Change: We have our early access program that.
Speaker Change: Will kick in when we just have a couple of satellites. This summer.
Speaker Change: Customers will begin.
Speaker Change: Acquiring imagery and will begin initial revenue generating operations through data sales and.
Speaker Change: Evaluation of the imagery and then.
Speaker Change: The way, we think about the commercial availabilities just having.
Speaker Change: Enough satellites, and the backend infrastructure ready to support.
Speaker Change: A broad range of customers through our spectra platform. So.
Speaker Change: It's a normal.
Speaker Change: It's a normal go to market strategy.
Speaker Change: But of course, we will start monetizing those satellites as fast as we can.
Speaker Change: Very good thank you and good luck with the next launch.
Chris Wilkie: Thanks, Chris.
Speaker Change: Thank you and your next question comes from the line of Scott <unk> from HC Wainwright. Please go ahead.
Scott: Hey, good morning, guys. Thanks for taking my questions.
Scott: Brian I guess first congrats on pulling commissioning the first Gen. Three satellite I'm curious having that first one under your belt does that change the timeline.
Scott: Or the steps required for.
Scott: For commissioning Q3 12.
Scott: No I think we're on plan I think obviously, we wanted to make sure that that satellite was performing as expected before we launched the second one.
Scott: In case, we had to make any incremental.
Scott: Refinements, but.
Scott: Per satellite performing.
Scott: Better than we expected.
Scott: Functionally it's.
Scott: It's really performing well.
Scott: The image quality is great and the agility is.
Scott: As meeting all of our expectations so.
Scott: We're moving out as planned to hit our launch schedule as I outlined earlier.
Scott: Okay appreciate that and then Henry I assume.
Scott: The capex builds through the year kind of in line with.
Scott: Gen three.
Scott: That is correct I mean, that's the primary driver behind our Capex is getting this next batch up and being prepared also for our launches in <unk>.
Scott: In 2026.
Speaker Change: Okay perfect. That's it for me guys I appreciate it.
Speaker Change: Thanks Scott.
Scott: Thanks.
Speaker Change: Thank you and your next question comes from the line of Austin <unk> from Canaccord. Please go ahead.
Austin: Hi, Good morning, Brian and Henry just my first question here you mentioned the early access program or their customers now that are getting that early Gen. Three times test cemetery that are paying a higher subscription premium under their contract or does that not occur until you have more customers.
Austin: The on the EAP they can actively task.
Austin: We have gen threes.
Speaker Change: Yes, I think the way to think about it is there will be customers that.
Speaker Change: We have contracts with to get imagery under the.
Speaker Change: Under the early program.
Speaker Change: This will be.
Speaker Change: Getting imagery at a lower volume.
Speaker Change: Primarily for evaluation purposes and to.
Speaker Change: Success integrating that into their operations.
Speaker Change: Fully automated commercial operations will be in the fourth.
Speaker Change: Fourth quarter.
Speaker Change: Okay.
Speaker Change: You mentioned, there's over 20, new customers added in that in that backlog that you discussed are you able to indicate without saying, who they are geographically where the bulk of that is located I'm just trying to understand if the NATO Europe commitment to spend more than 2% of GDP on defenses is becoming visible to you.
Speaker Change: Yes.
Speaker Change: Thanks for the question. So let me just clarify that.
Speaker Change: The 20, plus referring to is $20 million as part of that backlog.
Speaker Change: We have been bringing on new customers.
Speaker Change: As part of our normal.
Speaker Change: Sales operations.
Speaker Change: Customers, we're seeing are really.
Speaker Change: Really all over the world.
Speaker Change: There is there is a growing customers in Europe Middle East Asia.
Speaker Change: So.
Speaker Change: The.
Speaker Change: Tom.
Speaker Change: We're seeing particularly now with Gen. Three we're seeing a number of new larger customers.
Speaker Change: Working with us.
Speaker Change: To acquire Gen three capability and.
Speaker Change: As I mentioned in my remarks, we've seen a pretty significant increase.
Speaker Change: And our pipeline.
Speaker Change: Just over the last few months that are.
Speaker Change: From new customers for Gen. Three capability. So that's a really exciting and now we're working on how we can.
Speaker Change: Can move those customers, who are through the pipeline and transitioning those into contracts.
Speaker Change: That's very exciting thanks for the insights.
Speaker Change: Thank you.
Speaker Change: Thank you and your last question comes from the line of Steve Duane is from Stonegate. Please go ahead.
Steve Duane: Hey, good morning, and thank you for taking my questions.
Steve Duane: I wanted to circle back on some of the commercial capabilities that you're expecting later this year and maybe how they compare to the same capabilities.
Speaker Change: Expect in late 2026, once you have the full baseline constellation.
Steve Duane: I think functionally the capabilities that we'll have later this year as far as.
Speaker Change: Image quality automated AI.
Speaker Change: Latency and things of those so.
Speaker Change: Of those around those aspects were.
Speaker Change: We're pretty much being in place later this year what happens as we add more satellites is basically adding more capacity.
Speaker Change: It improves revisit.
Speaker Change: And in some cases reduces latency because we'll have quicker access to.
Speaker Change: Two locations.
Speaker Change: <unk>.
Speaker Change: Around the world the thing that you should keep in mind is.
Speaker Change: We're introducing gen three satellites into a very mature.
Speaker Change: Software and ground network that is operating our gen two constellation so.
Speaker Change: We're not having to go build out.
Speaker Change: New <unk>.
Speaker Change: Software.
Speaker Change: Extensively new software and product capabilities.
Speaker Change: To bring <unk> to market. It's just an extension of the platform that is.
Speaker Change: It is highly reliable and been serving our customers now for <unk>.
Speaker Change: Well over five years.
Speaker Change: Understood. That's very helpful. Thank you and then.
Speaker Change: Just curious now that the global data marketplaces and up for a little bit are.
Speaker Change: Are you seeing any differences in the bidding environment or what it takes to win.
Speaker Change: Contracts here compared to more traditional routes.
Speaker Change: Yes, it's a good question, we're starting to we're starting to win more of those.
Speaker Change: There is still small, but we are seeing a trend.
Speaker Change: Toward customers wanting to acquire longer term.
Speaker Change: Services, it's a pretty competitive marketplace, but we seem to be doing.
Speaker Change: Pretty well.
Speaker Change: And.
Speaker Change: We're forming some partnerships there.
Speaker Change: With other companies too.
Speaker Change: To be able to offer.
Speaker Change: <unk>.
Speaker Change: Higher value.
Speaker Change: Information and insight services so.
Speaker Change: Still early and we're excited about where that can go and we're seeing the trends.
Speaker Change: Related to that marketplace go in the right direction.
Speaker Change: Understood. Thanks for taking my questions and good luck in Q2.
Speaker Change: Thank you Dave.
Speaker Change: Thank you at this time there are no further questions. This concludes snacks guys first quarter 2025 earnings conference call. Thank you for joining the call today you may all disconnect.
Speaker Change: [music].