Q1 Imagery and Analytics Revenue Increases 114% from Prior Year
Won Over a Dozen New Contracts and Renewal Agreements
Amended Existing Debt Facility Extending Maturity to October 2026
HERNDON, Va. — (BUSINESS WIRE) — May 10, 2023 — BlackSky Technology Inc. (“BlackSky” or the “Company”) (NYSE: BKSY) announced results for the first quarter ended March 31, 2023.
First Quarter Financial Highlights:
- Revenue of $18.4 million, up 32% from the prior year period
- Imagery & software analytical services revenue grew 114% over the prior year quarter with substantial operating leverage as cost of sales, as a percent of revenue, decreased to just 23% from 49% in the prior year quarter
“We’re pleased that our high-margin imagery and analytics revenue in the first quarter of 2023 grew 114% year-over-year, and coupled with strong incremental contribution margins, we maintain our trajectory towards achieving positive adjusted EBITDA in Q4 this year,” said Brian E. O’Toole, BlackSky CEO. “Since the beginning of the year, in addition to the $150+ million, multi-year subscription contract award we announced in March, we’ve also won over a dozen new contracts and renewals primarily supporting U.S. and international government agencies. These contract wins continue to demonstrate how BlackSky is increasingly relied upon by important customers around the world to deliver actionable intelligence from space. During the quarter, we also successfully launched two new satellites that provide us with additional capacity and redundancy. These satellites entered revenue-generating operations within 18 hours of launch. With the traction we’re experiencing, we believe the Company is well-positioned to capitalize on the growing demand for geospatial intelligence and are re-affirming our guidance for the year.”
Recent Highlights
- The Company announced today an amendment to its existing debt facility extending the maturity term to October 2026 and also reducing the level of cash interest payments for the next two years
- Continued strong sales momentum in the international markets, as BlackSky recently won multi-year, multi-million dollar contracts to provide high-frequency imagery and advanced analytics in support of various international government agencies
- Received additional orders exercised under the Economic Indicator Monitoring program with the National Geospatial-Intelligence Agency (NGA)
- Signed contract with a large multinational commercial customer to provide imagery and analytics for supply chain logistics intelligence
- On March 24, the Company deployed two additional Gen-2 satellites into orbit, which began revenue-generating operations within 18 hours of launch, continuing our industry-leading ability to rapidly deploy and immediately deliver value to our customers
- Awarded a multi-year contract by the National Reconnaissance Office (NRO) to explore commercial hyperspectral imagery capabilities
Financial Results
Revenues(1)
Total revenue for the first quarter of 2023 was $18.4 million, up $4.5 million, or 32%, from the first quarter of 2022. Imagery and software analytical services revenue was $15.8 million, up 114% over the prior year period, primarily driven by increased demand from new and existing U.S. and international government customers. Professional and engineering services revenue was $2.6 million in the first quarter of 2023 compared to $6.5 million in the prior year period. In the first quarter of 2023, the Company had two research and development programs that were nearing completion and as a result, professional and engineering services revenue was lower than the prior year quarter. Professional and engineering services contracts are milestone-based contracts that have quarter-over-quarter variability in contrast to the high-margin imagery and software analytical services, which are typically recurring subscription-based revenues.
Cost of Sales(1)(2)
Cost of sales as a percent of revenue was 35% for the first quarter of 2023, compared to 79% in the first quarter of 2022. Imagery and software analytical services cost of sales as a percent of revenue was 23% in the first quarter of 2023, compared to 49% in the first quarter of 2022. The year-over-year improvement was primarily driven by greater volumes of imagery and analytical services revenue that inherently have a low fixed-cost structure as a percent of revenue. Cost of sales excludes depreciation and amortization expense.
Operating Expenses
Operating expenses for the first quarter of 2023 were $28.8 million, which included $2.7 million of non-cash stock-based compensation expense, compared to operating expenses of $30.1 million in the first quarter of 2022, which included $9.3 million in non-cash stock-based compensation expense. Excluding stock-based compensation expense from both years, operating expenses increased to $26.1 million in the first quarter of 2023 from $20.8 million in the prior year quarter. The $5.3 million year-over-year increase was primarily due to investments in sales and software talent and higher depreciation expense.
Net Loss
Net loss for the first quarter of 2023 was $17.3 million, compared to a net loss of $20.0 million in the first quarter of 2022.
Adjusted EBITDA(3)
Adjusted EBITDA loss for the first quarter of 2023 was $4.1 million, compared to an adjusted EBITDA loss of $9.5 million in the prior year quarter. The $5.4 million year-over-year improvement was primarily a result of strong operating leverage achieved through increased revenue of high-margin imagery and analytics.
Balance Sheet & Capital Expenditures
As of March 31, 2023, cash and cash equivalents, restricted cash, and short-term investments totaled $71.6 million, which includes the Company’s previously announced private placement financing of approximately $29.5 million. Capital expenditures for the first quarter of 2023 were $15.8 million, driven by final payments for the launch of the two Gen-2 satellites deployed on March 24, 2023, as well as expected payments for Gen-3 satellite production.
2023 Outlook
The Company anticipates strong global demand for BlackSky’s products and services to continue throughout the year. As a result, the Company maintains its full year 2023 revenue outlook of between $90 million and $96 million, a 42% increase over 2022 revenue at the mid-point of this range. The Company remains on track to achieve positive Adjusted EBITDA in the fourth quarter of 2023. In addition, the Company maintains its expectations for full year 2023 capital expenditures to be between $40 million and $45 million.
(1) Effective January 1, 2022, the Company reorganized its classification on the consolidated statements of operations and comprehensive loss to better align the Company’s broad portfolio. As a result, the prior period amounts presented to reflect the impact of the reorganization have been recast. |
(2) Cost of sales is defined as imagery and software analytical services costs and professional and engineering services cost, less depreciation and amortization. |
(3) Non-GAAP financial measure. See “Non-GAAP Financial Measures” below and reconciliation table at the end of this release. |
Investment Community Conference Call
BlackSky will host a conference call and webcast for the investment community this morning at 8:30 AM ET. Senior management will review the results, discuss BlackSky’s business, and answer questions. To access the live webcast or the archived webcast following completion of the call, please visit the Company’s investor relations website at
http://ir.blacksky.com and then select “News & Events” for the link to the webcast. A presentation accompanying the webcast can also be found on the investor relations website. To access the conference call, participants should dial 1-877-589-7299 (domestic) or 1-201-689-8778 (international) at least ten minutes prior the start of the call. To listen to a replay of the conference call, please dial 1-877-660-6853 or 1-201-612-7415 using access code 13738351. The audio replay will be available from approximately 12:30 PM ET on May 10, 2023, through May 24, 2023.
