Q2 Imagery and Analytics Revenue Increases 51% from Prior Year Period

Company Wins Over $35 Million in Multi-Year Contract Agreements

HERNDON, Va. — (BUSINESS WIRE) — August 9, 2023 — BlackSky Technology Inc. (“BlackSky” or the “Company”) (NYSE: BKSY) announced results for the second quarter ended June 30, 2023.

Second Quarter Financial Highlights:

• Revenue of $19.3 million, up 28% from the prior year period
• Imagery & software analytical services revenue grew 51% over the prior year quarter
• Cost of sales related to imagery & software analytical services improved to 23% from 34% in the prior year quarter

“BlackSky delivered another strong quarter as we continue to demonstrate revenue growth, substantial operating leverage, and effective cost management that maintain us on our path towards profitability,” said Brian E. O’Toole, BlackSky CEO. “Since the start of the second quarter, we won over $35 million in new contracts and renewal agreements supporting U.S. and international government agencies looking to secure access to our rapid revisit constellation of high-resolution satellites, bringing total bookings year to date to over $200 million. These wins underscore our customers’ reliance on and the increased demand for BlackSky’s capabilities. We continue to see a high-level of customer engagement from government agencies worldwide for our dynamic hourly monitoring and AI-driven analytic capabilities. With our strong operating leverage and a solid book of business, we remain on track to achieve positive adjusted EBITDA in Q4 of this year. We are actively working with several major customers on a number of sizable contracts and given the variability on timing, we are widening the range of our 2023 revenue outlook to between $84 million to $96 million.”

Recent Highlights

• Signed a multi-year renewal agreement with an international defense sector customer for more than $30 million, expanding and securing priority access to BlackSky’s high-frequency imagery services
• Awarded a two-year multi-million-dollar contract with an international Ministry of Defense customer to build ground station infrastructure to enable direct access to BlackSky’s rapid revisit constellation
• Won a two-year multi-million-dollar renewal contract to provide advanced subscription-based imagery and analytic services to an existing international Ministry of Defense customer
• Signed a one-year subscription agreement to provide on-demand satellite tasking of BlackSky’s imagery and other mission solutions to a Department of Defense customer
• Awarded two contracts by the National Reconnaissance Office (NRO) to study short-wave infrared capabilities and latency improvements
• Won a multi-year contract to provide on-demand imagery and AI-enabled analytics to an international non-government organization
• Selected by SynMax, a leading energy intelligence company, to monitor coal inventory at power plants using BlackSky’s advanced burst imagery capability
• Partnered with Spire Global to create a real-time, commercially available AI-driven maritime custody service to detect and track vessels worldwide, estimate cargo, and track activity over time
• Signed a launch agreement with Rocket Lab for a block of five dedicated launches to secure launch capacity to include deployment of initial Gen-3 satellites in 2024
• On June 26, 2023, BlackSky was chosen to be added to the Russell 3000 Index, a broad-market index widely used by investment managers and institutional investors

Financial Results

Revenues⁽¹⁾

Total revenue for the second quarter of 2023 was $19.3 million, up $4.2 million, or 28%, from the second quarter of 2022. Imagery and software analytical services revenue was $15.3 million, up 51% 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 $4.0 million in the second quarter of 2023, compared to $4.9 million in the prior year period. 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 44% for the second quarter of 2023, which included a $2.5 million expense recognized in professional and engineering services related to changes in the estimated cost and percentage of completion for an R&D related project, compared to 65% in the second quarter of 2022. Imagery and software analytical service costs as a percent of revenue was 23% in the second quarter of 2023, compared to 34% in the second 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.

Operating Expenses

Operating expenses for the second quarter of 2023 were $30.7 million, which included $2.1 million of non-cash stock-based compensation expense and $11.8 million in depreciation and amortization expenses. Operating expenses for the second quarter of 2022 were $27.0 million, which included $2.6 million in non-cash stock-based compensation expense and $9.2 million in depreciation and amortization expenses. Excluding the non-cash stock-based compensation and depreciation and amortization expenses from both years, cash operating expenses for the second quarter of 2023 were $16.8 million compared to cash operating expenses of $15.2 million for the second quarter of 2022. The year-over-year increase of $1.6 million, or 10%, was primarily due to expansion of the sales team and AI capabilities.

Net Loss

Net loss for the second quarter of 2023 was $33.4 million, compared to a net loss of $26.3 million in the second quarter of 2022.

Adjusted EBITDA⁽³⁾

Adjusted EBITDA loss for the second quarter of 2023 was $5.8 million, compared to an adjusted EBITDA loss of $8.8 million in the prior year quarter. The $3.1 million year-over-year improvement was primarily driven by strong operating leverage achieved through increased revenue of high-margin imagery and analytics, partially offset by the $2.5 million expense in professional and engineering service costs.

Balance Sheet & Capital Expenditures

As of June 30, 2023, cash and cash equivalents, restricted cash, and short-term investments totaled $59.5 million. Capital expenditures for the second quarter of 2023 were $12.6 million.

2023 Outlook

BlackSky remains on track to achieve positive Adjusted EBITDA in Q4 of this year. This is the result of continued revenue growth, high incremental margins from imagery and analytic services and continued responsible cost management. The Company continues to close a significant number of new contracts, further building a strong book of business. BlackSky is actively working with several major customers on a number of sizable contracts and given the variability on timing, the Company is widening the range of its 2023 revenue outlook to between $84 million and $96 million. Expectations for full year 2023 capital expenditures remain between $40 million and $45 million.