Q3 Total Revenue Increases 26% from Prior Year Period
Strong Improvement in Net Income; Achieves Nearly Breakeven Adjusted EBITDA
HERNDON, Va. — (BUSINESS WIRE) — November 8, 2023 — BlackSky Technology Inc. (“BlackSky” or the “Company”) (NYSE: BKSY) announced results for the third quarter ended September 30, 2023.
Third Quarter Financial Highlights:
- Revenue of $21.3 million, up 26% from the prior year period
- Imagery & software analytical services revenue grew 11% over the prior year quarter
- Cost of sales, as a percent of revenue, related to imagery & software analytical services improved to 23% from 26% in the prior year quarter
“Increased customer demand worldwide for BlackSky’s space-based intelligence drove record revenues in the third quarter, and coupled with strong operating leverage and responsible cost management, keeps us on track to achieve positive Adjusted EBITDA in Q4 this year,” said Brian E. O’Toole, BlackSky CEO. “We’re pleased with the strong momentum we’ve seen in our business. New contracts and renewal agreements primarily supporting U.S. and international government agencies illustrates growing demand and demonstrates how BlackSky is increasingly relied upon by some of the most demanding customers around the world. With our focused execution on profitable growth, we believe BlackSky is well-positioned to carry this momentum into 2024 and beyond.”
Recent Highlights
- Awarded over $9 million in contract expansions with existing U.S. government agencies for our advanced imagery and analytic services
- Signed a multi-year master service agreement for up to $8 million to support a new International Ministry of Defense for high-frequency imagery through BlackSky’s Spectra platform
- Expanded a contract with an existing International defense customer to increase assured access of their regions of interest
- Signed a contract with the U.S. Air Force Research Laboratory to provide an AI-enabled automated target recognition service to track mobile assets in real-time using multiple satellite data sources
- BlackSky was named to the 2023 Deloitte Technology Fast 500 list which honors the most innovative, fastest-growing public companies in North America
Financial Results
Revenues(1)
Total revenue for the third quarter of 2023 was $21.3 million, up $4.3 million, or 26%, from the third quarter of 2022. Imagery and software analytical services revenue was $15.3 million in the third quarter of 2023, up 11% 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 $6.0 million in the third quarter of 2023, up 86% over the prior year period, primarily driven by new programs won in 2023. 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 32% for the third quarter of 2023, compared to 46% in the third quarter of 2022. Imagery and software analytical service costs as a percent of revenue was 23% in the third quarter of 2023, compared to 26% in the third quarter of 2022. The year-over-year improvement in imagery and software analytical service costs was primarily driven by greater volumes of revenue that inherently have a low fixed-cost structure as a percent of revenue.
Operating Expenses
Operating expenses for the third quarter of 2023 were $29.0 million, which included $2.3 million of non-cash stock-based compensation expense and $11.3 million in depreciation and amortization expenses. Operating expenses for the third quarter of 2022 were $28.6 million, which included $2.9 million in non-cash stock-based compensation expense and $9.6 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 third quarter of 2023 were $15.4 million compared to cash operating expenses of $16.1 million for the third quarter of 2022. The year-over-year decrease of $0.7 million, or 4%, was primarily due to reductions in general corporate costs which more than offset investments in our go-to-market initiatives.
Net Income
Net income for the third quarter of 2023 was $0.7 million, compared to a net loss of $13.1 million in the third quarter of 2022.
Adjusted EBITDA(3)
Adjusted EBITDA loss for the third quarter of 2023 was $0.4 million, compared to an Adjusted EBITDA loss of $6.6 million in the prior year quarter. The $6.2 million year-over-year improvement was primarily driven by strong operating leverage achieved through higher revenues, gross margin growth, and reductions in operating expenses.
Balance Sheet & Capital Expenditures
As of September 30, 2023, cash and cash equivalents, restricted cash, and short-term investments totaled $51.5 million. Capital expenditures for the third quarter of 2023 were $35.9 million.
2023 Outlook
With strong operating leverage in the third quarter resulting in nearly breakeven Adjusted EBITDA, the Company remains on track to achieve positive Adjusted EBITDA in Q4 of 2023. BlackSky continues to experience strong global demand for its high-frequency imagery and AI-driven analytics as demonstrated by the strong book of business won this year. Considering the timing on a number of new contract wins, the Company is narrowing the range of its 2023 revenue outlook to be between $84 million and $90 million, representing a 33% increase over 2022 revenue. In addition, the Company expects capital expenditures for the full year 2023 to now be between $48 million and $54 million driven by the timing of payments on the Gen-3 constellation.
(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 expense. |
(3) Non-GAAP financial measure. See “Non-GAAP Financial Measures” below and reconciliation table at the end of this press 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 1-800-343-4136 or 1-785-424-1699 using “BlackSky” as the conference ID 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 13742217. The audio replay will be available from approximately 12:30 PM EST on November 8, 2023, through November 22, 2023.
About BlackSky Technology Inc.
BlackSky is a leading provider of real-time geospatial intelligence. BlackSky delivers on-demand, high frequency imagery, monitoring and analytics of the most critical and strategic locations, economic assets and events in the world.
