BlackSky Technology (BKSY) 8 Nov 232023 Q3 Earnings call transcript

[Operator Instructions]. Good morning, ladies and gentlemen, and welcome to BlackSky Technologies Third Quarter 2023 Earnings Conference Call. [Operator Instructions]. Please note, this conference call is being recorded. I would now like to turn the call over to Aly Bonilla, BlackSky's Vice President of Investor Relations. Aly. ahead, go Please

will thank business. Chief joining outlook and Executive Henry company's strategic financial call, Financial and quarter quarter on joined give third will and our Today, XXXX. then by for Officer, a Brian today's On our Officer, on Dubois. and some you morning, highlights us. the the for update I'm Chief provide Henry Good results Brian the O'Toole; review

your we approximately can Following Information replay open Time will questions. our release. for will from A the be this line available today remarks, press today's XX:XX call conference replay prepared in to access XX. of the Eastern found through be November p.m.

Investor with use of In along the Relations at prepared www.blacksky.com. Additionally, presentation call, quarterly that today's website you section may to will webcast a this the earnings our conjunction of have Relations website on call remarks. earnings follow posted we Investor a our in be with available

Before update of for except BlackSky discussion you our may the our we including and today's our may no full as stated of to release, as uncertainties, plans, by are our performance, price other you expected press filings Actual statements be begin, that statements, forward-looking pertain XXXX encourage objectives and SEC statements, and statements. to Form as on to law. our these certain remind call subject are uncertainties materially regarding assumes conference required our and based results review risks results affect applicable let We guidance may future to current and for XX-K. stock. or me obligation the financial a expectations in differ made during these risks today that statements market that forward-looking Form recent are those including future of and XX-K

GAAP cost of call, reconciliation non-GAAP measures, can in measures this adjusted expenses. comparable operating to Relations and sales and financial to the which services A today's website. are their downloaded accompanying measures presentation, including turn refer and Brian? to of today's O'Toole. I'll we viewed imagery during software over addition, EBITDA, included call adjusted analytical point, most cash Brian from In will these certain our non-GAAP At financial Investor be

Thanks, base and BlackSky us that delivered you everyone. good today's I'm expansion morning, with continued and Aly, pleased quarter adjusted breakeven record Thank strong on nearly EBITDA. report our for customer revenues, another of call. to joining

space-based capitalizing and long-term toward see new converting business to our sales continue of demand BlackSky's a on has on agencies of and base, the effective profitable capabilities government combination operating path for strong cost opportunity growing management We by this are The expanded the contracts. leverage pipeline us intelligence from growth. clear customer successfully and our world into around growing increasing our

and Before to long-term national capabilities and a of accelerate delivering aid, East expand to and worldwide through space-based or events people in to for our in our living their for empathy and to playing a to AI-driven out customers is as time horrific defense the events those analytics Nepal intelligence are world. Middle ongoing week's have conflict. products be and role I the demand and and many, all their delivery affected difficult this of capacity is humanitarian, BlackSky's humanitarian secure seek loved for crisis to meet This protecting imagery here the is analytic on The transparency very go organizations over security continues crisis reliably it's want begin, Ukraine, and this security Whether thousands providing in the by in From in or ones every supporting proud supporting critical war the homeland, economic to conflict BlackSky earthquake both I who day the and images express Gaza. take interests our Israel high-frequency our abroad. the mission a to the lost to critical by hearts moment needs. national

to which X turn and Slide products our demand let's customer and operating continues Now performance quarter-over-quarter demonstrate for to highlights, recent BlackSky's services. and growing strong

commitments First, as we prior execution Demand remain through XX% quarter $XX space-based reliable we delivery of and revenue our million, over our third continue services capabilities. achieved our a record to the and strong increase for quarter. over products meet of year customer focused

agencies demonstrate new brings million. to by Second, contracts bookings most up $XX BlackSky valued of the agreements contract we some our signed year-to-date increasingly million. renewal to and government over and $XXX around is upon the wins demanding and how These at world contract international U.S. customers multiple with relied

of focus first business. same This a imagery driver million in scaling incremental for a the in of our the X $XX XX% year, Fourth, to EBITDA the management, period to operating analytics and XX% continued Third, illustrates our strong of further This compared leverage is and margin cost responsible grew months leverage our the or QX. reported revenue increase an operating we revenue contribution delivered strong adjusted key on breakeven of and business as profitability. in result nearly XXXX.

positive focused to fast-growing toward been aspects across XXX our the list, of strong Fast XXXX us honored the we're momentum named of in demonstrate keeps many quarter. we These on the execution our companies. experiencing This finally, Technology and are EBITDA Deloitte fourth all quarter's ongoing highlights track adjusted business. achieving And joining have to performance goal other

strong high-frequency sales opportunities growth. I market and secure puts access capitalize We continue our us This demand profitable in like from new operational highlights now share the on government position increasing quarter. realize and to to interest growing looking a to see imagery sustainable AI-driven analytics. from would some worldwide, agencies satellite to to

of customer. This long-term constellation a satellite upcoming imagery new up these BlackSky and a from of the and our access them. intelligence valued new Turning critical Gen country's Global assured high-frequency access products also analytics provides international that come interest remain governments and in will advanced continues their our enables with immediate we to support services. X international to a are capabilities. to Slide our national investments matter directly Through end our imaging to and as Ministry for be constellation for in high-frequency, many and customer This seeing security signed multiyear agreement to world X. task governments around online. capacity services satellites access their to example services Spectra to strong and We're million, platform, on-demand areas of $X monitor most demand critical the increasing customer contract interest. once contract analytic space-based users master recently One able to the is with to more Defense to secure customer our engaging software economic

we BlackSky's to development contract We next-generation imaging Also are add regions around seeking capacity to quarter, during organizations of the agreements assured to supply-constrained to long-term with the capacity. also of the interest. governments secure architecture international order to intelligence a a are this increased multiyear an our customer tactical growing support access proud and for needs. in their existing This defense includes over globe. a environment, In their critical base, contract defense customer major expanded supporting customer

X. on to Slide Moving

leveraging products capabilities as to Defense well expand applications. a see space in customers and strong the as We existing agencies variety from BlackSky's continue services intelligence demand continue Department interest their commercial U.S. of emerging for U.S. of to mission for and government.

of During quarter, our and the contracts expanded contracts. some of new on existing closed we major a number

many U.S. build with $X awarded analytics space-based for in were over with existing look agencies expansions government rely we million our government to pleased to contract we them. advanced relationships that on and capabilities, imagery We're and our continuing continue to First, for our agencies forward BlackSky services.

data remote track and won analysts support secured example time. is is with devices Laboratory and Defense Research to actionable will our of contract mobile Agency sensor track satellite such This intelligence. requirements target and This U.S. of demonstrate radio worldwide. of the for Department Force recognition vehicles. AI of provide of data multiple intelligence automated maintain diffuse BlackSky frequency capabilities advanced we the custody dissemination service developing contract to Second, project will a space-based assets to real in the as capability, leverage together by an sources funded This Space electrooptical proprietary some Air Development U.S. moving another to to

is beginning has the contract. IOC on this contract. since This of utilization achievement designing under quarter the BlackSky imagery ordering the was X. performance enterprise delivery APIs the architecture streamline BlackSky's users. within of a milestone been of of during to EOCL providers BlackSky imagery successful the or architecture. as services like was interfaces validate a to and architecture important and first the This receipt imagery imagery to successfully capability U.S. imagery scale government the the imagery Turning to with high-frequency integration capability integrate of access A has completed In an we working enables successfully and commercial end this further the integrate commercial it NRO's QX, series the architecture. of and via the government. products. BlackSky the and government required of to improves data commercial initial NRO The into major commercial and and building our integration company milestone operating Slide with the U.S. been

X quarter, programs new key to emerging BlackSky recent by win As requirements. this Slide our awards. evidenced support R&D shows some of some wins mission of supporting capabilities contract the continues advanced to

can For algorithms capability, create burst burst video takes capability identify achieve our in multiple a by our to collection. be which moving example, AI images we imagery this targets models. year, used near and earlier to XD multi-frame released This succession

objects part and have example kilometers detection IARPA million platform the advantage our which which interest, airports, technology to anticipation ports with instrumental space, on Through our over provide Customers that government's such the innovative ships space in area customers' uses high-performance versatility growing of In site AI-enabled analytics be U.S. requirements Another images constellation, to the can program, and of to monitoring intelligence. of the advanced the ability broad we've developed we search deliver of government's for constellation. our capabilities, to as and to non that face-based earth demonstrate situational of AI our classification showing around combination solutions world. of use square capture able imagery. been as leverage AI the and rapidly automated XX capability of next-generation the taken our also we Smart is of analytics of able and objects awareness, AI-enabled satellite our of provide develop satellites are

to report program X XX. remains launch XXXX. I'm on satellite Slide that Gen track in our for happy Turning to

moving units. now first of components long critical We the lead into are and receiving the are and and integration assembly

demand XXXX. in satellite our continued in production progress scaling in achieved position quarterly with over specific timing ongoing it line, that renewal In more for revenues the we'll the we're financial now through I'll demonstrating contracts on customer the winning Henry? growth. revenue market and also pleased details new turn momentum the summary, in record QX, as detail. are program in more Henry the We manufacturing and the strong to go provide results to and of agreements we us

by Brian, and our business we've you, quarter XXXX XX% our the volumes revenue existing Analytics prior was prior an $X.X was of new third of revenue million quarter. Thank company XX% the year everyone. and $X million, pleased financial many This quarter services the $XX.X over $XX.X the of made a customer customers and million of the grew or won I'm professional progress with year for Imagery year. from of new this quarter. Professional million XX. of Beginning service Total third imagery $X.X by million driven ramp-up year delivered driven and to The of morning, to especially period, primarily with record. across XXXX revenue was compared fees in an new was in to Slide engineering with greater $X.X results. the good the and million, third quarter programs over primarily higher increase prior increase worldwide. aspects increase

the Defense set The subscription with work contract to an year. begins. integrate the initial recall, this customer you Ministry services increased of and a revenues is contributing of to prior development of fees when this we part may these multiyear the international contract won million in and up As on to contract includes QX $XXX-plus professional

Turning of to cost sales.

leverage our continue Analytics as Slide to operating in demonstrate business, strong on Imagery We shown XX. and

and or XXXX. imagery period of for analytics compensation, Excluding the of stock-based XXXX months expenses, depreciation amortization $XX.X same sales and the X to of X% a compared $XX.X was million, $XXX,XXX cost increase in million first increase

imagery incremental our $XX.X how core of our year-over-year. and X X-month of If XX% and the and increase adjusted revenue, look periods compared margin analytics months to increase a you we million the revenue we the the our to in $XX.X year, $XXX,XXX business. this increase year, leverage When $XX.X in business an million $XX.X million same validating revenues driving further for comparing analytics improvement to last at year is cost or for grew of sales revenue, was resulting the efficiently key in services scaling factor XX% this EBITDA This operating achieving this our imagery anticipate on first profitability. our strong and million

Slide about expenses. operating to and talk move Let's XX

without compensation to and impact expenses. this excludes discussion, more which For refer approach costs the noncash compare to year-over-year business will from and depreciation stock-based effectively our items. cash I operating us enables expenses, the amortization This for

which insurance another XXXX, costs, fees our $XX.X professional cash adjusted of focused general costs were including of year-over-year managing decrease year. rent in $XXX,XXX of investments initiatives. expenses QX operating cash expenses expense performance. primarily last responsibly, key our is on corporate in in was driven by that quarter third compared the premiums, driving million remain operating $XX.X in factor than X% or highly and EBITDA to reductions million The We our improving go-to-market more offset For

Slide XX. to Turning

of of revenue improvement This quarter EBITDA over roughly first, by year by reported strong key driven in adjusted growth loss demand factors: period XX% third the loss driven primarily $X.X are a prior million increased worldwide. the breakeven. XXXX, essentially For was is few the customer an and we a year-over-year $XXX,XXX

realizing contributed analytics incremental contribution Imagery revenue and prudent confidence increased services profits. quarter, gross with high as further in third and performance adjusted us also our to higher from Second, cost management. professional these achieve margins We're third, better QX. business in will new programs well very services margins year as of EBITDA the And we our results pleased in positive give with the adjusted this that EBITDA that goal

you also will the our driver treatment positive for note, quarter primary warrant reporting liability for of a we exposure. the As The are accounting was income net positive $XXX,XXX. the income of net

losses QX net a warrant $X.X QX our the was loss quarterly improvement you out, If net gains in net XXXX million XXXX. loss in and over

restricted Moving of cash sheet. on ended quarter short-term with We investments. the of to and our balance XXXX third million $XX.X cash,

from is year $X.X of in about this timing the due payments down our of to expenditures Our XXXX satellites. quarter capital Gen third on some the were million, which million $X QX X

be our than This As timing and cost milestone-driven adjusted you from million. know, profitable the meet EBITDA, balance of over the and more the believe a our $XX.X we liquidity to this CapEx our management have is CapEx quarter-to-quarter line driven. of X $XX months cash to brings total million, year prudent can drive lumpy future. to for first sufficient cash With needs we foreseeable for time spend our and spend of

Slide as on XX. to XXXX move shown on outlook let's Now our

deliveries. year. initial are range, XXXX this new adjusted include $XX to our EBITDA the earlier, EBITDA between timing some our revenue On is to in on uncertainty at this a our in achieve low we continuing surrounding operating remain year. outlook of adjusted achieving double-digit revenue in which achieve range mentioned QX, positive of Considering EBITDA large as we Even million focus and expect million. the QX the we to this With result of on I expected As and laser growth of of adjusted track may contracts, the leverage narrowing and cost we QX performance variability, responsible consistent in be had there degree from nearly revenue end revenue, $XX breakeven growth revenue strong of this management, business. revenue positive a

expectation pleased $XX turn Brian? primarily For we In remarks. made closing between satellite timing capital progress with Gen is XXXX. the $XX for million quarter for of are now to With expenditures, for on and the million. CapEx Brian to we've spend milestone-based down over financial launch anticipated raising our it business. in back and we're XXXX to that, across X payments our the some increase be our performance and constellation initially payments summary, related third our I'll This

results you, across with continuing strong to quarter our Thank third aspects we're business. momentum Henry. pleased all and are of our In experience closing, we the

on dividends needs customers. and of focus market Our paying solutions is as and defense intelligence long-term new the global accounts continue to the and capture to we deliver grow support technology existing new our customers, innovative

for that demand and sizable intelligence, multiyear a seeing clear our of contract sales which conversion are is We into and growing backlog. evidenced pipeline pipeline growing space-based by

continue with to look revenue the and that our momentum our concludes XXXX. us customers time, leverage Our our a invest additional EBITDA enables capabilities advancing same growth coupled operating we'll to This track and now QX. to adjusted our call, clearly expanding incremental positive is our when strong quarter the the keeps now we cost space and in focused and architecture your We execution on in deliver strong questions. the to fourth us business. carry evidenced forward value finish delivering strong in future. remarks At EBITDA and into performance management, This adjusted achieve third in our will achieve in responsible quarter to to take for is by in the AI

our take [Operator question with Instructions]. from And first Lake Schmidt Street. we'll Jaeson

number? do I'm sorry guys if I you missed a give it, backlog but

joining this Jaeson, Thank for you the call. Henry. is

XX the the was have September Q will $XXX We end about at and million. backlog that in of our

but card cancellations? you timing seen order know I is And Perfect. any Okay. wild the have always here,

No, timing. a it's matter of just

year to adjustment or the X driven is And broad-based into Got is your The midpoint for customer base? Or I'll of me, one more then just a pushouts? and across final X being full it slight that the it. outlook, queue. back by jump

Jaeson. morning, Good

last of have quarter, is it's our mentioned that I and a driving expecting slight the contracts of to revenues, ramp those we're close. of guidance. our timing And we those which As contracts of the number then refinement

And our with question Edison we'll Bank. take next Deutsche from Yu

we're First, think that you forward? margin Do something to on that is services upside, How that see expect to going we the about trajectory? professional going normalize? it do

take of services, R&D well. Yes, may doing contributing our in look as funded we're calling lot past, were at which we Thank a were you Edison. in the professional as you, what work we you recall as a

low fairly margins. have we So

type services, would As we integration a to more we on a support they yes, these those. subscription-based type expect have products into higher become this before move more new for commercial margins

on then And complexity, question some discussions guess, can governments, be simply contracts, of you something? with over the Is why in or just there so high-level Okay. be these little taking, curve the, more color various bit of Just I appears to it these guess, long? it helpful. closing I a maybe big go adoption would

And Edison, seeing varies as typically our regular I processes, they is with that, around those sales as But contracts, through customers. can there think once And expansion longer. you're business, the establish government as those also contracts incremental seeing a get sometimes basis. take you we're cycles world. we on longer moved internal in imagine, can their of

it take are usually looking that contracts in So place, those us longer. good very initial gives visibility it's the once But forward.

you. Got

for to growth pace kind you guidance of get implied think is and year, one And that will the at not I'm Do we more midpoint, the I I think a it's next but if a even represent continue? at normalized of the fourth something so, going pretty quarter could growth XQ that trying sneak acceleration. forward? decent guide, in. see Just could look more If if

to, revised strong in call typically additional very anticipating that we Well, nonsubscription I performance, would a strong we think And payments. have some that. contribute secured QX as contracts lower support had delivering we're also But outlined very the and that the I'll on QX we're you'll initial and are we've to that. of I QX. Edison, that backlog guidance, see At QX then we've a think, our expecting end outlook,

with Josh And Sullivan Benchmark question from we'll take our next the Co.

out noting? as this the anything driving CapEx or milestone push anything as quarter, being should supply chain else worth far milestone-driven, Just we note

I Josh, in process, variability the payments. that's typical milestone think has satellites as launching just that building No, these move through and being reflected and timing you of

at the targets. time? significant on a mentioned where of number you project, Got Is that it. commitment? you capability moving can And one resource-heavy is a tracking moving then Or track a AI that targets

It's to spectra. cloud our platform, all able of do and real-time as that in through automated And processed our in gets capability fully AI part platform. scalable we're our

world. the across significantly pretty scales it So

Got it. your ECL. one, last ramped just has How And just it to initial relative one expectations? on then

line. right t's in

of recall, you'll year they in X, years X subscription. originally and we're funded As

accelerates the the were so right data IOC and track The customer U.S. we're very as expectations. of architecture a imagery part And than much a on NRL broader milestone with milestone that the experiencing big on the base with integrating was in first to government commercial contract. within access we

excited milestone. is really It's program next this that expected, about program. we progressing phase So we're as and to the of the important

take Rhee question from our Jeffrey next we'll Van with And Craig-Hallum.

the possibility questions to up I'm roughly Congrats the real see Defense couple the of subscription good understand guys Ministry start some of there. But That's to understanding progression was margins being a that go of kind of on that. the A here. subscription progress question. component more sequentially because does curious when expected the in in? first based to really second to there's XX% about EBITDA, And on definitely what part the big back layer me variability you my QX, for win, incremental to pipeline, on

versus precise think there, the I magnitude a software the much coming you of sense on just at that's flat of guidance do you least on fall here. possible of that imagery and software but I'm line? and it professional engineering. in been Specifically that how and to want in could software spike line, And imagery imagery know give relatively and wondering QX

imagery contracts. Jeff, in uptick related typically to questions. both and think tied analytics I subscription see answer is We the revenue in Yes, certain quarter the third to fourth and

Defense new driving as front So that's professional from expansion then that fourth analytics in quarter. incremental that, some the year. contract And to revenue the also question contribution Ministry Henry we of of we're of larger or programs a our the for earlier seeing won in outlined, imagery from strong your on services

And from we'll Capital. Westpark Gregory Mesniaeff question next take with our

look seeing in your terms that of words, in contracts, trends, lines When you're are on the customers at recent any kind Yes. some asking of you that other you changes can time most comment and for? any deliverables

Yes, we're Sky. of seeing getting interested the that from customers relative not change anything kind with capability in Black are

you our secure capability As customers is are a analytic high-frequency to and recall, monitoring supply-constrained unique market. in the looking especially market in capability, and that

So consistent our in customers, we of international set of been And have business. on customers the and which drive us our services defense highly of element baseline buying new enabling this to around focused particularly sector. the is are pricing, high-margin those types intelligence

We'll Instructions]. B. Riley [Operator Securities. with next Boss question our take Griffin from

is Appreciate jump really to to XX% and just professional nice a margin to engineering it. see. Edison that back I wanted services question on asked the strong that earlier

as elaborate between could revenue? of and expectations Do you and expect sort about percentage you to engineering then if mix services? of ramping curious continue analytics forward Just imagery the overall your a going us professional

Thanks, Griffin.

from company. the of revenue, we advanced also funding for fairly the I always of be Imagery analytics. environments to our of professional includes drive some think services but part There element integration our some R&D are as outlined, of continuing future of into that which growth subscription services we're a customer business, which technology mix, will type programs and in anticipating capabilities consistent capabilities

always the to going imagery professional to the element So grow of there services. of some element business, remain continue we're will but

it. Got

Or And milestone all Great. sort integration first the view of million make rounds the guess, of an just to Can I you that, milestone funding? for X with funding, announcement the critical guaranteed that, expect $XX more a unlocks additional quantitatively the back Okay. allocated on the elaborate value then when you the I years? NRO. at if to that jumping NRO give you mean, above can to might

that BlackSky the and provider commercial stronger which, distribution as mentioned, U.S. What Imagery utilization commercial streamlines end was architecture. significant Well, the achieve is the milestone. to And higher validate the systems, that milestone a enables into new and at first of was means I day, their government BlackSky that demand. of provider that

And that the NRO we working so about phase getting we're XXXX, the next We excited point. that subscription. on in be ELCL anticipate will to with of

of backlog? I better Okay. And of if when the million you to last sort is represented Just one under revenue length the then that be Got contracts that trying $XXX to could. understand Do recognized? disclose average it. for me, expected

add we disclose seeing that? is you elements what a the but agreements want Henry, that, But of different and timing. multiyear do No, of agreements don't various have you're number to to

remainder to is XXXX of Sure. And Griffon, $XX close about see beyond. expect of XXXX rest is and of million there then is $XXX is business $XX this receive much we'll million of when you of breakdown the that in year, Q that the which a kind file the and today, we that after how is about million. And

That's it. super helpful. progress. Got on Great. Congrats the Appreciate it.

take And Quality next from we'll Panoli with Analytics. our B. question

with side, on light evolved any And can Spire it plan Since relationship the is X some commercial space on motion fpr the have diversification questions. how has just progressing? BlackSky? there for this also, throw customer is the is I announcing year. everyone. Naren How Hi, nature And solutions? for the in of your you with formation Spire

time a the hard first question, you. part repeat having please? you of We're hearing your Could

Yes.

Spire the was So about it with this the commercial deals announcement year. of

front? diversification evolve the there commercial on planning So how commercial has the the And for is any BlackSky? for motion space

quite work market are solutions. Spire. of we with the interest awareness in seeing domain bit continuing Thank for We're you. Yes, to maritime a maritime for

proposition. their our track value with monitoring constellation to to So is a with significant provide combining ability ships Spire's capability high-frequency

working to through bring the On that that, different commercial and Spire side of partners to channels. are with other capability we market

my launch. question Gen That about actually Okay. And helps. is last X

time lab affected of X Gen has in track? on profit line? the So is Or the it still only lighten anyway reason last

remains Gen on X outlined. track as we've

before. As events them a mentioned like very been Rocket we us, good Rocket agreement earlier, we this and a with has with multiyear and with we've partner with Lab. signed been things

they're we're we next impact cause, confident to launch don't going So see to plans root our and any year. to get

further there of And to Vice BlackSky's questions. over Aly. this it time, at President I'll ahead, back Bonilla, Relations. Go no Investor turn are Aly

I everybody right. for want on this joining us thank to All morning. the call

a We weeks, will upcoming to and day. see one of to hope again soon. the be these. we investor participating you We speaking next at in conferences over you look Have forward several to several great

That you concludes participation. teleconference. for today's Thank your

now You disconnect. may