BlackSky Technology Inc. Class A

Greetings and welcome to Black Sky fourth quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. Our question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this call is being recorded. I'd like to turn the conference over to your host, Ali Bonilla, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining us. Today, I'm joined by our Chief Executive Officer, Brian O'Toole, and our Chief Financial Officer, Johan Brookhuyden. On today's call, Brian will provide some highlights from last year and give a strategic update on the business. Johan will then review the company's quarterly and full-year financial results and outlook for 2022. Following our prepared remarks, we will open the line for your questions. The replay of this conference call will be available from approximately 1130 a.m. Eastern Time today through March 8th. Information to access the replay can be found in today's press release. Additionally, a webcast of this earnings call will be available in the investor relations section of our website at www.blacksky.com. Before we begin, let me remind you that today's conference call includes forward-looking statements, including financial performance and guidance for our fiscal year 2022, and that actual results may differ from the expectations reflected in these statements due to factors such as long sales cycles, customer demand, and our ability to estimate expense, operational, and liquidity needs. We encourage you to review our press release and most recent SEC filings for a full discussion of the risks and uncertainties that pertain to these statements and that may affect future results or the market price of our stock. Black Sky assumes no obligation to update forward-looking statements. In addition, during today's call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA. A reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in today's earnings press release, which can be viewed and downloaded from our investor relations website. Please note that our net income for Q4 that is included in our earnings release is subject to the completion of our financial closing procedures and adjustments that may remain from the completion of the audit of our consolidated financial statements. As a result, our Q4 net income estimate may differ from the actual net income reported in our 10-K. At this point, I'll turn the call over to Brian O'Toole. Brian?

Thanks, Ali, and good morning, everyone. Before I begin, I want to introduce and welcome Ali Bonilla to Black Sky. Ali joins us as our new Vice President of Investor Relations. He is a seasoned financial executive with extensive experience in public company investor relations. Ali has spent the last 25 years working in investor relations and broad financial management roles for large and established companies. We look forward to having him build a best-in-class investor relations program to elevate our profile among analysts and investors, and enhance Black Sky's commitment to delivering long-term shareholder value. Turning to our business, I'm pleased with the progress we're making and the positive traction we're seeing with our customers. We're successfully executing across all aspects of our business, and most importantly, providing our customers with real-time global intelligence and analytics that they rely on every day. More than ever today, there's a growing need for real-time global intelligence to support a wide range of industries and applications, from business optimization for supply chain intelligence to humanitarian efforts and crisis response operations. Customers come to Black Sky because it is essential to their operations and business to have a first-to-know advantage. From the crisis currently taking place in the Ukraine to real-time intelligence needed for businesses around the world, the BlackSky Spectra AI software platform is an important and essential capability, helping government and commercial markets understand and respond to events happening in our world. For example, just last week, one of our regional partners in Europe needed to rapidly respond to an emerging crisis related to a ferry that caught fire in Greece. Our partner logged into our Spectra AI platform through a web browser, and with a few clicks was easily able to task for satellites and receive imagery in just under three hours. By having this entire process fully automated, we believe this is a game-changing experience for the market. Through an excellent customer experience, disruptive economics, and delivery of information and insights through a modern artificial intelligence or AI-driven software platform, we are now making this capability widely available to a large commercial market. With our industry-leading platform in place and fully operational, we can now make great strides in building both our government and commercial businesses. In particular, we are focused on expanding our sales organization and growing our investments in cutting-edge AI technology and software development, all of which will accelerate the analytics and insights we can provide to meet customer demand. Now let me highlight some of the major accomplishments we achieved in 2021, which sets the foundation for growth this year. First, we successfully completed the business combination transaction and became a new public company listed on the New York Stock Exchange. The transaction provides the company with sufficient capital to fund our current strategic growth plans. Second, we achieved a baseline high revisit satellite service by doubling the number of high resolution imaging satellites in our constellation following the successful launch of six satellites in a 20 day period in the fourth quarter of 2021. These new satellites were successfully placed into revenue generating operations within 48 hours of launch. This was a significant achievement in our industry and demonstrates our ability to rapidly deploy capacity as needed to meet demand. With the constellation now at 12 satellites, we're delivering imaging performance at an optimal peak rate of 15 revisits per day. Based on our estimates, we now have sufficient on-orbit capacity to support our growth objectives for the foreseeable future. Third, we were awarded both multi-year contracts and extensions from customers such as the National Geospatial Intelligence Agency, or NGA, the National Reconnaissance Office, or NRO, the Intelligence Advanced Research Projects Activity, or IARPA, and the National Aeronautics and Space Administration, or NASA, just to name a few. We believe we are a partner of choice for some of the world's most demanding customers, and I'll touch on some of these in more detail in a few minutes. Fourth, we signed a multi-year partnership agreement with Palantir Technologies to integrate BlackSky's Spectra AI software platform with Palantir's Foundry platform to expand the delivery of high resolution imagery and deep analytics to customers worldwide. We are excited about this combined solution and encouraged by the initial demand we are seeing from customers, which we expect will grow as we continue to build on this strategic partnerships. Fifth, we've strengthened the talent within the Black Sky organization by adding four new strategic members to our board of directors. five seasoned executives to our management team, and expanded our product and engineering teams. With the addition of these new executives and team members, we now believe our team has the right talent and experience to help drive and attain our aggressive growth plans. And finally, we expanded our sales force and increased the number of resellers in our global network, spanning the UK, Australia, Mexico, Central America, and Southeast Asia, just to name a few locations. We continue to focus on growing our global sales network to address strong market demand. 2021 was a critical year for Black Sky, and I'm pleased that we ended the year on a strong note with growing momentum entering 2022. Fourth quarter revenue grew to $11.5 million, or a 79% increase from the prior year period. As a result of the strong quarterly performance, Black Sky's full year 2021 revenue came in at the high end of our guidance at $34.1 million, a record for the company and a 61% increase over 2020 revenues. Johan will provide more details on the quarter and full year financial results later. I would now like to highlight the progress we've made in our government and commercial business. Customer demand continues to be strong for a high revisit imaging and analytic products and services. In the fourth quarter, we won several new opportunities both in the U.S. and abroad. I'll start with our defense and intelligence business, which continues to drive our near-term growth, providing strong revenue visibility into 2022, especially as many contracts transition into multi-year recurring subscriptions. We expanded our footprint with both U.S. and international defense and intelligence agencies, through both an increase in demand from these customers and through major progress integrating our imaging and analytic services into their day-to-day operations. Black Sky is increasingly relied upon by some of the most important and demanding customers around the world to support their mission-critical operations. As a result, during the year, we're awarded multi-year contracts and extensions. The NGA remains one of our largest customers with multiple programs that are delivering advanced geospatial intelligence services to hundreds of users within the agency and the organizations they support across the Department of Defense. In Q4, we were awarded a follow-on contract extending the subscription of our Spectra AI software platform that is delivering multi-source insights and analytics to a large user base. This is significant as the NGA is transitioning to buying more analytic services from commercial companies. A key example of this is the five-year $30 million indefinite delivery indefinite quantity, or IDIQ, contract we were awarded in Q3 for economic indicator monitoring that leverages our high revisit imaging and our AI-driven analytics. We are combining our imagery with other space data and analytics, such as synthetic aperture radar, to provide new insights into global activity. In the fourth quarter, we were awarded multiple task orders under this program for subscription-based monitoring services that we expect to grow in 2022. Another key customer is the NRO, which is the US agency that is responsible for acquiring commercial imagery for all US defense and intelligence agencies. Black Sky has been under contract with this customer for many years, And last summer, we announced an award to expand this contract so the NRO can access more of our high revisit imagery services. The demand for our capabilities continue to grow in Q3 and Q4 as we are now integrated into the day-to-day operations, which we believe positions us well for the upcoming electro-optical commercial layer, or EOCL, contract. As many of you know, the NRO released its final request for proposal, or RFP, for the EOCL contract back in Q4 of 2021. As a reminder, this EOCL contract is the largest U.S. government contract we've seen to purchase commercial satellite imagery and will be the vehicle through which the U.S. government acquires these services over the next 10 years. Black Sky submitted its proposal to this RFP in December. The government is now in the proposal evaluation phase with the timing of the contract award announcement expected to be sometime this summer. We believe we are well positioned to capture a portion of this contract award. We will provide you with any updates on this procurement as they become available. Another key focus area is around emerging opportunities with the Space Force. As the U.S. government expands the role of this agency with stated objectives, of leveraging commercial companies with satellite constellations to support tactical reconnaissance missions from space. We identified this market opportunity several years ago and are now positioned with multiple contracts with key agencies. We continued strong execution of these programs, which are developing leading space capabilities for the Army, Air Force, and other organizations such as the Space Development Agency. These programs not only position us for emerging new programs, but are a great source of funded research and development, which is further advancing our space and software capabilities. For example, we recently demonstrated an ability to deploy our AI algorithms onboard satellites in space to analyze imagery as it is collected and deliver insights on orbit. This demonstrates how our technical teams are pushing the limits on operational capabilities to reduce timelines and improve insights for our customers. We continue to make a major step forward in delivering real-time intelligence solutions. In addition, we were awarded a new contract in the fourth quarter with a major customer as the first phase in a multi-year program. We expect progress in this area to continue and grow in 2022. Moving on to our international business, we are now supporting several major international ministries of defense. This business continued to expand in 2021, highlighted by a new contract award in the fourth quarter with a major customer. Under this contract, BlackSky will provide the customer with high-resolution imagery coupled with analytics from our Spectre AI platform. We continue to see large market opportunities internationally where our high-resolution imagery and analytics are in demand, particularly in regions like the Ukraine, Middle East, and Asia. To ensure we capitalize on this growing international market, We have and are continuing to expand our international sales team and partner network to secure these potential opportunities and drive incremental sales. Turning now to our commercial business, we continue to see increased interest and opportunities across several vertical markets. Just last quarter, we won commercial agreements with multiple global 2000 companies for applications that span supply chain and commodities intelligence. Our disruptive economics Excellent customer experience and AI delivered insights offered as a software-based subscription service are all driving a surge in customer interest. We are finding that more and more companies are utilizing space-based data and analytics to run their business more efficiently, and our real-time global intelligence capabilities provide a competitive advantage. Customers are discovering just how easy our Spectre AI SaaS platform is to use. with custom analytics delivered quickly just by simply logging in through a web browser and tasking our satellite constellation. With an intuitive user interface and integrated analytics delivered fast, BlackSky is leading a new era in geospatial intelligence by providing customers with a best-in-class experience. We are proud to be supporting organizations that are using our platform for supply chain intelligence, construction monitoring, transportation hub monitoring, economic monitoring, just to name a few. As we announced last November, we welcomed Amy Minnick on board as our Chief Commercial Officer. The Spear had the growth in our commercial business, and we're already seeing good progress on this front. As this business and the sales team gets built, we believe we will capitalize on a growing number of opportunities, leading to greater customer wins, higher recurring revenues, and margin growth. Moving on to our satellite constellation, Let me first start with a brief overview on our approach and strategy for our constellation. BlackSky has taken an innovative software-first approach to our space network. We have developed and are using proprietary real-time processing and AI to efficiently task our satellites, only collect locations that are of interest to our customers. Our satellites are deployed in orbit that optimize imaging over geographies primarily where greater than 90 percent of the world's economic activity occurs. We can image from dawn to dusk at high frequencies. This approach means we can optimize the constellation to meet customer demand and address the largest and fastest growing part of the market in a capital efficient manner. In other words, we have right sized the constellation to only collect what we can sell while providing superior high revisit rates and all day collection and monitoring performance. to power a next generation of business intelligence applications. Alternatively, the traditional industry has taken a hardware-first approach, requiring hundreds of satellites to collect and map the entire planet. With this approach, a large percentage of this data collected by these systems is over locations that will never be seen, analyzed, or monetized. These constellations were primarily designed for mapping, not business intelligence. which means they are deployed in polar orbits, which are limited to only collect locations at the same time every day, typically at 1030 in the morning or 130 in the afternoon. This is good for generating maps, but not for gaining insights into activities that happen throughout the day or when customers need immediate insights. Our approach enables us to right size the constellation, collect imagery throughout the day at high frequencies, and responsibly grow the constellation over time to meet demand without the risk of over or under building capacity. The result is better pricing and service for consumers, a more efficient deployment of capital spending, greater operating efficiencies, and a faster path to sustainable EBITDA and cash flow positive operations. With three successful launches of six satellites that took place in the fourth quarter of 2021, We have now achieved a baseline constellation with non-orbit capacity and revisit performance to meet customer demand and our growth objectives. Each of our new six satellites began operations in under 48 hours after launch, a reflection of Black Sky's best-in-class engineering and operations. This now brings our total constellation count to 12 satellites at year-end. For 2022, we have four additional satellites planned for launch in the first half of the year. two of which will replace certain satellites which have reached the end of their design life. This 14 satellite constellation will provide more than enough capacity to satisfy anticipated customer demand for the next couple years. We continue to make progress on our Gen 3 satellites with plans to begin launching those advanced satellites in 2023. Overall, we had good execution across the business in 2021 and are excited about the strong fourth quarter performance, which I will now let Johan go through in more detail. Johan?