BlackSky Technology Inc. Class A

Good morning ladies and gentlemen and welcome to Black Sky Technologies first quarter 2025 earnings conference call. Online sub-plates unmute to prevent any background noise. After the speakers remarks, there will be a question and answer session. To ask a question, you may press star then 1 on your touchtone phone. To withdraw your question, please press star then the number 2. Please note this conference call is being recorded. I would like to turn the call over to Ali Bonilla, Black Sky Vice President of Investor Relations. Please go ahead, Ali.

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 Henry Dubois. On today's call, Brian will provide some highlights on the quarter and give a strategic update on the business. Henry will then review the company's first quarter financial results and outlook for 2025. Following our prepared remarks, we will open the line for your questions. A replay of this conference call will be available from approximately 1230 p.m. Eastern Time today through May 22nd. 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 .blacksky.com. In conjunction with today's call, we have posted a quarterly earnings presentation on the Investor Relations website that you may use to follow along with our prepared remarks. Before we begin, let me remind you that certain statements made during today's conference call regarding our future plans, objectives, and expected performance, including our financial guidance for 2025, are forward-looking statements. Actual results may differ materially as these statements are based on our current expectations as of today and are subject to risks and uncertainties, including those stated in our Form 10-K. We encourage you to review our press release, Form 10-K, and other 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, except as may be required by applicable law. In addition, during today's call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA and adjusted imagery and software analytical service cost of sales. A reconciliation of these non-GAAP financial measures to their most comparable GAAP measures are included in today's accompanying presentation, which can be viewed and downloaded from our Investor Relations website. At this point, I'll turn the call over to Brian O'Toole. Brian?

Thanks, Ali, and good morning, everyone. Thank you for joining us on today's call. First off, I'm happy to report that our new Gen 3 satellite is performing exceptionally well and exceeding our expectations. As you can see on the first few slides, the image quality of this very high-resolution satellite is incredible. As we have been formally commissioning the satellite over the past several weeks and putting it through its paces, we have been successfully collecting imagery from all over the world. We were happy to announce earlier this week that we have now completed all of our formal tests and are now delivering evaluation imagery to customers. This achievement marks a major technical and business milestone for the company. The initial very high-resolution imagery and advanced analytics from our new Gen 3 satellite is generating a lot of excitement with our customers as they are actively evaluating imaging performance ahead of bringing this capability into their operations. I will share some additional details later, including upcoming plans for the next launch. Now beginning with slide 6, I'm happy to report that we are off to a strong start to 2025, building on our momentum from last year. We have continued to expand our customer base and are entering new markets as demand for our space-based intelligence solutions remain strong. Now let me share some of the key highlights from the quarter. First, we were awarded over $130 million in new contracts and renewal agreements in the quarter, primarily driven by several multi-year contract wins. These wins demonstrate the growing interest from defense and intelligence agencies worldwide to secure long-term contracts for our imaging capacity over the region of interest. We were also happy to announce a new contract to accelerate the development of India's commercial earth observation capabilities, a new and emerging market for commercial space. Second, as a result of the strong bookings in the quarter, our backlog grew 50% compared to the prior year quarter. This growth reflects the demand we're seeing for our space-based intelligence solutions and provides us with strong out-year revenue visibility. Third, we delivered strong -over-year revenue growth of 22%, primarily driven by new contract awards. Fourth, we're pleased that our first Gen 3 satellite is through extensive testing and continues to exceed performance expectations. And finally, our second Gen 3 satellite is being shipped and is on track to launch in Q2, which will begin a cadence of additional launches throughout the year. I'm also happy to report that we continue to improve our liquidity position in the quarter, strengthening our financial profile and our ability to invest in key growth and -to-market initiatives. These highlights demonstrate our continued strong execution and laser focus on providing customers with unmatched imagery and analytic insights while setting the stage for sustained, long-term, profitable growth. I would now like to share some operational highlights from the quarter. Turning to slide seven, we're pleased that we won $130 million in contracts in the quarter, which included several large multi-year agreements. The strong bookings performance drove a 50% -over-year growth in our backlog to $366 million. This significant increase is a clear indicator of the growing demand for our space-based intelligence solutions and the desire of our customers to secure long-term contracts for our imagery and analytic services to support their mission-critical operations for years to come. Our sales pipeline of multi-year subscription opportunities continues to grow as we bring Gen 3 to market. As we convert these opportunities into long-term subscription contracts, our multi-year backlog should also grow, providing improving long-term revenue visibility. As a reminder, the majority of our contracts are with government customers, and the timing of these contracts has the potential to introduce -to-quarter impacts to bookings, revenue, and EBITDA. The majority of our backlog is for high-margin imagery and analytic services from our current Gen 2 and future Gen 3 constellation. As we launch more Gen 3 satellites and get them into operations later this year, we expect to unlock further contract opportunities and recognize additional revenue growth from our existing backlog. Moving to slide 8. As I just highlighted, I'm excited to share that our Gen 3 satellite has completed calibration and testing and has delivered exceptional imagery that is achieving up to NIRS 6 quality. For those who may not know, NIRS is an industry standard image quality metric used by analysts to characterize the performance of imagery to meet certain mission requirements. Our Gen 3 satellite is delivering imagery at a quality equivalent to much larger and more expensive 25-centimeter class satellites. Attaining this class of image quality is a commercial first for a satellite of this size, cost, and performance. The Gen 3 satellite is proving to be an exceptional spacecraft that we expect will be a workhorse for Black Sky and our customers for years to come. But just as exciting is the AI-derived information that we are now extracting from these images. Within three weeks after launch, we demonstrated how our advanced, fully automated AI capabilities can transform Gen 3 satellite imagery into actionable insights at machine speed and scale for sites of interest around the world. Black Sky is setting a new industry standard using advanced software and AI-enabled automation to accelerate space-based intelligence capabilities through disruptive speed, economics, and insights. While optimizing and validating the performance of this satellite over the past several weeks, we have been providing sample imagery to customers and potential partners around the world. I'm proud to report that the customer response to our initial Gen 3 imagery has been overwhelmingly positive and is driving growth in our sales pipeline. Our customers are very excited about the new mission applications that will be enabled by combining very high-resolution imaging with high-frequency monitoring and advanced AI analytics. Turning to slide 9. With the superior resolution and image quality of Gen 3, we are now able to demonstrate the ability of our AI to extract an incredible amount of information and insights in real time and deliver this actionable intelligence at industry-leading speed and scale. In this example, our AI was able to automatically detect and classify over 25,000 individual vehicles and over 700 maritime vessels in just a few minutes, all fully automated and with incredible precision. This type of analysis would typically take teams of analysts hours and days using traditional tools and manual processes. This is a clear example of how proven and disruptive commercial space technologies can support a range of new and advanced applications and provide highly efficient and cost-effective solutions to government customers. Moving to slide 10. Now that we have demonstrated and validated Gen 3 satellite performance, image quality, and AI analytics, we are now set to commence a regular cadence of additional Gen 3 launches. In fact, our second Gen 3 satellite is being shipped this week and is on track to launch in Q2. As we look ahead, we are on track to have eight Gen 3 satellites on orbit by early 2026, with each launch improving our revisit rates, capacity, and the quantity and quality of actionable intelligence we are delivering to customers. We expect to begin providing early access of Gen 3 imagery and analytics services to major customers over the course of the summer, with general commercial availability anticipated to begin by Q4. As a reminder, many of our existing major contracts, such as EOCL with the U.S. government and several large multi-year international contracts are structured to incrementally expand as Gen 3 capacity comes online. Turning to slide 11. As we continue to build out the Gen 3 constellation, we are moving into our next phase of growth, where we can provide our customers with -in-class imagery and new and advanced applications that combine very high-resolution imagery, high-frequency monitoring, and AI-driven analytics. We believe we are redefining the future of space-based intelligence, enabled through a -in-class space and -its-kind software platform. Our Software First strategy, which leverages over 10 years of investment in our Spectre platform, is a unique capability and a key enabler for rapidly developing and deploying new and innovative space-based intelligence solutions to customers around the world. The combination of these advanced capabilities provides Black Sky with a powerful competitive advantage in the market and is able to overcome the limitations of legacy solutions that were designed for static mapping applications. We are excited to be entering into a new era of space-based intelligence, with new and exciting opportunities emerging on the heels of our successful demonstration of Gen 3. We are well positioned to meet the rapidly growing demand for space-based insights from an expanding global customer base, especially at a time when governments around the world are seeking to accelerate and expand their space-based capabilities, leveraging cost-effective and proven commercial space technologies. While we are bullish on this growing market opportunity, we are also cognizant of a very fluid geopolitical and economic environment, both here and abroad, and remain vigilant in monitoring changing policies and budget dynamics that may have near-term impacts on our business. Despite this uncertain time, we are maintaining our full-year outlook for 2025 and look forward to passing ahead with our growth plans. With that, I'll now turn it over to Henry to go through the quarterly financial results. Henry?

Thank you, Brian, and good morning, everyone. Before I begin, let me remind you that references to adjusted cost of sales excludes stock-based compensation, depreciation, and amortization expenses, as we believe this measure represents a more accurate picture of our business without having these non-cash items obscure the underlying performance. With that, let's go through our first quarter financial results, starting with slide 13. Total revenue for the first quarter of 2025 was $29.5 million, an increase of $5.3 million, or 22 percent, over the prior year quarter, driven by higher professional and engineering services revenue. The primary driver for this increase was related to the recognition of progress to date under a new contract to accelerate the development of India's Commercial Earth Observation Program, which we announced in February. These strategic contracts deepen our relationship with these customers and are typically precursors to securing long-term subscription contracts for imagery and analytics services. Keep in mind, revenues recognized from these types of contracts, which are largely milestone-based, may have -over-quarter variability. In addition, our high-margin imagery and analytics revenue currently comes from our Gen 2 satellites, as we look to begin mixing in initial Gen 3 imagery later this year. Moving to slide 14, our adjusted imagery and analytics cost of sales for the first quarter of 2025 was $3.8 million compared to $3.4 million in the prior year quarter. The slight -over-year increase was primarily due to short-term investments to optimize operating efficiencies that will drive margin improvement over time. Now turning to slide 15, our adjusted EBITDA for the first quarter was a loss of $600,000 compared to an adjusted EBITDA of $1.4 million in the prior year quarter. The $2 million -over-year decrease was primarily due to higher SG&A expenses of $2.6 million as we absorbed the first full quarter of overhead expenses from the recent LeoSeller acquisition. As a result of bringing LeoSeller's production capabilities in-house, we are only able to capitalize direct labor and costs associated with the construction of our satellites and not their associated overhead costs. Under the prior structure, we would have reported positive adjusted EBITDA of $2 million or $600,000 better than the prior year. Keep in mind, the strategic acquisition of LeoSeller was to allow us to better control and optimize our satellite manufacturing capabilities and secure advanced space technology and intellectual property to support our long-term growth objectives. Going into 2025, we expected to realize some cost savings related to the acquisition, but with the successful launch of Gen 3, we decided to make additional investments in innovative space technologies to support our next generation capabilities. Let's move on to our cash and liquidity position as shown on slide 16. We ended the first quarter of 2025 with $77 million of cash, restricted cash, and short-term investments. This amount includes a $32 million cash prepayment for work related to a new contract awarded with an International Defense and Intelligence customer in the first quarter. In addition, we have accumulated approximately $39.2 million in unbilled contract assets, of which $32.4 million is anticipated to be billed and received over the next 12 months as certain customer milestones are met, with the rest expected to be collected in the following 12 months. These assets, together with about $20 million in remaining vendor financing for several Gen 3 launches, brings our total liquidity position to over $136 million. This is an increase of $46 million, or 51% from the prior year quarter. Given this liquidity profile and our expected performance, we believe we are fully funded to deploy our baseline constellation of 12 satellites and get to free cash flow positive. Now turning to slide 17 and our outlook for the year. With the success of our Gen 3 satellite, we're seeing additional long-term opportunities emerge for commercial space-based solutions. We are also keeping a close eye on potential risks, particularly the timing of contract awards and budget allocations that may be associated with a rapidly changing geopolitical environment. While the near-term situation remains fluid, we are maintaining our full year 2025 guidance, which consists of revenue between $125 and $142 million, adjusted EBITDA between $14 and $22 million, and capital expenditures between $60 to $70 million. In summary, we're pleased with the strong revenue growth in the first quarter and the continued momentum we're seeing across the business. With that, I'll now turn it back over to Brian for some closing remarks. Brian?

Thanks, Henry. In closing, we're happy that our first Gen 3 satellite is now fully operational and delivering exceptional imagery and analytics, which is getting positive feedback from customers around the world. We're making great progress growing our customer base, building our backlog, advancing our technology, and strengthening our balance sheet. Our highly efficient and cost-effective space and software solutions are well positioned to address national security needs, both here and abroad, for years to come. As we deploy additional Gen 3 satellites this year and further expand our constellation in 2026, we believe black sky is at the forefront of a new era in real-time space-based intelligence. With new Gen 3 satellite launches on the horizon, deepening customer engagements, and a growing sales pipeline, the foundation we're building today is setting the stage to drive our next phase of growth into 2026 and beyond. This concludes our remarks for the call, and we'll now take your questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then the number one on your touchtone phone. If you're using a speakerphone, please lift the handset before pressing any keys. To withdraw your question, please press star, then the number two. At this time, we will pause momentarily to assemble our roster. Your first question comes from the line of Edison Yu from Deutsche Bank. Please go ahead.

Hey, good morning, guys. Thank you for taking our questions. So, first of all, I want to ask you, you mentioned some of the geopolitics and I guess macro uncertainty. How are you seeing that or are you seeing that impact some of the discussions with the international customers that may have been in progress? And I guess it's in the context of, are they now a little bit more hesitant because they want to see what kind of trade deal that's worked out or something? Or is it actually a good thing because now they feel, oh, we want to actually do something because we want to kind of see working with a U.S. commercial customer, a U.S. commercial EO provider.

Yeah, good morning, Edison. Thanks for the question. I think what we're experiencing right now is continued strong demand worldwide. We had a very strong first quarter. And in fact, since our demonstration of Gen 3, we're actually seeing our pipeline grow. So, I think there is clearly a lot of demand worldwide for space-based intelligence solutions. And we're seeing strong interest for commercial imagery and analytics services, but also governments that are accelerating their investments in their own sovereign capabilities. So, I think everybody's cognizant of the geopolitical dynamics, but I also think national security is a first and foremost priority. And we're well positioned to help them address that. So, despite some of the dynamics right now, we're seeing strong interest in demand and feel we're well positioned.

Gotcha.

Yeah, I think what we're seeing is, you know, now that the, and this is what we're seeing particularly in the U.S. market, is that there's a lot of demand for space-based intelligence solutions. Particularly as we've been bringing our Gen 3 imagery around the world to customers, where now they're moved, they can see that the very high resolution imaging is there. And then when you start to combine it with the high frequency, low latency collection, the volume and speed of the information they need to deal with is starting to outpace their normal operations. So, they are all recognizing they need to introduce AI into their environments and workflows to, you know, one, keep up with the rate and volume of information, but two, speed up the time to insights from when that data comes in and gets turned into actionable intelligence. So, that conversation with customers has to me made a market shift, particularly in the last 9 to 12 months. So, we're anticipating this to be a really critical capability that customers are going to need to have as they expand their capabilities over the next couple of years.

Thank you.

Thanks Edison.

Thank you. And your next question comes from the line of Jason Smith from Lake Street. Please go ahead.

Yeah, thanks for taking my questions. Just looking at your backlog, curious what timeline you expect to recognize that backlog and then relatedly how much of that relates to Gen 3 capacity.

Yep. Good morning, Jason. Thanks for the question. As we reported, we grew our backlog very significantly in the first quarter up to $366 million. And then near term, you know, there's a reasonable amount of revenue from our imagery and analytics line that we're going to see coming in to Gen 3. And we're going to see that coming in over the next couple of months. We announced our EOCL extension and a large international deal. So, near term, we're going to see that coming into play and stepping up as we get into the second half of the year. And then, you know, there's quite a bit of strong backlog out there post-2026.

Gotcha. And then just as a follow up, Henry, based on your comments on the professional services revenue line, would we expect that to take a step back here in Q2?

Thanks for the question, Jason. Yes, I mean, as you may recall, when we have some of these programs where we are taking some hardware and kind of positioning it off for a customer, we already have that sitting on our balance sheet and we're moving that into for sale assets. That's why you get a big catch up right up front. So we did have a fair bit of that happening in the first quarter there, correct?

Okay. Thanks a lot,

guys. Thank you. And your next question comes from the line of Jeff Van Wee from Craig Hallam. Please go ahead.

Great. Thanks. Thanks for taking the questions. Congrats, guys. Real nice progress on Gen 3 and some great images here. Talk to me maybe about, just briefly, on the 130 million increase in backlog. Can you give a sense of rough proportion, how much of that is from new customers versus existing customers?

I think we announced a very large international deal, which was a good portion of that from an existing customer. There are in the mix about 20 new customers in there, including

the

deal we announced in India.

Okay. That's helpful. And so talk to me then maybe just for a minute on the sovereign interest. Can you give just a little more expanded commentary on the scope and magnitude of the increase in sovereign capabilities and kind of how that's progressed over the last 90, 180 days?

Yeah, I think we're seeing growing interest and governments accelerating their programs. If you look at programs we publicly announced in India and Indonesia, we're seeing this growing opportunity for bundling our commercial imagery analytics services with the new customers. With the space and software assets. So, and we're seeing that pretty much worldwide across multiple regions. I think we're also seeing that those things seem to be those opportunities seem to be accelerating. I think as governments are looking to move quicker. And building out their capabilities. We are pretty well positioned to capitalize on this dynamic in the market. Yeah,

seems like one last, if I could, in terms of just sort of as you build out the architecture, how critical is EdgeComputer on OrbitCompute and your thoughts on optical interlinks, just a forward roadmap. How critical are those capabilities? How do you view them?

I think I think on board computing is a is another tool in the toolbox. We're delivering very high performance in low latency delivery without that capability. As we have mentioned before, optical cross links is something we're currently developing and investing in. This will be a next level of capability to improve latency and in the both on the tasking of the satellite and the delivery of information and analytics to our customers. So all of those things are are being addressed in our roadmap.

Sounds good. Congrats on the progress. Thanks. Thank you.

Thank you. And your next question comes from the line of theme Horan from Oppenheimer. Please go ahead.

Thanks, guys. Three questions, if I may. The near six, congratulations. But can you say what you were expecting and what we were conveying to your customers prior to the actual real life examples? Give us also, it sounds like you're going to be doing two satellite launches per quarter, starting the second half of the year. Is that pretty accurate and can you maintain that pace? Then I have an AI question.

I think, yeah, the image quality, you know, we had designed the system to be in the nearest five, five plus type realm. So and that is aligned with what our customers were. Our expectations, I think, you know, we're seeing some images come out in that near six level, which is indicating the system is performing beyond our expectations. But but for nominally. For where we expect it to be, you know, it's meeting and or exceeding where we wanted to be on image quality. The pace of launches, as I mentioned, are we're on track to. Or eight satellites. Early twenty, twenty six and six. On orbit, you know, by later this year. So we have a regular. Cadence of satellites coming off the production line and we're aligning launch. Launch capacity and are attracted hit that. Launch cadence.

So any sense by year and year and twenty six, how many satellites you'll have an operation?

We have a plan. Our plan is to have twelve that would get us to our baseline.

Consolation. Great on AI. Can you license out your technology for customers to analyze other images, other data sources out of curiosity?

Yeah, we would be able to do that. We don't currently do that, but we do have. I. P. and software capabilities that do analyze other people's other parties. Imagery, not only electro optical, but radar. And other capabilities, and we've been incorporating that into some of our advanced. Capabilities, I think I may have. Mentioned on prior call some of our work in doing broad area. Broad area search. For from our monitoring large area of interest for change. And we can do that at scale. Across very large data sets and large areas, regional areas of interest.

And so is that something you're planning on pursuing and is it could be a pretty large incremental revenue opportunity?

Well, we think the AI delivering AI derived information. Is certainly part of our core business plan. Now we're going to see how this market unfolds into into what levels of software and other types of capabilities we may or may not license to customers.

Thank you.

You and your next question. So, in the line of Josh, from the benchmark company, please go ahead.

Good

morning.

On the prepared. Prepared remarks. You noted guys entering the next phase of growth here. Maybe you could expand on that perspective or wax politically, I guess, just as you enter this next phase, what we should be expecting over the next one to three years versus maybe where you've been.

I think the main thing that we're excited about is. The interest in demand for Gen 3 imagery and analytics. And so. As we as we continue to deploy. Those satellites into our constellation, we are seeing. Strong step up in imagery and analytics revenue. That's going to be tied to that. We have a significant backlog. Tied to some of our major programs that begins to get unlocked. As we bring that capacity online. So, you know, as you look out over the next 18 to 24 months. That's the exciting part of our business that's going to be driving very good growth.

And then just on the full ownership of. How is that involved since taking ownership?

Yeah, I think, you know, as a reminder, you know. That was a strategic acquisition for us. As you can see, Gen 3 is. Really demonstrating to be a remarkable platform. And we wanted to make sure that we had. The ability to optimize and control. The production supply chain and production of those satellites. So we've got that

moving ahead

very nicely. There's also some some next generation technologies that that came along. With that, that that we're looking that we're investing in. We're only really a couple quarters into, you know, integrating them into the operations and that's. Going well, and, you know, we think. Over the long term, having that type of capability vertically integrated. Into the business on top of the satellite constellation, our AI and software is going to be. You're going to put us in a very strong competitive position.

Great, thank you.

Thank you. And your next question comes from the line of Chris from Milky space. Go ahead.

Thanks, Brian. Just want to follow up on that video. Stella discussion. I think you said during the discussion that you're going to invest in Gen 3. I was just wondering, is that R&D investments to improve the platform? Are we talking, you know, CapEx investments in the facilities to production or increase flexibility in the design?

Yeah, most of the investments are in the platform side. Facilities in decent shape will make some incremental investments in some of the. Back office infrastructure and supply chain. Management the our investments in next generation capability come in the two form come in the form primarily of R&D. Some of that begins to get capitalized as we. Those reach certain levels of feasibility. And so that's been our normal course, and we expect to continue that. And in some cases, the acquisition of Stella helps helps us move some of that along even faster.

And for Henry, when we look at the Q1. One op acts. Yes, you know, should we look at that as sort of a steady state now that we have Stella's fully folded in? Or should that number grow or come down over the course of the year?

Chris, now we've had a full quarter of Leo stellar in that does reflect kind of them in there. And we had baked in kind of as we did our forecast, assuming that they would be operating in as a as wholly owned, obviously. So that I don't expect that to grow. I think that would be kind of the same the same. And keep in mind those additional costs and SG and a are things that we would have been covering in prior in the prior world through a capex line, because it would have been covered by the invoices that we were paying to Leo stellar at an arms length basis. That doesn't change the cash profile.

OK, and presumably the increased investments are already or in the capital structure is already reflected in your capex guidance that you've provided.

Correct.

Gotcha. Quick question. The imagery and athletics was now a million sequentially. Obviously, you've got, you know, EOCL and other things that open up on the on a go for basis. Were there other one time items that might have led to the year over year or decline there or that just reflective of customer losses or timing of contracts?

Yeah, I think, you know, you know, keep in mind we still have. Quarter to quarter variability in the business related to. Both the particularly in the imagery and analytics business, because there are some projects that have deliverables on a quarterly basis that can surge. You know, we are seeing slower than we've seen in the past. We're seeing more than expected orders coming out of Luna, for example. But we're also seeing customers anxious to transition to Gen 3. But as I mentioned earlier, we have EOCL and backlog from any other international customers already secured for Gen 2 capacity going well into 2026. So this is really, I think Chris, as you're alluding, really timing. And, you know, if you look at the general general trend where we are in the direction of the business. You know, we're seeing we're seeing that backlog growing in the. And the visibility into transitioning that backlog into revenue growth emerging, especially now that we have Gen 3 operational.

Got it and speaking of timing, you know, you mentioned that you won't start offering. Gen 3 commercially until Q4. Is there any reason that you wouldn't, you know, if you've got a couple satellites on orbit, start selling that, you know, at least in a beta mode to customers prior to the end of Q4? Or what's the rationale for waiting until the end of the year?

Yeah, we are planning to. We have a early access program that. We'll kick in when we just have a couple satellites this summer. And customers will begin acquiring imagery and will begin initial revenue generating operations through data sales and. Evaluation of the imagery and then. You know, the way we think about the commercial availability is just having. You know, enough satellites and the back end infrastructure ready to support. A broad range of customers through our Spectre platform, so. It's a normal, it's a normal go to market strategy and. But, of course, we will start monetizing those satellites as fast as we can.

Very good. Thank you and good luck with the next launch.

Thanks,

Chris.

Thank you. And your next question comes from the line of Scott from each to see. Please go ahead.

Hey, good morning, guys. Thanks for taking my questions. Brian, I guess first congrats on fully commissioning the 1st, Gen 3 satellite. I'm curious having that 1st one under your belt. Does that change the timeline? Or the steps required for commissioning 2 through 12?

No, I think we're on plan. I think obviously we wanted to. Make sure that that satellite was. Performing as expected before we launched the 2nd one. In case we had to make any incremental refinements, but the 1st satellites performing. But we expected the functionally it's. It's really performing well. The image quality is great and the agility is is meeting all of our expectations. So. We're moving out as planned to hit our launch schedule as I outlined earlier.

Okay, appreciate that. And then. Henry, I assume the capex builds through the year kind of in line with. Gen 3.

That is correct. I mean, that's the primary driver behind our capex is getting this next batch up and being prepared also for our launches in in 2026.

Okay, perfect. That's it for me guys. I appreciate it.

Thank you. And your next question comes from the line of Austin molar from can. Please go ahead.

Hi. Good morning. Brian and Henry. Just my 1st question here. You mentioned the early access program. Are there customers now that are getting that early gen 3 temps test imagery that are paying a higher subscription premium under their contractor? Does that not occur until you have more customers on the on the they can actively task a growing fleet of Gen 3.

Yeah, I think the way to think about it is there will be customers that. We have contracts with to get imagery under the. Under the early program, this will be. Getting imagery at a lower volume. Primarily for evaluation purposes and to. Assess integrating that into their operations. The fully automated commercial operations will be in the 4th. 4th quarter.

Okay. And you mentioned there's over 20 new customers added in that in that backlog that you discussed. Are you able to indicate without saying who they are geographically where the bulk of that is located? I'm just trying to understand if the NATO Europe commitment to spend more than 2% of GDP on defenses is becoming visible to you.

Yeah, wait, let me first fix for the question. Austin, let me just clarify that the. The 20 I was referring to is 20Million dollars as part of that backlog. We have been bringing on new customers. As part of our normal sales operations, the customers we're seeing are really. Really all over the world. There's there's growing customers in Europe, Middle East, Asia. So, the. You know, we're seeing. Particularly now with Gen 3, we're seeing a number of new larger customers. Working with us. To acquire Gen 3 capability and. As I mentioned in my remarks, we've seen a pretty significant increase. In our pipeline, just over the last few months that are. From new customers for Gen 3 capability, so. That's a really exciting and now we're working on how we. Can move those customers to our through the pipeline and transition those into contracts.

That's very exciting. Thanks for the insights.

Thank you.

Thank you. And your last question comes in the line of state storms from Stodengate. Please go ahead.

Hey, good morning and thank you for taking my questions. I just wanted to circle back on some of the commercial capabilities that you're expecting later this year and maybe how they compare to the same capabilities. That you would expect in late 2026 once you have the full baseline constellation.

I think functionally the capabilities that we'll have later this year as far as. Image quality, automated AI. Latency and things of those of those around those aspects. We'll pretty much be in place later this year. What happens as we add more satellites is basically adding more capacity. It improves revisit and in some cases reduces latency because we'll have quicker access to. Two locations around the world. The thing that. Keep in mind is. You know, we're introducing Gen 3 satellites into a very mature. Software and ground network that is operating our Gen 2 constellation, so. We're not having to go build out new software. Extensively new software and product capabilities. To bring Gen 3 to market, it's just an extension of the platform that is. Is highly reliable and then serving our customers now for. Well over 5 years.

So that's very helpful. Thank you. And then just curious now that the global data marketplace has been up for a little bit. Are you seeing any differences in the bidding environment or what it takes to win contracts there compared to maybe more traditional roots?

Yeah, it's a good question. We're starting to we're starting to win more of those. They're still small, but we are seeing a trend. Toward customers wanting to acquire longer term. Services pretty competitive marketplace, but we seem to be doing. Pretty well and we're forming some partnerships there. With other companies to. To be able to offer. Higher value information and insight services, so. Still early and we're excited about where that can go and we're seeing the trends. Related to that marketplace go in the right direction.

So thanks for taking my questions and good luck in Q2.

Thank you, Dave.

Thank you. At this time, there are no further questions. This concludes Black Sky's first quarter 2025 earnings conference call. Thank you for joining the call today. You may all disconnect.