BlackSky Technology Inc. Class A

Good morning, ladies and gentlemen, and welcome to Black Sky Technologies' first quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's 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 now 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 www.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 stocks. BlackSky 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 Gen3 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 six, 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 year-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 go-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% year-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 analytics 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 quarter-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 eight, As I just highlighted, I'm excited to share that our Gen 3 satellite has completed calibration and testing and is delivering 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 Gen3 satellite imagery into actionable insights at machine speed and scale for sites of interest around the world. BlackSky 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 Gen3 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 nine. 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 best-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 best-in-class space and first of 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 BlackSky 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 Gen3. 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 progressing ahead with our growth plans. With that, I'll now turn it over to Henry to go through the quarterly financial results. Henry?