BlackSky Technology Inc. Class A

Good morning ladies and gentlemen and welcome to Black Sky Technology's second quarter 2025 earnings conference call. All lines have been placed on mute 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 a touch tone phone. To withdraw your question please press star then 2. Please note that this conference call is being recorded. I would now like to turn the call over to Ali Bonia. Black Sky's 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 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 August 21st. 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. Beginning with slide three, I'm pleased with our strong execution across many aspects of our business during the quarter. Building on the accomplishments that we have achieved so far this year, we have never been in a better position technically, operationally and financially to capitalize on the growing global market opportunity for our real-time space-based intelligence solutions. Our new Gen 3 satellites are delivering exceptional performance and when combined with our industry leading Spectra platform and AI capabilities, we are winning new contracts and expanding our customer base around the world. With the recent closing of our up-sized debt refinancing, we strengthened our balance sheet and improved our liquidity which now puts us in a position to unlock even more future growth opportunities. This strong financial position is further supported by over $350 million in funded backlog, most of which is from a growing and diverse international customer base for our Gen 3 services. As we continue to deploy our Gen 3 constellation over the coming months, we expect to continue this momentum as we add new customers and grow our services with existing customers. We are continuing to innovate across a strong and vertically integrated portfolio of space technologies that include proprietary AI, software and advanced satellite design and manufacturing capabilities. And finally, we are accelerating our investments for the future as evidenced by our recent announcement of a new Eros constellation which is a new growth and market expansion opportunity for Black Sky. Now let me share some recent highlights as shown on slide 4. First, as an example of our industry leading AI and space-based monitoring solutions, we were awarded a multi-year contract with the National Geospatial Intelligence Agency, or NGA, under the LUNO-A program valued at up to $24 million. We have a long history of supporting NGA and are pleased to have received this delivery order and to continue to assist their global monitoring needs. Second, we are seeing significant demand and growing traction for Gen 3 services from a diverse international market and as a result, we signed early access agreements in the quarter with multiple international defense sector customers. We now have customers around the world accessing and using imagery from our first Gen 3 satellites, with more customers expected to come online as we commence general availability and full commercial operations of Gen 3 services later this year. Third, in June we launched our second Gen 3 satellite which began delivering very high resolution imagery within just 12 hours after launch. The speed at which these satellites are collecting imagery and being commissioned into commercial operations is setting a new industry standard. This achievement is a testament to the differentiated performance of Black Sky's vertically integrated space, AI, and software technologies. Fourth, we remain on track to have six Gen 3 satellites on orbit by the end of this year. To that end, we're excited that our next Gen 3 satellite is in the final testing phase and getting ready to ship to the launch pad in the coming weeks. And finally, we successfully raised $185 million in an upsized convertible node offering, which increases our liquidity, strengthens our balance sheet, and puts us in a position to unlock additional revenue growth opportunities. Henry will go into more details on this transaction later. These highlights continue to demonstrate the momentum in our business and how our real-time, mission-critical, space-based intelligence solutions are gaining traction worldwide. I would now like to share some more details on the operational highlights from the quarter. Turning to slide five, we're pleased to have been awarded a four-year delivery order for facility operational monitoring under the LUNO-A program with NGA, valued at up to $24 million. This win further validates Black Sky's expertise and capabilities to deliver AI-enabled dynamic monitoring solutions. By employing leading-edge automated object and -of-life change analytics, we are providing customers with new, timely, and relevant insights that are critical to their operations. Our AI-powered Spectre platform is monitoring strategic military and economic facilities worldwide, enabling customers to detect and anticipate anomalies in activity at ports, airfields, rail yards, and other key infrastructure with unmatched speed, scale, and efficiency. Black Sky is now monitoring more than 30 million square kilometers of the Earth's surface and delivering advanced insights to geospatial analysts within minutes. Securing this LUNO-A task order continues Black Sky's long track record of success, delivering commercial real-time, AI-enabled monitoring capabilities to NGA in support of U.S. national security needs. We are winning contracts like this because of our proprietary AI capabilities, which are becoming a differentiator and a competitive advantage in the market. Moving to slide 6, we're seeing international demand for Black Sky services accelerate as Gen 3 has been validated and is coming online, and we remain focused on securing multi-year contracts with major customers around the world. In the second quarter, we won a -million-dollar contract with a major new international defense customer. This multi-year contract combines immediate Gen 3 and Gen 2 subscription-based imagery and analytics with ground-segment monitorization services. This customer will have guaranteed tasking ability for dynamic monitoring services over specific areas of interest using Black Sky's automated and AI-enabled Spectra platform. In addition, Black Sky will upgrade the customer's existing ground station and mission operations center with direct downlink and uplink communications capabilities for faster, locally controlled intelligence. This type of infrastructure investment illustrates the customer's commitment to employing Black Sky services for years to come. We also have continued our expansion into new markets, securing a new Latin American Defense and Intelligence Agency customer. This agreement includes immediate, on-demand subscription-based access to our Gen 3 and Gen 2 monitoring services, as well as access to our archive data and the ability to order third-party commercial constellation data through the Black Sky Spectra platform. This customer will gain rapid visibility into irregular activities that are taking place at certain strategic locations by monitoring vehicle, vessel, and aircraft movements, as well as important migration changes. We're pleased to support Latin American Defense Agencies with AI-driven intelligence at the tactical edge to assist their decision-making needs and efforts to combat transnational organized crime. In Q2, we also signed early access agreements for Gen 3 services with multiple allied defense customers. These customers are now using Gen 3 imagery in their daily intelligence operations. And when combined with Gen 2 imagery, are improving the speed of analysis and opening a new expansive set of mission solutions. These initial contracts are designed to scale in size and volume as capacity for Gen 3 services increases over time as we deploy the baseline constellation over the coming months. This strong international growth and demand is coming at a time when we are seeing near-term uncertainty from the U.S. government's fiscal year 2026 budget, which includes an expansive agenda from the new administration that is working its way through Congress. It's important to note that about 85% of our funded backlog of over $350 million is from international customers and for Gen 3 services. As you know, we have been investing in international expansion over the past few years, and this is now paying dividends as we have and continue to grow this long-term customer base. With the strong demand for Gen 3-related services and satellite solutions, we have limited our to a few large U.S. government contracts and annual appropriations uncertainties. We believe the long-term opportunities with the U.S. government remain strong as Black Sky's capabilities are aligned to the administration's agenda of increased national defense, leadership in space, and the use of cost-effective commercial solutions for government programs. New commercial acquisition strategies in the Space Force and emerging opportunities for programs like Golden Dome offer long-term opportunities for Black Sky, which we believe we are well positioned to capitalize on with our portfolio of Gen 3 satellites and manufacturing, AI, and real-time software capabilities. The acceleration and adoption of space-based intelligence solutions has never been more important as the speed of global change is driving the need to real-time and actionable insights across governments and businesses worldwide. Now let's look at some recent examples where customers are using the image quality and analytic insights being delivered by our Gen 3 satellites and the rapid response of our constellation to monitor and respond to global events. Moving to slide 7, let's start with the recent bombing of the Nuclear Research Center in Isfahan, Iran. As you can see in this image, we're able to clearly show the detail and extent of destruction to buildings in this complex following the missile attacks in June. This type of imagery provides critical intelligence assessments and insights into these types of operations. On the next slide, we captured an image of the Yuchi Naval Base in China, which is reportedly home to China's first aircraft carrier. With our AI-enabled spectra tasking and analytics platform, our customers are gaining persistent access to high cadence monitoring over areas of strategic importance, allowing them to detect damage patterns, track movements, and inform operations in real time. These are just two examples of the thousands of images we deliver to customers every day as they rely upon Black Sky for space-based intelligence to support their mission-critical national security needs. Moving to slide 9, we successfully launched and commissioned our second Gen 3 satellite this past quarter. The satellite began collecting its first images within 12 hours after launch, setting a new standard for achieving first light and entering into operations. With the second Gen 3 satellite performing as well as the first, we remain on track to meet our goal of having six Gen 3 satellites by the end of this year and having eight in Q1 of 2026. Our third Gen 3 satellite is now in the final testing phase, and we expect to ship the satellite to the launch site in the coming weeks. As I mentioned earlier, several customers have already signed agreements to receive early access to our Gen 3 imagery and analytics services and are now eagerly awaiting to receive broader access when we begin general commercial availability in Q4. In fact, due to the exceptional performance of these satellites, some customers requested and started using this imagery ahead of schedule in support of their operations. As a reminder, many of our existing major contracts are structured to incrementally expand as additional Gen 3 capacity comes online. Turning to slide 10. In addition to moving ahead with the Gen 3 constellation, we are also investing in the future, leveraging a recent acquisition of Liostela to further vertically integrate satellite production into our operations and accelerate new and advanced small satellite solutions. During the quarter, we announced Eros, a wide area mapping and global change monitoring constellation, which is being designed to address an emerging market opportunity for a wide range of government and commercial digital mapping applications. This new constellation provides an opportunity to significantly expand our total addressable market for the delivery of high performance and cost-effective digital mapping services worldwide. Eros will deliver large area, multispectral imagery at scale, supporting applications like digital mapping, maritime awareness, environmental and agriculture monitoring, and 3D digital twin databases. The Eros satellites will be different from Gen 3 satellites in that Gen 3 is more like a -and-shoot camera for high-frequency collection of strategic locations like airports, maritime ports, and border crossings, whereas Eros collects wide swaths of images for mapping applications like Google and Apple Maps. We made a decision in Q2 to accelerate Eros to meet a supply gap that we expect will impact the market starting around 2027, as legacy satellites that provide these services today are now beyond their expected life and are projected to age out of service in that timeframe. This anticipated decrease in wide area mapping capacity is a concern for many customers, as it will likely lead to lower collection rates, higher prices, and unreliable service. As a result, we are accelerating the Eros initiative with plans to start launching these satellites as early as 2027. It's important to note that we anticipated this market opportunity and began to invest in elements of the Eros system over two years ago, and this was a key factor in our acquisition of Leostela. Eros will also leverage a significant amount of core capabilities in Gen 3, which with the recent success clearly demonstrates the performance and maturity of this technology and our ability to rapidly deploy high performance satellites at destructive speeds and economics. The Eros constellation is an exciting new opportunity for Black Sky, and we look forward to combining our high frequency site monitoring capabilities from our Gen 3 constellation with the wide area mapping capabilities from Eros. We'll unlock an entirely new class of scalable AI and space-based intelligence solutions. With that, I'll now turn it over to Henry to go through the financial results. Henry?