Full Year Revenue of $65.4 million, at High-End of Guidance, up 92% from Prior Year

Company Provides Full Year 2023 Outlook

HERNDON, Va. — (BUSINESS WIRE) — March 7, 2023 — BlackSky Technology Inc. (“BlackSky” or the “Company”) (NYSE: BKSY) announced results for the fourth quarter and full year ended December 31, 2022.

Fourth Quarter Financial Highlights:

• Revenue of $19.4 million, up 69% from the prior year period
• Imagery & software analytical services revenue grew 196% over the prior year's quarter
• Capital expenditures of $9.7 million

Full Year Financial Highlights:

• Revenue of $65.4 million, up 92% compared to the prior year
• Imagery & software analytical services revenue grew 209% over the prior year
• Capital expenditures of $44.1 million

“2022 was a foundational year for BlackSky, we won up to $1.3 billion in multi-year contracts, nearly doubled revenues to $65.4 million, and demonstrated significant margin performance; this high level of execution has put us on a path to achieving positive adjusted EBITDA in Q4 of 2023,” said Brian E. O’Toole, BlackSky CEO. “Increased customer demand worldwide for BlackSky’s dynamic monitoring and analytic solutions drove record revenues in the fourth quarter growing 69% year-over-year to $19.4 million. In addition, we’ve successfully scaled our operations and are now delivering thousands of high-resolution images reliably each day with AI-driven analytics to customers around the world. I want to thank our team for all their hard work and dedication that enabled us to achieve all these milestones. We look forward to another strong year of execution and carrying this strong momentum into 2023.”

Recent Highlights

The Company is announcing the award of a $150+ million, multi-year subscription contract with a major international ministry of defense. BlackSky will provide this customer with next generation space-based tactical geospatial intelligence services to support their country’s most critical intelligence needs. Further details can be found in a separate press release. BlackSky is proud to support this international government customer to provide them with a tactical advantage to support their mission operations. With this contract, the Company’s multi-year backlog increases to over $250 million.

In addition, the Company announced a private placement of approximately $29.5 million from a syndicate of new and existing institutional investors, further strengthening the balance sheet. BlackSky intends to use the net proceeds from the transaction for general corporate purposes and investments in its space and software platforms.

Financial Results

Revenues⁽¹⁾

Total revenue for the fourth quarter of 2022 was $19.4 million, up $7.9 million, or 69%, from the fourth quarter of 2021. Imagery and software analytical services revenue was $16.2 million, up 196% over the prior year period primarily driven by increased demand from new and existing U.S. and international government customers. Professional and engineering services revenue contributed $3.3 million in the fourth quarter of 2022.

For the full year 2022, total revenue was $65.4 million, up $31.3 million, or 92% from 2021. Imagery and software analytical services revenue was $47.4 million, up $32.1 million, or 209% over the prior year period primarily driven by several new government and international contract awards.

Cost of Sales⁽¹⁾⁽²⁾

Cost of sales as a percent of revenue was 40% for the fourth quarter of 2022, compared to 89% in the fourth quarter of 2021. Imagery and software analytical services cost of sales as a percent of revenue was 24% in the fourth quarter of 2022, compared to 70% in the fourth quarter of 2021. The year-over-year improvement was primarily driven by greater volumes of imagery and analytical services revenue that inherently have a low fixed-cost structure as a percent of revenue and a decrease in stock-based compensation expense. Cost of sales excludes depreciation and amortization expense.

For the full year 2022, cost of sales as a percent of revenue was 55%, compared to 102% in 2021, with sequential improvements reported each quarter throughout 2022.

Operating Expenses

Operating expenses for the fourth quarter of 2022 were $30.0 million, which included $3.3 million of non-cash stock-based compensation expense, compared to operating expenses of $33.2 million in the fourth quarter of 2021, which included $12.1 million in non-cash stock-based compensation expense. Excluding stock-based compensation expense from both years, operating expenses increased to $26.7 million in the fourth quarter of 2022 from $21.1 million in the prior year quarter. Of the $5.6 million year-over-year increase, $5.0 million was due to higher depreciation expense.

For the full year 2022, operating expenses were $116.1 million, which included $18.1 million of non-cash stock-based compensation expense. For the full year 2021, operating expenses were $119.5 million, which included $38.5 million in non-cash stock-based compensation expense and $18.4 million in satellite impairment charges. Excluding the stock-based compensation expense from both years and the satellite impairment loss in 2021, operating expenses in 2022 were $97.9 million compared to $62.6 million in the prior year. Of the $35.3 million year-over-year increase, $21.4 million was due to higher depreciation expense, with the remaining increase due primarily to investments in sales, software, and artificial intelligence and a full year of public company operating costs.

Operating Loss

Operating loss for the fourth quarter of 2022 was $18.3 million, compared to an operating loss of $31.9 million in the fourth quarter of 2021. The year-over-year improvement was primarily a result of higher gross profit driven by increased imagery and software analytical services revenue, as well as a decrease in stock-based compensation expense, partially offset by higher depreciation expense.

For the full year 2022, operating loss was $86.5 million, compared to an operating loss of $120.1 million in 2021. The year-over-year improvement was primarily driven by higher gross profit, a one-time satellite impairment charge in 2021, and a decrease in stock-based compensation expense, partially offset by higher depreciation expense.

Adjusted EBITDA⁽³⁾

Adjusted EBITDA loss for the fourth quarter of 2022 was $4.6 million, compared to an adjusted EBITDA loss of $14.4 million in the prior year quarter. The $9.8 million year-over-year improvement was primarily a result of strong operating leverage achieved by increased revenue growth that significantly exceeded incremental costs.

For the full year 2022, Adjusted EBITDA loss was $29.5 million, compared to an Adjusted EBITDA loss of $44.4 million in 2021. The year-over-year improvement was primarily driven by strong operating leverage achieved by increased revenue growth that significantly exceeded incremental costs.

Balance Sheet & Capital Expenditures

As of December 31, 2022, cash and cash equivalents, restricted cash, and short-term investments totaled $75.0 million. Capital expenditures for the fourth quarter of 2022 were $9.7 million and for the full year 2022 totaled $44.1 million.

2023 Outlook

BlackSky expects full year 2023 revenue to be between $90 million and $96 million, a 42% increase over 2022 revenue at the mid-point of this range. With strong revenue growth, high incremental contribution margins, and prudent cost management, the Company anticipates achieving positive Adjusted EBITDA in the fourth quarter of 2023. In addition, the Company expects capital expenditures for the full year 2023 to be between $40 million and $45 million.