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Fresh off a new $150 million multiyear contract with an international defense customer, satellite data and analytics company BlackSky Technology Inc. (NYSE: BKSY) announced it will raise $29.5 million through a private placement.
The capital will give it the runway to reach positive earnings before interest, taxes and other costs, the company’s leadership said in an earnings call Tuesday. That’s as it sees strong growth in its high-margin data and analytics products.
“It was the breadth of requirements we were able to meet” that helped it secure the new defense contract, said CEO Brian O’Toole. “Not just what we’re putting in space, but a number of performance attributes such as frequency and latency and the accuracy of our analytics.”
The company said its fourth quarter revenue grew 69% year over year to $19.4 million with full-year revenue increasing 92% from the year prior to $65.4 million. The results fell short of analyst estimates of $19.6 million and $65.6 million, respectively, but the net loss of 13 cents per share beat average analyst estimates of 16 cents.
BlackSky is headquartered in Herndon, Virginia, but retains a large portion of its workforce at its Seattle tech hub.
The revenue gains have come from both new customer growth and higher spending from existing customers, O’Toole said, thanks to a “strong pipeline of follow-on and new opportunities.”
“We believe we’re still in a supply-constrained market and will remain so for a while,” he said, with just a few companies in operation that are considered “trusted suppliers,” and much of the new satellite capacity being launched taking over for aging equipment.
The company said it continues to plan its lead times for the development and deployment of its new “Gen-3” satellites well in advance, adding shortwave infrared imaging and other new capabilities to its constellation next year. It expects to launch two new second-generation satellites within the next month, bringing its network up to 16 satellites in orbit.
“The economics we achieved in the first gen are aligned and that range is consistent with what we’re seeing,” O’Toole said. “We’ve got a very good handle on cost of these satellites.”
Operating losses fell 28% as the company trimmed costs for engineering services and selling, general and administrative expenses. Meanwhile, research and development spending jumped nearly sevenfold.
Demand in the defense and intelligence sector is growing significantly, O’Toole said.
“We’re seeing a lot of these organizations committing more dollars sooner, particularly around space-based capabilities,” he said, while commodities and supply chain intelligence are driving commercial demand.
Meanwhile, “we believe the (intelligence, surveillance and reconnaissance) market is undergoing a paradigm shift,” where functions that were once managed by airborne craft will shift toward satellites, O’Toole added.
BlackSky said it expects revenue to grow another 42% in 2023 to around $90 million to $96 million and reach positive earnings before taxes and other costs by the fourth quarter. Capital expenditures are expected to stay on track with the prior year, at around $40 million to $45 million.
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