BlackSky Technology Reports Mixed Q3 Results Amid International Contract Growth
BlackSky Technology's third-quarter financial performance showed revenue declines but significant international contract wins totaling over $60 million, positioning the company for future growth as it prepares to launch its Gen-3 satellite constellation.
BlackSky Technology, Inc. reported third-quarter revenue of $19.6 million with adjusted EBITDA of negative $4.5 million and earnings per share of negative $0.44. These results fell below analyst expectations of $29.9 million in revenue and $3.2 million in adjusted EBITDA. The company's imagery and software analytical services revenue decreased to $15.8 million, representing an 8.6% year-over-year decline, primarily attributed to reduced National Reconnaissance Office EOCL tasking and broader U.S. government budget uncertainties affecting near-term imagery orders.
Professional and engineering services revenue also declined to $3.8 million from $5.2 million in the second quarter, largely due to project timing and milestone-based revenue recognition. Consolidated gross margins fell to 65.3% from 70.5% in the same quarter last year. The adjusted EBITDA loss of $4.5 million compares to a $0.7 million profit in the prior year period, driven by lower EOCL revenues and inclusion of overhead associated with the LeoStella operations.
Despite the quarterly challenges, BlackSky secured over $60 million in new contracts during the third quarter, growing its total backlog to $322.7 million. Approximately 91% of this backlog comes from international customers, signaling a strategic shift toward global markets. Key contract wins included a multi-year agreement valued at over $30 million with a strategic international defense customer for Gen 3 tactical ISR services, a new multimillion dollar Gen 3 imagery award with a U.S. customer, and several seven-figure contracts for AI-enabled change detection and space domain awareness expansion.
The company is preparing to launch its third Gen-3 satellite, expected to be operational by year-end. BlackSky remains on track for a fully operational commercial constellation with 12 satellites expected by the end of 2025. Management highlighted rising demand for Gen-3 services, including high-cadence tasking and AI-enabled analytics as customers integrate capabilities into secure, sovereign environments. Early access agreements for Gen-3 services continue to expand across international defense and intelligence customers.
BlackSky maintained $147.6 million in cash, restricted cash, and short-term investments at quarter end, reflecting net proceeds from an upsized convertible note offering and warrant exercises. The company reported $43.4 million in unbilled contract assets, with $36.0 million expected to be billed and collected over the next twelve months. Capital expenditures totaled $15.0 million for the quarter and $33.9 million year-to-date. Management cited total liquidity exceeding $200 million when including unbilled receivables and remaining vendor financing.
The company maintained its full-year 2025 guidance for revenue between $105 million and $130 million, adjusted EBITDA ranging from breakeven to $10 million, and capital expenditures of $60 million to $70 million. Management anticipates a stronger fourth quarter supported by international demand, Gen 3 availability, and backlog conversion. Stonegate Capital Partners' valuation analysis using discounted cash flow and EV/EBITDA comparisons produced valuation ranges of $24.60 to $30.40 and $23.26 to $28.18 respectively, indicating potential upside from current trading levels.