2023-05-01 08:00:06 ET
Summary
- Today, we circle back on satellite imagery provider BlackSky Technology, Inc. as the company has made some progress since our first article in June.
- The company is seeing impressive revenue growth, recently did a capital raise and plans to continue to reduce cash burn.
- Is this name worth a larger position within it yet? An updated investment analysis follows in the paragraphs below.
Intelligence shortcomings have a thousand fathers; secret intelligence triumphs are orphans . ? old sayings
Our initial article on BlackSky Technology, Inc. ( BKSY ) was published in June of 2022. We concluded that initial analysis on this satellite imagery solution provider with the following summary:
This stock seems reasonably priced based on price to future sales, especially when the net cash on the balance sheet is taken into consideration. I recently profiled Planet Labs and took a 'watch item' holding in that similar concern. I plan to do the same with BlackSky Technology. We will plan to revisit BlackSky again in 2023 as sales continue to gain traction, and hopefully as net losses drop significantly.
Given it has been nearly a year since our first take on BlackSky, it seems a good time to dig into what progress BlackSky has made over the past few quarters and update the investment thesis around it. An analysis follows below.
Company Overview
March 2023 Company Presentation
This D.C. headquartered company provides geospatial intelligence, imagery and related data analytic products and services, and mission systems via its Spectra AI SaaS platform which is powered by their proprietary space and terrestrial sensor network. The company can directly task a BlackSky satellite and receive imagery and analytics back in their software in 90 minutes or less for collection and distribution. Their satellite network allows enables the collection of high-resolution imagery on most locations up to 15 times a day from dawn to dusk. The stock currently trades around $1.25 a share and sports an approximate market capitalization of $170 million.
March 2023 Company Presentation
Fourth Quarter Results:
March 2023 Company Presentation
The company posted its fourth quarter numbers on March 7th. BlackSky saw revenues rise 69% on a year-over-year basis to just over $19.4 million, just a tad under expectations. The company delivered a GAAP loss of 13 cents a share, three pennies above the consensus. Its core imagery and software analytical services revenue came in at $16.2 million, nearly triple the same period a year ago. Professional and engineering services revenue contributed $3.3 million in the fourth quarter of 2022, which was flat to Q3 2022. Revenue from these types of projects can vary from quarter-to-quarter depending on the project's estimated cost and percentage of completion it should be noted.
March 2023 Company Presentation
Importantly, the Adjusted EBITDA loss for quarter was $4.6 million. This compares to an adjusted EBITDA loss of $14.4 million in Q4 2021. Most of this decreased was driven strong operating leverage achieved by increased revenue growth that significantly exceeded incremental costs.
March 2023 Company Presentation
This wrapped up an impressive year for BlackSky. The company garnered total revenues of $65.4 million, up 92% from FY2021. As or more importantly for future growth, BlackSky won up to $1.3 billion in multi-year contracts during the fiscal year. These resulted in over $250 million in recurring revenue backlog.
March 2023 Company Presentation
Management provided this initial guidance for FY2023. Full year 2023 sales to be between $90 million and $96 million, a 42% increase over 2022 revenue at the mid-point of this range. Capital expenditures for the year is expected to be between $40 million to $45 million in FY2023.
March 2023 Company Presentation
Analyst Commentary & Balance Sheet
Approximately eight percent of the outstanding float in the stock is currently held short. Several insiders sold just less than $125,000 worth of shares in mid-March collectively. That was the first insider activity in the stock in more than a year. Both Lake Street and Benchmark & Co. reissued Buy ratings with identical $4 price targets right after fourth quarter numbers were released.
March 2023 Company Presentation
The company ended FY2022 with approximately $75 million in cash and marketable securities on its balance sheet. It had a net operating loss of $18.3 in 4Q2022 and $86.5 million in FY2022. This was down from $31.9 million and $120.1 million in the year ago periods. The company raised an addition $29.5 million via private placement the same day it posted fourth results. Leadership has stated they ' anticipate achieving positive Adjusted EBITDA in the fourth quarter of 2023 '.
March 2023 Company Presentation
Verdict
The current analyst firm consensus has the firm losing 47 cents a share in FY2023 even as sales nearly 45% to just over $94 million. They see revenue growth accelerating to 55% in FY2024 as losses get cut to 20 cents a share. There is a fairly wide range of sales and earnings projections from the analyst community it should be noted.
The company has done a good job of continuing to establish itself as a premier provider of real-time global intelligence since we last visited with it. The company has greatly increased the contribution its SaaS business (imagery and software analytical services) resulting in higher margins.
March 2023 Company Presentation
Increases in defense spending globally, especially in space, is a nice long-term tailwind for the company. While BlackSky is too far away from profitability to warrant a large stake within my portfolio, its continued progress and solid execution continues to merit a small ' watch item ' position pending further developments.
In the intelligence community, a rumor was almost as good as a confirmation . ? Kenneth Eade, Unwanted
For further details see:
BlackSky Technology: Getting Closer To Takeoff