0001753539-25-000094
SEC filingRevenue declined 11% QoQ due to lower professional services, but cash flow improved; Gen-3 satellite launches expected to drive future growth.
For the three months ended June 30, 2025, total revenue decreased 11.0% to $22.2 million from $24.9 million in the same period of 2024. The decline was primarily driven by a 43.5% decrease in professional and engineering services revenue, which fell to $4.2 million from $7.5 million, due to differences in the progress of revenue recognition on long-term contracts. Imagery and software analytical services revenue was relatively flat at $18.0 million, up 2.9% year-over-year, as growth from new subscriptions was offset by prior period comparables.
Gross margin (calculated as revenue minus total costs excluding depreciation and amortization) was 71.9% in Q2 2025 compared to 72.4% in Q2 2024, a slight decline. Operating loss widened to $13.9 million from $11.7 million, driven by a 24.4% increase in selling, general and administrative expenses to $22.7 million, primarily due to higher salaries and benefits from the LeoStella acquisition, increased stock-based compensation, and professional fees. Research and development expense decreased 94.1% to $0.02 million due to project completions. Depreciation and amortization fell 36.1% to $7.2 million as Gen-2 satellites became fully depreciated, partially offset by new Gen-3 satellite depreciation.
Net loss increased to $41.2 million from $9.4 million, largely due to a $24.4 million loss on derivatives (non-cash fair value adjustments) compared to a $5.3 million gain in the prior year. Adjusted EBITDA turned negative to ($2.8 million) from positive $2.1 million.
Imagery and software analytical services revenue remained stable, representing 81% of total revenue in Q2 2025 versus 70% in Q2 2024, reflecting a shift toward higher-margin subscription-based offerings. The company expects increased revenue from new and incremental customer subscriptions following the launch of Gen-3 satellites. Professional and engineering services revenue declined sharply due to the timing of milestone completions on long-term contracts, but increased 22.1% for the six-month period, driven by a new satellite delivery contract.
Management expects continued revenue growth in imagery and software analytical services year-over-year, driven by new and existing customer demand. Professional and engineering services are expected to contribute meaningfully from existing U.S. and international defense contracts. Selling, general and administrative expenses are expected to trend higher in 2025 due to headcount increases and LeoStella integration. Capital expenditures will continue for Gen-3 satellite production and launch, with additional depreciation upon each satellite's service entry. The company's liquidity position improved with $94.9 million in short-term liquidity as of June 30, 2025, and the July 2025 issuance of $185.0 million in convertible notes, which also allowed repayment of all related-party and commercial bank debt, eliminating financial covenants.
As of June 30, 2025, BlackSky held $22.6M in cash and equivalents and $71.2M in short-term investments, totaling $93.8M in liquid assets. This marks a significant increase from $52.5M at year-end 2024, driven by $40.9M in net equity issuances under the ATM program. Total debt stood at $122.5M, consisting of $97.5M in related-party loans, $15.9M in satellite launch vendor financing, and a $10.0M commercial bank line. The current portion of debt was $5.2M. Shareholders' equity declined to $86.6M from $94.0M at year-end, reflecting a net loss of $54.1M partially offset by equity raises. Notably, inventory dropped to zero from $6.0M, likely due to the consolidation of LeoStella and reclassification of satellite components. Contract liabilities surged to $37.0M from $2.9M, including a new $20.0M long-term deferred revenue item, indicating significant upfront customer payments.
BlackSky disclosed $356.3M in total backlog as of June 30, 2025, representing the transaction price of executed contracts less recognized revenue. Of this, $45.7M is expected to be recognized in the second half of 2025, $64.9M in fiscal 2026, and $245.7M thereafter. The company entered into $0.5M in new operational commitments during the period. A vendor financing agreement for satellite launches provides up to $27.0M, with $10.5M drawn during H1 2025, accruing interest at 12.6% per annum. The company also has $10.5M in vendor-financed satellite launch costs recorded as a non-cash financing activity.
Capital expenditures totaled $18.9M for H1 2025, with $8.1M for property and equipment and $10.8M for satellite work in process. This represents 36.5% of total revenue. The company raised $40.9M in net equity proceeds through its ATM program, selling 3.7M shares at an average price of $11.56. Debt activity included $10.5M in new satellite launch financing and $0.6M in repayments. A transformative post-quarter event occurred in July 2025: BlackSky issued $185.0M in 8.25% Convertible Notes due 2033 (initial conversion price ~$36.78/share) and used proceeds to fully repay $100.2M in related-party loans and the $10.0M commercial bank line, eliminating all financial maintenance covenants.
The company operates as a single reportable segment. Revenue by type shows Imagery at $30.9M (59.8% of total), Engineering Services at $10.9M (21.1%), Professional Services at $6.0M (11.7%), and Data/Software/Analytics at $3.9M (7.5%). Geographically, Asia Pacific revenue surged to $20.8M (40.3% of total) from $11.8M in H1 2024, driven by $9.3M from Country B and $9.0M from Country C. North America declined to $25.9M (50.0%) from $30.2M. U.S. federal government customers represented 49% of revenue, down from 58% a year ago, while international governments grew to 48% from 39%.
CFO of $19,965k in H1 2025 reversed from -$5,602k prior year, aided by $34,183k contract liabilities inflow and $22,534k derivative loss add-back offsetting $54,052k net loss. Capex intensity remained elevated with $8,096k property purchases plus $10,772k satellite work-in-process. No FCF or capital returns (repurchases/dividends) disclosed. Working-capital swings were material: large contract asset outflow ($14,324k) and accounts payable reduction ($8,065k) partially offset by contract liabilities surge. One-time items limited to $1,509k interest paid and minor tax outlays. Overall liquidity supported by $40,861k equity raises, yielding $9,330k net cash increase to $23,708k ending balance.