BlackSky Technology Reports Mixed Third Quarter Results Amid Strategic International Expansion

Stonegate Capital Partners has updated its coverage on BlackSky Technology, Inc. following the company's third quarter 2025 financial results. BlackSky reported revenue of $19.6 million, adjusted EBITDA of negative $4.5 million, and earnings per share of negative $0.44. These figures fell short of Stonegate's estimates of $29.9 million for revenue and $3.2 million for adjusted EBITDA, as well as consensus estimates of $28.6 million for revenue and $1.9 million for 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 of 2024, largely due to project timing and milestone-based revenue recognition. The adjusted EBITDA loss of $4.5 million compares unfavorably to the $0.7 million profit recorded in the prior year period, driven primarily by lower EOCL revenues and the inclusion of overhead associated with LeoStella operations. Consolidated gross margins decreased to 65.3% from 70.5% in the third quarter of 2024, reflecting the challenging revenue environment.

Despite these financial headwinds, BlackSky demonstrated significant strategic progress through contract wins and technological advancement. The company secured over $60 million in new contracts during the third quarter, growing its total backlog to $322.7 million with approximately 91% of this backlog coming from international customers. 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 delivery. Additional significant awards included a new multimillion dollar Gen 3 imagery contract with a U.S. customer, a seven-figure Luno A delivery order for AI-enabled change detection capabilities, and a seven-figure space domain awareness expansion with HEO. Early access agreements for Gen 3 services continued to expand across international defense and intelligence customers, reinforcing BlackSky's growing role as a trusted intelligence partner globally.

The company is preparing to launch its third Gen-3 satellite, with deployment expected by year-end. BlackSky remains on track for a fully operational commercial constellation, targeting a 12-satellite constellation by the end of 2025. Management highlighted rising demand for Gen-3 services, including high-cadence tasking and AI-enabled analytics as customers integrate these capabilities into secure, sovereign environments. The company's balance sheet showed cash, restricted cash, and short-term investments totaling $147.6 million at quarter end, reflecting net proceeds from an upsized convertible note offering and warrant exercises. BlackSky 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, with management citing total liquidity exceeding $200 million when including unbilled receivables and remaining vendor financing.

BlackSky maintained its full-year 2025 guidance, projecting 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 performance supported by international demand growth, Gen 3 service availability, and backlog conversion. Stonegate Capital Partners utilizes discounted cash flow modeling and EV/EBITDA comparable analysis for valuation purposes, producing valuation ranges of $24.60 to $30.40 and $23.26 to $28.18 respectively, with midpoint valuations of $27.23 and $25.72. The company's strategic positioning in international markets and advancing satellite capabilities suggest potential for improved financial performance as government budget uncertainties resolve and new contract revenues materialize.