BlackSky: Next-Gen Satellites Bring Opportunities And Risks

seekingalpha11-20

BlackSky's Q3 results were weak, which the company attributed to contract timing. As a result, full-year guidance remains unchanged.While Q3 earnings caused BlackSky's stock to drop, its share price ...

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As a result, full-year guidance remains unchanged.While Q3 earnings caused BlackSky's stock to drop, its share price ...</p>\n\n<a href=\"https://seekingalpha.com/article/4738745-blacksky-next-gen-satellites-bring-opportunities-and-risks\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>BlackSky: Next-Gen Satellites Bring Opportunities And Risks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBlackSky: Next-Gen Satellites Bring Opportunities And Risks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-20 02:43 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4738745-blacksky-next-gen-satellites-bring-opportunities-and-risks><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>BlackSky's Q3 results were weak, which the company attributed to contract timing. As a result, full-year guidance remains unchanged.While Q3 earnings caused BlackSky's stock to drop, its share price ...</p>\n\n<a href=\"https://seekingalpha.com/article/4738745-blacksky-next-gen-satellites-bring-opportunities-and-risks\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BKSY","symbol_name":"BlackSky Technology Inc.","start_time":0,"source_url":"https://seekingalpha.com/article/4738745-blacksky-next-gen-satellites-bring-opportunities-and-risks","article_id":"2484382971","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/2097949780/image_2097949780.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2484382971","pubTimestamp":1732041796,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"BlackSky's Q3 results were weak, which the company attributed to contract timing. As a result, full-year guidance remains unchanged.While Q3 earnings caused BlackSky's stock to drop, its share price h","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BKSY":"BlackSky Technology Inc.","BK4123":"调查和咨询服务"},"translate_title":"BlackSky：下一代卫星带来机遇和风险","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BKSY":0.9},"content_text":"BlackSky's Q3 results were weak, which the company attributed to contract timing. As a result, full-year guidance remains unchanged.While Q3 earnings caused BlackSky's stock to drop, its share price has since recovered, creating pressure to perform in the coming quarters.The satellite imagery market is becoming more competitive, particularly as next-gen satellites with higher-resolution, lower latency and hyperspectral capabilities are introduced.BlackSky's valuation is reasonable, but the company will need far greater scale to generate the high margins investors expect. This could be difficult with increasing competition.   bjdlzx BlackSky's (NYSE:BKSY) third quarter results were soft, which the company attributed to contract timing. While the stock initially reacted negatively to this, it has since recovered, driven in large part by improved sentiment towards the space sector in general. I previously suggested that BlackSky would need access to capital and that commoditization of satellite imagery was a risk. While BlackSky has already raised capital through an equity offering, it will take time for competition to increase. I continue to think that the proliferation of LEO satellites will increase earth observation competition though, and BlackSky's lack of scale could be an issue if competition creates a race to the bottom on pricing. This issue is likely to come to the forefront in the next few years as companies like BlackSky and Planet Labs (PL) introduce the next generation of high-resolution satellites. Market Conditions The satellite imagery market has historically been dominated by a small number of companies leveraging large and expensive satellites in geosynchronous orbit. Declining launch costs, along with improved smallsat capabilities, have opened the market to new entrants in recent years though, which is changing competitive dynamics. Image pricing is driven by factors like resolution, spectrum and latency (dependent on revisit frequency and data transmission capabilities). Competition in these areas is likely to increase over time though, with Planet Labs in the process of introducing hyperspectral and high-resolution satellites. This has already created pressure in some parts of the market, with the price of medium resolution imagery with standard delivery priority down around 60% over the past decade.   Figure 1: Illustrative Value of Satellite Imagery (source: Created by author)BlackSky Business Updates BlackSky operates a constellation of 16 electro-optical imaging satellites. The company’s current constellation is made up of Gen-2 satellites that provide 1-meter resolution imagery. The company's Gen-3 satellites will produce sharper 35-centimeter resolution imagery and will also have dual optical-infrared sensors that allow for imaging in low-light conditions, along with high-speed communication to improve timeliness. BlackSky’s Gen-3 satellite is already in production and remains on track for launch in 2024. The company is currently working through final pre-ship testing of its first high-resolution satellite and expects to ship it to the launch site in the next few weeks. Once the on-orbit performance of this first satellite has been demonstrated, BlackSky will begin a regular cadence of Gen-3 deployments. These will be dovetailed into the existing constellation, with the constellation expanded as dictated by demand. In support of the Gen-3 scaleup, BlackSky recently acquired the remaining stake of LeoStella. LeoStella was a JV with Thales Alenia. In addition to providing manufacturing capacity, LeoStella has been developing an LS-300 bus which will be large enough to incorporate a xenon ion propulsion system, built by Astra. This will enhance the LS-300’s ability to perform orbital maneuvering and precision pointing, opening up new use cases. BlackSky recently launched a new product which provides non-Earth imaging for space domain awareness. This service recently resulted in the award of seven-figure contracts with government and commercial customers, including HEO, an Australian company focused on non-Earth imaging for government, defense, and commercial customers. In addition to improving the capabilities of its constellation, BlackSky continues to land new contracts. This includes a 5-year Luno A contract that is worth up to $290 million. The Luno program is one of the government's largest contracts to procure commercial space-based analytics services. Luno A is a follow-on contract to the Luno contract BlackSky was awarded in 2021. BlackSky will assist the NGA in monitoring global economic and environmental activity, using AI to detect and identify objects like ships, aircraft, vehicles, and shipping containers. BlackSky won new and follow-on contracts worth up to $780 million in the third quarter, which was one of its strongest quarters for bookings in the past two years. Demand continues to be driven by US defense and intelligence agencies who value BlackSky’s high-frequency imagery and advanced analytics. Most prominent of these was a $476 million IDIQ contract from NASA to support their commercial small-sat data acquisition program. BlackSky will provide NASA with high-revisit satellite imaging data that will be used in Earth and applied science research. BlackSky was also recently awarded a US Navy research contract to develop advanced OISL (Optical Inter-Satellite Link) terminals for Gen-3 imaging satellites, will eventually help to provide real-time imagery access to warfighters. The project directly supports the Navy’s Project Overmatch and the Department of Defense’s Joint All Domain Command and Control initiatives. OISL terminals will be integrated into BlackSky's Gen-3 satellites and will be compatible with both the Space Development Agency's Transport Layer and commercial transport layers. OISL are laser-based communication relays that enable faster communication and transmission of data through satellite networks. BlackSky expects this to improve delivery timelines by 10x. It will also reduce the importance of ground infrastructure. Planet Labs has also been developing inter-satellite links using RF terminals. The terminals will enable Planet Labs’ satellites to communicate with GEO-orbit SES and Telesat satellites in C-band, and in Ka-band to SES’s medium-Earth-orbit O3b mPower constellation and Telesat’s future Lightspeed constellation in low Earth orbit. This, along with on-board GPUs should help Planet Labs to deliver insights to customers much faster than in the past. BlackSky also recently won a $6 million contract expansion from an international defense sector customer. This expansion brings the total annual commitment from this customer to nearly $18 million. In addition, BlackSky is having success through the Global Data Marketplace, an online marketplace that streamlines the acquisition process for US government end users. These awards are for short-term services occurring within weeks to months. Financial Analysis BlackSky generated $22.5 million revenue in the third quarter, an increase of only 6% YoY. While this is obviously somewhat concerning, BlackSky's revenue is dependent on contract timing and tends to be lumpy. Timing delays reportedly shifted some revenue into Q4, but full-year revenue is not expected to be impacted. It is worth noting that professional and engineering services revenue has driven BlackSky's growth over the past year. This revenue is largely milestone-based, creating quarterly volatility. Professional and engineering service revenue also has lower gross margins (~50%). Despite third quarter weakness, BlackSky continues to expect $102-$118 million revenue in 2024, implying 8% YoY growth at the midpoint in the fourth quarter. A number of BlackSky's existing customers renew in the fourth quarter, which is expected to drive revenue growth.   Figure 2: BlackSky Revenue by Segment (source: Created by author using data from BlackSky)BlackSky's margins are heavily dependent on both scale and the mix of imagery and engineering revenue. The company's gross margins should continue to improve, particularly as its imagery and analytical service revenue increases.   Figure 2: BlackSky Imagery Gross Profit Margin (source: Created by author using data from BlackSky)BlackSky's operating profitability hasn't improved for a number of quarters, which is largely a function of scale, as the company's operating expenses have been fairly constant over the past few years. Breakeven is likely to occur at roughly $160 million annual revenue, which is probably around two years away.   Figure 3: BlackSky Margins (source: Created by author using data from BlackSky)Unsurprisingly, BlackSky raised capital through an underwritten public offering of common stock recently. The company offered 10 million shares of its Class A common stock at $4 per share. BlackSky also granted the underwriters a 30-day option to purchase up to an additional 1.5 million shares. A total of over $46 million gross capital was raised, which will be directed towards the company's Gen-3 constellation. As a result of this transaction, BlackSky ended the third quarter with $64.4 million of cash, restricted cash, and short-term investments. Conclusion BlackSky's growth was weak in the third quarter, which the company attributed to contract timing. BlackSky continues to land large contracts though, which should see the company continue to grow and improve its margins. There is also the imminent launch of the BlackSky's Gen-3 satellites, which will provide higher resolution images and infrared sensors for imaging in low light conditions. BlackSky also recently introduced a space domain awareness solution, which should be an additional source of high margin revenue.  Competition is rising though, with Planet Labs in the process of introducing high-resolution and hyperspectral satellites. With inter-satellite linking also set to become more common and vendors introducing onboard processing, competition will increase across resolution, spectrum and latency. While this isn't an immediate concern, I continue to think that competition will weigh on BlackSky's margins and growth in time.   Figure 4: BlackSky EV/S Ratio (source: Seeking Alpha)","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2484382971"}