BlackSky Technology (BKSY -6.70%), a geospatial intelligence company operating a proprietary constellation of high-resolution satellites, released its second quarter results on August 7, 2025, covering the period ended June 30. The most important news was a much wider than expected net loss, with earnings per share (EPS) (GAAP) at $(41.20) versus a consensus estimate of $(0.44), and revenue (GAAP) falling to $22.2 million, missing the $23.11 million expectation. The quarter reflected persistent volatility in non-core contract revenue and significant one-time losses on derivatives, as well as continued investment in satellite technology. Management’s overall assessment was that core technology and backlog remain strong, but near-term profitability and revenue growth are pressured by swings in contract recognition and market conditions.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $(1.27) | $(0.44) | $(0.52) | (144.2 %) |
| Revenue (GAAP) | $22.2 million | $23.11 million | $24.9 million | (10.9 %) |
| Adjusted EBITDA | $(2.8 million) | $2.1 million | N/A | |
| Imagery & Software Analytical Services Revenue | $18.0 million | $17.5 million | 2.9% | |
| Cash & Short-term Investments | $94.9 million | N/A |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Core Focus
BlackSky Technology provides satellite-powered real-time geospatial intelligence. It delivers high-frequency, high-resolution imagery and data analytics, serving mainly government and commercial clients with monitoring and analysis needs across the globe. Its constellation of small satellites enables rapid revisit rates, supplying up-to-date data for customers that require near real-time situational awareness.
The company’s recent focus has centered on expanding its Gen-3 satellite fleet, broadening the capabilities of its AI-enabled Spectra software platform, and securing longer-term government and international contracts. Success factors hinge on the reliable launch cadence of its advanced satellites, smooth integration of vertically acquired manufacturing operations, and the continued evolution of software services that drive high-margin subscription revenue. Securing government contracts, especially international, remains a structural driver for the business and source of financial stability.
Quarterly Highlights and Financial Details
The period was marked by a pronounced year-over-year drop in revenue and profits, with the increase in net loss primarily due to a $24.4 million loss on derivatives. Total revenue for the second quarter was $22.2 million, a decrease from $24.9 million in the same period of 2024, mainly because professional and engineering services revenue slid to $4.2 million from the prior year’s $7.5 million. Management cited “a difference in the progress of revenue recognition of long-term contracts” as the main reason for this decline, indicating that income from milestone-based contracts can vary greatly quarter to quarter.
Despite these declines, imagery and software analytical services revenue increased by $0.5 million to $18.0 million (GAAP), described as “driven by increased imagery orders.” This segment benefits from ongoing deliveries of high-frequency, high-resolution imagery and growing interest in AI-driven analytics, especially from government and international clients. Cost of sales as a percentage of revenue improved in this segment to 19% (non-GAAP, excludes depreciation and amortization expense), signaling some margin gains within the core business lines.
Total cost of sales as a share of revenue remained steady at 28%, while operating expenses ticked up marginally to $29.9 million from $29.8 million in Q2 2024. Net loss (GAAP) widened dramatically to $41.2 million, compared to $9.4 million in Q2 2024, mostly because of a $24.4 million loss on derivatives. Adjusted EBITDA, a metric that excludes non-cash charges and provides a snapshot of operating profitability, swung from a positive $2.1 million in Q2 2024 to a loss of $2.8 million. This was attributed to higher overhead expenses related to the LeoStella acquisition and lower revenues in professional services.
The company completed a $185.0 million convertible note offering subsequent to the quarter, eliminating previous secured note and commercial debt, and boosting liquidity. Cash and short-term investments at the close of the quarter totaled $94.9 million, jumping to more than $170 million pro-forma post-transaction. This capital move was aimed at strengthening the balance sheet and supporting ongoing satellite launches.
Operationally, BlackSky achieved significant progress in its satellite technology roadmap. It successfully launched and commissioned its second Gen-3 satellite during the quarter, joining the first in supplying very-high resolution imagery and AI-powered analytics to early-access customers. “We successfully launched and commissioned our second Gen-3 satellite, which is performing exceptionally well,” management reported. The company remains on track for six Gen-3 launches in the year and expects broader commercial availability in the fourth quarter. This technical progress is critical, as expanding imaging and analytic services is viewed as the main path to scaling subscription-based income for the future.
Notable customer wins included a “facility monitoring order valued at up to $24 million from the NGA Luno A program” and a new multimillion-dollar contract with an unnamed international customer. The backlog at quarter end reached $356 million, with approximately 85% from international contracts. This strong international focus underlines BlackSky’s diversification beyond U.S. government contracts and supports long-term sales visibility, though the slight dip in backlog from last quarter (from $366 million in Q1 2025 to $356 million) hints at lumpy order timing.
One-time events materially affected the results. The large derivative loss, primarily a balance sheet-driven accounting item, accounted for much of the widened net loss and increased earnings volatility (GAAP). At the same time, overhead from the LeoStella satellite manufacturing acquisition increased cash operating expenses (non-GAAP), as previously capitalized costs under vendor contracts are now recognized on the company’s books.
Business Lines and Products Explained
Within its offerings, the imagery and software analytical services segment is based on satellite images and advanced analytics delivered through the Spectra cloud platform, which also processes data from multiple external sources. Spectra employs machine learning to distill raw satellite imagery into actionable intelligence, such as change detection and site monitoring, and delivers insights to government and commercial clients. Professional and engineering services involve bespoke project work for clients, often based on milestone achievements, which leads to quarter-to-quarter swings in reported sales.
The Gen-3 satellite fleet is the company’s next-generation set of small, high-resolution satellites designed for very frequent revisit rates and enhanced image quality, targeting both government and commercial markets. Early access agreements and pilot contracts utilizing Gen-3 data have begun, with commercial rollout projected for later in the year. Investments in satellites and software integration are core to BlackSky’s competitive positioning in a fast-moving geospatial intelligence landscape.
Outlook, Guidance, and Key Items to Watch
Looking ahead, management lowered its guidance for full-year 2025 to $105 million to $130 million in revenue due to current revenue variability and delays in contract finalization, particularly related to government budgets and some international deals. Revenue (GAAP) is now expected in the range of $105–$130 million, down from prior guidance of $125–$142 million. Adjusted EBITDA (non-GAAP) is forecast at break-even to $10 million, down from the earlier $14–$22 million expectation. Capital expenditure guidance remained steady at $60–$70 million as satellite production continues on pace. Management highlighted ongoing “near term volatility from the U.S. government budget process and timing related to some international contracts” as principal drivers of the outlook shift.
For investors and observers, the main areas to watch are further ramp-up of Gen-3 satellite operations and commercial adoption, stabilization in professional and engineering services revenue, cost control as integration of new operations proceeds, and the potential impact of further swings in non-operating items such as derivative liabilities. Management provided no additional guidance beyond the updated financial outlook and reiterated its confidence in long-term prospects based on technology and backlog fundamentals.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
