What happened
Shares of real-time geospatial intelligence (i.e., spy satellites) company BlackSky Technology (BKSY 17.47%) surged ahead 6.7% through 10:20 a.m. ET Monday morning after the company -- which did less than $70 million in business over the past year -- announced a $30 million contract with an unidentified "international defense sector customer."
NYSE: BKSY
Key Data Points
So what
Before investors get too excited, though, a couple of things are worth pointing out about this contract. First, despite 70 plus 30 equaling 100, this contract for the provision of "on-demand, real-time, high-frequency imagery services" is not going to push BlackSky over $100 million in annual revenues, and for two reasons.
One, it's a multiyear contract, meaning the $30 million will be spread over at least two years (so at most, the increase in sales would be $15 million per year).
And two, this isn't a new contract BlackSky has signed, but a "renewed commitment" from an existing customer. So while it cements and extends an existing relationship, not all the $15 million per year will be sales growth.
To be precise, BlackSky notes that the contract "triples this customer's demand over the next two years." And if I'm doing my math right, this means the revenue from this single customer will go from $5 million a year to $15 million -- thus a $10 million per year increase, or $20 million total.
Now what
That being said, if I'm still doing my math right, this contract does seem to mean that this space stock just went from $70 million in annual revenue to $80 million in annual revenue -- assuming all other contracts remain unchanged and no other contracts are signed.
That's still a 14% increase in annual revenue for BlackSky. When you consider that the shares are up less than 7% on the news, I'd venture to say BlackSky stock has more room to run.
