Good morning, ladies and gentlemen, and welcome to BlackSky Technology's Fourth Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Please note, this conference call is being recorded. I would now like to turn the call over to Aly Bonilla, BlackSky's Vice President of Investor Relations. Please go ahead, Aly.

Good morning, and thank you for joining us. Today, I'm joined by our Chief Executive Officer, Brian O'Toole, and our Chief Financial Officer, Henry Dubois. On today's call, Brian will provide some highlights on the quarter and accomplishments over the last year and give a strategic update on the business. Henry will then review the company's fourth quarter and full year financial results and provide an outlook for 2023. Following our prepared remarks, we will open the line for your questions. A replay of this conference call will be available from approximately 12:50 p.m. Eastern Time today through March 21. Information to access the replay can be found in today's press release. Additionally, a webcast of this earnings call will be available in the Investor Relations section of our website at www.blacksky.com. In conjunction with today's call, we have posted a quarterly earnings presentation on the Investor Relations website that you may use to follow along with our prepared remarks. Before we begin, let me remind you that today's conference call includes forward-looking statements, including financial guidance for 2023, and that actual results may differ from the expectations reflected in these statements due to factors such as long sales cycles, customer demand, and our ability to estimate expense, operational and liquidity needs. We encourage you to review our press release and most recent SEC filings for a full discussion of the risks and uncertainties that pertain to these statements and that may affect future results or the market price of our stock. BlackSky assumes no obligation to update forward-looking statements, except as may be required under applicable security laws. In addition, during today's call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA, adjusted imagery and software analytical services cost of sales and adjusted selling, general and administrative expenses. A reconciliation of these non-GAAP financial measures to their most comparable GAAP measures are included in today's earnings press release and accompanying presentation, which can be viewed and downloaded from our Investor Relations website. At this point, I'll turn the call over to Brian O'Toole. Brian?

Thanks, Aly, and good morning, everyone. Thank you for joining us on today's call. Let's begin with Slide 4. 2022 was a foundational year that established BlackSky as a premier provider of real-time global intelligence. I'm pleased with the progress we've made across all aspects of our business and I'm particularly proud that we are now a preferred and trusted long-term partner of some of the most important customers in the world. BlackSky's platform is the first-of-its-kind capability in the market, and is providing these customers with new and critical real-time intelligence that they never had before. Our world needs real-time intelligence now more than ever, and we continue to see strong demand for our high-frequency imagery, monitoring and advanced analytics. Now let me highlight some of the accomplishments we've achieved in 2022 as well as some recent developments that we've announced today that will contribute to the strong momentum we have going into 2023. First, BlackSky has changed how space is used to deliver actionable intelligence. Last year, we achieved a baseline satellite constellation that now provides reliable, hourly monitoring of the most important strategic locations, economic assets and events in the world. Through our Spectra AI software, we have transformed the customer experience by providing on-demand access to new users and through the delivery of real-time geospatial information at unprecedented speeds, frequencies and economics. We are enabling users to gain new insights and see changes as they are happening on the ground and access that information through mobile devices, or directly in the software applications they use every day, such as Palantir or ESRI. Second, BlackSky's high-frequency imagery and analytics services were validated and are now relied upon by major U.S. and international government agencies for their mission-critical operations. Due to the quality, speed and reliability of our services, these customers have made long-term commitments through multi-year contracts to secure capacity from our current and future constellations and are growing their use of our AI-enabled analytics. Third, as a result, we booked multi-year contracts valued up to $1.3 billion from these key customers, resulting in over $250 million in recurring revenue backlog. This includes a new $150 million-plus contract that we announced today with a major international Ministry of Defense. This multiyear subscription contract is a long-term commitment for our next generation of real-time monitoring and analytics services for space-based tactical operations. This contract win was competitively bid and provides further validation of our vision, the differentiation that we have established in the market, the confidence these customers have in our long-term products strategy and the alignment of our capabilities to meet their long-term needs. I'll share more detail on this important contract win in a few minutes. Fourth, these contract wins enabled us to hit new revenue records, both quarterly and annually, with full year revenue reaching over $65 million, a 92% increase over 2021. These contracts also provide strong revenue visibility for 2023 and beyond, with over 65% of our forecasted 2023 revenues coming from contracted backlog. Fifth, these revenues were predominantly from our high-margin imagery, software and analytics services, which enabled us to demonstrate the operating leverage of our business model. In 2022, we achieved a 92% incremental contribution margin from these services, which we believe puts us on a path to achieving SaaS-type margins through a recurring revenue model and a high-margin EBITDA business. Sixth, we expanded our sales force and are positioned to capitalize on growing global demand for real-time intelligent solutions, particularly in the government, defense and intelligence sector. This strategy is paying off as governments around the world are increasing their spending for space-based intelligence and are now turning to BlackSky to meet their long-term mission needs. Further, as this market is traditionally non-cyclical, it has not been subject to the risks of other markets during times of economic uncertainty, providing us with good visibility into future opportunities and a strong and growing sales pipeline. Finally, today, we announced that we secured additional capital through a private placement that will strengthen our balance sheet. All of these achievements have set the stage for our next phase of growth and most importantly have put us on a path to achieve profitable growth in 2023. Moving on to Slide 5. As I mentioned earlier, I'm pleased that demand for BlackSky's products and services drove record revenue for the company. Revenues in 2022 grew to $65.4 million, in line with the upper end of guidance we previously communicated, representing an increase of 92% over 2021 revenues. We experienced strong customer demand from new and existing U.S. and international governments and believe this favorable trend will continue. We saw significant revenue growth in our imagery and software analytical services, which is our core business serving customers and is the highest margin element of our business. Henry will provide more details on the quarter and full year financial results later. Turning to Slide 6. Now, I would like to provide more detail on today's announcement of our new $150 million-plus multiyear contract award with a major international defense customer. I'm pleased to announce that BlackSky was selected from a competitive bidding process to provide next-generation space-based tactical GEOINT services under a multiyear services agreement. The services we'll be providing under the contract are for next-generation high-frequency monitoring and real-time delivery of AI-enabled intelligence. This multiyear subscription contract is valued at over $150 million and includes significant options whereby the scope of services may be extended or expanded over time. This project kicks off with an initial two-year development phase ahead of the start of the subscription service. We expect to recognize a few million dollars of revenue this year as we ramp up the initial phase of the contract in the second quarter. This contract further validates our customers are embracing our vision and securing advanced access to our differentiated offering in the market for advanced, dynamic monitoring and analytic services. We will be able to sell this type of service to any customer, whether government or commercial. We're proud to be partnered with this major international government customer and provide them with a tactical advantage to support their country's most critical intelligence needs. Moving on to our platform, as shown on Slide 7. BlackSky's products and services give customers unique information and insights about our changing world. We successfully scaled our operations and are now delivering thousands of high-resolution images reliably each day with AI-driven analytics to customers around the world. Our software-first strategy is now paying dividends as on-demand access to our testing, monitoring and AI-enabled analytics is accelerating adoption and go-to-market initiatives. For example, our software-based approach that combines high-frequency imaging and real-time analytics provides us with a competitive advantage and was the key factor in our capture of the Economic Indicator Monitoring contract with NGA. This win alone drove over $14 million in bookings in 2022. We're excited this customer increased the value of the contract ceiling from $30 million to $60 million in less than 12 months. Through our platform APIs, we are able to rapidly integrate with the machine-to-machine interfaces of third-party platforms such as Palantir and ESRI. This provides users with immediate access to BlackSky's on-demand services. Think of this as having an easy button right in these applications that enable a user to directly task BlackSky satellites and receive imagery and analytics back in their software within 90 minutes or less from collection. Our real-time software platform, Spectra AI, is how we are changing the customer experience. Turning to Slide 8. We also made significant advancements in our imaging constellation. In 2022, we achieved a baseline constellation that enables us to provide reliable and dynamic hourly monitoring of the most important and strategic locations, economic assets and events in the world. To put this in perspective, for most of you on this call, we now have a satellite passing over your location every hour, and through our Spectra AI software, from any mobile device or browser, you can task the constellation and access imagery and analytics on demand. Our constellation enables us to collect high-resolution imagery on most locations up to 15 times a day from dawn to dusk. We augmented this unique modern capability last summer with the ability to image at night, delivering new insights to our customers. We also continued to integrate SAR monitoring and analytics from third parties in our platform to further enhance the services we are offering to customers. Being able to deliver 24/7 all-weather monitoring is a key strategic advantage and an important driver for the increased demand we're seeing globally. Within the next month, we plan to launch two Gen-2 satellites to primarily replace the two initial satellites that were deployed in 2018 and are approaching their end of life. The satellites that are being replaced have been in operation for more than four years, well beyond their expected mission life. As the majority of our current constellation was launched within the past 18 months, we believe we have sufficient capacity on orbit today to meet existing customer requirements and support our growth for the next couple of years. Our vertically-integrated approach to space has enabled us to develop a satellite production line where we are able to incorporate new technologies in our satellites over time to provide continuous improvement of our on-orbit capabilities. We continue to remain on track with the production of our new Gen-3 satellites, which will include several new capabilities, including improved resolution performance and shortwave infrared imaging. We're excited about the new capabilities that our Gen-3 satellites will bring to our customers, and we expect to begin launching these satellites in 2024 and we'll provide more updates as they become available. Turning to Slide 9. From a customer win perspective, 2022 was a big year for BlackSky as we were relied upon more and more by some of the most important and demanding customers around the world to support their mission-critical operations. We've expanded our footprint with both U.S. and international defense and intelligence agencies, winning many multiyear agreements as well as expanding existing ones with some of our key wins shown here. These long-term contracts, totaling up to $1.3 billion, provide us with great revenue visibility into 2023 and beyond and have built a strong backlog that we will recognize in future years. Moving on to Slide 10. Our focus on the government sector, and particularly our investments in the growth of our international sales force, has us well positioned to capitalize on a growing defense and intelligence segment, which is traditionally non-cyclical and typically does not have the same level of exposure as certain commercial markets during times of economic downturn. Further, as a result of recent geopolitical events and the global environment, many governments around the world are significantly increasing their defense spending as a function of their GDP, with increased focus on space capabilities. This should provide BlackSky with an expanding total addressable market and strong growth opportunities over the coming years. We have a long history supporting various U.S. government agencies, like the NRO, NGA, NASA and others, with advanced imagery and analytics to deliver mission-critical intelligence and assist with their decision-making capabilities. Just a few months ago, Congress raised the 2023 spending budget for the U.S. Space Force to over $26 billion, an increase of 35% over 2022 funding levels, with a large part of this increase geared to help accelerate the use of commercial space technology. We believe the intelligence, surveillance and reconnaissance, or ISR, market is undergoing a paradigm shift whereby billions of dollars that were once spent on airborne systems are now moving to space-based technology that leverages small satellite constellations to support new and emerging missions. As this shift in the market is in its early stages, we believe BlackSky is well positioned to capitalize on a growing number of new programs that we expect will require our unique capabilities as these new programs are established over the next few years. Moving on to Slide 11. Never before has the need for real-time geospatial intelligence been so critical to identifying and tracking key events taking place around the world. Whether we're assisting allied partners with high-frequency imagery related to ongoing military conflicts, keeping a watchful eye in the sky on geopolitical events in remote locations, or monitoring supply chain activity at ports worldwide, BlackSky is there. With our unique dynamic monitoring and AI-driven analytics, we're providing mission-critical insights helping governments and enterprises globally make better decisions. We believe BlackSky is well positioned to capitalize on a growing market for real-time geospatial intelligence that is needed now more than ever. In summary, we're excited about where we are, the demand we are seeing in the market, and the strong momentum we have in our business. I'll now turn it over to Henry to go through the quarterly and full year financial results in more detail. Henry?

Thank you, Brian, and good morning, everyone. I'm pleased that our fourth quarter financial results were strong, ending the year on a high note as momentum for our imagery and analytics continued. Now, let's discuss our fourth quarter results, beginning with Slide 13. We continue to see strong demand in Q4 for our imagery and analytics, which drove revenue to $19.4 million, another quarterly record for the company. The 69% year-over-year improvement in Q4 was primarily driven by increased demand from new and existing U.S. and international government customers. Imagery and analytics revenue grew to $16.2 million, a 196% increase over the prior-year period, primarily driven by greater volumes of imagery delivered to new and existing customers. Professional and engineering services revenue contributed $3.3 million in the fourth quarter of 2022, consistent with the third quarter of '22. Keep in mind, revenue from these types of projects can vary from quarter-to-quarter depending on the project's estimated cost and percentage of completion. So, you'll likely see some variability over time. As an example, a few of our existing projects are in fact coming to an end, but the development work for the new international Ministry of Defense customer will be realized in the professional and engineering services line in advance of when their subscription contract begins. I'd like to point out, as we stated in our press release, we reclassified professional service revenues and costs out of the imagery and analytics category and combined it with our engineering services as the project types, durations and cost structures are more aligned with engineering services. This is only a change in the geography on the income statement and changes neither the top-line nor bottom-line numbers. We have included a recasting of prior quarters in the appendix of our presentation for ease of comparison. Now turning to Slide 14, you can see that our adjusted EBITDA performance continued to improve sequentially each quarter throughout last year. For the fourth quarter of 2022, we reported an adjusted EBITDA loss of $4.6 million, an improvement over the $14.4 million loss in the prior period and sequentially better than the $6.6 million loss reported in Q3 last year. The improvements are primarily driven by greater volumes of our high-margin imagery and analytics revenue and strong operating leverage enabled primarily by fixed operating costs and prudent expense management. In fact, our SG&A costs, excluding stock-based compensation expense, were only up 2% year-over-year on revenue growth of 69%. This demonstrates our strong inherent operating leverage in our business model and our focus on effective cost management. Now, let me provide some details on our full year financial results, starting with Slide 16. Following the strong revenue performance in Q4, we ended 2022 with revenue of $65.4 million, up 92% over the prior year. This result is in line with the upper end of guidance we previously communicated and completes another record year of revenues for the company. Our significant revenue growth can be attributable to the growing number of new customer wins in 2022 and the expanding share of wallet we're experiencing with our existing customers. For 2022, imagery and analytics revenue, which represents our core service offering, grew 209% over 2021 and we anticipate demand will continue to be strong in 2023. Moving on to costs. Our total cost of sales as a percent of revenue continues to improve. But more importantly, we saw a strong improvement in our imagery and analytics cost of sales on a non-GAAP basis. As shown in Slide 17, full year 2022 imagery and analytics cost of sales was $13.9 million compared to $11.2 million in the prior year, excluding stock-based compensation and depreciation and amortization expenses in both years. This is a small increase of $2.7 million year-over-year primarily due to the fixed cost structure of our business with limited marginal costs for incremental revenue deliveries. On the other hand, revenues increased significantly year-over-year by $32 million. This small increase in cost of sales on a large increase in revenue translates into high incremental contribution margins of 92% for the year. This high incremental contribution margin validates the high-margin nature of our imagery and analytics business and is the prime driver for how BlackSky will scale its business and achieve long-term profitability. Our full year 2022 adjusted EBITDA loss was $29.5 million compared to a loss of $44.4 million in the prior year. This $14.9 million year-over-year improvement was primarily driven by three factors: first, demand for our products and services was very strong as revenues in 2022 jumped up 92% over the prior year; second, a large part of our revenue growth came from high-margin imagery and analytics, which as I mentioned, represented a 92% incremental contribution margin in 2022, helping to drive improvements to our bottom line; and third, we drove strong leverage through prudent cost management with operating investments primarily made to expand our sales team, software and AI technology. We're very happy with the progress we've made in adjusted EBITDA and look forward to further improvements in 2023. I want to briefly mention that our fourth quarter capital expenditures were $9.7 million bringing the total CapEx spend for 2022 to $44.1 million. This amount is less than what we previously guided to due to costs we expected in Q4 for the launch of two Gen-2 satellites that were shifted into 2023. In addition, we incurred less spend on certain aspects of our Gen-3 satellite production and in other corporate areas as well. Looking at our balance sheet, we ended 2022 with $75 million of cash, restricted cash and short-term investments. Turning to Slide 18, we announced this morning a private placement financing raising approximately $29.5 million from a syndicate of new and existing institutional investors. The purchase price of each common share is $1.79 and each investor will receive an equivalent number of warrants with a strike price of $2.20, which represents a 14% premium over our last closing price. These funds will be geared towards general corporate purposes and investments in our space and software platforms. These additional cash proceeds strengthen our balance sheet and liquidity position to meet our needs for the foreseeable future. In addition, we filed an at-the-market (ATM) facility in December that will allow us to take advantage of opportunities in the capital markets if and when we decide to do so. Now, let's move on to our 2023 outlook, as shown on Slide 19. In addition to having 65% of our forecasted revenue currently in backlog, we anticipate strong global customer demand for our products and services to continue, fueling greater revenues and delivering additional operating leverage. As a result, we expect our full year revenue to be between $90 million to $96 million, which represents a 42% year-over-year growth at the midpoint of this range. With strong revenue growth, high incremental contribution margins and prudent cost management, we anticipate achieving positive adjusted EBITDA in Q4 of 2023. This will be a major accomplishment for our company and continues to demonstrate the scalability of our business model. In addition, we expect capital expenditures for 2023 to be between $40 million and $45 million, roughly in line with our 2022 spend. In summary, we're pleased with our financial performance in both the fourth quarter and full year 2022. We're seeing increased interest for BlackSky's imagery and analytics solutions worldwide and look forward to continuing this strong momentum into 2023. With that, I'll now turn it back over to Brian for some closing remarks.

Thank you, Henry. Now, I would like to spend a few minutes on one of our most important objectives for 2023, which is to achieve positive adjusted EBITDA in Q4 of this year. As a new space company, we recognize that it's important to achieve cash flow positive operations and profitable growth. We don't believe that growth at any cost is a viable strategy for sustainable long-term success in this industry. As such, we have a focused plan to achieve certain financial and business objectives that put us on this path, which are shown on Slide 20, and include the following: First, continuing to deliver strong revenue growth with a focus on recurring revenues from our high-margin imagery and analytics services. Second, improving margin performance by capitalizing on the operating leverage of our space and software platforms and achieving SaaS-type margins and operating performance. Third, a focus on prudent cost management. We are planning for only a marginal increase in overhead expenses this year with incremental growth targeted towards sales and marketing to drive further revenue growth. And finally, aggressive cash management by aligning the timing of CapEx investments with market-driven need for capacity and pursuing other initiatives to obtain cash flow favorable terms on recurring multiyear subscription contracts. We believe our accomplishments in 2022 have set the stage for us to achieve these business milestones and put us on a path for long-term sustainable profitable growth. In closing, I want to thank our employees for their hard work, dedication and tenacity that has gotten us here. We've established BlackSky as a premier provider of real-time geospatial intelligence and a trusted partner to some of the most important customers in the world. Building on the successes of 2022, we have strong momentum across all aspects of our business and look forward to executing another strong year in 2023. This concludes our remarks for the call and we'll now take your questions.

We will now begin the question-and-answer session. Our first question has come from the line of Josh Sullivan with The Benchmark Company. Please proceed with your questions.

Hey, good morning.

Good morning, Josh.

As far as the Gen-3 satellite, how is the timeline for deployment evolved? Has it been more customer demand, technology or resource allocation driven?

You mean, how was the timeline for deployment or development?

Deployment. I mean, did you say 2024 for the launch?

We have enough capacity with our current constellation to support our growth over the next few years. We will start deploying the Gen-3 satellites to replace the existing constellation while aligning with market demand. At the same time, we are building a strong backlog of interest in that capability for the future, driven by initiatives like EOCL and our recently announced Ministry of Defense contract.

Yes. And I guess on that point, the $150 million win this morning, you talked about the long-term product strategy was attractive. Can you just outline some of those long-term capabilities that they were attracted to?

Yes, Josh, the main thing is we've built a differentiated capability in the market with high-frequency monitoring with integrated AI and analytics. And our roadmap over time will continue to improve the frequency and the latency and the breadth of AI-enabled intelligence that we deliver and this is what attracted the customer and ultimately led to us winning that contract.

Got it. And then just one last one. As far as the sales force expansion, you talked a bit about controlling costs and having an eye on profitability. Do you feel you have the scale on the sales force at this point?

Yes, we made significant progress last year. We're continuing to invest in sales and marketing this year. Some of the achievements in integrating with third-party platforms through our software APIs such as ESRI and Palantir give us a sales force multiplier. As we realized some of those integrations mid to late last year, we expect to start seeing traction on that this year.

Great. Thank you for the time.

Thanks, Josh.

Thank you. Our next question has come from the line of Jaeson Schmidt with Lake Street. Please proceed with your questions.

Hey, guys. Thanks for taking my questions. Just curious, I know you mentioned in your prepared remarks sort of the non-cyclicality of this industry, but just given the macro, have you seen engagements with customers or engagements get pushed to the right or have timelines remained relatively intact?

The timelines we're seeing are remaining intact. In fact, as I mentioned in our remarks, the demand, particularly in the defense and intelligence sector, is growing very significantly. We're seeing a lot of these organizations committing more dollars sooner, particularly around space-based capabilities. And then, on the commercial side, we're also seeing some pretty significant interest, particularly in commodities and supply chain intelligence. So, we're not seeing a slowdown in demand.

Okay. And then, just as a follow-up. How should we think about gross margin trending this year?

Henry, you want to take that?

Sure. Thanks, Brian. Regarding gross margin, as illustrated in our slide showing incremental gross margin, it's clear that after normalizing for the period costs linked to revenue generation, each additional dollar contributes significantly to gross margin. This past year, we reported approximately $47 million in imagery and analytics revenue, with around $13 million attributed to operational costs for that period. This results in an impressive 92% incremental gross margin. The total gross margin for imagery and analytics stands at about 70.1% to 71%. However, as we continue to see growth in this area, we're close to achieving around 90% incremental margin. This momentum in our business is what we believe will lead us to EBITDA positive status in the fourth quarter, as we forecast.

Okay. That's helpful. Thanks a lot, guys.

Thank you. Our next question has come from the line of Scott Deuschle with Credit Suisse. Please proceed with your questions.

Hey, good morning. Brian, you said that, I think, 65% of your '23 revenue is from contracted backlog. Just wanted to check on the confidence interval in getting the other 35% and the line of sight you have to them?

Yes, as I mentioned, we're experiencing strong and growing demand globally. We have secured $65 million in contracts and have excellent visibility in our revenue forecast for 2023. This includes a robust pipeline of both follow-on and new opportunities. A significant part of the gap between the $65 million and our forecast is attributed to follow-on contracts from existing customers. Therefore, we are highly confident in our forecast for this year.

Got it, great. And then, you mentioned there's a development phase on this $150 million contract you won. If you could just talk a little bit about what that entails and how long the development period will last before it moves into the subscription period?

Yes, it will commence, as we said, in the second quarter. And there'll be over a period of a couple of years activities to develop and integrate certain capabilities with the customer. And so, that will continue, and then there will be a commencement of the subscription service that starts in a few years.

Are you basically building a bespoke constellation for them?

No, this is 100% aligned with our commercial strategy.

Why can't they just use the app or the SaaS model? Why does it take two years? I thought that the SaaS model was clear.

Yes, this customer is already getting capacity from our existing constellation. And the subscription increases significantly with our Gen-3 capability combined with the level of AI intelligence that we're going to be delivering under the contract as we're expanding the AI analytics of our platform over the coming years. So, this is a long-term strategy for this customer that's aligned with our commercial platform and the timing of our investments in both space and software.

Okay, great. And then the last question for Henry. Maybe just kind of wanted to get your sense for how you approach guidance in general, now that you've been public for, I guess, over a year now. It just seems like there's oftentimes three kinds of guidance you get from companies. One - in one case, it can be an aspirational plan; for some other companies, it can be an operational plan; and for other companies, it's more of a promise, not an actual promise, but it's something that they hope shareholders can heavily rely on. I guess, I'd just be curious as you think about guidance this year and going forward as a public company CFO, kind of which of those do you think you align toward?

Thank you for the question. When we provide guidance, we compile our budget and work with our Board for approval before the end of the previous year. We aim to offer the information that we are confident we can achieve. This past year, we set guidance that we later updated in August based on performance. We will continue to update our guidance as needed. We want to ensure that our plans are solid, though they are not guarantees. We strive to provide the best information possible.

Okay, great. Thank you, guys.

Thank you. Our next question has come from the line of Edison Yu with Deutsche Bank. Please proceed with your question.

Hey, good morning, guys, and thanks for taking our questions. First on the cap raise, how are you thinking about the cash needs going forward? I know you mentioned the ATM is still there. Do we feel confident about after private placement that this is enough for you? Or do you think there's still a bit left that we need to put on balance sheet?

Edison, this is Henry. Thanks for the question. The way we look at it is we're very pleased with the PIPE raise that we just completed. We've got gross proceeds of about $29.5 million from both long-term investors and institutional investors, all U.S. based. We felt that kind of topping up the tanks a little bit made some sense, because we have the opportunity to. We do have the ATM out there. We have not tapped it at this point, and don't foresee tapping that in the near future. But what we're looking at is we'll always look at our cap table and our capital structure and make sure that we're appropriately positioned.

Understood. Higher level question on the industry. Obviously, there's been quite a few things going on. You have Maxar going private. I think Airbus lost a few very important satellites on the Vega launch. You have updated view on how you see kind of the competitive landscape now? Is it tighter than you would have thought, which is driving some incremental pricing/demand? Just curious on the latest thoughts there.

We believe we are still in a supply-constrained market and that this will continue for some time. There are only a few companies, like BlackSky and Maxar, that are providing reliable operational performance and are seen as trusted suppliers. The recent Airbus incident was unfortunate. It's important to note that most new capacity being introduced, especially from established companies, is simply replacing older capacity that is being phased out. In many instances, the new satellites being launched have lower capacity than those they are replacing. Thus, BlackSky stands out as one of the few trusted providers adding significant new capacity to the market amid increasing demand. Regarding new entrants, it typically takes years to demonstrate performance and scalability, as well as to secure substantial contracts with government and large enterprise clients. Therefore, we believe we are well positioned in a growing and supply-constrained market. Our new capacity and distinct hourly monitoring capability, along with strong and dependable operating performance, put us in a very advantageous position.

Great. And one follow-up to that. On the $150 million, you mentioned it was a competitive bid. Should we think about the others as sort of the legacy guys or more sort of emerging players?

I think the key takeaway is that we have succeeded because we possess a unique capability that aligns with the market's direction towards high-frequency monitoring and real-time analytics. This differentiation has been recognized by customers who are committing to long-term contracts as a result of our strategy. As we mentioned today, we are making progress in establishing a substantial backlog of significant multiyear agreements with these clients. Therefore, I would emphasize the importance of the differentiation we've created and the confidence that customers have in our vision and long-term product strategy.

Thank you, guys.

Thanks, Edison.

Thank you. Our next question has come from the line of Austin Moeller with Canaccord Genuity. Please proceed with your questions.

Hi, good morning, Brian. My first question is just on the $150 million GEOINT contract with the international Ministry of Defense. How on this contract, just given the incorporation of AI capabilities, does this compare from a margin perspective to like EOCL, for example?

Well, I think a couple of things there, Austin. First off, the EOCL contract is for imagery only. As Henry has outlined, the imagery and analytics component of our business is the high-margin part of our business plan. The analytics that we provide based on our imagery enhance our margin performance. This illustrates the strength of our business model and the operational leverage we gain from our constellation combined with our software platform. In both scenarios, we're experiencing very high-margin revenue, and analytics enhance that.

Okay. And then, just the private placement you announced this morning, does that provide you with sufficient capital to get through full deployment of the next-generation constellation?

Sure. Let me address that question. The $29.5 million in gross proceeds does enhance our balance sheet. It provides us with enough capital for the foreseeable future. We anticipate becoming EBITDA positive in the fourth quarter, well before we run out of that capital. Thus, we believe we are in a strong position to get our Gen-3s operational.

Okay. And then, just one more if I may. Just back to the GEOINT contract, to what degree did the shortwave infrared instruments on the future constellation play a role in helping to win this contract?

Well, I think, Austin, it was the breadth of requirements that we were able to meet, not just what we're putting in space, but a number of performance attributes, such as frequency and latency and the accuracy of our analytics. So, it's a broad set of requirements that we were able to meet in our bid and that's what contributed and drove our win.

Okay, fantastic. Thanks for the color.

Thanks, Austin.

Thank you. Our next question has come from Griffin Boss with B. Riley Securities. Please proceed with your question.

Hi, good morning. Thank you for taking my questions. So, you spoke about having ample capacity. Is there a utilization percentage you could give us for the current constellation?

That's not a metric that we traditionally publish. But as I mentioned, we deployed most of our constellation within the last 12 to 18 months. So, we've got significant capacity available. The other thing I'll note is we've taken a software-first approach, so we can collect once and so many times. And there's also upside as we offer analytics as an upsell with our collection capability. So, we've got a very strong operating model and capacity we need to hit our growth plans.

Got it. Okay. Thanks, Brian. Are you still expecting the same economics for your Gen-3 satellites that you mentioned before, which I believe are between $10 million to $12 million total cost per satellite? I know you've previously talked about buying long lead items well in advance. So, I would appreciate any updates on that.

Yes, you can assume the economics that we achieved in the first gen are aligned and that range is consistent with what we're seeing, and we've got a very good handle on the cost of these satellites.

Got it. Great. Okay, regarding the CapEx guide, is any of the $40 million to $45 million for the year related to R&D that could potentially receive funding from government agencies?

We already have substantial R&D support funded by the government, which is reflected in our professional services, specifically in the engineering and integration segment of our financials. We have been successful in securing significant contracts that help offset R&D costs, particularly in satellites and software and analytics. This has also allowed us to build long-term, close relationships with key customers. This has been a strategy of ours for many years, and it continues to yield positive results.

Great. Really helpful. Thanks for that, Brian. And then last one for me. Can you just help me understand the strategic rationale for your X-Bow investments? I believe you own 13.5 million shares, something like that. Is that an asset that you aim to monetize at some point in the future? Or just any sort of color you can give about how you think about that business would be great.

Yes, that was an investment we made several years ago. We always believe that access to space is an important aspect of our strategy in the market. And so, we were involved in the early days with that company and that's a small element of our balance sheet right now.

Got it. Okay. All right. Well, thanks for all my questions. Appreciate it guys, and have a great day.

Thank you.

Thank you. Our next question has come from the line of Caleb Henry with Quilty Analytics. Please proceed with your questions.

Hi, guys. A couple of questions. First about EOCL, I think you previously forecast revenues of $18 million for 2022 and $36 million for 2023. Are those forecasts still on track?

Yes, regarding EOCL, we started that contract last July, so it's been almost nine months. We are performing well, delivering thousands of images each day and ramped up to that volume within 30 days of starting the contract while meeting all performance requirements. As we mentioned publicly when awarded the contract, we were granted initial services for two years, amounting to up to $36 million. So that is our expectation for this year.

Okay. And then, just a question on launches. You said you have an upcoming Gen-2 launch. Is that the last Gen-2 satellite launch? And are there any other spacecraft launching this year? Or is it nothing until Gen-3 starts in 2024?

Those will be our final two Gen-2 satellites. We have some backups. We haven't made a decision on whether to launch them. As I mentioned, we will start launching Gen-3 satellites in 2024, and we will share more details as we move forward.

Okay. You guys had a nice bump in Q4 margins. Can you comment on where you expect imagery margins to trend in 2023? And kind of is it reasonable to assume like 80% margins this year?

Caleb, this is Henry. As we've discussed regarding margins, it primarily relates to our fixed cost structure when delivering imagery and analytics, mainly due to the automated nature of these processes. This results in very low incremental costs. Referring to the slide I mentioned earlier, we see $47 million in revenue against $13 million in costs, in contrast to last year’s $15 million in revenue and $11 million in costs. From the GSE perspective, our incremental revenue should remain in the high 80s to maybe the 90s; it could even reach 92% for the full year. Once we move past the fixed costs, we’re looking at those high 80s to low 90s for incremental revenue. Overall, when we combine these figures, I believe we can achieve margins for imagery and analytics of over 75%. In 2022, our margins on imagery and analytics were about 71%, or 70.7%, after excluding stock compensation and depreciation.

Okay. And for my last question, I understand that international government was contributing 15% to total revenue. With some of the new awards you've received and the increase in the sales team, what percentage do you anticipate for that in the future?

We don't necessarily guide on the kind of by those regions. But you're right, when you take a look at kind of what we did in 2022, our international governments contributed about 17.5% of our overall revenue. You can imagine as we start winning these big international MOD type contracts, et cetera, that, that percentage will go up. But we're not guiding to a specific split here.

Okay, great. Thanks, guys.

Thank you.

Thank you. At this time, there are no further questions. I'll turn it back over to Aly Bonilla, BlackSky's Vice President of Investor Relations. Go ahead, Aly.

Thank you, everybody. I want to thank you for joining the call this morning. We will be talking with you shortly in the future and appearing at certain conferences upcoming. Thank you very much.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.