Greetings, and welcome to the BlackSky Technology Q4 2024 Earnings Conference Call and Webcast. At this time all participants are in a listen-only mode. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Aly Bonilla, Vice President, Investor Relations. Aly, please go ahead.

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 recent activities and give a strategic update on the business. Henry will then review the company's full year financial results and outlook for 2025. Following our prepared remarks, we will open the line for your questions. A replay of this conference call will be available from approximately 12:30 p.m. Eastern Time today through March 20. 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. 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 certain statements made during today's conference call regarding our future plans, objectives and expected performance, including our financial guidance for 2025, are forward-looking statements. Actual results may differ materially as these statements are based on our current expectations and are subject to risks and uncertainties. We encourage you to review our press release and other recent SEC filings for a full discussion of the risks and uncertainties that pertain to these statements. BlackSky assumes no obligation to update forward-looking statements except as may be required by applicable law. During today's call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA, adjusted imagery and software analytical service cost of sales, and cash operating expenses. A reconciliation of these non-GAAP financial measures to their most comparable GAAP measures is included in today's 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. Beginning with Slide 3, I'm happy to report that the future of real-time space-based intelligence is now here with Gen-3. On February 18, our first Gen-3 satellite was successfully launched into orbit and within five days entered into initial imaging operations. Initial images from this advanced spacecraft are already within expected quality specifications. This significant achievement represents a profound advancement for BlackSky and our industry, and marks a pivotal step forward in the evolution of our space architecture by introducing very-high resolution imaging to our high-frequency monitoring constellation. This new class of satellite, with its 35 centimeter resolution and other features, such as shortwave IR imaging, improved agility and advanced communications, will deliver image quality comparable to the best in the market. This exceptional image quality now enables us to deliver new AI-derived insights at the speed of conflict, providing our customers with new and advanced forms of space-based intelligence. With this major milestone behind us, we are confident that this spacecraft will deliver the level of performance required to meet the needs of a rapidly evolving market. We are now ready to move forward with a regular cadence of launches to rapidly build out and expand the Gen-3 constellation over the coming months and years. We are on track to make this new capability available to our customers shortly, adding very-high resolution imagery for best-in-class space-based intelligence. Our global customer base has been looking forward to this capability as evidenced by the significant multi-year contracts that are already in place and new contracts that we continue to win. Moving to Slide 4, the speed of deployment and commissioning of the first satellite marks a new standard for the industry, reducing these operational timelines from months to days. This achievement is especially impressive for a new spacecraft of this caliber, which is a testament to BlackSky's technical expertise, architecture, space technology and proven flight experience. The fact that we successfully moved from launch to first image in five days, even with this first vehicle, demonstrates an architectural readiness, maturity, and resilience that will serve our customers with high performance and cost-effective space-based intelligence solutions for years to come. The imagery that we are now producing is well within our expected performance specifications. One of our key strengths is our software architecture and our ability to use automation to efficiently operate our constellation. This capability was instrumental and a critical factor that enabled us to already have the vehicle in fully automated operations, which sets us up to efficiently continue additional testing and complete commissioning operations over the next 30 days. We've already begun providing sample imagery to our customers, which is ahead of our planned schedule. We will continue to improve the already exceptional imaging performance of Gen-3 as we further tune the payload and processing and ultimately lower the satellite to its final orbit. Turning to Slide 5, the imaging performance of the Gen-3 satellite is comparable to that of recently launched satellites from legacy providers. We are redefining the economics of space-based intelligence by producing our Gen-3 satellites at a fraction of the cost of traditional satellites while delivering new mission-critical insights, leveraging a proliferated constellation approach to dynamic hourly monitoring and automated AI. We believe the on-orbit costs of a Gen-3 satellite are between 10% to 15% of on-orbit costs of recently launched satellites from legacy providers. These new economics represent an efficient use of capital, while providing high value solutions to our customers through a proliferated constellation. With this low-cost, high-performance model, we can eliminate the trade-off between affordability and capability, allowing customers to access very-high-resolution, low-latency data without the prohibitive expense of traditional systems. This efficiency combined with our high-frequency monitoring capability is what's driving increased global demand for our services and giving us a significant competitive advantage in the market. Moving to Slide 6, with our first Gen-3 satellite now on orbit and into initial operations, we are on track to begin a regular cadence of launches of additional Gen-3 satellites. Our next Gen-3 satellite is currently in the final assembly, integration, and testing with plans to ship this satellite for launch in Q2. As we have mentioned before, we have a full production line of Gen-3 satellites underway at our production facility in Seattle, and are set to significantly expand our constellation with five additional Gen-3 satellites in 2025. In addition, we are launching another Gen-3 satellite that is for a U.S. government customer. We expect to enter revenue-generating operations and begin offering greater imaging resolution to our global defense and intelligence customers by mid-year. Within the next 12 months, we plan to have a fleet of at least eight Gen-3 satellites. These new satellites will integrate seamlessly into our existing constellation, global ground network, and Spectra software platform, dramatically increasing our revisit rates, reducing delivery latency, enhancing our image quality and capacity, and enabling new AI-derived insights. With each new deployment, we are scaling our ability to constantly improve the value we are bringing to our customers. Now let's move on to some recent contract wins that illustrate the ongoing demand for our imaging services, as more and more customers sign long-term subscription agreements to secure our capacity now and in the future. Turning to Slide 7, I'm happy to report that we recently won a seven-year contract valued at over $100 million with an existing strategic international customer. This contract is a prime example of how our mission-critical services are becoming an essential element of national and homeland security for customers worldwide. To meet their near-term and future needs for space-based intelligence, major customers are entering into long-term contracts to secure these services and guarantee their priority tasking rights in their region. This new subscription agreement guarantees the customer assured priority access to our high-resolution imagery over their region of interest for the next seven years, leveraging our entire constellation of Gen-2 and Gen-3 satellites. By securing annual capacity minimums through 2032, this contract allows the customer to lock in high cadence monitoring services today with the flexibility to adopt new advancements as their requirements evolve over time while providing BlackSky with good long-term revenue visibility. To secure priority access to the constellation, the contract included an upfront pre-payment of $32 million. We are excited to sign this agreement and continue to build on our long-term relationship with this important customer. Moving to Slide 8, we recently announced that we won contracts totaling approximately $20 million to support India's cutting-edge earth observation space capabilities. This is a major new customer and is our initial entry into a growing market in India. These agreements include immediate subscription-based access to our Spectra's real-time AI-powered imagery and analytics services, plus the delivery and support of a high-resolution satellite. Once operational, the dedicated satellite will work with our dynamic monitoring constellation to deliver mission-critical insights at industry-leading speeds. We are honored to be part of India's space development efforts and look forward to a long-term and growing partnership. Turning to Slide 9, over the past year, we continued to make significant strides expanding our customer footprint with the U.S. government and securing major contracts with key government agencies. One of the most notable, is the strong execution we continue to demonstrate supporting the NRO under the Electro-Optical Commercial Layer or EOCL contract. As we finish 2024, the NRO awarded us an additional extension to their subscription service to continue giving them access to our Gen-2 high-frequency imagery services through mid-2026. The contract also included some feature enhancements to the current service level agreement and interfaces to the U.S. government systems. This extension does not include access to our Gen-3 imaging services, which we expect will be added later this year as Gen-3 capacity comes online. Moving to Slide 10, we were awarded a multi-million dollar contract extension to our TACGEO contract with the U.S. government's Defense Innovation Unit. The TACGEO program includes a dedicated Gen-3 satellite as an advanced technology demonstrator to inform future space-based tactical intelligence, surveillance and reconnaissance or ISR capabilities. This contract extension expands on earlier government-funded R&D work and now includes the launch and management of a customer-owned Gen-3 satellite. This contract complements our recent announcements for customer-funded research and development projects, such as the integration of optical intersatellite links to our Gen-3 architecture. Our portfolio of strategic R&D programs enables us to partner early with U.S. government agencies to deliver and deploy cost-effective cutting-edge space-based intelligence solutions for a range of defense and intelligence mission needs. We believe the economics of our satellites combined with these advanced technology programs are highly aligned to support the government's objectives to leverage new advanced commercial technologies under agile and fixed-priced acquisition models. Turning to Slide 11, we are excited to be off to a great start to 2025. We've made great strides over the past year achieving key financial and operational milestones and are now well on our way toward our next phase of growth, building off several major recent achievements. First, the successful launch and deployment of our first Gen-3 very-high resolution satellite marks a major technological accomplishment and a key business milestone. This next-generation satellite represents a leap forward in imaging capabilities and sets us on a path for unlocking our next phase of growth. Second, in the past few months we secured multi-year contracts valued at over $150 million. These recent awards demonstrate ongoing demand and underscore our expanding role delivering mission-critical capabilities supporting customers around the world. Third, in 2024 we achieved our first full year of positive adjusted EBITDA. This significant financial milestone underscores the strong operating leverage inherent in our business and demonstrates our ability to scale efficiently while driving towards sustained long-term profitability. And finally, with these major achievements, we look forward to delivering a strong year of revenues in 2025, as we forecast total revenue growth of 30% over last year. This forecast reflects the strength of our existing contracts and the continued expansion of our capabilities and service offerings. With that, I'll now turn it over to Henry to go through the full year financial results. Henry?

Thank you, Brian, and good morning everyone. In 2024, we continue to make strong progress toward our financial and strategic objectives. Before I begin, let me remind you that references to adjusted imagery and analytics software cost of sales and cash operating expenses exclude stock-based compensation, depreciation and amortization expenses as we believe these measures represent a more accurate picture of our business without having these non-cash items obscuring the underlying performance. With that, let's go through our full year 2024 financial results, starting with Slide 13. In 2024 we generated total revenue of $102.1 million. Our Imagery & Software Analytical Services revenue grew to $70.1 million driven by continued demand from U.S. and international government customers. Professional and engineering services revenue increased to $32 million driven by support provided to strategic imagery and analytics customer programs. Turning to cost of sales, we continue to demonstrate our strong operating leverage in our imagery and analytics business as shown on Slide 14. Adjusted imagery and analytics cost of sales for the full year 2024 remained flat at $13.7 million. As such, we were able to grow our imagery and analytics revenue by nearly $5 million with minimal cost growth. This operating leverage continues to validate our compelling business model for delivering long-term profitability. Let's move to Slide 15 and talk about cash operating expenses. For the full year 2024, cash operating expenses were $64.9 million compared to $63.1 million in 2023. The small year-over-year increase of $1.8 million was due primarily to the integration of LeoStella, which I will speak to on the next slide. Our disciplined cost management approach has us continually looking at ways to further streamline our operations and drive additional efficiencies in our business. This enables us to make strategic investments in our go-to-market initiatives without necessarily impacting our adjusted EBITDA or long-term growth objectives. Moving on to Slide 16, as we announced in the fourth quarter of last year, we acquired the full ownership stake in LeoStella from our JV partner and now own 100% of the company. This was a strategic acquisition that enables us to have full control over current and future satellite manufacturing capabilities, providing better visibility into our supply chain, production processes, deployment schedules and long-term technology roadmap. This control is important as we embark on the rapid deployment of our Gen-3 constellation with a target of having eight Gen-3 satellites on orbit by the end of the first quarter in 2026. By bringing LeoStella in-house and vertically integrating their operations, some costs that would have been capitalized if LeoStella was still treated as a third-party manufacturer now need to be recorded as operating expense. In the past, LeoStella's overhead expenses such as back office support, management oversight, employee fringe benefits, etc., were paid for by LeoStella from payments made primarily by BlackSky to LeoStella against satellite production invoices. The entire invoice payment by BlackSky was capitalized on BlackSky's books. Now, however, as we incur these costs, they are no longer being capitalized and instead must be expensed. Now turning to Slide 17, our full year 2024 adjusted EBITDA was $11.6 million compared to a loss of $1 million in 2023. This was a significant milestone for us as we achieved our first full year of positive adjusted EBITDA. It should be noted that had we continued to maintain LeoStella as a third-party manufacturer for November and December, we would have reported an adjusted EBITDA of $13.4 million for the year. The significant year-over-year improvement of $12.6 million reported was primarily driven by a few key factors. First, continued revenue growth. Second, improved margin performance and third, responsible cost management. We're very pleased with the progress we've made in adjusted EBITDA and look forward to building on the strong performance in 2025. Moving on to our balance sheet, we ended 2024 with $53.8 million of cash, restricted cash and short-term investments in line with our ending cash balance in 2023. Over the next 12 months, we anticipate receiving approximately $28 million in payments as interim milestones on a few major customer contracts are met and expected to be billed. In addition, last month we received a $32 million cash pre-payment related to a recent contract win, bringing our cash balance at the beginning of March to over $80 million. Together with the vendor financing agreement in place to cover several upcoming Gen-3 launches and continued adjusted EBITDA performance, we believe we have sufficient cash and liquidity to deploy a baseline constellation of 12 Gen-3 satellites and drive to positive free cash flow. Capital expenditures for the full year were $50.2 million, slightly below our guidance for the year, primarily due to timing of payments related to our Gen-3 satellite and launch. Moving on to our 2025 outlook, please turn to Slide 18. For 2025, we are forecasting full year revenues to be between $125 million and $142 million, representing a 30% year-over-year growth at the midpoint of our guidance range. This growth is supported by the strong momentum we saw in 2024, coupled with the recent contract wins in early 2025, which provides us with a significant backlog. As of December 31, our multi-year backlog was approximately $261 million, and the contract wins in early 2025 grow that backlog to approximately $390 million. With continuing revenue growth, disciplined cost management, and a full year inclusive of LeoStella operations, we anticipate full year adjusted EBITDA in 2025 to be between $14 million and $22 million. In addition, we expect capital expenditures for 2025 to be between $60 million to $70 million as we ramp up production and launch additional Gen-3 satellites. In summary, we delivered a strong year of financial performance in 2024. We are proud to have achieved our first year of positive adjusted EBITDA and look forward to unlocking new revenue opportunities as our Gen-3 constellation comes online this year. With that, I'll now turn it back over to Brian for some closing remarks.

Thank you, Henry. With our first Gen-3 satellite on orbit and exceeding customer expectations, we are excited to be charging ahead to drive our next phase of growth with a focus on three major initiatives. First, immediately commencing a cadence of Gen-3 satellite launches to build out the constellation and get this capability in the hands of our customers by mid-year. Second, expanding contracts with existing customers to unlock new revenue growth. And third, aggressively going to market to capture new major customers as part of our land and expand strategy. With Gen-3, BlackSky is at the forefront of a new era of space-based intelligence. Combining very-high resolution imagery with our high-frequency monitoring and our industry-leading software and AI capabilities, we are bringing disruptive speed, economics, and insights to customers that will deliver new and advanced mission-critical capabilities in real-time. We are excited with the strong start to 2025 and look forward to an exciting year ahead. This concludes our remarks for the call and we'll now take your questions.

Our first question is from Jeff Van Rhee from Craig-Hallum. Your line is now live.

Hi, good morning team. This is Daniel on for Jeff. Really exciting on the Gen-3 commissioning going up live and quicker than expected. Maybe just talk through any implications of that going up faster than expected in terms of the commissioning and validation. And just, anything you can expand on in terms of it exceeding expectations in quality just in terms of, is that in relation to resolution or agility? Just any other color you have on that.

Yes. Thanks, Daniel. Good morning. Yes, as we outlined, just five days in, we were already beginning imaging operations. And from what we're seeing so far, the image quality is exceptional and exceeding customer expectations. Also, keep in mind we're early on, we still have more work to do in terms of tuning the payload, the processing of the system, and the satellite actually will be lowered into its operational objective altitude, which will further improve imaging resolution over the course of the next weeks and months. The vehicle is performing exceptionally well. The agility is great, which means it's going to be an exceptional collector for our customers. And I think, Daniel, this is really a testament to a very mature architecture that we have. And because of the significant achievements we've already been able to meet on this timeline, we are moving ahead with our next Gen-3 satellite, which is in the final phases of testing and we'll expect to launch that in the second quarter. So, everything's looking great and we're moving full speed ahead.

Yes. Actually, that's a great segue, Brian, to what I was going to ask next is, just in terms of the accelerate - presumably an acceleration and launch cadence with that validation. With the $60 million to $70 million in CapEx, should we interpret that as that was sort of the plan all along, or is that really sort of stomping on the gas here with the validation that it's working? That's sort of an acceleration in getting the constellation up as opposed to previously planned?

Yes, that was the plan all along. Obviously, we wanted to be a little conservative with the first one, but as I mentioned, we've got a full line of these in production and we've lined up launches through our vendor financing elements. So, this level of CapEx for this year was our plan all along. Henry, I don't know if you want to add to that.

Yes, Daniel, as you know, we've always been saying we're going to get to six by the end of this year. We are pulling to a little bit faster into this first quarter of next year, which does have some CapEx this year, but it's all generally part of our plan.

Okay, that's helpful. And then just one last question on the Gen-3 in terms of, you mentioned optical interlinks. I think I had been - just maybe clarify, are you ultimately pursuing optical or radio interlinks for Gen-3? And then I take it that neither of those functionalities is on Gen-3 now, but that's in the roadmap for the coming ones.

Yes, the current Gen-3 has already some communication capabilities for on-orbit. It does not currently have optical. We are, as we've mentioned in prior calls, being funded under a number of R&D programs to explore that type of capability. That type of communication capability will likely be integrated into a future tranche of Gen-3 satellites.

Okay. And then just the last question for me. Just on, jumping back to Luno A, is there any sense at this point of how that will ramp in terms of the task orders that you're starting to see come through, or is it still too early to gauge the magnitude of that?

It's still a little early. We are encouraged we're starting to see task orders move through the system. So it is a new program. Sometimes those new programs take a little bit of time to ramp-up, but we're starting to see some movement.

Thanks and congrats on the launch, guys.

Thanks, Daniel.

Thank you. Next question is coming from Greg Burns from Sidoti & Company. Your line is now live.

Good morning. When we look at the mix of revenue this quarter, the imagery piece is a little bit lighter than we were expecting. On the flip side, the professional and engineering services was higher. What was holding back imagery revenue growth this quarter? And when we look into the guidance for next year, what does that consider in terms of the mix of revenue and that 30% revenue growth?

Yes, thank you, Greg. That's a good question. I think the largest impact to imagery and analytics last year was the transition of the NGA EIM contract into Luno. We had been performing extremely well in the years prior to that and driving revenue growth through that contract. The transition to Luno took longer than expected, and that transition from EIM had a slight impact, that's the largest impact to that line last year.

And in terms of the guidance. How should we think about - what is the mix of revenue that you're expecting next year? Like, what are the growth rates you're looking for on imagery versus engineering?

Yes, I think just as a reminder, some of these engineering projects tend to have quarter-to-quarter variability. So you've seen that consistently over the last couple of years. We still have a very strong amount of revenue coming from that professional services line. I think as you see Luno ramping in the first half of the year and we start delivering Gen-3 capacity, you'll start to see - we expect to see the improving performance in that part of our business. It's also important to point out that those professional engineering services are tied to our imagery and analytics customers, which have subscription agreements. So these things are linked and early professional engineering activities generally tend to be driving towards later imagery and analytics revenues. These are long-term, very sticky contracts.

Thank you.

Thank you. Next question is coming from Josh Sullivan from The Benchmark Company. Your line is now live.

Good morning.

Good morning, Josh.

Good morning, Josh.

Just as far as the LeoStella overhead impact, just how do we think of that margin impact long-term or maybe what should the ramp look like over the next two years as that's absorbed?

Yes, I think, Josh, I'll throw it over to Henry, but the - we've really only been operating that company now for a few months. We expect to gain some operational efficiencies there over time as well as continued improvement in our overall cost and economics related to our satellites. And so it was a very strategic acquisition in the sense that we now have control over the entire operation and high visibility into the supply chain. And also, as importantly, the technology roadmap that's driving our future space capability. So net-net, you're seeing some near term impacts as we absorb expenses but long-term this was a really good move. So, Henry, do you want to add any more color?

Yes, just kind of getting to the specifics, Josh, as you kind of map it out. As I said in the remarks, the primary difference in the growth in expenses in 2024 versus '23 of about $1.8 million related to the integration of LeoStella in the last two months of the year. Those are costs that are actually, had we not integrated them, they probably would have - they would have been categorized as more CapEx, because LeoStella's would have incurred those costs, but they would have recouped those costs in the invoices they sent to us. So we've got a little bit of a geography difference on the financial statements going from OpEx to CapEx. Now with that said, as we go through the full integration, we do expect to be able to kind of optimize our operations and streamline and kind of bring those things back in line, so we end up getting some real synergistic savings in here as well as the strategic benefits that Brian was just mentioning.

Got it. Okay. And then maybe just switching over to kind of some headlines just around intelligence sharing. Does that impact any contracts in your view?

We're not seeing that. I think we're just seeing growing demand both in the U.S. and internationally. As a reminder, we - these are long-term subscription contracts which reflects the needs for our customers to have access to our capability on a daily basis. And so that's the nature of this industry and this is an exciting time for us and we're seeing that demand reflected in the large number of contracts, these multi-year agreements, and the continued expansion with these important customers.

Got it. And maybe I'll just ask a different way, are you seeing any difference in contracting since the new administration is coming in January, obviously more an emphasis on commercial-based models? Just curious, what you've seen since January in the market.

Well, it's pretty early. I think we've secured a lot of long-term contracts, which has us in a great position. We are very excited that BlackSky is really ideally suited for where the government wants to go long-term. And that's leveraging cost-effective solutions that are delivering significant value, leveraging technology and other capabilities. We are really well positioned to capitalize on that as that moves out over time.

Got it. Thank you for the time.

Thank you. Next question today is coming from Chris Quilty from Quilty Space. Your line is now live.

Thank you. So Brian, I guess first you were right, I was wrong. Five days is impressive. Congratulations. Henry, I know the guidance.

Thanks, Chris.

I know. Your guidance for next year obviously implies whatever step-up you may be seeing from the EOCL contract as you bring more Gen-3 online. But can you remind us like is that contract, and I know we don't know the details of it, but as we model out, is it - do the revenues step up associated with Gen-3 sort of accrue on a satellite-by-satellite basis, i.e., there was a nice steady ramp in the revenues with that or are there sort of stair steps built into it that trigger large step-ups? And I'm just trying to figure out the revenue progression as I look out into '25, and then how that progresses out into '26.

Yes, Chris, maybe.

How much of the contract value might we have - step-up value might we have captured?

Yes, thank you, Chris. It's Brian. I think there's a couple of things. We've talked about this in the past. We are selling our services under service level agreement for the entire constellation. So it's not on a satellite-by-satellite basis. The way the contract is structured is like a set of layered subscription services. Right now we have a base subscription with the U.S. government, that as we announced just got renewed out into 2026 for Gen-2. That's going to continue through '26. The government can award us additional subscription packages that are already in the contract that layer on top of that. That's where you begin to see a step-up as those additional layered services come online. As we bring Gen-3 capacity online, we are expecting to see a step-up of additional packages later this year.

Great. I have to ask the question, I mean with the DOGE cuts going around and you've got some at least exposure on the NASA side, where do you think you might have any exposure from or your customers might have exposure?

Right now, from a regulatory perspective, we have everything we need. Obviously, it's a fluid situation. So we're monitoring that very carefully as normal course.

Got you. And I guess final question just on the margin profile, looking at 2025, obviously there's an assumption of both costs rolling off or rolling out of CapEx into OpEx as satellites are brought online. But are there any other large step-ups in costs we should model for '25?

No, Chris, we've been consistently holding our costs fairly flat as a relative to our revenue growth. And so you can expect that going forward this year and next. We're just at this point going to continue against that model and the operating leverage we have and drive higher revenues and deliver that to the bottom line through increased EBITDA performance.

Great. And thanks for the higher granularity on the launch plans. That's helpful for modeling purposes. Appreciate it.

Yep. Thank you, Chris.

Thank you. Next question today is coming from Edison Yu from Deutsche Bank. Your line is now live.

Hi, good morning. Thanks for taking our questions. Just first on the growth, 30% for 2025, obviously an acceleration. Any way to dimension how much of that is new contracts versus existing?

Edison, good morning. Thanks for the question. Yes, a lot of the growth this year is coming from expansion of existing contracts. We are expecting to begin to ramp new customers later in the year as Gen-3 comes online. But if you think about our recent contract wins, winning Luno is yet to really ramp. We built significant backlog last year and over the course of the last few months, which, there's well over $100 million in backlog. That gives us very strong visibility into this growth we're forecasting for '25.

Makes sense. And then separately on the capital needs, if I kind of do some rough math, I guess the liquidity in some of these payments, you're getting to maybe over $110 million. Do we need to raise any more money to ensure some type of cushion going forward on Gen-3?

Edison, this is Henry. As we said in the remarks, when you take a look at the liquidity we have available, the cash on the balance sheet, as of early March, it was over $80 million. The financing we have for some of our launches from our vendor and also from the assets we expect to collect, and in addition to that, positive adjusted EBITDA performance, we believe we've got sufficient liquidity to get to our baseline constellation of 12 satellites. I think we're in pretty good shape right now. I believe we're able to execute against our plan with what we have. We could always be opportunistic, but I mean, I think we're in a good shape.

Got it. And just one long-term, one. As you think about Gen-3, it seems to be coming on a bit faster. Do we have any sort of confidence or do we have maybe line of sight into maybe the phasing of how fast we can recognize the contribution from Gen-3?

Well, I think we're seeing significant demand, Edison, and so it's kind of reflected in what you're seeing with these long-term contracts with the EOCL and the international agreement we just signed, remember we signed a very large international agreement last year or the year before, which is worth over $150 million. So I think we're excited that as we add more and more of those customers over time, we're going to begin to increase that backlog, those multi-year agreements and a lot of that future growth is ready to be unlocked as we get these Gen-3 satellites online.

Okay. Thank you.

Thank you. Next question is coming from Jaeson Schmidt from Lake Street Capital Markets. Your line is now live.

Hi guys. Thanks for taking my questions. Just curious, with Gen-3 contracts, if you're seeing sort of that price lift or lift in overall contract size that you had expected to see from this new capacity?

Yes, I think the growth we're seeing is in line with what we expected. This is a significant new capability, when you're combining very-high resolution with high-frequency and low latency delivering of AI-enabled insights. This is exactly what the market is looking for, right now as real-time intelligence is critical. This new capability is very significant to our customers and we're seeing them sign-up for long-term agreements to ensure they have access to it for years to come.

Okay. And then just as a follow-up, along what you just said. Are most of your conversations today with customers for Gen-3 capacity or do you still have a lot where Gen-2 capabilities are good enough?

Oh, Gen-2 is - obviously you've seen our growth from Gen-2 over the last couple of years and so there is significant value in Gen-2 and they're continuing to buy that. That's reflected in the U.S. government's extension of our EOCL contract into 2026 for that capability. The high-frequency, low-latency that we can offer through that constellation is an extremely important capability. We're seeing customers continue to buy that, but they're also excited about what happens when Gen-3 gets integrated over time.

Understood. And then just a final question and I'll jump back in the queue. Going back to the previous questions on kind of professional services and sort of that big jump in Q4, when we start to think about 2025, do you expect professional services revenue to be up from 2024?

Jason, this is Henry. In Q4 of 2024, we had the delivery of a feature set, if you will, that's going to enable one of our subscription customers to utilize their imagery more effectively as they go forward. That actually is highly supported by a long-term customer base there. That's the reason why we had that is for some work that we've been doing and been able to leverage. As we go forward, we've always said that we would expect to maintain some professional services and engineering services because that helps us get the long-term subscription contracts, and we would expect to have some growth, a little bit of growth in that as well. We would expect that imagery and analytics will grow faster in the long-term, but in 2025, you're going to kind of maintain a mix here.

All right, perfect. Thanks a lot guys.

Thank you. Next question today is coming from Tim Horan from Oppenheimer. Your line is now live.

Hi guys. So how much more can the imagery improve from where it's at now in the orbit? And can you just update us, how much faster you're delivering the images now? And maybe just on the AI front, are you seeing major improvements in your ability to analyze these images?

Yes, Tim, as I mentioned, it's pretty amazing that within five days we're producing images of this quality. We will continue to tune the payload and the processing over the coming weeks and as we will lower this a little further to improve the resolution. So it's already exceptional, and it will just get better from here. As I also outlined in my remarks, the Gen-3 satellites integrate seamlessly into our existing ground and software capabilities. So the speed of delivery, latency, and the exceptional customer experience begins to deliver right out of the box. We're in great shape there. And then the AI capabilities, as we're just still early in evaluating these images, we are working the AI online and parallel. As we expected, the value we're going to be able to pull out of these images at this resolution, combined with our AI capabilities, is going to be a really important capability for our customers. We are really excited for what we're seeing already there.

And if the demand is there, will you go beyond 12 satellites? Potentially, how many can you go to longer term? And are you starting to work on Generation-4 satellites at this point?

Yes, I think we - Tim, our model is, we would expand the constellation over time as the market demand meets. We've always been targeting about an hourly revisit frequency capability. That's dictated the size of this constellation. As customer demand increases, that's a great part of our model is that we can add incremental capacity as we need it without having to overbuild. We're excited about that. Of course, we are a space technology company, so we are continually always investing and looking ahead in software, AI, and our space capabilities.

And just, Henry, just two financial questions for you. So what do you expect the LeoStella impact to be for '25? Sorry, I got lost there with the numbers a little bit. And then can you give us a sense of how revenue paces throughout the year or I guess what should we be kind of expecting in the first half versus second half?

Sure, Tim. I mean regarding LeoStella, as I've said, in 2024 we had about a $1.4 million - I'm sorry, about $1.8 million increase in costs over 2023, primarily driven by the integration. That is a movement from what would have been CapEx to what is now OpEx due to the ownership structure. That was for the time period in November and December. We expect over time that we'd be able to continue to get efficiencies out of that and bring that in line. From a cash perspective, it's more of a geography placement as to where it shows up in our financial statements as opposed to an impact on cash. On kind of the revenue ramp, we expect imagery and analytics to ramp more in the second half of the year as we get more Gen-3's up. The first Gen-3 is great and shows the capabilities. We need to be able to get to a minimum viable offering with about four satellites, which would be expected to start sometime in the early second half of the year.

Thank you.

Thank you. Next question today is coming from Scott Buck from H.C. Wainwright. Your line is now live.

Hi, good morning guys. Thanks for the time. Brian, I guess a bit of a follow-up on one of the earlier questions. As some of your customers lock in this longer-term capacity, do you have the ability to start raising prices on those that are a little longer to wait or do you go straight to trying to build out more capacity?

Well, I think, Scott, the way we're seeing it is we're able to deliver - Gen-3 delivers a lot more value to customers with the improved resolution. Also, keep in mind there's a shortwave IR capability. This enables us to grow our accounts over time. The economics are compelling but also are in line with our business model. Where we're excited is our ability to deliver higher value services cost-effectively to customers that are interested in long-term engagements.

Okay, that's helpful. And then just my second one. In terms of CapEx and satellite or Gen-3 satellite production, any risk that potential tariff talk could increase the CapEx requirements? I mean, are you sourcing from anywhere outside the U.S.?

We don't. We understand our bill of materials on these satellites. We have long lead capability already in place and so we're not seeing that there will be an impact.

Good morning and thank you for taking my questions. Just wanted to start with the impressive backlog increase. Would we expect to see a rapid burn of that backlog once you hit any early Gen-3 milestones? Is there a critical mass that we should have in mind of satellites up that maybe start a burn in that backlog?

I don't, we're not seeing that there will be a critical mass of satellites that drive a significant step-up. But maybe I think, I'll throw it over to Henry, because there is a positive implication relative to some of the unbilled aspects of our balance sheet.

Yes, sure, Dave. When you take a look at our backlog, with the - what we had at year end and with the contracts that we just were awarded here in the first two months of this year, our backlog would stand at around $390 million in total. Of that $390 million, about $100 million would be expected to be realized here in 2025. That gives us a pretty good base to be working off of. The rest of that backlog will go out in '26, '27, et cetera. We're feeling pretty good about where that is and how that ramps up.

Understood. That's great color. Thank you. And then just one more for me. With the contracts you've been on with your Gen-3 satellites, aside from pricing, do they have any favorable milestones or terms that you can request compared to some of the Gen-2 satellites contracts?

Well, I think the - well, I think first off we are seeing customers wanting to lock-in long-term. The $100 million contract we just won reflects that. Our customers are also willing to sign-up for guaranteed annual minimums related to that. In that case, particularly in regions of high demand, you saw under that contract customers willing to pay upfront to secure their priority rights, tasking rights in those regions. What you're saying reflects the demand for Gen-3 and the interest of customers signing up for that long-term. I'll also say we view the relationships we have with these customers as part of a long-term relationship and things that we're doing in places like Indonesia and now India, tied to hybrid solutions is a very exciting opportunity for us. We - the way to think about this is we are aligned with these customers for a very long journey to grow and accelerate their space-based intelligence capabilities over time.

So thank you and good luck in 2025.

Thank you.

Thank you. Our final question today is coming from Austin Moeller from Canaccord. Your line is live.

Hi, good morning, Brian and Henry. Just my first question here. If we were to compare and contrast the LeoStella acquisition and integration to Maxar's acquisition of SSL, would you consider the key differences there to be you're primarily building your own satellites at cost and the satellites will be much complex - much less complex and time-consuming to build kind of similar to Spire's vertical integration?

Yes, I think the way we look at LeoStella is it's not an acquisition to get into the hardware business. Gen-3, as you can see, is a strategic capability. Having the ability to control cost, drive efficiencies and produce those at scale is really the main driver behind that. We did not acquire that business to go into the lower-margin hardware business. This is about driving high-margin imagery and analytics services through a disruptive space capability that we're seeing in Gen-3.

Great. And just a follow-up, if we think about what you might do for Gen-4, do you have any thoughts on very low earth orbit satellites and sort of the puts and takes of that in terms of how long the satellites are able to last versus the performance?

That's a good - it's a good question. I'll say a couple of things. I think we have a lot of experience in kind of where you want to ideally operate up there, and you're seeing that reflected in Gen-3, when you balance performance versus risk. We are continuing to invest and look at where we're going in the future. But right now, we got the first satellite up. We're going to focus on getting more and getting that into service.

Thank you. We have reached the end of our question-and-answer session. And ladies and gentlemen, that does conclude today's BlackSky Technology Q4 2024 earnings conference call and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.