Also keep in mind, there is still a lot of our customers that also use Gen 2. So what you saw happening here was new customers. As we've been saying, we had a number of customers that last year started with some small pilots that quickly went to seven and eight figure subscription deals. So you're seeing those kick in. We're seeing other pilot programs come online, and we're also seeing other customers, existing customers, starting to expand their contracts and transition into Gen3 services. So we're seeing a lot of momentum and opportunity across multiple vectors for driving growth around Gen3 services.

Great. And Henry, it looks like that NRO contract is now up around like $150 million. Can you remind us how that's going to flow through the P&L? And, you know, also, is it reflected as part of the backlog?

Yeah, Chris, let me take that one. I think when you look at that broader number, it's the total amount of contract dollars that we're getting through that contract, which consists of uh the base subscription for eocl imagery services as well as things like um the aros development uh which is more of a which is more of a r d program um rather than than a subscription business so i just want to be clear that when you hear that number that's a total number at that from from a point of year to date so um and then how that revenue um gets applied to the business is the the eocl subscription revenue falls under the space space intelligence business and right now the aros work um you know goes into the advanced technology program line and that's a contracted date number gotcha and so when would we see that ramp and would it shift would it stay in the advanced technology programs we're anticipating that it'll shift into mission solutions um and it will also uh it will also as we build out the commercial aspect of that drive revenue in the space-based intelligence business as well. But I think we're seeing opportunities for Aros where there is strong interest both here and internationally for a government-owned commercially operated model for Aros, which would be part of the mission solutions offering.

But then we see a pure play commercial imagery service for those type of mapping capabilities that would come off of a baseline commercial constellation gotcha and so the uh obviously you had a design for the system you had a customer who stepped in and said you know we like this and and we'd like to do certain things with it does that imply that there will be two designs you know a specific one for that customer and then another baseline that you'll operate or is it same design?

Same design. Yeah. And Chris, just to be clear, the reason we're moving forward with this is, as I mentioned in my remarks, there's a lot of the mapping capacity in the market right now comes from a handful of really large, expensive satellites that are coming out of service in the next couple of years, creating a gap. So customers have been coming to us seeking this solution so we've optimized the design to be a single design to support the commercial and the government requirements and i should also add it's really building on the on the advanced and superior technology we have in gen 3 and so that's giving the customers a lot of comfort in that gen 3 obviously is a best-in-class space vehicle built on a long heritage of small satellite capability that we've developed here at Black Sky. So that's giving us a significant competitive advantage.

Your next question comes from the line of Jeff Van Rie from Quegg Hallam Capital Group. Your line is now open. Please go ahead.

Yeah, great. Thanks for taking the questions. Good morning, guys. This is a few for me, maybe.

Brian, last quarter you mentioned you had a couple dozen Gen 3 six-figure pilots working through. and just curious if you can quantify to the degree that that pipeline has expanded evolution there paths to full deploy just maybe a little more color along that sort of set of metrics would be nice yeah jeff i think the way to think about it is you know we've we've been continuing to expand the pilot projects uh you can see from some of our announcement those pilots are transitioning to seven and eight figure subscription contracts we've got a very good pipeline pipeline of customers that are moving through that funnel. So, I mean, without getting into quantifying it, it's, you know, there is a significant number of customers that are looking at the system and trying it out. And then what we're seeing is a very high conversion rate of those customers into the next phase of contract growth.

So maybe just one follow on there. If you Look at the very large portion of the pipeline, very large deal portion of the pipeline, primarily sovereigns. Just any color on the evolution of those deals and how changes and how those deals are moving forward, things they're focused on, competitive, you know, landscape timing, that kind of thing. Just maybe an update on the sovereign slash very large deal portion.

Yeah, I think what we're seeing, Jeff, and I think it's really, as I mentioned in my remarks, the exceptional performance of Gen 3 as a best-in-class space vehicle is a competitive differentiator. And as we bundle that with the very high-resolution imaging services from our Gen 3 constellation, it's a very attractive offer for these customers that are seeking to accelerate their capabilities. So what we're seeing is because of that success, we're seeing a growth in the pipeline. And that is also triggering, you know, initial subscription contracts, and it's driving expanded discussions on how to accelerate their programs with Gen 3 satellites so we can take off the production line.

Yeah, and that's, again, Jeff, it's another driver to why we have invested in the inventory for the 20 satellites that I mentioned. yeah yeah makes sense and and congrats on the gen 3 by the way the imagery you guys are sharing is just uh is fantastic um one last for me on uh space domain awareness just kind of curious um you know a lot of folks talking although it's it's it's very seemingly misunderstood in terms of the in-space warfare aspect and just awareness of who's where doing what uh you you made a couple announcements about some of the things you're capable of and starting to do there just any sense of scope, timing, when do you think that'll turn into anything material?

Yeah, I would say we're early days on that. We have an architecture that supports what we call non-Earth imaging. You've seen some of that come out of Gen 2. It's extremely compelling and high performance, and we're able to support those applications with our real-time architecture. Gen 3 will be able to provide that capability as well. We have been receiving funding under some of our advanced technology programs to advance the automation of this. So we have some incremental programs and revenue moving through the system. And it's still a lured, but we're going to expect that to grow.

Okay, great. I'll leave it there. Congrats, guys.

Thanks, Jeff.

Your next question is from the line of Timothy Horan from Oppenheimer. Your line is now open. Please go ahead.

Hi, guys. A couple of questions. And the first one's kind of tied together. Can you talk about how rapidly your AI analysis is improving and your time to delivery maybe where you were a year or two from now and how are you improving on that? And can you just elaborate a little bit more on these new space-based systems? What's your skill set that's unique and customers are looking for from you? Just any more color on your various entry?

Yeah, maybe I'll start with your second question first. I think you're obviously seeing the performance of Gen 3 is exceptional, and customers are seeing that. It's exceeded expectations right out of the gate, and the on-orbit performance of that has emerged as a best-in-class space vehicle. The 35-centimeter image quality for this class is exceptional. And you can see that being reflected in the growth of our revenue and earnings on the bottom line. I think what's important to understand is we were able to achieve this level of performance and technology lead right out of the gate, because this is the third generation satellite for us. And we're building on significant on-orbit experience and a strong technology heritage for satellites of this class. um you know if you look back we haven't had to launch tech demos to prove out the technology our satellites have worked right out of the box as expected um you know there's there's others in the market that have not internally built a satellite of this class before um and when you look at the technology that's going into orbit there's a huge difference in image quality and this is the part of the system that matters most to customers as we're in a time when tactical mission capability is critical. Also, when you kind of look at the cost performance perspective of this, compared to the larger, more expensive satellites, we're offering really significant value at an attractive point for customers, which is also contributing to the performance of Gen 3. I'd say this technology heritage also extends into AI. We started investing in AI 10 years ago. It's been built into our platform from day one, and we deliver AI-enabled intelligence in real time. So as the data is coming off the satellites, we're able to bring that directly to the customers without having to bring it to the ground, process it for hours, and then deliver it to customers. So we're scaling our AI capability in multiple directions. We are improving the speed of that capability, and at the same time, we're improving the quality of the algorithms and the performance of the insights that we can derive off of satellites. The exceptional performance of Gen 3 gives us another competitive advantage because the very high-resolution capability when applying AI algorithms delivers exceptional insights and other analytic products that were more difficult to achieve with lower-resolution satellites. Now, I also want to add that this technology baseline translates into the competitive advantage for our mission solutions business where customers can try all of this out firsthand as they're developing their acquisition program. So I think we built a very strong technology-based, experienced team, and, you know, we're on our third generation of this, and that's being reflected in the leadership we're bringing to the market.

And then lastly, you know, we hadn't really ever modeled in Sovereign all that much or these new space-based systems. Can you talk about what percentage of revenue these two could represent if we're going out, you know, five longer term? You know, just any sense?

Yeah, look, I think, you know, right now, space-based intelligence services, the high margin part of the business is about 70% of our revenues. Obviously, that's going to continue to grow. I think as we get into next year and the year after and we start to capture some larger mission solutions deals, you know, you'll see some of the growth in that business. But I think the goal is because we're bundling these things together, we're going to be able to maintain a very high gross margin performance across all three elements of the business.

And that 70%, will that, you know, be maintained or these other businesses will be growing a lot faster? Maybe that drops to 50%.

I don't want to get into forecasting that, but I think, keep in mind, these mission solutions tend to be very large and they get delivered over a couple of years. So, you know, those are lumpy businesses. So, you know, we'll see how that plays out. But we expect all of, as I mentioned in my remarks, all three aspects of our business we expect to grow. And as we win mission solutions deals, you can expect there is going to be some large lumpy ones that are going to create some quarter over quarter variability.

Thank you. Your next question comes from the line of Austin Muller at Canaccord Genuity. Your line is now open. Please go ahead.

Hi, good morning, Brian and Henry. On the mission solutions, are those all sovereign governments, or are there potential U.S. intel agencies that would be interested in a responsive launch of a ISR satellite?

We see opportunity both within the U.S. government and internationally. I would say the strongest demand right now is internationally. But obviously, we do a lot of work with the U.S. government and we feel there's some emerging opportunities there.

And within the current quarter, are you seeing the most meaningful budget dollars from the U.S. customer coming out of the fiscal year 26 budget as people are trying to spend the appropriated dollars before the end of the year?

Or are you also starting to see funds from reconciliation bills like Big Beautiful Bill that had some space funding? um i i think you know that's all still playing out i think we're seeing some of that we're seeing all that flow through multiple through multiple types of contracts um you know eocl obviously uh continues at the current levels for us um you're seeing an uptick from us in us government funding for advanced technology programs uh both for aros and our next generation payloads with advanced segmented optics capabilities so and then of course we're pursuing a number of other opportunities that leverage both of those things so uh the budget's still playing out even though it's just it's getting late in the year um but we're we're capturing what we planned excellent i'll pass back there thank you Thanks, Austin.

Your next question is from the line of Sheila Kayaolu from Jefferies. Your line is now open. Please go ahead.

This is Adam Samuelson on for Sheila. Good morning. I guess the first question is in the space-based intelligence and AI, just trying to get a better sense of how much of your customer base has already converted to Gen 3 versus is kind of, or what's that mix looked like today? Just thinking about the potential kind of revenue uplift that would come as you see more customers switching to the Gen 3 offering?

I think almost all the customers we have, the large ones, are using both because they're taking advantage of the constellation of Gen 2s and Gen 3s to get this very high revisit, responsive, tactical capability. What we're seeing is that, you know, as they start to use Gen 3 in their operations, that, you know, they're going to be shifting to higher levels of Gen 3 tasking over time, which is a win-win in the sense that, you know, they'll start getting high-valued, very high resolution imagery um um as a higher value product for us so um that that that that helps drive our earnings growth so um i think i think at the end of the day uh we've got a very compelling offering with uh the constellation we have and as we add more gen threes that's going to

keep getting better okay and then just a quick follow-up just in the in the quarter and prepared market to 150 percent in the international revenue growth um i know the filings you provide your north america revenue not so it's not quite necessarily international but if international is growing 150 and presumably most support them also north america is the u.s just why the u.s business was flat maybe slightly down in the quarter um is that correct or am i missing something there yeah i would say i would say what we're seeing in the u.s is as what we expected primarily

driven by eocl um um and that's as we've said in the past that last year um you know we assume this year last year's run rate so um so you know i think you're seeing that reflected in the quarterly numbers henry do you have anything you want to add to that yeah i mean adam would if you take a look at the Q2 this year versus Q2 last year, you may recall last year we had some adjustments on the U.S. spending between the second quarter and third quarter.

And so in the second quarter, you still had higher U.S. government spending. And so it's the growth from the international in that quarter to the growth in international this quarter that we were comparing.

Okay, got it. That's very helpful. I'll pass it on. Thank you.

Your next question is from the line of Greg Pendy from Clear Street. Your line is now open. Please go ahead.

Hey, thanks for taking my question. Just want to shift gears a bit to the balance sheet. You know, the ATM gave you, you raised $150 million. You said total liquidity is at $325 million. And that stacks against CapEx of $50 to $60 million. So just wondering, you know, how should we think about that? I think in the last quarter, you said Eros could be a CapEx light strategy. with partnerships? Does this give you flexibility to possibly just do this alone? Just kind of wondering how we should think about the strong liquidity position you're on now.

Yeah, I think the way to think about it is we had a good opportunity to raise that capital to strengthen our balance sheet and improve our cash position. And it's there for if and when we need it. We are employing a CapEx Lite strategy for Eros. As you can see, we want an eight-figure contract from a customer to essentially fund that program out of the gate. And so, yeah, that $150 million is there opportunistically, and it's there if and when we need it.

Understood. Thanks. Your next question is from the line of Ryan Koontz at Edom and Company. Your line is now open. Please go ahead.

All right, thanks. Yeah, just reflecting on, you know, your progress in your non-traditional U.S. government business, maybe share a little more color in your differentiation on, you know, the mission systems and kind of operations support that you've got there for onboarding new customers and also reflect on maybe changes you've made, investments in go-to-market that give you reach and how do you plan to, you know, support these sort of customers as you continue to scale, in an OPEX efficient way. Thanks.

Yeah. As I said before, our advantage in the mission solutions business is the exceptional on-orbit performance of Gen 3, combined with the unit economics of that platform, and our ability to quickly pull those satellites off the production line and put that capability, provide a high level of certainty to customers, both from a cost, performance, perspective to meet their requirements. Also, you know, we can bundle that with our commercial services, which give them immediate additional capabilities and the opportunity for them to test the system and try it out firsthand with mature technology and mature operating capabilities. So that's a competitive advantage for us in the sense that our software platform, the real-time capabilities with AI is highly mature and works operationally at scale. And the satellites are best in class. So that combination of capability is creating a number of opportunities for us.

It's helpful. How about investments in go-to-market? on that line? How does that scale going forward? Do you feel like you have the resources you need and how has that evolved over the last several quarters?

Yeah, we have been investing in sales and marketing. We have been investing in the scaling of our sales organization, including our partner network, which is giving us scale globally. So we're making very good progress from that perspective um and again you know we started focusing on this international strategy years ago and you're seeing the results that's helpful thanks a lot your next question is from the line of greg burns at sidoti your line is now open please go ahead morning um what is the size of the mission solutions backlog uh greg we don't we don't break that out we just provide a single number for the total business okay um and then we saw a strong kind of unlock

from gen 3 this quarter with a big step up in imaging revenue um is there another like unlock to happen or now we had a run rate like do you get up four more satellites and there's another unlock or does it kind of build incrementally from this level now that um you have you know you know, for gen three operational now, like how should we think about kind of the revenue progression?

Yeah, I think we've established a very strong base, which is to build and grow from as a strong subscription base. So, you know, the way you should think about it is that we'll start, you'll start seeing that incrementally grow. um both top line and bottom line uh quarter over quarter um we will put additional gen 3 satellites on orbit um which will improve the service and the level of capacity in different regions so that will contribute to the scaling of that business uh but you should think about where we are now as a as a solid baseline of subscription revenue and as we mentioned at this $100 million run rate, which gets a subway hurdle, a revenue hurdle, which is driving bottom line performance for every incremental dollar we generate from there going forward.

Okay. And what is the NRO's current budget for broad area mapping? How much are they spending a year currently on that?

Yeah, well, that's something I can't share in public.

Okay. And do you have a sense of the NRL budget, like where that's landing? Is funding getting restored to fire levels? Do you have any sense of maybe that revenue line item stepping back up to where it was?

We're seeing how that manifests in 26. We've got good visibility of that. 27, it's still unclear. I just think from our perspective, we assumed the current levels from last year. But we are seeing growing interest in adoption on Gen 3. And they're very interested in that capability. and we think that's going to drive some growth going into 27.

Okay, great. All right, thank you.

Your next question is from the line of Dave Storms at Stonegate. Your line is now open. Please go ahead.

Hey, guys. The CapEx guide was obviously unchanged.

You started investing in AI like 10 years ago, but is there anything about the broader AI infrastructure buildout that's causing, you know, any constraints or higher costs your competition for ai talent you know anything like that you're navigating not really i think um as you said we started investing in this 10 years ago both with technology uh scalable infrastructure and talent uh we're able to acquire the talent we need um and you know i'll say we've we have been able to build quite a bit of efficiencies into our AI processing. We are really set up with our architecture to process where we can generate revenue to minimize our cost and maximize the value we're delivering to customers. And so I think we're in a great spot and the expansion of our AI capabilities is baked into our model.

Got it. That's helpful. And then maybe one quick follow up. I know you can't share specifics, but broadly, you know, how do you think about M&A? Are there any capabilities or assets you'd consider adding through another kind of Leo, Stella type transaction?

Yeah, Dave, we're always looking at opportunities. So that can grow our business or improve our competitive posture. So whether that's in space or in ground and AI, or through expanded customers' reach. We look at those things all the time, and if we see something that's interesting and makes sense, we'll take a look at it.

Hey, thanks, guys. Appreciate it.

Thanks, Dave.

There are no further questions at this time. We've reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.