BlackSky Reports Mixed Q3, Secures $60M in New Contracts

Stonegate Capital Partners has released an updated coverage report on BlackSky Technology, Inc. (NYSE: BKSY), revealing mixed financial results for the third quarter of 2025. The satellite imagery and analytics company reported revenue of $19.6 million, adjusted EBITDA loss of $4.5 million, and earnings per share of ($0.44), all falling short of analyst expectations. The decline was primarily driven by reduced imagery and software analytical services revenue, which dropped 8.6% year-over-year to $15.8 million, attributed to expected reductions in NRO EOCL tasking and broader U.S. government budget uncertainties. Professional and engineering services also declined to $3.8 million from $5.2 million in the previous quarter due to project timing issues. Despite these challenges, consolidated gross margins remained relatively strong at 65.3%, though down from 70.5% in the prior quarter.

Despite the quarterly setbacks, BlackSky demonstrated significant strategic momentum with over $60 million in new contracts secured during 3Q25, growing its total backlog to an impressive $322.7 million. Notably, approximately 91% of this backlog comes from international customers, highlighting the company's global expansion. Key contract wins included a substantial multi-year agreement valued at over $30 million with a strategic international defense customer for Gen 3 tactical ISR services, along with new multimillion dollar awards from U.S. customers and expansion of space domain awareness capabilities with HEO. The company is poised to launch its third Gen-3 satellite by year-end, maintaining steady deployment cadence toward a fully operational 12-satellite commercial constellation. Management emphasized rising demand for Gen-3 services, including high-cadence tasking and AI-enabled analytics as customers integrate these capabilities into secure, sovereign environments.

Financially, BlackSky maintains a strong position with $147.6 million in cash, restricted cash, and short-term investments at quarter-end, bolstered by net proceeds from an upsized convertible note offering and warrant exercises. The company reported $43.4 million in unbilled contract assets, with $36.0 million expected to be collected within the next twelve months. Management maintains its full-year 2025 guidance of $105-130 million in revenue, adjusted EBITDA of breakeven to $10 million, and capital expenditures of $60-70 million. Stonegate's valuation analysis using DCF and EV/EBITDA methodologies suggests a target price range of $23.26 to $30.40, with mid-points of $27.23 and $25.72 respectively, indicating significant potential upside from current trading levels.