BlackSky Reports Second Quarter 2022 Results

About BlackSky Technology Inc.

BlackSky is a leading provider of real-time geospatial intelligence. BlackSky delivers on-demand, high frequency imagery, monitoring and analytics of the most critical and strategic locations, economic assets and events in the world.

BlackSky designs, owns and operates one of the industry’s leading low earth orbit small satellite constellations, optimized to capture imagery cost-efficiently where and when our customers need it. BlackSky’s Spectra AI software platform processes data from BlackSky’s constellation and from other third-party sensors to develop the critical insights and analytics that our customers require.

BlackSky is relied upon by U.S. and international government agencies, commercial businesses, and organizations around the world. BlackSky is headquartered in Herndon, VA, and is publicly traded on the New York Stock Exchange as BKSY. To learn more, visit www.blacksky.com and follow us on Twitter.

Non-GAAP Financial Measures

Adjusted EBITDA is defined as net income or loss attributable to BlackSky before interest expense, income taxes, depreciation and amortization, as well as significant non-cash and/or non-recurring expenses as management believes these items are not as useful in evaluating the Company’s core operating performance. These items include, but are not limited to, realized loss on conversion of bridge notes, stock-based compensation expense, unrealized (gain)/loss on certain warrants/shares classified as derivatives, satellite impairment loss, (gain)/loss on debt extinguishment, (gain)/loss from discontinued operations, severance, loss/(gain) on equity method investment, transaction related legal settlements, and transaction costs associated with derivative liabilities.

Adjusted EBITDA is a non-GAAP financial performance measure. It should not be considered in isolation or as an alternative to measures determined in accordance with GAAP. Please refer to the schedule herein and our SEC filings for a reconciliation of Adjusted EBITDA to Net Loss, the most comparable measures reported in accordance with GAAP and for a discussion of the presentation, comparability, and use of Adjusted EBITDA.

Forward-Looking Statements

Certain statements and other information included in this release constitute forward-looking statements under applicable securities laws. Words such as "may", "will", "could", "should", "would", "plan", "potential", "intend", "anticipate", "believe", "estimate", "future", "opportunity", "will likely result", or "expect" and other words, terms, and phrases of similar meaning are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks, and uncertainties, as well as other statements referring to or including forward-looking information included in this release.

Forward-looking statements are subject to various risks and uncertainties, which could cause actual results to differ materially from the anticipated results or expectations expressed in this release. As a result, although BlackSky's management believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because BlackSky can give no assurance that they will prove to be correct. The risks that could cause actual results to differ materially from current expectations include, but are not limited to, the risk factors and other disclosures about BlackSky and its business included in BlackSky's disclosure materials filed from time to time with the U.S. Securities and Exchange Commission ("SEC"), which are available on the SEC's website at www.sec.gov or on BlackSky's Investor Relations website at ir.blacksky.com.

The forward-looking statements contained in this release are expressly qualified in their entirety by the foregoing cautionary statements. All such forward-looking statements are based upon data available as of the date of this release or other specified date and speak only as of such date. BlackSky disclaims any intention or obligation to update or revise any forward-looking statements in this release as a result of new information or future events, except as may be required under applicable securities law.

BLACKSKY TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(unaudited)
(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Revenue
Imagery & software analytical services	$	13,350		$	5,118		$	23,122		$	11,116
Engineering & systems integration		1,752			2,247			5,876			3,543
Total revenue		15,102			7,365			28,998			14,659
Imagery & software analytical service costs, excluding depreciation and amortization		5,350			4,171			11,257			8,550
Engineering & systems integration costs, excluding depreciation and amortization		4,436			2,237			9,484			3,367
Selling, general and administrative		17,739			8,827			40,275			17,305
Research and development		106			—			252			28
Depreciation and amortization		9,177			3,537			16,568			6,301
Satellite impairment loss		—			18,407			—			18,407
Operating loss		(21,706	)		(29,814	)		(48,838	)		(39,299	)
(Loss) gain on derivatives		(4,646	)		(967	)		3,494			(14,975	)
Income on equity method investment		1,213			767			1,470			963
Interest income		178			—			178			—
Interest expense		(1,275	)		(1,270	)		(2,530	)		(2,438	)
Other expense, net		(42	)		(3,279	)		(40	)		(147,370	)
Loss before income taxes		(26,278	)		(34,563	)		(46,266	)		(203,119	)
Income tax (expense) benefit		—			—			—			—
Loss from continuing operations		(26,278	)		(34,563	)		(46,266	)		(203,119	)
Discontinued operations:
Loss from discontinued operations (including loss from disposal of Spaceflight Inc. of $0, $1,022, $0, and $1,022 for the three and six months ended June 30, 2022 and 2021, respectively)		—			(1,022	)		—			(1,022	)
Income tax (expense) benefit		—			—			—			—
Loss from discontinued operations, net of income taxes		—			(1,022	)		—			(1,022	)
Net loss		(26,278	)		(35,585	)		(46,266	)		(204,141	)
Other comprehensive loss		—			(1,930	)		—			(541	)
Total comprehensive loss	$	(26,278	)	$	(37,515	)	$	(46,266	)	$	(204,682	)

Basic and diluted loss per share of common stock:
Loss from continuing operations	$	(0.22	)	$	(0.61	)	$	(0.40	)	$	(3.87	)
Loss from discontinued operations, net of income taxes		—			(0.02	)		—			(0.02	)
Net loss per share of common stock	$	(0.22	)	$	(0.63	)	$	(0.40	)	$	(3.89	)

Weighted average common shares outstanding - basic and diluted		118,112			56,704			116,803			52,434

BLACKSKY TECHNOLOGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except par value)

	June 30,			December 31,
	2022			2021
Assets
Current assets:
Cash and cash equivalents	$	64,827		$	165,586
Restricted cash		2,518			2,518
Short-term investments		43,833			—
Accounts receivable, net of allowance of $0 and $39, respectively		3,417			2,629
Prepaid expenses and other current assets		4,275			6,264
Contract assets		5,502			1,678
Total current assets		124,372			178,675
Property and equipment - net		83,899			70,551
Goodwill		9,393			9,393
Investment in equity method investees		5,159			4,002
Intangible assets - net		2,199			2,480
Satellite procurement work in process		35,761			40,102
Other assets		346			560
Total assets	$	261,129		$	305,763
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued liabilities	$	13,877		$	10,837
Amounts payable to equity method investees		1,537			5,613
Contract liabilities - current		4,931			11,266
Other current liabilities		2,835			2,819
Total current liabilities		23,180			30,535
Liability for estimated contract losses		3,384			6,054
Long-term contract liabilities		—			568
Derivative liabilities		13,431			16,925
Long-term debt - net of current portion		72,425			71,408
Other liabilities		5,162			653
Total liabilities		117,582			126,143
Commitments and contingencies
Stockholders’ equity:
Class A common stock, $0.0001 par value-authorized, 300,000 shares; issued, 120,926 and 117,160 shares; outstanding, 118,453 shares and 114,452 shares as of June 30, 2022 and December 31, 2021, respectively.		12			11
Additional paid-in capital		660,710			650,518
Accumulated deficit		(517,175	)		(470,909	)
Total stockholders’ equity		143,547			179,620
Total liabilities and stockholders’ equity	$	261,129		$	305,763

BLACKSKY TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)

	Six Months Ended June 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(46,266	)	$	(204,141	)
Loss from discontinued operations, net of income taxes		—			(1,022	)
Loss from continuing operations		(46,266	)		(203,119	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		16,568			6,301
Bad debt expense		(1	)		4
Stock-based compensation expense		13,226			772
Loss on issuance of 2021 convertible Bridge Notes		—			96,476
Loss on issuance of 2021 convertible Bridge Notes Rights Offering		—			3,193
Issuance costs for derivative liabilities and debt carried at fair value		—			47,718
Amortization of debt discount and issuance costs		1,018			823
Gain on equity method investment		(1,470	)		(963	)
Loss on disposal of property and equipment		—			24
(Gain) loss on derivatives		(3,494	)		14,975
Satellite impairment loss		—			18,407
Other, net		16			—
Changes in operating assets and liabilities:
Accounts receivable		(787	)		(1,293	)
Contract assets		(3,824	)		1,151
Prepaid expenses and other current assets		1,914			(405	)
Other assets		(30	)		(150	)
Accounts payable and accrued liabilities		389			(2,604	)
Other current liabilities		16			(2,067	)
Contract liabilities - current and long-term		(6,903	)		(952	)
Liability for estimated contract losses		(2,670	)		(1,047	)
Other liabilities		4,509			1,644
Net cash used in operating activities		(27,789	)		(21,112	)
Cash flows from investing activities:
Purchase of property and equipment		(5,289	)		(207	)
Satellite procurement work in process		(20,208	)		(11,205	)
Purchase of short-term investments		(43,774	)		—
Purchase of domain name		—			(7	)
Proceeds from equity method investment		313			—
Net cash used in investing activities		(68,958	)		(11,419	)
Cash flows from financing activities:
Proceeds from issuance of debt		—			58,573
Proceeds from options exercised		25			7
Proceeds from warrants exercised		—			120
Debt payments		—			(750	)
Payments for deferred offering costs		—			(3,487	)
Payments for debt issuance costs		—			(646	)
Withholding tax payments on vesting of restricted stock units		(4,037	)		—
Net cash (used in) provided by financing activities		(4,012	)		53,817
Net (decrease) increase in cash, cash equivalents, and restricted cash		(100,759	)		21,286
Cash, cash equivalents, and restricted cash – beginning of year		168,104			10,573
Cash, cash equivalents, and restricted cash – end of period	$	67,345		$	31,859

BLACKSKY TECHNOLOGY INC.
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(unaudited)
(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Net loss	$	(26,278	)	$	(35,585	)	$	(46,266	)	$	(204,141	)
Interest income		(178	)		—			(178	)		—
Interest expense		1,275			1,270			2,530			2,438
Depreciation and amortization		9,177			3,537			16,568			6,301
Loss on issuance of Bridge Notes, including debt issuance costs expensed for debt carried at fair value		—			3,288			—			147,387
Stock-based compensation expense		2,986			264			13,226			772
Loss (gain) on derivatives		4,646			967			(3,494	)		14,975
Satellite impairment loss		—			18,407			—			18,407
Loss from discontinued operations, net of income taxes		—			1,022			—			1,022
Severance		705			—			705			—
Income on equity method investment		(1,213	)		(767	)		(1,470	)		(963	)
Forgiveness of non-trade receivable		75			—			75			—
Adjusted EBITDA	$	(8,805	)	$	(7,597	)	$	(18,304	)	$	(13,802	)

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