The price of BlackSky Technology’s stock nearly tripled on Wednesday.
BKSY Stock : The shares of BlackSky Technology ( BKSY 2.91 0.9%) launched into orbit this week, and closed Wednesday’s trading with a gain of 97. One reason behind the increase is the fact that the company was among three selected from the National Reconnaissance Office (NRO) for what the agency called the “largest-ever” commercial imaging contract.
The details were a bit sparse, however the press release issued by the NRO, which is located within the Defense Department, includes wording that says this contract “valued to be billions over the course of the 10 years” and also states that this is the beginning of a “historic increase” of NRO’s “acquisition of old images” to keep up with the increasing demand. The CEO Brian E. O’Toole said that the contract is the largest in its history. NRO agreement is one of the biggest contract the company has ever had.
What exactly is BlackSky?
BlackSky has a fleet of satellites that have been 14 as of now offering high-frequency imaging as well as monitoring and analytics to clients from the commercial and governmental sectors. High-frequency imaging refers to the fact that the satellites of BlackSky and the growing network of sensors with internet connectivity make HD satellite photos of the desired region every day.
BlackSky claims that its satellites visit the areas of interest every 15 minutes and allows customers to observe patterns and activities with a new level of accuracy. The company’s aim is to create a SAAS-like (software as service) business that has a robust regular revenue source. Some examples of the use cases for the BlackSky service include monitoring activity at ports, monitoring shipping routes for commodities as well as crisis management and monitoring the world’s infrastructure.
In the company’s last conference call to discuss earnings, O’Toole explained that the company’s service is different by the fact that “Today with our platform, any user is able to sign in, work the constellation, and get the data and images delivered to their inbox within 30 minutes, or even less. and all completely automated.” The company is seeing a rise in revenue with all-time high of $13.9 millions in revenue, which is an increase of 91% over the same time last year.
However, the business suffered the loss as a net of $20 million. It appears to be far from achieving profitability. Positively, the company has one dollar of cash per share on its balance sheet which is quite a lot for shares that are priced at $2.44.
Validation of the strategy
The contract’s award is a good thing and is a welcome relief for BlackSky as well as its investors. Although the exact dollar value of the contract wasn’t immediately apparent, the contract will have two benefits for the business: It will give it a larger cash runway to run with and strengthens its business model and offerings. This endorsement from the NRO will help BlackSky establish its credibility to other potential government or private customer.
As O’Toole said in a blog article published following the announcement: “The contract value is significant, however should there be a more important factor, it’s that this award is a validation of our plan for an advanced monitoring platform that offers an ongoing monitoring of some of the most significant and strategic sites around all over the globe.”
