BlackSky Technology: High Risk, High Reward
Programming note: we’ve been a little quiet lately as we work on some big things for 2025. Going forward, we’ll be focusing our efforts on actionable investing ideas in the small cap space with a greater emphasis on quality over quantity. We have some big ideas lined up and hope you enjoy this deep dive into BlackSky Technology.
About The Business
BlackSky Technology (BKSY) was founded in 2014, through a SPAC merger of Osprey Technologies and BlackSky Holdings. After the merger BlackSky became a public company and received $283M. $103M was from the money Osprey raised and $180M from a PIPE deal.
BlackSky operates a constellation of small, low-earth orbiting (LEO) satellites, which are used for frequent image collection. These are utilized for geospatial intelligence, earth surface monitoring and reconnaissance. BlackSky’s satellite constellation provides real-time imagery services for economic monitoring, national security, disaster management, supply chain intelligence, critical infrastructure monitoring and high frequency monitoring of critical locations/objects, which are delivered in an easy-to-access, user friendly manner using their Spectra software. Their system is fully automated and can be used to provide time-sensitive insight. The company currently has 280 employees. BlackSky's edge lies in its rapid monitoring capability, with satellites able to capture imagery of the same location up to 15 times per day - a frequency set to increase further with their next-generation (Gen-3) satellites.
BlackSky enhances its satellite data with external sources like Synthetic Aperture Radar (SAR) for detailed earth imaging regardless of weather or lighting conditions, radio frequency (RF) data used to track communications, and information from GPS-enabled and IoT devices. This comprehensive data collection — spanning satellite imaging, SAR, RF, GPS, asset tracking, internet-enabled sources, environmental sensors, and IoT devices — is processed using AI and ML techniques through their Spectra software platform. Clients can access Spectra via web and mobile interfaces, receiving imagery and analytics typically within 90 minutes. The platform also supports API integration for seamless integration with customers' IT frameworks.
BlackSky’s offerings include images and data analytics, both provided through Spectra (software platform), which is usually sold through a subscription model. Additionally, they sell professional services (customizing software according to customer’s needs) and engineering services (selling satellites and payload systems instruments like cameras, radars etc.). These services are offered on a project-to-project basis. Booking sales of satellites before production and utilizing a subscription model allows the company to maintain a stable revenue base. Clients leverage BlackSky’s knowledge by using their engineering services, which includes designing satellites, managing ground operations and creating software systems. The company also provides special services which can be customized according to the business’ needs. For example, clients can pay a premium to prioritize their monitoring needs during critical situations.
The company have issued Class A common stock (BKSY) and warrants for class A shares with the exercise price of $92 per share (BKSY.W). Both trading on NYSE.
Long Thesis
Although not without risk we think BlackSky Technology represents an asymmetric opportunity based on the following factors: