What happened
Shares of space SPAC and satellite system operator BlackSky Technology (BKSY +0.20%) crashed more than 10% in early trading on the NYSE Tuesday before turning around and cutting their losses later in the morning. As of 11 a.m. ET, BlackSky stock is still down significantly -- 5.7% -- but it's down only half as much as it was an hour ago.
As for why it's down at all, well, the reason is earnings -- or, rather, sales.
Heading into its fiscal Q4 earnings report, analysts had forecast BlackSky would lose $0.16 per share on sales of $19.6 million. As it turned out, BlackSky's loss wasn't quite as bad as feared, with the company reporting a loss of only $0.13 per share. Sales, however, fell just short of estimates at $19.4 million.
NYSE: BKSY
Key Data Points
So what
So sales "missed," but earnings "beat." Is this bad news or good news? It depends on how you look at it.
On the one hand, the sales miss (which is presumably the major reason investors sold the stock off so hard this morning) was bad news, but it was also kind of good news -- because BlackSky's $19.4 million in sales was up 69% from one year ago, with imagery and software analytical services sales up triple. And for the year 2022 as a whole, BlackSky basically doubled its sales to $65.4 million, with imagery sales leading the charge -- tripling for both the quarter and the year.
Earnings, too, were kind of a mixed bag, and easy to read as either "bad" or "good" news depending on how you look at it. On the one hand, as already mentioned, $0.13 per share was a smaller loss than analysts had forecast (good news). One the other hand...BlackSky earned a profit in last year's Q4 (making today's loss bad news).
Meanwhile, on the third hand, for the full year, BlackSky's loss was $0.63 per share -- not a great number, certainly, but not nearly as bad as last year's full-year $3.39-per-share loss.
Now what
When you get down to it, though, the big-picture view on BlackSky is this: This space stock is not profitable, and it's probably not going to be profitable for a couple more years. (According to analysts polled by S&P Global Market Intelligence, 2025 will be BlackSky's first profitable year.) But BlackSky is at least moving in the right direction.
Management forecast 2023 sales between $90 million and $96 million, up about 42% from 2022. Capital spending is continuing to come down -- perhaps to $42.5 million this year, which would be a cut in spending of more than 20%. As sales grow and costs dwindle, this brings BlackSky closer to the point where it might expect to start earning some profits. Plus, BlackSky just announced a private placement to raise $29.5 million in new cash, which, when combined with the $75 million already on its balance sheet, should be enough to tide the company over until it can generate positive free cash flow on its own.
All in all, I'd say this is a good report from BlackSky -- and it confirms the stock is on the right track for profitability.
