International business was the main source of subscription growth during the period. Multi-year overseas contracts now represent more than 80% of BlackSky’s total funded backlog, giving the company greater visibility into future revenue.
“The strongest demand right now is internationally,” Chief Executive Officer Brian O’Toole said during BlackSky’s second-quarter earnings call. He said the company was also seeing potential demand from US government customers, although those opportunities were less advanced.
BlackSky is benefiting from a broader shift among governments seeking faster access to intelligence from space. O’Toole said sovereign space capabilities were increasingly being treated as a necessary part of national defence infrastructure rather than an optional investment.
The company’s Gen-3 satellites produce imagery at a resolution of 35 centimetres. They combine that performance with frequent revisits, low-latency delivery and AI-generated intelligence through BlackSky’s Spectra platform.
O’Toole said the system was designed to support tactical missions in which the speed of collection and analysis can be as important as image quality. BlackSky can process information as it comes from its satellites and deliver intelligence without hours of ground-based processing, he said.
The expansion of international subscriptions lifted BlackSky’s space-based intelligence and AI services revenue to a record $24.5 million in the quarter. That was 50% higher than in the preceding three-month period, Chief Financial Officer Henry Dubois said.
The company reached a $100 million annual revenue run rate for imagery and AI subscriptions. O’Toole said the increase reflected recurring contracts rather than one-off revenue recognition.
“It’s all subscription revenue,” he said. “We see this as a base for moving forward, and we anticipate this type of performance is going to continue.”
BlackSky said several customers that initially tested Gen-3 through small pilot programmes had moved into seven- and eight-figure subscription contracts. O’Toole reported a high conversion rate but did not disclose the number or identity of the customers.
The company expects further growth as new users complete their pilot programmes and begin operational subscriptions. Existing customers are also expanding contracts and shifting more satellite tasking towards Gen-3.
Most large customers currently use a combination of BlackSky’s Gen-2 and Gen-3 satellites. The mixed constellation provides frequent coverage, while Gen-3 supplies the higher-resolution imagery required for more demanding intelligence tasks.
BlackSky expects customers to increase their use of Gen-3 as more satellites enter orbit. Additional capacity should improve regional coverage, delivery latency and revisit rates while allowing the company to serve more concurrent missions.
The company plans to have eight Gen-3 satellites in orbit by the end of 2026. Its longer-term commercial constellation is expected to comprise about 12 to 15 satellites and provide an hourly revisit service.
More than 20 Gen-3 satellites are in production for the commercial constellation, existing sovereign programmes and prospective government orders. BlackSky is building some of those spacecraft as inventory to reduce delivery times for future customers.
That production strategy also supports the company’s push into sovereign satellite systems. BlackSky is offering governments dedicated Gen-3 spacecraft alongside immediate access to imagery and AI services from its commercial constellation.
The model allows a customer to test BlackSky’s operational technology before purchasing its own system. O’Toole said it could provide greater certainty over cost, performance and delivery schedules than a programme developed from the ground up.
BlackSky expects to deliver its first sovereign Gen-3 satellite in 2026. Management said the pipeline of potential sovereign programmes was expanding, with the strongest interest coming from international customers.
The international growth contrasted with a broadly stable US government intelligence business, which remains driven mainly by the Electro-Optical Commercial Layer programme. O’Toole said US spending was developing in line with the company’s assumptions, while overseas subscriptions provided the larger increase during the quarter.
BlackSky reported total quarterly revenue of $33.3 million, up 50% from a year earlier. Adjusted earnings before interest, taxes, depreciation and amortisation reached $4.7 million, producing a margin of 14.2%.
