BKSY 10-K & 10-Q changes, risk factors and insider trading

An investment in our Class A common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before deciding to invest in our Class A common stock. Additional risks and uncertainties that we are currently unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business or results of operations. If any of the following risks occur, our business, financial conditioncondition, and operating results may be materially adversely affected. In that event, the trading price of our Class A common stock could decline, and you could lose all or part of your investment.

• The market for our products and services has not been established with precision, is still emergingemerging, and may not achieve the growth potential we expect or may grow more slowly than expected.

•Our ability to grow our business depends on the successful production, launch, commissioningcommissioning, and/or operation of our satellites and related ground systems, which is subject to many uncertainties, some of which are beyond our control.

Although our revenue increased in 20232024 and 2024,2025, there can be no assurances that revenue will continue to grow or do so at current rates, and you should not rely on the revenue of any prior quarterly or annual period as an indication of our future performance. Our revenue growth rate has declined in the past and may decline in future periods. Many factors may contribute to declines in our revenue growth rate, including increased competition, slowing demand for our products and services from existing and new customers, increased regulatory burdens domestically or abroad, a failure by us to continue capitalizing on growth opportunities, terminations of existing contracts by our customers, and the maturation of our business, among others.other factors. If our revenue growth rate declines, our business, financial condition, and results of operations could be adversely affected.

Our financial performance is dependent on our ability to generate a sustainable order rate for products and services. This can be challenging and may fluctuate on an annual basis as the number of contracts awarded and the timing of such awards vary. If contract awards are delayed to subsequent periods, our quarterly or annual operating results may be adversely affected, and we may not achieve our expected results. If we are unable to win new contracts or execute on existing contracts as expected, our business, results of operationsoperations, and financial position could be further adversely affected.

The timing of our sales and related revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for our products and services. We are often required to spend significant time and resources to better educate and familiarize potential customers with the value proposition of our products and services. Therefore, our sales cycle is often long and can vary substantially from customer to customer. Further, decisions to purchase our imagery services can involve significant financial commitments; potential customers for larger monetary or specialized design/engineering contracts generally evaluate our systems, productsproducts, and technologies at multiple levels within their organization, each of which often have specific requirements, and can involve their senior management and multiple internal approvals.

•the cost or availability of raw materials or supplied components for the manufacturemanufacture, andoperation, operationor potential sale of our satellites;

•prolonged periods of unexpected weather patterns, natural disastersdisasters, or other events that can impact image quality or force a cancellation or rescheduling of satellite launches; and

We are dependent on a small number of customers for a large portion of our revenue. A significant decrease in the sales to or loss of any of our major customers would have a material adverse effect on our business, financial condition, and results of operations. In fiscal years 20242025 and 2023,2024, we had four and three customers respectively, that each accounted for more than 10% of our total revenuerevenue. and inIn the aggregate, these customers accounted for 88%89% and 88% of our total revenue, respectively. Customers in the defense market generally purchase our services in connection with government programs that have a limited duration,duration and are subject to government funding delays or shutdowns, leading to fluctuating sales to any particular customer in this market from year to year. If we lose one or more of our large customers, or if we experience a significant reduction in business from one or more large customers, there is no assurance that we would be able to replace those customers to generate comparable revenue over a short time period, which could harm our operating results and profitability.

Our contract terms with our customers and resellers vary in length and may require the customer or reseller to opt-in to extend the term. Our customers and resellers have no obligation to renew, upgrade, or expand their contracts with us after the terms of their existing contracts have expired. In addition, many of our customer and reseller contracts permit the customer or reseller to terminate their contracts with us with notice periods of varying lengths, and our contracts with U.S. government customers may be terminated for convenience. If one or more of our customers or resellers terminate their contracts with us, whether for convenience, for default in the event of a breach by us, or for other reasons specified in our contracts, as applicable; if our customers or resellers elect not to renew their contracts with us; if our customers or resellers renew their contractual arrangements with us for shorter contract lengths; or if our customers or resellers otherwise seek to renegotiate terms of their existing contracts on terms less favorable to us, our business, financial condition, and results of operations could be adversely affected.

We rely on the significant experience and specialized expertise of our senior management, engineering, salessales, and operational staff and must retain and attract qualified and highly skilled personnel in order to grow our business successfully.

Our future success also depends on the successful execution of our strategy to increase our sales to existing customers, identify and engage new customers, and enter new U.S. and non-U.S. markets,markets. whichThis strategy will depend, among other things, on our ability to successfully build and expand our sales organization and operations. Identifying, recruiting, training, and managing sales personnel requires significant time, expense, and attention, including from our senior management and other key personnel, which could adversely impact our business, financial condition, and results of operations in the short and long term.

In order to successfully scale our sales model, we must attract and retain qualified sales personnel with the right market and technical experience, both in the United States and outside of the United States, to generate additional revenue from new and existing customers. If we do not hire and retain a sufficient number of qualified sales personnel, our future revenue growth and business could be adversely impacted. It may take a significant period of time before our sales personnel are fully trained and productive, and there is no guarantee we will be successful in adequately training and effectively deploying our sales personnel. Our business would be adversely affected if our efforts to build, expand, train, and manage our sales organization are not successful. Any future sales organization changes may result in a temporary reduction of productivity, which could negatively affect our rate of growth. In addition, any significant change to the way we structure the compensation of our sales organization may be disruptive and may affect our revenue growth. If we are unable to attract, hire, develop, retain, and motivate qualified sales personnel, or if our new sales personnel are unable to achieve sufficient sales productivity levels in a reasonable period of time or at all, our sales may grow more slowly than expected or materially decline. Additionally, if our marketing programs are not effective or if we are unable to effectively build, expand, retain, and manage our sales organization and operations, our sales and revenue may grow more slowly than expected or materially decline, and our business may be significantly harmed.

The failure to realize all amounts in our backlog could adversely affect our future revenue and gross margins. As a result, our backlog as of any particular date may not be an accurate indicator of our future earnings. Furthermore, the presentation of our financial results requires us to make estimates and assumptions that may affect revenue recognition.recognition, which estimates and assumptions can be particularly challenging in new areas, such as our nascent Mission Solutions offering. In some instances, we could reasonably use different estimates and assumptions, and changes in estimates are likely to occur from period to period. Accordingly, actual results could differ significantly from our estimates.

Our ability to establish relationships with a comprehensive network of distributors, resellers, value-added resellersresellers, and similar entities with sufficient qualified and experienced personnel with the right relationships to support the sales of our products and services may impact our ability to generate revenue through this sales channel. If we are unable to develop products, structure products bundles, provide business terms, promote system integrations, optimize the effectiveness of our distributor and reseller network, or attract high-impact distributors, our business results may be negatively impacted. In addition, certain distributors and resellers may not be sufficiently capitalized and may experience difficulties during times of economic contraction.

The market for our products and services has not been established with precision, is still emergingemerging, and may not achieve the growth potential we expect or may grow more slowly than expected.

Competition in our imagery services business is highly diverse, and while our competitors offer different products and services, there is often competition for contracts that are part of governmental budgets. Our major existing and potential competitors for our products and services include commercial satellite imagery companies, state-owned imagery providers, aerial imagery companies, free sources of imageryimagery, and unmanned aerial vehicles. We also face competition from companies that provide geospatial data analytic information and services to the U.S. government, including defense contractors.

Our competitors or potential competitors could, in the future, offer satellite-based imagery or other products and servicesservices, such as mission solutions, with more attractive features than those of our products and services. The emergence of new remote imaging technologies or the continued growth of low-cost imaging satellites could negatively affect our sales efforts. If competitors develop and launch or sell satellites or other imagery-content sources with more advanced or sophisticated capabilities and technologies than ours, or offer products and services at lower prices than ours, our business and results of operations could be harmed. Due to competitive pricing pressures, such as new product introductions by us or our competitors, the selling price of our products and services may further decrease. If we are unable to offset decreases in our average selling prices by increasing our sales volumes or by adjusting our product mix, our revenue and operating margins may decline and our financial position may be harmed.

The U.S. government and foreign governments may develop, construct, launchlaunch, and operate their own imagery satellites with capabilities comparable or similar to ours, which could reduce their need to rely on us and other commercial suppliers. In addition, such governments could sellrely on, sell, or provide Earth imagery free of charge Earth imagery from their satellites and thereby compete with our products and services.

Our operations, products, solutions, analysisanalysis, and intellectual property are inherently at risk of loss, inappropriate access or use, or tampering by both insider threats and external bad actors. In particular, as a defense contractor, we face increased potential for cyber and other security threats, including:

•attempts to gain unauthorized access to our sensitive information, networks, operations and assetsassets, both cyber and physical;

•threats to the safety of our directors, officersofficers, and employees;

•threats to the security and viability of our facilities, infrastructureinfrastructure, and supply chain; and

•threats from state-sponsored and otherwise sophisticated actors, terrorist actsacts, or other acts of aggression.

Our customers and partners (including our supply chain, software and data providers, joint ventures and service providers) face similar threats.

With regard to cyber incidents in particular, the secure maintenance of information and technology is critical to our business operations and we, like our customers and partners, are subject to growing requirements for investments in cybersecurity and physical security. We have implemented multiple layers of security measures designed to protect the confidentiality, integrity, availabilityavailability, and privacy of data and the systems and devices that store and transmit such data. We utilize current security technologies, and our defenses are monitored and routinely tested internally.

However, cybersecurity threats can come from a variety of sources, such as an individual hacker, state-sponsored attackers, or malfeasance or even unintentional errors by employees, consultantsconsultants, or other service providers.providers, and even technical errors or vulnerabilities. Cyber threats may be generic, or they may be custom-crafted against our information systems. Over the past several years, cyber-attacks have become more prevalent and much harder to detect and defend against.against, and an increased level of sophistication and expertise of hackers (including through the malicious use of artificial intelligence technology) may increase the risks of cybersecurity incidents. Our network and storage applications and other systems used in our business and operations may be vulnerable to cyber-attack, malicious intrusion, ransomware or other malicious software, malfeasance, loss of data privacyprivacy, or other significant disruption and may be subject to unauthorized access by various parties, including hackers, employees, consultantsconsultants, or other service providers. In addition, hardware, softwaresoftware, or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security. For example, we or our partners may use artificial intelligence technology which causes increased risks of unauthorized or unintended disclosure of our confidential information, or which makes it easier for malicious actors to exfiltrate such information. Unauthorized parties may also attempt to gain access to our systems or facilities through fraud, trickerytrickery, social engineering, or other forms of deceiving our employees, contractorscontractors, and temporary staff. Further, because our teams are distributed and our employees often work remotely, the cybersecurity risks we face may be heightened by an increased attack surface across our business and those of our service providers and other third parties we work with. During times of war and other geopolitical tensions and conflicts, we, and the third parties upon which we rely, may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sellsell, and distribute our goods and services.

Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, we may be unable to anticipate these incidents or techniques, timely discover them, or implement adequate preventative measures. There can be no assurance that we will not be subject to cybersecurity incidents that bypass our security measures; impact the integrity, availability or privacy of data, including data that may be subject to laws, regulationsregulations, or other obligations relating to privacy, data protectionprotection, or security; or disrupt our information systems, devicesdevices, or business. As a result, cybersecurity, physical securitysecurity, and the continued development and enhancement of our controls, processesprocesses, and practices designed to protect our enterprise, information systemssystems, and data from attack, damagedamage, or unauthorized access remain a priority for us. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any cybersecurity vulnerabilities. The occurrence of any of these events, or the perception any such event has occurred, could result in:

•business interruptions, delaysdelays, and losses;

•the loss, misappropriation, corruption or unavailability of, or unauthorized access to or use, alterationalteration, or other processing of data;

•government and regulatory investigations, claims, demandsdemands, and litigation, including potential class action litigation, and potential liability under privacy, securitysecurity, and other applicable laws;

•regulatory fines, penaltiespenalties, and sanctions;

Moreover, given our customer base, a cyber or physical security event that involves classified or other sensitive government information or certain controlled technical information could subject us to civil or criminal penalties and could result in loss of our facility security clearance and other accreditations, loss of our government contracts, loss of access to classified information, loss of export privilegesprivileges, or debarment as a government contractor.

We rely on the technology, infrastructure, and software applications, including software-as-a-service offerings, of certain third parties, such as AWS and Microsoft Azure, in order to operate some or all of certain key features or functions of our business, including deployment of our cloud-based imagery services and other geospatial and data analytic services, customer relationship management activities, billing and order management, and financial accounting services. We do not have control over the operations of the facilities of the third parties that we use. If any of these third-party services experience errors, disruptions, security issues, or other performance deficiencies, if they are updated such that theydeficiencies; become incompatible,incompatible ifdue theseto services, software, or hardwareupdates; fail or become unavailable due to extended outages, interruptions, defects, or otherwise, or if they are no longer available on commercially reasonable terms or prices (or at all), these issues could result in errors or defects in the delivery of our products and services that include the development, integration, and operations of satellite and ground systems,systems. Consequently, our revenue and margins could decline, our reputation and brand could be damaged, we could be exposed to legal or contractual liability, our expenses could increase, our ability to manage our operations could be interrupted, and our processes for managing our sales and servicing our customers could be impaired until equivalent services or technology, if available, are identified, procured, and implemented, all of which may take significant time and resources, increase our costs, and adversely affect our business. Many of these third-party providers attempt to impose limitations on their liability for such errors, disruptions, defects, performance deficiencies, or failures, and if enforceable, we may have additional liability to our customers or third-party providers.

The market for our products and services is characterized by rapid technological change and evolving industry standards and, as we try to define a new market for space-based intelligence, the need to evolve is even more acute. Failure to respond in a timely and cost-effective way to these technological developments would result in serious harm to our business and operating results. We have derived, and we expect to continue to derive, a substantial portion of our revenue from providing products and services that are based upon today’s leading technologies and that are capable of adapting to future technologies.technologies, including artificial intelligence (“AI”) and machine learning (“ML”). As a result, our success will depend, in part, on our ability to develop and market service offerings that respond in a timely manner to the technological advances and needs of our customers, and evolving industry standards.

We believe that, in order to remain competitive in the future, we will need to continue to invest significant financial resources to develop new offerings and technologies or to adapt or modify our existing offerings and technologies, including through internal research and development, acquisitions and joint venturesventures, or other teaming arrangements. For example, we expect to continue to invest in AI and ML to develop and enhance our offerings and technologies. These expenditures could divert our attention and resources from other projects, and we cannot be sure that these expenditures will ultimately lead to the timely development of new offerings and technologies or identification of and expansion into new markets. DueThere are significant risks involved in deploying AI, and there can be no assurance that using AI in our products will be beneficial to our business. Also, due to the design complexity of our products, we may, in the future, experience delays in completing the development and introduction of new products. Any delays could result in increased costs of development or deflect resources from other projects. In addition, there can be no assurance that the market for our products and services will develop or continue to expand or that we will be successful in newly identified markets as we currently anticipate.

The failure of our technology to gain market acceptance could significantly reduce our revenue and harm our business. Market acceptance of our commercial high-resolution imagery and related products and services depends on a number of factors, including their quality, scope, timeliness, sophistication, and price and the availability of substitute products and services. There is no assurance that our investments in product development and enhancements, including through our use of AI, will be compelling to our customers, gain market acceptance, or have a material positive impact on our business, financial condition, or results of operations.

We cannot be sure that our competitors will not develop competing technologies that gain market acceptance in advance of our technologies or develop technologies that better meet the needs of our customers. The possibility exists that our competitors might develop new technology or offerings that might cause our existing technology and offerings to become obsolete. If we fail to develop, manufacture, and market innovative technologies or services that meet customers’ requirements or our technologies and services fail to achieve market acceptance more rapidly as compared to our competitors, our ability to procure new contracts could be negatively impacted and our business may not continue to grow in line with historical rates or at all. If we are unable to achieve sustained growth, we may be unable to execute our business strategy, expand our businessbusiness, or fund other liquidity needs and our business, financial condition, and results of operations could be materially and adversely affected.

We endeavor to obtain insurance coverage from established insurance carriers to cover certain risks and liabilities related to our business. However, the amount of insurance coverage that we maintain may not be adequate to cover all claims or liabilities, and even if adequate, may delay constellation or platform upgrades, which would negatively impact our ability to meet customer commitments and revenue expectations. Existing coverage may be canceled while we remain exposed to certain risks, and it is not possible to obtain insurance to protect against all operational risks, natural hazardshazards, and liabilities.

While we currently maintain insurance to cover certain risks and liabilities related to our business, we havemay not historicallyelect obtainedto andor maybe notable to maintain launch or in-orbit insurance coverage for our satellites to address the risk of potential systemic anomalies, failures, collisions with our satellites or other satellites or debris, casualty associated with impacts from satellite reentry, or catastrophic events affecting the existing satellite system. If one or more of our in-orbit uninsured satellites or payloads fail, one or more of our uninsured satellites is destroyed during failed launch, or if we have not obtained sufficient insurance for a particular event, we could be required to record significant impairment charges for the satellite or payload.

In addition, even though we carry business interruption insurance policies, any business interruption losses could exceed the coverage available or be excluded from our insurance policies. Any disruption of our ability to operate our business could result in a material decrease in our revenue or significant additional costs to replace, repairrepair, or insure our assets, which could have a material adverse impact on our business, financial condition, and results of operations.

Our products and services, including our satellites, satellite systems, and ground station infrastructure, are extremely complex and must operate successfully with complex hardware and software from other vendors. There can be no assurance that we will be successful in developing and marketing, on a timely basis, new products or product enhancements, or that the new products will adequately address the changing needs of the marketplace, or that we will successfully manage the transition from existing products. Despite testing, our BlackSky Spectra software platform and products may contain defects and errors, or experience performance problems when first introduced, when new versions or enhancements are released, or even after these products have been used by our customers for a period of time. These defects or errors could result in malfunctions, service interruptions, or other adverse consequences. We also employ sophisticated design and testing processes and practices for our satellites and satellite systems, which include a range of stringent factory and on-site acceptance tests with criteria and requirements that are jointly developed with customers. Certain products may also require external validation. Our systems may not be successfully implemented, pass required acceptance criteria, or operate or give the desired output, or we may not be able to detect and fix all defects and errors in the satellites and our products and services. These problems could result in expensive and time-consuming design modifications or warranty charges, delays in the introduction of new products or enhancements, significant increases in our service and maintenance costs, diversion of our personnel’s attention from our product development efforts, exposure to liability for damages, damaged customer relationships, and harm to our reputation, any of which could materially harm our results of operations. In addition, increased product development costs could be substantial and could reduce our operating margins.

In addition, our products and services integrate a wide variety of other elements, and our products and services must successfully interoperate with products from other vendors and our customers’ own technologies. As a result, when problems occur for a customer using our products and services, it may be difficult to identify the sources of these problems. The occurrence of software errors or errors in data, whether or not caused by our products and services, could result in malfunctions, service interruptions, or other adverse consequencesconsequences. andThese errors could delay or reduce market acceptance of our products and services and have an adverse effect on our business and financial performance, and any necessary revisions may cause us to incur significant expenses. In addition, we may not deliver or maintain interoperability quickly or cost-effectively, or at all. These efforts require capital investment and engineering resources. If we fail to maintain the compatibility of our products and services with our customers’ network and security infrastructures, our customers may not be able to fully adopt our offerings, and we may, among other consequences, experience reduced adoption of or demand for our products and services, which could adversely affect our business, financial condition, and results of operations. Further, the incorrect or improper implementation or use of our software, our failure to train customers on how to benefit from full utilization of our platform, or our failure to provide support services to our customers may result in errors or loss of data and as a result, dissatisfied customers, negative publicity, and harm to our reputation and brand, or legal claims against us.

We have in the past changed, and expect that we may need to, in the future, change our pricing model from time to time, including as a result of competition, global economic conditions, reductions in our customers’ spending levels generally, changes in product mix,offerings, or pricing studies or changes in how information technology infrastructure is broadly consumed.studies. Similarly, as we introduce new products and services, or as a result of the evolution of our existing products and services, we may have difficulty determining the appropriate price structure for our products and services. In addition, as new and existing competitors introduce new products or services that compete with ours, or revise their pricing structures, we may be unable to attract new customers at the same price or based on the same pricing model as we have used historically. Moreover, as we continue to target selling our products and services to larger organizations, these larger organizations may demand substantial price concessions. As a result, we may be required from time to time to revise our pricing structure or reduce our prices, which could adversely affect our business, financial condition, and results of operations.

If we fail to meet our service level commitments, our business, results of operationsoperations, and financial condition could be adversely affected.

A significant component of our growth strategy is to increase the cross-selling of our products and services to current and future customers,customers; however, we may not be successful in doing so if our customers find our additional solutions to be unnecessary or unattractive. We have invested, and intend to continue to invest, significant resources in developing and acquiring additional solutions, which resources may not be recovered if we are unable to successfully cross-sell these solutions to customers using our existing solutions. Any failure to sell additional solutions to current and future customers could harm our business, financial condition, results of operations, and prospects.

We may discover control deficiencies in the future, and we cannot assure you that we will not have a material weakness in future periods. If we are unable to successfully remediate any future material weakness and otherwise to establish and maintain an effective system of internal control over financial reporting, the reliability of our financial reporting, investor confidence in usus, and the value of our Class A common stock could be materially and adversely affected. Similarly, if our remedial measures are insufficient to address any future material weakness on a timely basis, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results.

•faulty human judgment and simple errors, omissionsomissions, or mistakes;

As of December 31, 2024,2025, we had an estimated $62.9$73.4 million of tax-effected U.S. federal net operating loss carryforwards available to reduce future taxable income. It is possible that we will not generate sufficient taxable income in time to use these net operating loss carryforwards before their expiration or at all. Under legislative changes made in December 2017, U.S. federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but, for taxable years beginning after 2020, the deductibility of such net operating losses is limited to 80% of taxable income. Limitations under state law may differ. In addition, our U.S. federal and state net operating loss carryforwards and certain tax credits may be subject to significant limitations under Section 382 and Section 383 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), respectively, and similar provisions of state law. Under those sections of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change attributes, such as research tax credits, to offset its post-change income or tax may be limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership (by value) by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. We have completed an analysis of historical “ownership changes” for purposes of Section 382 and Section 383 of the Code and believe an immaterial portion of our cumulative U.S. federal net operating loss carryforwards will expire unutilized.

We have contracts with the U.S. government, and we may enter into additional contracts with the U.S. government in the future, and this subjects a large part of our business to statutes and regulations applicable to companies doing business with the government, including the Federal Acquisition Regulation (“FAR”). These government contracts customarily contain provisions that give the government substantial, and sometimes unilateral, rights and remedies, many of which are not typically found in commercial contracts and which are unfavorable to contractors. The provisions in U.S. government contracts must be complied with in order for the contract to be awarded and provide for government audits and reviews of contract procurement, performanceperformance, and administration.

•requirements to procure certain materials, componentscomponents, and parts from specific countries or supply sources approved by the customer.

Government contracts are also generally subject to greater scrutiny by the government, which can initiate reviews, auditsaudits, and investigations regarding our compliance with government contract requirements. New regulations or procurement requirements (including, for example regulations regarding counterfeit and corrupt parts, supply chain diligencediligence, and cybersecurity) or changes to current requirements could increase our costs and risk of non-compliance. In addition, if we fail to comply with government contracting laws, regulationsregulations, and contract requirements, our contracts may be subject to termination, and we may be subject to financial and/or other liability under our contracts, the Federal Civil False Claims Act (including treble damages and other penalties), or criminal law. In particular, the False Claims Act’s “whistleblower” provisions also allow private individuals, including present and former employees, to sue on behalf of the U.S. government. Any penalties, damages, fines, suspension, or damages could adversely affect our ability to operate our business and our financial results.

Our role as a contractor to agencies and departments of the U.S. government results in our being routinely subject to investigations and reviews relating to compliance with various laws and regulations, including those associated with organizational conflicts of interest, procurement integrity, bid integrityintegrity, and claim presentation, among others. These investigations may be conducted without our knowledge. Adverse findings in these investigations or reviews can lead to criminal, civilcivil, or administrative proceedings, and we could face civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, finesfines, and suspension or debarment from doing business with U.S. government agencies. In addition, we could suffer serious harm to our reputation and competitive position if allegations of impropriety were made against us, whether or not true, and as a result there could be an adverse impact on our revenue, earningsearnings, and cash flow.

Further, changes in government policies, priorities, regulations, use of other commercial data providers to meet U.S. government imagery needs, government agency mandates, funding levels through agency budget reductions, the imposition of budgetary constraintsconstraints, or a decline in government support or deferment of funding for programs in which we or our customers participate could result in contract terminations, delays in contract awards, reduction in contract scope and/or value, the failure to exercise contract options,options or issue new delivery orders, the cancellation of planned procurementsprocurements, and fewer new business opportunities, all of which could negatively impact our business, financial condition, results of operationsoperations, and cash flows. In addition, continued uncertainty related to recent and future disruptions in U.S. federal government operations, such as government shutdowns, the U.S. budgetbudget, and/or failure of the U.S. government to enact annual appropriations, could have an adverse impact on our revenue, earnings and cash flow and may negatively impact regulatory approvals and guidance that are important to our operations. For example, in Q3 2025, due to a reduction in funds available to certain government programs, certain of our government contracts were reduced in value and/or experienced a decline in new delivery orders. As a result of a government shutdown, delays in enacting an annual federal government appropriation, or otherwise, we may experience additional reduction in contract value and/or delivery orders in the future.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. As discussed in the section titled “Special Note Regarding Forward Looking Statements,” the following discussion and analysis contains forward looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed in the section titled “Risk Factors” under Part I, Item IA in this Annual Report on Form 10-K. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “BlackSky,” “the Company,” “we,” “us” and “our” refer to the business and operations of BlackSky Holdings, Inc. (“Legacy BlackSky”) and its consolidated subsidiaries prior to the completion of its merger on September 9, 2021 with a wholly-owned subsidiary of Osprey Technology Acquisition Corp. (the “Merger”) and toof BlackSky Technology Inc. and its consolidated subsidiaries, following the closing of the Merger.

Founded in 2014, BlackSky is a space-basedspace intelligencetechnology company that delivers real-time imagery, analytics and high-frequency monitoring of the world’s most critical and strategic locations, economic assets, and events. By taking a software-first technology approach, we are delivering real time space-based intelligence at disruptive speed, scale and economics. BlackSky is trusted by many of the most demanding U.S. and international government agencies and commercial businesses around the world. We are defining a new category of space-based intelligence products and services withcentered upon real-time imagery and automated analytics, delivered through an easy-to-use interface coupledthat operates seamlessly with our high-revisit and low latency satellite constellationconstellation. bothOur designedfirst-of-its-kind, topurpose-built, helpsecure artificial intelligence ("AI")-enabled space-to-ground architecture helps customers see, understand and anticipate change for a decisive strategic advantage. BlackSky can provide dynamic hourly monitoring over many of the most strategic locations on Earth up to 15 times per day from dawn to dusk.

OnIn November 6, 2024, we acquired the remaining 50% of the common units of BlackSky Satellite Systems LLC, f/k/a LeoStella LLCLLC, (“BlackSky Satellite Systems” or “LeoStella”), andwhich LeoStellais becamenow a wholly-owned subsidiary of BlackSky. The acquisition allowsresulted in a vertical integration that enables us to improve control over theour Gen-3 satellite supply chain and production operations.operations Weby have manufacturing capacity to produce up to 40 satellites per year. This vertical integration enables BlackSky to controlcontrolling our satellites through the entire design, manufacturing, and operation processprocess, andthereby optimizeoptimizing performance per unit cost. LeoStella'sBlackSky Satellite Systems's financial results have beenare included in our operating results for the periodperiods following the acquisition date.

Our revenue is generated by selling imageryspace-based andintelligence software& analyticsAI services through our BlackSky Spectra software platform and by providing professionalmission solutions and engineeringadvanced servicestechnology programs to strategic customers on a project basis.

◦Data, Software, and Analytics: Our AI-generated analytics services are also offered on a subscription basis and provide customers with automated access to our site monitoring, event monitoringmonitoring, and global data services. WeOur leverage our proprietary AI and ML algorithms to analyze data coming from both our proprietary sensor network and third-party space sources in real-time to provide data, insights, and analytics for our customers. We provide services related to object,object change and anomaly detection, site monitoring, and enhanced analytics through which weservices can detect key pattern of lifepattern-of-life changes in critical locations. These critical locations can include strategic locations and infrastructureinfrastructure, such as maritime ports, airports,airfields, and construction sites; retail activity; commodities stockpiles; and other sites that contain critical commodities and supply chain inventory. Our AI-enabled analytics provide for the automated detection and classification of more than 30 objects of tactical interest.

Our costs and expensesexpenses, which includes stock-based compensation expense for those employees who support each category, are incurred from the following categories:

•ImagerySpace-Based andIntelligence software& analyticalAI services costsCosts: primarily include third-party data and imagery, ground station service payments, and internal labor to support theour ground stations and space operations.operations, and compute/storage costs to facilitate our expanding AI/ machine learnings ("ML") functionality. Costs are expensed as they are incurred except for incremental costs to obtain a contract, which are primarily sales commissions on contracts greater than one year andyear, are capitalized and amortized to selling, general, and administrative expenses on a systematic basis consistent with the transfer of goods and services and directly identifiable costs to fulfill a contract. Expense related to stock-based payments is classified in the consolidated statements of operations and comprehensive loss based upon the classification of each employee's cash compensation. We recognize stock-based compensation expense for those employees whose work supports the imagery and software analytical services costs we provide to customers, under imagery and software analytical service costs, excluding depreciation and amortization.

•Selling, general,General, and administrativeAdministrative expenseExpense: consists of salariessalaries, taxes, and benefit costs, product development costs, professional fees, and other expenses which include other personnel-related costs, stock-based compensation expensesexpense for those employees who generally support our business and operations, and occupancy costs. Our development costs include internal labor costs to design and plan critical real-time software and geospatial analytic solutions and solution enhancements, including mapping, analysis, site target monitoring, and news feeds.

•Research and developmentDevelopment expenseExpense: consists of employees’ salaries, taxes, and benefits costs incurred while researching next generation space and ground architectures in support of our long-term strategy. With our acquisition of LeoStellaBlackSky Satellite Systems in November 2024, research and development expense also includes our investments in satellite design and functionality. Additionally, we employ and classify third-party vendors who help fulfill our strategic projects as research and development expense. We intend to continue to invest appropriate resources in research and development efforts, as we believe that investment is critical to maintaining our competitive position.

•Depreciation expenseExpense: is related to property and equipment, which mainly consist of operational satellites.satellites and capitalized internal-use software. Amortization expense is related to intangible assets, which mainly consist of customer relationships. We expect to incur additional depreciation expense when each Gen-3 satellite is launched and placed into service.

The following table provides the componentsResults of results of operationsOperations for the yearsYears endedEnded December 31, 20242025 and 2023:2024

ProfessionalSpace-Based Intelligence and EngineeringAI Services Revenue

ProfessionalSpace-Based Intelligence and EngineeringAI Service Costs

ProfessionalSpace-based intelligence & engineeringAI serviceservices costs, excluding depreciation and amortization, decreasedincreased for the year ended December 31, 20242025 as compared to the same period in 2023, primarily2024, due to fewer direct material costs incurred on two long-term engineering contracts, which was driven by an increase in thethird-party program'simagery maturityfulfillment year-over-year and from contributed non-recurring costs that were incurred for programs in 2023 that did not reoccur in 2024.costs.

The following is our forecast for total RSUrestricted stock units ("RSUs") non-cash stock-based compensation expense as of December 31, 2024,2025, which, in addition to the amounts recognized in selling, general, and administrative expenses, includes the portion that will be capitalized or classified in imageryspace-based andintelligence software& analyticalAI serviceservices, costsmission andsolutions, professionalor andadvanced engineeringtechnology serviceprograms costs:

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed in the section titled “Risk Factors” under Part I, Item IA1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and filed with the Securities and Exchange Commission (the “SEC”). Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “BlackSky,” “the Company,” “we,” “us” and “our” refer to the business and operations of BlackSky Holdings, Inc. (“Legacy BlackSky”) and its consolidated subsidiaries prior to the completion of its merger on September 9, 2021 with a wholly-owned subsidiary of Osprey Technology Acquisition Corp. (the “Merger”) and of BlackSky Technology Inc. and its consolidated subsidiaries, following the closing of the Merger.

Customers experience the value of BlackSky’s space-based intelligence and AI capabilities through subscription-based On-Demand and Assured product offerings. Our Mission Solutions offering allows customers the ability to acquire, own, and operate their own customized Gen-3 satellite(s) and space-to-ground system(s). These solutions leverage our industry-leading, end-to-end satellite to ground infrastructure hardware and software technology stack. BlackSky Mission Solutions give nations the flexibility of owning space assets while having scalable access to additional capacity through BlackSky’s proprietary constellation. BlackSky also offers advanced technology program services that allow customers to conduct advanced R&D using aspects of BlackSky’s space-to-ground system that further enhance the capabilities that we can offer certain customers, or that further integratesintegrate BlackSky’s intelligence products into customer secure operational workflows. Our product and service offerings are designed to provide synergy to our customers. For example, when our Mission Solutions offerings are acquired in conjunction with our subscription data services, customers enjoy the benefits of speed, scale and reliability without having to own and operate a large constellation. Collectively, our offerings create a unified value proposition that supports national security, supply chain resilience, economic intelligence, and other critical decision-making requirements for customers worldwide.

Our revenue is generated by selling space-based intelligence & AI servicesservices, primarily through our BlackSky Spectra software platformplatform, and by providing mission solutions and advanced technology programs to strategic customers on a project basis. Due to shifting geopolitical realities, international defense spending has grown faster than U.S. spending in recent periods, with a significant emphasis on development of national space capabilities. For the six months ended June 30, 2026, revenue generated from international customers accounted for 60% of our total revenue, as opposed to 48% for the six months ended June 30, 2025.

•Space-Based Intelligence and AI Services Revenue: We offer high-revisit, high-resolution, satellite imaging products including dawn-to-dusk, 35 cm resolution electro-optical and nighttime imagery. Through our BlackSky Spectra software platform, customers can directly task our constellation to collect and deliver imagery over specific locations, sites, and regions that are critical to their operations. Customers also have access to multi-frame area 2x1 to capture areas larger than the single frame scene size, like large airports or large ports, burst to analyze motion with five frames collected in a single satellite pass, and stereo pairs (two frames) or sets (fivesfive frames) to build and update 3D products on short timelines. All imagery products are included in our On-Demand and Assured subscription plans. BlackSky also offers non-Earth imagery services for monitoring orbiting spacecraft and other objects of interest.

•Mission Solutions Revenue: We develop and deliver customized advanced satellites and payload systems for specific strategic customers that desire to leverage our capabilities in mission systems engineering and operations, ground station operations, software, analytics and systems development. By integrating our Gen-3 satellites, secure ground infrastructure, launch support, operations software, and training, this offering delivers rapid access to actionable intelligence, enhances mission continuity in secure or air-gapped environments, and supports national self-reliance in defense decision-making. Mission solutions empower customers to retain ownership and custody of satellites, tasking, and data while operating within their own borders and security frameworks. With proven, military-grade technology, globally distributed manufacturing, high-availability on-orbit performance, and transfer-of-knowledge programs that develop local workforce expertise, we enable partners to confidently build, operate, and evolve customized sovereign space architectures that strengthen national security and modern deterrence. These systems are sold to government customers under fixed price contracts and are often sold with operatingspace-based intelligence and imageryAI services or advanced technology programs service subscriptions. We retain rights to intellectual property for developed technology of certain systems. We also provide software systems engineering development services to support the integration of high volume and mass quantities of data in their operating platforms.

Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Effective January 1, 2025, we reclassified our captions on the unaudited condensed consolidated statements of operations and comprehensive loss to better align with our increasing portfolio of mission solutions product offerings and advanced technology program service offerings. Revenue and costs that were previously classified as imagery & software analytical services are now classified as space-based intelligence & AI services. Professional & engineering services are now either classified as mission solutions if they are related to our product offerings or advanced technology programs if they are related to our service offerings. As a result, for the three and six months ended MarchJune 31,30, 2025, the amounts presented have been reclassified to conform to the current presentation for the three and six months ended MarchJune 31,30, 2026.

The following table provides the components of results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025:

Space-based intelligence & AI services revenue was relatively flatincreased for the three and six months ended MarchJune 31,30, 20262026, as compared to the same periodperiods in 2025.2025, primarily from new assured contracts with existing customers in the second quarter of 2026 for increased space-based tactical intelligence, surveillance, and reconnaissance capabilities.

Mission solutions revenue decreasedincreased for the three months ended MarchJune 31,30, 20262026, as compared to the same period in 2025, primarily reflectingattributable one-timeto workan in process costs recognizedincrease in the first quarterrate of 2025performance on atwo customizedexisting Earthmission observationsolutions satellite for a then-new customer, which did not recur in 2026. The decrease was partially offset by revenue recognized on certain long-term contracts that are in various stages of completion.contracts.

Advanced technology programs revenue decreasedincreased for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, largely due to revenue generated from several new contracts in the timingsecond quarter of completion2026; ofthis designincrease and implementation services performed in 2025. These decreases werewas partially offset by the completion of services performed on certain contracts in early 2026. Advanced technology programs revenue was relatively flat for providingthe advancedsix researchmonths andended developmentJune services30, for2026 anas existing customercompared to developthe next-generationsame space-basedperiod intelligencein capabilities.2025.

Space-based intelligence & AI services costs, excluding depreciation and amortization, increased for the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025, driven by increased capacitylabor demandfulfillment from recent global events, which also caused an increase inand direct labor fulfillmentmaterial costs on new and existing long-term contracts.contracts driven by an increase in demand of space-based intelligence and AI services.

Mission solutions costs, excluding depreciation and amortization, increased for the three months ended June 30, 2026 as compared to the same period in 2025, reflecting an increase in the rate of performance on two mission solutions programs, one of which began in the fourth quarter of 2025. Mission solutions costs, excluding depreciation and amortization, decreased for the threesix months ended MarchJune 31,30, 2026 as compared to the same period in 2025, primarilylargely due to the impact of incurred work in process costs under a satellite procurement contract that began in the first quarter of 2025.

Advanced technology programs costs, excluding depreciation and amortization, decreased for the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025, primarilymainly due to a decrease in direct labor fulfillment costs caused by the timing of completion of design and implementation services performed inon 2025.a Thesenumber decreasesof were partially offset by costs to provide advanced researchnew and development services to an existing customer to develop next-generation space-based intelligence capabilities.contracts.

Selling, general, and administrative expenses increased during the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025, primarily relateddue to an increase in stock-based compensation expense resultingdriven fromby an increase in the average stock price at the time of the grant of new stock awards in 2026. In addition, selling and marketing expenses increased relateddue to theour costincreased utilization of international sales consultants as we continue to invest in international sales initiatives. Information technology and other administrative expenses increased as a result of additional procurement of company-wide software solutions. These various increases were partially offset by lower salaries and benefits costs as selling and marketing headcount decreased and we experienced increased labor utilization in customer programs. For the six months ended June 30, 2026, selling, general, and administrative expenses were also impacted by decreases in professional fees as a result of one-time transaction costs and accounting fees incurred during the first quarter of 2025 that were associated with finalizing the BlackSky Satellite Systems acquisition that closed in late 2024.

The following is our forecast for total restricted stock units ("RSUs") non-cash stock-based compensation expense as of MarchJune 31,30, 2026, whichwhich, excludes certain executive RSUs that were forfeited after March 31, 2026 but before the filing date. Inin addition to the amounts recognized in selling, general, and administrative expenses, this includes the portion that will be capitalized or classified in space-based intelligence & AI services, mission solutions, or advanced technology programs costs:

Research and development expense decreasedincreased for the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025, due to theincreased completion of certain development projectsinvestments in earlyour 2025.next-generation AROS multi-spectral, large-area collection system and novel AI capabilities.

Depreciation expense from satellites increaseddecreased for the three months ended MarchJune 31,30, 20262026, as compared to the same period in 2025, since 2025 relateddepreciation expense included both Gen-2 and Gen-3 satellites, whereas depreciation expense in the second quarter of 2026 only included Gen-3 satellites; our Gen-2 satellites became fully depreciated during the first quarter of 2026. Depreciation expense from satellites increased for the six months ended June 30, 2026, as compared to the same period in 2025, as a result of the launch of our Gen-3 satellites throughout 2025 and during the first quarter of 2026.2026; Thisthis increase in depreciation expense was partially offset by athe decreasedecline in our depreciation expense relatedon toour Gen-2 satellitessatellites, becomingwhich became fully depreciated in 2025.the first quarter of 2026.

Depreciation expense from all other property and equipment increased for the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025. This increase was primarily driven by the depreciation of increasing asset balances for internal-use software as we continue to invest in our BlackSky Spectra software platform, features for our Gen-3 constellation, and internal infrastructure.

Amortization expense increased for the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025 due to the change in the estimated useful life of an intangible asset during the fourth quarter of 2025.

Our common stock price significantly drives fluctuations in our equity warrants and other equity instruments that we classify as derivative liabilities in our unaudited condensed consolidated balance sheets and measure at fair value. Fluctuations to these instruments are inversely related to changes in our common stock price, the volatility of the markets, and the duration of the equity warrants. These re-measurements of derivative liabilities generated a loss for the three months ended March 31, 2026 and a gain for the three months ended March 31, 2025.

Interest income increased during the three and six months ended MarchJune 31,30, 2026 as a result of higher short-term investment balances during the period as compared to the same periodperiods in 2025.

Interest expense increased during the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025 because our outstanding debt increased from $116.5$123.5 million as of MarchJune 31,30, 2025 to $209.2$217.2 million as of MarchJune 31,30, 2026. In July 2025, we lowered the average interest rate of our outstanding debt when we repaid $100.2 million of loans from related parties in their entirety, which had a stated interest rate of 12% upon repayment, and issued $185.0 million of Convertible Senior Notes with a stated interest rate of 8.25%.

Adjusted EBITDA is defined as net income or loss attributable to us before interest income, interest expense, income tax expense or benefit, depreciation and amortization, as well as significant non-cash and/or non-recurring expenses as our management believes these items are not useful in evaluating our core operating performance. These items include, but are not limited to, stock-based compensation expense; unrealized gain or loss on certain warrants/shares classified as derivative liabilities; loss on debt extinguishment; non-recurring transaction costs; litigation, settlements, and related costs; severance; and impairment, obsolescence, and asset disposals. We have presented Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the exclusion of certain items in calculating Adjusted EBITDA can produce a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information in understanding and evaluating our operating results. In addition, we believe that Adjusted EBITDA provides additional information for investors to use in evaluating our ongoing operating results and trends. This non-GAAP measure provides investors with incremental information for the evaluation of our performance after isolation of certain items deemed unrelated to our core business operations.

The table below reconciles our net loss to Adjusted EBITDA for the three and six months ended MarchJune 31,30, 2026 and 2025:

As of MarchJune 31,30, 2026, our existing sources of liquidity included cash and cash equivalents and short-term investments. Our cash and cash equivalents excluding restricted cash totaled $39.4$36.9 million and $42.4 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively, and our short-term investments totaled $76.1$197.3 million and $82.0 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. We have incurred year to date losses and generated negative cash flows from operations since our inception in September 2014. As of MarchJune 31,30, 2026, we had an accumulated deficit of $756.1$776.9 million.

Our short-term liquidity as of MarchJune 31,30, 2026 was comprised of the following:

Our short-term liquidity as of MarchJune 31,30, 2026 was $117.5$244.1 million. We expect cash and cash equivalents, short-term investments, and cash generated from operating activities to be sufficient to meet our working capital and capital expenditure needs for the foreseeable future. Our future long-term capital requirements will depend on many factors, including our Gen-3 satellite and mission solutions production needs, launch and insurance costs, our growth rate, customer demand for capacity, the timing and extent of spending to support solution development efforts, our ongoing investments in technology infrastructure, and the continuing market acceptance of our products and services.

We entered into vendor financing agreements for $57.6 million to fund the costs of multiple satellite launches. Our November 2023 agreement provides for a $27.0 million borrowing commitment and payments accrue interest at 12.6% per annum while our November 2025 agreement is for a $30.6 million borrowing commitment and payments accrue interest at 9.50% per annum. A portion of the vendor financing agreements can be drawn down equally per satellite launch and will be repaid quarterly on a pro-rata basis across a three-year period after each successful launch milestone. Interest begins to accrue on each launch date. During the threesix months ended MarchJune 31,30, 2026, we incurred $3.0$13.2 million of additional debt related to the satellite launch vendor financing agreements. As of MarchJune 31,30, 2026, we have $28.9$18.7 million of additional vendor financing available to us for future launches. For additional information regarding the Convertible Senior Notes and vendor financing agreements, see Note 11 – “Debt and Other Financing” included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.

WeAs of June 30, 2026 and December 31, 2025, we had $24.2recorded $26.0 million and $28.6 million of current contract assets as of March 31, 2026 and December 31, 2025,assets, respectively. We expect to continue billing for and receiving payments on our contract assets over the next 12 months as interim milestones on a few major customer contracts are met. The timing of customer billing and payment varies from contract to contract and we may continue to generate additional contract assets in 2026 and beyond as we enter into new contracts.

As of MarchJune 31,30, 2026, our current assets were $185.3$309.8 million, consisting primarily of short-term investments, cash and cash equivalents, accounts receivable, and contract assets. Our current assets also include $10.0 million of restricted cash, of which $9.5 million was held primarily in term deposits that served as compensating balances for letters of credit required under contracts with certain customers.

As of MarchJune 31,30, 2026, our current liabilities were $53.6$53.1 million, consisting primarily of contract liabilities, accounts payable and accrued liabilities, and otherthe current liabilities, which includes a $7.5 million liability expected to be offset by an insurance recoveryportion of $7.4 million.debt. Accordingly, we have sufficient cash and working capital to fund our short-term liquidity requirements.

The following table provides a summary of cash flow data for the threesix months ended MarchJune 31,30, 2026 and 2025. Our short-term liquidity at MarchJune 31,30, 2026 was $117.5$244.1 million. Short-term investments of $76.1$197.3 million are not classified as cash, cash equivalents, or restricted cash.

For the threesix months ended MarchJune 31,30, 2026, net cash used in operating activities was $2.4$5.9 million, which is a decrease as compared to the same period in 2025. The decrease in net cash used in operating activities was largely related to a change in working capital in the first quarter of 2025 when we received a cash payment for capacity for future purchase orders and recorded it as deferred revenue in our unaudited condensed consolidated balance sheets. This decrease was partially offset by an increase in cash collected from interim milestone billings on a few major customer contracts during the threesix months ended MarchJune 31,30, 2026.

The change in net cash used in investing activities was primarily due to increased net proceedspurchases fromof short-term investments in government securities of $6.4$113.7 million during the threesix months ended MarchJune 31,30, 2026 as compared to $15.3$31.0 million of net purchases during the threesix months ended MarchJune 31,30, 2025.

We continue to have significant cash outflows for satellite procurement and launch-related services. We also incur labor costs for internally developed capitalized software as we add innovative new services and tools to our BlackSky Spectra software platform and our corporate business and operational systems. The total amount paid for capital expenditures increased during the threesix months ended MarchJune 31,30, 2026 as compared to the threesix months ended MarchJune 31,30, 2025 primarily due to an increase in cash paid to procure direct materials and build our Gen-3 satellites, as well as forto cashbuild paid forand launch insurance.our Gen-3 satellites. We expect cash outflows for satellite production to increase as we continue to build out our satellite constellation.

We received $14.3$160.2 million in net cash proceeds from our equity issuances during the threesix months ended MarchJune 31,30, 2026 as compared to $5.1$40.9 million in net proceeds during the threesix months ended MarchJune 31,30, 2025. Our equity issuances during the threesix months ended MarchJune 31,30, 2026 consisted of the sale of 0.64.2 million shares of our Class A common stock under the 2026 and 2025 ATM Agreement,Agreements, which resulted in $15.0$165.0 million in gross proceeds. In comparison, for the threesix months ended MarchJune 31,30, 2025, we sold 0.63.7 million shares of our Class A common stock under our 2022 ATM Agreement, which resulted in $5.4$42.5 million in gross proceeds. The increase in gross proceeds was the result of an increase in our average stock price during threethe six months ended MarchJune 31,30, 2026 as compared to the same period in 2025.

We evidence approval of the contract with the customer with dual signatures or approved purchase orders that detail the rights of each party and define payment terms. We have nevernot had any significant collection issues on contracts with new or recurring domestic and international government customers and we consider this historical trend when assessing the collectability risk for contracts with bespoke effective terms. We also consider the probability of the customer funding the total contract value as a component of the collectability risk.

We have classified the Privateprivate Placementplacement Warrantswarrants issued in October 2019 and March 2023 and the Osprey pre-merger Class B common shares that were exchanged for shares of our Class A common stock (the "Sponsor Shares") as long-term liabilities in our unaudited condensed consolidated balance sheets as of MarchJune 31,30, 2026 and 2025. Although some of the warrants have expiration dates within one year of MarchJune 31,30, 2026, current liabilities are used principally to designate obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current liabilities. The Privateprivate Placementplacement Warrantswarrants issued in October 2019 and the Sponsor Shares were initially recorded at fair value on the date of the Merger, whereas the Privateprivate Placementplacement Warrantswarrants issued in March 2023 were recorded at fair value on the date of issuance. The Privateprivate Placementplacement Warrantswarrants were recorded at fair value using a Black-Scholes option pricing model and the Sponsor Shares were recorded at fair value using a Monte Carlo simulation model. These liabilities are re-measured to fair value at each subsequent reporting date and immediately prior to each warrant exercise date. The remeasurements are recorded to (loss) gain on derivatives in our unaudited condensed consolidated statements of operations and comprehensive loss. We will continue to adjust the liability for changes in fair value until the financial instruments are exercised, redeemed, cancelled or released.