On April 26, MRP highlighted the key role satellite imagery is playing in the US’s monitoring of Russia’s attack on Ukraine. Government agencies and media sources alike have been bombarding satellite companies for photographs, 3D mapping, and other data, prompting the firms to expedite the expansion of their constellations. This was referred to as geospatial intelligence’s “internet moment” by Bill Rozier, the vice president of marketing at publicly traded satellite imagery provider BlackSky.
Just about a month later, on May 25, the US National Reconnaissance Office (NRO) announced they’d be funding three firms with billions of dollars in defense contracts throughout the next decade as part of its Electro-Optical Commercial Layer (EOCL) program. Each of those chosen firms, Maxar Technologies Inc., BlackSky Technology Inc., and Planet Labs, were direct focuses of our April intelligence briefing on this budding industry.
Maxar, in a securities filing, said its 10-year EOCL contract is worth up to $3.24 billion, with a five-year base contract of $1.5 billion and optional contracts worth up to $1.74 billion. BlackSky’s contract is valued at up to $1.02 billion over 10 years. Planet was more secretive about the value of its deal with the NRO since it is currently in a quiet period in its lead up to their quarterly earnings call. More details should be available on June 14 when they report.
As TechCrunch writes, commercial imaging capabilities in orbit have likely outstripped many assets put in place over the last few decades by the NRO. It’s not particularly feasible to launch a new, “secret” constellation that provides the level of coverage those providers do, so they’re just going to pay for the kind of high-level access the companies always knew would be valuable.
Use Cases Demonstrated in Ukraine
Uses for satellite monitoring have been plentiful throughout the last year, even long before the formal invasion of Ukraine began. As far back as June of 2021, when MRP first began covering Russia’s buildup of their troops in the southwest of the country near the border of Ukraine, satellite images were instrumental in helping the government agencies and media outlets observe Russian training sites, armored vehicles, and other military footprints. By the end of the year, Maxar had already locked up more than $100 million in new defense and intelligence contracts.
Just before Russian troops begun their invasion of Ukraine, The Wall Street Journal notes satellites were detailing the Kremlin’s plans. When Mr. Putin said his troops massing at the border were pulling back, satellites showed the opposite, and that Russia had built a bridge from Belarus for tanks to cross a river into Ukraine. Planet Labs was able to spot the bridge because its fleet of roughly 200 satellites scan all of Ukraine once a day, Planet co-founder and Chief Executive Will Marshall told the Journal.
Space News has reported the NRO and the National Geospatial Intelligence Agency more than doubled their purchases of commercial electro-optical imagery over Ukraine since the conflict started. Since the start of the year, Axios reports Maxar has been cited by the media more than 54,000 times. Much of this data is also being made available to Ukraine to aid their military operations.
As we highlighted in April, satellite imagery has also been used to ascertain more a more accurate number of military and civilian casualties. For example, Maxar’s satellite photographs helped confirm ground-level footage showing bodies in the streets of Bucha, a suburb of Kiev, as well as grave trenches and other evidence in the city that may be indicative of what US President Joe Biden has referred to as “war crimes”. As WIRED Magazine writes, a new government-funded Conflict Observatory, partnered with Yale University’s Humanitarian Research Lab, the Smithsonian Cultural Rescue Initiative, and several other private firms will use open-source investigation techniques and satellite imagery from the National Geospatial-Intelligence Agency’s commercial contracts with private companies to continue collecting evidence of possible war crimes.
Earnings and Valuations
Though revenue is booming and profitability improving for satellite imagery firms, valuations in the sector have been deteriorating for some time. The aforementioned NRO contracts provided a quick boost to share prices, but most remain well-off of previous highs reached in autumn 2021.
Per CNBC, Maxar reported $405 million in first quarter revenue for 2022, up slightly from a year prior, with an adjusted EBITDA profit of $84 million, a 25% increase. Maxar’s order backlog fell 14% from the fourth quarter to $1.6 billion. On a per-share basis, Seeking Alpha notes the Westminster, Colorado-based company posted a per share loss of -$0.10, but net loss was trimmed to -$7 million from -$84 million a year ago. Maxar has been the best performing stock in this industry, mostly keeping pace with the S&P 500 over the last 8 months.
BlackSky reported record revenue of $13.9 million in the first quarter, up a whopping 91% from the prior year period. Adjusted EBITDA showed a loss of -$9.5 million, a 53% improvement YoY. BlackSky’s full year 2022 guidance projects revenue between $58 million and $62 million – but Via Satellite notes that is down significantly from when the company first announced plans to go public in February 2021 and projected $114 million in revenue for 2022. Since BlackSky completed its SPAC merger with Osprey Technology Acquisition Corp. on September 9, 2021, the stock has plummeted roughly 80%.
As we mentioned earlier, Planet Labs will post their latest quarterly results next week.