Joshua Sullivan: Right.
Brian O’Toole: Yes. So yes, I think — for sure, I think the — obviously, the Space Force has now put out a formal strategy that is committing them to integrate with commercial space capabilities through what they call hybrid architectures. What we’re seeing is things that align with our purpose-built architecture are related to tactical SRT, very similar capabilities to what we announced on our $24 million AFRL contract. Other areas are space domain awareness and then other resiliency and command and control capability. So we’re excited as these things all align with the architecture that we have at BlackSky.
Operator: We’ll go next to Jeff Van Rhee with Craig-Hallum.
Jeff Van Rhee: A couple for me. Maybe, Henry, just to start on the $30 million in new renewals in terms of contracts signed. What’s the ARR on the $30 million?
Henry Dubois: Well, $30 million, some of those — for example, one of those is a contract that we’re doing some work with the U.S. government on. That was the one day we announced it’s starting off at about the 3.9% over about an 18-month period, and that was in a press release earlier this year and others are continuing to work forward. So they’re all typically multi-year, and we work our way through them as we get the task orders.
Jeff Van Rhee: So any bounds you can put around that? I mean, generally speaking, should I take that number and divide it by 2, 3, 4, 5, like a typical duration just to get a swag at how much ARR was signed?
Henry Dubois: Well, I mean, you heard Brian talk about the 10 contracts that are in the 6 figures that are multi-years. I mean they kind of go all over the place. But given the fact that they are all multi-years, the typical range of those is probably in that 3-year sort of time period.
Jeff Van Rhee: How are you thinking about path to free cash flow and timing?
Henry Dubois: Well, as we said in the prepared remarks, we’ve got — we feel like we’ve got a pretty good amount of liquidity on the books, including the commercial bank line we just put in place. We would have had about 55.8% at the end of the quarter. We did just talk earlier on the Q&A about the roughly $24 million of liquidity that will be coming in over time, from the major contracts that we’ve been progressing on the milestones. And we also, as you may recall, have our launches of vendor finance for the first couple of launches. So we feel like we’re in pretty good shape to get our Gen-3s up and get to the next stage of our growth.
Jeff Van Rhee: Okay. I guess just last one for me then. On the software line, specifically software. So $1.3 million in the quarter and Spectra and some of the capabilities they have long been talked about and certainly from our work, looked to be differentiated in terms of capabilities. From a revenue standpoint, I got to believe that’s not hitting where you’re sort of targeting that line. If I look over the last 3 years, it’s just generally flat to modestly down. What is it about that line that is not growing? And does it cause you to rethink about the competitive landscape? Is it just timing? Just a little more a little more specifics, if you would.
Brian O’Toole: Yes. I would say, Jeff, the real competitive advantage we have is that Spectra AI platform, which is driving increased a new user experience and then which is what is behind our increasing Imagery and Analytics revenues. We’ve had strong growth in that area, particularly around the NGA EIM program in the past. And that program is transitioning to a new program called Luno, which is currently in the proposal process and has a multi-year budget that will be 4x or 5x that of EIM. So we feel we’re well positioned for that. And that will drive our — help drive some of the future analytics revenues.
Operator: We’ll go now to Caleb Henry with Quilty Space.
Caleb Henry: Just a few from me. Because I know that BlackSky has always had a focus on AI, but I was wondering if the recent hype around generative AI, if that’s had any impact whatsoever on BlackSky?
Brian O’Toole: Yes. We’ve been using AI for quite a bit for quite a while here. We use it across all aspects of our operations from intelligent tasking to tipping and queuing to machine vision and learning on our Imagery and Analytics. We have used generative AI-type capabilities against opensource feeds to identify emerging events. And so we’re excited about where AI is right now. We are using it every day, and we’re seeing that as really an amplifier to our core Imagery and Analytics business over time.
Caleb Henry: And then there was a mention of space domain awareness earlier in the call. I was wondering if you could clarify that. Is that — is BlackSky planning on services that involve like imaging other satellites in space or is there something else?
Brian O’Toole: Our current satellites have a capability of looking up. In fact, that capability is available to the government today, and we see that as an emerging market opportunity.
Caleb Henry: Yes. I hadn’t heard about that before. Can you give a little bit more specifics on the Gen-3 plants? How many of those do you anticipate launching this year?
Brian O’Toole: As I said, we are on track to begin launching this year. I should also mention in parallel with getting the first couple of satellites up and working. There is a full production line that is being ramped up. So we will get into a steady cadence of satellites coming off that line and then up in the orbit over time.
Caleb Henry: One or 2 more questions. It looked like D&A was a little bit higher this quarter. Can you give any color on why that was?
Henry Dubois: Depreciation and amortization, do you mean?
Caleb Henry: Yes, yes.
Henry Dubois: Well, depreciation and amortization went up because we had more satellites in the year as compared to a year ago at this time.
Caleb Henry: Okay. And then last one for me. I was wondering if there any additional steps for the Indonesia contract? Or was that trading it? And then with — I think there was $7 million in revenue recognized last quarter. Is that kind of the expected rate in quarters to come? Or is there any kind of change along that quarter-over-quarter?
Brian O’Toole: That program will progress on 2 fronts. The first is their access to our Imagery and Analytic services through a subscription — multi-year subscription agreement. So that will ramp over time. And then the delivery of satellites, which will ramp as we make progress against the delivery of those satellites. That will be a little lumpier, but those are the 2 paths for that program.
Operator: We’ll go now to Scott Buck with H.C. Wainwright.
Scott Buck: Brian, can you give us any indication of what kind of stepped up pricing looks like for customers utilizing Gen-3 versus Gen 2?
Brian O’Toole: I’m not going to go into pricing specific pricing, but I think it’s safe to say that the Gen-3 capability is a significant step-up in capability, both from a resolution perspective, the fact that we’re adding a short way by our capability and we’ll have improved timeliness. So all of those things combined, we will be delivering a much higher service to customers as opposed to the current Gen-2 capability.
Scott Buck: And then second one for me. Just given that it’s an election year, I’m sure you guys have done some internal handicapping of outcomes and what kind of impact that may have on the business or programs you’re working with. Any thoughts you can share with us there?
Brian O’Toole: Well, I think the programs that we have visibility into, obviously, our EOCL, which is a 10-year program of record. And so that gives us good confidence in long-term budgets for that. They are subject to annual renewals. The Luno program by NGA is now a new program of record, which will drive a whole new set of revenue opportunities as that program ramps online. And then obviously, the Space Force strategy is putting budget in place for those capabilities. So everything we’re looking at is tied to long-term U.S. government programs.
Operator: [Operator Instructions] We’ll go now to Chris Quilty with Quilty Space.
Christopher Quilty: This week is GEOINT week. Are there any announcements out of that that you think are worth highlighting? And maybe can you comment specifically, I think there was an NGA preparedness announcement. Is that something that you feel well positioned?
Brian O’Toole: Yes, I think if you look at a lot of the remarks at GEOINT this year, they’re highly reinforcing of the government’s adoption of commercial Imagery and Analytics. As you mentioned, there’s now a new program related to maritime surveillance. That’s a capability we support today with some of our other partners and have demonstrated that. So that’s an exciting opportunity for us. Obviously, Luno is coming online, and then there were also remarks coming out of the Space Force related to the potential opportunities for commercial capabilities being involved with their hybrid architectures in the future. So we love the momentum, and we love the directionality that’s coming out of the government.
