Planet Labs PBC Q4 2025 Earnings Call Transcript

Quartr
Provided by Quartr
March 20, 2025

There are 13 speakers on the call.

Operator

Good afternoon. Thank you for attending today's Planet Labs PBC Fiscal Fourth Quarter and Full Year twenty twenty five Earnings Call. My name is Jayla, and I'll be your moderator for today. All lines will be muted in the presentation portion of the call with an opportunity for questions and answers at the end. I'd now like to turn the conference over to our host, Cleo Palmer Perronor from the Investor Relations team.

Operator

Cleo, you may proceed.

Speaker 1

Thanks, operator, and hello, everyone. This is Leo Palmer Kroner from the Investor Relations team at Planet Labs PBC. Welcome to Planet's fiscal fourth quarter and full year twenty twenty five earnings call. I'm joined by Will Marshall and Ashley Johnson, who will provide a recap of our results and discuss our current outlook. We encourage everyone to please reference the earnings press release and earnings update presentation for today's call, which are available on our Investor Relations website.

Speaker 1

Before we begin, we'd like to remind everyone that we will make forward looking statements related to future events or our financial outlook. We also may reference Qualified Pipeline, which represents potential sales leads that have not yet executed contracts. Any forward looking statements are based on management's current outlook, plans, estimates, expectations and projections. The inclusion of such forward looking information should not be regarded as a representation by Planet that future plans, estimates or expectations will be achieved. Such forward looking statements are subject to various risks and uncertainties and assumptions as detailed in our SEC filings, which can be found at www.sec.gov.

Speaker 1

Our actual results or performance may differ materially from those indicated by such forward looking statements, and we undertake no responsibility to update such forward looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. During the call, we will also discuss historic and forward looking non GAAP financial measures. We use these non GAAP financial measures for financial and operational decision making and as a means to evaluate period to period comparisons. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency respect to key metrics used by management and its financial and operational decision making. For more information on the non GAAP financial measures, please see the reconciliation tables provided in our press release issued earlier this afternoon, which is available on our website at investors.planet.com.

Speaker 1

Further, throughout this call, we provide a number of key performance indicators used by management and often used by competitors in our industry. These and other key performance indicators are discussed in more detail in our press release and our earnings update presentation, which are intended to accompany our prepared remarks.

Speaker 2

At this point, I'd now like to turn the call over to Will Marshall, Planet's CEO, Chairperson and Co Founder. Over to you, Will. Thanks, Cleo, and hello, everyone. Thanks for joining us today. Last year was an exciting and transitional year for Planet, and I'm incredibly proud of everything our teams have achieved.

Speaker 2

We shifted our go to market structure to be a vertically focused approach and towards selling solutions. We took a major step up in the satellite services market and closed a $230,000,000 contract with a marquee customer. We launched 74 satellites into orbit including our second Pelican and first Tanager spacecraft. We launched the Planet Insights platform and delivered our new Global Forest Carbon Monitoring product. And we drove meaningful improvements in our financials throughout the year including reaching our target of adjusted EBITDA positive in Q4, the first time in the company's history.

Speaker 2

All of this sets Planet on a sound footing going into this year. To briefly summarize the full year results, we generated a record $244,400,000 in revenue, representing an 11% year over year growth. Non GAAP gross margin for the year was a record 60%, up from 54% a year ago and full year adjusted EBITDA loss came in at $10,600,000 Q4 was a record quarter for revenue, gross margin and operating margin. And as I already mentioned, we achieved our goal of delivering a first adjusted EBITDA profitable quarter, a target we set two years ago and a major milestone on our journey to positive cash flow. Backlog increased in the quarter to almost $500,000,000 up over 100% year over year and approximately 115% quarter over quarter.

Speaker 2

We believe this puts us in a strong position with a clear path to at least double our revenue growth rate in FY twenty seven compared with FY twenty six. I'd like to spend a little time on our landmark $230,000,000 commercial agreement we signed with our long term partner in Japan, JSAP. Last year, we made the strategic decision to take a significant step forward in the satellite services market in response to a strong demand signal selling to customers who want preferred access to data in a particular region. These partnerships can be very synergistic to our core business. Our JSEP partnership announced last month is our first deal in support of this strategic direction.

Speaker 2

Under this agreement, Planet will build, launch and operate a constellation of 10 high resolution Pelican satellites for JASET. Planet will commercially sell the rest of the world's capacity of these satellites across the vast majority of the Earth's surface representing a significant upside opportunity. We couldn't be more pleased to have JSAT as our cornerstone partner as we embark on this new chapter. This deal is structured to create a win win win. For JSAEP, this aims to secure priority access to critical intelligence in their area of interest with a rapid turnaround from program start to operational capabilities.

Speaker 2

For Planet, we intend to drive scale in our business and monetize some of our most strategic assets and IP. And for all our other current and future Planet customers, we plan to bring more Pelican capacity online faster, substantially increasing global capacity and revisit rates. We see this as a major step forward for Planet in the satellite services market. The satellite services market is in the tens of billions of dollars globally today and we believe we can address a meaningful portion with this offering. Bigger picture, the world is in a state of significant transition across geopolitics and technology.

Speaker 2

Countries are moving with new clarity and speed to ensure that they have access to the technology and information needed to protect their interests. We are stepping up to meet this need around the globe for countries who are rushing to maintain or expand their sovereign access to space and the powerful information gathering and decision making it enables. We have always been and will continue to be a leading provider of geospatial data and solutions our core business. Our move to increase efforts into the satellite services expands our portfolio where we are accelerating our business by leveraging one of our greatest assets our proven ability to build and operate cutting edge fleets of remote sensing satellites quickly and cost effectively. We're actively pursuing a handful of similar such opportunities with other trusted strategic partners across the defense and intelligence, civil government and commercial markets and across all three of our satellite fleets.

Speaker 2

We aim to be the go to scaled space partner for these customers. Planning to sales highlights starting with the defense and intelligence sector. Revenue from the D and I sector grew more than 20% for the full fiscal year 2025. We're proud to share that we've been awarded a contract to build a prototype for the Defense Innovation Unit, the DoD, focused on bringing innovation to the DoD. We continue to engage in shorter term projects with the DoD as we work towards becoming part of operational DoD workflows and we are very excited that DIU has ordered this prototype from us.

Speaker 2

The order was won by Planet as a prime contractor with a partner subcontractor and is valued in the low 7 figures. During the quarter, we were pleased to be selected as one of the priors for the National Geospatial Intelligence Agency's Luno B commercial data IDIQ contract. Under this contract, we'll compete against other prime vendors for future delivery orders, the total value of which can be up to $200,000,000 over five years. Pliant was also awarded a 7 figure ACV renewal and expansion by the DoD. The order leverages our maritime domain awareness solution and was one with a partner.

Speaker 2

It includes Planet data and partner enabled AI capabilities. Looking forward, we expect continued strong growth in the defense and intelligence sector. In an increasingly complex geopolitical environment, Planet Solutions can enhance situational awareness for customers by providing greater transparency about emerging challenges and can provide more confidence in well informed responses. We see opportunity with the U. S.

Speaker 2

Government as it pursues efficiency and effectiveness across both civil defense and intelligence agencies and internationally as countries require increased access to information in an uncertain world. We are seeing strong and growing opportunities in maritime domain awareness where we offer open water monitoring and analytics to support situation awareness to thwart, piracy, smuggling and other serious maritime safety and security risks. Additionally, we're investing in the development of our Global Monitoring Service or GMS, a solution that leverages recent industry advances in artificial intelligence and our broad area data to enable customers to scan entire countries or regions for important changes and threats. Relatedly, we were pleased to welcome former General Jay Raymond to Planet's Board of Directors. General Raymond was the first Chief of the US Space Force and a member of the Joint Chiefs of Staff.

Speaker 2

His years of experience leading space operations at the highest levels of our government are invaluable as we continue to work closely with the critical government customers both here in The U. S. And abroad. Turning to the civil government sector where full year revenue grew approximately 15% year over year. While we've seen some seasonality due to large customer usage patterns in FY 2025, overall, the civil sector was strong this last year and we continue to see healthy demand for this market.

Speaker 2

Here are a few examples. We were pleased to announce a multi year contract with the European Space Agency, ESA, in January. Through this contract, Planet continues to serve the Copernicus contributing missions providing commercial satellite data alongside ESA's Sentinel satellite data to the Copernicus services. We also signed a new contract during the quarter with the Hellenic Space Centre to leverage PlanetScope data to support Greece's development of future downstream services for their national satellite data program. As they look to grow their own satellite capabilities, the Greek government will employ Planet's data to complement and inform their data sources.

Speaker 2

Shifting finally to the commercial sector which we previously discussed had faced headwinds particularly in the agriculture sector but where we've seen revenue stabilize in recent quarters. To share a few recent wins, last month we announced an expansion with the long term customer Bayer through a multi year enterprise license agreement. This agreement increases Bayer's access to Planet's satellite imagery and analytics, expanding into commercial operations and enabling enhanced decision making across its global agriculture operations. Bayer leverages a wide range of Planet's data and products, allowing them to make faster, data driven, agronomic decisions and improving efficiency across its operations. We also signed a multi year expansion with Syngenta during the quarter.

Speaker 2

Through the expansion, they will gain increased access to PlanetScope monitoring and SkySat high resolution data as well as the Planet Insights platform. With these products, Syngenta can enable farmers to remotely monitor crop health, detect pest infestations, and identify disease outbreaks with pinpoint accuracy. More broadly, our strategy in the commercial sector remains focused on delivering solutions enabled by the Planet Insights platform for market segments within agriculture, natural resources, energy and insurance verticals. Turning to product updates. During Q4, we successfully launched our Pelican two satellite.

Speaker 2

Pelican two is performing well in space and provides us valuable insights and confidence as we continue to build our next generation higher resolution fleet at pace. We're very proud to share today our first light images from Pelican two featured in our Q4 earnings presentation. We have multiple Pelican launches scheduled for this year as we scale towards a fully operational high resolution fleet. We also want to provide an update to our Tanager satellite. Tanager One launched last summer and has since been producing powerful hyperspectral data.

Speaker 2

We have already begun selling that data to a handful of selected customers under a limited availability program. The team has already delivered a five fold improvement in the Challenger one's tasking capacity since launch. Our partner Carbon Mapper has published over 1,000 methane and CO2 plume detections based on insights gleaned from the data And we're actively preparing to offer commercial data to the broader market particularly to the energy and civil government verticals within the next few months. On the platform side, in Q4, we released a physics based resolution sharpening technique that meaningfully improves the usability of our daily scan visual product. We also advanced our low touch enablement in the Planet Insights platform to expand and automate access to smaller customers.

Speaker 2

Planet's first fully automated low touch package on tropical forest observatory data formerly provided via the NICFI program was made available for purchase by self serve users a few weeks ago, a significant milestone. In addition, we continue to leverage advances in AI both for our solutions such as maritime domain awareness and our global monitoring service as well as through partnerships such as with AI leaders. A few weeks ago, we announced that we're collaborating with Anthropic to explore opportunities where satellite data and foundation models can be combined to deliver powerful new capabilities to users across government and business. In particular, Anthropic is fine tuning its Claude model on satellite data with the goal of enhancing model accuracy. We believe AI can enhance the extraction of value from satellite data accelerate delivery of insights and expand access to a wider range of users.

Speaker 2

This collaboration with Anthropic is mutually beneficial. AI helps unlock the value of satellite data. Meanwhile, satellite data helps AI models tackle real world problems. As mentioned before, we believe Planet is uniquely situated for AI given our unique daily scan and deep archive of over 3,000 images on average for every location on the Earth landmass. The pace of innovation in AI is extraordinary and if we describe Planet's strategic shift in FY '20 '5 as our big step up in the satellite services market, this year our strategic focus will be a big step up in AI and its potential to accelerate the development of solutions and increase accessibility to our powerful data.

Speaker 2

With that, I'll turn it over to Ashley to discuss our financials. Over to you, Ash.

Speaker 1

Thanks, Will. It was indeed a very productive year, representing an important transition for Planet across a number of fronts. Let's shift gears now to go through the financial results in more detail. Revenue for the fourth quarter came in at a record $61,600,000 representing approximately 5% year over year growth. Full year revenue came in at a record $244,400,000 representing approximately 11% year over year growth.

Speaker 1

As Will mentioned, we introduced a new go to market structure last year aligned to our customers and markets. And we began to see a shift from selling data to selling solutions targeted at specific market segments. We expect this shift to continue into the year ahead, led by our Defense and Intelligence business, but applying to our civil government and commercial business as well. We see this shift towards selling targeted solutions as a core part of our strategy to reaccelerate growth while enhancing the predictability of our business going forward. During fiscal year twenty twenty five, our defense and intelligence sector revenue grew more than 20% year on year.

Speaker 1

Civil government revenue grew approximately 15% year on year and the commercial sector was down more than 10% year on year, but has shown signs of stabilization and improvement since the trough in Q1. With the discrete commercial headwind showing signs of abating, we look forward to return to normalized growth in future periods. For the full fiscal year, EMEA revenue grew more than 15% year over year. Latin America revenue grew approximately 30%. Asia Pacific grew nearly 15%, while North America revenue grew approximately 5% year over year.

Speaker 1

Looking ahead, we see significant growth potential across all regions. In EMEA, National Security Solutions, particularly Maritime Domain Awareness or MDA and Global Monitoring Service, GMS are attracting strong interest driven by the current complex geopolitical environment. We also anticipate growth from area monitoring systems or AMS supporting the European common agricultural policy. In Latin America, the civil government sector remains a key growth driver as we continue to build on the incredible proof point from our work with the Brazilian Federal Police in identifying illegal deforestation in the Amazon. In North America and Asia Pacific, we similarly see National Security Solutions, MDA and GMS, generating considerable interest.

Speaker 1

Furthermore, as new Pelican high resolution data comes online, we expect the enhanced product and capacity to fuel growth across all regions. We continue to pursue commercial sector opportunities in agriculture, natural resources, energy and utilities and finance and insurance globally, albeit in a much more targeted and cost efficient way. Finally, global demand for our satellite services, exemplified by our work with JSAT, is strong. And as Will said, we are actively pursuing select opportunities with other trusted partners, both in The U. S.

Speaker 1

And around the globe. As of the end of fiscal twenty twenty five, our end of period customer count was nine seventy six customers, lower on a sequential basis, reflecting our direct sales team's focus on large customers in our core verticals. Over the last year, we've worked to enable smaller, more transactional customers to purchase through our platform or our marketplace partners. Average new customer ACV sizes increased sequentially throughout this year, while the majority of the churned accounts in the quarter were less than $50,000 in annual contract value. We see this as an indication that our intentional focus on larger accounts is working.

Speaker 1

As a reminder, customers who transact solely through our platform, which are typically smaller in nature, are not reflected in this customer account. Recurring ACV was 97% of our end of period ACV book of business, reflecting our continued focus on selling subscription data contracts and solutions as opposed to one time professional or engineering services. Over 89% of our end of period ACV book of business consists of annual or multiyear contracts. Our average contract length continues to be approximately two years weighted on an ACV basis. For the sake of clarity, the JSAT multiyear satellite services contract is not included in our ACV metrics, although it is included in our RPOs and backlog, which we will discuss in a moment.

Speaker 1

Net dollar retention rate at the end of fiscal twenty twenty five was 106% and net dollar retention rate with WinVAX was 107%. As we shift towards selling high value solutions targeted at embedding our data in core operational functions, especially within our top accounts, we expect NDRR to improve toward best in class levels over the next several years. Turning to gross margin. Non GAAP gross margin for the fourth quarter was a record 65% compared to 58% in the fourth quarter of fiscal twenty twenty four. Non GAAP gross margin for the full year was 60% compared to 54% in FY 2024.

Speaker 1

In fiscal twenty twenty five, we saw benefits from cloud infrastructure improvements offset by partner expenses and satellite depreciation. Adjusted EBITDA was a positive $2,400,000 for Q4, marking our first quarter of adjusted EBITDA profitability in the company's history and a major milestone on our journey to generating positive cash flow. For the full fiscal year, adjusted EBITDA loss was approximately $10,600,000 compared to a $55,300,000 loss in fiscal year twenty twenty four. We are proud of the financial and operational focus we've seen from our teams since setting this target two years ago. As we make some strategic investments this year, particularly in space systems to capture the opportunity in satellite services, we will do so with a stronger foundation of operating efficiency and focus on bottom line performance.

Speaker 1

Capital expenditures in Q4, including capitalized software development, were approximately $12,800,000 This was slightly higher than expected, driven largely by the timing of certain procurements for our Tanager, Pelican and Superdove satellites and for our ground station infrastructure. Full year capital expenditures were approximately $49,600,000 or approximately 20% of revenue, reflective of the investments we are making in our next generation fleets. Although we have been in a period of higher capital investment, our step in satellite services market represents a major expansion in our market opportunity that not only has the potential to become a major accelerate to growth, but even more so to long term free cash flow. Turning to the balance sheet, we ended the quarter with approximately $222,000,000 of cash, cash equivalents and short term investments. We significantly reduced our cash burn in fiscal year twenty twenty five and expect to further reduce it in fiscal twenty twenty six.

Speaker 1

We remain confident that we have sufficient capital to invest behind our core growth accelerating initiatives and achieve cash flow profitability without needing to raise additional capital, and we still have no debt outstanding. On that note, I'd like to echo Will's enthusiasm for our recently signed commercial agreement with JSAT. Under the agreement, we expect to recognize $230,000,000 of revenue of approximately the next seven years with cash payments weighted upfront to the earlier years to facilitate working capital for the program. As such, we expect the deal to be meaningfully accretive to cash flow, including in fiscal twenty twenty six. Revenue for the build of the pelicans will be recognized over time as work progresses.

Speaker 1

The cost for those pelicans will flow through cost of goods sold as opposed to CapEx and services revenue for the contract will be recognized as they are rendered. Please note that the accounting for long term contracts involves judgment and estimating costs and profit for each performance obligation and are subject to change. As we highlighted when we first announced the new win, we believe there is significant upside potential we can realize through selling the Constellation's substantial global capacity to Planet customers in the government and commercial sectors in other regions. At the end of fiscal twenty twenty five, we estimate that our remaining performance obligations or RPOs were approximately $407,500,000 up 179% quarter over quarter, of which approximately 37% apply to the next twelve months and 70% to the next two years. Our backlog, which includes contracts with the termination for convenience clause, which is common in our U.

Speaker 1

S. Federal contracts and occasionally found in other customer contracts, we estimate to be approximately $498,500,000 up 115 quarter over quarter. Approximately 38% of our backlog applies to the next twelve months and 69% to the next two years. This increase in backlog provides a solid foundation for meaningful growth rate acceleration into FY 2027. It's important to note that even without the landmark contract with JSAT, we saw strong growth in our RPOs and backlog in Q4.

Speaker 1

Let me now lay out our guidance for the first quarter of fiscal twenty twenty six. We're expecting revenue to be between $61,000,000 and $63,000,000 We expect non GAAP gross margin for the quarter to be between 5860%, impacted by the same factors that I described for fiscal year twenty twenty five. We expect our adjusted EBITDA loss for the first quarter to be between minus $3,000,000 and minus $2,000,000 reflective of the variability of our expenses quarter to quarter and our tight focus on cost controls and efficiencies even as we invest in strategic growth initiatives. Specifically, we are investing behind space systems capabilities and bringing new broad area solutions to market, both of which increase our expectations for R and D expenses in Q1 and the year ahead. We're planning for capital expenditures of approximately $11,000,000 to $16,000,000 in Q1 or approximately 20% of revenue, reflecting our continued investments in our next generation fleets and the ongoing maintenance CapEx for our PlanetScope constellation.

Speaker 1

For the full fiscal year 2026, we are expecting revenue to be between $260,000,000 and $280,000,000 While this range attempts to take into account potential risks related to timing of new business and customer usage patterns as well as timing of revenue recognition for our new satellite services contract, it may not reflect unforeseen volatility resulting from the current geopolitical and economic uncertainties. We're mindful that this is a rapidly evolving global environment. With that said, we're confident in the plan for the year ahead and see multiple potential sources of upside opportunity, including growing with our government customers, bringing new AI enabled solutions to market and our Pelican and Tanager data coming online. We expect non GAAP gross margin for fiscal twenty twenty six to be between 55% to 57%, reflecting assumptions around growth in partner revenue streams, increased depreciation related to satellites and costs related to the new contract with JSAT. Excluding these impacts, we would have expected non GAAP gross margin to be in line with or slightly better than fiscal twenty twenty five.

Speaker 1

Our long term target for non GAAP gross margin continues to be 70% to 80%. We see the new contract with JSAT as supporting our path to achieving our long term target given the incremental Pelican capacity that we expect to be able to monetize outside of our partners' area of interest. Over the course of the operational phase of the contract, we expect the gross margin to be in line with or accretive to the rest of the business. We expect our adjusted EBITDA loss for fiscal twenty twenty six to be similar to fiscal twenty twenty five with an expected range of minus $13,000,000 to minus $7,000,000 reflecting the aforementioned investments we're making in the business. We're planning for capital expenditures of approximately $50,000,000 to $65,000,000 for the year, reflecting the investments we're making in our next generation fleets, targeted to fulfill customer demand for cutting edge high resolution and hyperspectral data.

Speaker 1

We view this as the peak of the growth CapEx investment cycle for the build out of the Pelican and Tanager fleets and expect CapEx as a percentage of revenue to trend towards our long term target in fiscal twenty twenty seven. Finally, we expect to reduce our cash burn by approximately 50% in fiscal twenty twenty six and believe we have line of sight to cross over to positive cash flow in the next twenty four months, leveraging our strong balance sheet without needing to access the financial markets to fund our investments and growth. Looking ahead, the JSAT win and the significant increase in backlog gives us confidence in our path to meaningful revenue growth rate acceleration in fiscal year twenty twenty seven. Sources of incremental growth beyond that could be driven by acceleration from the new AI enabled solutions we're bringing to market from Pelican and Tanager data coming online and from any additional satellite services deals we close, all of which we are actively pursuing. To underscore our confidence in the opportunity, I'd like to highlight our plan to build and launch nearly 100 satellites here in The United States over the next two years, an incredible feat in our industry and indicative of the demand we see from the market.

Speaker 1

We're doing this with a non dilutive capital efficient model through innovative structures with partners such as JSAT and Carbonmapper, a testament to the strength of those relationships, the ingenuity of our teams and our commitment to creating shareholder value. As always, Will and I are thankful for the global Planet team. None of this would be possible without your dedication, resilience and innovation. Operator, that concludes our comments. We can now take questions.

Operator

We will now begin our question and answer session. Our first question comes from Colin Canfield with the company, Cantor Fitzgerald. Colin, your line is now open.

Speaker 3

May I

Speaker 4

ask the question?

Speaker 5

Focusing on the free cash flow dynamics, if we could maybe just kind of flush out the bridge, including what's moving in and out of CapEx and gross margin as well as some of the working capital assumptions you're making in 'twenty six? And then given that the company made some commentary on 'twenty seven, if we can kind of just flush out a little bit what the cadence looks like to getting to free cash flow positive? Thanks.

Speaker 1

Yes. Thanks, Colin. So as we talked about, we are in a peak CapEx investment cycle this year. So that's reflected in the guidance that we gave for CapEx for the full year, and is also reflected in my commentary about expecting our cash burn to be roughly half this year versus last year. As I mentioned, the JSAAC contract is structured in such a way that, we the cash payments are relatively front end loaded, which enables us to fund working capital for the program.

Speaker 1

So it's the balance of our traditional business, obviously with high gross margins and very strong collection experience with our customer base, managing our expenses across the board very carefully, and then at the same time investing in both the JSAT program and the building and launching of the Pelican and Tanager fleet. So, as I mentioned, this year, we're expecting cash burn to be roughly half. And based on our current view of the business, we could see getting to cash flow profitability over the next twenty four months.

Operator

Our next question comes from Edison Yu with the company Deutsche Bank. Edison, your line is now open.

Speaker 6

Hey, good afternoon. Thank you for taking our questions. I want to ask on the AI deal, it's Anthropic. In terms of the discussions you

Speaker 5

have with them, how are

Speaker 6

you thinking about the ultimate monetization of these, whether it's used to the model or whether it's just selling data to them? How are you sort of thinking about the way to actually make

Speaker 4

a lot of money off this?

Speaker 7

Good question. Well, I'm firstly very excited about that partnership. It's really cool and there's others that we're doing in a similar vein. I mean, it's really exciting time as I said on the prepared remarks. It's extraordinary the developments in AI and we feel right in the middle of it literally as well because we're a few blocks away from Antlerbiq, a few blocks away from OpenAI, a few blocks away from the Google Gemini team here in San Francisco and so you sort of feel it.

Speaker 7

And our data set as I mentioned in the remarks is just sort of sitting credible unique data set to train these models on. As these companies try to deal with real world problems, they need real world data. You can't very well deal with disaster response or security with any sort of synthetic data and so Planet Data is really very primed for that. As a monetization, look, I think our near term focus there is on these solutions that we're building with AI, they're AI enabled like the maritime domain awareness like looking over large ocean territory for ships and then identification of them and so on. That sort of thing we have real business to go after.

Speaker 7

We've already got meaningful revenue there. We're growing that with focus. There's others like GMS and AMS that Ashy mentioned. And then as for the foundation efforts of the kind that we're doing with Anthropic, it's a little bit more experimental but the in principle benefit there is really great because it can speed time to value. We've been very impressed with how these foundation models out of the box can do analysis on satellite data, can code against our API, can do things that speed up our ability of our existing customers to get from zero to something that has value and answers meaningful questions, as well as opening up to new set of potential clients that could get value who don't have geospatial expertise at all.

Speaker 7

And so this is an accelerant overall. It's It's early days on the foundation stuff, but the work we're doing on MDA and everything is really near term value that we're driving and growing our business.

Operator

Our next question comes from Michael J. Latimore with Company Northland. Michael, your line is now open.

Speaker 3

All right, great. Thanks. Yes, Ashley, at the end of your remarks there, you talked about AI, Pelican Tanger, new satellite service wins as a revenue opportunity in 2027. Would those be incremental to the doubling of the growth rate? Or are those included in that

Speaker 5

doubling of the growth rate?

Speaker 1

Yes. Great question. So in the remarks about the ability to double the growth rate based on the backlog that we have, that is literally pointing to the contracts that we have and have secured and our views as to, one, our ability to renew that business and then also execute against the business that's there that are multi year in nature. Upside to that growth rate is some of the areas that we talked about that we're investing in. So as Will just said, AI, we believe, is an incredible accelerant to delivering value to our customers and to enabling these solutions that we are building out with partners.

Speaker 1

In addition, if we sign any additional contracts on the satellite services front, that would be upside to that acceleration and growth rate. And then finally, bringing the Pelican and Tanagers online gives us an opportunity to increase the data that we're selling with our existing customers as well as bring new customers in. So those are all upside to the current visibility that we have to grow the growth rate of our business.

Speaker 3

Great. And then just to be clear, when you say positive cash flow, are you talking free cash flow or cash flow from operations?

Speaker 1

That's really about That's about free cash flow. Thanks for your question. Or another way of saying it's cash flow from operations and CapEx minus CapEx. Sorry, I interrupted you.

Operator

No problem. Our next question comes from Jason Gursky with the company, Citigroup. Jason, your line is now open.

Speaker 3

Great. Thank you.

Speaker 8

If you don't mind, just a couple of quick clarification questions and then one more meaty one. On the clarification of the doubling of the growth rate, is that at the midpoint of the range in 2026, so you double off of the midpoint? Or could we grow off the could we double off the top end of your range? That's the clarification one clarification question. And then the other clarification one, on the increased expenses that you expect here in 'twenty six, is that kind of like a one time in nature kind of thing and that rolls down in 'twenty seven?

Speaker 8

Or do we need to see revenue growth for margin expansion? And then the meat of the question the meat of your question is just the monetization of the non JSAT areas of the world. Just kind of curious, will you be going out and looking to try to find people that are going to take down dedicated access over a region of the world? Or is this all going into the library and you're trying to monetize the library? I'm just kind of curious how you're thinking about the monetization outside of that part of the world?

Speaker 8

Thanks.

Speaker 1

Great. Why don't I take the first two and let Will, talk about our strategy around satellite services. So in terms of the doubling of the growth rate, why don't we just start with looking at the midpoint, of our guidance as a good place to start for how we're thinking about FY 2027. But obviously, you can look at the increase in backlog and what applies to the next twelve months. And obviously, it's great to have such a strong book of business even for the twelve months after the one ahead of us.

Speaker 1

It's great visibility for us. On the expenses side, as I mentioned, we are both investing on the space systems side, so making sure that we have the capacity for all of the programs that we're running, for the core business. So that includes core data business, so Pelican and Tanager as well as our Super Dev fleets, in addition to the staffing required to execute against this great new contract that we have with JSAT. So that's one side of the investments. And so those obviously are teams that we'll need because we'll be continuing to grow our operations, in on the space system side, and then investments in AI and the software engineering team.

Speaker 1

So, again, I don't view these as one time in nature, but rather really investing, in R and D, which enables us to innovate and really stay ahead of the market. Will, do you want to take the question on monetization outside of?

Speaker 7

Yes. I mean, the great thing about this partnership is that not only does it pay for our satellites up front if you like those Pelican fleet and as I mentioned it's a sort of win win win for us them and our other customers because of the increased capacity. On that latter point we get to monetize the rest of the world which most of that capacity They have dedicated access over their area of interest which is in and around Japan basically. And so the rest of the world, we get that capacity and commercially can leverage that. And of course that's all upside to and great margin potential for that partnership.

Speaker 7

And I

Speaker 2

don't know if your question is leaning in

Speaker 7

this direction, but as I mentioned, there are a handful of other opportunities that we're going after where there's long term partnerships like we've had with Japan, they're strategic and synergistic with the core business. And we're very excited about the market potential here. Obviously, we feel that we're in a very strong position here because Planet has such a long history of doing Earth observation satellites. We've launched more Earth observation satellites than anyone else. And when countries think about their demand for dedicated access, we're really a first port of call.

Speaker 7

And so it's very exciting opportunity.

Operator

Our next question comes from Ryan Coombs with the company Needham and Company. Ryan, your line is now open.

Speaker 4

Great. Thank you. And sorry about the background noise, if there are some. But with regards to the revenue guide, Ashley, how much does that contemplate the current chaotic situation in Washington? Obviously, it's a very dynamic situation, but it seems that there are already impacts.

Speaker 4

I assume you're contemplating some impact in that revenue guide, just the state of things there, either on the civil especially on the civil side, I'm guessing. Any color you can share there?

Speaker 1

Look, I think we've attempted to take an appropriately conservative approach to our guidance. So reflecting potential risks related to macro pressures, timing of new business, so that would include ways that the uncertainty in the current environment might cause business new business to be delayed, Also factoring in customer usage patterns that we've seen, you know, have variability in the past. And then we have a brand new satellite services contract, which is a new revenue recognition methodology for us. And so we are, being appropriately conservative about how we see that revenue pacing in over the course of the year. So while it's not possible to reflect every potential outcome related to the current geopolitical and economic environment, we believe actually that solutions such as ours are core to government efficiency and that in many ways the current environment can be opportunity for companies like Planet, that bring much more efficient means of getting these kinds of insights and data.

Speaker 1

And we see this both domestically and internationally is driving a lot of opportunity for us. I don't know if you want to add anything there, Will.

Speaker 7

Yes, I could actually. I mean, there are real opportunities in this as Ashley is saying they're pushing towards efficiency. Planet is not just hypothetically able to do that. We've done that before. We've done that for NASA.

Speaker 7

We've done that for DOD. We've done that for the intelligence community. And so we are actually seeing opportunities like that arise. We're actively working with those agencies on that. And we feel like we're in a good position.

Speaker 7

And as Ashley mentioned, also internationally, this is creating a reaction that actually countries need and are demanding this type of capability sooner. And we've seen a lot of interest in that including in sovereign satellites and plan is in a unique position to service that. We've also seen increased budgets and an incredibly increased urgency for that in those countries as well. So, Planet, I think, can lean into some of that changing geopolitical dynamics pretty successfully. Of course, there's risks, but I would say the opportunities definitely outweigh them.

Operator

Our next question comes from Jeff Van Rhee with the company Credit Column. Jeff, your line is now open.

Speaker 9

Great. Thanks. Thanks for taking my questions guys. Couple for me. Maybe first just Will on Space Services.

Speaker 9

Just to be clear, this is sticking to existing configuration footprint capabilities. So this is doves, pelicans, etcetera, just being sold on essentially a different delivery model, sort of phrased differently. This isn't space services with a vision to customization?

Speaker 7

Yes. So we are really focused as I said, like we've got interest in all three types

Speaker 2

of our satellites, pelicans, tanagers and doves

Speaker 7

and all three in all three of our vertical markets, commercial, civil government and defense intelligence. The biggest area is in

Speaker 2

defense intelligence for pelicans, but

Speaker 7

it really does span all those. So yes, it's focused on the existing technology roadmap and that's how we can make it very synergistic here, where this pays ahead that capital expenditure, building up those fleets faster and but then of course there's plenty of upside potential as we were just talking about for JASA.

Speaker 1

Jeff, had a follow-up question.

Operator

Our next question comes from Trevor Walsh with the company Citizens Financial Group. Trevor, your line is now open.

Speaker 10

Great. Hi, Tim. Thanks for taking my questions. Maybe just to kind of piggyback a little bit off your comments, Will, and Ashley obviously chime in. But around this space services opportunity, it sounds like I think you had mentioned 10 satellites associated with JSAT.

Speaker 10

So, by my math, at least 22 kind of authorized pelicans. Does that footprint of 10 kind of is that a good proxy for kind of what other kind of console, like mini constellations, let's call them, for other types of deals that would kind of need to look like that? And then I guess, secondary question with that is how easy or could you kind of boost that 32 kind of regulatory kind of approved number, if the opportunity kind of demand kind of comes in and how easy or how much how quickly could you move on that kind of aspect of things? Thanks.

Speaker 7

Yes. I think you've got the math roughly right. And yes, as you know as you're citing, we've got approval up to 32 of those. The deals themselves could vary in numbers, of course. But, yes, I mean, we're seeing interest in around that sort of scale from other countries as well.

Speaker 7

So we'll see where that comes out. These are big strategic partnerships. So this is a it really is these are complex transactions, but they again, plan is in a relatively unique position to supply them being vertically integrated and having launched more Earth observations satellites than anyone else. So we really

Speaker 2

are and in some and in a

Speaker 7

lot of cases, having these long term relationships where they can trust our data and capabilities. Yes, I

Speaker 2

hope that gives us flavor.

Operator

Our next question comes from Josh Sullivan with the company The Mitchbank Company. Josh, your line is now open.

Speaker 4

Hey, good evening. Just as

Speaker 8

far as the focus on larger just the focus on larger customers while directing some of the smaller customers to third parties. What when's it dig through the snake there? Maybe when do we see the customer count stabilize?

Speaker 1

That's a good question. I think, as you know, the customer account excludes anybody that is solely transacting through the platform because those tend to be smaller. But obviously, we're developing a really strong pipeline of interest to the new solutions that we've been bringing to market. So the focus on making sure that we have the right solutions for the right customers should result in stronger net dollar retention rate, which I have said is a really core focus for us and also increase the average customer size, which is, obviously a really important metric for us as well. So, as I mentioned on the prepared remarks, the drop in customer count actually is in line with the strategy that we've had of really focusing our direct sales on those larger customers.

Speaker 1

And we've seen that play out in the increase in average ACV over the course of the year.

Speaker 7

Yes. And if I could just add, I mean, I think that the Planet Insights platform, the purpose of that is to help serve those smaller customers and to do so cost efficiently. So that most of our sales resources can be focused on those big accounts where we see the biggest potential still. But it is also because we believe in that long tail eventually as the tools get better as we are seeing with the planning insights platform and some of the AI solutions, this is enabling more people to get value out of it. That's a huge potential still here with geospatial data and particularly for Planet where you don't have to task satellites all the time because we've got the daily scan and for many users that means that the data is already there and they can get value out of it sitting there.

Speaker 7

So, that's our strategy.

Operator

The next question comes from Anthony Valentini with the company, Goldman Sachs and Co. Anthony, your line is now open.

Speaker 11

Hey, all. Thanks for taking my question. Ashley, I'm just curious, you've done a great job explaining the new strategy of going after larger new customers. And I think you had mentioned in your prepared remarks that you guys are looking to march your way back to Could you maybe just like talk a little bit about the strategy of like how you're actually going to achieve that? And then am I thinking of it correctly that, because you guys are going after larger customers that are new customers, that's almost like a like that's the offset of the lever on the NDRR that it's kind of going to be lower because of that.

Speaker 11

Just if you could kind of talk through that, that would be helpful. Thanks.

Speaker 1

Yes, absolutely. As I mentioned, core part of our strategy is in building these solutions that enable us to accelerate the time to value for our customers and to be embedded operationally with those customers. And we believe that by doing so, we have seen and we will continue to see strong retention rates and expansion rates with those customers. So in organizing our operations according to vertical markets, it's really about getting more of the company directly connected to our customer needs so that every aspect of our product development is really solving a core operational challenge that our customers are facing that our data can uniquely address, and enabling our sales team to really prioritize those opportunities where we have the strongest product market fit and growing with those customers. So, it's been a core part of the changes that we've made operationally over the last twelve months, as well as the investments that we've been making on the solution side and with our partners, to really see the time to value accelerate, which is a key part of then having best in class retention rates.

Speaker 1

I don't know if you'd add anything.

Speaker 2

No, thanks, Greg.

Operator

Our next question comes from Greg Pindy with the company ClearStreet Markets. Greg, your line is now open.

Speaker 6

Hey, thanks for taking my question. Just wanted to know on commercial, you mentioned stabilization that you're seeing, earlier in your comments. Can you elaborate a little bit on that? Thanks.

Speaker 1

Yes. So specifically in the agricultural sector, we're starting this year from a much stronger place. We've highlighted a few key customer wins and renewals. We're actually seeing our large ag customers ramp up nicely in their usage going into this growing season. And a lot of it was some transitions that we made working closely with those customers last year to understand where their business was going, parts of their business where they were reducing their investments, so more on the marketing side, and leaning into those areas where they're really investing, which is in, improving operational efficiencies and being part of, reducing the amount of inputs and increasing the output.

Speaker 1

So, and there's a lot of places where we can drive really tangible ROI to our customers, and making sure that that is the nature of the way we're working with those customers. We also see opportunity across the commercial sector with energy and insurance. Energy, obviously, with bringing Tanager online, as well as in the insurance space, we continue to expand with some of our marquee customers on that front. So, again, it's been a rough year just with all the changes going on in the ag sector, but a lot of really positive signs in the last few quarters.

Speaker 6

That's helpful. Thanks a lot.

Operator

Thank you. Our next question comes from Caleb Henry with the company, Multispace. Caleb, your line is now open.

Speaker 12

Hi. Thanks for taking my questions. Just had two questions. First is sort of on the existing changes in U. S.

Speaker 12

Government. On the Spire call, there was a conversation about seeing a lot more funding headed towards kind of commercial weather and them kind of anticipating a pretty dramatic change in uptake on their side. I'm wondering on the, electro optical side or any of the sensor types that Planet offers if you if management is kind of anticipating any similar meaningful changes from the new administration in terms of kind of how they make use of commercial satellite imagery?

Speaker 7

100%. Yes. So we are we expect them their focus is on efficiency and leveraging commercial capabilities and we fit right into that. Again, that's across civil government, defense and intelligence agencies. We're in

Speaker 2

active discussions with that and how

Speaker 7

we can help them on that priority and it's something that we have done before.

Speaker 2

This is a case in point, our Tanager partnership

Speaker 7

came out of a collaboration with NASA and is enabling them to do those missions at lower cost. Our EOCL contract with NRO is enabling them to get access to satellite imagery, much lower cost than doing their own way. So these are

Speaker 2

the kind of programs that I think the government is going to double down on and accelerate in this environment. And again, as I mentioned earlier, we're seeing significant budgetary increases in other countries like Japan and Europe

Speaker 7

as a part lead to Reactor and as well and that is something that we want

Speaker 2

to lean into too. We're a global company.

Speaker 12

Okay. Thanks. And then just one clarification on the JSAT contract. What's the rough timeline for when you start launching those satellites? Is that something where you want to get a minimum number of dedicated planet satellites up first and then you ship to JSAT, maybe interspersed?

Speaker 12

Or when do you start rolling out the JSAT portion of the Pelican fleet?

Speaker 2

Yes. So we are focused first on

Speaker 7

our own satellites that is most critical to the continuity of our SkySat fleet. Continuity and

Speaker 2

of course enhancements in all the

Speaker 7

ways we describe Pelican is. And then next is the JASAT one, which will be mainly over the next twenty four months.

Speaker 12

Okay. Thank you.

Operator

Our next question comes from Colin Canfield with the company Cancer Fitzgerald. Colin, your line is now open.

Speaker 5

Thanks for the follow-up. Maybe we could just talk a little bit about the contract opportunities that we'll talk about. A handful of opportunities, sounds like they're pretty similar. Obviously, you have a little bit of a split across the types of satellites that might be procured. But if you could maybe talk through kind of what the total size of that bid pipeline, so I can have that splits out relative to the services pipeline?

Speaker 2

I haven't got a pipeline for

Speaker 7

a number for you right this second. It is early days in our entry into this, but what I will say is that we're seeing strong demand there from different countries and many countries took note of the partnership we did with Japan, so it's only further accelerated subsequent to our announcement of that. There's a lot of interest, but we're being very strategic about which ones we focus on when because these are big complex transactions as

Speaker 2

I said and so we're focused on ones that are most synergistic that

Speaker 7

are going to drive our current product pipeline and aligns with our long term financials as well. So, yes, that's the way I think about it. We will obviously continue to share more as we can in upcoming quarters.

Operator

I would now like to turn the conference over to the CEO and Co Founder, Will Marshall. Will, you may proceed with closing remarks.

Speaker 7

Well, look, overall, I'm very proud of what we've achieved here in the last year that you've been hearing about today. And I feel that the planet is in a great position overall, especially based on the JSAT partnership that we mentioned and our strong backlog. Our big focus this year is really on growth acceleration using from these new data sets from these AI powered solutions and a handful of other partnerships in satellite services. And finally, I'll just note about the AI transition. I really think of that as a strategic focus for the year, a bit like going more fulsome into the satellite services sector was a big strategic decision last year.

Speaker 7

This year it's going to be focused on AI across the board and we believe that can accelerate our opportunity. So thanks for joining us today and a real big thanks to all of our teams that enable everything that we've been discussing and so look forward to giving you update next time. Thanks.

Operator

That will conclude today's conference call. Thank you for your participation and enjoy the rest of your day.

Powered by Quartr
Earnings Conference Call
Planet Labs PBC Q4 2025
00:00 / 00:00