Planet Labs PBC (PL) Q3 2026 Earnings Call Transcript
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Overview
The earnings call summary reveals strong demand for satellite services, a significant backlog, and positive financial metrics. Despite some uncertainties in project timelines, management's optimistic guidance and strategic partnerships, like with Google, suggest a positive outlook. The Q&A session highlighted confidence in meeting fiscal targets and scaling opportunities, further boosting sentiment. However, the lack of specific guidance on certain projects and potential sector pressures temper enthusiasm slightly. Overall, the sentiment leans positive, anticipating a modest stock price increase.
Key Financial Performance
Revenue $81.3 million, representing approximately 33% growth year-over-year. The growth was driven primarily by defense and intelligence and civil government customers, as well as progress against the JSAT satellite services contract. Upside was also supported by the Luno B win with the NGA and some onetime factors.
Non-GAAP Gross Margin 60% in the quarter, compared to 64% in the third quarter of fiscal year 2025. The decrease reflects investments in satellite services contracts and the mix of contracts, including AI-enabled partner solutions.
Adjusted EBITDA Profit $5.6 million, marking the fourth sequential quarter of adjusted EBITDA profitability. This was better than expected, primarily driven by revenue outperformance and disciplined OpEx spend.
Backlog $734.5 million at the end of the quarter, representing a year-over-year increase of 216%. This growth reflects strong demand and strategic wins in government sectors.
Free Cash Flow Positive for the third quarter in a row, reinforcing the expectation of being free cash flow positive for the full fiscal year.
Defense and Intelligence Sector Revenue Accelerated to over 70% growth year-on-year, up over 15% quarter-over-quarter. Growth was driven by strong performance in data subscription, solutions businesses, and satellite services.
Civil Government Sector Revenue Up approximately 1% year-over-year and up approximately 15% quarter-over-quarter. Growth was supported by a $13.5 million task order from NASA under the commercial satellite data acquisition program.
Commercial Sector Revenue Moderately down both year-over-year and quarter-over-quarter. The decline is attributed to increased focus on large government customers and seasonality in the agricultural sector.
Capital Expenditures Approximately $27.7 million in Q3, above guidance range due to prepayments for favorable pricing in hardware procurements and launch deposits for next-generation satellites.
Cash, Cash Equivalents, and Short-term Investments $677 million at the end of the quarter, an increase of approximately $406 million sequentially, driven by a $460 million convertible note raise.
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Operating Highlights
Owl Monitoring Fleet: Announced next-generation monitoring fleet with 1-meter resolution, lower latency, and upgraded onboard compute. First tech demo slated for late 2026.
Project Suncatcher: Funded R&D initiative with Google to enable scaled AI computing in space using Google's TPUs. Two prototype satellites planned for early 2027.
Pelican Satellites: Launched two high-resolution Pelicans, bringing the fleet to 5 satellites. Also launched 36 SuperDoves for broad area monitoring.
Defense and Intelligence Sector: Revenue grew over 70% year-on-year, driven by contracts with NGA, NRO, U.S. Navy, and NATO. Significant demand for AI-enabled analytics.
Civil Government Sector: Revenue up 1% year-on-year, with highlights including a $13.5M NASA task order and disaster response contract.
Commercial Sector: Revenue declined due to focus on government customers, but signed a new contract with AXA for insurance applications.
Revenue Growth: Achieved $81.3M in revenue, a 33% year-over-year growth. Backlog increased to $734.5M, up 216% year-over-year.
Profitability: Fourth consecutive quarter of adjusted EBITDA profitability with $5.6M in Q3. Free cash flow positive for the third quarter in a row.
Convertible Debt: Raised $460M in convertible debt at 0.5% interest rate, strengthening the balance sheet.
Bedrock Research Acquisition: Acquired AI solutions company to enhance capabilities in defense and intelligence markets.
Berlin Manufacturing Facility: Announced plans to open a new satellite manufacturing facility in Germany to double production capacity and meet European demand.
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Risk or Challenges
U.S. Government Shutdown and Federal Budget Reductions: The EOCL program and NASA's commercial satellite data acquisition program have been impacted by the U.S. government shutdown and potential federal budget reductions, which could affect future contracts and revenue.
Commercial Sector Revenue Decline: Revenue in the commercial sector was moderately down year-over-year and quarter-over-quarter, attributed to the company's increased focus on large government customers and seasonality in the agricultural sector.
Gross Margin Pressure: Non-GAAP gross margin decreased to 60% from 64% year-over-year, driven by investments in satellite services contracts and the mix of contracts, including AI-enabled partner solutions.
Capital Expenditure Increase: Capital expenditures in Q3 were above guidance due to prepayments for hardware procurements and launch deposits, reflecting a growth CapEx investment cycle that could strain cash flow.
Dependence on Large Government Contracts: The company’s revenue growth is heavily reliant on large government contracts, which are subject to political and budgetary uncertainties.
Customer Count Stagnation: The end-of-period customer count remained flat, reflecting a shift in focus to larger accounts, which may limit customer base diversification.
Short-Term Government Deals: A higher proportion of large shorter-term government deals has been closed, which could impact long-term revenue stability.
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Guidance & Outlook
Revenue Guidance for Q4 FY 2026: Expected revenue to be between $76 million and $80 million, representing approximately 27% year-on-year growth at the midpoint.
Full Year Revenue Guidance for FY 2026: Expected revenue to be between $297 million and $301 million, reflecting strong performance in Q3 and improved outlook for Q4.
Non-GAAP Gross Margin Guidance for Q4 FY 2026: Expected to be between 50% and 52%, driven by satellite services contracts, mix of deals with AI-enabled partner solutions, and investments in next-generation fleets.
Full Year Non-GAAP Gross Margin Guidance for FY 2026: Updated to be between 57% and 58%, reflecting better-than-expected gross margins during Q3.
Adjusted EBITDA Guidance for Q4 FY 2026: Expected to be between minus $7 million and minus $5 million, reflecting investments in AI-enabled solutions and next-generation fleets.
Full Year Adjusted EBITDA Guidance for FY 2026: Expected to be between $6 million and $8 million, reflecting strong performance in revenue and cost efficiencies.
Capital Expenditures Guidance for Q4 FY 2026: Planned to be approximately $22 million to $26 million.
Full Year Capital Expenditures Guidance for FY 2026: Planned to be approximately $81 million to $85 million, with increased investments in satellite fleets and pulling forward some investments for favorable pricing opportunities.
Free Cash Flow Guidance for FY 2026: Expected to be free cash flow positive on an annual basis, despite quarterly variations due to timing of cash collections and CapEx requirements.
Revenue Growth Outlook for FY 2027: Backlog provides good visibility to sustain Q4 revenue growth rate into fiscal '27 and achieve revenue and adjusted EBITDA targets shared at the October Investor Day.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:In terms of the revenue and margin guide down, is the revenue down on onetime benefits on usage in the past quarter and then the gross margin guide down, is that mostly tied to some of your large international programs you're ramping?
A:Ashley Whitfield Johnson explained that Q3 had onetime items related to renewals of certain contracts and timing of landing new business. The NASA and EOCL contracts were downsized, impacting Q4 guidance. Margin compression is due to investments in satellite services contracts and partner fees for awards like Luno B.
Q:Are the partner fees front-loaded in some way before revenue hits?
A:Ashley Whitfield Johnson clarified that partner fees align to revenue.
Q:Which sectors are Bedrock focused on, and what sort of data does Bedrock integrate?
A:William Marshall stated that Bedrock focuses on remote sensing, AI, and national security. They handle multiple data sets, including public and national security data, using versatile approaches like embeddings for AI modeling.
Q:Can you give us a sense of the feasibility and viability of Project Suncatcher and how to measure it going forward?
A:William Marshall described Suncatcher as a viable long-term project in R&D phase. It involves demo satellites to test components like heat shedding and formation flying. The project aligns with Google's architecture and has potential for scaling.
Q:Are there any special design changes needed for the bus used in Suncatcher?
A:William Marshall mentioned minor changes like expanding solar panels but emphasized that the bus design is largely the same as the Owl project.
Q:Is JSAT ahead of schedule, and how are the JSAT and Germany deals proceeding relative to internal timelines?
A:Ashley Whitfield Johnson noted that JSAT is meeting and exceeding customer expectations, resulting in financial upside. William Marshall added that both programs are progressing well, with a strong pipeline of opportunities.
Q:Do you expect the fourth quarter implied growth rate to continue into fiscal '27?
A:Ashley Whitfield Johnson confirmed that Q4 growth is indicative of fiscal '27 expectations, with a focus on converting the pipeline and maintaining EBITDA breakeven or better.
Q:How do you think about the sizing and magnitude of the pipeline of opportunities, and what is the timing for conversion?
A:William Marshall stated that Planet is well-positioned for sovereign satellite opportunities, focusing on a half dozen mature deals. Timing for conversion depends on execution and customer readiness.
Q:Can you provide numbers around Suncatcher and its scaling opportunity with Google's R&D budget?
A:William Marshall explained that the current contract is for demo satellites, with potential for scaling to thousands of satellites if cost advantages are proven. Google chose Planet for its expertise in scaled satellite operations.
Q:What is the demand pull for compute in space, and how ready are people to consume it?
A:William Marshall stated that demand for compute in space depends on cost thresholds. Some compute demands lend themselves to space, and companies like Google are investing in R&D for long-term scaling.
Q:How does revenue from Pelican satellites layer in, and is it gradual or lumpy?
A:Ashley Whitfield Johnson described revenue as more gradual, aligned with contract milestones. William Marshall added that Pelican satellites are scaling linearly as SkySats ramp down.
Q:Do you have clarity on what might replace the EOCL cutbacks?
A:William Marshall noted strong interest from the administration in leveraging new tech for DoD missions, with programs like Luno and Navy expansions showing positive trends.
Q:How scalable is the capability set for insurance-type businesses like AXA?
A:William Marshall highlighted high scalability and margins, with AXA using satellite imagery for claims processing and offering it on their platform for other insurers.
Q:Can you explain the immediate revenue impact of the Luno B contract?
A:William Marshall stated that Planet was ready to execute immediately upon contract signing, leading to instant revenue recognition.
Q:How does revenue from JSAT and Pelican satellites flow in, and is it included in ACV metrics?
A:Ashley Whitfield Johnson explained that JSAT revenue is predictable but excluded from ACV metrics. It includes upfront and managed components spread over the satellite's lifetime.
Q:Is the weakness in agriculture on the commercial side due to overall sector pressure?
A:Ashley Whitfield Johnson clarified that it is seasonality, not weakness, with usage peaking during harvesting periods. The sector shows stability and potential for growth.
Q:What production rate is needed for the pipeline, and is current capacity sufficient?
A:William Marshall stated that Planet is expanding facilities to match demand, with the Berlin site doubling Pelican satellite production capacity.
Q:What is the update on Tanager and its market potential?
A:William Marshall reported strong results from Tanager's first year, with applications in methane leak detection and interest from defense and intelligence sectors.
Q:What are the differences in next-gen 30-centimeter Pelican satellites?
A:William Marshall mentioned upgraded telescopes and lower altitude as key improvements for next-gen Pelican satellites.
Q:Review of Unclear Management Responses
A:Management avoided providing specific production rate numbers for competitive reasons and did not detail the exact timing for pipeline conversion or scaling of Suncatcher beyond the R&D phase.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AXA
Bedrock
Commercial
DCP
Director Investor
Labs PBC
NASA
NATO
National
Owl
Palmer
Poroner Director
Suncatcher
acquisition
application
area interest
award
class
detection monitoring
disaster response
government sector
government shutdown
insurance
manufacturing
monitoring area
opportunity relationship
pilot
processing
profitability backlog
relationship future
resolution imagery
road map
run rate
shutdown reduction
task order
traction
vessel detection
PL Transcript
Planet Labs PBC (PL) Q3 2026 Earnings Call Transcript
Positive12-11
The earnings call summary reveals strong demand for satellite services, a significant backlog, and positive financial metrics. Despite some uncertainties in project timelines, management's optimistic guidance and strategic partnerships, like with Google, suggest a positive outlook. The Q&A session highlighted confidence in meeting fiscal targets and scaling opportunities, further boosting sentiment. However, the lack of specific guidance on certain projects and potential sector pressures temper enthusiasm slightly. Overall, the sentiment leans positive, anticipating a modest stock price increase.
Planet Labs PBC (PL) Q2 2026 Earnings Call Transcript
Unknown9-8
The earnings call presents a mixed outlook. While there is strong growth in the Defense & Intelligence sector and promising partnerships, the guidance for Q2 and full-year shows expected losses and lower margins. The Q&A highlights strong demand and strategic partnerships but lacks detailed guidance, leading to uncertainty. The positive backlog growth and strategic initiatives are countered by the negative outlook on EBITDA and capital expenditures, resulting in a neutral sentiment.
Planet Labs PBC (PL) Q1 2026 Earnings Call Transcript
Positive6-5
The earnings call reveals positive financial performance with a 10% YoY revenue growth, improved gross margins, and positive free cash flow. The backlog and RPOs have significantly increased, indicating strong future revenue visibility. Despite economic uncertainties and customer concentration risks, the company is focusing on larger customers and has a strong partnership with Anthropic. The Q&A section shows optimism about growth and minimal disruption from tariffs. Overall, the company's strategic initiatives and financial health suggest a positive outlook, likely resulting in a stock price increase of 2% to 8%.
Planet Labs PBC (NYSE:PL) Q4 2025 Earnings Call Transcript
Positive3-22
The earnings call reveals strong financial performance with 11% YoY revenue growth and significant improvements in gross margin and EBITDA. The company's strategic plans, including AI partnerships and satellite service expansions, indicate promising future growth. Despite some concerns about CapEx and macroeconomic risks, the overall sentiment is positive, supported by a strong backlog and increasing RPOs. The market is likely to react positively to the first-ever adjusted EBITDA profitability and optimistic long-term outlook.
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PL Report
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