Earnings call transcript: Planet Labs Q1 2025 beats revenue forecast, stock rises

Planet Labs PBC (PL), with a market capitalization of $1.17 billion, reported its first-quarter 2025 earnings, revealing a revenue of $66.3 million, exceeding the forecasted $62.36 million. This 10% year-over-year growth was accompanied by a positive market response, with the stock price climbing 3.91% in regular trading and an additional 5.47% in aftermarket trading, reaching $4.05. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with analysts setting price targets ranging from $3.50 to $8.00.

Key Takeaways

• Revenue of $66.3 million surpassed expectations by $3.94 million.
• Stock price increased by 3.91% in regular trading and 5.47% in aftermarket.
• First quarter of positive free cash flow at $8 million.
• Strong demand in defense, intelligence, and government sectors.
• Strategic AI partnerships with Anthropic and Google.

Company Performance

Planet Labs demonstrated strong performance in Q1 2025, with a 10% year-over-year revenue increase to $66.3 million. The company achieved its first quarter of positive free cash flow, amounting to $8 million, and reported an adjusted EBITDA profit of $1.2 million. InvestingPro data reveals impressive gross profit margins of 57.65% and a strong balance sheet with more cash than debt, highlighting the company’s operational efficiency. This performance reflects the company’s strategic focus on expanding its market presence and enhancing its product offerings, particularly in the defense and government sectors. Discover 8 more exclusive InvestingPro Tips and comprehensive financial metrics with your subscription.

Financial Highlights

• Revenue: $66.3 million, a 10% increase year-over-year.
• Non-GAAP Gross Margin: 59%, up from 55% last year.
• Adjusted EBITDA Profit: $1.2 million.
• Positive Free Cash Flow: $8 million.
• Cash and Equivalents: $226.1 million.
• Remaining Performance Obligations: $451.9 million, a 262% year-over-year growth.

Earnings vs. Forecast

Planet Labs exceeded revenue expectations by $3.94 million, reporting $66.3 million against a forecast of $62.36 million. This represents a significant earnings surprise, reinforcing the company’s growth trajectory and market position.

Market Reaction

The stock price of Planet Labs rose by 3.91% during regular trading, closing at $3.99, and continued to climb by 5.47% in aftermarket trading, reaching $4.05. With a beta of 1.61 and significant price movements over the past year (ranging from $1.73 to $6.71), InvestingPro data indicates the stock’s volatile nature. This positive movement reflects investor confidence in the company’s strong financial performance and strategic initiatives, including its AI partnerships and market expansion efforts. The stock has delivered an impressive 124% return over the past year, though analysts have recently revised their earnings expectations downward.

Outlook & Guidance

For the second quarter, Planet Labs projects revenue between $65 million and $67 million. The company anticipates a full-year revenue of $265 million to $280 million, with an expected adjusted EBITDA loss ranging from $12 million to $7 million. Capital expenditures are projected between $50 million and $65 million, as the company targets double-digit growth in fiscal 2027. According to InvestingPro’s Financial Health assessment, the company maintains a FAIR overall score of 2.03, with particularly strong metrics in growth (3.61) and cash flow (2.06). Access the complete Planet Labs Pro Research Report, along with 1,400+ other detailed company analyses, exclusively on InvestingPro.

Executive Commentary

CEO Will Marshall emphasized the company’s role as a "reliable and trusted partner" amid global changes, highlighting the strategic importance of their offerings. CFO Ashley Johnson described recent product enhancements as a "strategic maneuver" to capture a broader customer base, underscoring the company’s commitment to growth.

Risks and Challenges

• Potential adjusted EBITDA loss in the upcoming quarter, indicating operational challenges.
• Uncertainties surrounding NASA and government budgets, which could affect future contracts.
• High projected capital expenditures, potentially impacting short-term profitability.
• Geopolitical changes influencing demand dynamics in key sectors.

Q&A

During the earnings call, analysts inquired about the company’s AI data ingestion strategies and partnerships, highlighting the potential for these initiatives to drive future growth. Concerns were also raised regarding NASA and government budget uncertainties, with executives addressing strategies to mitigate potential impacts.

Full transcript - Planet Labs PBC (PL) Q1 2026:

Cameron, Operator/Moderator: Good afternoon. Thank you for attending the Planet Labs PBC First Quarter of Fiscal twenty twenty six Earnings Call. My name is Cameron, and I’ll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. And I would now like to pass the conference over to your host, Palmer You may proceed.

Cleo Palmer Perroner, Investor Relations, Planet Labs PBC: Thanks, operator, and hello, everyone. This is Cleo Palmer Perroner from the Investor Relations team at Planet Labs PBC. Welcome to Planet’s first quarter of fiscal year twenty twenty six 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.

Before we begin, we’d like to remind everyone that we will make forward looking statements related to future events or our financial outlook. 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. 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 with respect to key metrics used by management in 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. 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 performance indicators are discussed in more detail in our press release and our earnings update presentation, which are intended to accompany our prepared remarks. 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.

Will Marshall, CEO, Chairperson, Co-Founder, Planet Labs PBC: Thanks, Cleo, and hello, everyone. Thanks for joining us today. We’re pleased to have delivered an excellent first quarter in fiscal twenty twenty six. To briefly summarize the results, we generated $66,300,000 in revenue, representing approximately 10% year over year growth and exceeding our expectations. Non GAAP gross margin was 59%, up from 55% a year ago and adjusted EBITDA profit came in at $1,200,000 representing our second sequential quarter of adjusted EBITDA profitability.

We also generated $17,300,000 of cash flow from operating activities and achieved our first ever quarter of positive free cash flow at $8,000,000 a significant milestone for the company and for shareholders. Our backlog grew to over $05,000,000,000 in the end of the quarter, reinforcing our path to accelerating growth. Before we turn to our first quarter wins, I’d like to share a few takeaways from my recent travels visiting our customers and partners around the globe. In DC, I met with various leaders at the US government, and the government’s demand signal for smarter solutions that leverage the latest innovations from technology providers is ringing loud and clear. Although today’s dynamic environment is creating uncertainty, my visit only reinforced our view that the opportunities outweigh the risks for planet.

While in Europe, I met with leaders across governments, and it’s clear that the changing geopolitical landscape is resulting in heightened need for planet services. This builds on the increased awareness of the significant value of satellites that has grown since the start of the war in Ukraine. Overall, we are seeing unprecedented interest in our solutions. We see Planet as a reliable and trusted partner to our domestic and international customers during such times of global change. So as I turn to sales highlights, I’ll start with the defense and intelligence sector, which was once again the key growth driver for the business this quarter.

Revenue from the D and I sector grew over 20% year over year during Q1, driven by strong performance with our core data and solutions business as well as our satellite services contract with JSAM. During the quarter, Planet was awarded an 8 figure ACV expansion contract by a European defense and intelligence customer for PlanetScope data and our maritime domain awareness solution. This relationship expanded rapidly progressing from a pilot last year to an 8 figure operational contract. As a reminder, our maritime solution is a high frequency board area solution with partner enabled analytics for vessel identification and classification, enabling customers to monitor large areas of open ocean for mission critical situation awareness. Similarly, we won a 7 figure ACV expansion to provide MDA to one of our long term customers, expanding them monitoring capability with Planet from land to sea.

More broadly, we continue to see robust demand for downstream products that embed our capabilities into customers’ operations, enhance situation awareness, and support informed decision making. This quarter’s wins are two of many proof points supporting the scale of this opportunity. Turning to the civil government sector, where first quarter revenue was down year over year largely due to the expiration of our NICFI contract. We continue to see significant growth opportunity here and to share a few recent highlights. In March, we announced that we’ve been selected as the primary subcontract for the California Air Resources Board’s Satellite Data Purchase Program, SDPP.

The $95,000,000 contract was awarded to our partner CarbonMapper and is centered on providing the state of California with methane data built upon Tanager hyperspectral collections as well as other data products. This three year plus program marks the first major purchase of Tanager data by a customer outside of the CarbonMapper consortium itself. It demonstrates the market potential within civil government for large scale automated environmental monitoring. This approach can be expanded to other government customers around the world. Last month, we announced an expansion of our seven figure countrywide contract with the German government entity, BKG, which now includes insights from planetary variables, water monitoring services from planet’s partner, EOMAP, and access to planet’s insights platform.

The data will be used to monitor water, forest, agriculture, socioeconomics, and land use, as well as to support the federal monitoring campaigns and environmental assessments. During q one, we also expanded our business with the Welsh government to help inform agriculture policy and natural resource management. Using our high cadence satellite imagery, historical archive, and tasking capabilities, the Welsh government is deriving data informed management plans for agricultural efficiency, water and land use change, and emergency response. Shifting finally to the commercial sector, where revenue was up slightly year over year, where we continue to see signs of more stable performance despite quarter to quarter variability. To share a highlight, we recently signed a multiyear expansion with OnX, an outdoor digital navigation company, to inform their suite of recreation applications with PlanetScope products.

With Planet satellite data, the apps enable users to stay informed about conditions in remote areas as they plan outdoor pursuits. Next, onto our nascent satellite services offering. Firstly, our team is executing well on the JCET contract. Secondly, as mentioned last time, we’re pursuing a handful of highly strategic deals, each significant in scale, and I’m pleased to report that we saw very solid progress with multiple prospects during the quarter. These deals are win wins providing software and satellite services to our customers and accelerating and funding the development of our new fleets.

Furthermore, the California STPP award showcases how a set of satellites initially funded through satellite services can drive incremental data business. Turning to product updates, starting on the platform side. We recently streamlined our self-service purchasing offering for small customers to make it easier to get started with the Planet Insights platform. This supports Planet strategy to support small customers efficiently with a flexible and scalable model that grows with their operations. For our larger customers, the platform delivers time series solutions and insights that become embedded into their workflows, which is key to expanding our addressable market with customers who haven’t traditionally used geospatial data.

We also released our new aircraft detection analytic feed, which automates detection of aircraft including commercial, private, and military around the world. By combining advancements in artificial intelligence with Planet’s high frequency scan of the earth, we’re able to offer this product at a global scale aiming to help users analyze patterns of life and anomalous geopolitical behavior. This presents a massive and unprecedented capability for analysts with or without geospatial expertise. On the space system side, Tanager one, which we launched last year, is servicing a number of early customers across energy, defense, civil government, and agricultural markets. Our space systems team has rapidly progressed the satellites’ operational maturity, expanding the satellites’ imaging capacity to bring down approximately 300,000 square kilometers per day via hundreds of collections.

We’re not only extremely pleased with the quality of data and the insights being derived from Tanja One, but also with early wins showing momentum and indicative of our demand for this new capability in the market. Meanwhile, Pelican two, which we launched in January, is continuing to perform very well. We’ve completed our commissioning process, fully validated the payload and optics, and begun providing data to select customers. Between our first two Pelikan satellites and our Tanager one satellite, we now have over two and a half years of on orbit experience of our small sat platform, the modular spacecraft architecture which is shared between the two fleets. These on orbit technology demonstrations have provided us with critical learnings as we develop this technology and prepare to launch operational fleets.

As a reminder, we plan to have multiple Pelican launches this year. We’re also working on additional Pelicans for our partner JSAT, which are expected to begin launching in calendar twenty twenty seven. I’d like to take a moment to commend our global sales product and space systems organizations on a phenomenal quarter and thank them for their hard work winning and delivering for our customers. Overall, our first quarter performance validates our strategic direction, relentless customer focus, and disciplined execution. Looking ahead, we are going to continue to aggressively execute on our two key initiatives.

One, delivering integrated global insights via AI enabled solutions, and two, rapidly expanding our satellite services offering. Both are seeing strong traction, and our end game is clear to establish Planner as the undisputed market leader for monitoring the physical world at a global scale. With that, I’ll turn it over to Ashley to discuss our financials. Over to you, Ash.

Ashley Johnson, CFO, Planet Labs PBC: Thanks, Will. As Will highlighted, Q1 was an excellent start to the year with record revenue and our second quarter of delivering adjusted EBITDA profits. Revenue for the first quarter came in at $66,300,000 representing approximately 10% year over year growth. The strong quarter was primarily driven by key wins with our defense and intelligence customers, higher than expected usage by some of our government accounts and steady progress across our new JSAT contract. During the first quarter, our defense and intelligence sector revenue grew over 20% year on year, the commercial sector was flat year on year, and civil government revenue was down year on year, impacted primarily by the end of our contract with Norway for their NICFI program.

The commercial sector has continued to show signs of stabilization since the trough in Q1 of fiscal twenty twenty five. The quarter on quarter step down in revenue within the commercial sector was largely attributable to the previously discussed final adjustments for a couple of our larger agricultural contracts in Q4. Switching to our regional revenue breakdown. For the first quarter, revenue grew more than 30% year over year in both EMEA and Asia Pacific, while North America and Latin American revenue were down year over year. North America was impacted primarily by the aforementioned agricultural impacts.

As of the end of Q1, our end of period customer count was nine nineteen customers, lower on a sequential basis reflecting our direct sales team’s focus on large customers in our core verticals and our shift to serving smaller customers via the Planet Insights platform. As a reminder, Planet Insights platform customers are not included in our end of period customer count. We saw overall revenue growth in spite of the decline in customer count and thus a solid increase in average revenue per customer as a positive indicator that our sales team’s focus on landing and expanding high value accounts is yielding results. As we shift to some of our ACV metrics, I want to remind you that the JSAT multi year satellite services contract is not included in our ACV metrics, although it is included in our RPOs and backlog, which we’ll discuss in a moment. 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 onetime professional or engineering services.

Over 90% of our end of period ACV book of business consists of annual or multi year contracts. Our average contract length continues to be approximately two years weighted on an ACV basis. Net dollar retention rate at the end of Q1 was 103% and net dollar retention rate with win backs was 104. Turning to gross margin. Non GAAP gross margin for the first quarter was 59% compared to 55% in the first quarter of fiscal twenty twenty five, demonstrating improvement year over year.

On a sequential basis, we saw an increase in cost of revenue attributable to depreciation from our satellites, costs related to partner solutions and costs associated with our new satellite services contract with JSAT. Adjusted EBITDA profit was $1,200,000 for Q1, better than expected primarily driven by revenue outperformance in the quarter and disciplined OpEx spend. Capital expenditures in Q1, which include our capitalized software development, were approximately $9,300,000 This was lower than expected, driven largely by the timing of certain launch payments and procurements for Pelican and Tanager satellites. We expect to see these expenses catch up in Q2, which is reflected in our guidance. As a reminder, we’re currently in a growth CapEx investment cycle as we build out our next generation fleets to capture the market opportunity we see for Planet.

Turning to the balance sheet. We ended the quarter with approximately $226,100,000 of cash, cash equivalents and short term investments, an increase of approximately $4,000,000 sequentially. During the quarter, we generated approximately $17,300,000 in net cash from operating activities and $8,000,000 in free cash flow, which marks our first quarter of positive free cash flow as a public company, a significant milestone for Planet’s employees and shareholders. The strong performance in the quarter reinforces our expectation for full year cash burn to be under half of what it was in fiscal twenty twenty five. While we expect cash flow to vary quarter to quarter, the milestone we reached in Q1 demonstrates excellent progress for the business.

Our focus remains on managing the business to enable sustainable cash flow generation through efficient growth across our data solutions and satellite services revenue streams. At the end of Q1, our remaining performance obligations or RPOs were approximately $451,900,000 up 262% year over year, of which approximately 45% apply to the next twelve months and 76% to the next twenty four months. We estimate our backlog, which includes contracts with the termination for convenience clause, which is common in our U. S. Federal contracts and occasionally found in other customer contracts, to be approximately $527,000,000 up 140% year over year.

Approximately 45% of our backlog applies to the next twelve months and 76% to the next two years. We believe this backlog provides us with good visibility to meaningful growth rate acceleration into fiscal twenty twenty seven. Let me turn now to our guidance for the second quarter and full year for fiscal twenty twenty six. In Q2, we’re expecting revenue to be between 65,000,000 and $67,000,000 Underlying this guidance is an assumption that the strong usage by some of our customers in Q1 returns to normalized levels in Q2. We expect non GAAP gross margin for the quarter to be between 5657%, and we expect our adjusted EBITDA loss for the second quarter to be between minus 4,000,000 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.

We are planning for capital expenditures of approximately $17,000,000 to $22,000,000 in Q2, reflecting the catch up of capital investments that we expected to see in Q1. Our full year expectations for CapEx have not changed. For the full fiscal year 2026, we expect revenue to be between $265,000,000 and $280,000,000 We are pulling up the lower end of our guidance range to reflect our improved outlook while recognizing that we remain in an environment with multiple geopolitical and economic uncertainties. We’re confident in our ability to execute, and we see multiple potential sources of upside for our revenue. We expect non GAAP gross margin for fiscal twenty twenty six to be between 55% to 57%, unchanged from the guidance provided on our prior call.

We expect our adjusted EBITDA loss for fiscal twenty twenty six to be in a range of minus 12,000,000 to minus $7,000,000 reflecting the investments we’re making in downstream solutions and our space systems capabilities. We’re planning for capital expenditures of approximately 50,000,000 to $65,000,000 for the year, unchanged from our prior call. To summarize, I’m incredibly proud of the execution and operational focus of our teams across Planet. We’re making a strategic shift toward downstream solutions, which is being validated with significant customer wins and demand signals. This isn’t merely a product enhancement.

This is a strategic maneuver designed across the chasm to capture the early majority of customers and establish a market leading position in our key target markets. Furthermore, our innovative satellite services model, as demonstrated with JSAT, represents a fundamental re architecting of how we fund and monetize our next generation fleets. This approach isn’t just about technology. It’s about aligning our offerings with a strong market demand, thereby ensuring we capture the value we create and deliver compelling returns as we scale. Operator, that concludes our comments.

We can now take questions.

Cameron, Operator/Moderator: We will now begin the question and answer session. And And due to the interest of time during this Q and A session, please limit your questions to one question. And the first question is from the line of Edison Yu with Deutsche Bank. You may proceed.

Edison Yu, Analyst, Deutsche Bank: Hi. Thank you. Thank you for taking our questions. I wanted to ask about AI. And I know it’s a pretty kind of loaded term there, but it’s been about three months, I think, since you signed that agreement with Anthropic or partnership with Anthropic.

And I’m wondering if you could talk about what you’ve kind of discussed with them so far, and in particular, about the maybe the amount of data that you would really need to to kind of ingest into, you know, LLM and also the diversity of data you would need. Is it enough just to have the planet archive or or plan scope? Do you need, to include, either SAR or other types of of data to make it useful? Just curious to kind of how those discussions are going and and about the quantity and diversity of data required. Thanks.

Will Marshall, CEO, Chairperson, Co-Founder, Planet Labs PBC: Yeah. Good questions. Overall, we’re we’re we’re we’re very excited by how these sort of developments of foundation models can speed kind of value for our customers and expand usability. The specific partnership with Anthropic is primarily focused on fine tuning their models on our data. And exactly the point you’re making there, the the the the data that those models have had access to thus far is primarily whatever they scraped from the Internet, is very limited satellite data.

So exposing them to more satellite data can can or the instinct is should help improve accuracy of those models in doing questions on our data. So we also are partnering with Google and others and so it’s not limited to them, but we think exploration with these sort of companies is good. That’s separate and in addition to the core work that we’re doing with AI on top of our main solutions, so you know, like the contract that we announced with the European government includes our MDA solution that involves AI, things like identifying ships and identifying ship activity like transshipments and other things, all leveraging AI. So it’s both in our core products that is to say and enabling us to speed time to value and ease usability that enables accessibility for more users and therefore expands our market potential. So it’s very exciting on all fronts, and we’re continuing to push in both of those ways.

Cameron, Operator/Moderator: Next question is from the line of Colin Canfield. The next question is from the line of Colin Canfield with Cantor Fitzgerald. You may proceed.

Colin Canfield, Analyst, Cantor Fitzgerald: Hey, thank you. Maybe talking to the free cash flow building blocks, half of $25,000,000 suggests maybe about $30,000,000 of free cash flow burn this year. So as we think through the EBITDA guidance and the CapEx guide that just maybe, call it, dollars 30,000,000 to $40,000,000 of working capital benefits. So I think it’s a two pronged question. One is how do we think about that working capital unwind over a multiyear period?

And the second part of that question is how do we think about the cash terms of the pipeline of deals, the handful of deals that you talked about that are similar to JSON? Thank you.

Ashley Johnson, CFO, Planet Labs PBC: Yes. Thank you for the question. Obviously, we were very excited to post our our first quarter of free cash flow positivity in in q one, and it’s a great milestone for the company. And as as I think your question is really pointing to working capital can be lumpy quarter to quarter, especially since we are working with such big contracts, you know, signing 8 figure contracts in addition to, you know, contracts like the JSAT satellite services contract just means that that the timing of those payments will cause quarter to quarter working capital to look different. That in combination with the fact that some of our CapEx activity, building and launching satellites satellites can cause that investment capital to vary quarter to quarter.

We’re very focused on one, you know, operating the business with a path to EBITDA profitability as well as sustainable free cash flow profits. As I mentioned last quarter, we see a path to sustainable free cash flow generation in the next twenty four months. And and really what we’re looking at is all the places where we can invest in growth, but do so in a very both capital efficient way and a way that sets us up to to operate a high margin business that’s self sustaining.

Cameron, Operator/Moderator: The next question is from the line of Michael Latimore with Northland. You may proceed.

Michael Latimore, Analyst, Northland: Alright. Great. Yeah. Congrats on the excellent results here. In terms of just the strong sequential growth in the quarter, can you, elaborate a little bit on what drove that?

I think you called out some usage maybe among current customers. Just a little more detail would be great. And then, Will, you talked about sort of seeing unprecedented demand, I mean, you know, kind of at this point. Can you parse that a little bit? Is it just broad based, or are there a couple areas that really stand out?

Ashley Johnson, CFO, Planet Labs PBC: Yeah. I’ll take the the first part of your question and and let Will address the second. In terms of q one revenue outperformance, it was really across multiple vectors. So one, just the sales team really having an excellent quarter. I mentioned, you know, or we mentioned in the prepared remarks specifically an 8 figure contract win, which was really exciting and and helped drive some of the revenue upside in the quarter.

In addition, you know, obviously, we work very closely with our customers to really drive that that engagement with our data, which can drive usage rates up. And so that drove some of the outperformance in the quarter. And then finally, great progress on the JSAT contract and and just, you know, hitting getting getting off to a strong start with hitting milestones. So it was it was really across multiple vectors that drove the outperformance in q one.

Will Marshall, CEO, Chairperson, Co-Founder, Planet Labs PBC: And just to the demand point, yeah, we’re seeing really strong demand in in the core data capabilities as well as for our nation satellite services opportunities. And so I think what’s happening in there is that the changing political landscape is heightening need for security. I mean, I mentioned my trip to Europe and visited a bunch of capitals over there. And frankly, I’ve never seen the urgency that I have felt on that trip from countries for both of those kinds of data and satellite services needs. And I think that’s them realizing they need to strengthen themselves and get their own capabilities.

And that’s not just applicable to Europe. We’re feeling it in Asia as well, for example. And so, yes, I think that all speaks to the point that we were hinting at last time that there’s opportunities and risks to this new changing environment, but the opportunities for Planet are pretty strongly outweighing the risks. And in fact, my trips to both DC and to Europe reinforce that.

Cameron, Operator/Moderator: The next question is from the line of Jeff Van Rhee with Craig Hallum. You may proceed.

Jeff Van Rhee, Analyst, Craig Hallum: Great. Thanks, Sal and my congratulations. The real nice quarter. I guess one question, two parts here. But the European Maritime deals, Will, just talk to those deals.

I mean, it’s great. It sounds like those have really broken open. How repeatable are those? What is what really broke them open now? What does the pipeline look like there?

And then the second part is just from a civil D and I and commercial breakdown, when you look at the pipeline, how do you see each of those sectors behaving over the next several quarters in terms of year over year growth?

Will Marshall, CEO, Chairperson, Co-Founder, Planet Labs PBC: Yes. I mean, on the maritime domain awareness solution piece, I mean, we have a real solution there and that is enabling that strong offering is enabling partners to really rely on that, our government. And then that’s coupled with the political piece that I just mentioned, which is driving urgency. I mean, it’s what it’s doing is it’s I mean, we’re seeing a strategic shift in Europe, which needs our kinds of capability. It needs more security, and, you know, people, look at, at the changing way in which these new technologies play into security as they have in Ukraine drones and satellites and AI, and they’re realizing that they need them, and they need them swiftly.

I’ve never felt that kind of urgency before, so it does say that and that that helps us drive these things a little bit faster. The the MDA in particular is probably because they are both real maritime needs, but also we’ve got a real full solution there. And so that I think is what has driven that. You know, people want to look out in open water and find the shipping activities and ensure that they can track them.

Ashley Johnson, CFO, Planet Labs PBC: And I I can jump in on the the question about pipeline. You know, obviously, as as Will highlighted, we continue to see strong demand emerging in the DNI sector. I think we’ve got both compelling solutions and very unique data. And, you know, the the changing political environment is just heightening the need for the solutions and the data that we have. On the civil side, our team’s doing a great job of engaging around some key solutions that we have running workshops to show them how our data can uniquely enable governments to either enforce and execute new policy commitments that they have, for example, the common agricultural policy over in Europe, or do broader based civil opportunities around things like water quality management, environmental monitoring, new building assessment, etcetera, as well high highlighted with the the BKG deal that we announced earlier in the quarter.

So a lot of strong opportunities on the government front. And on the commercial front, as we talked about last year, we’ve really been refocusing that team over a few key markets where we see the strongest product market fit. I think that refocusing has really enabled our team to see stronger execution and really understand where our AI based solutions are going to enable us to to take those markets over the longer term. So it’s been a refocusing, but I think is really starting to yield the results as evidenced by the comments we made around stabilization.

Cameron, Operator/Moderator: The next question is from the line of Trevor Walsh with Citizens Financial Group. You may proceed.

Trevor Walsh, Analyst, Citizens Financial Group: Great. Hey, Ashley and Will. Thanks for taking the questions. Just double clicking a little bit, actually, on that last comment you made around the commercial business. Just curious, just given the April, if there was any disruptions maybe around deals, or just in the last few weeks of the quarter with all the things around tariffs and some of the disruptions there?

And then kind of as you look forward in that pipeline, is there anything, that kind of signals at all any customer uncertainty around demand? Just kind of wrangling down with how that affects their own businesses, if that’s kind of coming coming within those key focus areas that you just kind of called out. Thanks.

Ashley Johnson, CFO, Planet Labs PBC: Yeah. To be honest, that isn’t something that’s that’s necessarily been impacting the conversations that we’ve been engaged with, at least, to my knowledge. Obviously, I think that there’s a an really interesting opportunity for Planet and the solutions that that we’ve been building around global monitoring to ultimately have applicability to things like supply chain and understanding any types of events like these and how they might impact supply chain. So I see that as a longer opportunity longer term opportunity for us, but nothing specifically jumps out at me from the quarter that that would be relevant in that vein.

Cameron, Operator/Moderator: The next question is from the line of Ryan Coombs with Needham and Company. You may proceed.

Ryan Coombs, Analyst, Needham and Company: Great. Thanks. I had two part if I could. Ashley, if you can just at least qualitatively kind of walk us through some of the puts and takes on gross margin maybe over the past year and as you look how we should think about that going forward. I know you’ve talked about some of the impacts of JSAT expenses hitting gross margin.

And then second to that, relative to, your civil exposure on U. S. Federal and NASA, any commentary there relative to efficiency activities in Washington? Thanks.

Ashley Johnson, CFO, Planet Labs PBC: Great. Well, specifically around gross margin, we’ve highlighted, a couple factors, as we actually, as we came into this year and gave gave guidance on on fiscal twenty six even last quarter. The the working with partners on solutions enables us to expand, the amount of data that we can sell and and drive value to customers, but it does have a a short term impact on margins. Similarly, with contract like JSAT, what’s obviously really exciting about it is, it enables us to scale the fleet faster. And the way the the contract, was signed, not only do we build the suite, for JSAT and their customers, but we’re actually able to monetize the rest of world capacity, which means that over the long arc of the the contract, we see the gross margins of it being similar to the rest of our business.

So while there is some short term impact on gross margins, over the long term, we see our margins stabilizing back towards our our long term targets. Will, do you want to address the first part of the question around U. S. Civil government?

Will Marshall, CEO, Chairperson, Co-Founder, Planet Labs PBC: Yes. And I mean, obviously, NASA is facing some uncertainty as politically right now and from a budget standpoint. During my trip there, I mean, firstly, we have tremendous relationship with NASA. The users get a lot of value, not just within NASA, but it provides value to users across the U. S.

Government and across universities, across The United States, federally funded university researchers. And those users love what they’re getting from our data and incredible productivity from it. I think overall, we had a there’s a there’s a leaning in this government towards more efficiency. And I think that that actually plays very well in the planet’s hands. NASA, we had conversations specifically on how we could help them with missions.

If there’s reduced budget, how we can help do those missions at lower cost as we have demonstrated before with the talent admission. So it’s actually something that we lean into. But yes, so we’re obviously tracking that and I think there’s a lot of opportunities to help the government do that sort of those sort of missions more efficiently.

Cameron, Operator/Moderator: The next question is from the line of Christine Lewag with Morgan Stanley. You may proceed.

Cleo Palmer Perroner, Investor Relations, Planet Labs PBC0: Hey, good afternoon everyone. Maybe a first quick question. I mean NASA’s fiscal year twenty twenty six budget is down almost 25%. I mean, appreciate it’s still early days and it looks like a lot of the cuts are on the science side of the business. But how are you thinking about potential risks from these cuts?

How exposed are you on your specific programs? And a second follow-up question. You talked about the high usage in 1Q from certain customers kind of tapering in 2Q. How do we think about this regarding overall demand? Or is there just a natural seasonality in the use of your products?

How do we think about that? Thank you.

Will Marshall, CEO, Chairperson, Co-Founder, Planet Labs PBC: Yes. Again, on that, the budget process is yet to be finalized. Of course, we’re tracking that. But again, the overall sentiment is that the administration is pushing into lower cost solutions and efficient ways of doing their missions, which is the kind of program that we fit within under our CSTA program, for example, at NASA fits very much into those set of priorities. So we don’t know exactly how that’s going to fall out.

That creates some uncertainty and our guidance takes that into account. But we actually think that the upside is quite significant there as they as they try to figure out how to do these missions more efficiently under those sort of budget arrangements. So we were having conversations to try and support that.

Ashley Johnson, CFO, Planet Labs PBC: And then with respect to to usage, yeah, as you point out, there are some some aspects of seasonality to usage in in certain sectors for in agriculture, for example, as we go into the growing season, we do see some uptick in usage. So that can be one of the drivers. The the other is is, you know, as I said, we’re really working with customers to engage them and help them get to value more quickly so that we see those usage patterns actually increase and sustain. Obviously, for some governments, one of the challenges would will be they they have budget for a certain amount in any given year. And so when I’m thinking about q one outperformance driven by usage and then how much do I roll that forward into subsequent quarters, I need to be careful in recognizing that in the past, we’ve seen them sometimes throttle back usage to make sure that they stay within their budget envelope.

So it’s less about, you know, the the value, which we know that they’re they’re seeing, and and it’s obviously reinforced by what we saw in q one. But that’s always gonna be counterbalanced with their own budgetary and and timing constraints.

Cameron, Operator/Moderator: The next question is from the line of Chris Quilty with Quilty Space.

Cleo Palmer Perroner, Investor Relations, Planet Labs PBC1: Cleo, I’m going to ask a question that you’re not going to answer, so this one doesn’t count. But obviously, the elephant in the room here are news stories we’ve seen about possible cuts to the EOCL program. Obviously, you’re probably limited in what you can say on that topic, and you’ve already kind of addressed it, I think, in your prior discussion here, in that you’re offering the low cost commercial solution that the government seems to be pushing for. Is there a insight you can give us on what might be happening in the background with potential cuts or the outlook for the EOCL program or what the government might have in the pipeline?

Will Marshall, CEO, Chairperson, Co-Founder, Planet Labs PBC: I mean, I think you’re getting there with the is analogous to what I was just saying about NASA. We obviously track the budget process carefully. And just like with NASA, we have a strong partnership with the NRO and NGA and and we know that the government is leveraging those capabilities and think they’re important. And this particular administration is leaning more into that. Right?

So we’ve seen the Trump administration push out executive orders looking to leverage commercial services and Planet Fitness well into that. There’s obviously opportunities and risks associated with the particular programs and so on. Obviously, we will discuss those if are if and when we put up more details on programs going forward. But overall, again, trip to DC, we affirm that there’s more opportunities than risk in this environment in DC.

Cameron, Operator/Moderator: The next question is from the line of Jason Gershky with Citigroup. You may proceed.

Cleo Palmer Perroner, Investor Relations, Planet Labs PBC2: Yes. Just maybe a quick follow-up to that last question. Will, maybe you could talk about the pockets of demand that you’re seeing in DoD inside Washington. To Chris’ point, it looks like the EOCL program is maybe at risk here as much as a 30% cut to it if what we read in some of the industry rags is correct. So when you say that you’re seeing lots of demand inside DoD, is it shifting around inside the agencies for this kind of for the geospatial data that you’re providing?

Is it going shift away from DoD I mean, from NRO and maybe go over to DOD directly, I think. And then maybe just tangential to that, I think you’ve got a renewal on the OCL coming up. Can you remind us of what the typical timing is on that? And do you expect that timing to change at all? Thanks.

Will Marshall, CEO, Chairperson, Co-Founder, Planet Labs PBC: Yes, yes. And there is interest in DoD separate. We’ve shared some of the details about the pilots that we have done with DoD and how they’ve leveraged in particular, then not so much buying the pixels as solutions, both our MDA solution. We’ve talked about our collaboration with the U. S.

Navy. And there’s more opportunities like that. So yes, we’re seeing opportunities like in the DoD. And then separately, there’s missions, right, that they to the sort of constellation services offerings. There could be opportunities like that within the U.

S. Government. I don’t want to speculate on any specifics on that yet. It’s too early to do that. But there are that’s what I’m talking about is the pull both for our solutions as well as for our satellite services.

And back to EEOC, there’s nothing much more I can say right now because it’s all in flux and hasn’t been determined yet. But again, we feel like we have a strong relationship and demand what we are providing and overall this government is pushing towards per that EO executive order, I should say, from the Trump administration pushing more into this. So we’ll see where it all comes out and watch this space and we’ll give you more updates when we can. But I believe overall, Planet stands to find more opportunities and risks in DC.

Cameron, Operator/Moderator: The next question is from the line of Anthony Valentini with Goldman Sachs and Co. You may proceed.

Colin Canfield, Analyst, Cantor Fitzgerald: Hey, guys. Thanks for taking the question. I just wanted to ask about I think last quarter you guys had said that you expect the growth next year to be at least double. Is that still the case? And if you guys can just provide an update there, that would be great.

Will Marshall, CEO, Chairperson, Co-Founder, Planet Labs PBC: Ashish, do say that?

Ashley Johnson, CFO, Planet Labs PBC: I mean, broadly, I would say our targets going forward are unchanged. So you saw the growth in our backlog, which we were very excited to see. And, you know, as well alluded to, we’re our sales team is performing well. We’ve brought in new contracts. So all of this gives us, you know, the the book of business that we need to see that sustain and accelerated growth.

So as far as all the commentary that we said last quarter about how we feel about, this year and next, I’d say our targets are unchanged.

Cameron, Operator/Moderator: The next question is from the line of Colin Canfield with Cantor Fitzgerald. You may proceed.

Colin Canfield, Analyst, Cantor Fitzgerald: Hey, thank you. So just to follow-up on the last few questions. One of the things that we have to deal with in government services is kind of confusion around requested budgets versus legislative budgets. So maybe if you could walk us through kind of the dynamics of an FY ’25 CR and what that means for on contract growth for Planet Labs? And then how we should think about the potential of an FY ’26 CR as it relates to that growth algorithm?

Thank you.

Will Marshall, CEO, Chairperson, Co-Founder, Planet Labs PBC: Yes. I mean, we’ve been to these sort of situations before and it’s not uncommon now to get a CR for a meaningful amount of time. So obviously, we track that. CRs have opportunities and risks. They tend to be stable because they discontinued the budget from the prior year.

They don’t allow big new starts basically. So are pluses and minuses about the different options here. But, you know, obviously, we’re tracking that space and and and as anyone else in the industry is, and we continue to pursue opportunities as they as they open up. Anything to add, Ashley?

Ashley Johnson, CFO, Planet Labs PBC: No. I I mean, I I think as you’ve heard, it’s a it’s a fluid environment. We’re keeping an eye on on, you know, things as they unfold. And, you know, as as Will said a few times now, we see a lot more opportunity, in the direction of looking for more efficient, more effective ways to service the needs of the government.

Cameron, Operator/Moderator: That was the last question for the call. I would now like to pass the conference back for any further remarks.

Will Marshall, CEO, Chairperson, Co-Founder, Planet Labs PBC: Maybe I’ll just close by saying, it’s great to see the strong performance we had in the first quarter of the year. It exceeded expectations and achieved significant financial milestones including especially positive free cash flow. And we secured really great wins, so we’re feeling good. We’re seeing strong demand for our solutions, both the global insights and our satellite services. And we believe we’re establishing Planet as a market leader here.

I’m very proud of our teams, the dedication, the hard work that enabled us to produce these results and we look forward to building on this momentum through the year. Thanks. So thanks very much for tuning in and see you next time.

Cameron, Operator/Moderator: That concludes today’s call. Thank you for your participation and enjoy the rest of your day.

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