Planet Labs Pbc’s Earnings Call Highlights Growth and Optimism

Planet Labs Pbc ((PL)) has held its Q1 earnings call. Read on for the main highlights of the call.

Planet Labs Pbc’s recent earnings call conveyed a generally positive sentiment, underscored by notable achievements in revenue growth and financial milestones. The company has made significant strides in expanding its footprint, particularly in the defense and intelligence sectors, despite facing challenges in the civil government sector and potential risks from budget cuts. The strategic direction and increased backlog have contributed to the overall optimistic outlook.

Record Revenue and Growth

Planet Labs reported a remarkable $66.3 million in revenue for Q1 FY2026, reflecting a 10% year-over-year growth and surpassing expectations. This achievement underscores the company’s strong market position and its ability to drive consistent revenue growth.

Positive Financial Metrics

The company demonstrated improved financial health with a non-GAAP gross margin increase to 59% from 55% a year ago. Additionally, Planet Labs reported an adjusted EBITDA profit of $1.2 million, marking the second consecutive quarter of profitability.

Positive Free Cash Flow

For the first time, Planet Labs generated $8 million in positive free cash flow, highlighting a significant milestone in the company’s financial journey and its ability to generate sustainable cash flow.

Defense and Intelligence Sector Growth

Revenue from the defense and intelligence sector saw a robust growth of over 20% year-over-year, driven by substantial contracts, including an eight-figure ACV expansion with a European customer, showcasing the company’s strong foothold in this sector.

Strong Backlog and Future Growth Visibility

Planet Labs’ backlog increased to over $527 million, up 140% year-over-year, with approximately 45% applicable to the next 12 months, providing strong visibility into future growth prospects.

Strategic Partnerships and Product Updates

The company continues to innovate with new partnerships and product developments, such as the streamlined Planet Insights platform and the aircraft detection analytic feed, which highlight ongoing advancements and strategic initiatives.

Decline in Civil Government Revenue

The civil government sector experienced a decline in revenue year-over-year, primarily due to the expiration of the NICSI contract, indicating challenges in this segment.

Challenges in North America

Revenue in North America declined year-over-year, impacted by adjustments in the agricultural sector, presenting challenges that the company needs to address.

Potential Budget Cuts and Uncertainty

Potential budget cuts in NASA and other governmental programs pose risks to future revenue. However, these are also seen as opportunities for Planet Labs to offer cost-effective solutions.

Forward-Looking Guidance

Planet Labs’ guidance for the second quarter of fiscal 2026 forecasts revenue between $65 million and $67 million, with a non-GAAP gross margin of 56% to 57%, and an adjusted EBITDA loss of between $4 million and $2 million. For the full year, the company expects revenue between $265 million and $280 million and maintains its non-GAAP gross margin forecast of 55% to 57%. The focus remains on expanding satellite services and integrating AI-enabled solutions for sustainable growth.

In summary, Planet Labs Pbc’s earnings call reflected a positive sentiment, driven by strong revenue growth, improved financial metrics, and strategic sector expansions. Despite some challenges, the company’s strategic initiatives and increased backlog provide a promising outlook for future growth.