Planet Labs PBC

Good afternoon. Thank you for attending the Planet Labs PPC third quarter of fiscal 2023 earnings call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to queue for a question on today's call, you can do so by dialing star 1. I would now like to pass the conference over to your host, Mr. Chris Genwaldi, Vice President of Investor Relations. Thank you. You may proceed.

Hello. And welcome to Planet's third quarter of fiscal year 2023 earnings call. Before we begin today's call, we'd like to remind everyone that we may 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 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 gap financial measures, please see the reconciliation tables provided in our press release issued earlier this afternoon. 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. Before we jump in, I'd like to encourage everyone to reference the slides we have posted on our investor relations website, which are intended to accompany our prepared remarks. At this time, I'd now like to turn the call over to Will Marshall, Planet's CEO, chairperson, and co-founder. Over to you, Will.

Thanks, Chris, and hello, everyone. We're glad you could join us. I'm pleased to share with you today our results for the third quarter of fiscal 2023, highlight some recent sales wins, and talk through our progress on a number of strategic initiatives. I'll also provide a perspective on the demand environment and our outlook for the remainder of the year. So let's dive in. In Q3, we generated $49.7 million in revenue, representing 57% year-over-year growth. Non-GAAP gross margins expanded to 54%. up from 35% a year ago, yet another significant year-over-year increase. We think this demonstrates the margin potential of Planet's one-to-many data subscription business model. We ended the quarter with 864 unique customers spanning a diverse range of industries. So to sum it up, We delivered another quarter of solid results in the face of an uncertain macro environment, which is testament to the strong execution across the company and the mission-critical nature of Planet Solutions. Now to take you through some highlights. As we discussed at our investor day in October, we're increasingly focused on building partnerships to accelerate growth of our ecosystem of customers and users. There are three new and exciting strategic partnerships that I'd like to discuss first here today. The first of which is that last week we announced a collaborative agreement with Accenture. We are combining planet's high-frequency satellite data with Accenture's industry and technology expertise to collaborate on an array of sustainability and impact initiatives, including traceable supply chain strategy and data-based climate risk assessments to mitigate disruption across global value chains. These are just our initial areas of focus. We're thrilled to be working with Accenture and think our partnership will drive great awareness of our offerings and the benefits of our data to deliver to organizations across many industry sectors. During the quarter, we also expanded our work with Microsoft At the United Nations 2022 Climate Change Conference, also known as COP27, we announced that we'll be supplying satellite data to support African climate adaptation projects developed out of Microsoft's first global expansion of its AI for Good lab into Nairobi, Kenya, and Cairo, Egypt. This work builds on prior projects, including the Global Renewables Watch, which is mapping the world's utility-scale solar and wind installations, and the creation of an important building damage assessment tool of Ukraine for the United Nations. Our partnership with Microsoft demonstrates how the combination of AI and satellite data is a powerful tool for helping to address some of the world's most complex and critical challenges. Finally, I'd like to highlight our partnership with Amazon Web Services, which we just announced today. We are directly embedding planet data into AWS SageMaker, enabling data scientists and machine learning engineers to acquire global daily satellite data through the platform. This partnership helps customers build, train, and deploy machine learning models on geospatial data with greater efficiency. The data from planets' consistent daily scan of the Earth is analysis-ready and ideal for developers to build on. is an exciting early stage go-to-market collaboration that amplifies the power of our sales organization with the significant potential given the large customer base of AWS. This new collaboration with AWS supports our go-to-market strategy to accelerate data access within geospatial tools and cloud platforms. Shifting gears to M&A. As you know, we view Planet as a natural consolidator and we're particularly interested in joining forces with teams that have potential to accelerate our product roadmap and enhance our value proposition. With this in mind, we're very excited to announce that we have signed an agreement to acquire Salo Sciences, a small California climate tech company specialized in measuring Earth's constantly changing ecosystems. Since 2019, we've partnered with Salo Sciences' team to deliver insights. One example is their California Forest Observatory, which dynamically maps forest structure and vegetative fuel loads at the individual tree level across California. Earlier this year, we partnered to directly measure forest carbon in select areas around the world. We at Planet see a planetary variable for carbon as a key element for the global sustainability transition in general and the carbon offsetting market in particular. Today, Salo Sciences products include a forest carbon measurement tool powered by Planet data that can help enable accountability tools for climate policies and markets. forest carbon inventories and storage, and much more. The next step is to extend the Salo Sciences products and reach, and that's where Planet comes in. This acquisition ties in neatly with our board of planetary variable work, including developments from our previous acquisition of Vanasat. I'm very excited what we can accomplish together. This deal is signed and subject to closing conditions. We expect to close early next year. We look forward to sharing more at that time. Turning to customer wins, let's start with the government sector. Demand for our solutions with the government customers, both civil and defense, domestic and international, is robust. During the third quarter, we closed a renewal and expansion contract worth more than $10 million over the next 12 months with an International Ministry of Defense customer. We've worked with this customer for over three years, and we're proud to continue to support them. On the civil government side, during the last month, we expanded our contract with the German Federal Agency for Cartography and Geodesy, also known as BKG. As shared previously, this pioneering countrywide partnership is providing access to planet data for over 400 German federal institutions to help promote public and civil safety and many other use cases. We see this as an innovative model that has the potential to be repeated in other countries. I'd like to take a moment to share some of the recent highlights that have come out of the Brazil MICE program, which is the largest remote sensing project in Brazil. Through this project, Brazilian federal agencies are able to gain access to Planit's daily satellite imagery and change alerts from our partner, SCCon, a Brazilian company that develops and supplies geo-IT solutions. With the implementation of our joint solution, the Brazilian federal police have used our data to help address illicit activities in the region. It's an amazing example of capabilities of our products at scale and the potential to deliver huge value to customers. The project leverages Planit's monthly base maps and daily PlanetScope data, and Planet's analytics feeds to scan for new roads and buildings across the country. Then this feeds into specialized alerting software developed by SDCon to bring the right information to the end customer. The project has already yielded significant benefits, including helping the Brazilian government collect the equivalent of over US$1.9 billion in fines, seized goods, and frozen assets since 2020. Additionally, over 3,000 public agents were mobilized throughout the project in over 120 operations. We're proud to be able to support this initiative with our partners in Brazil. Turning to the commercial side of the market, during the quarter we signed a deal with a Fortune 500 global energy services company. Planet is providing this customer with high-resolution imagery of remote energy facilities. Our data is being used in their digital platform for the display of greenhouse gas emissions measured by on-site sensors, helping to quantify, prioritize, and rectify emissions leaks quickly and efficiently. It's another example of how satellite and on-the-ground data can be combined to solve critical issues. In the insurance sector, we recently signed a deal with Zetri, a reinsurance provider based in Nairobi, Kenya. ZEPRI is leveraging PLANET's basemaps to enhance drought risk protection in the Horn of Africa. PLANET will deliver Normalized Difference Vegetative Index, or NDVI, time series data to measure vegetative health for an area of more than 600,000 square kilometers. ZEPRI also plans to use PLANET data as their independent calculation agent to quantify conditions and provide metrics to measure drought. Working with Planet, they aim to expand their insurance program from supporting 150,000 to over 250,000 pastoralists. In the process, Zepri is seeking to generate a drought index, which can be customized to locations to determine payer amounts, generate premium rates, and enable faster claims. We're also expanding our partnership with Swiss Re. In the last year, we have provided index insurance services with Swiss Re in 14 countries, providing drought cover for organizations and farmers around the globe, leveraging the planetary variables from the Vandasat acquisition, most notably the global soil moisture product. This is a very valuable and unique application of our data that we are seeing scaled across global markets. In other developments, we launched this quarter a non-profit and NGO program to provide access to planet imagery and support services specifically for these types of organizations. This program enables NGOs to get up and running with standard pricing and packaging and customer onboarding. It's a seed investment at this stage, but over time, we hope it will foster similar benefits to those we've seen with our successful education research program, which is an important contributor to our sales top of funnel as it cultivates new applications for our data that can later be commercialized. Let me end with some perspectives that we are seeing in the market today. Demand, pipeline, win rates, and our sales team execution all continue to be strong despite the economic backdrop. The pace at which our reps are signing new and expansion business remains healthy, and our average deal size continues to increase as our reps are focusing on those opportunities with the strongest product to market fit. As you've heard, the government segment of the market, both domestic and international, continues to be especially robust. On the commercial side of the market, we are seeing some customers become more cautious as they navigate the current economic environment, leading to increased scrutiny of spend. This market dynamic will require continued focus on these opportunities where our data can drive proven economic outcomes for commercial customers. Fortunately, we believe the secular tailwinds driving adoption of our solutions, digital transformation and sustainability transition, the need for greater peace and security, remain top priorities for countries and companies alike, and our sales team continue to systematically execute and win in the market. In summary, Q3 was another truly excellent quarter, and I'm proud of the team's execution. I'm particularly proud of the sales deals, such as those that I've just touched upon, and the burgeoning strategic partnerships. It's exciting to see global technology leaders leveraging planet solutions to helping new capabilities to their customers and users. I'm also excited about the signed acquisition agreement with Salo Sciences. We see a planetary variable for carbon as a key element for the global sustainability transition. With that, I'll now turn over to Ashley, after which we'll have some time for Q&A.