Planet Labs PBC

Good afternoon. Thank you for attending today's Planet Labs PBC fiscal year 2023 earnings call. My name is Hannah, and I will be your moderator for today's 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 ask a question, please press star 1 on your telephone's keypad. I would now like to pass the conference over to our host, Chris Genualdi, Vice President of Investor Relations. Please go ahead.

Hello, and welcome to Planet's fourth quarter and full 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 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 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. 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 hi, everyone. I'm excited to share with you our results for the fourth quarter of FY23, which cap off an incredible year for Planet. We'll also share some recent wins, discuss the progress we're making towards building an Earth data platform, including our announced acquisition of Synergize, and provide an outlook for FY24. So let's dive in. During Q4, we generated $53 million in revenue, representing 43% year-over-year growth. For the full year, revenue was $191.3 million, up 46% year-over-year. Our non-GAAP gross margins expanded to 58% for the fourth quarter, an improvement of 16 percentage points year-over-year, demonstrating the positive leverage that we have in our business. For the full year, our non-GAAP gross margins were 53% and improvement of 15 percentage points year over year. We ended the fourth quarter with over 880 unique customers spanning across government and commercial markets. Before I cover our recent commercial wins, let me first summarize the key takeaways for today's call. For fiscal 23, we exceeded the range we laid out at the beginning of the year, nearly tripling our revenue growth rate. as well as expanding gross margins by 15 percentage points. I'm incredibly proud of this growth acceleration as it reflects the execution and dedication from our teams across the entire company. Nearly two years ago, as we were going public, we outlined a plan to accelerate growth through systematic investments across product, go-to-market, as well as in M&A. And in the last year, we've witnessed the positive effects of those investments in our financial results and KPIs. We are carrying that momentum forward into fiscal 2024. These results tell us three things. First, we believe the market for Planet's data remains robust. While the macroeconomic climate remains uncertain, we are fortunate to serve a customer base that is diversified across government and commercial sectors. As shared previously, we've seen some caution from our customers in the commercial sector as they navigate the current environment. We've also seen strong demand in the government sector, and our expanded product capabilities and go-to-market reach are continuing to generate new opportunities for Planet at Pace. Second, our business is on a steady trajectory towards our long-term model. We outlined our long-term targets on Investor Day, which you can find on our investor relations website. You'll see that our business is more aligned with a technology SaaS business, not the traditional space industry models. Third, our strong finish positions us well for FY24, despite the challenging macroeconomic environment. As you'll hear from Ashley, over 60% of our revenue forecast for the year is already committed before factoring in renewals, new business, or revenue through the synergized acquisition. We expect the secular tailwinds of digital transformation, sustainability transformation, as well as global peace and security to continue to drive demand in FY24. These are monumental transitions that Planet is uniquely positioned to serve. Therefore, as you'll hear today, we're forecasting strong growth that balances the macro environment while also becoming more judicious on spending as we chart our path to profitability. Okay, we've got a lot to cover, so let's dive into some of the specific highlights from the quarter. During Q4, we closed another multi-year deal with an international Ministry of Defense customer for more than $10 million per year. We continue to gain share and expand the defense and intelligence market as customers see how our data supports fact-based and real-time decision-making. Last week, the National Reconnaissance Office, NRO, awarded Planet a contract for our hyperspectral capabilities. This aligns with existing and planned commercial capabilities for Tanager, our hyperspectral constellation, designed as part of our partnership with the Carbon Matter Coalition. The contract will allow us to work directly with the NRO to explore how these capabilities align with the agency's national space security architecture. On the civil government side, we won a contract with the Philippine Space Agency. They're using our data for multiple use cases, including disaster impact assessment, environmental monitoring, and scientific research. This is a great example of how countries can save time and money by leveraging planet's data instead of building their own Earth observation constellations, enabling them to concentrate on serving their constituents. We're also delighted to share that Norway's International Climate and Forestry Initiative has been extended for the calendar year 2024. The success of the program has exceeded all expectations. We now have over 18,000 registered users on the platform representing 158 countries. This program makes data available covering all of the world's equatorial tropical forests to governments, UN agencies, NGOs, scientists and others, enabling the monitoring of tropical deforestation and powerful programs and policies to reverse it. These four wins point to a larger trend we're seeing with the governments worldwide. Firstly, we're seeing strength in those markets, both civil and defense and intelligence. And second, they're also increasingly partnering with commercial providers like Planet to support their needs, rather than building all of their required infrastructure themselves. Turning to the commercial market, Pacific Gas and Electric Company, or PG&E, one of the US's largest utility companies, recently signed a multi-year, seven-figure contract for our new planetary variables product, vegetation encroachment. This helps them to determine locations along electric utility right-of-ways where there is a high likelihood of tree fall-in risk. I'm particularly proud of this win as it's a direct result of the recent acquisition of Sailor Sciences that we announced in our last call. PG&E plans to use our vegetative encroachment product to monitor the entire distribution transmission grid, totalling over 100,000 line miles, or 160,000 line kilometres, This also includes assets and grid risk modeling and public safety's power shutoff analysis to drive better grid performance and safety. In the financial services industry, we expanded our contract with Manulife Investment Management Timberland and Agriculture, the world's largest natural capital investment manager. They're using Planet's data within their forestry division to monitor their global timber operations. Our wins from the quarter showcase the diversity of customers and use cases we serve. We provide a capability that hasn't existed previously. In doing so, Planet is creating an entirely new market, bringing the power of geospatial data to customers that have never had it before. We're particularly excited about the value that artificial intelligence can unlock with our customers. The buzz around AI has clearly become louder in recent months, and data is critical as an ingredient. the essential foundation upon which AI models are built, trained and operate. Let me share two recent examples that highlight this. Firstly, in response to the devastating earthquake in Turkey and Syria. You may recall our partnership with Microsoft and our joint work on developing a building damage assessment, which we deployed over large regions of Ukraine for the United Nations. This solution was developed by training an AI model to assess building damage in satellite imagery. It took a couple of months to develop and deploy. In the wake of the earthquakes in Turkey and Syria, we worked with Microsoft and other partners to quickly deploy the same models in this new region, producing a building damage assessment solution to assist the Turkish government's emergency response efforts. This time, it only took a couple of days to deploy, and going from months to days is significant progress and critical in situations like this. This solution can be used for many kinds of natural disasters, floods, fires, hurricanes, etc., and for every country around the globe, helping to save lives. Secondly, last month, the public watched as a high-altitude Chinese balloon traveled across North American airspace. We received intense interest from the defense and intelligence community for ability to track the origin of that balloon. AI startup Synthetic was able to quickly train an AI model to search and locate the balloon on our imagery. Once the model was trained, it only took a matter of minutes to find balloon sightings. Next, Synthetic was able to track the balloon back to its original launch point. Our proprietary archive, going back over seven years, with approximately 50 petabytes of Earth data, is now a deep treasure trove with immense value that can be unlocked when combined with AI. The archive now contains on average 2,400 images of every spot on Earth's landmass, as well as some key maritime areas. The depth and consistency of this dataset makes it uniquely suitable for AI applications. We can enable a totally new type of planetary forensics, searching for objects around the globe and back through time, even searching for objects that our customers didn't know themselves in advance that they needed to find, like this high-altitude balloon. The revolution we're experiencing in AI has the potential to increase the value of our data and the speed at which Planet and our partners can turn it into solutions. Now moving to something really exciting. Today we announced our intent to acquire the business of Synergize with their leading developer platform for Earth observation data. I'd now like to invite Kevin Wheel, our president, to talk about how we expect this acquisition to accelerate our plans. For those who don't know Kevin, he has a proven track record in building successful multi-billion dollar software platforms, having led product at Twitter for many years as they scale from zero to over a billion dollars in revenue and at Instagram to over 10 billion. He joined Planet two years ago to lead the advancement of our software platform. Kevin, over to you to tell us about this exciting acquisition. Thanks, Will.