Planet Labs PBC

Good afternoon. Thank you for attending today's Planet Labs PBC second quarter of fiscal 2024 earnings conference call. My name is Alexis 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 one on your telephone keypad. I would now like to pass the conference over to Chris Ginualdi, VP of Investor Relations. You may proceed.

Thanks, Operator, and hello, everyone. Welcome to Planet's second quarter of 2024 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. We also reference qualified pipeline, which represents potential sales leads that have not yet executed contracts. 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 gap 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. Finally, for each of the customer contracts referenced during this call, please note that the revenue figures we cite will generally be recognized over the term of the contract, which can last multiple years. Further, the terms of these contracts can vary. We may not realize all expected revenue. 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. Thanks for joining the call today. For the second quarter of fiscal year 2024, we generated a record $53.8 million in revenue, representing 11% year-over-year growth. In line with the long gap, gross margin came in at 52% above the high end of our expected range. Our adjusted EBITDA loss for the quarter was $14.5 million, also better than expected, reflecting company-wide focus on operational efficiency. We ended the second quarter with 944 unique customers spanning across defense, civil government, and commercial markets. Today, we'll cover a number of items, including recent organizational changes, M&A, sales wins, and product developments. So let's dive in. Starting with organizational changes. In Q2, we undertook significant efforts to focus and optimize resources in support of sustainable long-term growth and profitability. Firstly, on August 1st, we announced a headcount reduction that led to an approximately 10% reduction in force. This was a difficult decision, but one that ultimately better positions Planet for the opportunity ahead of us. Our business has scaled rapidly over the last 18 months, and while we see the market for our solutions continuing to expand, and increased breadth of projects and people resulted in increased cost and complexity. We expect this action will support greater focus, agility, and operational efficiency across our organization. On product engineering priorities, we are pacing the build-out of our next-generation satellite fleets to optimize our resources and support our one-year payback targets for the satellites. I'll cover recent milestones achieved in our Pelican and Talenta programs shortly. And one area we're investing more behind is AI. We are seeing promising signs of commercial opportunity in AI, which I'll cover in a moment. We're also actively strengthening our go-to-market strategy. This itself has three components. One, aligning our teams and investments behind our core opportunities, defense and intelligence, civil government, and agriculture solutions. Our direct sales team is focused on serving high value, large customer opportunities within these markets. This includes selling our daily PlanetScope scan with AI-enabled analytics to defense and intelligence customers, selling our area monitoring for regulatory enforcement to civil government customers, and selling agricultural solutions that utilize our planetary variables. We plan to serve customers in other industries primarily through our growing network of partners around the globe. We will shift towards supporting smaller opportunities via our platform enabled by the synergized acquisition, which we'll discuss momentarily. These changes will allow our commercial teams to focus on high ROI, large opportunities in our pipeline. Three, we're taking steps to streamline and simplify our sales processes. We expect these actions will increase sales efficiency and shorten customer time to value. Ultimately, these organizational changes and programmatic focus have sharpened our efforts on key priorities and reinforced our path to profitability. To finish up the organizational updates, in early August, we closed the acquisition of Synergize, which will be a foundational element and accelerant of our Earth data platform. We see Synergize as an enabler to broad geospatial adoption and enhanced ease of use for customers, both speeding and widening customer adoption. We're making our data easier to work with by enabling customers to analyze data and create applications directly on our platform. Today, our customers and partners typically build their own custom workflows to download, analyze, and integrate our imagery. With Synergize, they will be more easily able to do this in our cloud platform, leveraging the geospatial power tools that Synergize has created. This will speed time to value for our customers in addition to more deeply integrating our platform into critical customer operations. Leveraging Sentinel Hub synergizes self-serve platform, which already serves thousands of users. We will shift towards supporting small deals through a lower touch channel. We're excited about the step function expansion of our platform that this acquisition can enable and the incredible talent joining Planet. We'll go into more detail and provide a demo of Synergize's capabilities at our Investor Day in October. Let's turn to recent sales highlights. Starting with the defense and intelligence market, we recently closed an expansion with the US Space Force. This 12-month extension will enable support of coalition partners' military training exercises around the globe utilizing responsive commercial space capabilities. Through our work together, They have been leveraging SkySat images, SkySat video, and AI-based vessel detection to support the US Department of Defense's commercial satellite capabilities. We also recently received a new seven-figure ACV award from a US government agency for high-resolution SkySat tasking solutions. This award was won through one of our planet partners. We're proud of the work we do to support multiple agencies across the US government. Additionally, we recently won a seven-figure ACV contract to provide our data to a Ministry of Foreign Affairs in Asia. This is a new customer for us, and the contract was won through one of our partners in the region. Within the civil government sector, we are seeing increased demand driven by disaster prevention, emergency response, as well as land management and permitting. For example, we recently expanded our contracts with multiple provincial governments in Canada. We closed a large expansion with the government of British Columbia, a six-figure ACV expansion contract with the Northwest Territories Center for Geomatics, and a six-figure ACV expansion with Quebec's Ministry of Natural Resources and Forests. Our data and solutions are being used to support critical disaster response efforts during the wildfire season to monitor the impacts of climate change on ecosystems and to support land rights across Canada. Similarly, here in California, Our data is being used by authorities to identify areas at risk of wildfires and to inform prevention efforts. During Q2, we signed a new deal to provide planet-scope monitoring, base maps, archive access, sky-set tasking, and synergized platform access to support wildfire fuel reduction programs. As the frequency and scale of wildfires increase, causing tens of billions of dollars in worldwide damages annually, and broader natural disasters causing hundreds of billions of dollars in damages, Our solutions help government customers around the globe prevent and respond to these disasters. In the case of wildfires, this can save significant costs through prevention and reducing severity, as well as help save lives. In Europe, we were recently awarded a new seven-figure ACV multi-year contract delivering environmental monitoring to the UK's Rural Payments Agency with our partner EarthEye. The UK government will use our data to support its environmental land management scheme, allowing for countrywide detection of a wide range of biophysical parameters. It's worth noting that the Rural Payments Agency is an early example of a customer accessing our fusion data via Synergise's platform. In the commercial market, we continue to add great customers across the agricultural solutions, energy and insurance sectors. Now I want to spend a moment on how AI, especially new generative AI and large language models, are enabling Planit's business traction. Planit has a deep proprietary archive of Earth data that grows by terabytes every day, a treasure trove for generative AI models to extract insights and create value. We've seen significant interest in this recently, and I'm pleased to report that last quarter we signed our first deal in this area, a six-figure, three-month pilot to explore the potential to unleash the value of planets' daily data with large language models. And we continue to see real-world impact that AI models and planets' data can make together. The latest example of this was in response to the recent wildfire in Maui. In continued collaboration with Microsoft, together we created an AI-based building damage assessment. Within 24 hours of being notified of the fire, this was delivered to Red Cross, who used it to quickly rearrange work in the field to respond to the most urgent priorities first, better supporting first responders on the ground. Damage assessment information is vital as it is used to make operational decisions such as where to focus response efforts. It can also be the first step in validating addresses for residents that may qualify for financial assistance, for instance. As you recall, we've recently partnered with Microsoft to support a building damage assessment solution in response to the war in Ukraine and the earthquake in Turkey and Syria. Together, we've shortened the time it takes to deploy the building damage assessment in each event from months to days to hours. Whether human conflict or natural disaster, access to timely, reliable data is critical to supporting quick and effective humanitarian responses, and in some cases, avoidance and prevention. This important work has already led to interest in our solutions from other countries and organizations. In all, we see AI as a powerful force that can unlock the potential of our deep data archive and accelerate the adoption of our solutions. Before I turn it over to Ashley, I'd like to highlight a few recent product developments. We're continuing to make great progress on our next-generation missions, Pelican and Tanager. I'm excited to announce that our first Pelican tech demo, TD-1, is now fully built and being ready for launch later this year. While this first Pelican is truly an R&D satellite, whose primary mission is to test the satellite platform and operational systems that are common between Pelican and Tanager, it's a critical milestone in our program, and I'm incredibly proud of our team's progress developing the unprecedented capabilities his new fleet promises. Further, Tanager's imaging spectrometer, developed and built by NASA JPL, is nearing readiness for integration onto our Tanager 1 satellite, which we expect to have ready for launch next year. The spectrometer is the instrument that will allow us to detect, pinpoint, and quantify point source emissions of methane and carbon dioxide, which we've discussed before has huge potential to support the global sustainability transition. Continuing that vein, we recently shared our concrete plans for the upcoming release of our forest carbon planetary variable. This groundbreaking data set aims to provide insights into forest change and carbon capture at nearly the individual tree level, serving voluntary carbon markets, forest related supply chains, conservation and regulators. Frequent and broad area, yet granular data are crucial tools to ensure successful carbon monitoring. Current offerings in this market are often based on data that is years out of date or significantly lacking in accuracy. Our forest carbon product has the potential to match the accuracy of physical or airborne measurements at a fraction of the cost, covering the entirety of the Earth's landmass. We plan to launch a global 30-meter resolution product this year and a global 3-meter resolution product updated on a quarterly basis in 2024. I want to underscore the significance here. With this capability, we hope to underpin global carbon markets, accelerating our ability to tackle climate change and supporting the multi-trillion dollar transition to a sustainable economy. In summary, this quarter marked one of sharpening focus, increased operational efficiency and improving execution. While the economic climate has been challenging for many companies, including Planet, we also have clear opportunities for changes within our business to support faster growth, and a significant and growing pipeline of opportunities to pursue. We expect the changes we're making will make Planet a stronger, more agile, and more efficient organization. We continue to feel the pull from customers for our insights that our business enables. Our focus is on improving execution across the board through prioritization and simplification. I'll now turn it over to Ashley for a review of the financials and our outlook. Over to you, Ashley.