Planet Labs PBC

Hello, everyone. Thank you for attending today's Planet Labs PBC second quarter of fiscal 2025 earnings call. My name is Sierra, and I will be your moderator for today. All lines 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, press star one on your telephone keypad. I would now like to pass the conference over to our host, Cleo Palmer-Perona, Investor Relations at Planet Labs PBC. Please proceed.

Thanks, Operator, and hello, everyone. This is Cleo Palmer-Peroner, Investor Relations at Planet Labs, PBC. Welcome to Planet's second quarter of fiscal 2025 earnings call. I'm joined today 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 may make forward-looking statements related to future events or our financial outlook. We also may 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 Planit 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. 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 and our earnings update presentation, which are intended to accompany our prepared remarks. At this time, I'd now like to turn the call over to Will Marshall, Plan's CEO, chairperson, and co-founder. Over to you, Will.

Thanks, Cleo, and hi, everyone. Thanks for joining the call today. For the second quarter of fiscal year 2025, we generated a record $61.1 million in revenue, representing a 14% year-on-year growth. This was driven by continued strength in the government sector. Non-GAAP gross margin for the quarter was 58%, and adjusted EBITDA loss was $4.4 million. These results were all in line with or better than the guidance provided on our last earnings call. Q2 marked our fifth sequential quarter of improvement in adjusted EBITDA as we persistently march towards our target of achieving adjusted EBITDA profitability by Q4 of this fiscal year. We also successfully launched our first Tanager satellite along with 36 new superdoves last month. All of the satellites have been contacted and are undergoing commissioning. Today, I'll cover a number of topics, including recent organizational changes, sales wins, satellite launches, and product updates. Ashley will then provide more color on the business and our financials. So let's dive in. Starting with recent organizational changes. In Q2, we took action to align resources to the market opportunity and improve our operational efficiency. We consider which areas of our business are operating most efficiently and which need improvement. as well as the demand trends we're seeing across geographies and sectors. These actions were simultaneously aimed at improving our go-to-market towards accelerating growth as well as reducing costs. We are creating industry-aligned business groups focused on specific sectors to help drive both product and sales strategy. As part of these changes, we undertook a headcount reduction that resulted in parting ways with approximately 17% of our planeteers. a process that was very difficult but allowed us to meaningfully improve our cost structure. We expect this new, more efficient operating model will support the sustainable long-term growth and profitability of the business. Ashley will provide additional details on these changes shortly as she oversees our go-to-market teams in her capacity as president and work with our go-to-market leaders to architect this new operating model. Let's turn now to some of our customer highlights from Q2. The defense and intelligence sector continues to be a strong industry vertical for Planet, with revenue in the quarter growing more than 30% year-over-year. I'd like to highlight a few of the sales wins we saw in the quarter, which are indicative of the increasing interest we are seeing from both U.S. and international government customers around the world for Planet's unique datasets and the solutions we're delivering with our partners. During the quarter, we closed a new deal with NATO. Their communications and information agencies knew Alliance Assistance Surveillance from Space Programme, or APSS, will evaluate using both planets' broad area monitoring and tasking solutions to perform detailed tracking and analysis of foreign military activities, monitor infrastructure, and fill intelligence gaps. We're proud to partner with NATO in this time of heightened global conflict to reinforce multinational alliances to enhance global security, and we look forward to developing our relationships. While this is an introductory deal, we view it as strategically important. Additionally, we closed a seven-figure deal with an international defense customer, which includes an expansion of high-resolution tasking and a pilot for PlanetScope data enhanced with AI capabilities from our partner CIMAX for maritime domain awareness. As discussed on previous courses, part of a growing trend we see in using AI on Planet's daily scan imagery to gather intelligence more efficiently and speed customer time devaluing. Overall demand in the defense and intelligence sector remains strong, and we believe in our new industry-aligned operating model will further support our ability to capitalize on the momentum we're seeing. Progress in the civil government sector also continues to be solid with revenue growth of over 20% year on year in Q2. I'll take a moment to highlight a couple of use cases that are highly repeatable for the civil government market. We recently announced that the Kingdom of Bahrain is using PlanetSkySat data, enhanced with AI solutions from our partner EtoSky, to support smart city management and urban planning initiatives across the country. Bahrain reported that thus far, this has led to a significant increase in the effectiveness of building permit validation activities. This is a great example of a use case that could be repeated in other nations and cities around the world. Last month at Planet on the Road, we announced that INRA, Bolivia's land management agency, is using Planet Insights platform with our local partner and geospatial AI service provider, CIVIS, for land use, titling, and emissions compliance. We also introduced IGAC, the Colombian Cartographic Entity, which utilizes AI and PlanetScope scenes and base maps for land use planning and infrastructure monitoring across Colombia. Ashley, who attended On the Road in Colombia, will share her reflections on the event shortly. Finally, we closed the seven-figure expansion with another international government agency for SkySat high-resolution data, which we previously announced in July. Overall, our ability to save government customers time and resources with our broad area management solutions is driving customer adoption globally. Leveraging our platform and solution partners, we believe we can further penetrate the global market opportunity we see for our data in the civil government sector. Shifting to the commercial sector, where we discussed on prior calls, we've seen both macroeconomic headwinds generally and challenges in the agriculture sector specifically. Under our new operating model, we are refining our resource allocations and focusing efforts on building out our insights platform for a lower friction experience for our customers and partners that are building solutions on top of Earth observation data. The platform provides valuable tools to our partners and customers while also reducing our cost to service these customers. We're seeing a lot of green shoots and experimentation in the platform at a small scale, which enables us to tap into the solid growth potential of the broader market, but in an automated and scalable way. We expect this structure will better position Planet to serve the large addressable markets in the commercial sector in particular, which we believe can be a driver of upside over the long term. To share some commercial wins from the quarter, we expanded our contract with longtime customer and agricultural leader BASF, who have added Planet's Field Boundary solution to support the Xavio digital platform. As we discussed in our prior call, we're seeing digital agriculture applications shift towards new business models with better aligned incentives, and customers like BASF are at the forefront leading this transition. We also recently announced a partner-led renewal and expansion with American Crystal Sugar via Planet partner, SatAgro, a precision agriculture company. Under this contract, SatAgro will use planet data to provide American crystal sugar with advanced sugar beet monitoring in the northern United States, including harvest progression, yield prediction, and other insights to enable crop management decisions. This brings us to product updates for Q2. As many of you saw, we successfully launched our first Tanager satellite and 36 super doves on board a SpaceX launch vehicle on August 16th. We're three weeks into a few months long commissioning period for this first of its kind Tanager hyperspectral satellite. I'm very proud of the progress that we've made as we work towards first light. On super doves, our mature fleet that supports the PlanetScope daily scan, I'm pleased to report that all 36 satellites have been contacted, the first reached first light in a record three days, and they are rapidly going into production mode. This constellation remains the largest Earth imaging fleet in history and the basis for a planet's core differentiated data. I want to thank the global team that worked nights and weekends to make this launch and these missions happen. Finally, we are preparing to ship the Pelican 2 satellite in the coming months. As a reminder, the Pelican program has our next generation high resolution fleet, which enables continuity and enhancements over its predecessor SkySat, including in resolution, image quality, spectral bands, and imaging capacity. The Pelican 2 design incorporates NVIDIA's latest Jetson GPU module. With this GPU, Planet plans to enable edge compute, allowing us to run AI onboard the satellite. When paired with our next generation communication technology, the program has the potential to decrease time to value by 10x, increasing customer value by significantly shortening the time of delivery of actual insights. Finally, Pelican will also improve resolution with the Pelican 2 satellite already expected to offer up to 40 centimeter class resolution imagery as part of a program that we expect will ultimately deliver 30 centimeter class resolution. We look forward to sharing updates on Pelican 2 as the launch date approaches. In software products, we recently rolled out customer education on how to use our land surface temperature planetary variable to optimize agricultural practices. Learned surface temperature can be a powerful tool to predict crop growth rates. Together with crop and regional specific models and Planit's daily monitoring, customers can use these tools to infer crop growth progress in specific areas. Our platform strategy continues to focus on providing tools that help reduce customer time to value and improve ease of use. In summary, we're steadily executing on our strategy and implementing a new industry aligned operating model across Planit to better support our customers and growth. The trends we're seeing in the government sector remain strong, fueled by heightened security needs, increased sustainability requirements, and global climate risks. In the commercial sector, we're making the strategic changes needed to better position Planet for the significant market opportunity that we believe we can capture while continuing our progress towards adjusted EBITDA profitability. Finally, I'd like to say thank you to the Planet team members around the world for all your commitment and enthusiasm. I'm continually impressed by our innovation and leadership of Planeteers in pursuit of our mission. I'll now turn it over to Ashley. Over to you.