Planet Labs PBC

Hello, everyone. Thank you for attending today's Planet Labs PBC third quarter of physical 2025 earnings call. My name is Sierra and I'll be your moderator for today. 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 like to pass the conference over to our host, Chris Genualdi, Vice President of Investor Relations. Please proceed.

Thanks, Operator. And hello, everyone. This is Chris Genualdi, Vice President of Investor Relations at Planet Labs PBC. Welcome to Planet's third quarter fiscal 2025 earnings call. I am joined 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 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 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, which is available on our website at investors.planet.com. 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 point, 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 us today. During the third quarter, we made significant progress across our go-to-market, technology, and financial objectives. We secured multiple large contracts with government customers globally, advanced our next generation data sets towards commercialization, and enhanced the Planet Insights platform with new capabilities. We also meaningfully improved the fundamentals of the business. To quickly summarize our financial achievements, for the third quarter of fiscal 2025, we generated a record $61.3 million in revenue, representing 11% year-on-year growth. Non-GAAP gross margin for the quarter increased to a record 64%, up from 52% a year ago and 58% last quarter. Adjusted EBITDA loss for Q3 narrowed to approximately $242,000, marking our sixth sequential quarter of improvement in adjusted EBITDA as we substantively narrow in on our target to achieving adjusted EBITDA profitability next quarter. Ashley will provide more detail on the financials shortly. Turning to sales highlights, let's start with the defense and intelligence sector. During Q3, we saw a substantial increase in new and expansion bookings with D&I customers, primarily driven by wins in the international market, which have contributed to the increase in our backlog and strengthened our foundation for growth going forward. Revenue from the D&I sector grew approximately 25% on a year-over-year basis, And we continue to see the emerging trend of defense customers adopting partner and AI-enabled solutions powered by our data to enhance their ability to identify known and unknown threats over broad areas. For example, during the quarter, Planet won an eight-figure expansion with an international defense customer to provide a full range of Planet products, including PlanetScope, SkySat, maritime domain awareness, and other analytics. We expect this contract to ramp into the next year. Planet also was selected for another seven-figure pilot with the U.S. Department of Defense. This is our third such pilot program with the U.S. DOD this year. Under this three-month project, Planet will provide satellite imagery in key areas of interest with analytics-powered insights developed with a Planet partner. We continue to work towards converting these pilots into operational contracts. The opportunity to sell global and regional monitoring services to existing and new government customers is significant in our view. Additionally, we have the opportunity to sell upcoming new datasets like Tanager Hyperspectral or Pelican High Resolution to government customers as those come available. We'll share more on Tanager and Pelican in a moment. Turning to the civil government sector, where revenue grew approximately 10% year-over-year in Q3. We're pleased to announce that we've received our first order under the new NASA Commercial Small Sat Data Acquisition Contract Vehicle, or CSDA, for approximately $20 million, covering one year of performance. As a reminder, NASA announced in early September that Planet was selected for the CSDA, the framework under which NASA can place orders through November 2028. While the first order came in later than we anticipated, landing on November 25th, with a renewal delay impacting revenue in Q3 by approximately $2.3 million, we were pleased to see that it came in as a seven-figure ACV expansion on our prior contract. Planet is very proud of the work our data have enabled through the CSDA program, which serves thousands of researchers at NASA and labs across the US working on a wide range of Earth system sciences and applications. In a similar program across the Atlantic, we also recently signed a multi-year contract with the German Space Agency, DLR, to provide data access and development support for the agency's Earth observation data platform, integrating planet data into the system and offering advanced services. These are two examples of government-wide agreements which provide broad access to our vast Earth observation archive to empower education research users in furthering science, research, and identifying and validating new use cases. These board agreements enable substantial user bases at research institutions and government agencies to access large data sets, often covering entire countries or regions. There are often seven or eight figure deals, and we believe there are over 100 countries that could benefit from such offerings. Shifting to the commercial sector, we're cautiously optimistic that the improving business environment, combined with the changes we've made in our go to market, will position this sector to return to growth. We were pleased to observe in the quarter that average deal sizes for new and expansion contracts continue to trend upwards, indicative of our sales team's focus on higher value accounts with strong ROI use cases. Here we are also seeing a growing trend for customers adopting AI-enabled solutions powered by Planit's differentiated datasets. We see these solutions as facilitating analysis across significantly broader areas and speeding up time to value for our customers. To share some examples, we recently signed an expansion with Abelio, a French technology company offering smart farming solutions. They're leveraging Planet Insights platform and our PlantScope data to enhance their digital agriculture solutions. Their solutions apply algorithms and AI models on top of Planet data to generate insights for precision farming and help save farmers between 5 and 10% in nitrogen application on average. They'll have access to our agriculture data across France, nearly three times the amount of data that they previously integrated into their solutions last year. We also recently won an expansion with Global Fishing Watch, an international nonprofit dedicated to advancing ocean governance. This six-figure deal represents a 650% expansion and enables 20 times the ocean coverage, allowing Global Fishing Watch to fully leverage PlanetScope data and machine learning to map vessel activity across millions of square kilometers of the ocean to better detect small vessels engaged in illegal fishing activities. Finally, we recently announced a partnership with Laconic to deliver AI-powered forest carbon insights aimed at enabling informed carbon credit trading. Under the seven-figure deal, Laconic will gain access to Planet's new forest carbon monitoring products we released last quarter. Leveraging these data feeds, Laconic plans to offer their customers accurate trends and verifications to instill trusted trading confidence and empower informed carbon credit decision-making. Overall, we're proud to share that Q3 represented our largest ever quarter of ACV bookings. We remain focused on driving growth acceleration while also building greater predictability into our book of business. This quarter's bookings expansion gives us confidence in our team's ability to do this, and Ashley will speak more to this shortly. Now to some recent product updates. During Q3, we released our analytics-ready PlanetScope ARPS product for time series analysis and machine learning models on our core daily scan. This product harnesses our proprietary algorithm to create harmonized and spatially consistent stacks of images of the same location over time. The result is a more precise data set that's readily available for manipulation analysis and visualization, all delivered in the Planet Insights platform. It's available today to our customers. In Q3, we also released our AI-powered forest carbon monitoring product at the UN Climate Week in New York. It's the world's first global-scale forest structure monitoring system at a three-meter resolution, an unprecedented data set that can be used to underpin voluntary carbon markets, regulatory compliance, and deforestation mitigation. Turning to updates on our next-generation satellite fleets, As many of you saw in September, we shared the first light images from Tanaja-1 hyperspectral satellite. Tanaja-1 has since begun helping CarbonMapper monitor hundreds of emission sites globally under our commercial partnership. Just last month, CarbonMapper published over 300 methane and CO2 plume detections at COP29 in Azerbaijan. In an incredible early win for the program, one emissions leak in Texas was voluntarily fixed by the commercial operator. This provides a small sense of the power of this data. It can lead to accountability and benefits for companies, enhancing their efficiency, while also providing significant benefits for the environment. Tanager One continues to go through its final commissioning and calibration, after which we plan to make the data commercially available to other customers across government and commercial markets. We're pleased with the near term traction we're seeing in our pipeline for hyperspectral data, particularly in the energy and government sectors. I'd also like to highlight how the Tanager program represents a powerful blueprint for accelerating our technology roadmap by leveraging our space systems capabilities and IP with a partner. Now that that first satellite is in orbit and delivering data, we can begin to unlock the growth potential of the Tanager program while also accelerating our partner carbon mappers mission. Overall, we see such opportunities as highly strategic, enabling us to scale our business more rapidly and strengthen our financial position. We expect to pursue similar opportunities going forward. Moving to our Pelican fleet, we're pleased to share today we shipped the Pelican 2 satellite to Vandenberg Space Force Base in preparation for launch, which is currently scheduled for January. As a reminder, the Pelican program is our next-generation high-resolution satellite, which enables continuity and enhancements over our current SkySat fleet, including image quality, spectral bands, imaging capacity, and latency. The Pelican 2 design incorporates NVIDIA's latest Jetson GPU module, enabling edge compute, the power to run powerful AI on the satellite, and speed time to insights. It also incorporates satellite-to-satellite links previously discussed, speeding time to value. In summary, we won multiple large contracts with government customers that we believe positions us to re-accelerate growth as those contracts ramp and expand. On the product front, we've made improvements to our core daily scan data. We're capturing a powerful new data set with our first Tanager satellite, which we expect to commercialize in the month ahead. And we plan to launch our next Pelican satellite shortly. Finally, the adoption of AI enabled solutions amongst both government and commercial customers is growing. We're focused on leveraging our platform and partners to nurture this adoption, increase customer value, expand the addressable market, and ultimately build greater predictability and growth into the business. With that, I'll turn over to Ashley to talk through more details around our financials. Over to you, Ashley.