Planet Labs PBC (PL) shares rocketed higher on Thursday as investors celebrated the company's increasingly dominant position in satellite imagery and Earth observation. If you've ever wondered who's watching our planet from space, it's probably these guys.
The company reported earnings Wednesday evening that made analysts do a double take. Revenue came in at $81.25 million, handily beating the $71.99 million Wall Street expected. Even better, adjusted earnings per share hit breakeven for the second time this year, outpacing forecasts.
That's the kind of performance that gets analysts excited. Really excited.
Wall Street Raises the Bar
Needham analyst Ryan Koontz reiterated his Buy rating and cranked up his price target from $16 to $22. His reasoning? The company's balance sheet is solid enough to support positive free cash flow in fiscal 2026 and 2027, while simultaneously funding its next-generation Pelican and Owl satellite constellations.
Koontz said the execution has been impressive, putting Planet Labs on track to hit the Rule of 30 in fiscal 2027 and the Rule of 40 in fiscal 2028. For those unfamiliar with SaaS metrics, these benchmarks measure combined revenue growth and profit margins, and they're basically the gold standard for subscription businesses.
What's Working and What's Not
The Defense and Intelligence segment absolutely crushed it with 72% growth, driving most of the quarter's upside. Civil government sales ticked up slightly as international strength offset a weaker contract in Norway. The commercial segment, however, took a hit from softer agricultural demand.
On the profitability front, gross margin hit 60.3%, topping guidance thanks to stronger revenue and usage-based subscriptions. Adjusted EBITDA beat expectations and stayed positive for the fourth consecutive quarter. Free cash flow remained in the black despite elevated capital spending on satellites.
One particularly encouraging metric: net dollar retention reached 109%, the highest level since fiscal 2023. That means existing customers are spending more, which is exactly what you want to see in a subscription business.
Big Wins Keep Rolling In
Total remaining performance obligations jumped sharply, boosted by recent contract wins in Japan and Germany. The backlog expanded meaningfully and held steady from the previous quarter.
New contracts included programs with the U.S. Navy, NATO, and NASA. Koontz noted these wins offset some renewals that came in at lower rates due to budget constraints.
Looking Ahead
Planet Labs expects fourth-quarter revenue between $76 million and $80 million, comfortably above the $73.88 million consensus. The company also raised its full-year revenue guidance from $281-$289 million to $297-$301 million, well ahead of the $284.11 million analysts had penciled in.
Koontz emphasized that Planet Labs remains the leader in next-generation Earth observation technology. The company operates roughly 200 satellites that image 350 million square kilometers daily—nearly twice Earth's entire landmass. Think about that for a second.
The analyst described the business model as a data subscription service backed by proprietary space infrastructure. It's essentially software-as-a-service, except the infrastructure happens to be orbiting the planet.
Koontz expects fundamentals to keep improving through fiscal 2025 and 2026, with tighter cost controls boosting profitability.
Shares surged 33% to $17.20 on Thursday, hitting a new 52-week high. Investors clearly like what they're seeing from this space-based data platform.