EPS of $-0.13 increased by 7.1% from previous year
Gross margin of 54.8%
Net income of -38.67M
"For the second quarter of fiscal year 2025, we generated a record $61.1 million in revenue representing 14% year-on-year growth." - Will Marshall
Planet Labs PBC (PL) QQ2 2025 Earnings Analysis: Government-Led Growth, Hyperspectral Momentum, and Path to Adjusted EBITDA Profitability by Q4 2025
Executive Summary
Planet Labs reported a solid QQ2 2025 quarter, marked by a record revenue run-rate and meaningful progress on path to profitability amid a shifting operating model. Key highlights include: 1) Revenue of $61.1 million, up 14% year over year, led by Defense & Intelligence and government demand, with non-GAAP gross margin at 58% and an adjusted EBITDA loss of $4.4 million—the fifth consecutive quarter of improving EBITDA metrics and in line with or better than prior guidance. 2) Strategic execution via an industry-aligned operating model, including a 17% headcount reduction aimed at lowering the cost structure by approximately $35 million per year, while preserving growth initiatives. 3) Major product/operational milestones: launch of the first Tanager hyperspectral satellite and 36 new SuperDoves; commissioning underway; Pelican-2 with NVIDIA Jetson GPU to enable onboard AI; and ongoing ramp of the Planet Insights Platform. 4) Government demand remains the principal growth engine (Defence & Intelligence up >30% YoY; Civil Government up >20% YoY), with NATO’s Alliance Persistent Surveillance from Space (APSS) program highlighted as a strategically important, up-to-$1B five-year opportunity. 5) Solid liquidity ($249M in cash and equivalents with no debt), RPO of ~$112M and backlog of ~$214M, underscoring a healthy revenue runway even as near-term profitability remains the focus. Management emphasizes durable growth in government markets, progress on optimization initiatives, and a scalable platform-led strategy to unlock longer-term value across commercial and government sectors.
Key Performance Indicators
Revenue
61.09M
QoQ: 1.08% | YoY:13.64%
Gross Profit
33.49M
54.83% margin
QoQ: 5.72% | YoY:27.39%
Operating Income
-39.58M
QoQ: -14.48% | YoY:8.56%
Net Income
-38.67M
QoQ: -32.00% | YoY:-1.82%
EPS
-0.13
QoQ: -30.00% | YoY:7.14%
Revenue Trend
Margin Analysis
Key Insights
Revenue (Q2 FY2025): $61.092M; YoY +13.6% (reported YoY 14% in the call materials); QoQ +1.1% (per four-quarter snapshot). - Gross profit: $33.494M; gross margin (non-GAAP) 58% (GAAP gross margin 54.8%). - Operating income: -$39.578M; EBITDA: -$24.626M; net income: -$38.668M; EPS (diluted): -$0.13. - RPO: ~$112.0M; backlog: ~$214.0M; 12-month RPO share: ~78% of RPO, 97% within 24 months. - End-of-period customers: 1,012. - Recurring ACV: 96% of end-of-period ACV; average contract length ~2 years. - Net dollar retention: 99% (100% including winbacks). - Cash & equivalents/short-term investments: ~$249.4M; cash at period-end: ~$166.6M; no debt outstanding; net debt: -$124.3M. - Capex (quarter): $16.6M; free cash flow: -$28.8M; quarterly operating cash flow: -$7.86M. - Guidance for Q3 FY2025: revenue $61–64M; non-GAAP gross margin 59–61%; adjusted EBITDA loss: $5M to $2M; capex $13–16M. - Light-touch commentary on profitability trajectory: path to adjusted EBITDA profitability by Q4 FY2025; government pipeline remains robust across Defense & Intelligence and Civil Government.
Financial Highlights
- Revenue (Q2 FY2025): $61.092M; YoY +13.6% (reported YoY 14% in the call materials); QoQ +1.1% (per four-quarter snapshot). - Gross profit: $33.494M; gross margin (non-GAAP) 58% (GAAP gross margin 54.8%). - Operating income: -$39.578M; EBITDA: -$24.626M; net income: -$38.668M; EPS (diluted): -$0.13. - RPO: ~$112.0M; backlog: ~$214.0M; 12-month RPO share: ~78% of RPO, 97% within 24 months. - End-of-period customers: 1,012. - Recurring ACV: 96% of end-of-period ACV; average contract length ~2 years. - Net dollar retention: 99% (100% including winbacks). - Cash & equivalents/short-term investments: ~$249.4M; cash at period-end: ~$166.6M; no debt outstanding; net debt: -$124.3M. - Capex (quarter): $16.6M; free cash flow: -$28.8M; quarterly operating cash flow: -$7.86M. - Guidance for Q3 FY2025: revenue $61–64M; non-GAAP gross margin 59–61%; adjusted EBITDA loss: $5M to $2M; capex $13–16M. - Light-touch commentary on profitability trajectory: path to adjusted EBITDA profitability by Q4 FY2025; government pipeline remains robust across Defense & Intelligence and Civil Government.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
61.09M
13.64%
1.08%
Gross Profit
33.49M
27.39%
5.72%
Operating Income
-39.58M
8.56%
-14.48%
Net Income
-38.67M
-1.82%
-32.00%
EPS
-0.13
7.14%
-30.00%
Key Financial Ratios
currentRatio
2.34
grossProfitMargin
54.8%
operatingProfitMargin
-64.8%
netProfitMargin
-63.3%
returnOnAssets
-5.87%
returnOnEquity
-8.17%
debtEquityRatio
0.05
operatingCashFlowPerShare
$-0.03
freeCashFlowPerShare
$-0.1
priceToBookRatio
1.56
priceEarningsRatio
-4.77
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Strategy & operating model: Management outlined a shift to industry-aligned business groups and a headcount reduction of ~17% to improve efficiency and align resources with market opportunity. Quote: Will Marshall emphasized the intent to pursue a sustainable long-term growth and profitability trajectory through the new operating model. (Will Marshall)
- Government demand and major wins: The company highlighted NATO APSS, a seven-figure expansion with an international defense customer, and ongoing interest in AI-enabled planetary data for maritime domain awareness. Quote: “The Defence and Intelligence sector continues to be a strong industry vertical… We closed a new deal with NATO… up to a billion dollars to that program over five years.” (Will Marshall)
- Hyperspectral and platform milestones: Tanager launched with 36 new SuperDoves; Pelican-2 to enable onboard AI; first light expectations and long-term resolution targets (40 cm class, potentially 30 cm in the future). Quote: “We launched our first Tanager satellite and 36 SuperDoves… Pelican-2… up to 40 cm class resolution… ultimately 30 cm class.” (Will Marshall)
- Civil Government and commercial mix: Revenue growth in Civil Government >20% YoY; commercial sector facing headwinds but offset by platform investments and partner-enabled margin benefits. Quote: “Kingdom of Bahrain… SkySat data enhanced with AI for smart city and urban planning… leadership in civil government adoption.” (Ashley Johnson)
- Margin discipline and uncertainty around bookings: Gross margin strength driven by mix and cloud cost efficiencies; 3Q guidance reflects potential variability from deal mix and partner arrangements. Quote: “Non-GAAP gross margin for the second quarter was 58%, better than we had originally expected… driven by mix of deals leveraging partner solutions and cloud infrastructure efficiencies.” (Ashley Johnson)
For the second quarter of fiscal year 2025, we generated a record $61.1 million in revenue representing 14% year-on-year growth.
— Will Marshall
Non-GAAP gross margin for the second quarter was 58%, which was better than we had originally expected, in part due to the mix of deals leveraging partner solutions, as well as benefits from the cloud infrastructure investments we've made to optimize cost.
— Ashley Johnson
Forward Guidance
Planet projects a constructive near-term growth path anchored by government demand and a ramp in hyperspectral capabilities. Key near-term guidance includes: 1) Q3 revenue guidance of $61–64M, representing roughly 10–16% YoY growth, supported by continued D&I and Civil Government activity and select large contracted wins; 2) gross margin target of 59–61% for Q3, with upside potential from higher data mix and partner arrangements, but acknowledging potential pressure if prime-led contracts increase COGS variances; 3) Adjusted EBITDA loss narrowing further to between -$5M and -$2M in Q3, as efficiency initiatives accrue and higher-margin data revenue scales; 4) Capex of $13–16M in Q3 to support Pelican/Tanager investments and maintenance of PlanetScope. In the remainder of FY2025, the pipeline in Defense & Intelligence and Civil Government remains robust with seven- and eight-figure opportunities, including NATO’s APSS and other international government programs. Management reiterates an objective to reach adjusted EBITDA profitability by Q4 FY2025 and to sustain cash flow breakeven without capital raises. Investment thesis hinges on: a) execution of the industry-aligned operating model to drive higher win rates and revenue mix shift toward scalable platforms; b) successful commercialization of the Tanager hyperspectral and Pelican-2 programs to broaden addressable markets; c) material contribution from the Planet Insights Platform and partner ecosystem to accelerate time-to-value for customers. Investors should monitor: timing and size of large government wins, evolution of RPO/backlog into realized revenue, platform adoption by commercial customers, and the cadence of Pelican/Tanager-related costs versus realized data-driven revenue.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
PL Focus
54.83%
-64.80%
-8.17%
-4.77%
RKLB
22.80%
-40.70%
-9.15%
-13.47%
RDW
16.60%
-8.57%
23.10%
-6.30%
MNTS
1.00%
-5.76%
3.91%
-4.38%
BKSY
27.20%
-47.00%
-12.30%
-3.21%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Planet Labs is at an inflection point where near-term profitability remains the primary objective, with a clear runway for margin expansion and revenue growth driven by government demand and high-value hyperspectral capabilities. The QQ2 2025 results demonstrate disciplined cost controls, a shift to an industry-aligned operating model, and strong absolute cash position, all of which support a path to adjusted EBITDA profitability by Q4 FY2025. Key catalysts include NATO APSS deployment, the Tanager hyperspectral program, Pelican-2 onboard AI, and the Planet Insights Platform’s monetization through the partner ecosystem. The company’s balance sheet affords significant flexibility to fund Capex and growth initiatives without equity raises, while RPO/backlog implies a robust future revenue stream. Investors should monitor: timing and scale of large government awards, the pace of revenue recognition from RPO/backlog, pipeline progression in D&I and Civil Government, and the monetization trajectory of hyperspectral data and platform offerings. Relative to select aerospace/industrial peers, Planet exhibits higher gross margins and meaningful government-driven growth, but remains EBITDA-negative in the near term as it funds aggressive fleet and platform investments. If management sustains operating efficiencies and accelerates high-margin platform deals, the stock has potential to re-rate on a sustained break-even trajectory and longer-term revenue expansion driven by AI-enabled geospatial data solutions.
Key Investment Factors
Growth Potential
Strong long-term growth potential from government datasets (D&I, Civil Government) and expanding commercial adoption via the Planet Insights Platform. Hyperspectral capabilities (Tanager) and the Pelican-2 program enable higher-value offerings (AI onboard, 40 cm+ resolution) and broader market reach. NATO APSS represents a multi-year, multi-party opportunity potentially exceeding $1B over five years; international expansion (EMEA, APAC, LATAM) is accelerating (EMEA +20%, APAC +40%, LATAM +30% YoY). Recurring revenue with high ACV and a robust backlog/RPO trajectory supports revenue visibility and scalable economics; net dollar retention at 99% (100% with winbacks) signals strong customer fidelity and cross-sell potential.
Profitability Risk
Concentration in government spending cycles and timing risk around large, multi-year contracts; revenue remains exposure to lumpiness from renewals and complex procurement processes in the defense and civil government sectors; near-term profitability depends on mix of prime vs. partner-driven deals and the ability to scale platform-based services without proportionate OPEX; execution risk related to ramping new fleets (Pelican-2) and AI-on-satellite initiatives; competition and potential delays in hyperspectral data monetization; macro headwinds in some commercial verticals (e.g., agriculture) could pressure growth if government momentum slows.
Financial Position
Strong liquidity with $249M in cash and equivalents and no debt; end-of-period cash ~$166.6M; net debt of -$124.3M indicates a net cash position. RPO ~$112M with ~78% expected to be recognized in the next 12 months and backlog ~$214M with ~65% in the next 12 months and 87% in 24 months. Management targeted cost savings of ~$35M annually from headcount reductions and structural efficiency gains, funded partly by a ~$10.5M one-time restructuring charge in Q2; Capex expected to remain around $13–16M in upcoming quarters to support fleet modernization. The company remains on track to achieve adjusted EBITDA profitability by Q4 FY2025, albeit with ongoing investments in growth initiatives and platform enhancements.
SWOT Analysis
Strengths
Strong government demand powering revenue growth (Defense & Intelligence up >30% YoY)
Strategic NATO APSS engagement with multinational defense implications
First Tanager hyperspectral satellite launched; Pelican-2 on track for edge AI and higher resolution (40 cm class, targeting 30 cm long-term)
Largest Earth imaging fleet with 36 new SuperDoves achieving first light rapidly
Platform-led, partner-friendly go-to-market and Planet Insights Platform to reduce time-to-value for customers
Healthy balance sheet: $249M in cash and equivalents, no debt, robust RPO/backlog
Weaknesses
Bottom-line profitability still negative; adjusted EBITDA loss (-$4.4M in Q2)
Free cash flow negative (-$28.8M) and reliance on government contracts which can be lumpy
Operational leverage depends on successful ramp of new fleets and AI initiatives; exposure to customer mix shifts (prime vs. partner arrangements) impacting gross margins
RPO/backlog volatility driven by renewal timing and large multi-year contracts that can cause quarter-to-quarter fluctuations
Opportunities
NATO APSS expansion could drive multi-year, multi-vendor opportunities (addressable up to $1B over five years)
Hyperspectral data monetization via Tanager opens new verticals (carbon/methane, industrial inspection, mining, agriculture) and NRO collaboration potential
Pelican-2 AI edge compute enables faster insight delivery and higher-value products
Planet Insights Platform and partner ecosystem (SCCON, BASF, SatAgro) to broaden commercial adoption and reduce cost to serve
International civil government deployments (Bahrain, Bolivia INRA, Colombia IGAC, New South Wales) offer repeatable use cases and potential cross-border expansion
Threats
Budget cycles and procurement delays in government sector could delay large wins
Competition from peers in satellite data and analytics space; technology maturation risk in AI/foundation models and onboard processing
Economic headwinds in certain commercial sectors (e.g., agriculture) could slow non-government revenue growth
Geopolitical and regulatory risks that affect international expansion and data-sharing agreements