Key Points
- Planet Labs’ vast satellite fleet and AI-driven analytics give it a strong competitive edge in Earth imaging.
- Serving defense, environmental, and commercial sectors, its real-time data is increasingly valuable.
- Revenue is rising, but profitability remains elusive; analysts are optimistic but cautious.
Planet Labs Has One-of-a-Kind Technology
Planet Labs has about 200 small satellites orbiting the planet. These satellites carry sensitive cameras and telescopic lenses that stay focused on Earth’s surface. With such wide coverage, Planet Labs can generate a highly detailed image of the planet almost once per day. In the near future, it expects to cover small gaps to meet its complete image-per-day goal.
Some potential investors ask how this is different from companies like SpaceX and Blue Origin. Unlike those companies, which largely want to grow human presence in outer space, Planet Labs wants to turn its attention to the planet’s surface.
A company like SpaceX could potentially become a competitor, but it would need to reconfigure its mission scope and technology. Planet Labs has such a head start that it likely doesn’t make sense for these companies to pivot. That puts PL almost in a class of its own.
If we were to attempt to nail down a unique selling proposition for PL it would be that it has the largest fleet of Earth observation satellites and so has the most extensive dataset archive of earth imagery. Overlaying AI-powered geospatial analytics on top of that data means customers have an easy way to access and interpret the data, which Planet then sells as a SaaS-like subscription service.
So, in essence, the marginal cost of selling data over and over is low which theoretically should lead to a highly profitable business model.
Planet Labs Serves Diverse Markets
Critically, Planet Labs knows that it offers a service that many sectors find appealing. The ability to map the planet and track changes daily has obvious defense applications. For example, the company’s SkySat constellation was able to take images of Kabul International Airport 45 minutes apart from each other. Comparing the images shows how quickly the situation in Kabul was deteriorating.
Planet Labs’ technology goes far beyond defense and intelligence applications, though. Companies and governments already use satellite constellations and machine-learning features to oversee infrastructure development projects, monitor events like earthquakes and storms, spot illegal fishing operations, and estimate the amount of carbon held in the world’s forests.
As Planet Labs continues adding sophisticated features to its platform, it can serve an even broader range of markets. It could even become a GPS replacement for companies willing to spend a little more money tracking its most valuable assets.
Planet Labs has impressive technology, but this is just the beginning. As artificial intelligence becomes increasingly powerful, its attributes could assist detailed imaging and power accurate forecasts.
What Planet Labs’ Financials Say About the Company
It’s easy to see that Planet Labs has impressive technology that government agencies and corporations will want to use. Just recently, the company has picked up several pilot projects from the U.S. National Geospatial-Intelligence Agency, the Colombian National Police (DIRAN), and Laconic, a carbon-capture company.
So there’s lots of good news around partnerships and commercialization but what do Planet Labs’ financials reveal?
The most recent financial report includes plenty of information that should make investors optimistic. Importantly, Planet Labs is growing revenues. CEO Will Marshall reported $61.3 million in revenue for Q3, a slight increase from the $61.1 million it made in Q2. The revenue increase likely comes from bringing on a few new clients (1,012 in Q2 grew to 1,015 in Q3).
What really matters, though, is that most of the clients paying Planet Labs have annual or multi-year contracts. Unless something unprecedented happens, Planet Labs can count on similar top line sales for upcoming quarters. This puts the company in a position to start recruiting new clients while it serves its existing base. More likely than not, we’ll see an even higher number of clients and a larger revenue in Q4.
Additionally, Planet Labs has been able to pay for its tech development without going into debt.
In terms of growth vectors, Planet has landed successful partnerships with the US Department of Defense, NASA CSDA, the German Space Agency at German Aerospace Center, and an unnamed client in the international defense sector.
A recent presentation released by the company also calls attention to recent and emerging products developed to collect and enhance more data. Planet Labs is displaying its sound financials, but it’s pointing emphatically to its future success.
Should You Invest in Planet Labs?
We’ve gone over the company’s financials, some of its top-tier clients, and its prospects for the future. All of those factors indicate that Plant Labs has a strong foundation with room to grow.
As far as analysts are concerned, Planet Labs is a Buy but the consensus fair value estimate is lower at $4.60 per share.
Planet Labs has the hallmarks of being an intriguing opportunity for investors who want to get into the Earth imaging sector but it remains early stage and still needs to turn a profit. Cost cutting measures hint at management’s acute awareness of this fact.
Over the last 52 weeks, share prices have hovered between $1.67 and $6.25. It wouldn’t be a surprise of Planet Labs returns back to $10 per share where it first debuted on public markets over the next 12 months. However, management has had a history of disappointing investors during earnings calls so this might well be a case of positive expectancy but buyer beware at the same time.
