Earth observation satellite company Planet Labs (PL 3.13%) stock started out the week right as it soared nearly 48% after beating earnings Monday morning. It's giving back some of those gains Tuesday, having fallen back 3.9% through 10:40 a.m. ET.
And that's OK.
Image source: Getty Images.
Planet Labs Q2 earnings
If you recall, Planet Labs reported $0.07 in losses yesterday but beat analyst forecasts for "adjusted" earnings, and for revenue according to generally accepted accounting principles (GAAP) as well. Revenue growth was strong at 20% year over year, and gross margins were exceptional, rising 5 full percentage points to 58%.
Best of all was Planet Labs' announcement that it is firmly free-cash-flow positive, and sooner than Wall Street expected (if not quite as soon as Planet Labs promised before it came public via a special purpose acquisition company years ago).
What Planet Labs said, and what Planet Labs did
Back in 2021, Planet Labs made some predictions about where it would be today, in its fiscal 2026. Right about now, Planet Labs predicted, it would be earning 74% (non-GAAP) gross margins, growing revenue at a consistent rate north of 50% annually, and firmly free-cash-flow positive.
So far, only one of these predictions has come true, and only partially so: Free cash flow arrived a year later than predicted. Sales growth and profitability are both tracking lower than predicted -- but as I said, that's OK.
Why? Because Planet Labs stock costs less today than it did back at its IPO. Valued at $2.9 billion, on course for perhaps $100 million in FCF this year, and growing at 20%, the stock's close enough to the mark that investors can once again seriously start looking at Planet Labs as a stock worth buying.
