Geopolitical relationships, defense and military needs, and climate monitoring are just a few of the important use cases for real-time Earth data. This is a problem Planet Labs PBC (PL +3.38%) is solving with its large fleet of satellite constellations.
NYSE: PL
Key Data Points
Planet's stock launched into space
Planet Labs' stock skyrocketed recently on a solid quarterly earnings report and the news of a deal it struck with Sweden's military. The contract is reportedly a multiyear, nine-figure deal. Planet Labs' stock is up 28% year to date as of Jan. 21, and 468% in the past year.
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Planet Labs operates on a subscription basis, offering clients access to its satellite data. The company is gaining traction, as the Sweden deal is its third major satellite services contract in the past 12 months.
In Planet Labs's third-quarter fiscal 2026 earnings, the company also showed impressive growth. Revenue hit a record $81 million for the quarter, and the backlog has increased to $734 million. The backlog grew 216% year of year. More than 80% of the company's contracts are multiyear, which suggests revenue growth should continue steadily for several years.
While geopolitical instability can drive demand for Planet Labs' satellite data, it might also hinder it. For example, while tensions were running high among European allies and the U.S. over Greenland, Planet Labs' shares responded negatively. Regulatory and political pressures could potentially adversely affect Planet.
The company's greatest strengths are multiyear government and agency contracts and its ability to provide real-time, daily Earth imagery. The company also sells AI-driven insights, and its data is machine-learning-ready. Planet's competitive moat is wide within this industry.
Planet Labs' financials are also improving. The company is slowing its cash burn, and adjusted EBITDA is now positive. Planet isn't profitable on a GAAP basis yet, but as expenses stabilize and recurring revenue grows, profitability could be in the near to intermediate term.
There are considerable risks with Planet Labs, however. Satellites are not inexpensive. They are quite costly to build, launch, and maintain. There's also a risk associated with Planet's customers. The company is likely to derive most of its income from a few highly lucrative contracts. If any of these fall through, that would be damaging to the stock. It's also more difficult to bring on new customers at this enterprise level. The sales cycle is slow and arduous.
Should investors orbit Planet?
Planet Labs is still a high-risk, high-reward investment, but it is an interesting AI-adjacent company with many highly profitable applications in defense, climate, and commercial industries. Planet Labs is also rich in useful data. It's a compelling growth stock for investors who can tolerate increased volatility. The stock could see further substantial gains soon if the business turns profitable on a GAAP basis and continues to secure long-term contracts that provide reliable cash flow.
