Planet Labs Revenue Jumps 20% in Q2

Key Points

• Record revenue of $73.4 million, up 20% year over year and above prior guidance.

• Backlog and remaining performance obligations soared, with RPOs up 516% year over year and backlog up 245% year over year.

• Free cash flow turned positive at $46.3 million, and adjusted EBITDA shifted to a $6.4 million profit.

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Planet Labs Pbc (NYSE:PL), the satellite data and analytics provider with the world’s largest fleet of Earth observation satellites, reported its earnings for the quarter ended July 31, 2025 on September 8, 2025. The release highlighted a record revenue performance, robust growth in both government and commercial contracts. Overall, the quarter showed material progress toward long-term profitability and scale, even as net losses persisted in Q1 and Q2 FY2026.

Management expectations based on management's guidance, as provided in Q1 2026 earnings report.

About the Business and Recent Focus Areas

Planet Labs Pbc operates the world’s largest constellation of Earth observation satellites. Its core business is collecting daily satellite imagery and analytics for customers such as governments, insurers, and agricultural businesses. The company sells access to this data, letting users monitor changes to the planet in near real-time.

The company’s recent focus has centered on expanding its recurring revenue base, targeting contracts with governments and major enterprises. Key to its growth is the ability to land multi-year deals, deploy new-generation satellites, and embed data-driven insights into customer workflows. Success factors include technological leadership in high-resolution imaging and analytics, a scalable subscription model, and execution on major contract wins with public sector and commercial customers.

Quarter Highlights: Performance and Developments

Revenue reached a new record, outpacing the upper end of guidance set after Q1 FY2026. The revenue figure of $73.4 million for Q2 FY2026 exceeded the prior guidance range of $65 million to $67 million. Year-over-year, revenue climbed by just over $12 million in Q2 FY2026 compared to Q2 FY2025, driven by strong demand from government and security-sensitive sectors.

The adjusted EBITDA metric—a gauge of profit before interest, taxes, depreciation, and amortization, used to measure operating performance—showed a positive $6.4 million outcome versus a $4.4 million loss in the prior-year period. Free cash flow, an indicator of cash left over after capital expenditures and a key measure of financial health, turned positive at $46.3 million after being negative in the previous year.

The company expanded its satellite fleet with launches of two next-generation Pelican satellites, known for high-resolution imagery, and maintained the operational capability of its Tanager-1 satellite for environmental monitoring. In product terms, these hardware advances keep Planet Labs’s data offerings at the forefront, supporting mission-critical applications for defense, agriculture, and climate monitoring customers.

Backlog and remaining performance obligations grew at a rapid pace, providing strong visibility into future revenue. Remaining performance obligations (RPOs) jumped 516% year-over-year to $690.1 million. Backlog, defined as contracted business not yet recognized as revenue, rose 245% year over year to $736.1 million. Notably, the German government awarded the company a €240 million (approximately $260 million) satellite services contract, with revenue recognition expected to begin in 2026. Similar multi-year agreements with NATO, the U.S. Department of Defense, SwissRe, and other commercial partners underscored the growing customer demand for Earth observation data.

Non-GAAP gross margin, which excludes certain expenses such as stock-based compensation, increased to 61%, up 3 percentage points from Q2 FY2025, beating guidance. With 98 % of the quarter’s annual contract value classified as recurring. However, GAAP net losses remained, with management citing ongoing investments to support new contracts and satellite deployments.

Research and development spending declined compared to the prior year. Sales and marketing and general and administrative expenses also declined year over year, though investment levels were still significant given the size and scale of recent contract awards and product launches.

Business Model and Product Overview

At its core, Planet Labs Pbc’s value proposition is based on offering daily, high-frequency satellite imaging and actionable analytics to a diverse customer set. Technical strength lies in its rapidly expanding satellite fleet, which underpins a massive archive of proprietary data. This data supports machine learning applications and analytics that customers use to monitor everything from agricultural trends to security risks in real time.

The firm’s subscription business model allows it to generate recurring revenue by selling “one-to-many” data services. Each satellite image captured can be resold to an unlimited number of customers. The marginal cost of delivering this data is low, helping the company achieve economies of scale and improve margins as the customer base grows. Critical markets include government agencies focused on national security, commercial users such as agricultural insurers, and environmental organizations that leverage analytics to drive sustainability goals.

Management Outlook and What to Watch Next

Management raised guidance for FY2026, projecting revenue between $281 million and $289 million, up from prior forecasts. Near-term, Q3 FY2026 revenue is expected in the range of $71 million to $74 million. However, Non-GAAP gross margin is expected to decline to between 55% and 56% for Q3 FY2026 as ramp-up costs for new satellite services and large government contracts come into play. Adjusted EBITDA is projected to move back to breakeven or a modest loss in Q3 FY2026 before potentially improving again later in the year. Capital expenditures are anticipated to increase as satellite fleet expansion continues, with management raising full-year capex guidance by roughly 25% at the top end for FY2026.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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