We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Planet Labs Margins Expand on Revenue Mix Shift, Automation?
Read MoreHide Full Article
Key Takeaways
Planet Labs gross margin expanded 1,930 bps in four years despite cost of revenues rising to as high as 63%.
PL benefits from shift to subscription data and recurring contracts, lowering incremental delivery costs.
PL guides gross margin of 50%-52% as automation, scale, and analytics growth drive lower marginal costs.
Planet Labs’ (PL - Free Report) cost of revenues has trended upward over the past five years, ranging between 44% and 63% of total revenues. Despite this, gross margin has improved significantly, expanding by 1,930 basis points over the last four years. This improvement has likely been driven by a combination of operational efficiencies and a favorable shift in revenue mix.
Cost of revenues primarily includes employee-related expenses tied to account management, data provisioning, customer support, and satellite and engineering operations. It also covers costs associated with operating satellites, retrieving, processing, and storing data, among others.
Gross margin expansion has been supported by a transition from hardware-like, usage-based revenue toward higher-margin, subscription-based data products and analytics services. Increasing adoption of recurring contracts—especially among government and enterprise clients—lowers incremental delivery costs, creating operating leverage. Additionally, a stable satellite fleet reduces the need for frequent launches and improves depreciation efficiency across a growing revenue base. Vertical integration, including in-house satellite design and manufacturing, has further lowered per-unit costs.
Planet Labs expects the cost of revenues to rise as it invests in delivery capabilities, launches satellites for customer contracts, integrates third-party solutions, and develops new products requiring higher computing capacity. However, continued growth in subscription revenues and analytics offerings should drive economies of scale, lowering marginal costs per customer. With accelerating revenues, increased automation and disciplined cost management, the company aims to sustain its margin expansion, with management guiding gross margin to approximately 50%–52%.
What About Its Peers?
Rocket Lab’s (RKLB - Free Report) gross margin reflects its transition from launch services to higher-margin space systems. Gross margin expanded 3740 basis points over the last four years. Rocket Lab benefits from vertical integration and reusable technologies, improving cost efficiency. As Rocket Lab scales satellite manufacturing and services, gross margins should expand.
BlackSky’s (BKSY - Free Report) gross margin expanded 6880 basis points in the last four years, benefiting from shifts toward subscription-based analytics and higher-value data services. BlackSky benefits from scalable satellite operations, though costs for constellation upgrades and data infrastructure remain. As BlackSky expands its customer base, operating leverage should support gradual gross margin expansion over time.
PL’s Price Performance
PL shares have gained 55.7% year to date, outperforming the industry.
Image Source: Zacks Investment Research
PL’s Expensive Valuation
Planet Labs stock is currently trading at a forward price-to-sales ratio of 22.15, above the industry’s 2.14, as well as above PL’s median of 3.65 over three years.
Image Source: Zacks Investment Research
Estimate Movement for PL
The Zacks Consensus Estimate for PL’s fiscal first-quarter 2027 and fiscal second-quarter 2027 EPS witnessed a southward movement in the past 30 days. The consensus estimate for fiscal 2027 earnings witnessed southward movement in the past 30 days but the same for fiscal 2028 witnessed northward movement in the same time frame.
Image Source: Zacks Investment Research
The consensus estimates for PL’s 2026 and 2027 revenues indicate year-over-year increases. The consensus estimate for 2027 earnings indicates no change year over year, while that for 2028 indicates 267% year-over-year increase.
PL stock currently carries a Zacks Rank #3 (Hold).
View the Zacks #1 Rank List
Image: Bigstock
Planet Labs Margins Expand on Revenue Mix Shift, Automation?
Key Takeaways
Planet Labs’ (PL - Free Report) cost of revenues has trended upward over the past five years, ranging between 44% and 63% of total revenues. Despite this, gross margin has improved significantly, expanding by 1,930 basis points over the last four years. This improvement has likely been driven by a combination of operational efficiencies and a favorable shift in revenue mix.
Cost of revenues primarily includes employee-related expenses tied to account management, data provisioning, customer support, and satellite and engineering operations. It also covers costs associated with operating satellites, retrieving, processing, and storing data, among others.
Gross margin expansion has been supported by a transition from hardware-like, usage-based revenue toward higher-margin, subscription-based data products and analytics services. Increasing adoption of recurring contracts—especially among government and enterprise clients—lowers incremental delivery costs, creating operating leverage. Additionally, a stable satellite fleet reduces the need for frequent launches and improves depreciation efficiency across a growing revenue base. Vertical integration, including in-house satellite design and manufacturing, has further lowered per-unit costs.
Planet Labs expects the cost of revenues to rise as it invests in delivery capabilities, launches satellites for customer contracts, integrates third-party solutions, and develops new products requiring higher computing capacity. However, continued growth in subscription revenues and analytics offerings should drive economies of scale, lowering marginal costs per customer.
With accelerating revenues, increased automation and disciplined cost management, the company aims to sustain its margin expansion, with management guiding gross margin to approximately 50%–52%.
What About Its Peers?
Rocket Lab’s (RKLB - Free Report) gross margin reflects its transition from launch services to higher-margin space systems. Gross margin expanded 3740 basis points over the last four years. Rocket Lab benefits from vertical integration and reusable technologies, improving cost efficiency. As Rocket Lab scales satellite manufacturing and services, gross margins should expand.
BlackSky’s (BKSY - Free Report) gross margin expanded 6880 basis points in the last four years, benefiting from shifts toward subscription-based analytics and higher-value data services. BlackSky benefits from scalable satellite operations, though costs for constellation upgrades and data infrastructure remain. As BlackSky expands its customer base, operating leverage should support gradual gross margin expansion over time.
PL’s Price Performance
PL shares have gained 55.7% year to date, outperforming the industry.
Image Source: Zacks Investment Research
PL’s Expensive Valuation
Planet Labs stock is currently trading at a forward price-to-sales ratio of 22.15, above the industry’s 2.14, as well as above PL’s median of 3.65 over three years.
Image Source: Zacks Investment Research
Estimate Movement for PL
The Zacks Consensus Estimate for PL’s fiscal first-quarter 2027 and fiscal second-quarter 2027 EPS witnessed a southward movement in the past 30 days. The consensus estimate for fiscal 2027 earnings witnessed southward movement in the past 30 days but the same for fiscal 2028 witnessed northward movement in the same time frame.
Image Source: Zacks Investment Research
The consensus estimates for PL’s 2026 and 2027 revenues indicate year-over-year increases. The consensus estimate for 2027 earnings indicates no change year over year, while that for 2028 indicates 267% year-over-year increase.
PL stock currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.