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 Down 51% in 6 Months: Is This a Buying Opportunity?
Read MoreHide Full Article
Key Takeaways
Planet Labs' 51% slide contrasts with 58% revenue growth and rising defense demand.
PL had an $815M backlog and expects fiscal 2027 revenues to be in the range of $430-$441M.
Planet Labs has $865M in liquidity to fund expansion, though valuation and execution risks remain.
Planet Labs PBC’s (PL - Free Report) shares have declined 50.6% over the past six months, raising a familiar question for investors: Is the selloff a warning sign or an opportunity to buy?
Price Performance
Image Source: Zacks Investment Research
Planet Labs provides daily satellite imagery and geospatial solutions. The company has a differentiated position in the Earth-observation industry, combining daily global monitoring with a decade-long imagery archive.
However, a lower share price alone does not establish a buying opportunity. Let’s discuss the company’s growth factors and the risks it faces to assess investment prospects and make an informed decision.
Defense Demand Main Driver for Planet Labs
Revenues surged 58% year over year to $116 million in the second quarter of fiscal 2027. Defense and Intelligence revenues (including satellite services revenues) rose more than 90% year over year, while commercial and civil-government revenues increased over 15% and 5%, respectively.
The handover of the Pelican satellite to the Swedish Armed Forces supported top-line growth. In August, the company was awarded a satellite services tender by Germany’s Federal Ministry of the Interior, making the country the first civil government to procure Planet Labs’ dedicated Constellation Services. The tender includes options and has a maximum possible value of €25 million over five years.
At its last earnings call, Planet Labs also highlighted an $8 million August award from the National Geospatial-Intelligence Agency for its Global Monitoring Service.
Management raised the lower end of fiscal 2027 revenue guidance to $430-$441 million, representing 40-43% growth. It also projected adjusted EBITDA profit of $3-$10 million and targeted positive annual adjusted free cash flow.
PL’s Backlog Provides Revenue Visibility
The company had a backlog of approximately $815 million, up about 11% year over year at the end of the fiscal second quarter. Roughly 50% of the backlog applies to the next 12 months and 70% to the next 24 months. Within Planet Labs’ eligible annual contract value book, recurring contracts represented 98%, and net dollar retention was 109%. Remaining performance obligations (“RPO”) totaled approximately $753 million, up 9% year over year.
Management estimates that executing contracts already in backlog could generate more than $400 million in revenues over the next four quarters, excluding new business and renewals. Management added that the company is confident it can sustain “high growth rates in future years,” supported by near-term visibility and pipeline strength.
This visibility is important as Planet Labs ramps up its satellite services business. On the last earnings call, management added that it had identified more than $4 billion in satellite-services opportunities, with over 25% qualified as near-term.
Planet Labs is also expanding capacity to support this opportunity. The company recently opened its Berlin manufacturing facility, which is expected to produce Pelican satellites and eventually scale to as many as 60 satellites per year.
AI and Satellite Upgrades Expand PL’s Opportunity
Commercial applications are already emerging. An expanded six-figure renewal with a hyperscaler AI developer covers monitoring of global data centers and semiconductor-facility construction, illustrating how Planet Labs can participate in AI infrastructure growth through intelligence services.
The company is also advancing its satellite roadmap. On Oct.1, Planet Labs announced the launch of 20 satellites which includes a Google Project Suncatcher prototype, Tanager-2 and 18 SuperDoves. This launch was the 40th for Planet Labs, which now has a total of 718 satellites built and delivered into orbit. Suncatcher satellite will test Google’s Tensor Processing Units in space for the first time.
Looking ahead, Planet Labs is accelerating Owl, its upcoming next-generation monitoring satellite. Owl is expected to upgrade Planet Labs' monitoring capabilities from 3-meter to 1-meter-class resolution while providing roughly 10 times more data at about 10 times the speed, added management.
PL’s Sizable Financial Resources
Planet Labs exited the second quarter of fiscal 2027 with approximately $865 million in cash, cash equivalents and short-term investments, up more than 200% year over year. This increase was driven by positive free cash flow and proceeds from capital transactions over the past year.
The company generated $68.4 million in net cash from operating activities, while free cash flow was $21.3 million for the six months ended July 31, 2026. Adjusted free cash flow (excluding nonrecurring payments related to litigation settlements) was $28.8 million. PL generated nearly $120 million from stock sales under its ATM program. This sizable liquidity position gives Planet Labs ample flexibility to accelerate investments as demand for its satellite services and AI-enabled solutions grows.
No Case Is Without Risks
Quarterly performance will remain uneven owing to the timing of satellite deliveries. Sweden’s satellite handover pulled revenues into the fiscal second quarter from the fiscal third quarter. Fiscal third-quarter guidance of $101-$105 million therefore implies a sequential revenue decline, alongside an expected adjusted EBITDA loss of $1-$6 million.
Growth also requires substantial investment. Planet Labs spent about $29 million in capital expenditures in the fiscal second quarter and expects fiscal 2027 capex of $100-$115 million. Management expects capex to increase in future quarters as it plans to channel spending toward manufacturing expansion in San Francisco and Berlin, supply-chain resiliency and next-generation satellite fleets.
Moreover, the increasing competition in the Earth observation space leaves less room for execution missteps. New satellites and AI offerings must deliver commercially, not merely meet development milestones. Planet Labs faces competition in the space from players such as BlackSkyTechnology (BKSY - Free Report) , Satellogic (SATL - Free Report) and Intuitive Machines, Inc. (LUNR - Free Report) .
PL’s Valuation
Planet Labs is trading at a forward 12-month price/sales ratio of 11.89X, higher than the Satellite and Communication sector’s multiple of 2.98X.
Image Source: Zacks Investment Research
The premium valuation to an extent is justified by its stronger growth profile, expanding backlog and rising defense exposure.
In comparison, BlackSky Technology trades at a forward 12-month P/S multiple of 4.51X, while Satellogic and Intuitive Machines are trading at a multiple of 12.62X and 2.97X, respectively.
Over the past six months, BKSY, SATL and LUNR have registered losses of 37.2%, 23.4% and 37.1%, respectively.
PL: A Buying Opportunity?
At present, PL carries a Zacks Rank #2 (Buy).
Planet Labs’ sharp share-price decline appears to offer a favorable entry point given its strong revenue growth, sizable backlog and expanding opportunities across defense. Its solid liquidity position provides room to fund expansion, while execution risks and elevated valuation remain key considerations.
View the Zacks #1 Rank List
Image: Bigstock
Planet Labs Down 51% in 6 Months: Is This a Buying Opportunity?
Key Takeaways
Planet Labs PBC’s (PL - Free Report) shares have declined 50.6% over the past six months, raising a familiar question for investors: Is the selloff a warning sign or an opportunity to buy?
Price Performance
Image Source: Zacks Investment Research
Planet Labs provides daily satellite imagery and geospatial solutions. The company has a differentiated position in the Earth-observation industry, combining daily global monitoring with a decade-long imagery archive.
However, a lower share price alone does not establish a buying opportunity. Let’s discuss the company’s growth factors and the risks it faces to assess investment prospects and make an informed decision.
Defense Demand Main Driver for Planet Labs
Revenues surged 58% year over year to $116 million in the second quarter of fiscal 2027. Defense and Intelligence revenues (including satellite services revenues) rose more than 90% year over year, while commercial and civil-government revenues increased over 15% and 5%, respectively.
Planet Labs PBC Revenue (Quarterly)
Planet Labs PBC revenue-quarterly | Planet Labs PBC Quote
The handover of the Pelican satellite to the Swedish Armed Forces supported top-line growth. In August, the company was awarded a satellite services tender by Germany’s Federal Ministry of the Interior, making the country the first civil government to procure Planet Labs’ dedicated Constellation Services. The tender includes options and has a maximum possible value of €25 million over five years.
At its last earnings call, Planet Labs also highlighted an $8 million August award from the National Geospatial-Intelligence Agency for its Global Monitoring Service.
Management raised the lower end of fiscal 2027 revenue guidance to $430-$441 million, representing 40-43% growth. It also projected adjusted EBITDA profit of $3-$10 million and targeted positive annual adjusted free cash flow.
PL’s Backlog Provides Revenue Visibility
The company had a backlog of approximately $815 million, up about 11% year over year at the end of the fiscal second quarter. Roughly 50% of the backlog applies to the next 12 months and 70% to the next 24 months. Within Planet Labs’ eligible annual contract value book, recurring contracts represented 98%, and net dollar retention was 109%. Remaining performance obligations (“RPO”) totaled approximately $753 million, up 9% year over year.
Management estimates that executing contracts already in backlog could generate more than $400 million in revenues over the next four quarters, excluding new business and renewals. Management added that the company is confident it can sustain “high growth rates in future years,” supported by near-term visibility and pipeline strength.
Planet Labs PBC Price, Consensus and EPS Surprise
Planet Labs PBC price-consensus-eps-surprise-chart | Planet Labs PBC Quote
This visibility is important as Planet Labs ramps up its satellite services business. On the last earnings call, management added that it had identified more than $4 billion in satellite-services opportunities, with over 25% qualified as near-term.
Planet Labs is also expanding capacity to support this opportunity. The company recently opened its Berlin manufacturing facility, which is expected to produce Pelican satellites and eventually scale to as many as 60 satellites per year.
AI and Satellite Upgrades Expand PL’s Opportunity
Commercial applications are already emerging. An expanded six-figure renewal with a hyperscaler AI developer covers monitoring of global data centers and semiconductor-facility construction, illustrating how Planet Labs can participate in AI infrastructure growth through intelligence services.
The company is also advancing its satellite roadmap. On Oct.1, Planet Labs announced the launch of 20 satellites which includes a Google Project Suncatcher prototype, Tanager-2 and 18 SuperDoves. This launch was the 40th for Planet Labs, which now has a total of 718 satellites built and delivered into orbit. Suncatcher satellite will test Google’s Tensor Processing Units in space for the first time.
Looking ahead, Planet Labs is accelerating Owl, its upcoming next-generation monitoring satellite. Owl is expected to upgrade Planet Labs' monitoring capabilities from 3-meter to 1-meter-class resolution while providing roughly 10 times more data at about 10 times the speed, added management.
PL’s Sizable Financial Resources
Planet Labs exited the second quarter of fiscal 2027 with approximately $865 million in cash, cash equivalents and short-term investments, up more than 200% year over year. This increase was driven by positive free cash flow and proceeds from capital transactions over the past year.
The company generated $68.4 million in net cash from operating activities, while free cash flow was $21.3 million for the six months ended July 31, 2026. Adjusted free cash flow (excluding nonrecurring payments related to litigation settlements) was $28.8 million. PL generated nearly $120 million from stock sales under its ATM program. This sizable liquidity position gives Planet Labs ample flexibility to accelerate investments as demand for its satellite services and AI-enabled solutions grows.
No Case Is Without Risks
Quarterly performance will remain uneven owing to the timing of satellite deliveries. Sweden’s satellite handover pulled revenues into the fiscal second quarter from the fiscal third quarter. Fiscal third-quarter guidance of $101-$105 million therefore implies a sequential revenue decline, alongside an expected adjusted EBITDA loss of $1-$6 million.
Growth also requires substantial investment. Planet Labs spent about $29 million in capital expenditures in the fiscal second quarter and expects fiscal 2027 capex of $100-$115 million. Management expects capex to increase in future quarters as it plans to channel spending toward manufacturing expansion in San Francisco and Berlin, supply-chain resiliency and next-generation satellite fleets.
Moreover, the increasing competition in the Earth observation space leaves less room for execution missteps. New satellites and AI offerings must deliver commercially, not merely meet development milestones. Planet Labs faces competition in the space from players such as BlackSky Technology (BKSY - Free Report) , Satellogic (SATL - Free Report) and Intuitive Machines, Inc. (LUNR - Free Report) .
PL’s Valuation
Planet Labs is trading at a forward 12-month price/sales ratio of 11.89X, higher than the Satellite and Communication sector’s multiple of 2.98X.
Image Source: Zacks Investment Research
The premium valuation to an extent is justified by its stronger growth profile, expanding backlog and rising defense exposure.
In comparison, BlackSky Technology trades at a forward 12-month P/S multiple of 4.51X, while Satellogic and Intuitive Machines are trading at a multiple of 12.62X and 2.97X, respectively.
Over the past six months, BKSY, SATL and LUNR have registered losses of 37.2%, 23.4% and 37.1%, respectively.
PL: A Buying Opportunity?
At present, PL carries a Zacks Rank #2 (Buy).
Planet Labs’ sharp share-price decline appears to offer a favorable entry point given its strong revenue growth, sizable backlog and expanding opportunities across defense. Its solid liquidity position provides room to fund expansion, while execution risks and elevated valuation remain key considerations.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.