Planet Labs PBC Price & Performance (PL)

The inclusion of such forward looking information should not be regarded as a representation by Planet future plans, estimates or expectations will be achieved. Such forward looking statements are subject to various risks and uncertainties and assumptions as detailed in our SEC filings, which can be found at www.sec.gov. Our actual results or performance may differ materially from those indicated by such forward looking statements, and we undertake no responsibility to update such forward looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of an unanticipated events. During the call, we will also discuss historic and forward looking non GAAP financial measures. We use these non GAAP financial measures for financial and operational decision making and as a means to period to period comparisons. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. For more information on the non GAAP financial measures please see the reconciliation tables provided in our press release issued earlier this afternoon, which is available on our website at investors.planet.com.

Further, throughout this call, we provide a number of key performance indicators used management and often used by competitors in our industry. These and other key performance indicators are discussed in more detail in our press release and our earnings update presentation, which are intended to accompany our prepared remarks. At this point, I'd now like to turn the call over to Will Marshall, Planet CEO, Chairperson and Co Founder. Over to you, Will.

Thanks, Cleo, and hello, everyone. Thanks for joining us today. Last year was an exciting and transitional year for Planet. And I'm incredibly proud of everything our teams have achieved. We shifted our go to market structure to be a vertically focused approach and towards selling solutions We took a major step up in the satellite services market and closed a $230,000,000 contract with a marquee customer. We launched 74 satellites into orbit including our second Pelican and first Tanager spacecraft. We launched the Planet Insights platform and delivered our new Global Forest carbon monitoring product And we drove meaningful improvements in our financials throughout the year, including reaching our target of adjusted EBITDA positive in Q4, the first time in the company's history. All of this sets Planet on a sound footing going into this year. Briefly summarize the full year results, we generated a record $244,400,000 in revenue, representing representing an 11% year over year growth. Non GAAP gross margin for the year was a record 60% up from 54% a year ago and full year adjusted EBITDA loss came in at $10,600,000. Q4 was a record quarter for revenue gross margin and operating margin. And as I already mentioned, we achieved our goal of delivering a first adjusted EBITDA profitable quarter.

Target we set two years ago and a major milestone on our journey to positive cash flow. Backlog increased in the quarter to almost $500,000,000 up over a % year over year and approximately a 15% quarter over quarter. We believe this puts us in a strong position with a clear path to at least double our revenue growth rate in FY twenty seven compared with FY '26. I'd like to spend a little time on our landmark $230,000,000 commercial agreement we signed with our long term partner in Japan, JSAT. Last year, we made the strategic decision to take a significant step forward in the satellite services market in response to a strong demand signal selling to customers who want preferred access to data in a particular region. These partnerships can be very synergistic to our core business. Our JCET partnership announced last month is our first deal in support of this strategic direction. Under this agreement, Planet will build, launch, and operate constellation of 10 high resolution pelican satellites for JASON. Planet will commercially sell the rest of the world's capacity of these satellites across the vast majority of the Earth's surface, representing a significant upside opportunity. We couldn't be more pleased to have JSAT as our cornerstone partner as we embark on this new chapter.

This deal is structured to create a win win win For JCET, this aims to secure priority access to critical intelligence in their area of interest with a rapid turnaround from program start to operational capabilities. For Planet, we intend to drive scale in our business and monetize some of our most strategic [indiscernible] and for all our other current and future Planet customers, we plan to bring more Pelican capacity online faster, substantially increasing global capacity and revisit rates. We see this as a major step forward for Planet in the satellite services market. The satellite services market is in the tens of billions of dollars globally today, we believe we can address a meaningful portion with this offering. Bigger picture, the world is in a state of significant transition across geopolitics and technology. Countries are moving with new clarity and speed to ensure that they have to the technology and information needed to protect their interest. We are stepping up to meet this need around the globe for countries who are rushing to maintain or expand their sovereign access to space and the powerful information gathering and decision making it enables. We have always been and will continue to be a leading provider of geospatial data and solutions, our core business.

Our move to increase efforts into the satellite services expands our portfolio where we are accelerating our business by leveraging one of our greatest assets, our proven ability to build and operate cutting edge fleets of remote sensing satellites quickly and cost effectively. We're actively pursuing a handful of similar such opportunities with other trusted strategic partners across the defense and intelligence, civil government, and commercial markets, and across all three of our satellite fleets. We aim to be the go to scaled space partner for these customers. Turning to sales highlights, starting with the defense and intelligence sector. Revenue from the DNI sector grew more than 20% for the full fiscal year 2025. We're proud to share that we've been awarded a contract to build a prototype for the Defense Innovation Unit The DOD focused on bringing innovation to the DOD. We continue to engage in shorter term projects with the DoD as we work towards part of operational DoD workflows, and we are very excited that DIU has ordered this prototype from us. The order was won by Planet as a prime contractor with a partner subcontractor and its values in the low 7 figures. During the quarter, were pleased to be selected as one of the priors for the National Geospatial Intelligence Agency's LUNO b commercial data IDIQ contract.

Under this contract, we'll compete against other prime vendors for future delivery orders, the total value of which can be up to $200,000,000 over five years. Planet was also awarded a 7 figure ACV renewal and expansion by the DoD. The order leverages our maritime domain awareness solution and was won with a partner. Includes Planet Data and partner enabled AI capabilities. Looking forward, we expect continued strong growth in the defense and intelligence sector. In an increasingly complex geopolitical environment Planet Solutions can enhance situational awareness for customers by providing greater transparency about emerging challenges and can provide more confidence in well informed responses. We see opportunity with the US government as it pursues efficiency and effectiveness across both civil defense and intelligence agencies, And internationally, as countries require increased to information in an uncertain world. We are seeing strong and growing opportunities in maritime domain awareness where we offer open water monitoring and analytics to support situation awareness, the thwart piracy, smuggling, and other serious maritime safety and security risks. Additionally, we're investing in the development of our global monitoring service or GMS, a solution that leverages recent industry advantage in artificial intelligence and our board area data to enable customers to scan entire countries or regions for important changes and threats.

Relatedly, we were pleased to welcome former general Jay Raymond to Planet's board of directors. General Raymond was the first chief of the US space Force and a member of the joint chiefs of staff. His years of experience leading space operations at the highest levels of our government are invaluable as we continue to work closely with the critical government customers both here in The US and abroad. Turning to the civil government sector, where full year revenue grew approximately 15% year over year. While we've seen some seasonality due to large customer usage patterns in FY '25, overall, the civil sector was strong this last year, and we continue to see healthy demand for this market. Are a few examples. We were pleased to announce a multiyear contract with the European Space Agency, ESA, in January. Through this contract, Planet continues to serve the Copernicus contributing missions providing commercial satellite data alongside ESA's Sentinel satellite data the Copernicus services. We also signed a new contract in the quarter with the Hellenic Space Center to leverage PlanetScope data to support Greece's development of future downstream services for their national satellite data program. As they look grow their own satellite capabilities, the Greek government will employ Planet's data to complement and inform their data sources.

Shifting finally to the commercial sector, which we previously discussed had faced headwinds particularly in the agriculture sector, but where we've seen revenue stabilize in recent quarters. To share a few recent wins, last month, we announced an expansion with a long term customer Bayer through a multiyear enterprise license agreement. This agreement increases buyers' access to Planet's satellite imagery and analytics, expanding into commercial operations, and enabling enhanced decision making across its global agriculture operations. Bayer leverages a wide range of Planet's data and products allowing them to make faster, data driven, agronomic decisions, and improving efficiency across its operations. We also signed a multiyear expansion with Syngenta during the quarter. Through the expansion, they will gain increased access to Planet monitoring and SkySat high resolution and data as well as the PlanetInsights platform. With these products, Syngenta can enable farmers to remotely monitor crop health detect pest infestations, and identify disease outbreaks. With pinpoint accuracy. More broadly, our strategy in the commercial sector remains focused on delivering solutions enabled by the Planet Insights platform for market segments within agriculture, natural resources, energy, and insurance verticals. Turning to product updates. During q four, we successfully launched our Pelican two satellite, Pelican two is performing well in space and provides us valuable insights and confidence as we continue to build our next generation high resolution fleet at pace.

We're very proud to share today our first light images from Pelican two featured in our Q4 earnings presentation. We have multiple Pelican launches scheduled for this year as we scale towards a fully operational high resolution fleet. We also want to provide an update to our Tanager satellite Tanager one launched last summer and has since been producing powerful hyperspect data. We have already begun selling that data to a handful of selected customers under a limited availability program. The team has already delivered a five fold in improvement in the Challenger ones tasking capacities since launch. Our partner, CarbonMapper, has published over a thousand methane and c o two plume detections based on insights gleaned from the data, and we're actively preparing to offer commercial data to the broader market particularly to the energy and civil government verticals within the next few months. On the platform side, in Q4, we released a physics based resolution sharpening technique that meaningfully improves the usability of our daily scan visual product. Also advanced our low touch enablement in the Planet Insights platform to expand and automate access to smaller customers. Planet's first fully automated low touch package on tropical forest observatory data, provided via the NICFI program, was made available for purchase by self serve users few weeks ago, a significant milestone.

In addition, we continue to leverage advances in AI both for our solutions such as maritime domain awareness and our global monitoring service as well as through partnerships such as with AI leaders. A few weeks ago, we announced that we're collaborating with Anthropic to explore opportunities where satellite data and foundation models can be combined to deliver powerful new capabilities to users across government and business. In particular, Anthropic is fine tuning its Claude model on satellite data with the goal of enhancing model accuracy. We believe AI can enhance the extraction of value from satellite data accelerate delivery of insights, and expand access to a wider range of users. This collaboration with Anthropic is mutually beneficial. AI helps unlock the value of satellite data. Meanwhile, satellite data helps AI models tackle real world problems. As mentioned before, we believe Planet is uniquely situated for AI given our unique daily scan and deep archive of over 3,000 images on average for every location on the Earth landmass. The pace of innovation in AI is extraordinary. And if we describe Planet's strategic shift in f y '25 as our big step up in the satellite services market, This year, our strategic focus will be our big step up in AI.

And its potential to accelerate the development of solutions and increase accessibility to our power data. With that, I'll turn it over to Ashley to discuss our financials Over to you, Ash.

Thanks, Will.

It was indeed a very productive year, representing an important transition for Planet across a number of fronts. Let's shift gears now to go through the financial results in more detail. Revenue for the fourth quarter came in at a record $61,600,000 representing approximately 5% year over year growth. Full year revenue came in at a record $244,400,000 representing approximately 11% year over year growth. As Will mentioned, we introduced a new go to market last year aligned to our customers and markets. And we began to see a shift from selling data to selling solutions targeted at specific market segments.

We expect this shift to continue into the year ahead led by our defense and intelligence business but applying to our civil government and commercial business as well. We see this shift towards selling targeted solutions as a core part of our strategy to reaccelerate growth while enhancing the predictability of our business going forward. During fiscal year twenty twenty five, our defense and intelligence sector revenue grew more than 20% year on year Civil government revenue grew approximately 15% year on year and the commercial sector was down more than 10% year on year but has shown signs of stabilization and improvement since the trough in Q1. With the discrete commercial headwinds showing signs of abating we look forward to return to normalized growth in future periods. For the full fiscal year EMEA revenue grew more than 15% year over year. Latin America revenue grew approximately 30% Asia Pacific grew nearly 15%, while North America revenue grew approximately 5% year over year. Looking ahead see significant growth potential across all regions. In EMEA, National Security Solutions, particularly maritime domain awareness or MDA, and global monitoring service, GMS, are attracting strong interest driven by the current complex geopolitical environment. Also anticipate growth from area monitoring systems or AMS supporting the European common agricultural policy.

In Latin America, the civil government sector remains a key growth driver as we continue to build on the incredible proof point from our work with the Brazilian federal police in identifying illegal deforestation in the Amazon. In North America and Asia Pacific, we similarly see National Security Solutions, MDA and GMS, generating considerable interest. Furthermore, as new PELICAN high resolution data comes online, we expect the enhanced product and capacity to fuel growth across all regions. We continue to pursue commercial sector opportunities in agriculture, natural resources, energy and utilities, and finance and insurance globally albeit in a much more targeted and cost efficient way. Finally, global demand for our satellite services exemplified by our work with JSAT is strong And as Will said, we are actively pursuing select opportunities with other trusted partners both in The US and around the globe. As of the end of fiscal twenty five, our end of period customer count was 976 customers, lower on a sequential basis, reflecting our direct sales team's focus on large customers in our core verticals. Over the last year, we've worked to enable smaller, more transactional customers to purchase through our platform or our marketplace partners. Average new customer ACV sizes increased sequentially throughout this year while the majority of the churned accounts in the quarter were less than $50,000 in annual contract value.

We see this as an indication that our intentional focus on larger accounts is working. As a reminder, customers who transact solely through our platform, which are typically smaller in nature, not reflected in this customer account. Recurring ACV was 97% of our end of period ACV book of business, reflecting our continued focus on selling subscription data contracts and solutions as opposed to onetime professional or engineering Over 89% of our end of period ACV book of business consists of annual or multiyear contracts. Our average contract length continues to be approximately two years weighted on an ACV basis. For the sake of clarity, the JSAT multi year satellite services contract is not included in our ACV metrics although it is included in our RPOs and backlog which we will discuss in a moment.

Net dollar retention rate at the end of fiscal twenty five was 106% net dollar retention rate with Winbacks was a 7%. As we shift towards selling high value solutions targeted at embedding our data in core operational functions, especially within our top accounts. We expect NDRR to improve toward best in class levels over the next several years. Turning to gross margin. Non GAAP gross margin for the fourth quarter was a record 65% compared to 58% in the fourth quarter of fiscal twenty twenty four. Non GAAP gross margin for the full year was 60% compared to 54% in FY24. In fiscal twenty five, we saw benefits from cloud infrastructure improvements, offset by partner expenses and satellite depreciation. Adjusted EBITDA was a positive $2,400,000 for Q4, marking our first quarter of adjusted EBITDA profitability in the company's history and a major milestone on our journey to generating positive cash flow. For the full fiscal year, adjusted EBITDA loss was approximately $10,600,000 compared to a $55,300,000 loss in fiscal year twenty twenty four. We are proud of the financial and operational focus we've seen from our teams since setting this target two years ago. As we make some strategic investments this year, particularly in space systems to capture the opportunity in satellite services, we will do so with a stronger foundation of operating efficiency and focus on bottom line performance.

Capital expenditures in Q4 including capitalized software development were approximately $12,800,000 This was slightly higher than expected driven largely by the timing of certain procurements for our Tanager, Pelican and Superdev satellites and for our ground station infrastructure. Full year capital expenditures were approximately $49,600,000 or approximately 20% of revenue reflective of the investments we are making in our next generation fleets. Although we have been in a period of higher capital investment our step in satellite services market represents a major expansion in our opportunity that not only has the potential to become a major accelerate to growth, but even more so to long term free cash flow. Turning to the balance sheet, we ended the quarter with approximately $222,000,000 of cash cash equivalents and short term investments. We significantly reduced our cash burn in fiscal year twenty twenty five and expect to further reduce it in fiscal twenty six. We remain confident that we have sufficient capital to invest behind our core growth accelerating initiatives and achieve cash flow profitability without needing to raise additional capital. And we still have no debt outstanding. On that note, I'd like to echo Will's enthusiasm for our recently signed commercial agreement with JSAT.

Under the agreement, we expect to recognize $230,000,000 of revenue over approximately the next seven years with cash payments weighted up to the earlier years to facilitate working capital for the program. As such, we expect the deal to be meaningfully accretive to cash flow including in fiscal twenty twenty six. Revenue for the build of the Pelicans will be recognized over time as work progresses. The cost for those Pelicans will flow through cost of goods sold as opposed to CapEx and services revenue for the contract will be recognized as they are rendered. Please note that the accounting for long term contracts involves judgment in estimating costs and profit for each performance obligation, and are subject to change. As we highlighted when we first announced the new win, we believe there is significant upside potential we can realize through selling the Constellation's substantial global capacity to Planet customers in the government and commercial sectors in other regions. At the end of fiscal twenty five, we estimate that our remaining performance obligations or RPOs were approximately $407,500,000 up 179% quarter over quarter of which approximately 37% apply to the next twelve months and 70% to the next two years.

Our backlog, which includes contracts with the termination for convenience clause, which is common in our US federal contracts and occasionally found in other customer contracts, we estimate to be approximately $498,500,000 up 115% quarter over quarter.

Approximately 38% of our backlog applies to the next twelve months and 69% to the next two years. This increase in backlog provides a solid foundation for meaningful growth rate acceleration into FY 2027. It's important to note that even without the landmark contract with JSAT, we saw strong growth in our RPOs and backlog in Q4. Let me now lay out our guidance for the first quarter of fiscal twenty twenty six. We're expecting revenue to be between 61,000,000 and $63,000,000 We expect non GAAP gross margin for the quarter to be between 5860% impacted by the same factors that I described for fiscal year twenty twenty five. We expect our adjusted EBITDA loss for the first quarter to be between minus 3,000,000 and minus $2,000,000 reflective of the variability of our expenses quarter to quarter and our tight focus on cost controls and efficiencies, even as we invest in strategic growth initiatives. Specifically, we are investing behind space systems capabilities and bringing new broad area solutions to market both of which increase our expectations for R and D expenses in Q1 and the year ahead. We're planning for capital expenditures of approximately $11,000,000 to $16,000,000 in Q1 or approximately 20% of revenue reflecting our continued investments in our next generation fleets and the ongoing maintenance CapEx for our PlanetScope constellation.

For the full fiscal year 2026, we are expecting revenue to be between 200 and and $280,000,000 While this range attempts to take into account potential risks related to timing of new business and customer usage patterns as well as timing of revenue recognition for our new satellite services contract it may not reflect unforeseen volatility resulting from the current geopolitical and economic uncertainties. We're mindful that this is a rapidly evolving global environment.

With that said, we're confident in the plan for the year ahead and see multiple potential sources of upside opportunity including growing with our government customers, bringing new AI enabled solutions to market, and our Pelican and Tanager data coming online. We expect non GAAP gross margin for fiscal twenty twenty six to be between 55% to 57% reflecting assumptions around growth in partner revenue streams increased depreciation related to satellites and costs related to the new contract with JSAT. Excluding these impacts, we would have expected non GAAP gross margin to be in line with or slightly better than fiscal twenty twenty five. Our long term target for non GAAP gross margin continues to be 70 to 80%. We see the new contract with JSAT as supporting our path to achieving our long term target given the incremental Pelican capacity that we expect to be able to monetize outside of our partner's area of interest. Over the course of the operational phase of the contract, we expect the gross margin to be in line with or accretive to the rest of the business. We expect our adjusted EBITDA loss fiscal twenty twenty six to be similar to fiscal twenty twenty five with an expected range of minus 13,000,000 to minus $7,000,000 reflecting the aforementioned investments we're making in the business.

Planning for capital expenditures of approximately 50 to $65,000,000 for the year, reflecting the investments we're making in our next generation fleets. Targeted to fulfill customer demand for cutting edge high resolution and hyperspectral data. We view this as the peak of the growth CapEx investment cycle for the build out of the Pelican and Tanager fleets and expect CapEx as a percentage of revenue to trend towards our long term target in fiscal twenty twenty seven. Finally, we expect to reduce our cash burn by approximately 50% in fiscal twenty twenty six and believe we have line of sight to cross over to positive cash flow in the next twenty four months. Leveraging our strong balance sheet without needing to access the financial markets to fund our investments in growth. Looking ahead, the JSAT win and the significant increase in back backlog gives us confidence in our path to meaningful revenue growth rate acceleration in fiscal year 2027. Sources of incremental growth beyond that could be driven by acceleration from the new AI enabled solutions we're bringing to market from Pelican and Tanager data coming online, and from any additional satellite services deals we close, all of which we are actively pursuing.

To underscore our confidence in the opportunity, I'd like to highlight our plan to build and launch nearly 100 satellites here in The United States over the next two years incredible feat in our industry indicative of the demand we see from the market. We're doing this with a non dilutive capital efficient model, through innovative structures with partners such as JSAT and CarbonMapper a testament to the strength of those relationships, the ingenuity of our teams, and our commitment to creating shareholder value.

As always, Will and I are thankful for the Global Planet team. None of this would be possible without your dedication, resilience, and innovation. Operator, that concludes our comments. We can now take questions.

We will now begin our question and session. Again, to ask a question, it is star one.

One.

Our first question comes from Colin Canfield with the company Cancer Fitzgerald. Colin, your line is now open.

Thanks for the question.

Focusing on the free cash flow dynamics, if we could maybe just kind of flush out the bridge including what's moving in and out of CapEx and gross margin as well as some of the working capital assumptions you're making in 2026 And then given that the company made some commentary on 2027, if we can kind just flesh out a little bit what the cadence looks like to getting to free cash flow positive? Thanks.

Thanks, Colin. So as as we talked about, we are in a peak CapEx investment cycle this year. So that's reflected in in the guidance that we gave for CapEx for the full year. And is also reflected in my commentary about expecting our cash burn to be roughly half this year versus versus last year. As I mentioned, the the JSAT contract is structured in such a way that we the cash payments are relatively front end loaded, which enables us to front fund working capital for the program. So it's a the balance of, you know, our traditional business, obviously, with high gross margins and very, strong collection experience with with our customer base. Managing our expenses across the board very carefully, And then at the same time investing in both the the JSAT program and the, the building and launching of the Pelican and Tanager fleet. So as I mentioned, this year, we're expecting cash burn to be roughly half. And and based on our current view of the business, we could see getting to cash flow profitability over the next twenty four months. [indiscernible] Absolutely. Our next question comes from Edison Yu with the company Deutsche Bank.

Edison, your line is now open.

Hey, good afternoon. Thank you for taking our questions. Want to ask on the the AI deal.

With Anthropic In terms of the discussions you you have with them, are you thinking about the ultimate monetization of of these, you know, whether it's used to the model or whether it's just selling data to them, how are you sort of thinking about the the way to actually make make a lot of money off this?

Good question. Well, I'm personally very excited about that partnership. It's really cool and there's others that we're doing in a similar vein. I mean, really exciting time as I said on the prepared remarks. It's extraordinary, the developments in AI and we feel right in the middle of it. Literally as well because we're a few blocks away from public, a few blocks away from open AI, a few blocks away from the jet Google Gemini team here in San Francisco. And so you sort of feel it And and our dataset, as I mentioned in the remarks, is just sort of sitting credible, a unique dataset to train these models on as these companies try to deal with real world problems they need real world data. You can't very well deal with disaster response or security, with with any sort of synthetic data. And so PlanetStata is really very primed for that. [indiscernible] look, I think our near term focus there is on these solutions that we're building with AI they're AI enabled like the maritime domain awareness, looking over large ocean territory, for ships and then identification of them and so on. But that sort of thing, we have real business to go after.

We've already got meaningful revenue there. We growing that with focus. And there's other others like GMS and AMS that Ashley mentioned. And then as for the foundation efforts of the kind that we're doing with anthropic, it's a little bit more experimental, but the the in principle, benefit there is really great because it can speed time to value. We've been very impressed, with how these foundation models out of the box can do analysis on satellite data, can code against the r a [indiscernible] can do things that speed up our ability of our existing customers to get from zero to something that has value and answers meaningful questions. As well as opening up a new set of potential clients that could get value who don't have geospatial expertise at all. And so this is an accelerant overall. It's it's early days on the foundation stuff, but the, the work we're doing on MDA and everything is is really near term value, that we're driving and growing our business.

Our next question comes from Michael J. Latimore with Company Northland. Michael, your line is now open.

Right. Great. Thanks.

Yeah. Ashley, at the end of your remarks there, you talked about, AI, telecom manager, new satellite service wins, has a revenue opportunity in '27.

Would that would those, be incremental to the doubling of the growth rate? Or are those included in that doubling of the growth rate? [indiscernible] Yeah. Great great question. So and and the remarks about the ability to double the growth rate, based on the backlog that we have, That is literally pointing to the you know, the contracts that we that we have and unsecured and our our views as to, you know, one, our our ability to renew that business and and then also execute against the business that's there. That are that is multiyear in nature. Upside to that growth rate is of the areas that we talked about that we're investing in. So as Will just said, AI, we believe, is an incredible accelerant to delivering value to our customers and to enabling these solutions that we are building out with partners. In addition, if we sign any additional contracts on the satellite services front, that would be upside to that that acceleration and growth rate. And then finally, bringing the Pelican and Tanagers online gives us an opportunity to, increase the the data that we're selling with our existing customers as well as bring new customers in.

So those are all upside to the current visibility that we have to grow it the growth rate of our business.

Great. And then just to be clear, when you say positive cash flow, are you talking free cash flow or cash flow from operations?

That's really about, that that's about free cash flow. Thanks for sorry. I had a way of saying it's cash flow Oops. Sorry. Another way of saying it's cash flow from operations and CapEx minus CapEx. Sorry. I interrupted you.

No problem. Our next question comes from JC Jason Gursky with the company Citigroup. Jason, your line is now open.

Great. Thank you. If you don't mind, just a couple of quick clarification questions and then one more meaty one. On the clarification, the doubling of the growth rate, is it that is that at the midpoint of the range in 2026, so you double off of the midpoint? Or could we grow off the could we double off the top end of your range? That's the clarification one clarification question. And then the other clarification one, on the increased expenses that you expect here in 2026, is that kind of like a onetime in nature kind of thing and that rolls down in 2027? Or do we need to see revenue growth for margin expansion? And then the meat of your question is just the monetization of the non JSAT areas of the world. Just kinda curious, will you be going out and looking to try to find people that are gonna take down dedicated access over a region of the world? Or is this all going into the library and you're trying to monetize the library? I'm just kinda curious how you're thinking about the the monetization outside of part of the world. Thanks.

Great. Why don't I take the first two and and let Will, talk about our strategy around satellite services? So in terms of the doubling of the growth rate, why don't we just start with looking at the midpoint, of our guidance as a a good place to start for how we're thinking about FY 2027. But obviously, you can you can look at the increase in backlog and what applies to the next twelve months and you know, obviously, it's great to have such a strong, book of business even for, you know, the twelve months after the one ahead of us. It's it's great visibility for us. On the expenses side, as I mentioned, we are both investing on the space systems side. So making sure that we have the capacity for all of the programs that we we're running, for the core business. So that includes, you know, core data business, so Pelican and and Tanager as well as our our Superdev fleets, in addition to, the the staffing required to execute against this this great new contract that we have with JSAT. So that's one side of the investments, and so those know, obviously, teams that that we'll need because we'll be continuing to grow our operations, in on the space system side.

And then investments in in AI and the engineering teams. So, again, I don't view these as one time in nature, but rather really investing in r and d, which enables us to innovate and really stay ahead of the market. Will, do you wanna take the question on monetization outside of Yeah. I mean, the great thing about this partnership is that not only does it pay for us satellites upfront, if you like, there's Pelican fleet. And as I mentioned, it's a sort of win win win for us them and our other customers because they increase capacity. On that latter point, we get to monetize the rest of the world, which most of that capacity they have dedicated access over their area of interest, is in and around Japan basically. And so the rest of the world we get that capacity and commercially can leverage that. And, course, that's all up upside to and great margin potential for that partnership. And I don't know if your question is leaning in this direction, but there are, as I mentioned, were a handful of other opportunities that we're going after where there's long term partnerships like we have with Japan, a strategic and synergistic with the core business.

And we're very excited about the market potential here. Obviously, we feel that we're in a very strong position here because Planet has such a long history of doing earth observation satellites We've launched more Earth observation satellites than anyone else. And when when countries think about their demand for dedicated access, we're really a first port of call. And so it's very exciting opportunity.

Our next question comes from Ryan Coombs with the company Needham and Company. Ryan, your line is now open. Great.

You. And, sorry about the background noise if there was some, but, with regards to the revenue guide, Ashley, how much does that contemplate you know, the the the current chaotic situation in in Washington. Obviously, it's a very dynamic situation, but it seems that there are already impacts I assume you're contemplating some impact in that revenue guide. This the state of things there, either on the civil especially on the civil side, I'm guessing. Any color you can share there?

Look. I I think we've attempted to take an appropriately conservative approach to our guidance so reflecting potential risks related to macro pressures, timing of new business. So that would include you know, ways that the uncertainty in the current environment might cause business new business to be delayed. Also factoring in customer usage patterns that we've seen you know, have variability in the past. And then we have a brand new satellite services contract, which is a new revenue recognition methodology for us. And so we are being appropriately conservative about how we see that revenue pacing in over the course of the year. So while it's not possible to reflect every potential outcome related to the current geopolitical and economic environment, We believe actually, that that solutions such as ours are are core to government efficiency and and that in many ways, the current environment can be opportunity for companies like Planet, that bring know, much more efficient means of getting these kinds of insights and and data.

And know, we see this both domestically and internationally as driving a lot of opportunity us. I don't know if you can add anything there, Will.

Yeah. Could actually. I mean, there there are real opportunities in this. As as Ashley's saying, they're pushing towards efficiency. Planet is not just hypothetically able to do that. We've done before. We've done that for NASA. We've done that for DOD. We've done that for the intelligence community. And so we're actually seeing opportunities like that arise We're actively working with those agencies on that. And we feel like we're in a good position. And as Ashley mentioned also internationally, this is creating a reaction that actually countries need and are demanding this sort of capability sooner. And we've seen a lot of interest in that. Including in sovereign satellites. And Planet is in unique position to service that. Also seen increased budgets and incredibly increased urgency, for that in those countries as well. So Planet, I think, can lean into some of that changing geopolitical dynamics pretty successfully. Of course, there's risks, but I would say the opportunities definitely outweigh them.

Our next question comes from Jeff Van Rhee with the company Craig Hallum. Jeff, your line is now open.

Great. Thanks. For taking my questions guys. A couple for me. Maybe first just Will on Space Service Just to be clear, this is sticking to existing configuration capabilities. So this is Doves, Pelicans, etcetera.

Just being sold on essentially a different delivery model, sort phrase differently. This isn't space services with a vision to customization?

Yes. So we are really focused I said, like we've got interest in all three types of our sound lines. [indiscernible] all three in all three of our vertical markets. Commercial, civil government and defense intelligence. The biggest area is the defense intelligence. For Pelican, but that but it really does span all those. Yes, it's focused on the existing technology roadmap and that's how we can make it very synergistic here. Where this pays ahead that capital expenditure, building up those fleets faster. And but then of course, plenty of upside potential as we were just talking about for JSA.

Jeff had a question.

Our next question comes from Trevor Walsh with the company Citizens Financial Group. Trevor, your line is now open.

Great. Hi, team. Thanks for taking my questions. Maybe just to kind of piggyback a little bit off your comments, Will and Ashley, obviously, in. But around this space services opportunity, sounded like I think you had mentioned 10 satellites associated with JSAT. So I think by my math, at least 22 kind of authorized pelicans Does that footprint of 10 kind of that a good proxy for kind of what other kind of console like mini constellations, let's call them, for other types of deals that would that would kinda need to look like that? And then, I guess, secondary question with that is, how how easy or could you kind of boost that 32 kind of regulatory kind of approved number if the opportunity kind of demand kind of comes in and how how easy you are, how much how could how quickly could you move on that kinda aspect of things? Thanks.

Yes. I think you've got the math roughly right. And yes, as you know, you're citing, we've got approval up to 32 of those The deals themselves could vary in numbers, of course. But yes, I mean, we're seeing interest in around that sort of scale. From other countries as well. So we'll see where that comes out. These are big strategic partnerships. This is it really is these are complex transactions, but they again, Planet is in a relatively unique position to supply them being vertically integrated and having launch more Earth Observations satellite than anyone else. So we really are and in some in a lot of cases having these long term relationships where they can trust our data and capabilities. Yeah. I hope that gives us flavor.

Our next question comes from Josh Sullivan with the company, The Benchmark Company. Josh, your line is now open.

Hey, good evening.

I'm just as far as the focus on larger the just the the focus on larger customers while directing some of the smaller customers to third parties. When's the pig through the snake there? Maybe when do we see customer count stabilize?

That's a good question. You know, I I think as as you know, the the customer account excludes anybody that is solely transacting through the platform because those tend to be to be smaller. But, obviously, we're developing a really strong pipeline, of interest to the new solutions that we've bringing to market. So, you know, the focus on making sure that we have the right solutions for the right customers should, you know, result in stronger net dollar retention rate, which I've said is a is a really core focus for us and and also increase the average customer size, which is obviously a really important metric for us as well. So, know, as I as I mentioned on the prepared remarks, the drop in customer count actually is in line with the strategy that we've had of of really focusing our direct sales on those larger customers. And we've seen that play out in the increase in in average ACV over the course of the year.

Yeah. And if I could just add, I mean, I think that the Planet Insights platform, the purpose of that is to help serve those smaller customers and to do sort of cost efficiently so that most of our sales resources can be focused on those big accounts where we see the biggest potential still. But it is also because we believe in that long tail Eventually, as the tools get better, as we are seeing with the Planet Insights platform and some of the AI solutions, is enabling more people to get value out of it. That's a huge potential still here with geospatial data and particularly for Planet. Where you don't have to cast satellites all the time because we've got the daily scan. And for many users that means that the data is already there. They can get value out of it sitting there. So that's our strategy.

The next question comes from Anthony Valentini with the company Goldman Sachs and Co. Anthony, your line is now open.

Hey, all. Thanks for taking my question. Ashley, I'm just curious, you've done a great job explaining the new strategy of going after larger new customers. And I think you had mentioned in your prepared remarks that you guys are looking to march your way back to like industry leading net dollar retention ratios. Could you maybe just like talk a little bit about the strategy of how you're actually going to achieve that? And then am I thinking of it correctly that because you guys are going after larger customers that are new customers, That's almost like a, you know, like, that's the offset of the lever on the NDRR that it's kinda gonna be lower because of that. Just if you could kind of talk through that, that would be helpful. Thanks.

Yeah. Absolutely. As I mentioned, core part of our strategy is in building these solutions that enable us to accelerate the to value for our customers and to be embedded operationally. With those customers. And we believe that by by doing so, we have seen and and we will continue to see strong retention rates, and expansion rates with those customers. So and order organizing our operations according to vertical markets. It's really about getting more of the company directly connected to our customer needs so that every aspect of our product development is really solving a core operational challenge that are customers are facing that our data can uniquely address. And enabling our sales team to really prioritize those opportunities where we have the strongest product to market fit and growing with those customers. So it's been a core part of the changes that we've made operationally over the last twelve months.

As well as the investments that we've been making on the solution side and with our partners. To really see the time to value accelerate. Which is a key part of of them having best in class retention rates. And if you'd add anything I think it's great.

Our next question comes from Greg Pendy with company Clear Street Markets. Greg, your line is now open.

Hey, thanks for taking my question.

Just wanted to know on commercial, you mentioned stabilization.

That you're seeing earlier in your comments. Can you elaborate a little bit on that? Thanks.

Yeah. So I specifically in the agricultural sector, we're starting this year from a from a much stronger place. We've highlighted a few key customer wins and renewals, We're actually seeing our large ag comp customers ramp up nicely in their usage going into this growing season. A lot of it was some transitions that we made working closely with those customers last [indiscernible] To understand where their business was going, parts of their business where they were reducing their investments, so more on the on the marketing side, and leaning into those areas where they're really investing, which is in improving operational efficiencies. And being part of, you know, reducing the amount of input and and increasing the output. And there's a lot of places where we can drive really tangible ROI to our customers, and making sure that that that is the nature of the way we're working with those customers. We also see opportunity across the commercial sector with energy and insurance. Energy, obviously, with bringing Tanager online as well as in the insurance space, we continue to expand with with some of our marquee customers on that front. So, again, it's it's been a rough year just with all the changes going on in the ag sector, but a lot of really positive signs in the in the last few quarters.

That's helpful. Thanks a lot.

Thank you.

Our next question comes from Caleb Henry with the company MultiSpace. Caleb, your line is now open.

Hi. Thanks for taking my questions. Just had two questions. First is sort of on the existing, changes in US government. On the Spire call, there was conversation about seeing a lot more funding headed towards kind of commercial weather and and them kind of anticipating a pretty dramatic change in uptake on their side. I'm wondering on the electro optical side or any of the the sensor types that Planet offers, if you if management is kind of anticipating any similar meaningful changes from the new administration in terms of kinda how they make use of commercial satellite imagery?

A %. Yes. So we are, we expect them and their focus is on efficiency. [indiscernible] leveraging commercial capabilities. And we fit right into that I I again, that's across civil government, defense and intelligence agencies. We're in active discussions with them and how we can help them on that priority. And it's something that we have done before. This is a case in point, our Tanager partnership came out of a collaboration with NASA and is enabling them to do those missions at lower cost. Our EOCL contract with NRO is enabling them to get access to satellite imagery. Much lower cost than doing their own way. So these are the kind of programs that I think government is going to double down on. And accelerate in this environment. And again, as I mentioned earlier, we are seeing significant budgetary increases in other countries like Japan and Europe as a partly to reaction as well. And that is something that we want to lean into too. We're a global company.

Okay. Thanks. And then just one clarification on the JSAT contract. What's the rough timeline for when you start launching those satellites? Is that something where you want to get a minimum number of dedicated Planet satellites up first and then you ship to JSAT?

Maybe interspersed or when do you start rolling out the JSAT portion of the Pelican fleet?

Yes. So we are focused first on our own satellite that is most critical to the continuity of our SkySat fleet. Continuity and of course enhancements in all the ways we've described describe Pelican is. And then next is the JSAT-one, which will be mainly over the next twenty four months.

Okay.

Thank you. Our next question comes from Colin Canfield with the company Cancer Fitzgerald. Colin, your line is now open.

Hey. Thanks for the follow-up. [indiscernible] we could just talk a little bit about the contract opportunities that we'll we'll talk about. Handful of opportunities like they're pretty similar. Obviously, you have a little bit of a split across the types of satellites that might be procured, but if you could maybe talk through kind of what the total size of that bid pipe looks like and how that splits out relative to the services pipeline?

I'm gonna pipeline for for number for you right this second. In his early days in our entry into this, but I will say is that we're seeing strong demand there. From different countries and and many countries took note of the partnership we did with Japan. So it's only further accelerated subsequent to our announcement of that. There's a lot of interest, but we're being very strategic about which ones we focus on when, because these are big complex transactions as I said and so we're focused on ones that are most synergistic that are going to drive our current product pipeline and aligned with our long term financials as well.

So, yes, that's the that's the way I think about it. We'll obviously continue to share more as we can in upcoming quarters.

I would now like to turn the conference over to the CEO and Co Founder, Will Marshall. Will, you may proceed with closing remarks.

Well, look, overall, I'm very proud of what we've achieved here in the last year that you've been hearing about today. And I feel Planet is in a great position overall especially based on the JSAT partnership that we mentioned and our strong backlog Our big focus this year is really on growth acceleration using from these new data sets from these AI powered solutions and a handful of other partnerships in satellite services. [indiscernible] finally, I'll just note about the AI transition. I really think of that as a strategic focus, for the year, but, like, going more fulsome into the satellite services sector was a big strategic decision last year. This year, it's going be focused on AI. Across the board, and we believe that can accelerate our opportunity. So thanks for joining us today, and a real big thanks to all of our teams that enable everything that we've been discussing. And so look forward to giving you update next Thanks.

That will conclude today's conference call. Thank you for your participation. And enjoy the rest of your day.