What's driving PL's EPS volatility recently?

Planet Labs' (PL) EPS volatility over the recent years can be attributed to a combination of factors:

1. **Revenue Shortfall and Guidance Miss**: The most recent EPS shortfall occurred in Q1 2025, where the company's revenue fell slightly below expectations at $61.55 million compared to the forecasted $62.2 million. This was part of a trend of missing revenue targets, with Q4 2024 revenues at $61.55 million missing analyst estimates by 1.2%. The guidance for the next quarter, $62 million, also undershot analysts' expectations, signaling ongoing challenges in forecasting accuracy.
2. **Strategic Shifts and Investments**: Planet Labs has been undergoing strategic changes, including a shift towards AI-enabled solutions and a new industry-aligned go-to-market structure. These shifts have likely impacted short-term profitability as the company invests in new technologies and market structures. For example, the introduction of AI-enabled solutions and the launch of new satellites may have increased expenses that are not yet offset by revenue growth.
3. **Cost Management and Margin Improvements**: Despite the EPS volatility, there are signs of improving financial discipline and operational efficiency. The company reported a significant year-over-year increase in revenue, from $216 million in 2024 to $244.4 million in 2025. The gross margin improved to 62% in Q4 2025 from 55% in the same period last year, and the full-year gross margin improved to 57%. Adjusted EBITDA was positive in Q4 2025, marking the first quarter of profitability.
4. **External Factors and Market Conditions**: The company's performance is also influenced by external factors, such as market conditions and customer demand. For instance, the agriculture sector, a key customer for Planet Labs, faced headwinds that resulted in a more than 10% year-over-year revenue decline. Additionally, regional challenges in North America limited revenue growth.

In summary, Planet Labs' EPS volatility is primarily driven by revenue shortfall concerns, strategic shifts and investments, cost management improvements, and external factors influencing market conditions and customer demand.