Planet Labs (PL): Earnings Momentum and Strategic Contract Wins Signal a Buy Opportunity

Earnings Momentum and Margin Expansion: A Foundation for Growth
Planet Labs (PL) has demonstrated robust earnings momentum, with Q2 FY2025 revenue reaching $61.1 million—a 14% year-over-year increase driven by over 30% growth in its Defense and Intelligence (DNI) segment [1]. This acceleration continued into Q1 FY2026, where total revenue hit $66.3 million, reflecting 10% YoY growth despite a challenging macroeconomic environment [2]. Notably, non-GAAP gross margin expanded to 58% in Q2 FY2025 and further improved to 55% in Q1 FY2026, outpacing prior-year figures of 52% [3]. Adjusted EBITDA turned positive in Q1 FY2026 at $1.2 million, reversing a $8.4 million loss in the same period in 2025 [4]. These metrics underscore the company’s operational efficiency and its ability to scale profitably.

Strategic Contract Wins: Defense and Intelligence as a Growth Engine
The DNI segment has emerged as a critical catalyst, accounting for 55% of Q1 FY2026 revenue and delivering over 20% YoY growth [5]. This surge was fueled by high-impact contracts, including an eight-figure ACV deal with a European defense client for PlanetScope and Maritime Domain Awareness (MDA) solutions [6]. The MDA contract, which expanded from a pilot to a full operational agreement, enables high-frequency monitoring for vessel identification—a capability highly valued in national security applications [7]. Additionally, the company secured an expanded contract with the German government and was selected as a primary subcontractor for California’s $95 million Satellite Data Purchase Program [8]. These wins not only diversify revenue streams but also lock in long-term recurring revenue, with 97% of Annual Contract Value (ACV) derived from recurring sources in Q1 FY2026 [9].

Margin Improvements and Path to Profitability
Planet Labs’ margin trajectory is equally compelling. The company reduced its adjusted EBITDA loss from $14.5 million in Q2 FY2024 to $4.4 million in Q2 FY2025, reaffirming its target to achieve profitability by Q4 FY2025 [10]. While Q1 FY2026 guidance projected a temporary dip in adjusted EBITDA ($2–4 million loss), this reflects strategic investments in satellite fleet expansion and AI integration, which are expected to drive long-term margin resilience [11]. The balance sheet remains strong, with $249 million in cash and no debt, providing flexibility to fund growth initiatives [12].

Valuation and Investment Case
Despite these positives, Planet Labs remains undervalued relative to its growth potential. At a forward price-to-sales (P/S) ratio of ~5x (based on FY2026 revenue guidance of $270–280 million [13]), the stock trades at a discount to peers in the geospatial and defense tech sectors. The company’s focus on high-margin DNI contracts, coupled with its leadership in satellite imagery and AI-driven analytics, positions it to capture market share in a $5 billion global Earth observation industry [14]. Analysts project Q2 FY2025 revenue of $65.93 million, a 7.9% YoY increase [15], suggesting continued momentum ahead of earnings reports.

Conclusion
Planet Labs’ earnings growth, margin expansion, and strategic contract wins in defense and intelligence create a compelling investment thesis. With recurring revenue now 97% of ACV and a clear path to EBITDA profitability, the company is well-positioned to deliver outsized returns for investors willing to capitalize on its undervalued position in the geospatial data sector.

Source:
[1] Planet Labs PBC (PL) Q2 FY2025 earnings call transcript [https://finance.yahoo.com/quote/PL/earnings/PL-Q2-2025-earnings_call-201916.html/]
[2] Planet Labs PBC Reports Q1 FY2026 Earnings [https://www.businesswire.com/news/home/20250604140394/en/Planet-Reports-Financial-Results-for-First-Quarter-of-Fiscal-Year-2026]
[3] Planet Reports Financial Results for Q1 FY2026 [https://www.tradingview.com/news/tradingview:2c51801d7d7a9:0-planet-labs-pbc-reports-financial-results-for-q1-fy2026/]
[4] Planet Labs PBC (PL) Q1 FY2026 earnings call transcript [https://finance.yahoo.com/quote/PL/earnings/PL-Q1-2026-earnings_call-329285.html/]
[5] Planet Labs: Backlog Growth, Fleet Expansion, And Big Contract Wins [https://seekingalpha.com/article/4816042-planet-labs-backlog-growth-fleet-expansion-big-contract-wins]
[6] Planet Reports Financial Results for Q1 FY2026 [https://www.businesswire.com/news/home/20250604140394/en/Planet-Reports-Financial-Results-for-First-Quarter-of-Fiscal-Year-2026]
[7] Planet Labs PBC (PL) Stock Price [https://www.datainsightsmarket.com/companies/PL]
[8] Planet Labs PBC (PL) Q1 FY2026 earnings call transcript [https://finance.yahoo.com/quote/PL/earnings/PL-Q1-2026-earnings_call-329285.html/]
[9] First Quarter of Fiscal Year 2026 Financial Highlights [https://www.businesswire.com/news/home/20250604140394/en/Planet-Reports-Financial-Results-for-First-Quarter-of-Fiscal-Year-2026]
[10] Planet Labs PBC (PL) Q2 FY2025 earnings call transcript [https://finance.yahoo.com/quote/PL/earnings/PL-Q2-2025-earnings_call-201916.html/]
[11] Planet Labs (PL) Q1 2026 Earnings Call Transcript [https://www.fool.com/earnings/call-transcripts/2025/06/04/planet-labs-pl-q1-2026-earnings-call-transcript/]
[12] Planet Labs PBC Reports Q2 FY2025 Earnings [https://www.gurufocus.com/news/2518035/planet-labs-pbc-reports-q2-fy2025-earnings-eps-of-013-misses-estimates-revenue-at-611-million]
[13] Planet Labs PBC (PL) Q1 FY2026 earnings call transcript [https://finance.yahoo.com/quote/PL/earnings/PL-Q1-2026-earnings_call-329285.html/]
[14] Planet Labs: Backlog Growth, Fleet Expansion, And Big Contract Wins [https://seekingalpha.com/article/4816042-planet-labs-backlog-growth-fleet-expansion-big-contract-wins]
[15] Planet Labs (PL) Prepares for Q2 Earnings Announcement [https://www.gurufocus.com/news/3096455/planet-labs-pl-prepares-for-q2-earnings-announcement]