Planet's Q2 2026 Earnings Call: Contradictions in AI Monetization, Customer Churn, and Government Contract Strategies

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: $73.4M, up ~20% YOY
• Gross Margin: 61%, up from 58% a year ago

Guidance:

• Q3 revenue: $71M–$74M.
• Q3 non-GAAP gross margin: 55%–57%.
• Q3 adjusted EBITDA: $0–$4M.
• Q3 capex: $18M–$24M.
• FY26 revenue: $281M–$289M (range raised on Q2 outperformance).
• FY26 non-GAAP gross margin: 55%–57% (unchanged).
• FY26 adjusted EBITDA: loss of $7M to breakeven.
• FY26 capex: $65M–$75M.
• Expect full-year FY26 free cash flow positive; achieved first rolling 12 months of FCF profitability in Q2.

Business Commentary:

* Revenue Growth and AI Integration: - Planet reported $73.4 million in revenue for Q2, representing 20% year-over-year growth, marking another quarter of growth reacceleration. - Growth was driven by the team's excellent execution in delivering integrated global insights through AI-enabled solutions and rapidly expanding the satellite services business.

• AI-Enabled Solutions and Government Contracts:
• The defense and intelligence sector saw 41% year-over-year growth, contributing significantly to the overall revenue.

• This was due to strong performance with core data and solutions business, as well as satellite services contracts, such as the JSAT contract, and the addition of new contracts like the seven-figure option from the Defense Innovation Unit and the expansion of the EOCL contract with the U.S. National Reconnaissance Office.

• Satellite Services and International Expansion:

• The satellite services offering grew, with notable international deals, including a €240 million multi-year collaboration with Germany and the JSAT contract.

• Growth in this segment is driven by strong demand for sovereign access to space, particularly in the current geopolitical landscape, and strategic partnerships with key customers.

• Operational Profitability and Cash Flow:

• Planet achieved adjusted EBITDA profit of $6.4 million and $85.1 million in net cash from operating activities in Q2.

• This was due to disciplined OpEx spend and revenue outperformance, particularly from high-margin data subscription customers, leading to positive free cash flow.

• Backlog and Market Visibility:

• The backlog increased to $736.1 million, representing a 245% year-over-year increase.
• This increase was driven by large contracts from key customers, providing significant visibility into future revenue and contributing to the company's confidence in growth acceleration into FY2027.

Sentiment Analysis:

• “Revenue came in at $73.4 million, approximately 20% YOY growth… Non-GAAP gross margin was 61% vs 58% a year ago… adjusted EBITDA profit $6.4 million (third sequential quarter).” “Backlog increased to $736.1 million, up ~245% YOY… gives us confidence in growth acceleration into FY27.” “We now expect to be free cash flow positive this fiscal year… raised full-year revenue outlook to $281–$289M.”

Q&A:

• Question from Colin Michael Canfield (Cantor Fitzgerald): How much of the Germany and JSAT deals are in backlog, and what are DoD growth mechanics, including maritime domain awareness and work with combatant commands?
  Response: DoD demand is leaning into broad-area monitoring and MDA; Germany and JSAT contracts are fully included in backlog and recognized over multiple years.

• Question from Colin Michael Canfield (Cantor Fitzgerald): How should we think about working-capital timing and multi-year free cash flow from satellite services awards (Germany, JSAT, and similar pipeline)?
  Response: Satellite services are working-capital positive with payments weighted earlier, reducing balance-sheet funding needs; milestones shift to managed services later.

• Question from Trevor James Walsh (JMP Securities): Update on satellite services pipeline and execution constraints (Pelican capacity vs. customer scale)?
  Response: Pipeline is strong globally with longtime partners; Planet is leaning in and well positioned; deals are synergistic with core business and not capacity-constrained.

• Question from Trevor James Walsh (JMP Securities): Can 60%+ gross margin hold next fiscal year given JSAT/other mix?
  Response: Q2 margin strength was usage-driven; gross margin will vary with mix—satellite services are lower margin during build phases and higher in later years.

• Question from Michael Latimore (Northland): What drove elevated usage and is it continuing? Any early renewals or overages?
  Response: Usage uptick drove Q2 outperformance; guidance assumes reversion to historical pacing; some customers seek early renewals, but budget access dictates timing.

• Question from Michael Latimore (Northland): EOCL renewal timing beyond October?
  Response: Scope expanded to PlanetScope monitoring and MDA; no new renewal timeline disclosed.

• Question from Ryan Koontz (Needham): What percentage of satellite capacity is committed to Japan and Germany deals?
  Response: Only a small fraction of overall capacity is dedicated; JSAT is a tiny fraction, Germany leverages existing Pelican plans, primarily European theater.

• Question from Ryan Koontz (Needham): Updates on maritime domain awareness product and partners?
  Response: MDA is Planet’s most mature AI solution; sole-sourced by U.S. Navy for broad-area monitoring; partnerships include NATO and SIMAX; included in Germany deal.

• Question from Daniel Hibschman (Craig Hallum): What drove the commercial segment inflection and outlook?
  Response: Strength in energy, agriculture, and insurance (e.g., SwissRe); D&I-built solutions translate to commercial; AI accelerates extracting actionable insights.

• Question from Gregory Pendi (ClearStreet): Status of Anthropic relationship and year-ahead expectations?
  Response: Fine-tuning multimodal models on Planet data to improve accuracy; also partnering with Google and NVIDIA; advancing AI on-satellite and on-ground.

• Question from Caleb Henry (Quilty Space): How will Tanager be monetized and what’s visibility on future constellation?
  Response: Early revenues via Carbon Mapper and California; strong interest in emissions monitoring; market is nascent but performance and demand are encouraging.

• Question from Caleb Henry (Quilty Space): Backlog growth and revenue timing—front-loaded or linear?
  Response: Drivers are multi-year Japan and Germany deals plus 7–8 figure solutions; ~35% of backlog in next 12 months and 59% in next two years (RPO: 32%/57%).