Planet Labs PBC (PL) Earnings Call Transcript & Summary

Hello, and welcome. I am Jarrett Banks, Editor-at-Large, here at IPO Edge, and we've got another exciting fireside chat for everyone today. Today, we'll be talking with the CEO and CEO (sic) [ CFO ] of Planet Labs, which is merging with a SPAC called dMY Technology Group IV, that's NYSE: DMYQ. And before we meet our esteemed guests, we'll just run through a little bit of housekeeping. One of the great things about this event is that viewers get to ask questions to our guests and you can do that by submitting questions by the Zoom portal or e-mailing at [email protected], and a reminder that the replay will be available about an hour after we finished the event at ipo-edge.com. You can watch the whole thing or you want to watch it again, it will be up. So let's just watch a quick video to give us an overview about Planet. [Presentation]

Okay. Very cool. Let's bring on Co-Founder and CEO, Will Marshall. Will, welcome to the program.

Hey, thanks for having us, Darren, and Alexandra.

Great. So now Planet is a data subscription business delivering insights about daily change on Earth, and I wonder if you could give us a very high-level overview of what exactly the company does.

Yes, absolutely happy to do that. And I'm looking forward to this being a very open Q&A site session. Let me just tell some basics about the company and just in a couple of slides that will help to give the very, very top level perspective. I really want to keep most of this just Q&A. But like this slide, I think, helps to give people a bit of a sense of where we're at as a company today. So we're simultaneously a space company, a software company and a data company. We have a satellite back end, where we build data on top of that and software services that enable analytics of that data. This slide gives you a little bit about Planet at a glance. So we're like 200 satellites in orbit today. And it's the largest Earth imaging fleet in human history, with those image about 300 million square kilometers of area per day. That's about twice the Earth landmass. So we image some land areas multiple times. And most of it, we just scan once per day. Just to give you a sense of scale, that's about 100x more imaging in area coverage per day than any other Earth imaging player, about 100x. And then all of that, we process to be what we call machine learning ready, so analytics ready. So harmonize the pixels, so that the user on top of that, the client just gets to have a seamless interface to build their tools, their ML code or other analytics software. On the business side, just over $100 million in revenue last year. So we're January fiscal year-end, so FY '21 was last year. So that's last year, looking at the rearview mirror, just over $110 million in revenue. Most of that, over 90% is recurring revenue. So we're really a data subscription business and those metrics show. Also, just the gross margins that I just point out on this slide because I think it shows why we were one-to-many model. I mean we sell each image multiple times. Any image that comes down from our satellite, we can sell it to a lot of users because that's our ag customers, the civil government customers and so on. And every time the incremental cost of selling our imagery to the next player is, of course, really low. It's just the compute and egress costs of selling that image to -- or the analytics feed on top of that. So it's very, very high margins. 62% is already including is for our PlanetScope business, which is 73% of our revenue last year and that includes the cost of the satellites. Most people think, oh my God, you're building satellites and operating satellites, must be terrible gross margin. That's 62% is going up really fast and already includes the cost of the satellite. So we've really made very efficient satellite systems. Just a couple of more slides there. Next slide. Just -- this just is the video that just shows a little bit more how it works. So we have 180 satellites in a polar orbit, Sun Synchronous Orbit it's called. And they each take an image -- set of images as they go down, it's just vertically a strip of image, but the Earth rotates underneath. So by the time the next satellite comes, it takes a strip next to the previous one. So they end up being like a line scanner for the Earth every day because the Earth rotates in 24 hours, we scan the whole Earth. We also have a set of SkySats, which are higher resolution images, that can have a resolution up to 50 centimeters and can take images on any particular place. We just did this really cool thing last year, we launched 2 sets of 6 -- 2 sets of 3 satellites on 2 SpaceX rockets into 2 inclined planes that enable us to revisit any particular location up to 12 times per day, and that's the fastest revisit system of any Earth imaging system on the planet or off the planet in this case. So anyway, that's roughly how our system works. If you can go to the next slide. That's a little bit about the back end. And of course, as a space geek, I could spend hours talking about that bit, but I'm not going to in the interest of time. Really, what I wanted to just speak to very, very briefly is that what's exciting is what does it mean for the customer? And what the customer looks at is something like this. It's like the imagery served up. It's a bit like Google Earth, but you have today's image and yesterday's image and the day before and you have over 1,000, actually, you have 1,500 images for every point on the Earth's landmass on average. So just imagine a time series of imagery and you can set up your bespoke areas of interest and time of interest and feeds, analytical feeds, you can say just show me the boats in the ports in my area or just show me the agricultural output, and we have those sort of analytical feeds. And in the end, the data -- the customers are subscribing to these data feeds, whether they're in agriculture, there's a drive into agriculture farm feeds. If they're in civil government, they might be getting into feeds of all the new roads or buildings in the area or the imagery itself, like Google uses the imagery itself to then inform and improve the maps. But like however, they're digesting it is data feeds. And that's why we would liken it to a Bloomberg Terminal. A lot of people are familiar with Bloomberg Terminal that provides data feeds into people's workflows and help them make smarter decisions, whether that's the imagery itself or the analytics. So on top of that, we are doing the same. And just like Bloomberg, it's a high -- data business is a high-growth, high-margins business, and it's high stickiness. That means when people have integrated this data into their workflow, it's very hard to switch because now they're calibrated to that and so on. And so that's why we think of Bloomberg. There are some differences with Bloomberg. Obviously, there's limitations to that [ analogy ]. And we're not certainly talking about a physical terminal, of course. We're talking about a web interface. But the main differences are that we -- whereas Bloomberg mainly aggregates open source data that's available financial data and provides data analytics on top of that, we have a proprietary data set from our 200 satellite fleet that enable this. And so -- and we service multiple vertical markets, not just finance, although finance is a market we serve. And so we think of it as Bloomberg plus plus. Obviously, that's a great analogy for us, that Bloomberg is a very successful business. But I really think, in all honesty, there's -- it does look and feel like a Bloomberg data business and not a satellite business, right? We're not selling satellite [indiscernible] data feeds. So there's just 1 final slide I have just to tee up our discussion. Just to talk -- just a bit tiny bit about some of the use cases that people actually get value out of our imagery. It's not just for s**** and giggles. This is imagery that is really enabling smarter decisions economically and so on. So in agriculture, our data enables improvements of crop yields. So if each 3x3 meter box, we can actually tell with our spectral bands how well the crop is doing. Is it wheat, or is it soy? And how well is it doing? And that enables it. When we do that across the whole farmers' field, we can then determine this area has got blind, so this area needs more fertilizer, or this is when the crop is ready to be harvested. All that sort of intelligence helps what's called precision or digital agriculture, enables improvements of crop yields of tens of percent, which is a big deal with agriculture. And we can do this for all the farmers' fields across the entire world every day. So big companies like Corteva and others that are using our data across wide areas. Can't be done with drones. They just don't have the coverage. Can't be done with the higher resolution, zooming satellites that everyone else has. Only we have the scan of the whole Earth every day, and agriculture is 25% of the landmass of the Earth. Just to mention a couple of others, and I won't go in the same length of depth, but defense and intelligence, we enable countries to cease new threats around the corner that they didn't know. We discovered a missile site in Eastern Iran that people didn't know about. We found new threats, and that's super important for countries to know about what threats are emerging around the world. In civil government, we help countries respond to floods and fires, disaster response and code enforcement. So just to give you a couple of examples, we've been helping the German government recently with the floods that happened, with the California state's various counties with the Dixie and other fires that were happening here in California. So we -- and the code enforcement is really fascinating. It's where counties and states use our data to enforce code like -- we work with Humboldt County as an example, and they use our data to check on cannabis growing. And cannabis growing is actually legal in Humboldt, but you have to have a permit, and they check the permits using our satellite data and other counties use it for checking, building permission, road construction efforts and so on. Mapping is companies like Google that use -- I mean Google does something incredibly sophisticated. Every time they find something is getting out of date in a map, they automatically [ task ] on the satellites. The satellites takes a picture, they automatically extract out that new road, that new train station, whatever it is and then update the map, and they do that tens of thousands of times a year in an automated, fully automated process. I won't go through the rest of the vertical markets, only to say that the ones on the left-hand side, the majority of our revenue, it's roughly 25%. For those fall on the left-hand side, it's not quite. But last year, sort of 25, 25, 25 and then 15 or something on those left hand fall, and all the rest is that like final bit. The ones on the right-hand side, however, are going to be big in our future, finance, insurance, energy. Our data is super relevant. But those in an industry like finance, I mean, we can -- we have huge [indiscernible] a lot of the world's commodities, like agriculture commodities, like output from all the world's raw material mines, all the world's shipping and transportation network. But those hedge funds don't want pretty pictures. They want time series calibrated data. We haven't yet got to that. So what we're doing in going public is exciting because for 2 reasons. One is that we're ready. And another thing is that we're feeling this pull. We're having a lot of finance companies. And what this going public means for Planet is that we have the capital to put more boots on the ground to go after the huge market opportunities, especially the ones in the left hand for and more software to go up the [ stack ] for the right-hand vertical markets that need more analytics to enable them to get going. So with that, I'll leave it there, but that's a quick overview of Planet and some of the use cases and a quick sense of the financials just so that people have a sort of level set.

I mean, it's absolutely incredible. And you can imagine if you were a commodities trader, you would really need a product like this. So going public, that's a great segue to my next question before I bring on our other panelists. Why SPAC? Why now?

Great questions. Well, firstly, why now? I mean the first thing is do you know a company that analyzes, do you want to go public. And we have been analyzing that for some years, and we always thought that was the right thing in the end. The question was when. And Ashley, our CFO, who has been with us for 1.5 years, we've been preparing. We've had audited financials for 3 years, and we were getting to the point where we thought we were ready. We had a mature satellite segment, over 200 satellites operating. We had a data business. We have clear product to market fits in those 4 left hand verticals, I was just saying. And we were doing a serious amount of revenue, right, over $100 million of revenue last year. We felt that it was at the right stage to go public. Why SPAC? Well, it's an efficient vehicle to do it. It was ideal for our kind of company because we could do it quickly. We could talk a little bit about the future, and I think that we found a great partner in dMY who've done this many times before, saw the real value of us not just as a satellite company, as a data and analytics company and saw the value proposition to sustainability. And so I would say that's the reason we chose SPAC. And then we found some great pipe investors, right, with BlackRock leading the pipe with Marc Benioff coming in, in a big way, Google coming in. We just upped the pipe with CPP, the Canadian Pension Fund, which we really stoked to have them. And just 1 final thing about the SPAC process. We're also feeling this pull right now. Everyone wants our data. And why? It's because the whole planet is trying to transition to a sustainable economy, ESG targets for companies, emissions targets for countries. And what do they need when they're transitioning to a sustainable economy? The first thing, they set these goals and then they're like, well, we need to measure it. That's the very next thing because otherwise, they can't manage it. And so we can measure those ESG targets. We can measure those emissions. And so we're feeling the pull of the market. And so this is the right time to go public for us. The market pull is there, and so we're leaning into it.

That's a great answer. I'm going to bring in my colleague, Alexandra now; and Ashley Johnson, the CFO. And take it away Alexandra.

Yes. It's great to be with you both. And we would encourage our audience to keep submitting questions. We already have a few going, but hope to foster a really great discussion. So Ashley tell us a bit more about Planet's one-to-many data subscription business model. Will alluded to the fact that your incremental operating costs become very low as more users are added. So tell us about that.

Yes. Thank you, and it's great to be here. When I joined the company about 1.5 years ago, what struck me is that while from the outside, everybody is really focused on the fact that Planet has totally revolutionized how to build satellites and design satellites through its agile aerospace, the business model is actually very similar to a data infrastructure SaaS company. So any company that's building software solutions on top of complex data center infrastructure, that business model looks very similar to our own. We've built proprietary data and analytics on top of our data center, it's just that our data center happens to be in space. So when you look at the business model, the metrics are very similar. So we have 90% recurring revenue. Our customers are subscribing to these data feeds over multiple years. On a dollar-weighted basis, 70% of our contracts are multiyear, on average about 2.5 years. Our customers are embedding our data into their business intelligence, so they want to lock in pricing over multiple years. So actually on the commercial side of our business, the nongovernmental side, our contracts are skewing closer to 3 years on average on a dollar-weighted basis. And so when you look at these types of metrics, net dollar retention rate greater than 110%, these types of metrics are very analogous to SaaS companies and other data-as-a-service companies.

Yes. And then what -- there's so many potential end user opportunities for Planet from agriculture to sounds like military intelligence, it seems endless. Can you talk about which of these vertical markets will drive the most growth in the future and potential tailwinds?

Yes, it's interesting. As Will mentioned, in the near term, we see a lot of the growth coming from the core markets, which have historically been users of geospatial data. So this is the agricultural industry, civil government, defense and intelligence and mapping. And as we ramp up our sales team globally, we expect a lot of the near-term growth to be in those markets. But the exciting inflection for this company is as new markets understand the value of the data that we're bringing and are embedding it in their business intelligence systems. And so that's like financial services companies that are trying to understand land use for their commercial loan portfolios that are trying to assess insurance risk related to wildfires and flooding. They're trying to model out the impact of climate change on their overall municipal bond portfolios. They're trying to predict commodities prices as a result of global agricultural production of different commodities. And then also a lot of pull across all markets because of the heightened focus on ESG and environmental impact to the ability to really measure the E in those ESG scores and understand what is the true environmental impact of that supply chain footprint and have consistent scoring across companies. All of these are indicators of the types of inflection that we expect to see in our business in these new markets that are just really opening their eyes to the power of our data sets.

Yes. And just along those lines, kind of questions of privacy or legality issues. Like are you able to anonymize the status of that individuals aren't ever individually identifiable. I mean, I guess, the reference that comes to mind is almost like the Truman Show, Big Brothers watching you. What would you say to critics that bring those kind of issues out?

Will, why don't you take this one?

Yes, I'm happy to. Look, I mean, remember that we're about 500 kilometers up. So this is not like right over your head. This is like us taking a picture with our telescope from here in San Francisco to Los Angeles and seeing things, right? That means that we can't see a person in our medium resolution imagery and even in the high resolution, very, very difficult. Maybe you can start seeing crowds of people. You certainly can't identify a person from space. It's just too far away. Even the big satellites can't do that, like even the big government one. Drones can because they could be 5 meters above your head or 5 kilometers above your head even there with its sort of 100x further away than if there were 5 kilometers up, right, so where a plane might fly. So you remember the distance, so really what satellites are good for is wide-scale scanning, right? And that's why our applications are things like agriculture because that's 25% of the landmass of the Earth. You just can't do that with drones, but we kept sufficient resolution to provide precision agricultural benefits, right, subfield understanding of crop health. Similarly, on the military side, it's more like scanning for new threats. On disaster response, it's finding all the fires across whole of California or helping floods because we automatically scan the whole world, we have the day before and the day after for a flood. And that's really important to have timely information on that scan before you've been able to fly airplanes or anything else. So it's wide scale effects like that, that affect and help our use case. The use cases are sort of focused on that. The advantages satellites have is they're going 8 kilometers per second. So they cover vast territories, right, that planes and drones and other things can't. But the good thing about that is that they're so far away. They don't touch really personal privacy so much.

That's great. And then Ashley, how does Planet's business model -- how is this transforming the Earth observation industry at large?

That's a great question. So when you think about historically, the Earth observation industry, specifically around satellites has been about building very big, very expensive satellites that can take -- can capture images, but really on demand. And so when -- the fundamental capacity of those satellites is limited, they're looking in very specific places. And so from that end, the satellite manufacturer has to be thinking about how do they optimize the revenue per satellite, which typically translates into the highest bidder, which typically translates into a government buyer. And so that's how the historical industry has really been focused is very big players that are servicing a government customer. And in some cases, you can see in the public filings, the U.S. government, for example, may represent as much as 80% of revenues. That's a very different value proposition than what Planet has built. Because we are scanning the Earth every single day, we're effectively taking images of what anybody might want to look at. So we don't have to be tasked on demand. We already have that image, and we can sell that data multiple times over. And every incremental customer is really just dropping profits to the bottom line for us that we can then reinvest in the capability of those satellites. And so it's a fundamentally different proposition when you're talking about a one-to-many subscription model versus a one-to-one tasking model. Now we do have 21 high-resolution satellites. We have the highest revisit rate of any point on earth of satellite providers in the Earth observation industry. And what that enables us to do is to combine the 2 data sets to increase the capabilities of the analytics and the robustness of those analytics as well as to scan for the things that our customers may not know they need to look for and then task the satellites to zoom in and learn more. So the multimodal fleet that we have is also very unique in the industry. And we think we're fundamentally transforming the way the market thinks about accessibility to and usability of satellite data.

Yes, and talking more about those vertical markets and kind of the scope of Planet's end users. Can you give us a bit more along the lines of the revenue breakdown for government, usership versus commercial?

Yes. So Will mentioned, we have 4 core markets today that make up the majority of our revenue. So our largest market is civil government, so that last year, our fiscal '21 is 24% of our revenue. And we got a nice slide to break it down. Second largest market was agriculture, and that's one where we're seeing a lot of growth this year as we've really been attacking that market as we've expanded our commercial sales team. And then defense and intelligence, another sector within government represents about 22% of our revenue as of last year. And then as Will mentioned, mapping is kind of a close fourth by about 17% of revenue last year. That 14% other is really where we see opportunity over the long term to expand the reach of our business. So that's opportunities in financial services, insurance, forestry and the energy markets, which really are nascent markets for us today.

Yes. And then let's talk a bit more before we get into some of the financial nitty-gritty about kind of new markets and growth forecasting, what analytics and solutions and products are going to be deployed to address new markets, new customers.

Yes. So it's really building on top of the platform that we have today. So today, our customers can access our data a couple of ways. So one is through our own web-based interface, which we call Planet Explorer, or they can use subscription APIs to ingest our data into whatever systems they might be using on their side. So we have partnerships with S3, we integrate into Google Earth Engine and other tools that may be in use by our customers on their desktop. As we think of the opportunity going forward, it's really building on top of that solution stack. So building more APIs to be able to integrate into other analytics solutions as well as building our own analytics solutions inside of Explorer to enable our customers to interact with the data, however, they are most comfortable and using whatever tools they're most accustomed to. I don't know, Will, if you have anything to add on the platform side.

I mean, obviously, it's a significant area of focus. Our main areas of focus with this capital that we're getting through this process are in sales and marketing and then going up the software stack. And that's a lot to do with adding analytics that enable our [ newer ag ] market. It's actually -- it helps our current vertical markets because even say, the big ag companies are asking us, hey, can you just do this image processing step? Can you just do this analytics piece first because we prefer to focus on the farmers. Great. We can do that, add that value and go up the value proposition there and gain more share for Planet. On the -- but it also opens out to the -- going up the stack opens out the new vertical markets that aren't addressable until you get to a certain stage like the finance one I mentioned.

Great. And then how is Planet data measuring results in the growing ESG market? How -- what is Planet's strategy to build, buy or partner to move up the "stack" as you just had alluded to, Ashley?

So a lot of different ways for our data to be used for sustainability purposes. So for example, we have partnerships underway to look at incorporating Planet's data into ESG scores. We're working with Fortune 100 customers so that they can understand their global supply chain footprint and the impact of the minerals that they may be sourcing for their own products. And what type of environmental foot print are those mining practices, having on the planet, being able to track that measure and report out on it as part of their own sustainability commitments. Will, do you want to talk a little bit about just kind of the relevance of Planet data to you and SDGs and other larger global efforts?

Yes. I mean if I must say, I mean, look, we think of Planet data as enabling this sustainability transition, right? And I mentioned that the whole world is trying to do that. We looked at the UN Sustainable Development Goals and found that our data is relevant to measuring 13 of the 17 SDGs from food security because of our agriculture security, all these things. And what does that mean? It means that every one of those things, whether you're a company or a government is trying to transition to a sustainable practice. You have to measure that piece. And our data set is really foundational to measuring the natural capital, which we have to take into account. We're presuming it's all for free. And what is natural capital? It's the trees, it's the water, it's the pollution, it's the air, it's all these things. And Planet is a daily snapshot of where we're at with our natural capital. So when companies are trying to measure their ESG targets, that is of course environment, it's in supply chain, it's like understanding risks of assets to disasters, it's about like floods or fires. It's about understanding do their supply chains come from sustainable sources. And so we can help them to measure that. Does that paper come from a sustainable forest, et cetera, et cetera. And so all about -- it's all about measuring natural capital and our data set, we think, is foundational to that transaction -- transition.

Awesome. And then, Ashley, let's get into a little bit more of the Planet's financial model. Can you go over some of the KPIs?

Sure. So as I talked about earlier, some of the things that we manage from a financial KPIs is very similar to what you might see from a SaaS company. So we're reporting out on what percentage of our revenue is recurring. So as of the last quarter, it was 93% of our revenue is recurring in nature. We're tracking our average contract length. So as this metric shows over 70% are multiyear deals, and as I referenced earlier, on a dollar-weighted basis, we're trending around 2.5 years on average for our average contract length. Net dollar retention rate is a really important metric that we manage as a business. We start with a book of business at the beginning of the year, and we look as the year goes along, how that business is renewing and expanding to measure the net dollar retention rate. We also have a supplemental metric that we provide to investors as disclosed in our [ S-4 ] around net dollar retention rate, including win back. So a customer that may have lost budget in prior periods or might have taken longer beyond the renewal date to navigate the renewal, we factor that in a supplemental metric, which is the net dollar retention rate plus win backs. And that, as a metric, increased 14% year-over-year -- 14 percentage points year-over-year from our fiscal '20 to our fiscal '21. And that's a metric that we report out on regularly. And then we're looking at how many customers we have. So we do have a bit of an 80/20 rule with a large concentration in our largest customers in terms of revenue. But a broad array of customers with whom we're engaging and really looking to drive expansion of that footprint. So the land and expand sales notion is one that is very familiar to our enterprise sales reps around the world. And so the more customers we have, the more opportunity we have to drive expansion in our core customer base.

Yes, that's super interesting. Can you go over like the margin -- sorry, the margin profile and CapEx requirements of Planet?

Yes. So Will talked about in the beginning that we have 2 fleets of satellites. So one is our medium resolution satellites are PlanetScope satellites or Dove satellites. They cost on approximately $300,000 per satellites, including the bill of materials, labor and launch costs that get capitalized. They typically have a useful life of about 3 to 5 years. In our financial model, we assume that around 3 years. So we're roughly assuming we're replenishing 1/3 of that fleet every year. Our high-resolution satellites are more expensive. We acquired them from Google a few years back. We are still amortizing the cost of those satellites through our cost of goods sold. But as we look at our next-generation high-resolution satellites, we anticipate that those will cost more in the order of magnitude about $4 million per satellite, have a useful life of, we assume, 5 years, although our SkySat satellites have actually have achieved the useful life greater than 6 years and we estimate 9 years. And so if you use that 5-year useful life, you assume you're roughly replenishing that fleet about 1/5 every year. So that's kind of how we've factored it into the model. And that results in CapEx as a percentage of revenue really trending down as our revenue scales. So last year, our satellite CapEx was about 18% of revenue. This year, it will be closer to 10%. I think our total CapEx as a percentage of revenue in Q2 was around 9%, and our steady state for CapEx as a percentage of revenue, we model around 5% to 8%, and that's inclusive of our satellite costs as well as any capitalized software, other capitalized expenditures. So again, as you think about what businesses are most analogous to Planet, it really does look like a data center SaaS company in terms of CapEx as a percentage of revenue on a steady-state basis.

Yes. And then in addition to Planet's Dove Constellation, recently announced the new satellite Pelican. Can you talk about how this fits into your financial model and revenue acceleration?

Yes. So I'll touch briefly on financial model and then Will can talk about kind of how we think about it from a market perspective. But this is effectively our next -- as we think about the next generation of our high-resolution satellites. And so as we think about replenishing the SkySat fleet, it's really with greater capabilities and using that agile aerospace model to drive down our overall cost of maintaining the fleet. And so that -- and as we drive those costs down, we increase the capabilities of that fleet. So Will can talk a little bit about what we've been sharing on that front?

Yes. Pelican is really exciting. It's our next-generation high res as Ashley is saying. So this -- what this is going to have is even higher resolution as our current system is 50 centimeters, and it's going to go significantly higher than that and higher revisit rates. So we're already imaging up to 12x per day any particular location certainly it's depending on latitude, and we're going to increase on that. We haven't released all the specs because we want to be a little -- have some fun secrets for later, but it's going to be exciting, and there's some really, really cool technology aboard. And this is all, by the way, going to cost even less than the previous satellite iterations, about 3x less. So we, as a company, have something that's important, that we have all of our satellite capabilities are built and designed and built in-house, something also distinguish us from most of the competitors in the arena. And that makes a big difference because if you go and buy your satellites from Lockheed, say, it's a very sort of government process because they're used to do in government contracting, and you'll buy your $1 billion satellite. In fact, the last satellite from NASA, for example, costs over $800 million for a single satellite. That's more than we spent on all of our satellites combined, right? And by having it vertically integrated in-house, we can design, build satellites much faster, much, much lower cost and iterate the capability to what the customer needs. Just last year, we increased our Doves by 5x data rate per satellite per day. By adding spectral bands, adding faster radios, adding more larger sensor, we went from a 29 megapixel sensor to a 47 megapixel sensor, so on and so forth, as the technology improves, we call it strapping space to Moore's Law. We want -- as the technology underlying gets better, we want to constantly put that in space. And so our goal is to constantly improve, and that Pelican is the next evolution in our high-resolution fleet.

It's all very, very exciting technology and outlook. And we've got some really great, very informed questions coming in. I'm going to throw this back to my colleague, Jarrett Banks, and to start fostering this what will be, I think, a very robust discussion from our audience.

Thanks, Alexandra. And we promise we will get to as many of the audience questions as possible. We can't get to them all. We will pass them on to Will and Ashley. So don't worry about that. Okay. Let's start here. Here's one Roberto. How many satellites would you say you will need to be as efficient as you would like? And approximately how many satellites do you think you will have for next year?

Well, actually, I think the quick answer to this is that we've done building the fleets that we wanted to build that enable us to operate the core parts of our business. So the 180 Dove satellites is complete, that does the daily scan. And last year, which was actually a very busy year, we launched 89 satellites on 5 rockets, all during COVID. So space did not slow down by COVID. But that -- the final set that I said the 2 sets of 3 satellites on the 2 SpaceX launches of the high resolution system completed our high-resolution system. So with those 2 systems complete, we are now in maintenance mode, largely, right? So we're constantly refreshing when -- as we need every year, but it's basically maintenance mode, which is why, and Ashley can talk to this in more detail if anyone is interested, the CapEx that we're talking about as a percentage of revenue is now, was 18% last year. It's projected to be just under 10% this year. And so we're going down and maybe to even the long-term range is going to be 5% to 8%. So we're really a capital-efficient business despite having certain -- and that's because we're now in maintenance mode. We have a fully scaled and operational satellite fleet. Now it's mainly around go-to-market using that data to service all the vertical markets and adding analytics to enable others.

Fantastic. Here's a question about when the SPAC transaction will close? Now that hasn't been given out yet. But I would just like to point out that if you do buy shares of DMYQ, they will automatically convert into Planet shares once that SPAC transaction does close.

Yes. And that will be PL on the New York Stock Exchange afterwards. But yes, DMYQ is the SPAC...

So no need to worry. Okay. Moving on, what's on the road map for the coming years in regards to hardware and software?

Well, there's lots of exciting stuff. I mean, as I just mentioned, like this last year, we increased the amount of data per satellite 5x. We also increased our resolution from 70 centimeters to 50 centimeters on our high-resolution system and increased the number of revisits from 2 or 3x a day to up to 12x per day. We are going to continue on those sort of high growth vectors in better and better data. So the first thing on the hardware side is constantly investing in those next-generation satellites that enable a better and better data sets and better data means higher resolution, more spectral bands and more frequent revisits so more cadence. But I think even more important is what we're doing on the software side. I mean this -- I was asked the question on the software side. And as I said, the main thing is going up the stack, as we call it, to enable us to out -- to service different vertical markets and get more value out of the existing ones. And so that means things like adding better analytics, adding more bespoke analytics, adding more -- building up more towards indicators, not just -- so like if we could do crop soy yield for the whole world per day, that would be very interesting to a lot of players, right? We haven't got to that sort of aggregated analytics or statistics yet. So that's going to take some time and calibration and so on. We've got the raw data for it. But now we need to add some of the analytics there. So a lot of the growth areas in software. And in fact, I think our software team is projected to grow about 300% over the next 5 years, whereas the space team, which we will continue to invest in is only growing about 30% or 40% over that similar time for horizon, just to give you a sense of the scale. So yes, we're investing in space, but we're investing even more on the software side.

Right, right. Next question, are there any restrictions for imagery for certain countries or locations on Earth? Do you foresee any future restrictions arising?

Roughly speaking, no, there's an international treaty that enables any country to take pictures of anyone else from space, unlike planes where you have to fly in the planes, in the air territory. In space, you're above any country's territory, and so you can take a picture. We are restricted from supplying data to certain parties. There's an embargoed list of entities, both countries, organizations and people that we can't service our data to under U.S. and EU law. And we have an ethics committee to check any of our prospective customers before we take them on to ensure that there's no issues to do with ethical bad uses of our data. I think that's pretty unlikely, but we do keep a check on it because we do really think it's important to use our technology for good. But for the most part, our technology is spent towards good, and we can supply it to most people. And now we think that's a great thing. The more people that access this information, the better.

Right. Now you touched on this at the beginning, but I want to go back to some of those verticals. We have a question here. You're diversified across several verticals, but are there 1 or 2 that investors should watch closely for the most growth in coming years?

I would say agriculture is really exciting because we've got so many ag customers. I think there's -- we will grow that market significantly. We've already got a couple of customers that are in a sort of $10 million a year kind of range, and we expect them to grow. And there's 30 or 50 more ag companies of that scale. Well, that's a big growth opportunity for us. Long term, as I've already mentioned, I'm most excited about finance because of the alpha that we have, but that's a longer-term play. Ashley, anything to add on that?

I think you hit the right core markets. Obviously, civil government is also a very big area of growth for us. We've done a lot of expansion contracts with the civil governments that have understood how our use case can help them provide better services and infrastructure to the people to be able to monitor sustainable development in those types of practices and to provide emergency and disaster response. So a lot of civil governments to target around the world, and that's another area where I expect near-term growth.

Okay. Let's turn to competition for a little bit. Now in your investor deck, you pointed out [indiscernible] head start over would be rivals, but are there any serious competitors investors should be aware of?

Look firstly, I think competition is good for everyone. But we got a huge, huge lead in this scanning system that no one else has and it would take many years for them to catch up and that is just as big markets. So I'd just touch on that just a little bit again. So we have 200 satellites operating, they collect about 100x the area of any other player per day. And that is what enables us to service these big new markets like agriculture, forestry, the maritime and so on. And I think a couple of things that people -- when you look on the surface, there's a few companies, of course, that have satellites doing imagery. But basically, all the other players are tasked, so they task their satellites to take targets that customers ask for. That makes it inherently more like a one-to-one model because they give that imagery then to that customer. But it's rarely interest -- of interest to other players. Our scan is automatically of the whole Earth, and we don't provide -- we don't provide it exclusively to any one customer and we, in fact, we clip and ship it to multiple customers. And that means that we have this one-to-many model. So I think the summary sort of is that we've got this unique daily scan, which no one else has and can touch. And it would take many years for anyone to, and that's what services the most of the vertical markets that we're excited about and that we think most of our vertical markets today, but also where the growth areas are. And it would take many years for anyone to build such a system. So it's very hard to get to what we've built and almost impossible to catch up because we, of course, we're not going to sit on our hands there. But also, it is impossible to go back and get the archive. We now have 1,500 images for every point in the Earth's landmass and that is where all the training happens. So machine learning, if you ask any machine learning experts, they will say the most important thing is the data archive or the training data, right, that you can train your algorithms. We've got this stack of data. And as far as I'm aware, and I'm a physicist, so I thought a lot about this, you -- no one has invented the time machine yet to go back in time and erect satellite fleet to collect the data that they need to do the training. So that archive is super important for all the analytics that we're building now on top.

And just, if I can layer on top of that, you can see the difference in our business model also in the financials. So most of the other vendors or suppliers in the market calculate the gross margins, excluding the cost of the satellite. So excluding the depreciation and amortization of that significant investment. When you do that, for Planet, our gross margins would be roughly 75% today. So we are already a very high gross margin business. Our incremental cost to serve a new customer is extremely low. So our direct margins we calculate around 94% to 96%. When you look at others, they have much lower gross margins, which is indicative of really building bespoke solutions for a single customer, which, by definition, is going to be much more expensive value proposition and a much less scalable model. So I do think that technology is a huge differentiator for us. We have a substantial lead, but our business model is also a significant competitive differentiation.

Great. And Ashley staying with you, when will you be cash flow positive? And will the SPAC deal provide enough cash to fund the bids until its cash flow positive?

So that is the intention. So as I mentioned, we do have very high gross margins. So our investments are really in the building out of our commercial organization, so growing our feet on the street and then increasing our marketing spend as well as the investments that Will referenced in our software team. So really investing and hiring the engineering team to build that platform capability and enhanced analytics to expand our share of wallet with our customers and expand our market share. With those investments, we anticipate we'll need approximately $200 million to fund the company to cash flow breakeven and again, these are projections that are contingent on a lot of things happening, which we've described in the S-4. So I do encourage everybody to read and understand the assumptions underlying that model. But nonetheless, we anticipate that the capital that we've raised from the pipe investors should fund the company to cash flow breakeven, which leaves the capital that we receive from the SPAC that's in trust as effectively dry powder to enable us to have a stronger balance sheet, pay down some of the existing debt that's on the business. We have about $65 million of bank debt on the business as well as to enable us to have capital for consolidating in the industry as we see appropriate.

Right. Okay. How do you consolidate your place in the emergent and fast changing on the tech side, new space industry?

Well, this is a fun one. I mean, look, the space industry is undergoing a bit of a renaissance. And -- but like all the excitement in the rockets and the billionaires going up in the rockets and all this stuff. But I think the true excitement, the true upshot is all these new data sets, really like that's the excitement. And there's been about a 4x reduction in launch costs, but there's been about a thousandfold increase in capability performance of satellites. And that's a revolution, right? That's like the [ model T ] forward moment. This is more like the mainframe to desktop computer at the moment for IT. So aerospace is undertaking a big revolution. Of course, there's -- the Planet and SpaceX alone have about half the satellites in August. So it's producing lots of new satellites, right? And Planet and SpaceX are sort of pioneering the way in communications and Earth observation, respectively. And what's the main upshot of those satellite fleets. It's either producing or transporting massive new data sets about the Earth and that has huge implications for the Earth economy and for transitioning to a sustainable economy. And so people think of space in this renaissance, and they're thinking rockets and billionaires and the Mars -- the Moon and Mars. I think of the data economy, the Earth, and all the applications that are happening here. And I'm excited about the rockets too, but I think I'm even more excited about how this data is relevant to the Earth's economy. And I think that's the $1 trillion opportunity here, not the rockets. And so that's what we're going after.

Great. I think that's a great way to end it, very positive note. My thanks to our guests, Will and Ashley here today. This has been a great discussion. I promise we will get those questions over to Planets, and they can certainly respond. And thank you to the audience members and my co-host, Alexandra.

Thanks very much, folks. Thanks for having us. We're really excited to go public and thanks for having us on the show.

Thank you very much.

Thanks a lot. Signing out.