Planet Labs PBC (PL) Earnings Call Transcript & Summary

Hello, and welcome to Planet's Business Momentum Update press briefing. On the call today are Will Marshall, CEO; Ashley Johnson, President and CFO; and Martin Polak, Managing Director of Planet Labs, Germany, GmbH. They will share a brief update on the business, then take questions on the webcast console. [Operator Instructions] We encourage everyone to please reference the press releases issued ahead of today's call, which are available on Planet's website. Before we begin, we'd like to remind everyone that Planet team will make forward-looking statements related to future events or its financial outlook. These forward-looking statements are based on management's current outlook, plans, estimates, expectations and projections. The inclusion of such forward-looking information should not be regarded as a representation by Planet that future plans, estimates or expectations will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions as detailed in Planet's SEC filings, which can be found at www.sec.gov. Planet's actual results or performance may differ materially from those indicated by such forward-looking statements and plan and 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 unanticipated events. At this point, I'd now like to turn the call over to Will Marshall, Planet's CEO, Chairperson and Co-Founder. Over to you, Will.

Good morning. Thanks for joining. The changing global geopolitical landscape is accelerating the demand for sovereign access to geospatial services. And we are seeing unprecedented interest in our unique solutions. Governments worldwide are recognizing the timely, comprehensive earth data, coupled with advanced analytics, is critical for security and strategic decision-making. We believe that factual information about global events leads to better decision-making and ultimately increase peace and security. Today, we're proud to announce significant contract wins to underscore this growing demand and validate Planet's strategic direction. The first is a EUR 240 million partnership funded by the German Government, aimed at supporting European peace and security. Through this agreement, Planet will provide dedicated capacity and direct downlink services on Pelican satellites over specific European regions for several years. Separately, the contract includes access to PlanetScope and high-resolution data today, along with AI-enabled solutions for enhanced situation awareness and maritime domain awareness. While comparable in scope and scale to our deal with our partners in Japan, JSAT, announced in January, this new deal will uniquely leverage satellites that are already in plan and under development. Furthermore, it's our first customer partnership that leverages both our AI-enabled solutions and our new satellite services, demonstrating the complementary nature of these offerings. This capacity is also a direct response to a fundamental customer need, ensuring that they have timely intelligence needed to act decisively and maintain their strategic edge. We view Planet as uniquely equipped to meet the complex and pressing needs of governments, combining a proven track record of building, launching and operating hundreds of earth imaging satellite far more than any other company, efficient satellite manufacturing having pioneered agile aerospace leading to faster delivery as well as lower price points and trusted partnerships, because many of the countries we've been working with for years in both the case of Japan and Germany over 10 years, and trust is paramount in this partnership. We are incredibly proud of this new agreement and hope it can directly support Europe's efforts to rapidly enhance and bolster security for regional peace and stability. Now I'm going to hand over to Marty Pollack, the Managing Director of Planet Labs Germany, to speak a little bit more about our collaboration with Germany; and then Ashley Johnson, our President and CFO, to talk to the additional news we're showing today.

Thanks, Will. With the long history in Germany stretching back to 1998 when we first started our satellite business with the rapid eye satellites, Planet Labs, Germany GmbH, probably serves as our European headquarters. Our dedicated team here plays an essential role in Planet's global business from satellite constellation operations to software development, to driving our extensive commercial work across the EMEA region. We've had a long history of partnership with the German government from the development and operation of the initial rapid fleet that Planet came to acquire to our long-term partnership with the German Federal Cartographic Agency, BKG, that was extended earlier this year. Our new contract that Will spoke to before supported by the German government to enable broader peace and security efforts inside and around Europe and it underscores the unique value we offer for Germany's and Europe's long-term security interest. We are very proud to deliver the information and tools that European governments urgently need at this critical time. Building on Planet's recent landmark award from NATO, this affirms Planet's position as a trusted and essential partner for customers working to bolster their strategic capabilities. This commitment in Europe reflects a global need for enhanced daily monitoring, advanced indicators and warning tools as well as responsive space capabilities as governments navigate a complex and rapid deep evolving geopolitical landscape. Next, I'll pass to Ashley.

Thanks, Martin. I'd like to take a few minutes to highlight the strong demand for Planet's data and AI-enabled products. Since our most recent earnings call, Planet has secured 4 major awards for our new AI-enabled solutions with customers in the defense and intelligent sector. This includes a component of the EUR 240 million contract funded by Germany for AI-enabled solutions, which includes access to Planet data and our Maritime Demand Awareness solution. In addition, we are announcing 2 other contracts today, and expansion of our contract with the Defense Innovation Unit at the U.S. DoD in support of INDOPACOM for our global monitoring services capability and an expansion of our contract with the U.S. Navy for MDA. These add to our landmark award from NATO, which we announced a few weeks ago, and our large win with a European defense customer, which was announced on our last quarterly call. This momentum is a direct result of our focused strategy on delivering not just data but AI-enabled solutions that transform that data into immediate, actionable intelligence for better decision-making. In a world where threats evolve rapidly and often unexpectedly, our customers need a complete picture. A so-called peripheral vision that allows them to identify, understand and anticipate patterns of life and emerging threats across entire countries or regions. Our approach moves beyond traditional reconnaissance, which often focuses on known threats to help uncover the unknown unknowns. We're enabling proactive vigilance through automated anomaly detection and change analysis at an unprecedented scale. That is critical in this new world. Let me tell you a bit more about two of the solutions that we're providing, Maritime Demand Awareness or MDA and our Global Monitoring Service or GMS. MDA offers high frequency, broad area coverage powered by partner-enabled analytics for vessel identification and classification, Four of the five contracts I listed include MDA, which is seeing rapid adoption by our users. Customers can monitor vast open ocean areas every day. We partner with companies like SynMax to deliver to defense customers capabilities that previously didn't exist, comprehensive visibility across immense open ocean territories, enabling them to detect, classify and track the activities of all vessels. This provides the critical situational awareness necessary to address piracy, smuggling and other serious maritime safety and security risks. The other solution that we're providing that I want to highlight today is our Global Monitoring Service. This solution is designed to deliver critical intelligence to senior leaders of the armed forces responsible for strategic planning and decision-making. This high-impact monitoring service provides comprehensive daily insights into strategic locations worldwide. GMS is the foundation of our new award from NATO and the deal with the U.S. Defense Innovation Unit. GMS leverages Planet's daily scan, vast archive, analytics and partners to enable customers to detect, analyze and respond to critical changes across infrastructure, objects of interest and precursor activities. It's built on our PlanetScope data, enabling the high-frequency, complete coverage of entire countries or regions. When combined with advanced AI models, this creates a unique indications and warning service that is currently unparalleled in the market. GMS is designed to help customers look left of an event. In other words, identifying changes that happened prior to a significant event, empowering them to anticipate threats and respond proactively. We're excited to highlight that two of our customer wins featured today include this innovative capability. These AI-enabled solutions reinforce our position as an essential partner for governments, seeking to modernize their defense capabilities and gain a crucial awareness in their region. We are proud to provide these services to our defense and intelligence customers around the globe, furthering our mission to help advance peace and security on our planet. I'm now going to hand it back to Will to close before Q&A.

Thanks, Ashley. I just want to add that these announcements highlight the strong demand for AI-enabled solution and the value that that unlocks. To give a sense of scale, all 5 contracts Ashley discussed are either 8 figures of annual contract value today or if they were to extend at current levels, the annual or multiyear contracts will be 8-figure relationships. And with our announcement today with the support of Germany, we now have two 9-figure scale multiyear satellite services partnerships. We're committed to delivering exceptional value to these customers as well as going systematically after these markets. Last year, we focused our attention on 2 strategic business areas. First was AI-enabled solutions to set up our daily scan, in particular MDA and GMS. The second was satellite services to dedicated satellites for countries. Today's news shows strong momentum in both validating those strategic decisions. As I said at the start, the changing global geopolitical landscape has accelerated the demand for sovereign access to unique solutions like ours. Governments worldwide are recognizing a timely, comprehensive earth data are also critical to peace and security and Planet stands ready to support their mission. So thank you for your attention. We'll now take a few questions.

[Operator Instructions] Also joining us today from Planet's DC office is Robert Cardillo, Chief Strategist and Chairman of the Board for Planet Federal. I'll now read the first question. The first question comes from Kimberly Burke with Quality Space. Given the scale and timing of the new EUR 240 million German government contract, can you elaborate on how Planet is ramping up its satellite manufacturing capacity? Are you relying on in-house production, external partners or a combination? And do you anticipate any significant changes in your supply chain manufacturing footprint or CapEx to meet these obligations and timelines?

Sorry, firstly, for some of the choppiness in the initial bit of the call there. It seems like a lot of people have dialed in. I'm going to go for it for a second. But yes, I mean, just on the satellites, we're building them in-house, relying entirely on in-house production. Obviously, Planet has a long history of building and launching large numbers of earth imaging satellites. We've launched over 600 today on over 30 launches. So that's our kind of bread and butter, scaling up satellites to large numbers of fleet for large fleet sizes for these customers. That's our skill set. So that's very much why I think these sort of deals we're uniquely positioned for the scale and speed that we can deliver these kind of satellites, because we build them in-house. So no major changes. We continue to build them in-house here in San Francisco.

Next question comes from Kristine Liwag with Morgan Stanley. Congratulations on the contracts you won since the last earnings call. For international customers, particularly from NATO customers, can you discuss what their decision tree was to arrive to contracting with Planet Labs? What were their other options? And what was your value proposition?

Yes. Great question. Let me see if I can go on video now. Let's see. Hopefully, it won't break anything. So yes, so -- there was a competitive process with NATO just to start off. And I mean, again, what their situation here is that they're trying to look at broad areas to try and find new threats, and our daily scan is pretty much unique. We've only -- we're the only company that has a daily scan of the Earth's landmass and certain important waters. And so what they're leaning into is both maritime domain awareness in certain key water areas as well as land surveillance for new threats. And I guess, Planet's was really the only solution that can do that. Robert, have you got anything to add to that?

Yes, Will. I think it's useful if I frame it with my context in the U.S. government. And when I was running the National Geospatial Intelligence Agency, if I wanted to create new accesses from remote sensing, broadly speaking, it's a 10-year proposition or it was a 10-year proposition. Today, because of the history and the pedigree of performance that Will and Ashley have discussed, Planet Labs can create that agile technology much, much more quickly. And it's one of the reasons why I think the deal came together so quickly because we were able to respond to that demand signal given the insecurity that everyone has spoken about. So I think Planet is just here at the right time at the right place to deliver the security that the world needs.

Your next question is from Kimberly Burke with Quilty Space. Can you break down how much of the EUR 240 million is for new satellites or infrastructure versus recurring data services? And will any German or European partners be involved in manufacturing, operations or data delivery under this agreement?

Ashley, do you want to take this?

Sure. So as Will mentioned earlier, we're leveraging our existing in-plan satellites for this current contract -- for this new contract. And there is also a portion of the contract, as I mentioned, that is for data and AI-enabled solutions, and we are working with a number of partners for those AI-enabled solutions, some of which are European-based. So we aren't breaking down the specifics on the different components on the contract at this time.

Your next question comes from Tim Fernholz with Payload Space. Will this new contract and other recent international defense and intelligent contracts make up for the revenue that could be lost due to reported cuts to the NRO's EOCL program?

Well, maybe I can start and Ashley can add. But basically, firstly, we're proud of continuing to support with EOCL. As we announced also as part of this announcement today, we have extended that partnership at the levels that we had before through the end of October. And of course, we're proud of these new contracts as well, so they just add in. Ashley, anything to add?

No. I would just say, as we mentioned on our prior earnings call, it's a fluid budget environment in D.C. at this time. And so we were very pleased to see the extension of our existing contract. We continue to be proud to serve the NRO and the U.S. government more broadly. And as the circumstances evolve with FY '26 budget, we'll be sharing more information about how that program continues with Planet.

Your next question comes from Kristine Liwag with Morgan Stanley. European countries have highlighted their lack of space capabilities. This lack of indigenous capabilities in space is mirrored in the gap in defense as well. There is a push to invest and buy more from European companies. How do you think about your long-term sustaining power in keeping European customers?

Well, look, European countries are in a situation where the U.S. is pushing them to spend more on defense. They have a real security situation. They are responding and investing more in defense. And some of them are turning to some of the new technologies that can really enable them with this peripheral vision with the kind of urgency and speed that they need. As I mentioned in my earlier answers the question -- earlier question, Planet has an unprecedented history of launching over 600 satellites more than anyone else has in Earth observation and can do it quickly with the kind of speed that these countries need and match their urgency. So Planet is uniquely positioned. And then adding to that, we have a long history of working with the German government in particular, and we have our European headquarters there, as Martin mentioned, enabling us to do real substantive work there in Europe, a significant fraction of our teams, our processes, our satellite components and constellation all of -- a lot of our ground stations and other things that are in Europe. So we have a significant presence. We are a German company as well. And so we're looking forward to supporting this partnership in collaboration with Germany in this new phase.