Yesterday, Planet Labs PBC (PL) posted the type of earnings that often herald an important multi-quarter inflection.
Planet has multiple divisions focusing on Defense, Satellite and Commercial applications. We are most excited about its AI-leading capabilities that are powering what, we believe to be, a multi-quarter inflection, but also very likely, a multi-year inflection for the company.
Quick sidebar: Last year we saw Palantir queued up for its parabolic move when its Enterprise division saw its annual contract value (ACB) grow exponentially year-over-year in Q2. The significant rise in Palantir's Enterprise ACV signaled the powerful inflection forthcoming in the following quarters.
Take a look at PLTR's Q2 ACB growth below:
On the Planet Lab call, CEO Will Marshall, confirmed:
"Our backlog increased to $736.1 million at the end of the quarter, representing a year-over-year increase of 245%, which provides us with excellent visibility to revenue over the next 12 to 24 months and gives us confidence in our growth acceleration into FY '27."
For those investors who invest in free cash flow inflections, PL is executing on these cylinders, as well:
"We are delighted to share that with the strong Q2 performance, we are now expecting to be free cash flow positive this fiscal year, over a year ahead of our prior target and a major milestone for the company."
While the underlying revenue and EBITDA metrics were not as dynamic, PL’s beat and raise helped catalyze a significant inflection in demand for the stock.
Planet Labs sees Q3 Revenue of $71-$74M vs consensus $68.86M.
The company said, "For the third quarter of fiscal year 2026, ending October 31, 2025, Planet expects revenue to be in the range of approximately $71 million to $74 million. Non-GAAP gross margin is expected to be in the range of approximately 55% to 56%. Adjusted EBITDA loss is expected to be in the range of approximately ($4) million to $0 for the quarter. Capital expenditures are expected to be in the range of approximately $18 million and $24 million for the quarter."
PL will be pricing a $300M convert, most likely, tonight. We have started a 1/4 position here and plan to be full tomorrow, assuming it prices tonight.
When we look at the inflection in the volume yesterday on the multi-year weekly chart, PL looks poised to join the ranks of other big satellite winners and get institutionalized in a major way over the coming quarters.
We think All-Time Highs at $12.15 is a very viable first target on PL by early Q4:
Longer-term, we also see a potential move to the low $20s manifesting the next 3-4 quarters.
We have seen this movie before so many times in our career.
As a stock graduates to double-digits in price, powered by a strong fundamental inflection, it typically heralds a stair-stepped move higher thereafter. More often than not, the stock rises to the low teens, then the mid-teens, and eventually trends to $20 over multiple quarters.
This is the setup we see in PL.
Importantly, there is a huge runway for institutional ownership to inflect meaningfully in the coming quarters. To wit, there are only ~300 funds long PL.
So, PL finds itself at a similar point as RKLB 4 quarters ago. We have all subsequently watched RKLB go from $10-$50 – as these additional 200+ funds moved aggressively into the stock:
Looking ahead, Planet will be hosting an Investor Day on October 16. We expect more good news to come out then, which should help catalyze a further embrace by both the Sell Side and also new Buy Side investors.
We plan to size to a Top 5 position AFTER the convert prices.
Stop Loss: Time Stop of one quarter to give this Top Tier Inflection time to inflect further.
The foremost risk to our thesis is sluggish economic growth which would impact Planet’s near-term revenue ramp in its various verticals. Execution risk is also worth noting, specifically where PL does not become cash flow positive as quickly as Management has suggested.
In summary, however, we give PL a Conviction Level of 10. We think this is the beginning of a secondary short-term inflection and a longer-term multi-quarter rise for the stock.
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Disclosure: We are long PL stock and calls. We may change our positioning at a moment’s notice, without notifying you of any such moves.
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