Planet Labs PBC(PL) - 2024 Q4 - Annual Report

Part I Business Overview Planet Labs PBC operates the largest fleet of Earth observation satellites, providing daily, global satellite imagery and analytics - Planet's core business is imaging the entire Earth's landmass daily, creating a vast, non-replicable historical data archive used for analytics and machine learning[17] - The company generates revenue primarily through fixed-price subscription and usage-based licenses for its data and analytics, employing a "one-to-many" model where each image can be sold multiple times[21] - As of January 31, 2024, Planet had approximately 1,180 employees worldwide[84] Technology Platform and Products Planet's technology platform is built on agile aerospace, a proprietary big data archive, and advanced analytics capabilities, offering daily monitoring, on-demand tasking, and derived data products - The company's technology is built on three core competencies: "Agile Aerospace" for rapid satellite development, a proprietary Big Data archive growing daily since 2017, and a Platform with Analytics capabilities[48][49][51] - Planet offers several data and analytics products, including: - Planet Monitoring: Daily scans of the Earth's landmass at up to 3.5m resolution - Planet Tasking: High-resolution (up to 50cm) imagery of specific locations on demand - Derived Products: Analytics, Planetary Variables, APIs, Apps, and Basemaps that leverage AI and machine learning to extract insights from the data[55][56][57] Growth Strategy Planet's growth strategy focuses on scaling existing markets, expanding into new verticals, investing in data products, building an ecosystem, developing new sensors, and strategic acquisitions - Planet's growth strategy focuses on several key areas: - Scaling in Existing Verticals: Deepening penetration in markets like civil government, agriculture, and defense - Expansion into New Verticals: Targeting energy, finance, and insurance by making data more accessible to non-experts - Investment in Data Products: Enhancing machine learning and computer vision capabilities - Platform Ecosystem: Developing a user and partner ecosystem to build solutions on Planet's platform - New Sensors & Data Sets: Strategically investing in new sensors to capture valuable new data - Strategic Acquisitions: Continuing to evaluate acquisitions to accelerate growth[71][72][73] - The company has a history of strategic acquisitions, including Sinergise (August 2023), Salo Sciences (January 2023), VanderSat (December 2021), and Terra Bella from Google (April 2017)[77] Competition The satellite imagery industry is characterized by competition from both established incumbents and next-generation players, alongside data analytics platforms - The satellite imagery industry is divided between incumbents like Airbus and Maxar, and next-generation players such as BlackSky and Satellogic; Planet also competes with data analytics platforms that use geospatial data from various sources[78][80] Risk Factors The company faces significant risks including a history of net losses, intense competition from both commercial and government entities, and reliance on the successful launch and operation of its satellite constellation - The company has a history of operating losses, reporting net losses of $140.5 million, $162.0 million, and $137.1 million for fiscal years 2024, 2023, and 2022, respectively, with an accumulated deficit of $1,079.8 million as of January 31, 2024[105] - The business is highly dependent on the successful production, launch, and operation of its satellites, which are subject to risks like launch failures, in-orbit malfunctions, and interference[124][126][127] - A significant portion of revenue comes from government contracts, which are subject to unique risks such as termination for convenience, budget uncertainties, and stringent regulatory requirements (e.g., FAR)[137][144] - The multi-class stock structure concentrates over 62% of voting power with the Planet Founders, limiting other investors' ability to influence major corporate decisions[267] - As a public benefit corporation, the company is required to balance stockholder interests with its public benefit purpose, which could lead to decisions that do not maximize short-term financial results and may increase the risk of derivative litigation[283][289][293] Cybersecurity Planet has implemented a comprehensive cybersecurity risk management program covering its corporate, space, data pipeline, and customer delivery domains - The company employs a cross-functional approach to manage cybersecurity threats across four interdependent domains: corporate security, space segment, data pipeline, and customer delivery[302] - A dedicated security team, led by a Chief Security Officer, is responsible for risk assessments and managing security controls[304] - The Board of Directors' Audit Committee provides oversight of cybersecurity risks, receiving periodic reports from management[308] Properties The company's main facilities are leased, with its corporate headquarters in San Francisco and European offices supporting various functions - The corporate headquarters in San Francisco, California, spans approximately 71,280 square feet and houses all satellite manufacturing, testing, and R&D[311] - European offices are located in Berlin (Germany), Haarlem (Netherlands), Ljubljana (Slovenia), and Graz (Austria), supporting sales, software engineering, and satellite operations[311] Part II Market for Common Equity and Related Matters Planet's Class A common stock and warrants are traded on the New York Stock Exchange, and the company does not anticipate paying cash dividends in the foreseeable future - The company's Class A common stock and warrants are listed on the NYSE under the trading symbols "PL" and "PL WS"[316] - As of March 21, 2024, there were 103 holders of record for Class A common stock, 2 for Class B common stock, and 4 for warrants[317] - The company has never declared or paid cash dividends and does not intend to in the foreseeable future[318] Stock Performance Comparison (December 7, 2021 - January 31, 2024) | Date | Planet Labs PBC Class A | NASDAQ Composite | NASDAQ Computer | | :--- | :--- | :--- | :--- | | 12/7/21 | $100.00 | $100.00 | $100.00 | | 1/31/22 | $56.43 | $91.72 | $93.59 | | 1/31/23 | $45.79 | $75.25 | $73.74 | | 1/31/24 | $20.91 | $99.33 | $110.07 | Management's Discussion and Analysis (MD&A) In fiscal year 2024, Planet's revenue grew 15% to $220.7 million, driven by customer growth and expansion, particularly in government sectors, while reporting a reduced net loss Recent Developments Recent developments include the acquisition of Sinergise and a strategic headcount reduction to enhance operational efficiency - In August 2023, the company acquired Sinergise, a cloud-based geo-spatial analysis business, for approximately $40.0 million in cash, stock, and escrowed funds[342][605] - In August 2023, Planet implemented a headcount reduction of approximately 10% to focus on growth opportunities and operational efficiency, resulting in a $7.4 million charge for termination benefits[344][345] Key Operational and Business Metrics Key operational metrics for fiscal year 2024 show changes in Net Dollar Retention Rate, customer count, recurring ACV, and capital expenditures Key Metrics (Fiscal Year Ended Jan 31) | Metric | FY 2024 | FY 2023 | Change Driver | | :--- | :--- | :--- | :--- | | Net Dollar Retention Rate | 101% | 131% | Decrease due to large prior-year government expansions and current-year renewal delays | | EoP Customer Count | 1,018 | 882 | Increased demand for data | | Percent of Recurring ACV | 93% | 94% | Remained stable | | Capital Expenditures as % of Revenue | 19% | 7% | Increased investment in next-gen Pelican satellites | Results of Operations (FY2024 vs. FY2023) Fiscal year 2024 results show a 15% revenue increase and a reduced net loss, driven by customer growth and contract expansions, despite higher costs of revenue Consolidated Results of Operations (in thousands) | Line Item | FY 2024 | FY 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $220,696 | $191,256 | $29,440 | 15% | | Cost of revenue | $107,746 | $97,248 | $10,498 | 11% | | Gross profit | $112,950 | $94,008 | $18,942 | 20% | | Research and development | $116,339 | $110,916 | $5,423 | 5% | | Sales and marketing | $86,304 | $78,020 | $8,284 | 11% | | General and administrative | $80,055 | $80,747 | ($692) | (1)% | | Loss from operations | ($169,748) | ($175,675) | $5,927 | (3)% | | Net loss | ($140,509) | ($161,966) | $21,457 | (13)% | - Revenue increased by 15% primarily due to a $17.6 million increase from customer growth (including the Sinergise acquisition) and an $11.8 million net expansion of existing customer contracts, mainly in the Civil Government and Defense sectors[380] - Cost of revenue increased 11% due to higher hosting costs, employee-related costs (including severance), and depreciation; depreciation expense increased by $7.0 million due to changes in the estimated useful lives of certain high-resolution satellites[381][382][383] Non-GAAP Financial Measures Non-GAAP financial measures provide insights into adjusted EBITDA and backlog, offering a clearer view of operational performance and future revenue potential Adjusted EBITDA Reconciliation (in thousands) | | Year Ended Jan 31, 2024 | Year Ended Jan 31, 2023 | | :--- | :--- | :--- | | Net loss | $(140,509) | $(161,966) | | Adjustments (Interest, Tax, D&A, etc.) | $85,225 | $105,165 | | Adjusted EBITDA | $(55,284) | $(56,801) | Backlog Reconciliation (in thousands) | | Year Ended Jan 31, 2024 | Year Ended Jan 31, 2023 | | :--- | :--- | :--- | | Remaining performance obligations | $132,571 | $151,976 | | Cancellable amount of contract value | $109,821 | $127,667 | | Backlog | $242,392 | $279,643 | Liquidity and Capital Resources The company's liquidity is supported by cash and short-term investments, with cash flow analysis detailing operational, investing, and financing activities - As of January 31, 2024, the company had $83.9 million in cash and cash equivalents and $215.0 million in highly liquid short-term investments[406] Summary of Cash Flows (in thousands) | Activity | Year Ended Jan 31, 2024 | Year Ended Jan 31, 2023 | | :--- | :--- | :--- | | Net cash used in Operating activities | $(50,711) | $(73,933) | | Net cash used in Investing activities | $(33,586) | $(242,263) | | Net cash (used in) provided by Financing activities | $(1,598) | $7,860 | Critical Accounting Policies and Estimates Critical accounting policies involve significant judgments in revenue recognition, stock-based compensation, asset valuation, business combinations, and income taxes, impacting financial reporting - Key critical accounting policies involve significant judgments and estimates, including Revenue Recognition (identifying performance obligations and determining standalone selling price), Stock-Based Compensation, valuation of Warrant Liabilities, Property and Equipment (especially satellite useful lives), Business Combinations, Goodwill, and Income Taxes[418][494] - For revenue recognition, the company identifies access to its platform and the ability to download imagery as two separate performance obligations, allocating the contract price accordingly; revenue for access is recognized ratably, while download revenue is recognized based on usage or ratably if unlimited[422][525] - During fiscal year 2024, the company revised the estimated useful lives of certain high-resolution satellites, resulting in a prospective increase of $7.0 million in depreciation expense[442][514] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from foreign currency fluctuations, interest rate changes, and inflation, with foreign currency risk being notable due to international revenue - Approximately 24% of revenue for the fiscal year ended January 31, 2024, was denominated in foreign currencies, primarily the Euro and Norwegian Krone, exposing the company to foreign currency exchange risk[453] - The company holds a portfolio of cash, cash equivalents, and short-term investments; due to the short-term nature of these investments, management believes a 100 basis point change in interest rates would not have a material effect on the portfolio's fair value[455] Financial Statements and Supplementary Data This section contains the audited consolidated financial statements for the fiscal year ended January 31, 2024, including auditor's reports, balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, with accompanying notes detailing accounting policies and transactions Consolidated Balance Sheets The consolidated balance sheets present the company's financial position, detailing assets, liabilities, and equity as of January 31, 2024, and 2023 Consolidated Balance Sheet Highlights (in thousands) | | Jan 31, 2024 | Jan 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $83,866 | $181,892 | | Short-term investments | $215,041 | $226,868 | | Property and equipment, net | $113,429 | $108,091 | | Goodwill | $136,256 | $112,748 | | Total Assets | $701,997 | $752,723 | | Liabilities & Equity | | | | Deferred revenue (current & non-current) | $77,620 | $54,782 | | Public and private placement warrant liabilities | $2,961 | $16,670 | | Total Liabilities | $183,979 | $176,619 | | Total Stockholders' Equity | $518,018 | $576,104 | Consolidated Statements of Operations The consolidated statements of operations summarize the company's financial performance, including revenue, gross profit, and net loss for fiscal years 2024, 2023, and 2022 Consolidated Statements of Operations (in thousands) | | FY 2024 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | | Revenue | $220,696 | $191,256 | $131,209 | | Gross profit | $112,950 | $94,008 | $48,222 | | Loss from operations | $(169,748) | $(175,675) | $(128,051) | | Net loss | $(140,509) | $(161,966) | $(137,124) | | Net loss per share | $(0.50) | $(0.61) | $(1.72) | Consolidated Statements of Cash Flows The consolidated statements of cash flows detail the inflows and outflows of cash from operating, investing, and financing activities for fiscal years 2024, 2023, and 2022 Consolidated Statements of Cash Flows (in thousands) | | FY 2024 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(50,711) | $(73,933) | $(42,211) | | Net cash used in investing activities | $(33,586) | $(242,263) | $(25,149) | | Net cash (used in) provided by financing activities | $(1,598) | $7,860 | $489,184 | Notes to Consolidated Financial Statements Notes to the consolidated financial statements provide detailed information on acquisitions, revenue disaggregation, commitments, related party transactions, and stock-based compensation - Acquisitions (Note 6): The company acquired Sinergise on August 4, 2023, for total consideration of approximately $40.0 million; it also acquired Salo Sciences on January 3, 2023, for total consideration of $11.8 million, including contingent consideration[604][614] - Revenue Disaggregation (Note 4): For FY2024, revenue from the United States was $98.7 million, while revenue from the rest of the world was $122.0 million[587] - Commitments (Note 11): The company has minimum purchase commitments for hosting services from Google totaling $127.5 million from fiscal 2025 through 2028[652] - Related Party Transactions (Note 15): Google, a holder of over 10% of Class A common stock, is a significant customer and vendor; in FY2024, Planet recognized $1.3 million in revenue from Google and recorded $28.7 million in hosting expense from Google[696][697][698][699] - Stock-Based Compensation (Note 16): As of January 31, 2024, total unrecognized compensation cost related to unvested RSUs was $98.9 million, expected to be recognized over approximately 2.8 years[712] Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of January 31, 2024 - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective as of January 31, 2024[732] - Management concluded that internal control over financial reporting was effective as of January 31, 2024, based on the COSO 2013 framework; the independent auditor, Ernst & Young LLP, issued an unqualified opinion on the effectiveness of internal control[334][469]