Planet Labs shares soar after strong Q3 earnings, AI demand drives growth

Planet Labs shares jumped 25% after the satellite-imaging and AI-data company reported fiscal Q3 revenue of $81.3m, up 33% year-on-year and well above the $72.2m consensus, with non-GAAP EPS at breakeven (vs. an expected $0.03 loss) and adjusted EBITDA of $5.6m marking a fourth consecutive profitable quarter. The business showed strong subscription-driven visibility—97% of annual contract value was recurring, total RPO rose 361% to $672m and backlog climbed 216% to $734m—while YTD free cash flow was $55.2m and cash plus short-term investments increased 180% to $677.3m. Management guided Q4 revenue of $76–80m and full-year revenue of $297–301m, expects non-GAAP gross margins of 50–52% and modest adjusted EBITDA losses in Q4, and Wedbush reiterated an Outperform and raised its 12-month target to $20, citing robust demand at the intersection of space and AI—underscoring durable demand and improved financial flexibility despite near-term profitability variability.

Analysis

Planet Labs (PL) shares jumped 25% after reporting fiscal Q3 revenue of $81.3 million, up 33% year‑over‑year and beating the Street estimate of $72.2 million, with non‑GAAP EPS at breakeven versus an expected $0.03 loss and adjusted EBITDA of $5.6 million marking a fourth consecutive profitable quarter. Recurring revenue comprised 97% of total annual contract value, underscoring subscription-driven demand, while management highlighted momentum tied to AI-enabled applications.

Total remaining performance obligations rose 361% to $672 million and backlog climbed 216% to $734 million, providing material revenue visibility; year‑to‑date free cash flow was $55.2 million and cash plus short‑term investments increased 180% to $677.3 million, improving liquidity to fund growth and execution. CEO Will Marshall framed the quarter as progress on profitability goals amid accelerating revenue growth.

Management guided Q4 revenue of $76–80 million, non‑GAAP gross margins of 50–52% and modest adjusted EBITDA losses of $5–7 million, with full‑year fiscal 2026 revenue expected at $297–301 million, signaling near‑term margin variability despite larger RPO/backlog. Wedbush maintained an Outperform rating and raised its 12‑month target to $20, implying analyst conviction but leaving execution and RPO conversion as the key near‑term risks investors should monitor.

Key Decisions for Investors

• Consider initiating or adding a position supported by the 33% revenue beat, fourth consecutive adjusted EBITDA profitability and a materially strengthened cash position ($677.3m), but size exposure conservatively given Q4 adjusted EBITDA loss guidance of $5–7m
• Monitor RPO conversion and backlog monetization closely—RPO of $672m (+361%) and backlog of $734m (+216%) are the primary catalysts that must translate into reported revenue to justify re‑rating
• If already long, consider trimming some post‑earnings gains after the 25% rally and employ hedges (e.g., collars) or stop levels to protect against guidance‑driven volatility
• Track quarterly indicators of recurring revenue retention (97% of ACV recurring), sustained AI demand, and analyst revisions (Wedbush raised its target to $20) as triggers to increase conviction or re‑weight the position