Planet Labs (PL)

Earth imaging satellite company Planet Labs (NYSE:PL) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 41.1% year on year to $86.82 million. On top of that, next quarter’s revenue guidance ($89 million at the midpoint) was surprisingly good and 5.6% above what analysts were expecting. Its non-GAAP loss of $0 per share was significantly above analysts’ consensus estimates.

Company Overview

Pioneering the concept of "agile aerospace" with hundreds of small but powerful satellites, Planet Labs (NYSE:PL) operates the world's largest fleet of Earth observation satellites, capturing daily images of our planet to provide insights on deforestation, agriculture, and climate change.

A combination of increasing reliance on data and analytics across various industries and the desire for cost efficiency through outsourcing could mean that companies in this space gain. As functions such as payroll, HR, and credit risk assessment rely on more digitization, key players in the data & business process services industry could be increased demand. On the other hand, the sector faces headwinds from growing regulatory scrutiny on data privacy and security, with laws like GDPR and evolving U.S. regulations potentially limiting data collection and monetization strategies. Additionally, rising cyber threats pose risks to firms handling sensitive personal and financial information, creating outsized headline risk when things go wrong in this area.

Planet Labs competes with other satellite imagery providers including Maxar Technologies (NYSE:MAXR), BlackSky Technology (NYSE:BKSY), and Airbus's Intelligence business unit. The company also faces competition from drone-based imaging services and public satellite programs like NASA/USGS Landsat and the European Space Agency's Copernicus program.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $307.7 million in revenue over the past 12 months, Planet Labs is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand.

As you can see below, Planet Labs’s sales grew at an incredible 22.2% compounded annual growth rate over the last five years. This is a great starting point for our analysis because it shows Planet Labs’s demand was higher than many business services companies.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Planet Labs’s annualized revenue growth of 18.1% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Planet Labs’s backlog reached $900.4 million in the latest quarter and averaged 157% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for Planet Labs’s products and services but raises concerns about capacity constraints.

This quarter, Planet Labs reported magnificent year-on-year revenue growth of 41.1%, and its $86.82 million of revenue beat Wall Street’s estimates by 10.6%. Company management is currently guiding for a 34.3% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 23.6% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and indicates its newer products and services will catalyze better top-line performance.

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

Planet Labs’s high expenses have contributed to an average operating margin of negative 62.5% over the last five years. Unprofitable business services companies require extra attention because they could get caught swimming naked when the tide goes out.

On the plus side, Planet Labs’s operating margin rose by 66.7 percentage points over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability.

In Q4, Planet Labs generated a negative 41.5% operating margin.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Although Planet Labs’s full-year earnings are still negative, it reduced its losses and improved its EPS by 100% annually over the last four years. The next few quarters will be critical for assessing its long-term profitability. We hope to see an inflection point soon.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Planet Labs, its two-year annual EPS growth of 65.4% was lower than its four-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q4, Planet Labs reported adjusted EPS of $0, up from negative $0.08 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Planet Labs to perform poorly. Analysts forecast its full-year EPS of negative $0.03 will tumble to negative $0.06.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Planet Labs’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 22.4%, meaning it lit $22.38 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that Planet Labs’s margin expanded by 55.3 percentage points during that time. In light of its glaring cash burn, however, this improvement is a bucket of hot water in a cold ocean.

Businesses that maintain a cash surplus face reduced bankruptcy risk.

Planet Labs is a well-capitalized company with $640.1 million of cash and $15.6 million of debt on its balance sheet. This $624.5 million net cash position is 6.8% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was good to see Planet Labs beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 6.3% to $28.72 immediately after reporting.

Updated: March 19, 2026 at 11:37 PM EDT

Before making an investment decision, investors should account for Planet Labs’s business fundamentals and valuation in addition to what happened in the latest quarter.

Planet Labs is an amazing business ranking highly on our list. To begin with, its revenue growth was exceptional over the last five years, and its growth over the next 12 months is expected to accelerate. And while its projected EPS for the next year is lacking, its backlog growth has been marvelous. Additionally, Planet Labs’s rising cash profitability gives it more optionality.

Planet Labs’s EV-to-EBITDA ratio based on the next 12 months is 374.6x. You get what you pay for, and in this particular situation, Planet Labs’s higher valuation multiple is justified. We think it’s one of the best businesses in our coverage and deserves a spot in your portfolio.

Wall Street analysts have a consensus one-year price target of $24.71 on the company (compared to the current share price of $30.87).