Salo Sciencesの技術的マイルストーンの支払いに関する偶発的対価負債の公正価値は、各マイルストーンの確率加重支払いの現在価値に基づいて決定されます。公正価値測定で使用される重要な非可観測入力は、技術的マイルストーン基準を達成する確率の管理の見積もりと割引率です。会社は、2024年10月31日までの9か月間において、2つの技術的マイルストーン基準が達成されたと判断しました。
2024年8月19日にデラウェア州 Chancellor 裁判所において、dMY IV およびその会社の元役員および取締役に対して株主集団訴訟が提起されました。訴状は、個々の被告が dMY IV 株主に対するさまざまな信託義務を違反し、会社がその違反を助長したと主張しています。この事件は、ビジネス統合のための償還期限前に当該株式を保有し、株式を償還する権利を行使せず、かつ傷害を受けたとされる dMY IV クラス A 普通株式の保有者の代表として提起されています。被告は2024年11月12日に訴状の却下を求める申し立てを行いました。
会社は四半期ごとに税務ポジションを評価し、それに応じて見積もりを修正します。未認識の税務利益の総額は$9.8 百万ドル及び$8.7 2024年10月31日および2024年1月31日時点でそれぞれ百万ドルでした。未認識の税務利益が認識された場合、繰延税金資産に対する評価引当金のため、実効税率には影響しません。会社は、 no 2024年10月31日および2024年1月31日時点で利息および罰金の引当が必要であると判断しました。 no そのような費用は、表示された期間に発生しました。
To increase customer retention and expansion of revenue from existing customers, we are making a number of investments in our operations. Customer retention and expansion is driven by the speed with which our customers realize the value of our data once they become customers, our ability to cross-sell our different products to our existing customers and our ability to offer new products to our customers. Therefore, to increase customer retention and sales to existing customers, we have invested in our customer success function, continuous improvements to our existing data, and the software tools and analytic tools that make our data easier to consume. As a result of such investments, we anticipate our cost of revenue, operating expenses, and capital expenditures may generally increase as we continue to prioritize customer retention and expansion and consequently, we are likely to experience losses in the near term, delaying our ability to achieve profitability and adversely affecting cash flows.
Developing New Sensors and Data Sets
We plan to make strategic investments in building new sensors to capture additional data sets from space. As we grow our customer base and the use cases we can address, we believe we can better understand what additional data sets our customers are eager to access and therefore which sensors might enable us to capture additional data that is valuable to such customers. By leveraging our agile aerospace approach to space systems, we believe we are well-positioned to introduce new Earth observation sensors into orbit to capture new types of data with greater capital efficiency and speed than other satellite data providers. Having these capabilities can deepen our value proposition to customers and help us both acquire new customers and expand our offering to existing customers.
Investment Decisions
We regularly review our existing customers and target markets to determine where we should invest in our product and technology roadmap, both for our space systems engineering to enable new geospatial coverage models, as well as our software engineering focused on providing sophisticated analytics models and tools to service an expanding set of markets and use cases. Our financial performance relies heavily on effective balance between driving continued growth, maintaining technology leadership, and improving margins across the business.
Seasonality
We have experienced, and expect to continue to experience, seasonality in our business and fluctuations in our operating results due to customer behavior, buying patterns and usage-based contracts. For example, we typically have customers who increase their usage of our data services when they need more frequent data monitoring over broader areas during peak agricultural seasons, during natural disasters or other global events, or when commodity prices are at certain levels. These customers may expand their usage and then subsequently scale back. We believe that the seasonal trends that we have experienced in the past may occur in the future. To the extent that we experience seasonality, it may impact our operating results and financial metrics, as well as our ability to forecast future operating results and financial metrics. Additionally, when we introduce new products to the market, we may not have sufficient experience in selling certain products to determine if demand for these products are or will be subject to material seasonality.
Key Operational and Business Metrics
In addition to the measures presented in our consolidated financial statements, we use the following key operational and business metrics to evaluate our business, measure our performance, develop financial forecasts, and make strategic decisions.
In connection with the calculation of several of the key operational and business metrics we utilize, we calculate Annual Contract Value (“ACV”) for contracts of one year or greater as the total amount of value that a customer has contracted to pay for the most recent 12 month period for the contract, excluding customers that are exclusively Sentinel Hub self-service paying users. For short-term contracts (contracts less than 12 months), ACV is equal to total contract value.
We also calculate EoP ACV Book of Business in connection with the calculation of several of the key operational and business metrics we utilize. We define EoP ACV Book of Business as the sum of the ACV of all contracts that are active on the last day of the period pursuant to the effective dates and end dates of such contracts, excluding customers that are exclusively Sentinel Hub self-service paying users. Active contracts exclude any contract that has been canceled, expired prior to the last day of the period without renewing, or for any other reason is not expected to generate revenue in the subsequent period. For contracts ending on the last day of the period, the ACV is either updated to reflect the ACV of the renewed contract or, if the contract has not yet renewed or extended, the ACV is excluded from the EoP ACV Book of Business. We do not annualize short-term contracts in calculating our EoP ACV Book of Business. We calculate the ACV of usage-based contracts based on the committed contracted revenue or the revenue achieved on the usage-based contract in the prior 12-month period.
Net Dollar Retention Rate
Nine Months Ended October 31,
2024
2023
Net Dollar Retention Rate
104
%
104
%
We define Net Dollar Retention Rate as the percentage of ACV generated by existing customers in a given period as compared to the ACV of all contracts at the beginning of the fiscal year from the same set of existing customers. We define existing customers as customers with an active contract with Planet. We believe our Net Dollar Retention Rate is a useful metric for investors as it can be used to measure our ability to retain and grow revenue generated from our existing customers, on which our ability to drive long-term growth and profitability is, in part, dependent. We use Net Dollar Retention Rate to assess customer adoption of new products, inform opportunities to make improvements across our products, identify opportunities to improve operations, and manage go to market functions, as well as to understand how much future growth may come from cross-selling and up-selling customers. Management applies judgment in determining the value of active contracts in a given period, as set forth in the definition of ACV above. Net Dollar Retention Rate remained flat at 104% for both the nine months ended October 31, 2024 and 2023. This was primarily due to expansion of a large international contract, offset by delay in renewal of a certain government contract.
Net Dollar Retention Rate including Winbacks
Nine Months Ended October 31,
2024
2023
Net Dollar Retention Rate including Winbacks
105
%
105
%
We assess two metrics for net dollar retention—Net Dollar Retention Rate, as described above, and Net Dollar Retention Rate including winbacks. A winback is a previously existing customer that was inactive at the start of the measurement period but has reactivated during the measurement period. The reactivation period must be within 24 months from the last active contract with the customer; otherwise, the customer is counted as a new customer and therefore excluded from the retention rate metrics. We define Net Dollar Retention Rate including winbacks as the percentage of ACV generated by existing customers and winbacks in a given period as compared to the ACV of all contracts at the beginning of the fiscal year from the same set of existing customers. We believe this metric is useful to investors as it captures the value of customer contracts that resume business with Planet after being inactive and thereby provides a quantification of Planet’s ability to recapture lost business. Management uses this metric to understand the adoption of our products and long-term customer retention, as well as the success of marketing campaigns and sales initiatives in re-engaging inactive customers. Beyond the judgments underlying managements’ calculation of Net Dollar Retention Rate set forth above, there are no additional assumptions or estimates made in connection with Net Dollar Retention Rate including winbacks. Net Dollar Retention Rate including winbacks remained flat at 105% for both the nine months ended October 31, 2024 and 2023. This was primarily due to expansion with a large international contract, offset by delay in renewal of a certain government contract.
We define EoP Customer Count as the total count of all existing customers at the end of the period excluding customers that are exclusively Sentinel Hub self-service paying users. For EoP Customer Count, we define existing customers as customers with an active contract with us at the end of the reported period. For the purpose of this metric, we define a customer as a distinct entity that uses our data or services. We sell directly to customers, as well as indirectly through our partner network. If a partner does not provide the end customer’s name, then the partner is reported as the customer. Each customer, regardless of the number of active opportunities with us, is counted only once. For example, if a customer utilizes multiple products of Planet, we only count that customer once for purposes of EoP Customer Count. A customer with multiple divisions, segments, or subsidiaries are also counted as a single unique customer based on the parent organization or parent account. For EoP Customer Count, we do not include users that only utilize our self-service Sentinel Hub web based ordering system, which we acquired in August 2023, and which offers standard starter packages on a monthly or annual basis. We believe excluding these users from EoP Customer Count creates a more useful metric, as we view the Sentinel Hub starter packages as entry points for smaller accounts, leading to broader awareness of our solutions throughout their networks and organizations. We believe EoP Customer Count is a useful metric for investors and management to track as it is an important indicator of the broader adoption of our platform and is a measure of our success in growing our market presence and penetration. Management applies judgment as to which customers are deemed to have an active contract in a period, as well as whether a customer is a distinct entity that uses our data or services. The EoP Customer Count increased to 1,015 as of October 31, 2024, as compared to 976 as of October 31, 2023. The increase was primarily attributable to the increased demand for our data.
Percent of Recurring ACV
As of October 31,
2024
2023
Percent of Recurring ACV
97
%
94
%
Percent of Recurring ACV is the portion of the total EoP ACV Book of Business that is recurring in nature. We define EoP ACV Book of Business as the sum of the ACV of all contracts that are active on the last day of the period pursuant to the effective dates and end dates of such contracts, excluding customers that are exclusively Sentinel Hub self-service paying users. We define Percent of Recurring ACV as the dollar value of all data subscription contracts and the committed portion of usage-based contracts (excluding customers that are exclusively Sentinel Hub self-service paying users) divided by the total dollar value of all contracts in our EoP ACV Book of Business. We believe Percent of Recurring ACV is useful to investors to better understand how much of our revenue is from customers that have the potential to renew their contracts over multiple years rather than being one-time in nature. We track Percent of Recurring ACV to inform estimates for the future revenue growth potential of our business and improve the predictability of our financial results. There are no significant estimates underlying management’s calculation of Percent of Recurring ACV, but management applies judgment as to which customers have an active contract at a period end for the purpose of determining EoP ACV Book of Business, which is used as part of the calculation of Percent of Recurring ACV. Percent of Recurring ACV increased to 97% for the six months ended October 31, 2024, as compared to 94% for the six months ended October 31, 2023. The increase was primarily attributable to expansions on existing contracts in the Government and Commercial Verticals.
Capital Expenditures as a Percentage of Revenue
Three Months Ended October 31,
Nine Months Ended October 31,
2024
2023
2024
2023
Capital Expenditures as Percentage of Revenue
14
%
16
%
20
%
20
%
We define capital expenditures as purchases of property and equipment plus capitalized internally developed software development costs, which are included in our statements of cash flows from investing activities. We define Capital Expenditures as a Percentage of Revenue as the total amount of capital expenditures divided by total revenue in the reported period. Capital Expenditures as a Percentage of Revenue is a performance measure that we use to evaluate the appropriate level of capital expenditures needed to support demand for our data services and related revenue, and to provide a comparable view of our performance relative to other earth observation companies, which may invest significantly greater amounts in their satellites to deliver their data to customers. We use an agile space systems strategy, which means we invest in a larger number of significantly lower cost satellites and software
infrastructure to automate the management of the satellites and to deliver our data to clients. As a result of our strategy and our business model, our capital expenditures may be more similar to software companies with large data center infrastructure costs. Therefore, we believe it is important to look at our level of capital expenditure investments relative to revenue when evaluating our performance relative to other earth observation companies or to other software and data companies with significant data center infrastructure investment requirements. We believe Capital Expenditures as a Percentage of Revenue is a useful metric for investors because it provides visibility to the level of capital expenditures required to operate our business and our relative capital efficiency. Capital Expenditures as a Percentage of Revenue decreased to 14% for the three months ended October 31, 2024, as compared to 16% for the three months ended October 31, 2023. The decrease was primarily attributable to an increase in revenue primarily driven by growth in the Civil Government and Defense and Intelligence Verticals. Capital Expenditures as a Percentage of Revenue remained flat at 20% for both the nine months ended October 31, 2024 and 2023.
Components of Results of Operations
Revenue
We derive revenue principally from licensing rights to use our imagery that is delivered digitally through our online platform in addition to providing related services. Imagery licensing agreements vary by contract, but generally have annual or multi-year contractual terms. The data licenses are generally purchased via a fixed price contract on a subscription or usage basis, whereby a customer pays for access to our imagery or derived imagery data, delivered by Planet or through partners, which may be downloaded over a specific period of time, or, less frequently, on a transactional basis, whereby the customer pays for individual content licenses.
We also provide a small amount of other services to customers, including professional services such as training, analytical services, and other value-added activities related to our imagery, data and technology. These revenues are recognized as the services are rendered, on a proportional performance basis for fixed price contracts or ratably over the contract term for subscription professional services and analytics contracts. Training revenues are recognized as the services are performed.
Cost of Revenue
Cost of revenue consists of employee-related costs of performing account and data provisioning, customer support, satellite and engineering operations, as well as the costs of operating and retrieving information from the satellites, processing and storing the data retrieved, third party imagery expenses, depreciation of satellites and ground stations, amortization of acquired intangibles and amortization of capitalized internal-use software related to creating imagery provided to customers. Employee-related costs include salaries, benefits, bonuses and stock-based compensation. To a lesser extent, cost of revenue includes costs from professional services, including costs paid to subcontractors, solution partners and certain third-party fees.
We expect cost of revenue to continue to increase as we invest in our delivery organization, incorporate third-party products into our solutions and introduce future product sets that may require higher compute capacity. As we continue to grow our subscription revenue contracts and increase the revenue associated with our analytic capabilities, we anticipate further economies of scale on our satellites and other infrastructure costs as we incur lower marginal cost with each new customer we add to our platform.
Research and Development
Research and development expenses primarily include personnel related expenses for employees and consultants, hardware costs, supplies costs, contractor fees and administrative expenses. Employee-related costs include salaries, benefits, bonuses and stock-based compensation. Expenses classified as research and development are expensed as incurred and attributable to advancing technology research, platform and infrastructure development and the research and development of new product iterations. Funding for our performance of research and development services under certain arrangements are recognized as a reduction of research and development expenses based on a cost incurred method.
We continue to iterate on the design of our satellites and the capabilities of our automated operations to optimize for efficiency and technical capability of each satellite. Costs associated with satellite and other space related research and development activities are expensed as incurred.
We intend to continue to invest in our software platform development, machine learning and analytic tools and applications and new satellite technologies for both the satellite fleet operations and data collection capabilities to drive incremental value to our existing customers and to enable us to expand our traction in emerging markets and with new customers. As a result of the foregoing, research and development expenditures may increase in future periods.
Sales and marketing expenses primarily include costs incurred to market and distribute our products. Such costs include expenses related to advertising and conferences, sales commissions, salaries, benefits and stock-based compensation for our sales and marketing personnel and sales office expenses. Sales and marketing expenses also include fees for professional and consulting services principally consisting of public relations and independent contractor expenses. Sales and marketing costs are expensed as incurred.
We intend to continue to invest in our selling and marketing capabilities in the future and may increase this expense in future periods as we look to upsell new product features and expand into new market verticals. Selling and marketing expenses as a percentage of total revenue may fluctuate from period to period based on total revenue and the timing of our investments.
General and Administrative
General and administrative expenses include personnel-related expenses and facilities-related costs primarily for our executive, finance, accounting, legal and human resources functions. General and administrative expenses also include fees for professional services principally consisting of legal, audit, tax, and insurance, as well as executive management expenses. General and administrative costs are expensed as incurred.
We expect to incur additional general and administrative expenses as a result of operating as a public company, including expenses related to compliance and reporting obligations of public companies, and increased costs for insurance, investor relations, and professional services. As the company grows, our general and administrative expenses may increase in future periods and vary from period to period as a percentage of revenue, but we expect to realize operating scale with respect to these expenses over time as we grow our revenue.
Interest Income
Interest income primarily consists of interest earned on our cash, cash equivalents and short-term investments. Our cash equivalent and short-term investment portfolio is invested with a goal of preserving our access to capital, and generally consists of money market funds, commercial paper, corporate debt securities and U.S. government and U.S. government agency debt securities.
Change in Fair Value of Warrant Liabilities
The change in fair value of warrant liabilities consists of the change in fair value of the public and private placement warrant liabilities. We expect to incur other incremental income or expense for fair value adjustments resulting from warrant liabilities that remain outstanding.
Other Income, net
Other income, net, primarily consists of net gains or losses on foreign currency.
Provision for Income Taxes
Our income tax provision consists of an estimate for U.S. federal and state income taxes, as well as those foreign jurisdictions where we have business operations, based on enacted tax rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We believe that it is more likely than not that the majority of the U.S. and foreign deferred tax assets will not be realized. Accordingly, we recorded a valuation allowance against our deferred tax assets in these jurisdictions.
Three months ended October 31, 2024 compared to three months ended October 31, 2023
The following table sets forth a summary of our consolidated results of operations for the interim periods indicated and the changes between such periods.
Three Months Ended October 31,
$
%
(in thousands, except percentages)
2024
2023
Change
Change
Revenue
$
61,266
$
55,380
$
5,886
11
%
Cost of revenue
23,749
29,350
(5,601)
(19)
%
Gross profit
37,517
26,030
11,487
44
%
Operating expenses
Research and development
25,216
33,002
(7,786)
(24)
%
Sales and marketing
16,795
20,774
(3,979)
(19)
%
General and administrative
18,114
20,112
(1,998)
(10)
%
Total operating expenses
60,125
73,888
(13,763)
(19)
%
Loss from operations
(22,608)
(47,858)
25,250
(53)
%
Interest income
2,414
3,445
(1,031)
(30)
%
Change in fair value of warrant liabilities
198
6,833
(6,635)
(97)
%
Other income (expense), net
(60)
(69)
9
(13)
%
Total other income, net
2,552
10,209
(7,657)
(75)
%
Loss before provision for income taxes
(20,056)
(37,649)
17,593
(47)
%
Provision for income taxes
25
355
(330)
(93)
%
Net loss
$
(20,081)
$
(38,004)
$
17,923
(47)
%
Revenue
Revenue increased $5.9 million, or 11%, to $61.3 million for the three months ended October 31, 2024 from $55.4 million for the three months ended October 31, 2023. The increase was primarily due to a $6.2 million increase from total customer growth worldwide, which was partially offset by a $0.3 million reduction of existing customer contracts primarily in the Commercial Vertical. EoP Customer Count increased approximately 4% to 1,015 as of October 31, 2024 from 976 as of October 31, 2023. The increase in revenue from new customers was primarily driven by growth in the Civil Government and Defense and Intelligence Verticals.
Cost of Revenue
Cost of revenue decreased $5.6 million, or 19%, to $23.7 million for the three months ended October 31, 2024, from $29.4 million for the three months ended October 31, 2023. The decrease was primarily due to a $4.7 million decrease in depreciation expense, which was primarily due to certain high resolution satellites that have fully depreciated. The decrease was also partially due to a $1.1 million decrease in employee-related costs due to reduced headcount and a $1.0 million decrease in hosting costs. These decreases were partially offset by a $1.2 million increase in costs paid to solution partners and subcontractors.
Research and Development
Research and development expenses decreased $7.8 million, or 24%, to $25.2 million for the three months ended October 31, 2024, from $33.0 million for the three months ended October 31, 2023. The decrease was primarily due to a $3.7 million decrease in purchases of material utilized for research and development activities and a $3.3 million decrease in severance and termination benefits charges associated with the 2023 headcount reduction. The decrease was also partially due to a $2.6 million decrease in employee-related costs due to reduced headcount and a $1.9 million decrease in non-recurring expenses related to transaction bonuses paid to Sinergise employees, which was allocated from the purchase consideration we paid in connection with the Sinergise acquisition in August 2023. These decreases were partially offset by a $2.3 million decrease in funding recognized for our research and development arrangements, and a $1.7 million increase in launch provider costs associated with the launch of a satellite classified as experimental.
Sales and marketing expenses decreased $4.0 million, or 19%, to $16.8 million, for the three months ended October 31, 2024, from $20.8 million for the three months ended October 31, 2023. The decrease was primarily due to a $2.0 million decrease in employee-related costs due to reduced headcount and a $1.9 million decrease in severance and termination benefits charges associated with the 2023 headcount reduction.
General and Administrative
General and administrative expenses decreased $2.0 million, or 10%, to $18.1 million for the three months ended October 31, 2024, from $20.1 million for the three months ended October 31, 2023. The decrease was primarily due to a $1.6 million decrease in severance and termination benefits charges associated with the 2023 headcount reduction. The decrease was also partially due to a $0.9 million decrease in employee-related costs due to reduced headcount, a $0.6 million decrease in our allowance for expected credit losses for accounts receivable, and a $0.5 million decrease related to recovery of previously written-off accounts receivable. These decreases were partially offset by a $1.1 million increase in legal costs and a $0.7 million increase in stock-based compensation.
Interest Income
Interest income decreased $1.0 million to $2.4 million for the three months ended October 31, 2024, from $3.4 million for the three months ended October 31, 2023. The decrease was primarily due to a decrease in our short-term investment balances.
Change in Fair Value of Warrant Liabilities
The change in fair value of warrant liabilities for both the three months ended October 31, 2024 and 2023 represents the change in fair value of the public and private placement warrants, which primarily fluctuates based on the change in trading price of our Class A common stock.
Other Income (Expense), net
Other income (expense), net for the three months ended October 31, 2024 and October 31, 2023, primarily reflects realized and unrealized foreign currency exchange gains and losses.
Provision for Income Taxes
Provision for income taxes was immaterial for the three months ended October 31, 2024 and $0.4 million for the three months ended October 31, 2023, respectively. For the three months ended October 31, 2024 and 2023, the income tax expense was primarily driven by the current tax on foreign earnings. The effective tax rate for the three months ended October 31, 2024 and 2023 differed from the federal statutory tax rate primarily due to the valuation allowance on the majority of our U.S. and foreign deferred tax assets and foreign rate differences.
Nine months ended October 31, 2024 compared to nine months ended October 31, 2023
The following table sets forth a summary of our consolidated results of operations for the interim periods indicated and the changes between such periods.
Nine Months Ended October 31,
$
%
(in thousands, except percentages)
2024
2023
Change
Change
Revenue
$
182,798
$
161,844
$
20,954
13
%
Cost of revenue
81,288
81,375
(87)
—
%
Gross profit
101,510
80,469
21,041
26
%
Operating expenses
Research and development
78,055
87,929
(9,874)
(11)
%
Sales and marketing
62,013
66,209
(4,196)
(6)
%
General and administrative
58,198
62,161
(3,963)
(6)
%
Total operating expenses
198,266
216,299
(18,033)
(8)
%
Loss from operations
(96,756)
(135,830)
39,074
(29)
%
Interest income
8,292
11,753
(3,461)
(29)
%
Change in fair value of warrant liabilities
1,126
14,004
(12,878)
(92)
%
Other income (expense), net
660
894
(234)
(26)
%
Total other income (expense), net
10,078
26,651
(16,573)
(62)
%
Loss before provision for income taxes
(86,678)
(109,179)
22,501
(21)
%
Provision for income taxes
1,364
1,244
120
10
%
Net loss
$
(88,042)
$
(110,423)
$
22,381
(20)
%
Revenue
Revenue increased $21.0 million, or 13%, to $182.8 million for the nine months ended October 31, 2024 from $161.8 million for the nine months ended October 31, 2023. The increase was primarily due to a $12.6 million increase from total customer growth worldwide, including new customers acquired from the Sinergise acquisition and net expansion of existing customer contracts of $8.4 million. EoP Customer Count increased approximately 4% to 1,015 as of October 31, 2024 from 976 as of October 31, 2023. The increase in revenue was primarily driven by growth in the Civil Government and Defense and Intelligence Verticals.
Cost of Revenue
Cost of revenue remained relatively flat, decreasing $0.1 million to $81.3 million, for the nine months ended October 31, 2024, from $81.4 million for the nine months ended October 31, 2023. The decrease was primarily due to a $4.0 million decrease in depreciation expense, which was primarily due to certain high resolution satellites that have fully depreciated. This decrease was partially offset by a $4.0 million increase in costs paid to solution partners and subcontractors.
Research and Development
Research and development expenses decreased $9.9 million, or 11%, to $78.1 million for the nine months ended October 31, 2024, from $87.9 million for the nine months ended October 31, 2023. The decrease was primarily due to a $8.7 million decrease in purchases of material utilized for research and development activities, a $6.4 million decrease in stock-based compensation expense, a $4.5 million decrease in employee-related costs due to reduced headcount, a $1.9 million decrease in non-recurring expenses related to transaction bonuses paid to Sinergise employees, which was allocated from the purchase consideration we paid in connection with the Sinergise acquisition in August 2023, and a $1.1 million decrease in consulting costs. These decreases were partially offset by a $7.5 million decrease in funding recognized for our research and development arrangements, a $2.8 million increase in depreciation expense associated with satellites classified as experimental, and a $1.7 million increase in launch provider costs associated with the launch of a satellite classified as experimental.
Sales and marketing expenses decreased $4.2 million, or 6%, to $62.0 million, for the nine months ended October 31, 2024, from $66.2 million for the nine months ended October 31, 2023. The decrease was primarily due to a $3.8 million decrease in employee-related costs due to reduced headcount. The decrease was also partially due to a $1.0 million decrease in stock-based compensation expense, a $0.8 million decrease in marketing expense, and a $0.8 million decrease in employee travel and entertainment costs. These decreases were partially offset by a $2.5 million increase in severance and termination benefits charges associated with our headcount reductions.
General and Administrative
General and administrative expenses decreased $4.0 million, or 6%, to $58.2 million for the nine months ended October 31, 2024, from $62.2 million for the nine months ended October 31, 2023. The decrease was primarily due to a $1.7 million decrease in employee-related costs due to reduced headcount, a $1.1 million decrease in our allowance for expected credit losses for accounts receivable, a $0.8 million decrease in insurance costs, a $0.8 million decrease in consulting costs, and a $0.5 million decrease related to recovery of previously-written off accounts receivable. These decreases were partially offset by a $1.6 million of expense associated with the revaluation of the contingent consideration liability for the Sinergise acquisition customer consent escrow.
Interest Income
Interest income decreased $3.5 million, to $8.3 million for the nine months ended October 31, 2024, from $11.8 million for the nine months ended October 31, 2023. The decrease was primarily due to a decrease in our short-term investment balances.
Change in Fair Value of Warrant Liabilities
The change in fair value of warrant liabilities for both the nine months ended October 31, 2024 and 2023 represents the change in fair value of the public and private placement warrants, which primarily fluctuates based on the change in trading price of our Class A common stock.
Other Income (Expense), net
Other income (expense), net of $0.7 million for the nine months ended October 31, 2024 includes the derecognition of a $1.3 million liability for which settlement is not considered probable. Other income (expense), net of $0.9 million for the nine months ended October 31, 2023 includes the recognition of an insurance claim recovery of $0.8 million associated with a high resolution satellite.
Provision for Income Taxes
Provision for income taxes was $1.4 million and $1.2 million for the nine months ended October 31, 2024 and 2023, respectively. For the nine months ended October 31, 2024 and 2023, the income tax expense was primarily driven by the current tax on foreign earnings. The effective tax rate for the nine months ended October 31, 2024 and 2023 differed from the federal statutory tax rate primarily due to the valuation allowance on the majority of our U.S. and foreign deferred tax assets and foreign rate differences.
Non-GAAP Information
This Quarterly Report on Form 10-Q includes Non-GAAP Gross Profit, Non-GAAP Gross Margin, Adjusted EBITDA, and Backlog, which are non-GAAP measures that we use to supplement our results presented in accordance with U.S. GAAP. We include these non-GAAP financial measures because they are used by management to evaluate our core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments.
We define and calculate Non-GAAP Gross Profit as gross profit adjusted for stock-based compensation, amortization of acquired intangible assets classified as cost of revenue, restructuring costs, and employee transaction bonuses in connection with the Sinergise business combination. We define Non-GAAP Gross Margin as Non-GAAP Gross Profit divided by revenue.
We define and calculate Adjusted EBITDA as net income (loss) before the impact of interest income and expense, income tax expense and depreciation and amortization, and further adjusted for the following items: stock-based compensation, change in fair value of warrant liabilities, non-operating income and expenses such as foreign currency exchange gain or loss, restructuring costs, certain litigation expenses, and employee transaction bonuses in connection with the Sinergise business combination.
We present Non-GAAP Gross Profit, Non-GAAP Gross Margin and Adjusted EBITDA because we believe these measures are frequently used by analysts, investors and other interested parties to evaluate companies in our industry and facilitates comparisons on a consistent basis across reporting periods. Further, we believe these measures are
helpful in highlighting trends in our operating results because they exclude items that are not indicative of our core operating performance.
We define and calculate Backlog as remaining performance obligations plus the cancellable portion of the contract value for contracts that provide the customer with a right to terminate for convenience without incurring a substantive termination penalty and written orders where funding has not been appropriated. Backlog does not include unexercised contract options. Remaining performance obligations represent the amount of contracted future revenue that has not yet been recognized, which includes both deferred revenue and non-cancelable contracted revenue that will be invoiced and recognized in revenue in future periods. Remaining performance obligations do not include contracts which provide the customer with a right to terminate for convenience without incurring a substantive termination penalty, written orders where funding has not been appropriated and unexercised contract options.
An increasing and meaningful portion of our revenue is generated from contracts with the U.S. government and other government customers. Cancellation provisions, such as termination for convenience clauses, are common in contracts with the U.S. government and certain other government customers. We present Backlog because the portion of our customer contracts with such cancellation provisions represents a meaningful amount of our expected future revenues. Management uses backlog to more effectively forecast our future business and results, which supports decisions around capital allocation. It also helps us identify future growth or operating trends that may not otherwise be apparent. We also believe Backlog is useful for investors in forecasting our future results and understanding the growth of our business. Customer cancellation provisions relating to termination for convenience clauses and funding appropriation requirements are outside of our control, and as a result, we may fail to realize the full value of such contracts.
Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, as a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. The non-GAAP financial measures presented are not based on any standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly-titled measures presented by other companies, which may have different definitions from ours. Further, certain of the non-GAAP financial measures presented exclude stock-based compensation expenses, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy.
Non-GAAP Gross Profit and Non-GAAP Gross Margin
The table below reconciles Non-GAAP Gross Profit and Non-GAAP Gross Margin to Gross Profit and Gross Margin (the most directly comparable U.S. GAAP measure), for the periods indicated:
Three Months Ended October 31,
Nine Months Ended October 31,
(in thousands, except percentages)
2024
2023
2024
2023
Gross Profit
$
37,517
$
26,030
$
101,510
$
80,469
Cost of revenue—Stock-based compensation
745
888
2,563
2,855
Amortization of acquired intangible assets
759
796
2,298
1,674
Restructuring costs(1)
128
563
1,312
563
Employee transaction bonuses in connection with the Sinergise business combination(2)
—
267
—
267
Non-GAAP Gross Profit
$
39,149
$
28,544
$
107,683
$
85,828
Gross Margin
61
%
47
%
56
%
50
%
Non-GAAP Gross Margin
64
%
52
%
59
%
53
%
(1) As part of the 2024 headcount reduction, we recognized $0.1 million and $1.3 million of severance and other employee costs within cost of revenue for the three and nine months ended October 31, 2024, respectively. For the three and nine months ended October 31, 2024, the restructuring related stock-based compensation benefit recognized within cost of revenue of $0.2 million is included on its respective line item. As part of the 2023 headcount reduction, we recognized $0.6 million of severance and other employee costs within cost of revenue for the three and nine months ended October 31, 2023. For the three and nine months ended October 31, 2023, the restructuring related stock-based compensation benefit recognized within cost of revenue of $0.1 million is included on its respective line item. Refer to Note 7 “Restructuring” to the condensed consolidated financial statements for further information.
(2) Certain employees of Sinergise, which became employees of Planet, were paid cash transaction bonuses in connection with the closing of the Sinergise acquisition. The cost of the transaction bonuses was allocated from the purchase consideration we paid for the acquisition. Refer to Note 5 “Acquisition” to the condensed consolidated financial statements for further information.
The table below reconciles Adjusted EBITDA to net loss (the most directly comparable U.S. GAAP measure), for the periods indicated:
Three Months Ended October 31,
Nine Months Ended October 31,
(in thousands)
2024
2023
2024
2023
Net loss
$
(20,081)
$
(38,004)
$
(88,042)
$
(110,423)
Interest income
(2,414)
(3,445)
(8,292)
(11,753)
Income tax provision
25
355
1,364
1,244
Depreciation and amortization
10,117
13,625
36,365
36,033
Change in fair value of warrant liabilities
(198)
(6,833)
(1,126)
(14,004)
Stock-based compensation
11,829
12,598
36,467
44,611
Restructuring costs(1)
25
7,341
10,524
7,341
Employee transaction bonuses in connection with the Sinergise business combination(2)
—
2,317
—
2,317
Certain litigation expenses(3)
395
—
395
—
Other (income) expense, net
60
69
(660)
(894)
Adjusted EBITDA
$
(242)
$
(11,977)
$
(13,005)
$
(45,528)
(1) As part of the 2024 headcount reduction, we recognized immaterial severance and other employee costs for the three months ended October 31, 2024 and $10.5 million of severance and other employee costs for the nine months ended October 31, 2024. For the three and nine months ended October 31, 2024, the restructuring related stock-based compensation benefit of $1.4 million is included on its respective line item. As part of the 2023 headcount reduction, we recognized $7.3 million of severance and other employee costs for the three and nine months ended October 31, 2023. For the three and nine months ended October 31, 2023, the restructuring related stock-based compensation benefit of $1.5 million is included on its respective line item. Refer to Note 7 “Restructuring” to the condensed consolidated financial statements for further information.
(2) Certain employees of Sinergise, which became employees of Planet, were paid cash transaction bonuses in connection with the closing of the Sinergise acquisition. The cost of the transaction bonuses was allocated from the purchase consideration we paid for the acquisition. Refer to Note 5 “Acquisition” to the condensed consolidated financial statements for further information.
(3) Expenses relating to the Delaware class action lawsuit. Refer to Note 10 “Commitments and Contingencies” to the condensed consolidated financial statements for further information.
There are a number of limitations related to the use of Adjusted EBITDA, including:
•Adjusted EBITDA excludes stock-based compensation, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy;
•Adjusted EBITDA excludes depreciation and amortization expense and, although these are non-cash expenses, the assets being depreciated and amortized will have to be replaced in the future;
•Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments on debt, which reduces cash available to us;
•Adjusted EBITDA does not include severance expense in conjunction with a reduction in headcount, which reduces cash available to us;
•Adjusted EBITDA does not reflect income tax expense that reduces cash available to us; and
•the expenses and other items that we exclude in our calculation of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from similar measures when they report their operating results.
The table below reconciles Backlog to remaining performance obligations for the periods indicated:
(in thousands)
October 31, 2024
January 31, 2024
Remaining performance obligations
$
145,890
$
132,571
Cancellable amount of contract value
86,250
109,821
Backlog
$
232,140
$
242,392
For remaining performance obligations as of October 31, 2024, the Company expects to recognize approximately 82% over the next 12 months, approximately 98% over the next 24 months, and the remainder thereafter. For Backlog as of October 31, 2024, the Company expects to recognize approximately 70% over the next 12 months, approximately 91% over the next 24 months, and the remainder thereafter.
Liquidity and Capital Resources
Since inception, we have incurred net losses and negative cash flows from operations. Our operations have historically been primarily funded by the net proceeds from the sale of our equity securities and borrowings under credit facilities, as well as cash received from our customers. We currently have no debt outstanding.
We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital and capital expenditure needs, contractual obligations, including debt obligations, and other commitments, with cash flows from operations and other sources of funding. Our current working capital needs relate mainly to our continued development of our platform and product offerings in new markets, as well as compensation and benefits of our employees. Our ability to expand and grow our business will depend on many factors, including our working capital needs and the evolution of our operating cash flows.
As of October 31, 2024 and January 31, 2024, we had $139.0 million and $83.9 million, respectively, in cash and cash equivalents. Additionally, as of October 31, 2024 and January 31, 2024, we had short-term investments of $103.3 million and $215.0 million, respectively, which are highly liquid in nature and available for current operations. We believe our anticipated operating cash flows together with our cash on hand provide us with the ability to meet our obligations as they become due during the next 12 months.
We expect our capital expenditures and working capital requirements to continue to increase in the foreseeable future as we seek to grow our business. We could also need additional cash resources due to significant acquisitions, an accelerated manufacturing timeline for new satellites, competitive pressures or regulatory requirements. We may need to seek additional equity, equity-linked or debt financing. The issuance of additional shares may create additional dilution to our stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating or financial covenants that would restrict our operations. We cannot assure you that any such financing will be available on favorable terms, or at all. If needed financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to decrease our level of investment in software and market expansion efforts or to scale back our existing operations, which could have an adverse impact on our business and financial prospects.
As of October 31, 2024, our principal contractual obligations and commitments include lease obligations for real estate and ground stations and minimum purchase commitments for hosting services from Google, LLC. Refer to Notes 8, 10, and 12 to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information regarding these cash requirements.
We do not engage in any off-balance sheet activities or have any arrangements or relationships with unconsolidated entities, such as variable interest, special purpose, and structured finance entities.
Statement of Cash Flows
The following tables present a summary of cash flows from operating, investing and financing activities for the following comparative periods. For additional detail, refer to the unaudited condensed consolidated statements of cash flows as presented within the unaudited condensed consolidated financial statements.
Net cash used in operating activities for the nine months ended October 31, 2024, primarily consisted of the net loss of $88.0 million, adjusted for non-cash items and changes in operating assets and liabilities. Non-cash items primarily included stock-based compensation expense of $36.5 million and depreciation and amortization expense of $36.4 million. The net change in operating assets and liabilities primarily consisted of a $8.5 million decrease in prepaid expenses and other assets and a $5.5 million decrease in accounts receivable, which were partially offset by a $7.7 milliondecrease in accounts payable, accrued and other liabilities.
Net cash used in operating activities for the nine months ended October 31, 2023, primarily consisted of the net loss of $110.4 million, adjusted for non-cash items and changes in operating assets and liabilities. Non-cash items primarily included stock-based compensation expense of $44.6 million and depreciation and amortization expense of $36.0 million, which were partially offset by a change in fair value of warrant liabilities of $14.0 million. The net change in operating assets and liabilities primarily consisted of a $19.6 million increase in deferred revenue and a $9.5 million decrease in prepaid expenses and other assets, which were partially offset by a $20.7 million decrease in accounts payable, accrued and other liabilities, and a $3.9 million increase in accounts receivable.
Net cash provided by (used in) investing activities
Net cash provided by investing activities for the nine months ended October 31, 2024, primarily consisted of sales of available-for-sale securities of $162.3 million and maturities of available-for-sale securities of $57.0 million, which were partially offset by purchases of available-for-sale securities of $105.6 million, purchases of property and equipment of $32.7 million, and purchases of licensed imagery of $4.6 million.
Net cash used in investing activities for the nine months ended October 31, 2023, primarily consisted of purchases of available-for-sale securities of $166.2 million, purchases of property and equipment of $29.1 million, and $7.5 million of consideration paid related to the acquisition of Sinergise, which were partially offset by maturities of available-for-sale securities of $142.9 million and sales of available-for-sale securities of $40.1 million.
Net cash used in financing activities
Net cash used in financing activities for the nine months ended October 31, 2024 included $8.8 million of contingent consideration payments for business acquisitions, of which $7.5 million relates to the settlement of the customer consent contingent consideration liability for the Sinergise acquisition. Net cash used in financing activities for the nine months ended October 31, 2024 also included payments for withholding taxes related to the net share settlement of equity awards of $7.3 million, which was partially offset by proceeds from our employee stock purchase program of $1.1 million.
Net cash used in financing activities for the nine months ended October 31, 2023, consisted of payments for withholding taxes related to the net share settlement of equity awards of $7.1 million, which was partially offset by proceeds from the exercise of common stock options of $6.8 million.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our unaudited condensed consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. The accounting policies that have been identified as critical to our business operations and to understanding the results of our operations pertain to revenue recognition, stock-based compensation, public and private placement warrant liabilities, property and equipment and long-lived assets, business combinations, and goodwill. The application of each of these critical accounting policies and estimates is discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2024 Form 10-K.
Recent Accounting Pronouncements
Refer to Note 2 to our unaudited condensed consolidated financial statements included elsewhere in Part I, Item 1 of this Form 10-Q for information regarding recently issued accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We have in the past and may in the future be exposed to certain market risks, including foreign currency exchange risk, interest rate risk and inflation risk, in the ordinary course of our business. For information relating to quantitative and qualitative disclosures about these market risks, refer to Item 7A “Quantitative and Qualitative Disclosures About Market Risk” contained in Part II of our 2024 Form 10-K. Our exposure to market risk has not changed materially since January 31, 2024.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of October 31, 2024 at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended October 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Disclosure Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are detected. The inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.
Part II - Other Information
Item 1. Legal Proceedings.
See discussion of Legal Proceedings in Note 10 to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q
Item 1A. Risk Factors.
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K, for the fiscal year ended January 31, 2024. Other than the risk factor set forth below, there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K.
Risks Related to Ownership of Our Securities and Operating as a Public Company
Any outstanding or potential stockholder litigation may result in substantial costs and diversion of our management’s attention and resources.
The market price of our Class A common stock may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We are and may continue to be subject to stockholder litigation against us and we may be the target of this type of litigation in the future. Any such litigation against us could result in substantial costs and divert management’s attention from other business concerns, which could seriously harm our business or reputation.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None, other than the shares repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of restricted stock units.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Securities Trading Plans of Directors and Executive Officers
During our last fiscal quarter, no director or officer, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Regulation S-K Item 408.
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because iXBRL tags are embedded within the Inline XBRL document).
Cover Page Interactive Data File (formatted as Inline XBRL)
^ Portions of this exhibit (indicated by asterisks) have been omitted under rules of the SEC permitting the confidential treatment of select information.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: December 9, 2024
PLANET LABS PBC
By:
/s/ Ashley Johnson
Ashley Johnson
President and Chief Financial Officer
(Duly Authorized Officer, Principal Financial Officer and Principal Accounting Officer)