Planet Labs PBC delivered its strongest quarterly revenue performance to date in the fiscal second quarter ended July 31, underscoring how rapidly sovereign satellite services and defense-focused geospatial intelligence are becoming material growth engines for the Earth-observation company.

The San Francisco-based company reported revenue of $116.1 million, an increase of 58% from the comparable period a year earlier. The result was substantially above the roughly $104.5 million level expected by analysts and represented a new quarterly record for Planet. Management attributed much of the upside to execution on satellite-services contracts, particularly the commissioning and formal handover of a Pelican spacecraft to the Swedish Armed Forces.

The quarter illustrates an important evolution in Planet’s business model. The company built its commercial identity around a large constellation of small satellites continuously imaging Earth and selling access to that data through recurring subscriptions. It is increasingly extending that infrastructure into sovereign satellite services, under which governments can obtain dedicated spacecraft or imaging capacity while leveraging Planet’s manufacturing, launch, commissioning and data-management capabilities.

That strategy contributed directly to second-quarter revenue. Planet said its space systems organization completed rapid commissioning of the first satellite for Sweden and transferred the spacecraft to the customer, allowing the company to recognize point-in-time revenue associated with the milestone. The satellite had been launched only months after the Swedish contract was signed, highlighting what management describes as a faster route for governments seeking sovereign Earth-observation capability without developing an entire satellite program internally.

Defense and intelligence was the strongest market segment during the quarter. Revenue from those customers grew more than 90% from a year earlier and accounted for about 70% of total revenue, according to management’s earnings commentary. That would put quarterly defense and intelligence revenue at roughly $81 million. Commercial revenue increased more than 15%, while civil-government revenue grew more than 5%.

The international contribution was also significant. Planet said revenue from Europe, the Middle East and Africa increased more than 130% year over year, supported by expanding government relationships and sovereign-space programs. North American revenue rose about 25%, while Asia-Pacific increased more than 15%.

The revenue surge translated into stronger operating results. Planet reported adjusted EBITDA of $13.9 million, compared with $6.4 million in the year-earlier quarter. Non-GAAP net income was $0.02 per diluted share, compared with analyst expectations for a loss of approximately $0.02 per share. On a GAAP basis, the company remained unprofitable, but its quarterly net loss narrowed to $9.4 million from $22.6 million a year earlier, and the GAAP net loss per share was $0.03.

Margins remained high but edged below the prior-year level. GAAP gross margin was 57%, compared with 58% a year earlier, while non-GAAP gross margin was 59%, down from 61%. The combination of rapid revenue growth and positive adjusted EBITDA nevertheless allowed Planet to record its fourth consecutive quarter of meeting or exceeding the Rule of 40, a measure commonly used by technology companies that combines revenue growth with an operating profitability margin.

The results also strengthened the case that Planet’s government expansion can complement rather than replace its recurring data business. The company said 98% of annual contract value at quarter-end was recurring. Planet’s ACV metric covers imagery licensing, data solutions and dedicated image-tasking capacity, although the company excludes satellite-services contracts from that calculation. As a result, the high recurring percentage principally reflects the durability of its traditional data and analytics customer base rather than the newer sovereign satellite business.

Satellite services, however, are becoming increasingly important to incremental growth. Chief Executive Will Marshall said the company is pairing sovereign satellite capabilities with AI-enabled analytics, allowing governments to acquire dedicated observation capacity while also using Planet’s data archive, monitoring tools and machine-learning products.

The strategic appeal is especially evident in national-security markets. Governments increasingly want persistent monitoring rather than isolated high-resolution images, while many also want greater control over collection capacity. Planet’s model seeks to address both requirements by combining its global daily-imaging architecture with higher-resolution Pelican spacecraft, dedicated satellite capacity and software that can identify changes or patterns across large geographic areas.

Recent contract activity suggests that demand is extending beyond Sweden. In August, after the fiscal second quarter had ended, Planet received an $8 million award from the U.S. National Geospatial-Intelligence Agency to deploy its Global Monitoring Service in support of national-defense priorities. Planet said the agreement contains opportunities for expansion and extension.

The Global Monitoring Service is designed to combine Planet’s extensive historical imagery archive with AI-based pattern recognition to identify activity and emerging changes over broad areas. Management said the NGA program grew out of an earlier pilot conducted with the Defense Innovation Unit in support of U.S. Indo-Pacific Command, moving the capability from an experimental deployment toward an operational government program.

Planet also disclosed a seven-figure, one-year agreement with a European defense and intelligence customer for high-resolution global mosaics supporting operational planning. Separately, the German government awarded Planet a tender for dedicated-capacity satellite services in August. The German contract includes options and carries a maximum potential value of €25 million over five years.

Those contracts were not included in second-quarter revenue because they were awarded after July 31, but they reinforce management’s argument that sovereign satellite demand can remain a durable source of future growth. Planet said its identified satellite-services pipeline now exceeds $4 billion, with more than one-quarter categorized as near-term opportunities. That implies more than $1 billion of potential business that management believes could mature over the coming quarters.

The pipeline spans Europe, Asia-Pacific and North America, reducing the extent to which Planet’s satellite-services strategy depends on one government or geography. At the same time, growing exposure to public-sector procurement introduces different risks from commercial subscriptions. Government contracts can involve long sales cycles, changing budget priorities, options that may never be exercised and termination-for-convenience provisions.

That distinction is also visible in Planet’s contracted-revenue metrics. The company ended the quarter with remaining performance obligations of approximately $753.1 million. It expects about 46% of those obligations to be recognized within 12 months and about 68% within 24 months.

Planet reported backlog of approximately $814.9 million. The backlog measure is broader than remaining performance obligations because it includes certain cancelable contract amounts and written orders where funding has not yet been appropriated. Planet expects about half of backlog to convert into revenue over the next 12 months and roughly 70% within two years.

The balance sheet provides significant capacity to finance the next phase of the satellite buildout. Cash, cash equivalents and short-term investments totaled $865.4 million at quarter-end, up 219% from the prior-year period. During the quarter, Planet raised approximately $120 million through sales under its at-the-market equity program at an average net price of $31.95 per share.

Year-to-date operating cash flow was $68.4 million. Free cash flow totaled $21.3 million, while adjusted free cash flow reached $28.8 million. Management reiterated that it intends to remain adjusted free-cash-flow positive for fiscal 2027 on a full-year basis, even as quarterly cash generation can fluctuate because of satellite manufacturing, launches and contract timing.

The company is directing more capital toward its next generation of spacecraft. Planet successfully launched a Pelican technology demonstration satellite and said it shipped its second Tanager spacecraft and 18 SuperDove satellites for an upcoming launch. Pelican is designed to expand higher-resolution imaging capabilities, while Planet’s broader fleet continues to support frequent global coverage.

Management is also investing in the Owl satellite platform, manufacturing capacity and long-lead components. Those investments contributed to an increase in projected capital expenditures. Planet now expects fiscal-year capital spending of approximately $100 million to $115 million. Third-quarter capital expenditures are expected to fall between $30 million and $37 million.

The higher investment requirements are one reason investors are likely to focus not only on current revenue growth but also on the timing and economics of future sovereign satellite programs. Dedicated spacecraft contracts can create sizable revenue milestones when hardware is delivered or transferred, making quarter-to-quarter comparisons less linear than in a pure subscription software model.

That timing effect is apparent in Planet’s third-quarter outlook. For the quarter ending October 31, management expects revenue of approximately $101 million to $105 million, below the second quarter’s $116.1 million record and below Wall Street expectations that had been around $114 million immediately following the report.

Planet expects third-quarter non-GAAP gross margin of 56% to 58% and an adjusted EBITDA loss of $6 million to $1 million. Management said the sequential revenue decline largely reflects the absence of the Swedish satellite-handover contribution that boosted the second quarter, rather than a reversal in underlying customer demand.

The full-year outlook presents a stronger picture. Planet now expects fiscal 2027 revenue of $430 million to $441 million and non-GAAP gross margin of 55% to 57%. Adjusted EBITDA is projected to be positive for the year, ranging from $3 million to $10 million. The guidance suggests management expects growth in the core data business and execution on existing contracts to offset near-term volatility associated with satellite-service milestones.

The contrast between the quarterly and annual guidance will be central to how investors assess the earnings report. The second quarter showed that sovereign programs can produce meaningful top-line acceleration and improve operating leverage, but it also demonstrated why the timing of individual spacecraft deliveries can create sharp changes in reported revenue from one period to the next.

Market reaction reflected that tension. Planet shares had fallen 8.2% during regular trading on September 3, closing at $18.35 before the earnings release. The stock recovered roughly 4.4% in after-hours trading after the company reported the revenue and earnings beat, though it remained below the previous day’s closing level.

For Planet, the broader earnings question is whether the company can convert its growing sovereign opportunity pipeline into a repeatable business without sacrificing the high-margin economics of its subscription data operations. The quarter offered evidence in favor of that strategy: defense revenue grew rapidly, adjusted EBITDA improved, cash generation remained positive on a year-to-date basis and several new government awards followed after quarter-end.

Execution will now depend on manufacturing capacity, spacecraft performance, launch schedules and government procurement decisions. The company must also manage higher investment spending as it scales Pelican and future satellite platforms. Because government contracts increasingly represent a meaningful share of expected revenue, delays or changes in procurement schedules could produce greater volatility than investors have historically associated with Planet’s recurring imagery subscriptions.

At the same time, sovereign demand is broadening Planet’s addressable market beyond the sale of geospatial imagery. Governments that might once have purchased individual data feeds can now procure dedicated capacity, full satellites, persistent global monitoring and AI-enabled analytics from the same provider. That gives Planet multiple ways to monetize the same core infrastructure and imagery archive.

The fiscal second quarter therefore represents more than a single record-revenue period. It provides an early financial demonstration of Planet’s attempt to evolve from an Earth-imagery subscription provider into a combined satellite, data and intelligence platform. With a multibillion-dollar satellite-services pipeline and new U.S. and European government awards entering the opportunity set, the key test over the coming quarters will be whether those contracts convert into sustained growth while Planet preserves margins, cash discipline and positive full-year adjusted profitability.