Needham has adjusted the price target for Planet Labs (NYSE: NYSE:PL), a satellite imaging company, reducing it to $5.00 from the previous $7.00.
Despite this change, the firm retained a Buy rating on the stock. The adjustment followed Planet Labs' recent financial performance report, which presented a mixed picture with in-line second-quarter results for the fiscal year 2025, slightly lower third-quarter revenue guidance, and adjusted EBITDA surpassing consensus.
Planet Labs witnessed divergent trends within its business segments. Government sales saw a robust year-over-year increase of 30%, signaling strong demand in this area.
In contrast, commercial sales dipped by 22% compared to the previous year, attributed to poor renewal rates and general economic caution.
However, there was a notable improvement in next-generation gross margins, which surged by 610 basis points year-over-year, a development credited to more efficient cloud costs.
During the quarter, Planet Labs reported significant achievements, including securing key contracts with NATO and various international defense and civil government entities.
The company also made strides in its satellite technology, successfully launching the first Tanager satellite and updating its SuperDove satellites.
Looking ahead, Planet Labs' management reaffirmed their goal to reach adjusted EBITDA breakeven by the fourth quarter of the fiscal year. Needham expressed confidence in the company's strategic direction, believing that Planet Labs is making the appropriate decisions to foster long-term growth.
However, the firm noted that there are no immediate signs of acceleration in the company's top-line revenue.
Planet Labs PBC reported its second quarter fiscal 2025 results, revealing revenue growth and a narrower loss compared to the prior year.
The company's revenue, however, came in slightly below analyst estimates. The satellite imagery and data firm posted a revenue of $61.1 million for the quarter ended July 31, an increase of 14% year-over-year, but fell short of the consensus estimate of $61.82 million. Adjusted earnings per share recorded a loss of $0.06, surpassing expectations for a $0.08 per share loss.
Planet Labs demonstrated a strong demand from government customers, particularly in the defense and intelligence sector where revenue grew over 30% YoY. The company also expanded its gross margin to 53% on a GAAP basis and 58% on a non-GAAP basis.
Looking ahead, Planet Labs anticipates revenue between $61-64 million for the third quarter, compared to analyst estimates of $64.16 million. The company also expects an adjusted EBITDA loss of $2-5 million.
InvestingPro Insights
As Planet Labs (NYSE:PL) navigates its financial landscape, current metrics from InvestingPro provide additional context to the company's valuation and performance. With a market capitalization of approximately $721.11 million, the company holds a negative P/E ratio of -5.01, reflecting challenges in profitability. Despite these challenges, Planet Labs boasts an impressive gross profit margin of over 51%, indicating strong cost management in relation to revenue generation. This aligns with the company's reported improvement in next-generation gross margins.
InvestingPro Tips highlight two contrasting aspects of Planet Labs' financial health. On one hand, the company holds more cash than debt, which is a positive sign of financial stability. On the other hand, analysts have revised their earnings expectations downwards for the upcoming period, suggesting that the market may have concerns about future profitability. Notably, Planet Labs does not pay a dividend, which may influence investor decisions depending on their preference for income-generating investments.
For investors seeking a deeper dive into Planet Labs' prospects, there are additional InvestingPro Tips available at Investing.com. These tips may provide further insights into the company's financial health and help investors make more informed decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.