Good afternoon. Thank you for attending today's Planet Fiscal Q3 2022 Earnings Call. My name is Hannah, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions].

I would now like to pass the conference over to Christopher Genualdi, VP of Investor Relations. Please go ahead..

Hello, everyone, and welcome to Planet's fiscal third quarter of 2022 quarterly earnings call. Before we begin today's call, we'd like to remind everyone that we may make forward-looking statements related to future events or our financial outlook.

Any forward-looking statements are based on our historical performance as well as our current plans, estimates and expectations. The inclusion of such forward-looking information should not be regarded as a representation by Planet that future plans, estimates or expectations will be achieved.

Such forward-looking statements are subject to various risks and uncertainties and assumptions as detailed in our SEC filings, which can be found at www.sec.gov.

Our actual results or performance may differ materially from those indicated by such forward-looking statements, and we undertake no responsibility to update such forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

During the call, we will also discuss non-GAAP financial measures. We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period to period comparisons.

We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.

For more information on the non-GAAP financial measures, please see the reconciliation tables provided in our press release issued earlier this afternoon. Further, throughout this call, we provide a number of key performance indicators used by management and often used by competitors in our industry.

These and other key performance indicators are discussed in more detail in our press release. At this time, I'd now like to turn the call over to Will Marshall, Planet's CEO, Chairperson and Co-Founder. Over to you, Will..

Thanks, Chris. Thank you everyone for tuning into our call today. We're thrilled to have just completed our merger with dMY Technology Group, Inc. IV, and listed on the New York Stock Exchange under the ticker PL. It was truly fantastic to ring the opening bell at the New York Stock Exchange last week and celebrate such a huge milestone for Planet.

Through this transaction, we've raised over 519 million in gross proceeds. We saw remarkable less than 2% redemptions from the $345 million of SPAC trust proceeds and received the additional 252 million from our PIPE investors. With this capital, we believe we’re fully capitalized to invest in our long-term growth initiatives.

Going public marks a significant milestone in our 10-year journey and the beginning of the next chapter for Planet. Before we dive into the results for the quarter, I'd like to take a moment to thank our team, their tremendous hard work and dedication in getting us here today.

Without this world-class team that is so dedicated to Planet's mission, we wouldn’t be where we are today. Let's now turn to the results straight away. From the third quarter of fiscal 2022, we delivered a record 31.7 million of revenue. This represents 16% year-over-year growth for our quarter.

We increased the customer count to 742 customers at the end of the period, which is a 32% year-over-year growth. We saw our sales pipeline grow 46% year-on-year as we grew and continue to see additions to and execution by our sales team.

As you'll hear from Ashley momentarily, we're reiterating our full year revenue outlook for fiscal 2022 and remain focused on executing against this growth plan. Our growth is a reflection of the mission-critical value that we deliver to our customers by subscriptions to our proprietary data.

Whether you're a large agricultural company, a state or local government, Google, or an analyst at the U.S. National Geospatial Intelligence Agency, Planet's data delivers unique value and timely insights that help people to make smarter decisions in a rapidly changing world. We make global change visible, accessible, and actionable.

Our fleet of approximately 180 scanning Doves and super Doves is unlike any other industry, with its global scan capability.

It's complemented by a fleet of 21 high-resolution SkySats, which is also record breaking, the largest fleet of high resolution satellites in space today, and able to deliver the highest number of revisits of any area of interest to our customers. This empowers us to deliver proprietary data feeds to our customers.

Together, these two fleets cover more than 300 million square kilometers of earth’s landmass every day, which enable us to serve a diverse set of customers and use cases. It opens up the geospatial market to new applications and use cases that have never existed before.

Our unique daily scan constellation is unparalleled in coverage and gives us a significant technology lead, made possible by our unique agile aerospace approach to spacecraft development, which sets us apart from others in the industry. Now I'd like to tell you about some of the recent key customer wins to give you a sense for how our data is useful.

Last month, we announced that we are providing critical disaster response data to the Federal Emergency Management Agency, FEMA, through a collaboration with our partner New Light Technologies or NLT.

With this partnership, FEMA can access and integrate our daily PlanetScope imagery into its disaster response program to assess damages and plan recovery following incidents such as hurricanes and tornadoes, which are becoming ever-more frequent with climate change.

Also during the third quarter, we announced that we signed a contract extension with the U.S. National Reconnaissance Office, or NRO. This extension both expands access to our daily PlanetScope data and incorporates it into NRO's existing workflows.

It will expand the NRO's access to include the monitoring over new areas of interest and the extension includes continued integration efforts to make Planet's the archive dating back to 2009 and daily satellite data available to NRO's users through the Commercial GEOINT Integration or CGI architecture.

While Planet's high-resolution SkySat data is already available through the CGI architecture, incorporating our medium-resolution PlanetScope data into the same system enables faster decision making by providing users with data in a user friendly fashion.

In agriculture, we had a number of significant expansions among our top customers during the third quarter, including Taranis, who expanded into the Southern hemisphere to help farmers make informed decision.

Taranis is a company that helps growers and crop consultants make informed decisions through the growing season using a combination of advanced aerial imagery and artificial intelligence.

We remain very excited about our opportunity in the agriculture market where our data can help improve crop yields, reduce fertilizer use, and generally increase efficiency which is critical to their businesses.

We see significant opportunities to expand with customers as they increase their area of coverage with Planet data, and expand the different use cases for our data and adopt different Planet products as we demonstrate the value of our solution. These are just three recent examples of ways that our customers use our data.

In the call ahead, you'll hear more about how our customers use data across all verticals; agriculture, government mapping, forestry, finance, and so forth and using data to improve their outcomes. You'll hear myriad stories of incredible value of Planet's data, which is both unique and proprietary to our company.

We are focused on systematically going after all of these markets. And that's the first and foremost investment focus with the capital that we have just raised. As we described in our September Analyst Day, we see huge market opportunity in the current markets alone. Now I want to turn to our products.

In October, we held our third annual user conference, Explore 2021, where we hosted a diverse audience of customers and users from across all of our vertical markets that we serve.

We made a number of big announcements there, including Pelican, our next-generation very high resolution satellite constellation, which will offer increased accuracy, reduced latency and enhanced image resolution.

We also announced data fusion monitoring with SAR, or synthetic aperture radar, which helps customers see through clouds and weather the obscure optical data. Let me talk about our software strategy, which is our second key area of focus of investment.

As you probably know, earlier this year, we welcomed Kevin Weil to Planet as our President of Product and Business. Kevin leads both our product organization and our go-to-market teams with sales, marketing and software engineering reporting to him. His goal is to drive organizational alignment towards higher growth.

Kevin brings to Planet his incredible expertise in building and scaling software platforms at companies such as Facebook, Instagram and Twitter. He has a proven track record of helping organizations scale through hyper growth, monetizing data products, and disrupting old entrenched industries and mindset that fits right into Planet.

If you tuned into our virtual Investor Day last month, which is available for replay on our Investor Relations webpage, then you probably heard Kevin walk you through our strategy of moving up the stack to expand our analytics capabilities.

With each step that we take up the stack, we are making our data easier to use and consume, that's opening up a potential addressable market to a greater number of users and applications. This is how we're democratizing access to geospatial data.

We are moving from board data imagery that is usable only by geospatial experts towards statistical time series data and other insights that can be used by any business analyst or researcher. Every step we take on this journey makes our data accessible to a greater number of users.

This is why we're investing in our software organization and we're confident that it will drive growth in a new vertical market where we see tremendous amount of potential for Planet's data. A third use of our capital is in M&A to accelerate Planet's roadmap and business. Along these lines, we have closed our acquisition of VanderSat.

We think this is a great example of where we are strategically accelerating our product roadmap. And we are also in this case gaining a team of data scientists.

We expect VanderSat will help Planet deliver what we call planetary variables, which are variables such as biomass, soil moisture and soil temperature, and that this acquisition will accelerate our position in one of the most important verticals, agriculture as well as help mature our offerings in other verticals such as insurance and finance.

We believe our acquisition of VanderSat can help us bridge the gap from complex remote sensing science to products that offer derived data series to our customers. VanderSat brings to Planet a world class data science team, top tier customer accounts in agriculture and insurance, and the potential to accelerate our software strategy.

We're very excited to have the VanderSat team join us at Planet. Finally, before I hand it over to Ashley to cover financials, I'd like to touch on our impact work. Planet is a mission-driven company. Our mission is to use space to help life on earth by imaging the whole world every day and making change visible, accessible and accessible.

Our platform includes imagery in science and machine learning that empowers companies, governments and communities around the world to make timely decisions about the evolving world. This, of course, has huge value in sustainability.

As an example, last year, we worked with a consortium of NGOs and researchers to build the first detailed map of the entire world's tropical coral reef system. We can see these from space because most corals are in shallow waters, and we can classify their type.

We've already seen six nations put marine protected areas, or MPAs, around the coral systems that we have met.

This is good for the planet and it also is good for Planet, because it drives real revenue, both directly through the philanthropic funding for these investments and projects but it's also because it enables us a lead generation for several governments in those regions. Also, last month, I was at the COP26 Conference in Glasgow.

My key take away from that conference is that I've never felt such a powerful pull for Planet's data than today. All the major commitments made by the governments and companies require effective means of measurements to achieve their goals. Countries need our data to track emissions. Companies need our data to measure their ESG targets.

The data we produce on a daily basis are critical ingredients to the planetary emergency that we face. We believe the world needs Planet more than ever today. We reinforce our commitment to our mission because we've decided to begin this new journey to the public markets as a Public Benefit Corporation.

For those that don't know what that means, a Public Benefit Corporation is a relatively new class of corporations that intend to produce a public benefit and to operate in a responsible and sustainable manner.

Planet's Public Benefit is to accelerate humanity towards a more sustainable and secure and prosperous world by illuminating environmental and social change. Whilst this has always been part of the DNA of Planet, by going public as a PBC we are codifying that mission into our certificate of incorporation.

So in summary, we have made our debut onto the public markets with an incredible group of investors supporting us. We now have the capital that we need to execute against our growth plan. And we're seeing significant momentum in our commercial business, tailwinds in the forms of sustainability and digital transformation to the global economy.

And we have a mission that keeps us committed to and focused on the long term. I'm incredibly excited to be a public company, confident in our plan, and look forward to building relationships with you all. And now I'd like to turn the call over to Ashley to provide a recap of the financials. After which, we will take questions. Thank you..

Thanks, Will, and good afternoon, everyone. I'm pleased to report that we had a strong third quarter of fiscal 2022. Revenue came in at $31.7 million, which represents 16% year-over-year growth.

Our revenue came in slightly higher than we anticipated, largely due to the quarterly pacing of one of our larger customers for which revenue is recognized on a consumption basis. We continue to execute against our top line growth plan, and are therefore reiterating our revenue outlook of $130 million for the full year.

Our end of period customer count was 742 customers for the third quarter, which represents 32% year-over-year growth. End of period customer count has consistently grown quarter-over-quarter for more than 10 quarters, reflecting the continued growing market demand for Planet's data.

As a reminder, we define end of period customer count as the total count of all customers with an active contract with Planet at the end of the reported period. Another metric that we look at internally as an indication of market demand is the growth of our sales pipeline. We achieved sales pipeline growth of 46% on a year-over-year basis.

Historically, our growth has been rate limited by the amount we've been able to invest in growing our sales force. As such, one of the primary expected uses of the capital we raised in going public is to invest in our sales force and the supporting infrastructure that they need to meet the market potential we see for Planet's data.

We began making these investments in earnest in Q3, filling critical sales leadership positions globally, adding to all of our teams across the sales organization, and beginning to step up our investments in marketing. These investments are critical to enabling us to capture the market opportunity ahead of us and accelerate our top line growth.

While adding new sales reps is an important factor in our ability to meet market demand and drive new customer wins, equally important is our ability to retain and grow our existing customer accounts.

As we have been investing in our global customer success organization as well as enhancing our data products, we've seen significant improvement in our Net Promoter Score, which should also lead to growth in our net dollar retention rate, another critical driver for top line growth.

For the third quarter of fiscal '22, our net dollar retention rate was 98% and net dollar retention rate with winbacks was 105%. This metric includes the suspension of a large government contract due to the government takeover by an unsanctioned regime.

As shared at our Analyst Day meeting in September, we continue to expect our net dollar retention rate with winbacks to exceed 110% for fiscal year '22. Turning to gross margins, we saw non-GAAP gross margins expand to 35% for the third quarter of fiscal '22 compared to 28% in Q3 of fiscal '21.

This is driven both by scaling our revenue and by the extension and useful life of several of our SkySat satellites. Because of our data subscription model, our cost of goods sold is relatively fixed, resulting in very high direct margins, which we estimate between 94% and 96%.

As a reminder, we include depreciation and amortization of our satellites in our cost of goods sold.

On the topic of depreciation expense, in the third quarter, we experienced the failure of some of the thrusters on one of our SkySat satellites, which caused us to adjust our useful life estimate for that satellite, which accelerates the depreciation expense.

We expect this accelerated depreciation to reduce our expected non-GAAP gross margin by approximately 1.5 percentage points in both fiscal '22 and fiscal '23.

We don't anticipate that this will impact our ability to serve current and future customers, demonstrating our agile aerospace model that enables us to build our constellation of satellites with strong redundancy. We expect our gross margins to continue to expand as we grow our top line and scale our business model going forward.

During the third quarter, we began to accelerate our investments in R&D and sales and marketing. For R&D, we increased our spend on software and product, in line with the strategy Will outlined just a moment ago.

In addition, we announced our new very high resolution Pelican fleet in Q3 and began to accelerate those investments to meet the strong demand we are seeing for our high revisit, high resolution solution. In sales and marketing, we increased our investment in our sales force and accelerated investments in our marketing programs.

These investments in the business resulted in an adjusted EBITDA loss for the third quarter of $12.3 million. Going forward, we expect sales and marketing and software engineering to be key areas of investment for Planet. We're confident in our strategy for investing in our commercial business and excited about the outcomes that it will drive.

Our CapEx spend for the third quarter was $2.8 million, with our CapEx as a percentage of revenue approximately 9% for the quarter. Looking forward to the fourth quarter of fiscal '22, we expect revenue to be in the range of approximately $35 million to $37 million, implying full year revenue guidance of $129 million to $131 million.

This is in line with the outlook shared earlier this year, in spite of the large contract suspension I alluded to earlier. We expect non-GAAP gross margins of approximately 37% to 39%, expanding on a quarter-over-quarter basis from 35% in Q3.

Adjusted EBITDA is expected to be a loss between $15 million and $17 million as we continue our investments in sales and marketing and R&D, resulting in a full year EBITDA loss of $39 million to $41 million.

Our CapEx spend is expected to be between $5 million and $7 million, up from $2.8 million in Q3 with investments in our ground station network as well as our super Doves replenishment launch scheduled for early January. This results in full year CapEx of $13 million to $16 million, or 10% to 12% of revenue.

Finally, some of the housekeeping items for your models. First, we completed the payoff of our debt with SVB of approximately $67 million, including associated fees and accrued interest and therefore will not incur interest expense for that loan going forward.

Additionally, the convertible notes that were previously on Planet's balance sheet have all been converted to equity. For detail on our pro forma cash and cash equivalents and shares outstanding following the transaction, please refer to our form 8-K filed with the SEC earlier today. That concludes our comments, and we can now take questions..

Certainly. [Operator Instructions]. The first question on the line of Mike Latimore with Northland Capital, you may proceed..

Great. Thanks a lot. Congrats on being public and the first earnings call here. Good news..

Thanks..

Thank you..

So the pipeline growth was very strong at 46%.

Can you give a little color on how sales cycles and close rates are trending?.

Can you take that, Ashley?.

Yes. I'd say they've basically been in line with prior periods. And in some geographies, showing signs of improvement..

Got it. And then on the ag vertical, you talked about several big expansions there. And you highlighted one where they expanded in a new geography.

Can you give a little more color on kind of some of the dynamics behind these expansions? Is it specifically around geographic expansion with current use cases? Are you seeing further demand for new products or expanding into new use cases such as for -- like internal R&D? A little color on what's going on in the ag vertical would be great..

Yes, I suppose but it's primarily the former. So it's expansion of territories where we have clear product market fit with them and they're just -- in this case, Taranis was exactly just expanding to the Southern hemisphere or territory. We do see that there's big growth opportunities within ag both in that expansion piece.

And then also in addition, as we add value-added services, a lot of those ag companies have asked for other product capabilities that as we add, they will be wanting to pay us for. We've also signed a partnership to expand with Syngenta actually, which is really another significant expansion that we can talk about as well..

Great. I guess just the last one, sounds like sales hires are on track.

Can you just confirm you’re hiring sales headcount as expected?.

Yes. The number of reps and ramp reps continues to grow quarter-over-quarter, so pleased with the progress there. As I mentioned, we've publicly disclosed the fact that we filled out the sales leadership team, which is obviously an important part of our strategy.

And we continue to see, frankly, strong candidates in the pool and the ability to close them just based on Planet's position and mission..

I'd just personally add that we have great confidence in Charlie Candy, our Chief Revenue Officer. He's doing just a fantastic job of building out that team..

Excellent. Thank you. Good luck..

Thank you..

Thank you, Mr. Latimore. The next question is from the line of Jeff Van Rhee with Craig-Hallum. You may proceed..

Great. Thanks for taking my questions. I'll add my congrats off and running here. So a couple for me. Just want to dig for a second on pipeline.

And in terms of anything that's a variance from the norm, if you were to look at it within the ESG, ag and defense key target markets, any of those particularly notable in terms of what you're seeing develop in the pipeline?.

No. I'd actually say it's across the board. I think one is, as we've been able to get more awareness about Planet, that's certainly helping drive pipeline and then having the feet on the street to qualify it and bring it in.

One of the areas where we're seeing a significant amount of growth and interest is in civil government, which covers a broad array of use cases from land use monitoring to actually water monitoring and some really interesting new applications, including deforestation.

So that's one of the areas where we're seeing a significant uptick in our pipeline and it's certainly exciting, and that's one area where we anticipate sustainability will be an important tailwind for the sector overall..

Helpful. Two numbers questions if I could. One on the revenue picture, obviously outperformed I think consensus and myself as well on the quarter. And then the guide was a bit below. You talked about some usage revenue that had some unpredictability. I'm wondering if that's the difference.

And just any color about that Q4 guide versus where the consensus was. And then also, secondarily, if you look at the Q4 guide on EBITDA, I'm wondering what the impact is on Q4 with respect to incremental expenses from the VanderSat acquisition..

Okay. So on revenue, yes, you've got it exactly right. And I thought I had given a wide enough range at the Analyst Day, knowing that there was a little bit of unpredictability around usage. But our expectation is that was really just a little bit more in Q3.

And so I've just haircut that out of the Q4 that keeps us whole on the overall year, but it's a matter of just timing and pacing. And that's where -- as we move more and more of our revenue to ratable revenue recognition, we'll get some of this lumpiness out of the picture. So that's primarily what you're seeing on the revenue front.

And then on EBITDA, there's been a little bit of movement between OpEx and CapEx. And so if you look at EBITDA minus CapEx in our guidance, you'll see that it's consistent with where we were back in September, but we have had some shifts between OpEx and CapEx predominantly related to expense for the Pelican fleet.

So we talked about that following our marketing event in October, and the fact that we're seeing a lot of interest in our high resolution, high revisit capabilities. And so as we lean into that, that's shifted some of our expense from what would be recognized as CapEx to OpEx. So there's a little bit of variability there.

But the overall kind of spend picture is the same..

Okay, great. I'll leave it there. Thank you..

Great. Thanks..

Thank you, Mr. Rhee. The next question is from the line of Ruben Roy with West Park Capital. You may proceed..

Thanks very much for taking my questions and echo my congratulations. To start, I guess we could just start off on the last comment you made, Ashley, maybe just talk about usage. And some of these new verticals start to ramp as you add sales across some of these areas like finance, insurance, et cetera.

I'm just trying to figure out how to think about sort of usage versus subscription as some of those new verticals ramp, and if you are getting more use cases I guess, how do you think the mix is going to look as we think about maybe next year, fiscal '23?.

Yes, I think a lot of it just has to do with how we structure our contracts. And so even for, for example, tasking customers, if we sell them on a credit basis and they're basically subscribing to a certain number of passing credits per month, per quarter, then it virtually becomes ratable revenue recognition, because it's easier to use it [ph].

It gives us high predictability versus some of the contracts that we might have signed a couple of years ago when we were still ramping that revenue stream, which gave us a lot more latitude to the customer in terms of when they would actually use the credits across the year.

So I think in terms of how we think about the shift to more subscription-like revenue that has more predictability, it's less of whether it's a PlanetScope subscription or a SkySat tasking subscription, we're able to see more of the revenue shifting to ratable and move away from pure consumption contracts.

Does that make sense? Does that address your question?.

Yes, it does. That's very helpful. Thank you, Ashley. And then just a quick follow up for Will. As we think about -- you guys talked about these big expansions, and again obviously a lot going on with the government, defense intelligence, et cetera.

Now you have capitalized the balance sheet and it's exciting to think about kind of next steps in kind of addressing some of the growth areas in some of these emerging markets.

So are there any one or two markets that you're most excited about, Will, or you think you need to invest immediately or accelerate investments into, or do you think it's kind of across the board as we think about some of those new markets, whether it's forestry or finance, insurance, et cetera?.

Well, firstly, I think most of our growth is going to come from the existing markets for the next couple of years, and that comes from either expansion in existing accounts or new accounts in those vertical markets where we already know the use cases work.

So agricultural, civil government, defense intelligence mapping, and that's where -- there's a lot more ag companies to go after. There's a lot more civil government opportunities to go after. There's 200 countries in the world.

We've got -- and then there's state and local governments where we're having a lot of traction on the civil government side as well. There’s 3,000 counties across the U.S. and equivalents across the rest the world. And so we've got huge, huge market there.

For the other vertical markets that you're talking about, like finance and insurance and so on, the primary attack is using the capital to build the software stack to enable those, right? We will be doing some work in that area for sure and more in the sort of business development mode.

But now that's primarily -- that's why the two major investments, our sales and marketing for the core markets and software to go after the new one. I personally have expressed before that I'm very excited about finance, because I think the principal value of our data for finance is huge. I just think it's a massive alpha on anyone else alike.

We can tell the world wide soil before anyone else, we can tell the output of all those couple of mines before anyone else, it ships into our ports before anyone else, et cetera, et cetera. That's got to have intrinsic value. But that needs software to go up the stack to really enable that market. So it's not a primetime thing now.

As I said, a huge opportunity in front of us really just in the core markets and that is -- we've got billions of billions of revenue opportunity just in those..

Right. Makes sense. Thanks, Will..

No worries..

Thank you, Mr. Roy. That concludes the question-and-answer session. I would now like to pass the call back to the management team for any closing remarks..

I think that's all we've got today. We look forward to continuing the conversation as we go forward as a public company. So thanks for joining today..

Yes. Thank you, everyone. I'm looking forward to building relationships with you all as we -- and the public market.

Look, I said at the beginning of our Analyst Day that we are really excited about the fact that Planet is a data subscription business with a huge market and a big differentiation in the sense that no one else has the scan which is what enables our big market.

I think we can add to that a fourth thing which is we're now fully capitalized, right, to go after those opportunities. And so we know where we're investing and now it's execution, execution and execution. So thanks very much..

That concludes the Planet fiscal Q3 2022 earnings call. Thank you for your participation. You may now disconnect your line..