Planet Labs Stock Surges 38%. Here’s Why.

Planet Labs posted better-than-expected revenue and a narrower-than-anticipated loss in its fiscal second quarter. (Courtesy Planet Labs/NASA)

Planet Labs stock soared Monday after the Earth imaging company posted a narrower-than-expected loss in the fiscal second quarter and raised its guidance.

Planet Labs, which operates more than 150 satellites in orbit, posted a second-quarter loss of 7 cents a share, narrower than the 9-cent loss analysts had forecast, according to Bloomberg. Revenue surged 20% to $73.4 million and came in above the $66.1 million Wall Street had expected.

The company also notched its second quarter of positive free cash flow. Year to date, that number stands at $54.3 million.

For the fiscal year, Planet Labs guided for revenue of $281 million to $289 million, up from a prior range of $265 million to $280 million. Analysts polled by Bloomberg were looking for $273 million.

CEO and co-founder Will Marshall cited a handful of “pivotal contracts” with collaborators such as NATO, the German government, and the U.S. Department of Defense. These partnerships demonstrate “the critical role Planet plays in addressing global challenges and supporting peace and security,” Marshall said.

Planet Labs stock surged 38% to $8.99 on Monday, putting it on pace for the highest close since Dec. 10, 2021, when it ended the session at $9.47, according to Dow Jones Market Data. Shares have gained more than 122% this year.

The benchmark S&P 500 was up 0.3%. Follow satellite operator BlackSky Technology was up 0.6%, while space launch provider Rocket Lab and equipment manufacturer Redwire rose 3.4% and 0.5%, respectively.

Cantor Fitzgerald analysts noted Monday that the company was “materially accelerating” its FCF targets. On the earnings call, Planet Labs CEO Marshall said the company was expecting to be FCF positive for the fiscal year, “over a year ahead of our prior target and a major milestone for the company.”

“We also got the sense that the domestic environment was
improving thanks to material acceleration with DoD customers,” analysts wrote. This comes despite initial concerns about demand from the National Reconnaissance Office, an arm of the U.S. Department of Defense, and NASA.

Come October’s investor day, Cantor Fitzgerald will be looking for color on the company’s multi-year sales and free cash flow expectations. The firm rates the stock at Overweight with a $8.50 price target.

Of nine analysts polled by FactSet, eight rate Planet Labs at Buy or the equivalent. Just one rates it at Hold.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com