Shares of Planet Labs PBC (NYSE: PL) experienced a volatile trading session on Friday, ultimately giving back most of a significant premarket gain. The stock had jumped as much as 12.3% in early trading before retreating, as investors weighed the company's record revenue against a concerning decline in its order backlog.
By 9:46 a.m. EDT, shares were trading at $18.52, up just 0.9% from Thursday's close of $18.35. This was a sharp reversal from the premarket high of $20.60, which had suggested a much stronger opening. The early enthusiasm was tempered by the company's fiscal Q2 2027 earnings report, which revealed a mixed picture of strong financial performance but weakening forward indicators.
Record Revenue and Improved Profitability
Planet Labs reported revenue of $116.1 million for the fiscal second quarter, a 58% increase year-over-year and a 23.2% sequential gain. This marked a new record for the Earth-imaging company, driven by fresh contracts and strong demand for its satellite data services.
The company also demonstrated meaningful progress toward profitability. Adjusted EBITDA came in at $13.9 million, up from $6.4 million in the same period last year. On a GAAP basis, the net loss narrowed significantly to $9.4 million, compared to a loss of $22.6 million in the year-ago quarter. Recurring contracts represented 98% of annual contract value, underscoring the stability of the revenue base.
Chief Executive Will Marshall highlighted the "record revenue of $116.1 million, representing 58% year-over-year growth," in the earnings release. However, while the quarter's results were impressive, the company's guidance for the current quarter painted a more cautious picture.
Backlog Contraction Raises Concerns
The primary source of investor anxiety was the company's backlog, which fell to $814.9 million as of July 31, down from $900.4 million at the end of January. This represents a 9.5% contraction, or an $85.6 million decline over the six-month period.
More importantly, the company's remaining performance obligations (RPO), a stricter measure that excludes cancelable orders and government contracts without appropriated funds, stood at $753.1 million. The $61.7 million gap between backlog and RPO highlights the potential for some of those orders to be canceled or delayed.
Management estimates that half of the backlog will convert into revenue within the next 12 months, with 70% expected to be recognized within two years. However, the recent contraction suggests that new contract awards are not keeping pace with revenue recognition.
Q3 Guidance Points to a Pullback
Looking ahead, Planet Labs guided for Q3 revenue of $101 million to $105 million, with a midpoint of $103 million—an 11.3% decline from Q2. The company also expects adjusted EBITDA to swing to a loss of $1 million to $6 million, a notable reversal from the $13.9 million profit in Q2.
This guidance suggests that the company's growth trajectory is not linear, and the market is bracing for a potential slowdown. The company's cash position, however, provides some cushion. Planet Labs held $865.4 million in cash and short-term investments, with $28.8 million in year-to-date adjusted free cash flow.
It's worth noting that approximately $120 million of the cash balance came from sales under an at-the-market (ATM) stock program, with shares sold at an average net price of $31.95 per share—well above the current trading price. While this provided capital at a favorable price, it also diluted existing shareholders.
Market Reaction and Outlook
For fiscal 2027, Planet Labs forecasts revenue of $430 million to $441 million, with adjusted EBITDA between $3 million and $10 million. The key question for investors is whether the Q3 guidance reflects temporary timing issues or a more fundamental slowdown.
If backlog stabilizes and new contracts flow in, the current weakness could be seen as a buying opportunity. However, another decline in backlog, coupled with weakening margins, would signal a more concerning trend. The market's reaction on Friday suggests that investors are adopting a wait-and-see approach, balancing the company's strong execution against the uncertainty in its forward pipeline.
