Planet Labs (PL 0.00%↑ ) reported earnings for Q4 2023 and full year 2023 as follows:
PL grew sales about 45% year over year, and is projecting sales of between $248-$268 million in the coming year (fiscal year 2024). Taking the midpoint ($258 million), that would equate to an increase in sales of 35% for the coming year.
PL has an enterprise value of about $661 million, with no debt. So the company is trading at about 2.5x projected sales for the coming year. PL is not profitable and the company burned through about $85 million for the year ended January 31, 2023.
Overall, PL falls in the “too hard to understand camp”. I can see a number of scenarios play out over the coming years where this is a $2 billion+ company with strong recurring revenues, a sticky customer base, and prospects for sustainable profitability. I could also see a scenario where the company hits a sales wall and starts treading water if they are not able to demonstrate a value proposition to their customers. All that being said, I am honestly impressed with what PL has been able to deliver so far. Management has set ambitious sales targets and delivered on them. They have promised expansion into new verticals and it seems like that they are delivering in that area as well.
From the earnings call, this stuck out to me:
This seems like the potential for a “killer app”. I don’t know. It seems impressive on the surface. Time will tell I guess. I also like the things the company said about having flexibility with regard to capex spending depending on how sales come in. Also, I like that PL has a lot of cash on hand. That gives them a lot of flexibility navigating through the current environment. I am starting to get a better sense of the value proposition with PL. It seems like the company is able to have a good read through into customer needs and meet those needs. There could be something there.
I added to PL below $4. I think it is a pretty good risk/reward at this level.
I am long PL.
References:
Planet Earnings (September 17, 2022)
Planet Labs (June 15, 2022)
Planet Labs II (April 16, 2022)
Planet Labs (December 21, 2021)