Planet Labs Breaks Its Trend, But I’m Buying the Weakness
Let’s review the quarterly results, what the chart looks like and why I’m adding.
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On Thursday evening, portfolio holding Planet Labs (PL) released its fiscal first-quarter financial results. For the period ended April 30, Planet Labs posted an adjusted loss per share of $0.03 (GAAP loss per share: $0.40) on revenue of $94.15 million. The top and adjusted bottom-line results both beat Wall Street’s expectations, while that revenue print was good for year-over-year growth of 41.9%.
The lion’s share of the adjustment was made for the purpose of changed valuations in the fair value of warrant liabilities. During the quarter, the company’s remaining performance obligation ran up 81% to $816 million while the order backlog grew 72% to more than $906 million. In all, it looks as if the business is starting to do much better.
Co-Founder, Chair and CEO Will Marshall commented in the press release:
“Planet’s excellent start to the year is a testament to the mission-critical nature of our data in an increasingly complex world. Planet is executing with speed and focus, evidenced by the successful launch of Sweden’s first sovereign reconnaissance satellite just four months after contract signing. By investing in AI, we are positioning Planet at the forefront of the industry and pioneering ways to make planetary-scale insights available and actionable to more users than ever before.”
Operations
As sales grew 41.9% to $94.15 million, the cost of that revenue increased 47.5% to $43.749 million. This left a gross profit of $50.401 million (+37.7%) as gross margin narrowed to 53.5% from 55.2%. GAAP operating expenses increased 43.7% to $85.289M, leaving a GAAP operating loss of $34.888 million (versus a loss of $22.771 million). GAAP net loss came to $138.872 million or a GAAP loss per share of $0.40.
This measures poorly against the $0.04 loss per share from the same period last year, but does include a loss of $106.474 million tied to those warrant liabilities and is not an indictment against the business. After adjustments, net loss printed at $8.757 million, versus a loss of $9.315 million. This was good for an adjusted loss per share of $0.03, which was even with the year-ago comp.
Guidance
For the full fiscal year, Planet Labs now sees revenue landing in a range spanning from $425 million to $441 million. This was up from prior guidance of $415 million to $440 million.
Adjusted gross margin is expected to print between 52% and 54%. Adjusted EBITDA is projected in the range from roughly $0 to $10 million.
Finally, the company sees capex spending in the range of approximately $80 million to $95 million.
Fundamentals
For the period reported, Planet Labs generated operating cash flow of $15.44 million. Out of that number came capex spending of $17.31 million and capitalized internal use software spending of $647,000. This left “free” cash flow of -$2.517 million, versus the year-ago comp of +$8.002 million when capex spending was less than half.
Turning to the balance sheet, Planet Labs ended the quarter with a cash position of $731.725 million and inventories of $9.343 million. That left current assets at $848.978 million. Current liabilities add up to $302.549 million. There is no short-term debt in this number, but $230.682 million of that total is labeled as deferred revenue, which is not a true financial obligation. This puts the adjusted current ratio at an incredibly muscular 11.81.
Total assets amount to $1.251 billion, of which just 13.5% is labeled as either goodwill or other intangibles. This is exceptional. Total liabilities less equity comes to $807.727 million. This does include $447.569 million in convertible notes which the company, in theory, could cover almost two times over out of pocket. There is also a small amount of non-current deferred revenue.
This is a top-notch balance sheet.
Opinion
The quarter wasn’t bad. The business is growing, which could create pricing power.
Capex spending is up huge, impacting cash flows. However, the balance sheet is in “beyond excellent” condition.
I will be adding to the $10,000 portfolio’s long position on Friday morning’s weakness.
Readers will see that PL dropped out of trend this morning, while losing its 50-day simple moving average (SMA). The shares are now trying to find support at the halfway back (50% retracement) point of the early February through late May rally.
Relative Strength has dropped out of bed, as has the daily moving average convergence divergence (MACD). That said, I do not at all feel that all is lost here.
Wall Street Says…
Analyst Michael Latimore of Northland Securities was assigned coverage of PL by his firm. Latimore has adopted a “buy” rating on the stock while increasing his firm’s target price to $50 from $33. Latimore is rated at five stars out of five by TipRanks. Over the past two years, Latimore has had a 43% success rate with a 29.1% average return.
Analyst Ryan Koontz of Needham was assigned coverage of PL by his firm. Koontz has adopted a “buy” rating on the stock while setting his firm’s price target at $53. Koontz is rated at five stars out of five by TipRanks. Over the past two years, Koontz has had a 54% success rate with a 73% average return.
Analyst Dan Ives of Wedbush reiterated a “buy” rating on PL while reiterating his target price at $50. Ives is rated at five stars out of five by TipRanks. Over the past two years, Ives has had a 59% success rate with a 32.6% average return.
Analyst Gregory Pendy of Clear Street reiterated a “buy” rating on PL while increasing his target price to $53 from $34. Pendy is rated at five stars out of five by TipRanks. Over the past two years, Pendy has had a 70% success rate with a 44.3% average return.
Analyst Jeff Van Rhee of Craig-Hellum reiterated a “buy” rating on PL while increasing his target price to $49 from $36. Van Rhee is rated at five stars out of five by TipRanks. Over the past two years, Van Rhee has had a 48% success rate with a 27.2% average return.
Recent Portfolio News
Amazon (AMZN)
On Friday morning, analyst Mark Shmulik of Bernstein reiterated a “buy” rating on AMZN while reiterating his target price at $315. Shmulik is rated at four stars out of five by TipRanks. Over the past two years, Shmulik has had a 62% success rate with an 18.9% average return.
Palantir Technologies (PLTR)
On Friday morning, analyst John McPeake of Rosenblatt reiterated a “buy” rating on PLTR while reiterating his target price at $225. McPeake is rated at four stars out of five by TipRanks. Over the past two years, McPeake has had an 82% success rate with a 36.1% average return.
On Friday morning, analyst Arvind Ramnani of Truist Financial reiterated a “buy” rating on PLTR without setting a target price. Ramnani is rated at one star out of five by TipRanks. Over the past two years, Ramnani has had a 38% success rate with a -1.7% average return.
Snap Inc (SNAP)
On Thursday, news broke that Snap (SNAP) was acquiring spatial augmented reality company Illumix in an effort to bolster its AR efforts. The Snapchat parent, reportedly, did not disclose the transaction’s value.
Thursday’s Intention vs Thursday’s Actual Trade
Purchase 2 shares of RKLB at $114 or better.
- Nothing Done.
Friday’s Intention
Purchase 3 shares of PL at or close to the last sale of $34.48.
Purchase 2 shares of RKLB at $114 or better.
Current Positions
Long 100 shares of ALTO at $5.79. Target Price: $9. Last sale: $5.39.
Long 2 shares of AMZN at $263.71. Target Price: $324. Last sale: $252.37.
Long 60 shares of EVLV at $5.9895. Target Price: $8.50. Last sale: $6.26.
Long 200 shares of OCUL at $8.271. Target Price: $11. Last sale: $8.69.
Short one OCUL $11 Sep 18th call at $1.65, Last sale: $1.35.
Short one OCUL $9 July 17th call at $0.90. Last sale: $1.18.
Long 150 shares of ONDS at $9.7624. Target Price: $14. Last sale: $10.95.
Long 7 shares of PL at $37.18. Target Price $55. Last sale: $34.48.
Long 10 shares of PLTR at $137.906. Target Price: $194. Last sale: $138.26.
Long 5 shares of RKLB at $59.206. Target Price: $185. Last sale: $111.89.
Long 150 shares of SIDU at $3.0909. Target Price: $6. Last sale: $4.41.
Long 200 shares of SNAP at $5.7642. Target Price: $7.50. Last sale: $5.97.
Short two SNAP October 16th $6 calls at $0.87. Last sale: $1.09.
Long 150 shares of SOFI at $15.9035. Target Price: $24. Last sale: $16.41.
Short one SOFI August 21st $20 call at $1.02. Last sale: $0.95.
Long 35 shares of VELO at $12.3231. Target Price: $30. Last sale: $16.75.
Cash: $541.46.
Portfolio Value: $11,862.19, +18.6% from inception on March 24th.
At the time of publication, Guilfoyle was long ALTO, AMZN, EVLV, OCUL, ONS, PL, PLTR, RKLB, SIDU, SNAP, SOFI, VELO; Short SOFI, SNAP, OCUL.
