Planet Labs (PL) Q2 2026: Backlog Soars 245%, Locking In Multi-Year Revenue Visibility
Planet Labs delivered a pivotal Q2, with a 245% surge in backlog underpinning multi-year growth confidence. The company’s dual-engine model of AI-enabled data solutions and sovereign satellite services is gaining traction, especially in defense and intelligence. With free cash flow profitability arriving a year ahead of plan and major new contracts secured, Planet enters FY27 with robust momentum and operational leverage.
Summary
- Backlog Expansion Unlocks Growth: Record backlog sharply increases revenue visibility over the next two years.
- AI and Satellite Services Gain Traction: Defense, intelligence, and commercial customers accelerate adoption of integrated solutions.
- Profitability Arrives Early: Cash flow positive milestone reached ahead of schedule, supporting further fleet and solution investments.
Performance Analysis
Planet Labs’ Q2 results reflect a business in transition from pure data sales to a multi-pronged solutions and services provider. Revenue grew 20% year-over-year, with defense and intelligence delivering standout 41% growth, now comprising a growing share of the mix. The commercial segment returned to growth, up 6% YoY and 13% sequentially, led by agriculture and energy use cases. Civil government was a drag, down 4% YoY, with Norway’s NICFI contract expiration offsetting new wins in the UK and Latin America.
Margin dynamics improved materially, with non-GAAP gross margin up to 61% (from 58% last year), driven by high-margin data subscriptions, especially among government clients. Adjusted EBITDA remained positive for the third straight quarter, and free cash flow margin hit 39%. Notably, the customer count declined as the sales team shifted focus to larger, higher-value accounts, driving up average revenue per customer. Regional growth was strongest in Asia-Pacific and EMEA, while North America was flat due to timing of government pilots.
- Backlog Acceleration: Backlog rose to $736 million, up 245% YoY, now covering 59% of the next two years’ revenue, providing strong forward visibility.
- Defense and Intelligence Outperformance: Sector delivered 41% YoY growth, with new U.S. and European contracts, and expanded maritime domain awareness solutions.
- Commercial Inflection: Sequential and YoY growth in commercial signals broader applicability of Planet’s solutions beyond government.
Operational discipline and capital allocation were evident, with CapEx focused on next-gen fleets (Pelican, Tanager, Superdove) to capture rising demand, and cash position rising for a second consecutive quarter.
Executive Commentary
"Our backlog increased to $736.1 million at the end of the quarter, representing a year-over-year increase of 245%, which provides us with excellent visibility to revenue over the next 12 to 24 months and gives us confidence in our growth acceleration into FY27."
Will Marshall, CEO, Chairperson and Co-Founder
"Q2 represented our first rolling 12 months of free cash flow profitability, something our team should be very proud of, given the work they all contributed to get us to this milestone."
Ashley Johnson, Chief Financial Officer
Strategic Positioning
1. Dual-Track Model: Data Solutions and Satellite Services
Planet’s business model now rests on two pillars: recurring data and AI-driven solutions, and multi-year satellite services contracts. The company is leveraging its daily scan archive and AI to deliver actionable insights, while sovereign satellite deals (such as with Germany and Japan) provide long-term, high-value revenue streams and working capital benefits, reducing reliance on balance sheet funding for fleet expansion.
2. Defense and Intelligence as Growth Engine
Defense and intelligence contracts are now the primary growth engine, with new and expanded awards from the U.S. Department of Defense, National Reconnaissance Office, NATO, and others. Maritime domain awareness, persistent surveillance, and hybrid space architecture are key solution areas, with Planet’s unique daily scan capability serving as a major competitive differentiator.
3. Commercial Sector Re-Ignition
After a prolonged stagnation, commercial revenue returned to growth, driven by agriculture, energy, and insurance. Partnerships with companies like Farmdar and Swiss Re validate the cross-sector applicability of Planet’s data and analytics, and AI is lowering barriers for new use cases in crop monitoring, disaster response, and risk management.
4. Technology and Fleet Investments
Investment in next-generation fleets (Pelican, Tanager) is central to Planet’s strategy, enabling higher resolution, more frequent data, and new hyperspectral capabilities for methane and CO2 detection. Rapid launch cadence and full-stack integration are viewed as competitive moats, allowing faster customer onboarding and bespoke solutions.
5. AI Partnerships and Ecosystem Leverage
AI is both a product enabler and a market unlock, with partnerships including Anthropic, Google, and NVIDIA focused on fine-tuning large language models on Planet’s imagery. This positions Planet at the intersection of space data and generative AI, expanding addressable markets and solution depth.
Key Considerations
This quarter marked a shift from growth-at-all-costs to operational leverage and capital discipline. Planet’s evolving customer mix, contract structure, and technology investments all point to a more durable business model, but several watchpoints remain.
Key Considerations:
- Backlog Quality and Timing: The majority of backlog is multi-year, with front-loaded payments on satellite services, but revenue recognition will be spread, requiring ongoing execution and delivery milestones.
- Customer Concentration: Defense and intelligence now drive a large share of growth, increasing exposure to government budget cycles and procurement risk.
- Margin Mix Shift: Satellite services contracts are lower margin in the build phase, with profitability ramping in later years; near-term gross margin will fluctuate based on contract mix.
- Commercial Growth Sustainability: While Q2 saw a rebound, it remains to be seen if commercial can become a stable, high-growth contributor or if momentum is episodic.
- AI Execution Risk: While AI partnerships are promising, competitive advantage depends on successful model training and integration into customer workflows.
Risks
Heavy reliance on government contracts exposes Planet to budget delays, shifting priorities, and contract renewal uncertainty. Execution risk remains around large-scale satellite deployments and maintaining high-margin data subscription growth. The margin profile will be pressured in the near term as satellite services revenue ramps, and commercial sector growth is not yet proven to be durable. Geopolitical and regulatory factors could also impact international contract fulfillment and data access.
Forward Outlook
For Q3, Planet guided to:
- Revenue of $71 to $74 million
- Non-GAAP gross margin of 55% to 57%
- Adjusted EBITDA between minus $4 million and break even
- CapEx of $18 to $24 million
For full-year 2026, management raised revenue guidance to:
- $281 to $289 million
- Non-GAAP gross margin of 55% to 57%
- Adjusted EBITDA loss of $7 million to break even
- CapEx of $65 to $75 million
Management emphasized strong backlog-driven visibility, ongoing investment in fleet and AI, and a continued focus on operational efficiency. They noted that government customer usage patterns may normalize, and margin will fluctuate with contract mix.
- Backlog supports sustained growth into FY27
- Free cash flow positive for the year, ahead of prior targets
Takeaways
Planet Labs is entering a phase of heightened visibility and operational leverage, with a record backlog and early free cash flow profitability supporting continued investment in technology and solutions.
- Multi-year backlog locks in growth, but execution on satellite services and maintaining high-margin data business are critical for margin expansion.
- Defense and intelligence are now the primary growth drivers, but customer concentration risk is elevated; commercial must scale for diversification.
- Investors should watch for commercial momentum, AI-driven solution launches, and margin evolution as the contract mix shifts and new fleets come online.
Conclusion
Planet Labs’ Q2 marked a strategic inflection, with a 245% backlog surge, strong defense momentum, and early profitability milestones. The company’s dual-track model and technology investments position it for durable growth, but execution on large contracts and commercial scaling will define its long-term trajectory.
Industry Read-Through
Planet’s results signal a broader shift in the Earth observation and geospatial analytics industry toward bundled data, analytics, and sovereign satellite services. Heightened geopolitical tensions are driving demand for sovereign space capacity and persistent monitoring, a trend likely to benefit vertically integrated players with rapid deployment capability. AI partnerships and solution-centric go-to-market strategies are becoming essential, raising the bar for competitors reliant solely on raw data sales. The commercial rebound, if sustained, could spark broader adoption of satellite analytics in agriculture, insurance, and energy, while the margin and contract structure evolution will be closely watched by peers and investors alike.