Planet Labs (PL) Q3 2026: Backlog Surges 216% as Defense and AI Wins Drive Visibility
Planet Labs’ Q3 marked a pivotal acceleration in government and AI-driven contracts, with backlog and RPO growth vastly outpacing headline revenue gains. Defense and intelligence demand, major new contract wins, and a robust pipeline for advanced satellite services are reshaping the company’s revenue mix and capital allocation. Management’s raised outlook and sustained investment in next-gen platforms signal a strategic shift toward high-value, recurring government business and AI-enabled solutions, with implications for future growth and margin trajectory.
Summary
- Defense-Driven Backlog Expansion: Multi-year government contracts and satellite services are transforming Planet’s revenue base.
- AI and Analytics as Growth Catalysts: New solutions and acquisitions are embedding Planet deeper into customer operations.
- Visibility and Investment Cycle: Record backlog and RPO support aggressive fleet expansion and long-term growth, despite near-term margin compression.
Performance Analysis
Planet Labs delivered 33% year-over-year revenue growth in Q3, led by a dramatic surge in defense and intelligence sector sales, which grew over 70% year-over-year and 15% sequentially. This segment, now the company’s primary growth engine, benefited from landmark wins including the LUNO-B contract with the National Geospatial Intelligence Agency (NGA), a renewed National Reconnaissance Office contract, and a significant U.S. Navy renewal. These awards, alongside international deals, are reshaping Planet’s revenue composition toward larger, multi-year government relationships.
Backlog and remaining performance obligations (RPO) soared 216% and 361% year-over-year, respectively, far outpacing revenue growth and providing multi-year visibility. Free cash flow remained positive for the third consecutive quarter, and adjusted EBITDA profitability was achieved for the fourth straight period, underscoring operational discipline. However, gross margin compressed to 60% (from 64% a year ago), reflecting a mix shift toward satellite services and partner-enabled AI solutions, as well as upfront investments in next-generation fleets. Civil government revenue was stable, while commercial sector revenue declined modestly, consistent with Planet’s pivot toward large government contracts and away from lower-value, seasonal commercial deals.
- Defense and Intelligence Outperformance: Over 70% YoY growth in this segment, now the company’s largest and fastest-growing vertical.
- Backlog and RPO Acceleration: Backlog at $734M and RPO at $672M, supporting multi-year revenue streams and capital investment.
- Margin Compression: Lower gross margin driven by mix shift and investment in satellite services and AI-enabled solutions.
Positive cash flow and balance sheet strength (bolstered by a $460M convertible note raise) enable continued investment in R&D, fleet expansion, and strategic acquisitions. Customer count was flat sequentially, but average revenue per customer rose, reflecting a deliberate focus on high-value, recurring contracts.
Executive Commentary
"Our backlog was $734.5 million at the end of the quarter, representing a year-over-year increase of 216%. Once again, we delivered positive free cash flow, the third quarter in a row, reinforcing our expectation of being free cash flow positive for the full fiscal year. I'm particularly proud to report that with the strong performance in Q3, we are now also expected to be adjusted EBITDA positive in FY26, an excellent milestone for the team as we work to strike a balance between profit and growth."
Will Marshall, CEO, Chairperson and Co-Founder
"We achieved an excellent outcome, raising $460 million at a 0.5% interest rate for a five-year term... This capital provides us a strategic asset in the form of a very strong balance sheet. Year-to-date, we generated approximately $114 million in net cash from operating activities and $55 million in free cash flow. Our focus remains on managing the business to enable sustainable cash flow generation through efficient growth across our data, solutions, and satellite services revenue streams."
Ashley Johnson, CFO
Strategic Positioning
1. Government and Defense as Core Growth Engine
Planet’s strategic pivot toward multi-year government contracts is driving both scale and stability. The defense and intelligence sector, now accounting for the majority of incremental growth, is underpinned by landmark awards from U.S. and international agencies. The LUNO-B win, NRO renewals, and NATO expansions reinforce Planet’s status as a mission-critical partner for AI-enabled surveillance and analytics.
2. AI-Enabled Solutions and Vertical Integration
AI and analytics are becoming core to Planet’s value proposition. The acquisition of Bedrock Research, an AI solutions company focused on remote sensing for national security, accelerates in-house development and operational leverage. Planet is embedding AI capabilities directly into customer workflows, as seen with the AXA insurance partnership, which integrates satellite imagery to automate claims processing and disaster response.
3. Satellite Services and Fleet Expansion
Satellite services are a robust new revenue stream, with the JSAT and German-funded contracts delivering upside and driving demand for sovereign space access. The launch of 38 new satellites (including high-resolution Pelicans and SuperDoves) and the upcoming Berlin manufacturing facility will double production capacity, supporting both direct sales and strategic partnerships.
4. Advanced R&D and Strategic Partnerships
Planet’s R&D pipeline is anchored by Project SunCapture, a collaboration with Google to deploy AI compute in space using custom satellites with Tensor Processing Units (TPUs). This initiative leverages Planet’s experience with large-scale constellations and aligns with the company’s roadmap for next-gen platforms like OWL, which integrates NVIDIA GPUs for real-time analytics. These programs position Planet as a leader at the intersection of space infrastructure and AI.
5. Capital Allocation and Profitability Focus
Disciplined capital deployment is enabling growth without sacrificing profitability. The recent convertible debt raise provides flexibility to fund fleet expansion, R&D, and opportunistic acquisitions. Management is balancing near-term investment in high-growth areas with a commitment to sustained adjusted EBITDA and free cash flow generation, targeting annual profitability even as gross margins fluctuate.
Key Considerations
This quarter marks an inflection in Planet’s business model, as the company transitions from a broad-based commercial data provider to a specialized government and AI-driven solutions partner. The following points shape the strategic context:
Key Considerations:
- Backlog-Led Visibility: Record backlog and RPO provide multi-year revenue coverage, de-risking near-term growth targets.
- AI and Analytics Differentiation: Proprietary AI solutions and partnerships (e.g., Google, AXA) are embedding Planet deeper into customer operations and expanding addressable markets.
- Fleet and Production Scaling: Doubling satellite manufacturing capacity in Berlin positions Planet to meet rising demand from sovereign and commercial customers.
- Margin Dynamics: Near-term margin compression is a function of contract mix, partner fees, and upfront investment in next-gen fleets, but recurring revenue and operating leverage are expected to improve as new platforms scale.
Risks
Key risks include ongoing U.S. government budget uncertainty, which has already led to contract downsizing, and the potential for further shifts in federal funding priorities. Margin volatility will persist as Planet invests in new fleets and absorbs partner costs. Execution risk remains around scaling new AI-driven products, integrating acquisitions, and maintaining operational excellence as fleet complexity grows.
Forward Outlook
For Q4, Planet guided to:
- Revenue of $76M to $80M, reflecting 27% YoY growth at the midpoint and normalization after Q3’s one-time items.
- Non-GAAP gross margin of 50% to 52%, reflecting contract mix and ongoing investments.
- Adjusted EBITDA loss of $5M to $7M, as investment ramps.
For full-year 2026, management raised guidance:
- Revenue of $297M to $301M (up from prior guidance).
- Non-GAAP gross margin of 57% to 58% (improved outlook).
- Adjusted EBITDA profit of $6M to $8M, targeting annual profitability.
Management highlighted:
- Robust backlog and contract pipeline support sustained growth into FY27.
- Investment in next-gen fleets and AI solutions will remain a priority, with profitability maintained at the annual level.
Takeaways
- Government and AI Solutions Are Now the Core Growth Levers: Planet’s business is increasingly tied to defense, intelligence, and AI analytics contracts, which offer scale, visibility, and operational leverage.
- Record Backlog and RPO De-Risk Growth Trajectory: Multi-year contracts and a robust pipeline allow for aggressive fleet expansion and R&D, supporting long-term revenue and margin improvement.
- Investors Should Track Execution on Next-Gen Platforms and Commercial Reacceleration: The ability to deliver on AI-driven solutions, scale production, and reignite commercial growth will determine Planet’s margin profile and multiple in coming years.
Conclusion
Planet Labs’ Q3 results confirm a structural shift toward high-value, recurring government and AI-driven contracts, underpinned by record backlog and multi-year RPO growth. Management’s capital allocation and investment in next-gen platforms are setting the stage for sustained growth, though near-term margin volatility and execution risk remain. The company’s trajectory now hinges on scaling AI-enabled solutions and maintaining discipline as it expands its fleet and customer base.
Industry Read-Through
Planet Labs’ results signal accelerating demand for commercial space-based analytics, sovereign satellite services, and AI-enabled geospatial intelligence, reflecting a broader shift among governments and enterprises toward real-time, actionable data from orbit. The rapid growth in backlog and multi-year contracts points to a secular trend in defense and civil government spending on space infrastructure and analytics, with implications for satellite manufacturers, AI hardware providers, and data analytics firms. The company’s R&D partnerships with hyperscalers like Google also highlight a convergence between space and cloud computing, foreshadowing a future where orbital infrastructure becomes a core component of AI and data center strategies. Investors in aerospace, defense, and data infrastructure should watch for similar pivots among peers as the market for space-based analytics and compute scales.