What Are Planet Labs Stock Bulls Not Worried About

Shareholders of Planet Labs (PL) have faced a difficult six months: the stock lost 55% while the S&P 500 gained 12.6%. The company, however, just reported a record quarter featuring revenue of $116 million in fiscal Q2 2027. Optimistic investors might view those figures as reassuring, but executives attributed most of the beat to a specific type of contract. So what else comes with that kind of deal?

Planet Expects Satellite Deals To Make Its Quarters Uneven

Planet categorizes these contracts as satellite services, where a government either owns a satellite or secures direct access to one. The largest portion of the fiscal Q2 2027 beat came from delivering the first Pelican satellite for the Swedish Armed Forces.

The company recognizes revenue from this type of handover at a single point in time rather than spreading it over the life of a contract. Such recognized revenue made up 12% of total revenue in fiscal Q2 2027, compared to 1% in the same quarter a year earlier. Executives expect that percentage to increase alongside satellite services, and to vary from quarter to quarter. For fiscal Q3 2027, the company forecasts revenue of $101 million to $105 million, falling short of the recently reported record.

Margins also fluctuate with these arrangements. During the fiscal Q2 2027 call, executives noted that the margin on satellite services is different. The company anticipates some variability in gross margin as the overall business mix evolves from quarter to quarter. Planet's quarterly results therefore depend partly on the exact timing of individual satellite handovers.

How Large Could Planet's Satellite Services Get?

The company has identified over $4 billion of satellite services opportunities, including about $1 billion in near-term prospects, and executives noted the pipeline has never been this large. It remains unclear how much of that total will actually translate into revenue, or in which quarter. When asked about programs in the Pentagon budget, the company confirmed a high level of interest but offered no specifics.

These contracts are already visible in Planet's financial results. Its Defense and Intelligence revenue, which includes satellite services, increased more than 90% from a year earlier in fiscal Q2 2027, compared to growth of more than 15% for commercial revenue.

Planet stock currently sits 70.5% below its 52-week high. Even at that level, it trades at 14.4 times sales, compared to 3.1 for the S&P 500. The company's P/E is not meaningful because Planet lost money over the past twelve months. At that sales multiple, the current valuation appears to assume the business will maintain rapid growth quarter after quarter.

Planet Fell Harder Than The Index In Past Shocks

Planet stock has historically fallen harder than the broader index during market shocks. The shares dropped 47% in the 2025 US tariff shock, compared to a 19% decline for the S&P 500. During the 2022 inflation shock, as the Fed tightened policy, Planet fell 36%, while the index lost 24%.

Investors must weigh the real risks of the satellite deals alongside broader market exposure. The resulting volatility is an immediate factor, as executives openly expect these contracts to produce uneven quarters. Planet reported a non-GAAP gross margin of 59% in fiscal Q2 2027, a figure the company described as better than expected. With forward guidance set between 56% to 58%, gross margin remains the metric to watch when Planet reports its fiscal Q3 2027 results.

Does This Mean You Should Act On PL?

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