Today witnessed another surge in Planet Labs' share price.
Planet Labs, the Earth observation satellite operator, saw a 8% surge in its shares last month, following the announcement of a "six-figure deal" with Global Fishing Watch. This partnership allows Planet Labs to help monitor fishing activities globally. Interestingly, despite another potential deal worth up to 10 times as much, the stock is only up 4.5% as of Monday morning.
This morning, Planet Labs announced a "multiyear, seven-figure deal" with climate finance company Laconic. The deal involves Laconic using Planet Labs' satellite images to generate "AI-powered forest carbon insights", which can be used to value carbon credits and securities in the global market. This could be a significant revenue stream for Planet Labs, especially considering the value of last month's deal.
However, Planet Labs is notoriously vague about the details of these contracts. It's unclear whether "six figures" refers to $100,000 or $999,999 in revenue, or how long these revenues will be spread over. The same goes for the recently announced seven-figure deal; it's unclear whether the revenue is annual or spread over a longer period. This lack of transparency makes it challenging for investors to accurately assess the financial impact of these deals.
In the context of data companies, this opacity is particularly perplexing. The more information Planet Labs provides about its contracts, the less clear the picture becomes for investors. It's a strange paradox that highlights the need for greater transparency in how these companies value and disclose their revenue-generating agreements.
On a related note, Planet Labs recently signed a $230 million multi-year agreement with an Asia-Pacific commercial partner to build and deliver a constellation of new Pelican high-resolution satellites. The revenue from this agreement will be recognized over approximately seven years, posing short-term financial challenges but potentially improving financial stability in the long term. The agreement is a significant milestone for Planet Labs, strengthening its market position and capabilities.
In conclusion, while Planet Labs' deals are financially beneficial in the long term, the extended revenue recognition period creates transparency issues regarding the immediate financial impact and the duration of the contract's value. This makes it difficult for investors to accurately assess the company's short-term financial health based on these agreements.
Investors may find it challenging to evaluate Planet Labs' financial performance due to the company's ambiguity in disclosing the exact figures and duration of its deals, such as the "multiyear, seven-figure deal" with Laconic for generating AI-powered forest carbon insights. This lack of clear financial information can hinder informed investing decisions in the short term.
As Planet Labs continues to secure significant deals like the Laconic agreement and the $230 million partnership with an Asia-Pacific commercial partner, the company should consider improving its financial disclosure to provide investors with a more comprehensive understanding of its financial prospects in both the short and long term.
