Is Planet Labs Stock Stronger Than It Looks?

Investors often view Planet Labs (PL) simply as a vendor of satellite imagery, but the company’s business model is expanding. It now builds and operates custom satellites for government clients, and this emerging hardware focus may matter more than the share price suggests. A stark contradiction remains, however: the company continues to report a loss, and the stock has lost 50% in six months. So, how much do government satellites already add to Planet’s sales?

Planet Already Sells Satellites To Governments

Rather than simply subscribing to an imagery feed, some government agencies now prefer to own dedicated satellites. Planet manufactures these custom units, hands them over, and can operate them on the client’s behalf. The company recognizes a sale like this at the moment it delivers the hardware. In fiscal Q2 2027, Planet booked 12% of its revenue at the moment of delivery, compared with just 1% a year earlier.

That Q2 delivery involved the first Pelican satellite built for the Swedish Armed Forces. During an earnings call on September 3, 2026, management cited this handover as the primary reason sales exceeded expectations. Revenue grew about 58% from a year earlier.

This expansion is strongest in defense and intelligence. Sales to defense and intelligence customers, which include the custom satellite work, grew more than 90% from a year earlier. Over the same period, sales to commercial customers grew more than 15%.

Has Planet Signed The Next Government Satellites?

For the most part, those next big orders remain pending. On the same call, management outlined more than $4 billion of possible satellite orders, noting that it considers over 25% of them as near-term opportunities. Planet is already preparing for higher volume. A new manufacturing plant in Germany is expected to roughly double its manufacturing capacity.

Actual signed contracts are growing slowly so far. Planet ended Q2 with a backlog of about $815 million, up about 11% from a year earlier.

Planet Is Forecasting A Dip After Its Handover

Planet projected fiscal Q3 revenue of between $101 million and $105 million, a drop from the $116 million generated in Q2. A satellite handover lands in a single quarter, and management said that the share of sales booked on delivery will vary from quarter to quarter. As a result, a single reporting period offers limited insight into whether Planet is successfully converting its possible orders into actual contracts.

Profit on the hardware side will prove similarly volatile. Management indicated that margins on these deals depend on how far along each delivery is, meaning gross margin will fluctuate by quarter.

So the backlog provides a clearer picture of the business than quarterly sales. If that backlog is still growing at about 11% or less when Planet reports fiscal Q3 2027, it would show that the multibillion-dollar pipeline of possible orders is not yet materializing into firm contracts.

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