Planet Labs (NYSE: PL) last week announced a €240 million satellite contract with the German government. This news has been well-covered by media outlets. And the stock rose 11.56% following the news. Planet Labs now trades at levels not seen since going public in late 2021.
Only two points are offered for consideration here:
- Germany is a pre-existing customer, with the relationship dating back to November 2021. Thus, investors would be unwise to view this €240 million as revenue in addition to existing levels. Instead, it appears the German government extended its existing relationship with Planet Labs through a follow-on contract.
- Planet Labs did not disclose the length of this new contract. €240 million over three years versus €240 million over eight years present clearly different revenue projections. Planet Labs did however state the revenue will likely commence in January of 2026. This is approximately four years following Planet’s prior announced contract with Germany.
If this new contract is also for a four-year term, this equates to €80 million in yearly revenue. As discussed, this value should not be interpreted as revenue growth, since Germany is an existing Planet customer. However, Planet Labs’ entire revenue from Europe, the Middle East, and Africa over the past four quarters totaled $74 million. So if the new contract equates to €80 million yearly, this still represents significant Germany sourced revenue growth.
But again, if the contract is eight years, it’s entirely possible and consistent with the math that the contract represents little to no growth versus Germany’s current spend.
Nevertheless, the German government’s decision to renew its partnership is a substantial victory for Planet. The alternative scenario, losing this key customer to a competitor like Blacksky, would have presented a significantly different and far less favorable outlook for the company.