$PL Q2 2023
A few highlights from the quarter:
  • Accelerating revenue growth (+59% Y/Y)
  • Increasing customer spend (125% net dollar retention rate vs. 105% in Q1)
  • Gross margin +1400 basis points since Q3 2022 (quarter prior to going public)
  • Continued operating leverage (OpEx at 136% of revenue vs. 191% in Q4 2022)
  • Second consecutive quarter raising guidance

If you're interested in reading more, I shared a few thoughts here.
SLT Innovation Portfolio: Update on Planet Labs ($PL) - the company boosts its full-year forecasts
PL is the "Bloomberg Terminal" for Earth data is a company in which we are invested since 2/27 this year, as part of the SLT Innovation Portfolio. What struck me when analyzing the company is that digital and sustainability transformation is reaching almost all industry, hence PL has a massive TAM. The company is operating with a highly scalable business model and experts estimate that PL has a 5 years lead over competitors mainly due to significantly higher square kilometers covered, and more advanced technology.

After the closing bell yesterday, PL reported FY23 Q2 earnings and boosted its full-year guidance for revenue and adjusted gross margin. EBITDA loss and Capex have been revised downward.

Top-line growth accelerated during last quarter. NDDR reached 127% and margins improved thanks to the scalable data subscription model. We are still bullish on the company as it is (my opinion) one of the best investible options to gain exposure to the Space industry.

The stock opened c.10% higher today, and even if we adopt a very, very long-term investment horizon for the SLT Innovation Portfolio, the unrealized P&L is +19.67% (in EUR terms) since we initiated the position (following our recommendation in late Feb-22).
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$PL beat consensus estimates on top and bottom lines and raised full year guidance. I will share a more in-depth analysis after I have a chance to review the conference call.

Space continues to be an interesting area to invest!
Sales Cycles at $PL and $SPIR
Planet ($PL) is set to report fiscal Q2 (ending July) earnings on Monday (Sept. 12). My investment thesis largely rests on a continuous expansion of the customer base. As such, it will be interesting to see how sales cycles have trended in the quarter.

$PL reported a shortening of sales cycles in Q1 (ending April):
  • "During Q1, we saw a record number of new deals that were both generated in and closed within the quarter."

When prompted whether this was mostly driven by an urgent need for Ukraine imagery, Will Marshall noted:
  • "I think some of it relates to Ukraine. It’s a little bit hard to parse it out. But, certainly, the Ukraine situation is...pushing demand on the defense and intelligence sector. I will just note out as well that this is now becoming a significant food security crisis and we're tracking that with NGOs and also with our agriculture customers."

Spire Global ($SPIR), a related firm selling a different space dataset (radar-generated), also reported a shortening of its sales cycle in Q1 (ending March):
  • _“We are actually seeing...our sales cycles actually shorten in the near-term.”

In Q2, however, $SPIR saw the sales cycle for some larger contracts stretch out:
  • "The macro environment has also lengthened the time from initial conversation to contract signature for a handful of our larger pipeline deals. And given the ever-changing market conditions that businesses are contending with, we're also seeing some of our customers needing to go through additional approval cycles, while others are taking longer to obtain the necessary funding. While the pipeline remains extremely robust and growing, we're carefully watching our cycle-time to close."

Planet's Q2 sales cycle trend should provide some answers as to the extent the start of the Ukraine War fueled customer urgency. If cycles continue to improve, it may also reveal an interesting difference in the target customer base's contract approval process.
Space SPACs and "The Kindness of Strangers"
Warren Buffett stated in the 2008 Berkshire shareholder's letter, "We never want to count on the kindness of strangers in order to meet tomorrow's obligations." Analyzing the potential reliance of firms on the future kindness of strangers can be a good method to gauge resilience as we enter a period where fresh capital will likely be harder to come by. Already, broad-based declines across newly public (ex. $MAXR, which went public in 2009) space companies hints at a lack of enthusiasm for parking capital in more speculative ventures.

So, how likely are these firms to rely on other people's money to drive growth?

Pretty likely. Most firms seem to be in a somewhat precarious situation with little cash available for growth capital. Planet Labs ($PL) is the notable exception; interestingly, of the four companies above, all except Planet remain in the relatively early stages of building out their planned constellations.
(I excluded $MAXR as it is a more mature business with ~$1.7 billion in TTM revenue. Maxar holds $2.2 billion of debt on its books and only $15 million in cash.)

Additionally, as these firms invest in their future, they are burning significant amounts of cash relative to reserves. For such early-stage ventures, it's difficult to assess the return on these investments, but it's worth understanding which firms will likely need to tap capital markets to fund ongoing investments. (Below numbers reflect the most recent quarter's financials.)

From these numbers, $PL stands out as a particularly resilient operator. At the current quarterly cash burn rate, Planet can last 51 quarters without accessing additional capital. The pace of investments will almost certainly ramp up, but it's a useful reference point. In comparison, at current quarterly run rates:
  • Satellogic ($SATL) has enough cash to fund less than one quarter.
  • Terran Orbital ($LLAP) has ~7 quarters.
  • BlackSky ($BKSY) has ~5-6 quarters.

Again, I excluded Maxar due to the different profile of the business, but the company is already highly levered at 8.5x net debt / EBITDA less capex. Under the same analysis, $MAXR would also have less than a quarter of cushion, but it is less relevant as it has historically been cash flow positive on an annual basis.

This is not an exhaustive analysis by any means, but it's interesting to view the difference in financial condition among companies investing to gain share in the same markets.
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Great post on space SPACS. I do own $SPCE... any reason you didn't include it here? (Alas, I'm not sure they'll be around much longer either.) Another area currently seeing a "lack of enthusiasm for parking capital in more speculative ventures" is biotech.
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Global Space Industry
Two interesting, divergent opinions on the global space industry:
  • Bank of America has the industry valued at $1.4 trillion by 2030.
  • Citi has it reaching $1 trillion only by 2040.

Launch costs have declined precipitously over the last two decades -- more than 10x. Seems BofA views the curve likely to be similar to the one shown below, while Citi projects more of a flattening in the growth rate.

I'm not sure, of course, but I do find it difficult to believe launch costs don't decline significantly again in the next 10 years with the pattern resembling a disruptive innovation curve. New companies are already coming online with launch capabilities. It seems to be a matter of iterations (time) before new supply drives the cost down.

What will companies do with the decline in launch costs to drive the growth of the overall industry? I'm unsure, but confident in our historical capability for innovation.

Consider what Planet Labs ($PL) is doing -- imaging every point on the Earth's surface every day, in a data uniform way. The value of that data in software-form is likely to be highly valuable in the future. As of yet, the viability of the commercially driven space business model is unproven, but I believe launch costs will enable new industries, and with that, new business models.

Just my two cents on an industry I find fascinating.

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This is really a fascinating industry. But never really looked much into it yet when it comes to the landscape of what is investible and what is publicity traded right now and could be interesting. Know only $SPCE and $BA are in it.
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Eric Weiner's avatar
$2.6m follower assets
Micro & Small Caps
Are micro & small caps making a lasting comeback? Since the June "bottom" (bottom so far) some have done phenomenally well. I don't know what's to come, but each of these companies has earned my doubling, tripling and quadrupling down:

*Not advice * I own a sizeable % of each in my own portfolio.
Been experiencing the same in my portfolio. $MVIS reports earnings today, excited to hear some updates!
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Another look at co's trading near/below Cash - more SPACs this time

Did some more screens around this, and the following tickers are registering extremely low Price/Cash from completed SPAC perspective. Any takers out there for these? Write-ups or feedback welcome. All companies at less than 2-1 to cash ratio, some are under.

$LTCH - Fast growing arguably "tech" play at 30%+ under cash. Have read the CEO is a bit off via reviews. Is there a story here?
$NNDM - Additive manufacturing play trading 25%+ under cash. Why?
$SHPW - Similar to above, trading way below cash - seem to be collaborating with Desktop metal. Why the disastrous price - worst on the list? Well under cash.
$BLDE - Obviously a long way for VTOLs to really become a thing, but barely over cash value.
$HLGN - Unique approach to Solar.
$ROIV - Anyone understand this business?
$SPIR - Similar profile to $PL here.
$ASTR - Are reusable rockets going to be a thing? If so, these guys are a top 3 player and trading at cash.
$CURI - I've used the product and like it, although a lot of garbage on there, its value for the price.
$AESE - Cash pile trading at 63 cents on the dollar looking for target. Hit a home run on this last time it was setup similarly a year+ ago. Seen a few of these now. Do we just not trust the mgmt?
$ACHR - Seems like a Rivian-tier player in VTOL space. Can they get across finish line?
$SMFR - They seem to be struggling for a direction without Covid testing growth?
$EVLV - Does the technology here look realistic to take share from metal detectors?
$VLDR - Under cash value, but it's Lidar... seems too competitive.
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