Planet Labs (PL -3.10%) stock tumbled 3.9% through 11 a.m. ET Tuesday after reporting mixed Q3 earnings last night.
Heading into the report, analysts forecast Planet Labs would lose $0.04 per share (adjusted for one-time items) on sales of $63.1 million. In fact, Planet reported an underwhelming $61.3 million. Its loss for the quarter, however, was a better-than-expected $0.02 per share pro forma, and $0.07 under generally accepted accounting principles (GAAP).
Planet Labs Q3 earnings
Planet Labs CFO Ashley Johnson hailed the company's "significant improvement in the fundamentals of the business during the quarter, as evident in the year-over-year and sequential improvement in margins" -- and she has reason to boast.
Compared to the 47% gross profit margin recorded in Q3 of last year (fiscal 2024), this space company's gross margin of 61% in fiscal Q3 2025 represents 14 full percentage points of improvement. The company further noted its non-GAAP gross margin is now 64%, and Planet might hit 65% next quarter. For context, when preparing for its IPO three years ago, Planet had promised that by fiscal 2026 (i.e., actual 2025), the company would be pulling down non-GAAP gross margins of 74%.
Planet is now well on its way to fulfilling that promise.
Is Planet Labs stock a buy?
Where Planet is failing to deliver on its promises is on revenue growth.
Three years ago, laying out its path to profitability, Planet forecast sales of roughly $449 million in fiscal 2025, and a revenue growth rate of 55%. Year-to-date sales, however, are only $183 million, and with its Q4 forecast of no more than $63 million, Planet now looks on course for perhaps $250 million in sales this year -- about $200 million short of the goal it set itself three years ago.
Plus, these revenues are only growing at about 11% annually -- a far cry from 55%.
With numbers like these, it's hard to call Planet Labs as a growth stock anymore. It might still manage to turn a profit, however. If it can accomplish that, the stock might still be worth buying.
