The reason behind the decrease in Planet Labs' share value post-earnings report.
Space Tech Firm (PT 3.08%) witnessing a 3.9% decline in share value by 11 a.m. ET, on Tuesday, following its Q3 financial report unveiled late yesterday.
Anticipating a $0.04 per share loss (adjusted for one-time expenses), analysts had predicted sales of $63.1 million for the firm. Conversely, the company registered sales of $61.3 million. Although the reported quarterly loss of $0.02 per share fell short of the generally accepted accounting principles (GAAP), the pro forma loss of $0.02 per share was lower than expected.
Q3 Earnings Analysis for Space Tech Firm
Ashley Johnson, the company's CFO, commended the "notable enhancement of the core business fundamentals during the quarter, as evidenced by the year-over-year and sequential advancement in profit margins." This praise is warranted.
Comparing the 47% gross profit margin from Q3 in the previous fiscal year (2024) to the 61% gross margin in Q3 of the current fiscal year (2025), there is a remarkable improvement of 14 percentage points. Furthermore, the firm's non-GAAP gross margin now stands at 64%, with a potential increase to 65% in the next quarter. When preparing for its IPO three years back, the company had stated that by fiscal 2026 (actually, 2025), it would achieve a non-GAAP gross margin of 74%.
The firm is making impressive strides towards achieving this target.
Is Space Tech Firm Stock a Viable Investment?
While the firm fails to meet expectations in terms of revenue growth, it remains successful in other areas.
Three years ago, the company had pledged sales of approximately $449 million in fiscal 2025, accompanied by a 55% revenue growth rate. However, with year-to-date sales amounting to $183 million, and an estimated Q4 revenue of no more than $63 million, the firm seems poised for a potential annual revenue of $250 million -- a significant gap from the $400 million target set three years ago.
Moreover, the annual growth rate is currently at about 11%, significantly less than the predicted 55%.
In light of these figures, it becomes challenging to consider the Space Tech Firm as a growth stock. However, if the company succeeds in turning a profit, the stock might still prove to be a worthy investment.
Despite the current revenue growth falling short of expectations, Space Tech Firm's finance department has shown remarkable improvement in profit margins, leading to a potential increase in the non-GAAP gross margin to 65% in the next quarter. This progress towards the 2025 target of a 74% non-GAAP gross margin makes investing in the company's stock an attractive prospect for those interested in finance and money, particularly if the firm manages to turn a profit in the future.
