Prepared remarks
Hello, everyone. Thank you for attending today's Planet Labs PBC Third Quarter of Fiscal 2024 Earnings Call. My name is Sierra, and I'll be your moderator today. All lines will be muted during the presentation portion of the call, with an opportunity for questions-and-answers at the end. I would now like to pass the conference over to our host, Chris Genualdi, VP of Investor Relations with Planet Labs PBC, please proceed.
Thanks, operator, and hello, everyone. Welcome to Planet's third quarter of 2024 earnings call. Before we begin today's call, we'd like to remind everyone that we may make forward-looking statements related to future events or our financial outlook. We also reference qualified pipeline which represents potential sales leads that have not yet executed contracts. Any forward-looking statements are based on management's current outlook, plans, estimates, expectations, and projections. The inclusion of such forward-looking information should not be regarded as a representation by Planet that future plans, estimates, or expectations will be achieved. Such forward-looking statements are subject to various risks and uncertainties, and assumptions as detailed in our SEC filings, which can be found at www.sec.gov. Our actual results or performance may differ materially from those indicated by such forward-looking statements and we undertake no responsibility to update such forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
During the call, we will also discuss non-GAAP financial measures. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in financial and operational decision-making. For more information on the non-GAAP financial measures, please see the reconciliation tables provided in our press release issued earlier this afternoon. Further, throughout this call, we provide a number of key performance indicators used by management and often used by competitors in our industry. These and other key performance indicators are discussed in more detail in our press release.
Before we jump in, I'd like to encourage everyone to reference the slides we have posted on our Investor Relations website, which are intended to accompany our prepared remarks. Finally, for each of the customer contracts referenced during this call, please note that the revenue figures we cite will generally be recognized over the term of the contract, which can last multiple years. Further, the terms of these contracts can vary and we may not realize all expected revenue. At this time, I'd now like to turn the call over to Will Marshall, Planet's CEO, Chairperson and Co-Founder. Over to you, Will.
Thanks, Chris, and hello, everyone. I appreciate you joining the call today. In the third quarter of fiscal year 2024, we achieved a record $55.4 million in revenue, reflecting an 11% increase compared to last year. Our non-GAAP gross margins were at 51.5%, which is above the midpoint of our anticipated range. We recorded an adjusted EBITDA loss of $12 million for the quarter, which is $1 million better than our guidance, thanks to cost management and our commitment to achieving adjusted EBITDA profitability by the fourth quarter of next year. Our growth this quarter was largely fueled by strong performance in the Civil Government and Defense and Intelligence markets, both of which experienced revenue growth exceeding 20% year-over-year, though this was somewhat counterbalanced by ongoing macroeconomic challenges in the commercial sector. We have consistently added substantial seven and eight-figure government opportunities to our qualified sales pipeline across various government and defense and intelligence markets.
While these deals may take longer to finalize, they have the potential to establish a dependable long-term revenue base with significant growth prospects. As our focus shifts towards government opportunities, our overall sales cycles have necessarily lengthened, which is characteristic of government procurement processes. In response, we've recently adjusted our go-to-market strategy to concentrate on these larger opportunities and made enhancements to optimize our sales execution. Let’s briefly revisit the improvements we’re putting into place, which are consistent with what we discussed in our last earnings call and Investor Day. These adjustments involve directing our sales force towards our most significant opportunities in core markets, managing smaller commercial opportunities through our partner network and low-touch channels, including our newly acquired Sentinel Hub platform, and simplifying our sales processes.
These go-to-market enhancements aim to foster quicker sales cycles, boost customer adoption, and enable gradual expansions. Expanding on our growth strategy, we recognize several U.S. government entities as primary near-term growth catalysts. Importantly, we believe our relationship with the U.S. government has never been stronger and we are well-positioned to significantly increase our collaborations with this crucial client in the coming fiscal year. Additionally, we remain optimistic about the diverse global pipeline of opportunities we've nurtured, especially with various government customers. We have observed solid year-over-year growth in the civil government sectors throughout the year. These prospects cover all our datasets and encompass additional services from our Planetary Variables, including our new carbon solutions and enhanced capabilities from our Sinergise acquisition. Lastly, despite existing macroeconomic challenges, we see considerable market potential in the commercial sector as a significant long-term growth driver.
Our commercial strategy is centered around partner-led opportunities and efficient, low-touch sales approaches. We consider partners to be an effective means of expediting sales cycles and increasing customer time-to-value with solutions and services tailored to specific geographic markets or commercial needs. As mentioned earlier, our Sentinel Hub platform allows smaller customers to buy data from Planet via a low-touch channel. Reflecting on our go-to-market strategy, it is foundationally built on our core value proposition, which enables broad area management at a global scale previously unachievable. Our capability to recognize changes across vast areas of our Planet sets us apart and drives the adoption of our solutions. As we share our recent customer accomplishments, you will notice this common theme across various industries. Let's now highlight some recent successes in the Civil Government sector.
During the quarter, we secured a seven-figure ACV contract with IGAC, the Cartographic Agency of Colombia. This new client is utilizing PlanetScope and SkySat data for a variety of applications, including geographic studies, professional training, improved land planning, and risk management in Colombia. We also expanded our engagement with NGIS, an Australian partner that leverages Planet Data to provide essential geospatial services to Australian Civil Governments, assisting with resource management and disaster responses. In the Defense and Intelligence market, we experienced a seven-figure ACV expansion with a Ministry of Defense client in Asia for our high-resolution SkySat tasking capabilities. It was gratifying to see expected growth in data usage by the customer. In Latin America, we welcomed a government intelligence agency as a new client, utilizing our PlanetScope and SkySat data for extensive monitoring.
Additionally, we closed a new contract with SI Analytics, a South Korean AI firm, which adopted our solutions for anomaly detection in North Korea. Originally a partner of Planet, SI Analytics is now a customer utilizing PlanetScope for analytics for defense and intelligence sectors. More generally, we are observing increasing interest from global defense and intelligence customers for our combined deep data archive and artificial intelligence capabilities. We view this combination as an extraordinarily effective tool for monitoring, searching, and scanning. It enables them to swiftly identify new threats, continuously monitor them, and serves as a powerful time machine for forensic analysis of past events over large geographical areas. In the agricultural sector, we renewed and expanded our seven-figure contract with BASF Digital Farming, a multinational chemical producer based in Europe.
They are employing PlanetScope and our Planetary Variable solutions for broad area management to offer timely agronomic advice to their clients. We also inked a new contract with the USDA's Foreign Agriculture Service, which connects U.S. agriculture to global markets to enhance export opportunities and promote food security. They aim to use our broad area management solutions for creating crop-type maps and estimating areas abroad. Additionally, in the commercial sector, we announced the addition of onX Maps as a new client, utilizing Planet's base maps to furnish outdoor enthusiasts with current imagery of recreational landscapes. This exemplifies how our data is reaching consumers, and onX was recently honored by Time Magazine for one of the top inventions of 2023 for their product that leverages our imagery. Moving on to product developments, we recently achieved three significant launches.
First, on November 11, we launched 36 SuperDoves and our initial Pelican Tech demonstration into orbit aboard a SpaceX Falcon 9 rocket. We established contact with all satellites within hours of the launch. I’m pleased to share that on-orbit testing of the Pelican Tech Demo is proceeding well, offering valuable insights regarding this new spacecraft design. This marks our 33rd successful launch and a total of 569 satellites successfully launched and deployed. It's important to recognize the remarkable work our team accomplishes here; Planet's capability to rapidly build satellites affordably and at scale is truly impressive. I'm grateful to our team for their dedication and hard work in making this launch a success. Secondly, as previously mentioned, we introduced Planet Data and Services on the Sentinel Hub platform with clear pricing and packaging, facilitating low-touch or self-service sales for smaller deals and allowing partners the flexibility to quickly develop solutions using our data.
Lastly, last month we launched our new Forest Carbon product. Our decade-long data archive on Global Forest Carbon is accurate, affordable, and scalable, addressing long-standing challenges in measuring Forest Carbon Stocks. This Forest Carbon Solution is being offered at competitive and accessible pricing to expedite customer adoption and capture early market interest. We are pleased with the demand already forming for this new product and are excited to welcome our first customer, BeZero Carbon, a carbon ratings agency that has adopted this innovative solution to assist their clients in making informed carbon credit investments. There is strong interest across the carbon value chain, encompassing project developers, carbon marketplaces, standard-setting organizations, and others. In conclusion, during the third quarter, we experienced robust growth in our civil government and defense and intelligence markets.
We concentrated on efficiency in our go-to-market efforts, as we outlined on Investor Day. Additionally, we had a productive quarter in product development, launching 37 satellites, introducing our Forest Carbon product, and facilitating low-touch access to Planet Data via Sentinel Hub. The pace of innovation and development at Planet is truly remarkable, and we have accomplished all of this while maintaining disciplined spending to support our journey toward adjusted EBITDA profitability. Our confidence in the significant opportunities for our solutions remains strong. The ability to comprehend changes occurring across vast areas of our Planet sets us apart and encourages the adoption of our solutions. We continue to perceive immense market potential for our offerings, driven by global trends in security, sustainability, and digitalization. I will now hand it over to Ashley for a review of our financials and outlook. Over to you, Ashley.
Thanks, Will, and thanks everyone for joining today. As Will mentioned, our revenue for the third quarter of fiscal '24 ending October 31 came in at a record $55.4 million, which represents 11% year-over-year growth. This was driven by strength in the civil government and defense and intelligence markets, both of which grew more than 20% year-over-year, partially offset by the continued headwinds we've seen in the commercial market. From a geographic perspective, we continued to see a strong diversification of our customer base. EMEA revenue growth was especially strong in Q3, up almost 70% year-over-year, while revenue in both Asia Pacific and Latin America grew more than 20% year-over-year. North American revenue decreased by 11% on a year-over-year basis, primarily impacted by the discontinuation of the legacy contract we've discussed previously. As Will mentioned, we see multiple significant growth opportunities with various U.S. government entities in the near term, and we continue to build out our partner ecosystem to address the longer-term opportunity we see in the commercial markets.
As of the end of Q3, our end-of-period customer count was 976. This count does not include customers who are exclusively self-serve users on our Sentinel Hub platform, which we acquired with the Sinergise business. Recurring ACV or annual contract value was 94% of our book of business and over 90% of our ACV book of business consists of annual or multi-year contracts. Our average contract length continues to be approximately two years, weighted on an ACV basis. Year-to-date, net dollar retention rate was 104% and net dollar retention rate with win-backs was 105%, both up slightly from the prior quarter. Increases in net retention rate are typically driven by the timing of large expansion contracts with existing customers. And as we mentioned on the last call, we've seen longer sales cycles with some of our larger expansion opportunities. These opportunities remain active, and our go-to-market changes are focused on capturing this business and improving our sales cycles.
Just as a reminder, as detailed in our quarterly earnings investor presentation, our net dollar retention rate starts on day one of each fiscal year at 100%, then develops through the course of the year towards our final full-year results. Turning to gross margin. Our non-GAAP gross margin for the third quarter of fiscal '24 was 51.5%. Similar to the prior quarter, non-GAAP gross margin during Q3 was impacted by the accelerated depreciation of two SkySat satellites. This impacted Q3 non-GAAP gross margin by approximately 6 percentage points. This accelerated depreciation expense will continue at a lower level in Q4 and reach completion by the end of this fiscal year. Adjusted EBITDA loss was $12 million for the quarter, better than our guidance and marking another consecutive quarter of narrowing losses driven by cost management and our commitment to reaching adjusted EBITDA profitability by Q4 of next fiscal year.
During Q3, we incurred a non-recurring restructuring charge of approximately $7.3 million, offset by a $1.5 million benefit in stock-based compensation, all related to our headcount reduction in August. In addition, we incurred a $2.3 million non-recurring charge in the quarter primarily impacting R&D related to the acquisition of Sinergise. These expenses are excluded from adjusted EBITDA. Capital expenditures, including capitalized software development were $8.6 million for the quarter or approximately 16% of revenue. Turning to the balance sheet. We ended the quarter with $315 million of cash, cash equivalents, and short-term investments, which we continue to believe provides us with sufficient capital to invest behind our core growth accelerating initiatives and achieve cash flow breakeven without needing to raise additional capital and we still have no debt outstanding. At the end of Q3, our remaining performance obligations or RPOs were approximately $153 million, of which approximately 82% applied to the next 12 months and 97% to the next two years.
Please keep in mind that RPOs can fluctuate quarter-to-quarter as multi-year contracts come up for renewal. Also remember that our reported RPOs exclude the value associated with the EOCL contract as well as other contracts that include a termination for convenience clause which is common in our U.S. federal contracts and occasionally found in other customer contracts as well. For the fourth quarter of fiscal '24, we're expecting revenue to be between $56 million and $59 million, which represents growth of approximately 6% to 11% year-over-year. We expect non-GAAP gross margin for Q4 to be between 52% and 56%. We expect our adjusted EBITDA loss for the fourth quarter to be between negative $12 million and negative $9 million. We are planning for capital expenditures of approximately $14 million to $16 million. For the full fiscal year ending January 31, 2024, we expect revenue to be between $218 million and $221 million or growth of 14% to 16% year-over-year.
We expect our non-GAAP gross margin to be between 53% and 54%. We expect adjusted EBITDA loss to be between negative $58 million and negative $55 million and we expect capital expenditures to range between $46 million and $48 million. In summary, we are in a period of transition as we focus our go-to-market resources around the largest opportunities in front of us, which we expect in the near term to be predominantly in the government sectors on a dollar-weighted basis. We are expanding our partner ecosystem to continue to develop opportunities in the commercial markets as the macro tailwinds of digitization and sustainability continue to see new opportunities for our data and analytics each day. We are aligning our investments to drive growth in the near term while carefully managing expenses and continuously exploring opportunities for greater internal efficiencies that we believe will make it easier to work with Planet as well as at Planet. As always, I want to thank our Planetiers around the globe for their continued execution and commitment.
Questions and answers
Absolutely. We will now begin the Q&A session. Our first question today comes from Jason Gursky with Citi. Please proceed.
Good afternoon, everyone. I wanted to explore the go-to-market strategy in more detail and discuss the focus on targeting large contracts. I'm interested to know if, in addition to the seven-figure contracts you've mentioned, there are opportunities for eight or nine-figure contracts. Also, could you share some insights on where you see the largest opportunities geographically? Thank you.
Yeah. Great question. We have a number of eight-figure deals. I think we've previously mentioned about eight, and we've continued to bring in more eight-figure deals and seven-figure deals through the year. What we're mainly seeing in them is in defense and intelligence but also civil government, we've got real opportunities both, and geographically, I would say a lot of it's in the U.S., but we do have a number of these big deals in the rest of the world as well, and so it's primarily in those two sectors. Does this answer your question?
Yeah. Sorry, I am at an airport. I'm going to leave it there. I appreciate you guys taking the question.
Our next question comes from Trevor Walsh with JMP Securities. Please proceed.
Hi, team. Thanks for taking my questions and congrats on a solid set of results. Will, I'll start with you if I can. Congrats on the successful launch of Pelican, it sounds like the initial demo is helping you guys get some good lessons learned. Just curious if I know in the last earnings call you reiterated or confirmed that there's not necessarily a revenue opportunity kind of driving from this Pelican one satellite, but can you maybe help us understand a little bit better as to what the uplift potential within the current accounts might be from the new set of spacecraft just being that they are, in fact, have just higher resolution, higher revisit, all the kind of technical abilities that are added, better with Pelican and then also the low cost like just kind of how from a top-line perspective that might, how are you guys looking at price increases potentially there around those capabilities? How will customers kind of feel I guess in terms of what they're paying currently versus later? Thanks.
Yeah. Great question. So firstly, we're very, very happy with the Pelican spacecraft. It's going really well. All of the commissioning is going well, and we're learning a huge amount, very, very good so far. And it is a Tech Demo, so yes, this is not going to be revenue-producing just to confirm what you said. To the capabilities, yeah, so it's going to be better on multiple axes, high resolution. We talked about 30 centimeters, higher revisit rates when we ultimately get our full fleet, going up toward 30 per day. But probably the biggest substantive increase is the fact that as we add satellite-to-satellite communications on these vehicles, it enables us to lower latency. And to your final point, lower latency is something very differentiated and high value, and so you can definitely charge more. So you can charge more for higher resolution, you can charge more for lower latency, and I think that the lower latency is almost a 10x improvement on our current system, so that is a big deal getting the sub-hour latency. Does that answer your question or do you have another one?
I appreciate the insight. I have a follow-up for Ashley, but Will, feel free to jump in as well. Great job on the new customer count increasing this quarter. As we analyze our model, it seems like the revenue per average customer may have decreased. I'm curious if this is due to a higher number of smaller customers joining this quarter. If that's the case, could it indicate that your go-to-market strategies, such as the self-serve platform or partner initiatives, are successfully attracting smaller customers? Thank you.
Yeah. Thanks for the questions. I'd have to look a little bit more closely to answer the revenue per customer question more specifically, but I'd say, yes, we do have more customers coming on board through the Sentinel Hub platform, now that the Sinergise acquisition is closed, and that is an opportunity for us to really scale up low-touch customer onboarding and also enable partners to create solutions on top of our data more easily through those APIs. So in terms of deal sizes that's actually consistent. So I would suspect if I were to dig into the details behind the average revenue per customer, what we're probably seeing is a little bit of the impact from bringing on the Sinergise customers, but I'd have to get back to you to look into that more specifically.
And if I can just add a tiny thing on the prior question, I forgot to mention, of course, it wasn't just the Pelican that we launched, we also launched 36 SuperDoves, and although we take that sort of for granted, because that's primarily continuing operations of that daily scan fleet. Firstly, that's our bedrock fleet and gives the daily scan, which is so differentiated, and secondly, yeah, we take for granted being able to rapidly build and launch and operate large numbers of satellites like this, but basically that's one of the very few companies in the world that can do that, and really that's an incredibly strong differentiator that we sort of take for granted sometimes.
Great. Thank you, both, so much. Appreciate it.
Thank you.
Our next question comes from Michael Latimore with Northland. Please proceed.
Great. Yes. Thanks very much. What are you thinking about in terms of the NDR number for the fourth quarter?
Yeah. Obviously, that's driven by the timing of when some of these larger expansions land that will impact where we end up landing on that number for the year. As I said in the prepared remarks, we ticked up quarter-over-quarter, and I feel very good about where we are on overall retention rates. It's just a matter of that NDR ultimately depends on some of the larger expansion opportunities and the timing of when they come in.
Okay. And then, you seem positive on the U.S. government opportunities in the pipeline, can you mention a use case or two that might be in the mixer?
Yes, there are several opportunities. We have multiple chances for expansion and new partnerships on both the civil government side and the defense and intelligence side. It's important to note that the U.S. government consists of many agencies in both sectors that require our data. We've also seen significant interest in our mainstay products, as well as a growing demand from both U.S. and international governments for AI integration with our PlanetScope Imagery. This combination allows for the search and analysis of large areas to identify new threats or changes, which has become increasingly viable due to advancements in large language models used with PlanetScope imagery. The application of our services varies among different agencies, and while I can't detail all of them right now, there is strong demand on both fronts.
Okay. Great. Thanks so much.
Your next question comes from Ryan Koontz with Needham and Company. Please proceed.
Thanks for the question. Ashley, could you explain the decline we're experiencing in commercial? You mentioned the churn from legacy contracts; is that the main reason for the decline? Are there other factors at play, and does this quarter signify the end of that impact, or can we expect it to continue affecting future quarters? Thank you.
Thank you, Ryan. The main factor affecting the year-over-year revenue comparison in the commercial sector is the conclusion of the legacy contract in Q1, which was a minor issue. As you noted, Q4 marks the end of that year-over-year comparison challenge. We did experience some weakness in renewals from the previous year, which we discussed regarding the commercial market and that also contributed to the pressures we faced at the start of the year. The commercial sector continues to encounter challenges in expanding those businesses. However, we expect much of the growth in the coming year to come from the commercial government sector. Nevertheless, we remain strong believers in the potential within the commercial space and view it as an opportunity we will pursue alongside our partner ecosystem.
Got it. That's great. And just a couple of quick product questions for Will on the Forest Carbon product, can you kind of walk us through that business model and how you productize that for these sorts of customers? That will be really helpful? Thanks.
Absolutely. One of our Planetary Variables allows us to measure important factors. We have been involved in deforestation monitoring and assisting countries for a long time, but now we can quantify the carbon stock in forests, starting at 30 meters, with a 3-meter level launch planned for next year, getting close to the individual tree level. We are very excited about this. There has been considerable interest, and we hope it will support carbon markets. We have been pleasantly surprised by the initial demand from regulatory bodies checking the calculations on carbon trading, as well as from marketplaces connecting buyers and sellers of carbon, both of which want to verify the data. We are thrilled to see this demand early on, especially from our first customer, BeZero Carbon, which is a carbon rating agency in the marketplace sector.
Got it. Really helpful. Thanks so much. That's all I have.
No problem.
Thank you.
Your next question comes from Noah Poponak with Goldman Sachs. Please proceed.
Hello, everyone. With the expanding Defense and Intel and civil government opportunity set that you're referencing, are there contract names you can cite that we can follow, or is it some combination of small or classified or extension or reprogrammed dollars or something that we can follow?
I mean, most of them are public procurement mechanisms you can follow. I would just say that it takes a lot to follow. I mean, there's a lot of different agencies that you have to track, but no, mostly public procurement. There is no huge one outstanding to just point out like EOCL is of course our mainstay contract with the NRO, and there are opportunities for expansion there, and you can watch that, but there's no big other ones to just pull out and identify for you right this second, but we certainly continue to monitor all of those, of course, that's our job.
Will, can you mean the one or two largest even understanding it's maybe a pool of with no single one that's much larger than the others, but whether its size or just what's most exciting to you because of what it means for your future, just something we could track I think would be helpful.
Yeah, I mean, the two biggest ones that we presently have are the NRO's EOCL, and there's lots of expansion opportunity there. The relationship is very good, and the other is on the civil side with NASA, which is called CSDA, and you can track that and the budgets are very healthy going into that. So those are the two biggest ones that I can name off the cuff. We could try and get back to you if you want further details on that.
Okay, great. On the commercial side, Ashley, you made a comment about working with your partner network kind of like, while you wait for the end market to come back to you or the set of end markets come back to you or I guess maybe the macro to come back. Can you expand on that like what are you actually doing? Why are the partner networks willing to do that? How does that help you once demand comes back?
I think it's more about the fact that the market on the commercial side is still relatively immature especially when you think about the broader market opportunity and they will require solutions that incorporate our data and extract value from the data for them because they're unlikely, for example, to have geospatial analysts on staff. So really it's about making it easier for our partners to develop those solutions that will effectively drive the value to the end customer. So that's effectively what I meant by really leaning into the partner ecosystem to drive that ultimate value to the end customer in the commercial market to really get that market off the ground.
And if I could just add to keep our sales reps focused on the big deal opportunities, which are primarily right this second in civil government and defense and intelligence. So we see a huge future in commercial. We continue to see that, and we continue to do deals. I mentioned a few in my prepared remarks, right, but the biggest ones in defense and intelligence and civil government, and so we want to focus our energies on that. So it's both because they need solutions, that Ashley was saying, but also because we want to focus our attention on the pipe of opportunities and progressing them through to close, and that's more in civil government and defense and intelligence.
But there are commercial markets that are more advanced, and we will obviously continue to sell into them including agriculture and insurance for example.
Okay. Great. Thank you so much. I appreciate it.
Thank you. Our next question comes from Edison Yu with Deutsche Bank. Please proceed.
Thanks for taking our questions. Wanted to ask about the cadence of growth. Since in Q4, the implied is 6% to 11%, do you think that represents perhaps the bottom given that some of the headwinds go away in the first quarter, do we see that sort of a bottom in terms of year-over-year growth?
I think it's important to understand that one of the biggest headwinds that we had coming into this year was the legacy contract that came to an end. So Q4 will mark the end of that headwind. We're obviously leaning into a lot of opportunity that we see, and especially with large expansions with existing customers leaning into the opportunity in the government sector and the timing of when that business lands. Obviously, will determine ultimately how our growth accelerates going beyond Q4. We remain very optimistic about the ability of our teams to execute in the market that's there for us just based on the continued pull that we feel and we've had challenges this year with timing of bringing that new business in and the longer sales cycles, but still remain very optimistic in our ability to reaccelerate growth. Anything to add there, Will?
Yeah. I mean I would only say, of course, we're not satisfied with that sort of growth rate, we want to continue to drive towards higher growth rates, we think that is possible. I'm firmly convinced that that's possible. And we got a huge pipeline that we're working on. We please tell you that it's progressing in stage, we're moving things along and we are closing some deals, it is still taking a bit too long, and with our job to go close it. You've heard how we are focused. Our efforts are really focused right now to improve that execution, focusing on the big deals, trying to automate the small deals, making it easy to work at Planet, just trying to reduce the time to value for customers so that we can land and expand them. We're very focused on those efforts that the areas are in our control to improve win rates and so on that pipe, but that's where we're heads down and focused. We certainly think it's possible to accelerate growth.
Understood. Longer term question, in terms of the commercial market, do you have a view on when that might kind of turn around? I understand it's probably not anytime in the near term, but is this a couple of years, is this five years? Just when do you think that can kind of reaccelerate meaningfully in the future?
I would like to mention a few points. Some of the challenges we faced were driven by macro factors, particularly in the agriculture market. When those conditions change, we believe we will continue to see opportunities on the commercial side. We have launched products like the Sentinel Hub, which provides easy access for users to begin developing their own products and services. We are collaborating closely with partners that offer strong solutions for specific markets. Additionally, similar to what I mentioned about the government sector, artificial intelligence is a significant advantage here as it streamlines the process of obtaining answers. This aligns with the vision I shared during my TED Talk several years ago about a queryable Earth, where commercial clients could ask any question of the data, akin to querying text on the internet with tools like ChatGPT 4. This vision is gradually becoming a reality thanks to advancements in large language models, which are increasingly capable of processing not just text but also images, videos, and audio.
Our extensive archive of imagery data gives us a substantial advantage as these models improve at interpreting imagery and context. Consequently, we can better provide answers to commercial clients who may not possess extensive geospatial expertise. Ultimately, we are confident about the long-term potential in the commercial market, viewing it as a significant opportunity.
Got it. And just one last one for me, housekeeping, can you tell us or remind us what is the contribution from Sinergise in the full year number at this point?
I think last quarter we said we expected it to be somewhere between $4 million and $6 million on the year, and I think we're in line with that expectation. It's small enough that we aren't breaking it out, but generally, it's performing in line with our expectations.
Thank you. Our next question comes from Jeff Van Rhee with Craig-Hallum. Please proceed.
Great, thanks. I have a couple more questions regarding the sales changes. Is there any measurable evidence you can share about the effectiveness of these changes, such as specific improvements in sales cycles or any other measurable outcomes? I understand that your focus is on major deals, automation, and making collaboration easier, but do you have any tangible indications, even if they're small signs, that these changes are positively impacting your results?
Ashley, do you want to speak to that?
Yeah. I'd say, first of all, obviously it's still early days. I'd say, the good news is, we've seen a lot of those metrics really stabilize. We're not seeing sales cycles go longer than what we talked about before, and obviously, we're focused on now bringing them in shorter. Similarly, I talked about the fact that deal sizes have generally stabilized, and as we lean into the larger deal opportunities, we would expect those to expand as well. So we're looking at the same types of metrics that you would expect us to be focused on making sure that we close the business that's in front of us, shorten the sales cycles going forward, and as Will said, really make sure we drive that time to value for the customers so that we continue to land and expand, so that's where we're focused. We're in a transition, But we feel really good about what we've implemented so far and the early results we're seeing.
Okay. And then one brief one on Sinergise, I know you just touched on the four to six for the year, just curious if you'd expand or there is any other color to provide there, any behavioral clues that have been provided by the existing Sinergise base the way they've reacted thus far, any other indications of either upside or downside to what you thought you bought there?
Overall, we feel very positive about the acquisition and how that team is performing. We do see a lot of opportunities coming in related to the tools that they have there. A lot of it's things like automating the onboarding of those new capabilities so that we can scale to more actors with any given solution, so that's goodness. As far as I'm concerned, because that means there is the demand and pull.
Yeah. I'd say that, we're very pleased so far. Obviously, it's an incredible talent pool and a great platform. We've moved very quickly on the integration side to enable our customers to leverage those tools and their customers to access Planet data through the platform, and now we're continuing that integration process to create a more seamless experience across the user base and to really push the new capabilities through our sales teams.
Okay. Fair enough. Thank you.
Thanks, Jeff.
Our last question for today comes from Chris Quilty with Quilty Space. Please proceed.
Thank you. I wanted to follow up a bit on the Pelican, congratulations on the initial launch. Beyond the standard first light and calibration of the satellite, there’s also the aspect of altitude and altitude maintenance. Do you have an estimate of how long the validation process will take before you decide to make a larger commitment to the fleet?
It typically takes several months to fully understand spacecraft in orbit, and we feel very positive about our current status in that regard. This understanding is crucial for making key decisions about expanding the fleet. We are actively constructing several additional units, and we are incorporating insights from our initial spacecraft as we proceed. We ensure that nothing is sent to the launch site until we have a thorough understanding of how the first one is functioning. The construction process for the next set, which we refer to as the first block one, is already underway. Overall, I am very optimistic about the progress of that program at this time.
Got it. Sorry, I think I have a little technical difficulty problem. Are you still taking in new customers on the early access program and have you seen any growth in that pipeline?
You mean for tonnage, I assume? Yes, I think it was a limited group. Perhaps one or two were added, but they have been making progress, showing use cases and early demand, so there are legitimate opportunities there. We feel positive about that program, and it's exciting to see the JPL instrument in the lab and integrated into the spacecraft, as well as the developments happening downstairs. Overall, we're feeling good about that program too.
And did you provide expected CapEx on that program and over what timeframe and looking for first launch?
So that program is categorized as an R&D program because it's the first time we've launched a hyperspectral satellite, and that has been in partnership with the team of our Carbon Mapper and NASA JPL, and we have funds that we've received for that program, and those get recognized not as revenue but as actually an offset to that Contra R&D, so you don't really see that show up as CapEx on our balance sheet. In terms of the overall size of that fleet in that program and the timing, we haven't given a lot of specifics because we are still in the R&D phase. As we get closer to the launch of that fleet, we'll share more details.
If I could just add one more thing, just like the Carbon Planetary Variable I mentioned earlier, there is interest on both the regulatory side as well as the users that would use it to stop and get ahead of regulation to the commercial side, if you like. And on that point, we've made a couple of announcements at COP; the meeting is ongoing right now in Dubai, relating to this because as we get better to measure all of these emissions and we are getting indirectly right now and helping this organization, climate trace, which tracks over 350 million facilities globally, renewable energy facilities, emitters with our visual data, this will then add to that, to be able to have more quantified emission amounts of data, which is all feeds into, if you like, the transparency and accountability. And as we transition to a sustainable economy, it's a massive transition, many, many tens of trillion dollars as we transition to a sustainable economy, but there's no way that it is going to be possible without the careful measurement as we've discussed before, whether that's the Forest Carbon piece or the emission piece that we just talked about here. So we really care about it from a pure sustainability point of view; it fits our mission, but there is a massive market opportunity as well and so we're going after that.
Great. And final question, just you talked about the latency with the RF crosslinks on the Pelican; I think that was announced C-band, SES, but you also had an announcement with Telesat and KA. Can you just give any color on how that's proceeding and do you need any specific FCC licenses to operate those crosslinks?
Yeah. We are pursuing two programs there, one with ViaSat, one with Telesat. They're both supported by NASA's CSP program that helps fund that R&D. They are both proceeding according to plan as far as I'm aware. I think they're more into KA band than the C-Band, but I may stand corrected there; I don't know, we can check for you and confirm the details.
Great. Thanks so much, guys.
Thank you.
Thank you all for your questions. There are no questions waiting at this time, so I'll turn the conference over to Will Marshall, CEO for closing remarks.
Well, look, overall, I feel like we had solid growth in both our civil and defense markets as we've been talking to. We're very focused as a team on the go-to-market execution to close the opportunities in front of us to close faster and make customers successful to land and expand. We feel good about the multiple product milestones we mentioned, including the 37 satellites, the Pelican we've been speaking a fair bit about, Forest Carbon, and getting low-touch access to Planet's data via the Sentinel Hub system, the new platform that we acquired from Sinergise over the summer. We're also doing all of this, while keeping a disciplined spending on our path to adjusted EBITDA profitability by Q4 of next year. Overall, I would say our conviction remains high in the opportunity in front of us, and so with that we will look forward to seeing you next time.
That will conclude today's conference.