Planet Labs PBC (NYSE:PL) Q1 2024 Earnings Call Transcript

Page 2 of 10

Trevor Walsh: Great, terrific. And then maybe just a follow-up around the consumption piece either jump-off for you or for Ashley. Do you get the sense as customers are maybe talent — trailing back or curtailing their consumption rates a little bit to match the contracts? Is that really a function of just what’s happening with the macro and kind of budgetary concerns or would there also just need just larger rightsizing of their kind of consumption just based on, they’ve had a year or to understand what their needs are, and they’re just now rightsizing the contract regardless of macro or is it really just attributable to them not wanting to kind of get ahead of their skees as far as kind of just given the uncertainty in the more [Technical Difficulty] Does that makes sense?

Ashley Fieglein Johnson: It does make sense. I’d say, the good news is as we think — as we look forward to on the renewables front, actually, we continue to see a strong line of sight to a strong renewal rate this year. And as I said, we’re still targeting north of 120% NDRR. So, it’s not that we’re seeing contracts renewing necessarily at smaller amounts. The issue is, as I mentioned last year, we saw a pretty significant uptick in the pace of consumption. I’m starting in Q2, we attributed that to we had rolled out a number of software improvements that frankly just made it easier to access the data and we’d caution at that time that we didn’t know whether customers would renew early or increase the size of their contracts because it’s a continued at that pace, they would use up their contract allowance early and what we’re seeing now is as we are getting to those Q2, Q3 renewal dates, we’re actually seeing customers slow down because frankly they just can’t get the budget ahead of when it’s set at the renewal date.

So, that’s a little bit of what we’re seeing that’s impacting some of the Q2 compares in particular.

Trevor Walsh: Great. Thanks for taking the questions.

Ashley Fieglein Johnson: Great. Thank you.

Operator: Thank you, Mr. Walsh The next question is from the line of Jason Gursky with Citigroup. You may proceed.

Jason Gursky: Hey, good afternoon, everybody. Can you just provide a little bit more color on what’s going on with the government contracts you suggested that things are not moving along as fast as you’d like either on new deals or renewals. Where are you seeing that behavior, here in the United States, outside of the United States? Just a little bit more color on what’s going on with the government markets would be helpful.

Will Marshall: Yeah, happy to do that. So, yeah, we have seen the softness on the commercial side before. This is a little bit new data points on the government piece added by the way the elongation on the commercial side but on the government piece, I think we’ve seen some of these procurement cycles taken longer than we had expected. These are complex government processes, but — and you’re sort of where does they divide up? I would say we’ve seen it both in small deals and larger deals and I don’t know any particular geographic focus, so not aware of any distinction there. Does that answer your question?

Jason Gursky: Yeah. I think so. So, you’re not seeing it concentrated either inside or outside the United States it’s everywhere.

Will Marshall: No, no. And just to shed a tiny bit more light on that. Just one of the eight-figure deals that we had mentioned in our remarks slipped, but now it’s signed and the revenue increase really ticks up — is expected to pick up later in the year like Q3 and that was later than we had planned. So this is just –so it’s timing basically.

Ashley Fieglein Johnson: Yeah. We saw this impacting a couple of deals. It’s not specific to the US where the deal was kind of expected to land right at the end of the quarter kind of slipped into early Q2. Got awarded the business, but that process of getting the ink on the paper is just taking a little longer, seeing just some of the government bureaucracy ticking up an unclear whether vessels just a point in time or whether there’s something else going on where given the economic environment governments also are getting more scrutiny around getting these procurements over the goal line. So, we’re looking at it and trying to understand it. Right now we’re making the assumption that deals are going to be slower, so that we factor that into our revenue assumptions, but it’s kind of early days.

Page 2 of 10