Planet Labs (PL -0.18%) it may be the largest space company you’ve never heard of.
To be clear, with a value of just $ 1.5 billion and a turnover of around one-tenth, Planet is nowhere near a “big” space giant as Lockheed Martin or Boeing. But with nearly 200 Dove, SuperDove and SkySat satellites in orbit, Planet Labs has the largest constellation of Earth observation satellites in the world.
And now that constellation is going to get a little bit bigger.
I know what a “dove” is. What the hell is a “Tanager?”
About 90% of Planet’s satellites are of the Dove variety: tiny 6-kilogram satellites that cost $ 300,000 each to build and launch, which are capable of taking 3 million photos from space every day.
Planet uses these satellites to deliver information to customers ranging from defense agencies to civilian government, mapping companies to agriculture. But last week Planet announced that it will develop and launch a new class of satellites, dubbed Tanager, * to complement its Doves’ capabilities with “hyperspectral” imagery.
(* Wikipedia informs me that tanagers are colorful, tropical, fruit-eating birds.)
Working in partnership with and receiving funding from the Carbon Mapper Coalition, an organization dedicated to “locating, quantifying and monitoring methane and CO2 emissions” to measure their impact on global warming, Planet says its new Tanager satellites will be able to monitor “400 spectral bands.” This should allow Planet to see the chemical signatures of global warming gases that are invisible to the naked eye.
dollars and cents
This all sounds like great news for the planet, but what does this Tanager announcement mean for Planet stock investors?
It’s hard to say. According to the Planet press release, the first two Tanager satellites are expected to launch next year. By contacting Planet, I was able to confirm that these Tanagers will not be replacement any existing fleet of company doves, so that their cost can be considered part of Planet’s ongoing “agile” product upgrade program, which costs Planet about $ 10 million annually in capital expenditures , according to data from S&P Global Market Intelligence.
These satellites will add new capacity and therefore add costs.
As for how much the cost, well, Planet hasn’t revealed the cost of the satellites, but assuming they’re on par with the cost of the company’s Dove satellites – $ 600,000 for the pair – this development won’t have a huge impact on Planet’s bottom line, especially if the Carbon Mapper Coalition is collecting part of the development costs.
But offsetting the new cost will be the new revenue Planet can get from selling images across Tanager’s “hyperspectral” coverage range. Again, management has not been specific on this point, but it is assumed that environmental regulators will be the most interested in paying for this service. Oil and gas companies could also pay Planet to monitor methane leaks at their extraction sites and along their pipelines, to help with their environmental compliance.
So there I am revenue streams investors can expect from Tanager. In fact, according to the company, the 400 spectral bands that Tanager can monitor open up “a range of applications,” says Planet, even beyond monitoring methane and CO2. Planet expects to be able to sell Tanager images to various clients in the “agriculture, defense and intelligence, civil government and sustainability” sectors.
The big picture
Long story short, it remains to be seen how much adding Tanager capability will add to Planet’s costs, but that doesn’t seem to be much. At the same time, it is also hard to say how much Tanager will add to Planet’s income. But it will probably add something.
Meanwhile, Wall Street is still not considering much of everything that comes out of Tanager in the way of improving revenue growth for Planet. The current forecast basically tracks what Planet was still telling investors to expect in late 2021, prior to the IPO, which is that revenue will grow between 45% and 55% annually until fiscal 2026, at which point. it will pull in less than $ 700 million in annual sales, or five times the current year’s projected sales of $ 131 million.
If Tanager manages even moderately to expand Planet’s revenue streams, however, you can probably expect that by 2026 Planet will do even better than that.