The most important news in space business aren’t Richard Branson and Jeff Bezos’ suborbital joy rides. It’s the decision by Planet, the satellite data company, to go public after being bought by a special-purpose acquisition company (SPAC), DMY Technology Group.
Planet is the most mature space company to come to market—it had more than $114 million in revenue last year, which is more than comparable new space businesses that went public through SPACs: Virgin Galactic, a suborbital tourism company, earned $238,000; Spire, a firm that uses satellites to collect data about weather, shipping and other subjects, earned $29 million; and Rocket Lab, the launch vehicle maker, earned about $35 million.
It’s also doing the most to mainstream space business, paying careful attention to customers outside of the aerospace sector. It’s been two years since the company began reframing itself as a “data” company, not a satellite operator, concerned that the public was too focused on its achievement of launching hundreds of low-cost PlanetScope satellites that capture images of the earth’s entire landmass every day. The company also operates larger satellites for higher-resolution imagery.
“That’s the back-end,” CEO Will Marshall told Quartz. “People don’t buy [our] satellites…we are providing information. Our financials and business really looks like a data and software business. People are very surprised to see our gross margins. For example, last year gross margins for the Planetscope business were about 62%, which includes the depreciation and amortization costs of the PlanetScope satellites. Most satellite companies have negative growth margins, excluding the cost of the satellites!”
Providing satellite imagery for agriculture and business
Marshall co-founded Planet in 2010 with Robbie Schingler, the company’s chief strategy officer, and Chris Boshuizen, now a partner at venture firm DCVC. All three worked at NASA and saw a chance to leverage advances in small satellites in the private sector. But a technology is not a business model, and the firm has had to figure out how to make its data useful not just to organizations that already use satellite information, but also those that don’t.
That’s why it’s interesting that less than a quarter of the company’s current customers are defense and intelligence agencies; the biggest buyers of its data are agricultural firms. One recent hire is the company’s president, Kevin Weill, who helped turn Twitter’s firehose of data into saleable insights to advertisers. Marshall sees his company as something like a Bloomberg terminal, but for data about the earth, not the financial markets—and with the same attractive subscription-based business model.
Bloomberg terminal users might agree: One key angle for Planet’s arrival on the public markets is the rise of ESG investing, short for “Environmental, Social, and Governance” rules that investors want to see companies adopt. Mega-asset manager Blackrock, a key advocate of this practice, is among the private investors joining Planet’s SPAC transaction, alongside Google and Salesforce founder Marc Benioff. “BlackRock has said you’re not really an investable company if you don’t track your ESG scores,” Niccolo de Masi, the investor who led the SPAC taking Planet public, said last week. “Planet helps companies do that.”
“The world needs this, we’re feeling this pull, the transition out of the Covid-induced recession into a new economy, everyone trying to switch to digital economy, every industry switching to a sustainable economy,” Marshall says. “Our data is very mission critical to those companies, it’s not like they can walk away. It’s about seeing threats around the corner, it’s about companies with fundamental efficiency maneuvers without which they can’t the competitive, civil governments doing regulatory enforcement they can’t do without our data. Every company is measuring their ESG target. Every country is measuring emissions.”
Planet is still a risky technology company by normal standards; it’s currently investing in growth and doesn’t forecast profitability until 2025. One concern for investors might be the company’s debts of $147 million; those will be reduced by some of the money raised in the current transaction and Planet expects that $71 million of the loans will be converted to equity shares prior to its close. Much of the rest of the proceeds, Marshall says, will be used to hire salespeople to expand their customer base, and software engineers to develop better tools for their customers. The company’s satellite fleet is largely established, although it will need to be continually refreshed with new spacecraft every few years.
The goal is to scale Planet up, like a “normal” digital start-up. It’s not a test of a novel new luxury good or infrastructure to boost space activity. It’s a test of whether data gathered in space is as valuable as information gathered by your mobile phone or Google’s searches. In other words, whether space business is just regular business, after all.
A version of this post originally appeared in Quartz’s Space Business newsletter.
Correction: This story has been corrected to reflect Spire’s business model; it is not a satellite imaging company, but collects a variety of other data from space.