Planet coefficient (PL -0.18%) Probably the biggest space company you’ve ever heard of.
To be clear, at just $1.5 billion in revenue and about a tenth of that, Planet isn’t a space-faring giant as “big” 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 this constellation will get a little bigger.
I know what a “pigeon” is. What is “Tanager” the heck?
Roughly 90% of the Planet’s satellites are of the Dove constellation – tiny 6-kilogram satellites that cost $300,000 each to launch and launch, and are collectively capable of taking 3 million images from space each day.
Planet uses these satellites to provide information to clients ranging from defense agencies to civilian government to corporate mapping to agriculture. But Planet announced last week that it will develop and launch a new class of satellites, dubbed Tanager*, to supplement Doves’ capability with “hyper-spectral” imaging.
(*Wikipedia tells me tanners are colorful, tropical fruit-eating birds.)
Working in collaboration with, and receiving funding from, the Carbon Mapper Alliance, an organization dedicated to “locating, measuring and tracking methane and carbon dioxide emissions” to measure their impact on global warming, Planet says its new Tanager groups will be able to monitor “400 scales spectral.” This should allow a planet to see chemical signatures of greenhouse gases that are invisible to the naked eye.
dollar and cent
This all sounds like great news for The Planet, but what does this Tanager announcement mean for stock planet investors?
It’s hard to say. According to a Planet press release, the first two Tanger satellites are supposed to be launched sometime next year. Communicating with Planet, I was able to make sure that these Tangers wouldn’t be replacing Any of the company’s existing fleet of Doves, whose cost could be considered part of Planet’s ongoing “rapid” product modernization program, which costs Planet nearly $10 million a year in capital spending, according to data from S&P Global Market Intelligence.
These satellites will add new capacity – and thus add cost.
As for how Many Cost, well, Planet hasn’t disclosed the cost of the satellites, but assuming it’s on par with the company’s Dove sats cost – $600,000 a pair – this development won’t have much of an impact on Planet’s earnings, especially if the Carbon Mapper Alliance captures some of the development cost.
But offsetting the new cost would be the new revenue that Planet could derive from selling images across Tanger’s “hyper-spectral” coverage. Again, management has not been specific on this point, but one would imagine that environmental regulators would be interested in paying for this service. Oil and gas companies may also pay Planet to monitor methane leaks at their extraction sites, and along their pipelines, to help with environmental compliance.
So there be Revenue streams that investors can expect to receive from Tanager. In fact, according to the company, the 400 spectral bands that Tanager can monitor opens up “a range of applications,” Planet says, even beyond observing methane and carbon dioxide. Planet expects to be able to sell Tanager images to various clients in the areas of “agriculture, defense, intelligence, civilian government and sustainability.”
The Big Picture
Long story short, it remains to be seen how much the addition of Tanager’s ability will add to Planet’s costs – but it doesn’t seem like much. At the same time, it also It’s hard to say how much Tanager will add to Planet’s he won. But it will probably add something.
Meanwhile, Wall Street hasn’t yet factored in much of anything coming out of Tanager in order to improve Planet’s revenue growth. The current forecast basically tracks what Planet was still telling investors to expect in late 2021, before its initial public offering — that is, revenue will grow in the 45% to 55% range annually through fiscal year 2026, at which point Planet will succeed with a decline of 700 million dollars in annual sales, or five times the current year’s forecast of $131 million.
If Tanager has been somewhat successful in expanding Planet’s revenue streams, you can probably expect that by 2026, Planet will do even better.