Planet Labs PBC (PL) delivered a strong fiscal first-quarter 2027 performance that prompted analysts to raise expectations for the satellite imaging company. But investors looked past the upbeat results on Friday, sending the stock sharply lower amid dilution concerns and a broader selloff in space stocks.

Wall Street analysts turned more constructive following the earnings report, with both Wedbush and Needham highlighting accelerating revenue growth, expanding backlog, and increasing demand from defense customers.

Planet Labs reported first-quarter revenue of $94.2 million, up 42% from a year earlier and ahead of the $90 million consensus estimate.

Geopolitical Tensions Accelerate Defense Sales

According to Needham analyst Ryan Koontz, Planet Labs reported its strongest revenue growth in 12 quarters, driven by sustained momentum in the Europe, Middle East, and Africa (EMEA) region, where revenue increased 88% year over year, and in its Defense and Intelligence segment, which grew 68% year over year. The performance reflects rising demand for sovereign Earth observation (EO) data amid escalating geopolitical tensions.

A new eight-figure one-year European contract signed early in the quarter significantly lifted performance. Wedbush analyst Dan Ives noted that the defense and intelligence sector represents a major tailwind, stating that "PL is seeing major tailwinds in the geopolitical space, continuing to drive mission-critical demand globally."

Massive Backlog Gains Secure Future Visibility

The company's forward-looking metrics impressed both firms, with total backlog rising 72% year-over-year to $906.1 million. Total remaining performance obligations (RPO) jumped 81% to $816 million. Wedbush highlighted that approximately 40% of this backlog applies to the next 12 months, providing Planet Labs with significant short-term visibility. Furthermore, the company successfully reached a Rule of 40 profile for the third consecutive quarter.

AI Innovation Expands Commercial Horizons

Beyond government sales, Planet Labs achieved 28% year-over-year growth in its Commercial segment, according to Needham. To ignite further growth, the company launched artificial intelligence initiatives, including pioneering tools that utilize a natural language interface to query global data. Koontz commented that management views natural language as key to expanding commercial segments "which are often not accustomed to working with GIS."

Wedbush also pointed to "SuperRes," an AI-powered technology focused on improving PlanetScope data resolution, as a key differentiator.

Analysts Lift Price Forecast On Disciplined Scaling

In response to enhanced gross margins of 56.3% and an improved outlook, analysts adjusted their models. Needham maintained its Buy rating and raised its 12-month price forecast to $53 from $40, stating they see the increased revenue multiple justified by the "meaningful expansion of global opportunities and improvements in execution with limited competition."

Wedbush maintained its Outperform rating and a $50 price forecast, concluding that Planet Labs remains a "key provider of necessary data across commercial and government applications."

PL Stock Falls Despite Analyst Optimism

Despite the bullish analyst commentary, Planet Labs shares came under heavy pressure Friday. The stock slumped after the company announced a massive $1.5 billion at-the-market (ATM) equity offering, raising concerns about potential shareholder dilution.

Planet Labs disclosed in a June 5 SEC filing that it entered into an equity distribution agreement allowing the company to sell up to $1.5 billion of Class A common stock from time to time through an at-the-market offering program. The structure also permits forward sale agreements, adding to investor concerns about potential dilution.

The selloff also occurred amid broader weakness across space-related stocks following S&P Global's decision to maintain existing index eligibility rules, a move that dampened expectations for a rapid S&P 500 inclusion following SpaceX's anticipated IPO.

PL Price Action: Planet Labs shares were down 25.06% at $32.61 at the time of publication on Friday.