What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-30 compared with 2022-04-14 · 159 added, 279 removed, 381 unchanged (53% of the section changed)

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Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

This MD&A generally discusses fiscal year ended January 31, 2023 and fiscal year ended January 31, 2022 items and year-to-year comparisons between fiscal year ended January 31, 2023 and fiscal year ended January 31, 2022.

Discussions of fiscal year ended January 31, 2021 items and year-to-year comparisons between the fiscal year ended January 31,2022 and the fiscal year ended January 31, 2021 that are not included in this Form 10-K can be found in “Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations” of the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2022, filed with the SEC on April 14, 2022.

Business and Overview

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We deliver a differentiated data set:

a new image of the entire Earth landmass every day.

a new image of the entire Earth’s landmass, constantly refreshed.

To collect this powerful data set, we design, build and operate hundreds of satellites, making our fleet the largest Earth observation fleet of satellites in history.

Our daily stream of proprietary data and machine learning analytics, delivered through our

cloud-native platform, helps companies, governments and civil society use satellite imagery to discover insights as change happens.

Our daily stream of proprietary data and machine learning analytics, delivered through our cloud-native platform, helps companies, governments and civil society use satellite imagery to discover insights as change happens.

To help further our mission, we have developed advanced satellite technology that increases the cost performance of each satellite.

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Our products serve a variety of diverse customer needs.

For example, our products help farmers make decisions that result in significant increases in their harvests, while using fewer resources, by timely alerting them to changes happening within their fields.

For example, our products help farmers make decisions that result in significant increases in their harvests, while using fewer resources, by timely alerting them to changes happening within their

Governments use our data to help deliver public services more effectively in disaster response.

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As of January 31, 2023, our EoP Customer Count was 882 customers, which represented a 15% year-over-year growth when compared to January 31, 2022.

Our EoP Customer Count has grown quarter-over-quarter for every quarter in the prior two years.

For a definition of EoP Customer Count see the section titled “Key Operational and Business Metrics.” Over 90% of our customers sign annual or multiyear contracts, with an average contract length of approximately 2 years, weighted on an annual contract value basis.

Our EoP Customer Count has grown quarter-over-quarter for every quarter in the prior three years.

For a definition of EoP Customer Count see the section titled “Key Operational and Business Metrics.” Over 95% of our customers sign annual or multiyear contracts, with an average contract length of approximately two years, weighted on an annual contract value basis.

The Business Combination

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Following the completion of the Business Combination, dMY IV was renamed Planet Labs PBC.

The Business Combination was accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with U.S.

Under the guidance in Accounting Standard Codification (“ASC”) 805, Business Combinations , dMY IV was treated as the “acquired” company for financial reporting purposes.

Former Planet was deemed to be the accounting predecessor of the combined business, and Planet Labs PBC, as the parent company of the combined business, is the successor SEC registrant, meaning that our reported consolidated assets, liabilities and results of operations prior to the Business Combination are those of Former Planet.

Upon the closing of the Business Combination, we received aggregate gross proceeds of $590.4 million, including $252.0 million in gross proceeds from a Private Investment in Public Equity financing (“PIPE Investment”) which closed substantially simultaneously with the Business Combination.

We paid approximately $57.2 million of transaction expenses in connection with the Business Combination.

We also repaid our existing debt of approximately $67.1 million, including repayment fees associated with the debt of approximately $2.0 million and accrued interest, after the Business Combination was consummated.

In addition, immediately prior to the effective time of the Business Combination, Former Planet’s outstanding convertible notes were automatically converted into

shares of Class A common stock, and as such, the converted convertible notes are no longer outstanding and ceased to exist at the effective time of the Business Combination.

As a result of the Business Combination, we are an SEC-registered company listed on the NYSE which requires us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.

We expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal, and administrative resources, including increased personnel costs, audit and other professional service fees.

Our results of operations and statements of financial position may not be comparable between periods as a result of the Business Combination described above.

As a result of the Business Combination, we became a SEC-registered company listed on the NYSE which required us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.

Our results of operations and statements of financial position may not be comparable between periods as a result of the Business Combination.

Impact of COVID-19

COVID-19 continues to spread throughout the United States and other parts of the world and has negatively affected the U.S.

and global economies, disrupted global supply chains, resulted in significant travel and transport restrictions, including mandated closures and orders to “shelter-in-place” and quarantine restrictions.

We have taken measures to protect the health and safety of our employees, including shifting many employees to remote work.

We have also worked with our customers and suppliers to minimize disruptions, and we support our community in addressing the challenges posed by this ongoing global pandemic.

The COVID-19 pandemic has generally disrupted the operations of our vendors, customers, and prospective customers, and may continue to disrupt their operations, including as a result of travel restrictions and/or business shutdowns, uncertainty in the financial markets, or other harm to their business and financial results.

This disruption could result in a reduction to information technology budgets, delayed purchasing decisions, longer sales cycles, extended payment terms, the timing of payments, and postponed or canceled projects, all of which could negatively impact our business and operating results, including sales and cash flows.

The ultimate impact of COVID-19, including the impact of any new strains or variants of the virus, on our financial and operating results is unknown and will depend on the length of time that the disruptions to our vendors, customers and prospective customers exist.

The ultimate impact of COVID-19, or other national or global health concerns, on our financial and operating results is unknown and will depend on the length of time that the disruptions to our vendors, customers and prospective customers exist.

The full extent of the impact of COVID-19 is unknown but we do not expect the COVID-19 pandemic to have a material impact on our business going forward.

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Data licensing subscriptions and minimum commitment usage-based contracts provide a large recurring revenue base for our business with a low incremental cost to serve each additional customer.

Payment terms of our customer agreements are most commonly in advance on an either quarterly or annual basis, although a small number of large contracts have required payment terms quarterly in arrears.

We also generate an immaterial amount of revenue from sales of third-party imagery, professional services, and customer support.

We employ a “land-and-expand” go-to-market strategy with the goal to deliver increasing value to our customers and generate more revenue with each customer over time by expanding the scope of the services we offer.

We work closely with our customers and partners to enable their early success, both from an account management and technical management perspective.

We work closely with our customers and partners to enable their early success, both from an account management and

technical management perspective.

Deeper adoption from our customers comes in many forms, including more users, more area coverage, and more advanced software analytics capabilities.

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We plan to invest in sales, marketing and software solutions to drive our expansion within our existing customer base and further penetrate verticals that are early adopters of geospatial data, such as Civil Government, Agriculture, Defense & Intelligence, and Mapping.

In addition, we plan to invest in expanding the analytic tools we make

available to these customers with the goal of increasing the services we provide to these customers and more deeply embed our data and analytics into their business intelligence systems.

In addition, we plan to invest in expanding the analytic tools we make available to these customers with the goal of increasing the services we provide to these customers and more deeply embed our data and analytics into their business intelligence systems.

Expansion into New Verticals :

We plan to invest in our software engineering teams to develop solutions to address use cases in emerging markets in our industry such as Energy & Infrastructure, Finance & Insurance, and Consumer Packaged Goods.

In addition, to expand our reach within vertical markets, we intend to leverage our open data platform with specific vertical partners to deliver vertical market-specific solutions.

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We expect that our ability to provide new data sets through new sensors and new proprietary data will be an important factor for our long-term growth and future market penetration.

We believe offering new data sets and fusing new data sets with our existing data sets will enable us to deliver greater value to our existing customers and help us attract new customers.

We believe offering new data sets and fusing new data sets with our existing data sets will enable us to deliver greater value to our existing customers and

help us attract new customers.

This may require significant investment in technology and personnel and result in increased research and development costs as well as costs of revenue.

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In addition to the measures presented in our consolidated financial statements, we use the following key operational and business metrics to evaluate our business, measure our performance, develop financial forecasts, and make strategic decisions.

Year Ended January 31,

2022 2021 2020

Net Dollar Retention Rate 108 % 113 % 102 %

Net Dollar Retention Rate including Winbacks 116 % 117 % 103 %

EoP Customer Count 770 618 442

% Recurring 92 % 92 % 88 %

Capital Expenditures as Percentage of Revenue 11 % 27 % 25 %

ACV and EoP ACV Book of Business

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Net Dollar Retention Rate

Year Ended January 31,

Net Dollar Retention Rate

We define Net Dollar Retention Rate as the percentage of ACV generated by existing customers in a given period as compared to the ACV of all contracts at the beginning of the fiscal year from the same set of existing customers.

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Management applies judgment in determining the value of active contracts in a given period, as set forth in the definition of ACV above.

Net Dollar Retention Rate decreased to 108% for the fiscal year ended January 31, 2022, as compared to 113% for the fiscal year ended January 31, 2021, primarily due to the lower renewal value of a large government contract and the discontinuation of services to a government customer that ceased to exist beginning in August 2021.

Net Dollar Retention Rate increased to 113% for the fiscal year ended January 31, 2021, as compared to 102% for the fiscal year ended January 31, 2020, due to our success in upselling and cross-selling to our existing customers during the period, as well as a reduction in customers with contract lengths less than one year.

Net Dollar Retention Rate increased to 131% for the fiscal year ended January 31, 2023 as compared to 108% for the fiscal year ended January 31, 2022, primarily due to improved renewal and expansion value of large government contracts and the overall retention rate improvement across our customer base due to tiered customer success programs and targeted use case selling approach in the fiscal year ended January 31, 2023.

Net Dollar Retention Rate including Winbacks

Year Ended January 31,

Net Dollar Retention Rate including Winbacks

We report on two metrics for net dollar retention—net retention excluding winbacks and including winbacks.

A winback is a previously existing customer who was inactive at the start of the fiscal year, but has reactivated during the same fiscal year period.

A winback is a previously existing customer who was inactive at the start of the current fiscal year, but has reactivated during the current fiscal year.

The reactivation period must be within 24 months from the last active contract with the customer;

otherwise, the customer is assumed as a new customer.

otherwise, the customer is counted as a new customer and therefore excluded from the retention rate metrics.

We define Net Dollar Retention Rate including winbacks as the percentage of ACV generated by existing customers and winbacks in a given period as compared to the ACV of all contracts at the beginning of the fiscal year from the same set of existing customers.

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Beyond the judgments underlying managements’ calculation of Net Dollar Retention set forth above, there are no additional assumptions or estimates made in connection with Net Dollar Retention Rate including winbacks.

Net Dollar Retention Rate including winbacks decreased to 116% for the fiscal year ended January 31, 2022 as compared to 117% for the fiscal year ended January 31, 2021.

The Net Dollar Retention including winbacks as of January 31, 2022 was primarily impacted by the discontinuation of services to a government customer that ceased to exist beginning in August 2021.

Net Dollar Retention Rate including winbacks increased to 134% for the fiscal year ended January 31, 2023 as compared to 116% for the fiscal year ended January 31, 2022, primarily due to improved renewal and expansion value of large government contracts and the overall retention rate improvement across our customer base due to tiered customer success programs and targeted use case selling approach in the fiscal year ended January 31, 2023.

EoP Customer Count

Year Ended January 31,

EoP Customer Count 882 770

We define EoP Customer Count as the total count of all existing customers at the end of the period.

We define existing customers as customers with an active contract with Planet at the end of the reported period.

We define existing customers as customers with an active contract with us at the end of the reported period.

For the purpose of this metric, we define a customer as a distinct entity that uses our data or services.

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If a partner does not provide the end customer’s name, then the partner is reported as the customer.

Each customer, regardless of the number of active opportunities with Planet, is counted only once.

Each customer, regardless of the number of active opportunities with us, is

counted only once.

For example, if a customer utilizes multiple products of Planet, we only count that customer once for purposes of EoP Customer Count.

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The EoP Customer Count increased to 882 as of January 31, 2023, as compared to 770 as of January 31, 2022.

The EoP Customer Count increased to 618 as of January 31, 2021, as compared to 442 as of January 31, 2020.

These increases were primarily attributable to the increased demand for our data.

The increase was primarily attributable to the increased demand for our data.

Percent of Recurring ACV

Year Ended January 31,

% Recurring 94 % 92 %

Percent of Recurring ACV is the portion of the total EoP ACV Book of Business that is recurring in nature.

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There are no significant estimates underlying management’s calculation of Percent of Recurring ACV, but management applies judgment as to which customers have an active contract at a period end for the purpose of determining ACV Book of Business, which is used as part of the calculation of Percent of Recurring ACV.

Percent of Recurring ACV stayed constant at 92% for the fiscal year ended January 31, 2022, as compared to 92% for the fiscal year ended January 31, 2021.

Percent of Recurring ACV increased to 94% for the fiscal year ended January 31, 2023, as compared to 92% for the fiscal year ended January 31, 2022.

The increase for the fiscal year ended January 31, 2021 was primarily attributable to scaling our business models towards subscription and annual commitment usage sales.

The increase in Percent of Recurring ACV is largely attributable to large, multi-year contracts signed in fiscal year ended January 31, 2023.

Capital Expenditures as a Percentage of Revenue

Year Ended January 31,

Capital Expenditures as Percentage of Revenue 7 % 11 %

We define capital expenditures as purchases of property and equipment plus capitalized internally developed software development costs, which are included in our statements of cash flows from investing activities.

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Capital Expenditures as a Percentage of Revenue decreased to 7% for the fiscal year ended January 31, 2023, as compared to 11% for the fiscal year ended January 31, 2022.

The decrease was primarily attributable to the fact that our high-resolution satellite constellation was completed during the fiscal year ended January 31, 2021;

therefore capital expenditures in the fiscal year ended January 31, 2022, were primarily associated with the replenishment of our lower cost PlanetScope satellites.

Capital Expenditures as a Percentage of Revenue increased to 27% for the fiscal year ended January 31, 2021, as compared to 25% for the fiscal year ended January 31, 2020.

The increase was primarily attributable to an increase in capital expenditures related to the launch of high-resolution satellites.

The decrease in Capital Expenditures as a Percentage of Revenue was primarily attributable to the increase in revenue during the fiscal year ended January 31, 2023.

Components of Results of Operations

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We also provide an immaterial amount of other services to customers, including professional services such as training, analytical services, research and development services to third parties, and other value-added activities related to our imagery, data and technology.

These revenues are recognized as the services are rendered, on a

proportional performance basis for fixed price contracts or ratably over the contract term for subscription professional services and analytics contracts.

These revenues are recognized as the services are rendered, on a proportional performance basis for fixed price contracts or ratably over the contract term for subscription professional services and analytics contracts.

Training revenues are recognized as the services are performed.

Cost of Revenue

Cost of revenue consists of employee-related costs of performing account and data provisioning, customer support, satellite and engineering operations, as well as the costs of operating and retrieving information from the satellites, processing and storing the data retrieved, third party imagery expenses, depreciation of satellites and ground stations, and the amortization of capitalized internal-use software related to creating imagery provided to customers.

Cost of revenue consists of employee-related costs of performing account and data provisioning, customer support, satellite and engineering operations, as well as the costs of operating and retrieving information from the satellites, processing and storing the data retrieved, third party imagery expenses, depreciation of satellites and ground stations, amortization of acquired intangibles and the amortization of capitalized internal-use software related to creating imagery provided to customers.

Employee-related costs include salaries, benefits, bonuses and stock-based compensation.

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Expenses classified as research and development are expensed as incurred and attributable to advancing technology research, platform and infrastructure development and the research and development of new product iterations.

Fees for our performance of research and development services under certain arrangements are recognized as a reduction of research and development expenses based on a cost incurred method.

We continue to iterate on the design of our satellites and the capabilities of our automated operations to optimize for efficiency and technical capability of each satellite.

Satellite costs associated with the design, manufacturing, launch, and commissioning of experimental satellites or other space related research and development activities are expensed as incurred.

Costs associated with satellite and other space related research and development activities are expensed as incurred.

We intend to continue to invest in our software platform development, machine learning and analytic tools and applications and new satellite technologies for both the satellite fleet operations and data collection capabilities to drive incremental value to our existing customers and to enable us to expand our traction in emerging markets and with new customers.

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We intend to continue to invest in our selling and marketing capabilities in the future and expect this expense to increase in future periods as we look to upsell new product features and expand into new market verticals.

Selling and marketing expenses as a percentage of total revenue may fluctuate from period to period based on total revenue and the timing of our investments.

and marketing expenses as a percentage of total revenue may fluctuate from period to period based on total revenue and the timing of our investments.

General and Administrative

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Debt extinguishment gain (loss) reflects the gains or losses associated with the extinguishment of debt or incurred in connection with our early repayment of debt.

Interest Income

Interest income primarily consists of interest earned on our cash, cash equivalents and short-term investments.

Our cash equivalent and short-term investment portfolio is invested with a goal of preserving our access to capital, and generally consists of money market funds, commercial paper, corporate debt securities and U.S.

government and U.S.

government agency debt securities.

Interest Expense

Interest expense primarily consists of interest expense associated with our borrowings and amortization of debt issuance costs for our loans.

Our debt as of January 31, 2021 included loans with Venture Lending & Leasing, Inc.

Prior to the Business Combination, our debt included loans with Venture Lending & Leasing, Inc.

(“Venture”), an affiliate of Western Technology Investment and our Credit Agreement with Silicon Valley Bank (“SVB”) and Hercules Capital, Inc.

(“Hercules”).

We repaid our debt with SVB and Hercules of $67.1 million, including the outstanding principal, accrued interest and repayment fees, upon completion of the Business Combination.

We repaid our debt with SVB and Hercules of $67.1 million, including the outstanding principal, accrued interest and repayment fees, upon completion of the Business Combination and we had no debt outstanding as of January 31, 2023 or 2022.

Change in fair value of convertible notes and warrant liabilities

Change in fair value of liabilities includes the change in fair value of warrant liabilities, including the change in fair value of the public and private placement warrant liabilities assumed in connection with the Business Combination, and the change in fair value of our convertible notes, which converted into Class A common stock in connection with the Business Combination.

Change in fair value of liabilities includes the change in fair value of warrant liabilities and the change in fair value of our convertible notes, which converted into Class A common stock in connection with the Business Combination.

We expect to incur other incremental income or expense for fair value adjustments resulting from warrant liabilities that remain outstanding.

Other Income (Expenses), net

Other income (expenses), net, consists of interest income earned and net gains or losses on foreign currency.

Other income (expenses), net, primarily consists of net gains or losses on foreign currency.

Other income (expenses), net for the fiscal year ended January 31, 2022 includes transaction costs associated with the public and private placement warrants assumed in connection with the Business Combination.

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Debt extinguishment gain (loss) — (1,690) 1,690 (100) %

Interest income 7,672 21 7,651 36,433 %

Interest expense — (8,772) 8,772 (100) %

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Other income (expense), net 330 (2,248) 2,578 (115) %

Total other expense, net (6,963) (38,588) 31,625 (82) %

Total other income (expense), net 14,556 (6,963) 21,519 (309) %

Loss before provision for income taxes (161,119) (135,014) (26,105) 19 %

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Revenue increased $60.0 million, or 46%, to $191.3 million for the fiscal year ended January 31, 2023, from $131.2 million for the fiscal year ended January 31, 2022.

The increase was due, in part, to a significant customer contract in Europe which resulted in an $11.3 million increase in revenue for the fiscal year ended January 31, 2022, the significant expansion of a U.S.

civil government contract during the same period, and an increase in total customers worldwide.

Total customers increased approximately 25% to 770 as of January 31, 2022 from an EoP Customer Count of 618 as of January 31, 2021.

The increase in total customers and the associated revenue from those customers was largely due to our investment in expanding our sales and marketing teams.

These increases in revenue were partially offset by the timing of renewals, as well as the restructuring of a significant customer contract that expired at the end of December 2020, resulting in a decrease in revenue of approximately $7.6 million for the fiscal year ended January 31, 2022.

The increase was primarily due to net expansion of existing customer contracts of $47.2 million and an increase from new customers worldwide of $12.8 million.

EoP Customer Count increased approximately 15% to 882 as of January 31, 2023, from 770 as of January 31, 2022.

The increase in total customers and the associated revenue from those customers was largely due to increased demand for our products.

The increase in revenue was also attributable to increased usage from our existing customers in the current period.

Cost of Revenue

Cost of revenue decreased $4.4 million, or 5%, to $83.0 million for the fiscal year ended January 31, 2022, from $87.4 million for the fiscal year ended January 31, 2021.

The decrease was primarily due to a $17.4 million decrease in depreciation expense, mainly associated with reduced satellite depreciation expense as a result of an increase in the estimated useful life of certain of our high resolution satellites from six years to nine years.

See Note 2 in our consolidated financial statements included elsewhere in this Form 10-K for information on the change in estimate.

The decrease was partially offset by an increase in hosting costs of $6.4 million associated with an increase in archive data costs and the growth of our customer base, a $4.5 million increase in salaries and related personnel costs associated with an increase in headcount and a $1.4 million increase in stock-based compensation expenses.

Cost of revenue increased $14.3 million, or 17%, to $97.2 million for the fiscal year ended January 31, 2023, from $83.0 million for the fiscal year ended January 31, 2022.

The increase was primarily due to a $8.6 million increase in employee related costs, due to increased headcount and a $2.9 million increase in stock-based compensation.

The increase in stock-based compensation was primarily due to earn-out shares for which the recognition of expense commenced upon the closing of the Business Combination on December 7, 2021 and increased headcount.

The increase was also partially due to a $4.5 million increase in hosting costs associated with an increase in archive data and growth in our customer base and a $0.7 million increase in travel expense.

Research and Development

Research and development expenses increased $44.2 million, or 66%, to $110.9 million for the fiscal year ended January 31, 2023, from $66.7 million for the fiscal year ended January 31, 2022.

The increase was partially due to an increase of $11.8 million in stock-based compensation expenses primarily due to restricted stock unit awards subject to both time-based service and liquidity event vesting requirements that met the liquidity event requirement upon the closing of the Business Combination.

The increase was also partially due to an increase of $7.0 million in costs associated with our software and product development teams as a result of an increase in headcount and program expenses.

The increase was primarily due to a $39.3 million increase in employee related costs, due to increased headcount and a $16.6 million increase in stock-based compensation.

The increase in stock-based compensation was primarily due to earn-out shares for which the recognition of expense commenced upon the closing of the Business Combination on December 7, 2021 and

increased headcount.

The increase was also partially due to a $1.4 million increase in software and maintenance expenses and a $1.6 million increase in travel expenses.

Sales and Marketing

Sales and marketing expenses increased $25.1 million, or 47%, to $78.0 million, for the fiscal year ended January 31, 2023, from $52.9 million for the fiscal year ended January 31, 2022.

The increase was partially due to an increase of $6.2 million in stock-based compensation expenses primarily due to restricted stock unit awards subject to both time-based service and liquidity event vesting requirements that met the liquidity event requirement upon the closing of the Business Combination.

The increase was also partially due to an increase of $4.2 million for headcount, commissions and program expenses and an increase of $3.8 million in marketing program expenses, primarily related to events.

The increase was primarily due to a $18.5 million increase in employee related costs, due to increased headcount, a $1.3 million increase in commission expense and a $5.9 million increase in stock-based compensation.

The increase was also partially due to an increase of $3.7 million for travel and entertainment expenses, an increase of $0.7 million for professional and consulting services, and an increase of $0.7 million for software and maintenance expenses.

General and Administrative

General and administrative expenses increased $24.1 million, or 42%, to $80.7 million for the fiscal year ended January 31, 2023, from $56.7 million for the fiscal year ended January 31, 2022.

The increase was partially due to an increase of $8.3 million in stock-based compensation expenses primarily due to restricted stock unit awards subject to both time-based service and liquidity event vesting requirements that met the liquidity event requirement upon the closing of the Business Combination.

The increase was also partially due to an increase of finance and accounting costs of $5.5 million, primarily due to accounting and consultant fees and employee personnel costs, an increase of $2.3 million in legal fees, including costs related to acquisition activities, and an increase of $1.8 million in directors’ and officers’ insurance.

The increase was primarily due to a $16.4 million increase in employee related costs, due to increased headcount and a $8.3 million increase in stock-based compensation.

The increase was also partially due to an increase of $3.2 million in directors’ and officers’ and other corporate insurance, an increase of finance and accounting costs of $2.5 million, primarily due to accounting and consultant fees, and an increase of $1.8 million in rent and occupancy costs.

Debt Extinguishment Gain (Loss)

Debt extinguishment loss for the fiscal year ended January 31, 2022 reflects the loss realized upon the repayment of all amounts owed under the credit agreement with SVB and Hercules in connection with the Business Combination.

Debt extinguishment gain for the fiscal year ended January 31, 2021 reflects the gain realized upon the repayment of a portion of our borrowings under our Venture Tranche B loans.

Interest Income

Interest income was $7.7 million for the fiscal year ended January 31, 2023 as compared to an immaterial amount for the fiscal year ended January 31, 2022.

The increase was primarily due to our short-term investment balances and an increase in interest rates.

Interest Expense

Interest expense decreased $0.7 million, or 7% to $8.8 million for the fiscal year ended January 31, 2022, from $9.4 million for the fiscal year ended January 31, 2021.

The decrease in interest expense is primarily due to the repayment of all amounts owed under the credit agreement with SVB and Hercules in connection with the Business Combination.

No interest expense was recognized for the fiscal year ended January 31, 2023 because we had no debt outstanding during the period.

Interest expense for the fiscal year ended January 31, 2022, was related to our credit agreement with SVB and Hercules which we repaid upon completion of the Business Combination.

Change in fair value of convertible notes and warrant liabilities

The change in fair value of convertible notes and warrant liab ilities increased $35.8 million to a gain of $5.7 million for the fiscal year ended January 31, 2022, from a loss of $30.1 million for th e fiscal year ended 2021.

The change in fair value of convertible notes and warrant liabilities during the fiscal year ended January 31, 2022 includes a loss of $13.1 million due to the revaluation of the 2020 convertible promissory notes and our Venture Tranche B convertible note upon conversion to Class A common stock in connection with the Business Combination transactions, a loss of $12.1 million due to revaluations of liability classified Series B and Series D preferred stock warrants that converted to Class A common stock warrants in connection with the Business Combination, offset by a

gain of $31.0 million due to the revaluation of the public and private placement warrants assumed in connection with the Business Combination.

The change in fair value of convertible notes and warrant liabilities for the fiscal year ended January 31, 2021 reflects a $24.4 million loss due to the revaluation of the 2020 convertible promissory notes, a $0.7 million loss due to the revaluation of our Venture Tranche B convertible note, and a $4.9 million loss due to the revaluation of the liability classified Series B and Series D preferred stock warrants.

The change in fair value of convertible notes and warrant liab ilities increased $0.8 million to a gain of $6.6 million for the fiscal year ended January 31, 2023, from a gain of $5.7 million for th e fiscal year ended January 31, 2022.

The change in fair value of convertible notes and warrant liabilities during the fiscal year ended January 31, 2023 reflects a gain of $6.6 million due to the revaluation of the liability classified public and private placement warrants that were assumed in connection with the Business Combination.

Other Income (Expense), net

Other expense of $2.2 million for the fiscal year ended January 31, 2022 represents $2.2 million of transaction costs associated with the public and private placement warrants assumed in connection with the Business Combination.

Other income of $0.2 million for the fiscal years ended January 31, 2021 primarily reflects realized and unrealized foreign currency exchange gains and losses.

Other income of $0.3 million for the fiscal year ended January 31, 2023 primarily reflects realized and unrealized foreign currency exchange gains and losses.

Other expense of $2.2 million for the fiscal year ended January 31, 2022 primarily reflects $2.2 million of transaction costs associated with the public and private placement warrants assumed in connection with the Business Combination.

Provision for Income Taxes

Provision for income taxes increased $1.0 million or 97% to $2.1 million for the fiscal year ended January 31, 2022, from $1.1 million for the fiscal year ended January 31, 2021.

Provision for income taxes decreased $1.3 million or (60)% to $0.8 million for the fiscal year ended January 31, 2023, from $2.1 million for the fiscal year ended January 31, 2022.

For the fiscal year ended January 31, 2023, the income tax expense was primarily driven by the current tax on foreign earnings and foreign withholding taxes, partially offset by the recognition of an acquisition related deferred tax benefit.

For the fiscal year ended January 31, 2022, the income tax expense was primarily driven by the current tax on foreign earnings.

For the fiscal year ended January 31, 2021, the income tax expense was primarily driven by the foreign withholding taxes.

The effective tax rate for the fiscal year ended January 31, 2022 differed from the federal statutory tax rate primarily due to the valuation allowance on the majority of our U.S.

The effective tax rate for the fiscal years ended January 31, 2023 and January 31, 2022 differed from the federal statutory tax rate primarily due to the valuation allowance on the majority of our U.S.

and foreign deferred tax assets and foreign rate differences.

The effective tax rate for the fiscal year ended January 31, 2021 differed from the federal statutory tax rate primarily due to the valuation allowance on the majority of our U.S.

and foreign deferred tax assets and the tax impact of the non-deductible revaluation loss on our convertible debts.

Year Ended January 31, 2021 Compared to Year Ended January 31, 2020

The following table sets forth a summary of our consolidated results of operations for the years indicated, and the changes between such periods.

Year Ended January 31,

(in thousands, except percentages) 2021 2020 Change

Revenue $ 113,168 $ 95,736 $ 17,432 18 %

Cost of revenue 87,383 102,393 (15,010) (15) %

Gross profit 25,785 (6,657) 32,442 (487) %

Operating expenses

Research and development 43,825 37,871 5,954 16 %

Sales and marketing 37,268 34,913 2,355 7 %

General and administrative 32,134 27,019 5,115 19 %

Total operating expenses 113,227 99,803 13,424 13 %

Loss from operations (87,442) (106,460) 19,018 (18) %

Debt extinguishment gain (loss) 673 (11,529) 12,202 (106) %

Interest expense (9,447) (6,946) (2,501) 36 %

Change in fair value of convertible notes and warrant liabilities (30,053) 207 (30,260) (14,618) %

Other income (expense), net 239 1,144 (905) (79) %

Total other expense, net (38,588) (17,124) (21,464) 125 %

Loss before provision for income taxes (126,030) (123,584) (2,446) 2 %

Provision for income taxes 1,073 130 943 725 %

Net loss $ (127,103) $ (123,714) $ (3,389) 3 %

Revenue increased $17.4 million, or 18%, to $113.2 million for the fiscal year ended January 31, 2021 from $95.7 million for the fiscal year ended January 31, 2020.

The increase in revenue for the fiscal year ended January 31, 2021, as compared to the fiscal year ended January 31, 2020, is primarily attributable to an increase in the value of our existing customer contracts and an increase in new customer contracts.

EoP Customer Count increased approximately 40% from 442 as of January 31, 2020 to 618 as of January 31, 2021.

The increase in revenue and EoP Customer Count was largely due to our expanded marketing efforts, investment in new high resolution data offerings, investments in analytic capabilities, and expansion of our commercial sales team globally.

Cost of Revenue

Cost of revenue decreased $15.0 million, or 15%, to $87.4 million for the fiscal year ended January 31, 2021, from $102.4 million for the fiscal year ended January 31, 2020.

The decrease in cost of revenue is driven by a $13.9 million decrease in depreciation and amortization expense year-over-year, in large part due to a reduction in satellite depreciation related to our RapidEye fleet of satellites.

Our RapidEye satellite fleet reached the end of its useful life in March 2020 and did not require replacement as customers were able to transition to our PlanetScope products.

This resulted in a $7.6 million decrease in depreciation and amortization for the fiscal year ended January 31, 2021.

The end of life of the RapidEye fleet also resulted in a $1.5 million decrease in ground station costs.

These decreases were offset in part by an increase in hosting costs of $2.6 million resulting from the increase in archive data and current data accessed by our growing customer base.

Research and Development

Research and development expenses increased $6.0 million, or 16%, to $43.8 million for the fiscal year ended January 31, 2021, from $37.9 million for the fiscal year ended January 31, 2020.

The increase in research and development expense is primarily due to an employee and personnel cost increase of $6.9 million in the fiscal year ended January 31, 2021, as compared to the fiscal year ended January 31, 2020, which resulted from an increase in headcount in both our space systems and software development teams.

Sales and Marketing

Sales and marketing expenses increased $2.4 million, or 7%, to $37.3 million for the fiscal year ended January 31, 2021, from $34.9 million for the fiscal year ended January 31, 2020.

The increase in sales and marketing expense is primarily related to the increase in headcount in the sales and marketing organization.

This increase was offset by the reduction in travel, entertainment, and marketing spend due to COVID-19, as our user conference was transitioned from an in-person event in the fall of 2019 to a virtual event in the fall of 2020 at lower cost, and employees were discouraged from traveling to meet customers.

As a percentage of revenue, selling and marketing expenses decreased to 32.9% from 36.5% due to the increase in revenue in addition to the lower non-personnel related costs.

General and Administrative

General and administrative expenses increased $5.1 million, or 19%, to $32.1 million for the fiscal year ended January 31, 2021, from $27.0 million for the fiscal year ended January 31, 2020.

The increase in general and administrative expense is primarily related to an increase in stock-based compensation expense of $6.6 million due to options granted to executives during the fiscal year ended January 31, 2021.

This increase was partially offset by lower travel and entertainment expenses and other overhead expenses due to COVID-19.

As a percentage of revenue, general and administrative expenses remained flat at approximately 28%.

Debt Extinguishment (Gain) Loss

Debt extinguishment gain for the fiscal year ended January 31, 2021 reflects the gain realized upon the repayment of a portion of our borrowings under our Venture Tranche B loans.

Debt extinguishment loss for the fiscal year ended January 31, 2020 reflects the loss realized upon the early repayment of the 2017 Venture loans.

Interest Expense

Interest expense increased $2.5 million, or 36%, for the fiscal year ended January 31, 2021, from $6.9 million for the fiscal year ended January 31, 2020.

This increase was primarily related to an increase in borrowings under our Credit Agreement with SVB and Hercules.

This increase was partially offset by a decrease in borrowings under the 2017 Venture loans.

Change in fair value of convertible notes and warrant liabilities

The change in fair value of convertible notes and warrant liabilities was a loss of $30.1 million for the fiscal year ended January 31, 2021, as compared to a gain of $0.2 million for the fiscal year ended January 31, 2020.

The increase in fair value of these instruments is primarily related to the increase in our enterprise valuation.

The change in fair value of liabilities for the fiscal year ended January 31, 2020 reflects a $0.2 million gain due to the revaluation of our Venture Tranche B convertible note and a $0.1 million gain due to the revaluation of the liability classified Series B and Series D preferred stock warrants.

Other Income (Expense), net

Other income (expense) of $0.2 million and $1.1 million for the fiscal years ended January 31, 2021 and 2020, respectively, primarily reflects realized and unrealized foreign currency exchange gains and losses.

Provision for Income Taxes

Provision for income taxes increased to $1.1 million for the fiscal year ended January 31, 2021 from $0.1 million for the fiscal year ended January 31, 2020.

For the fiscal year ended January 31, 2021, the income tax expense was primarily driven by the foreign withholding taxes.

For the fiscal year ended January 31, 2020, the income tax expense was primarily driven by the current tax on foreign earnings.

The effective tax rates for the fiscal years ended January 31, 2021 and 2020 differed from the federal statutory tax rate primarily due to the valuation allowance on the majority of our U.S.

and foreign deferred tax assets and the tax impact of the non-deductible revaluation loss on our convertible debts.

Non-GAAP Information

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We believe Non-GAAP Gross Profit and Adjusted EBITDA are useful in evaluating our operating performance, as they are similar to measures reported by our public competitors and are regularly used by security analysts, institutional investors, and other interested parties in analyzing operating performance and prospects.

As mentioned above, Non-GAAP Gross Profit and Adjusted EBITDA are non-GAAP measures, are additions, and not substitutes for or superior to, measures of financial performance prepared in accordance with U.S.

As mentioned above, Non-GAAP Gross Profit and Adjusted EBITDA are non-GAAP measures, and are additions, and not substitutes for or superior to, measures of financial performance prepared in accordance with U.S.

GAAP and should not be considered as an alternative to gross profit, net income, operating income or any other performance measures derived in accordance with U.S.

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We include these non-GAAP financial measures because they are used by management to evaluate our core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments.

Non-GAAP Gross Profit excludes stock-based compensation expenses that are classified as cost of revenue from gross profit (loss), which is required in accordance with U.S.

Non-GAAP Gross Profit excludes stock-based compensation expenses that are classified as cost of revenue from gross profit, which is required in accordance with U.S.

Non-GAAP Gross Profit also excludes amortization of acquired intangible assets related to business combinations, which is a non-cash expense required in accordance with U.S.

Adjusted EBITDA excludes certain expenses from net income (loss) that are required in accordance with U.S.

We exclude in this calculation certain non-cash expenses, such as depreciation and amortization, stock-based compensation and change in fair value of convertible notes and warrant liabilities, and expenses that are considered unrelated to our underlying business performance, such as interest income, interest expense, and taxes.

Non-GAAP Gross Profit (Loss)

We define and calculate Non-GAAP Gross Profit (Loss) as gross profit (loss) adjusted for stock-based compensation classified as cost of revenue, and Non-GAAP Gross Margin percentage as the percentage of Non-GAAP Gross Profit (Loss) to revenue as outlined in the reconciliation below.

The table below reconciles our Gross Profit (Loss) (the most directly comparable U.S.

GAAP measure) to Non-GAAP Gross Profit (Loss), for the periods indicated:

Non-GAAP Gross Profit

We define and calculate Non-GAAP Gross Profit as gross profit adjusted for stock-based compensation and amortization of acquired intangible assets classified as cost of revenue, and Non-GAAP Gross Margin percentage as the percentage of Non-GAAP Gross Profit to revenue as outlined in the reconciliation below.

The table below reconciles our Gross Profit (the most directly comparable U.S.

GAAP measure) to Non-GAAP Gross Profit, for the periods indicated:

Year Ended January 31,

(in thousands, except percentages) 2023 2022

Gross Profit (Loss) $ 48,222 $ 25,785 $ (6,657)

Gross Profit $ 94,008 $ 48,222

Cost of revenue—Stock-based compensation 5,119 2,257

Non-GAAP Gross Profit (Loss) $ 50,479 $ 26,628 $ (5,869)

Amortization of acquired intangible assets 1,553 —

Non-GAAP Gross Profit $ 100,680 $ 50,479

Gross Margin percentage 49 % 37 %

Non-GAAP Gross Margin percentage 53 % 38 %

Non-GAAP Gross Profit (Loss) excludes stock-based compensation, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy.

Adjusted EBITDA

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Since inception, we have incurred net losses and negative cash flows from operations.

Our operations have historically been primarily funded by the net proceeds from the sale of our equity securities, borrowings under credit facilities, as well as cash received from our customers.

Our operations have historically been primarily funded by the net proceeds from the sale of our equity securities and borrowings under credit facilities, as well as cash received from our customers.

We currently have no debt outstanding.

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As of January 31, 2023, and 2022, we had $181.9 million and $490.8 million, respectively, in cash and cash equivalents.

We believe our anticipated operating cash flows together with our cash on hand provide us with the ability to meet our obligations as they become due during the next twelve months.

Additionally, as of January 31, 2023, we had short-term investments of $226.9 million which are highly liquid in nature and available for current operations.

There were no short-term investments as of January 31, 2022.

We believe our anticipated operating cash flows together with our cash on hand provide us with the ability to meet our obligations as they become due during the next 12 months.

We expect our capital expenditures and working capital requirements to continue to increase in the foreseeable future as we seek to grow our business.

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The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financial covenants that would restrict our operations.

We cannot assure you that any such equity or

debt financing will be available on favorable terms, or at all.

We cannot assure you that any such equity or debt financing will be available on favorable terms, or at all.

If the needed financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to decrease our level of investment in software and market expansion efforts or to scale back our existing operations, which could have an adverse impact on our business and financial prospects.

Our principal commitments were as follows as of January 31, 2022:

(in thousands) Total Less than

1 Year 1-3 Years 3-5 Years More than

Operating lease obligations (1) $ 7,088 $ 5,359 $ 1,729 $ — $ —

Launch and Ground Station Services (2) 6,780 3,431 2,871 447 31

Other (3) 180,891 25,379 58,170 63,915 33,427

$ 194,759 $ 34,169 $ 62,770 $ 64,362 $ 33,458

(1) Includes operating leases of corporate office facilities, including our headquarters in San Francisco, California.

(2) Includes purchase commitments under non-cancelable future satellite launch services and ground station services, including leases, to be performed by third-parties.

(3) Includes minimum purchase commitments for hosting services from Google, LLC (“Google”) through January 31, 2028.

Refer to Note 12 in our consolidated financial statements included elsewhere in this Form 10-K for information regarding our related party transactions with Google.

As of January 31, 2023, our principal contractual obligations and commitments include lease obligations for real estate and ground stations, purchase commitments for future satellite launch services, and minimum purchase commitments for hosting services from Google, LLC.

Refer to Notes 7, 10, and 14 to our consolidated financial statements in Part 8 of this Form 10-K for more information regarding these cash requirements.

We do not engage in any off-balance sheet activities or have any arrangements or relationships with unconsolidated entities, such as variable interest, special purpose, and structured finance entities.

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The following tables present a summary of cash flows from operating, investing and financing activities for the following comparative periods.

For additional detail, please see the consolidated statements of cash flows as presented within the Consolidated Financial Statements.

For additional detail, refer to the consolidated statements of cash flows as presented within the consolidated financial statements.

Year Ended January 31,

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Net cash used in operating activities

Net cash used in operating activities for the fiscal year ended January 31, 2023, primarily consisted of the net loss of $162.0 million, adjusted for non-cash items and changes in operating assets and liabilities.

Non-cash items primarily included depreciation and amortization expense of $43.3 million and stock-based compensation expense of $75.5 million, which were partially offset by a change in fair value of warrant liabilities and convertible notes of $6.6 million.

The net change in operating assets and liabilities primarily consisted of a $14.4 million decrease in deferred

revenue, a $3.0 million decrease in accounts payable, accrued and other liabilities and a $10.1 million increase in prepaid expenses and other assets, which was partially offset by a $6.3 million decrease in accounts receivable.

Net cash used in operating activities for the fiscal year ended January 31, 2022, primarily consisted of the net loss of $137.1 million, adjusted for non-cash it ems and changes in operating assets and liabilities.

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The net change in operating assets and liabilities primarily consisted of a $16.1 million increase in accounts payable and accrued expenses, a $5.8 million increase in deferred hosting costs and a $3.3 million decrease in accounts receivable, which were partially offset by a $8.7 million increase in prepaid expenses and other assets, a $4.9 million decrease in deferred revenue and a $2.1 million decrease in deferred rent .

Net cash used in operating activities for the fiscal year ended January 31, 2021, primarily consisted of the net loss of $127.1 million, adjusted for non-cash items and changes in operating assets and liabilities.

Non-cash items included depreciation and amortization expense of $62.2 million, stock-based compensation expense of $14.0 million, and the change in fair value of warrant liabilities and convertible notes of $30.1 million.

The net change in operating assets

and liabilities primarily consisted of a $14.4 million increase in deferred revenue, a $11.0 million increase in accounts payable and accrued expenses, a $8.0 million increase in deferred hosting costs, and a $2.6 million decrease in prepaid expenses and other current assets, which were partially offset by a $19.9 million increase in accounts receivable and $2.2 million decrease in deferred rent.

Net cash used in operating activities for the fiscal year ended January 31, 2020, primarily consisted of the net loss of $123.7 million, adjusted for non-cash items, which included depreciation and amortization expense of $77.6 million, stock-based compensation expense of $5.1 million and a loss on extinguishment of debt of $11.5 million.

These non-cash items were partially offset by a change in operating assets and liabilities of $6.0 million.

The net change in operating assets and liabilities primarily consisted of a $27.3 million decrease in deferred revenue and $3.7 million decrease in deferred rent, which were offset partially by a $9.0 million decrease in accounts receivable and $12.9 million decrease in prepaid expenses and other current assets.

Net cash used in investing activities

Net cash used in investing activities for the fiscal year ended January 31, 2022, consisted of purchases of property and equipment of $10.3 million, inclusive of satellite expenditures of $10.0 million, and capitalized internal-use software costs of $4.6 million.

Net cash used in investing activities for the fiscal year ended January 31, 2023, consisted of purchases of property and equipment of $10.4 million, capitalized internal-use software costs of $2.3 million and purchases of available-for-sale securities of $280.3 million, partially offset by maturities of available-for-sale securities of $55.2 million.

Cash used in investing activities also included $3.8 million, net of cash acquired, for the acquisition of Salo Sciences in January 2023.

Net cash used in investing activities for the fiscal year ended January 31, 2022, consisted of purchases of property and equipment of $10.3 million and capitalized internal-use software costs of $4.6 million.

Cash used in investing activities also included $9.6 million, net of cash acquired, for the acquisition of VanderSat in December 2021.

Net cash used in investing activities for the fiscal year ended January 31, 2021, consisted of purchases of property and equipment of $26.1 million, inclusive of satellite expenditures of $25.0 million, and capitalized internal-use software costs of $4.0 million.

Net cash used in investing activities for the fiscal year ended January 31, 2020, consisted of purchases of property and equipment of $16.7 million, inclusive of satellite expenditures of $13.4 million and capitalized internal-use software costs of $7.4 million.

Cash used in investing activities also included $2.5 million, net of cash acquired for the acquisition of Boundless Spatial in March 2019.

Net cash provided by financing activities

Net cash provided by financing activities for the fiscal year ended January 31, 2022, primarily consisted of $533.2 million of proceeds from the Business Combination and PIPE Investment net of transaction costs paid, $28.6 million proceeds from the exercise of common stock options, inclusive of an early exercise of $17.9 million in July 2021, which was offset by a $67.0 million principal repayment of the credit agreement with SVB and Hercules and $5.6 million for common stock withheld to satisfy employee tax withholding obligations.

Net cash provided by financing activities for the fiscal year ended January 31, 2021, primarily consisted of net proceeds of $71.1 million received from the issuance of the 2020 convertible promissory notes and warrants and $14.9 million net proceeds received from borrowings under the Credit Agreement with SVB and Hercules.

The proceeds received from the Credit Agreement with SVB and Hercules were used in part for the repayment of $2.6 million of principal balance of our Venture Tranche B loans.

Net cash provided by financing activities for the fiscal year ended January 31, 2020, primarily consisted of $10.0 million in net proceeds received from the issuance of Series D preferred stock, $49.6 million in net proceeds received borrowings under the Credit Agreement with SVB and Hercules.

These proceeds were partially offset by repayment of the 2017 loans from Venture of $51.2 million.

Net cash provided by financing activities for the fiscal year ended January 31, 2023, primarily consisted of proceeds from the exercise of common stock options of $14.7 million, which was partially offset by payment of tax withholding obligations for vesting of restricted stock units of $6.3 million.

Net cash provided by financing activities for the fiscal year ended January 31, 2022, primarily consisted of $533.2 million of proceeds from the Business Combination and PIPE Investment net of transaction costs paid, $28.6 million proceeds from the exercise of common stock options, inclusive of an early exercise of $17.9 million in July 2021, which was offset by a $67.0 million principal repayment of the credit agreement with SVB and Hercules and $5.6 million for payment of tax withholding obligations for vesting of restricted stock units

Critical Accounting Policies and Estimates

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The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures.

We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest

potential impact on our financial statements and, therefore, we consider these to be our critical accounting policies.

We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements and, therefore, we consider these to be our critical accounting policies.

Accordingly, we evaluate our estimates and assumptions on an ongoing basis.

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The licenses are generally purchased on a subscription basis, whereby a customer pays for access to our imagery that may be downloaded over a specific period of time, or, on a transactional basis, whereby the customer pays for individual content licenses at the time of download.

Our imagery licensing agreements and service agreements are generally non-cancelable and do not contain refund-type provisions

imagery licensing agreements and service agreements are generally non-cancelable and do not contain refund-type provisions

The recognition and measurement of revenue requires the use of judgments and estimates.

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We also provide other services to customers, including professional services such as training, analytical services, research and development services to third parties, and other value-added activities related to imagery products.

These revenues are recognized as the services are rendered, on a proportional performance basis for fixed price

contracts or ratably over the contract term for subscription professional services contracts.

Training revenues are recognized as the services are performed.

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We typically bill in advance either quarterly or annually for contracts with terms of one year or longer.

We also have a small number of large contracts that have required payment terms that are monthly or quarterly in arrears.

Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the underlying performance obligations have been satisfied.

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The financing component of multi-year contracts was not significant.

Stock-Based Compensation and Common Stock Valuation

Stock-based compensation expense is measured based on the grant-date fair value of the stock-based awards, and is recognized over the requisite service period.

We determine the fair value of stock-based awards granted or modified on the modification date at fair value, using appropriate valuation techniques.

Stock-Based Compensation

We account for stock-based compensation expense in accordance with the fair value recognition and measurement provisions of U.S.

GAAP, which require compensation cost for the grant-date fair value of stock-based awards to be recognized over the requisite service period.

We determine the fair value of stock-based awards granted or modified, using appropriate valuation techniques.

We recognize forfeitures as they occur.

We grant certain awards, primarily options, that vest based upon a service condition.

We use the Black-Scholes option pricing model to determine the fair value of the stock options granted.

The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the fair value of the underlying common stock, the expected term of the option, the expected volatility of the price of the common stock, risk-free interest rates, and the expected dividend yield of the common stock.

The Black-Scholes option pricing model requires the input of subjective assumptions, including the fair value of the underlying common stock, the expected term of the option, the expected volatility of the price of the common stock, risk-free interest rates, and the expected dividend yield of the common stock.

The assumptions used to determine the fair value of the option awards represent management’s best estimates.

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We record stock-based compensation expense for stock options on a straight-line basis over the requisite service period, which is generally four years.

We have historically granted stock options at an exercise price equal to the fair value.

The fair value of the Restricted Stock Units (“RSUs”) is the fair value of the underlying stock at the measurement date.

For awards that are subject to both time-based service and performance conditions (including liquidity events), no expense is recognized until it is probable that the vesting criteria would be met.

Stock-based compensation expense for awards with performance and other vesting criteria is recognized as expense under an accelerated graded vesting model.

The fair value of Restricted Stock Units (“RSUs”) is the fair value of the underlying stock at the measurement date.

For RSU awards that are subject only to a time-based service vesting requirement, we record stock-based compensation expense on a straight-line basis over the requisite service period, which is generally four years.

For RSU awards that are subject to both time-based service and performance condition (including liquidity event) vesting requirements, no expense is recognized until it is probable that the vesting criteria would be met.

Stock-based compensation expense for RSU awards with performance and other vesting criteria is recognized as expense under an accelerated graded vesting model.

Pursuant to the Merger Agreement for the Business Combination, Former Planet equity holders, including Former Planet equity award holders, have the right to receive earn-out consideration (the “Earn-out Shares”).

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Any right to Earn-out Shares that remains unvested on the first business day after five years from the closing of the Business Combination will be forfeited without any further consideration.

The Earn-out Shares allocated to Former Planet equity award holders are accounted for as stock-based compensation pursuant to ASC 718, Compensation—Stock Compensation, because service must be provided through each market

condition vesting requirement described above.

The fair value of the Earn-out Shares allocated to Former Planet equity award holders was determined upon the close of the Business Combination which will be recognized as stock-based compensation expense over the requisite service period.

The fair value of the Earn-out Shares allocated to Former Planet equity award holders was determined upon the close of the Business Combination which is recognized as stock-based compensation expense over the requisite service period.

Compensation expense for awards with market conditions is not reversed if the market condition is not met.

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This valuation model requires inputs such as the fair value of our Class A common stock, the risk-free interest rate, expected term, expected dividend yield and expected volatility.

The fair value of our Class A common stock was the closing stock price on the NYSE as of the measurement date.

The fair value of our Class A common stock is the closing stock price on the NYSE as of the measurement date.

The risk-free interest rate assumption is determined by using the U.S.

Treasury rates of the same period as the expected term of the Earn-out Shares, which is 5 years from the closing of the Business Combination.

Our volatility is derived from several publicly traded peer companies.

We have historically been a private company and lacked sufficient company-specific historical and implied volatility information.

Our volatility was derived from several publicly traded peer companies.

We had historically been a private company and lacked sufficient company-specific historical and implied volatility information.

Therefore, we estimated our expected stock volatility based on the historical volatility of a publicly traded set of peer companies.

The requisite service period for each of the four vesting tranches for the Earn-out Shares was derived from the median time to vest for each tranche utilizing the same simulation model that produced the fair value estimate.

Common Stock Valuations

Prior to the Business Combination, our board of directors estimated the fair value of our common stock at the time of each grant of an equity-based award.

Our board of directors utilized various valuation methodologies in accordance with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately Held Company Equity Securities Issued as Compensation, to estimate the fair value of our common stock.

These estimates and assumptions include numerous objective and subjective factors to determine the fair value of our common stock at each grant date, including the following factors:

• relevant precedent transactions including our capital transactions;

• the liquidation preferences, rights, preferences, and privileges of our preferred stock relative to the common stock;

• our actual operating and financial performance;

• our current business conditions and projections;

• our stage of development;

• the likelihood and timing of achieving a liquidity event for the common stock underlying the stock options, such as an initial public offering, given prevailing market conditions;

• any adjustment necessary to recognize a lack of marketability of the common stock underlying the granted options;

• the market performance of comparable publicly traded companies;

and global capital market conditions.

In valuing our common stock, our board of directors determined the equity value of our business generally using the income approach and the market approach valuation methods.

In allocating the equity value, we considered and have used a combination of the option pricing method, or OPM, the Probability Weighted Expected Return Method, or PWERM, and the Hybrid Method (which is a combination of the OPM and PWERM).

When using the Hybrid Method, it involves the estimation of multiple future potential outcomes for us and estimates of the probability of each respective potential outcome.

The common stock per share value determined using this approach is ultimately based upon probability-weighted per share values resulting from the various future scenarios.

Our scenarios included the use of an initial public offering scenario and a scenario assuming continued operation as a private entity (in which an OPM was applied).

After the equity value is determined and allocated to the various classes of shares, a discount for lack of marketability, or DLOM, is applied to arrive at the fair value of the common stock.

A DLOM is applied based on the theory that as a private company, an owner of the stock has limited opportunities to sell this stock and any such sale would involve significant transaction costs, thereby reducing overall fair market value.

In addition, we also considered any secondary transactions involving our capital stock.

In our evaluation of those transactions, we considered the facts and circumstances of each transaction to determine the extent to which they represented a fair value exchange.

Factors considered include transaction volume, timing, whether the transactions

occurred among willing and unrelated parties, and whether the transactions involved investors with access to our financial information.

Application of these approaches involves the use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding our expected future revenue, expenses, and future cash flows, discount rates, market multiples, the selection of comparable companies, and the probability of possible future events.

Following the consummation of the Business Combination, the fair value of our common stock is now determined based on the quoted market price on the NYSE.

Public and Private Placement Warrant Liabilities

In connection with dMY IV’s initial public offering, which occurred on March 9, 2021, dMY IV issued warrants which entitle the holder to purchase one share of Class A common stock at an exercise price of $11.50 per share, subject to adjustment (the “Public Warrants”).

In connection with dMY IV’s initial public offering, which occurred on March 9, 2021, dMY IV issued 34,500,000 units, consisting of one share of Class A common stock of dMY IV and one-fifth of one redeemable warrant, at a price of $10.00 per unit (the “Public Warrants”).

Simultaneously with the closing of its initial public offering, dMY IV completed the private sale of 5,933,333 warrants to dMY Sponsor IV, LLC (the “dMY Sponsor”) at a purchase price of $1.50 per warrant (the “Private Placement Warrants”).

Upon the closing of the Business Combination and as of January 31, 2022, there were 6,899,982 Public Warrants and 5,933,333 Private Placement Warrants outstanding.

The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants, including the Class A common stock issuable upon exercise, are not transferable, assignable or salable until 30 days after the closing of the Business Combination (except in limited circumstances) and are not redeemable by us so long as they are held by the dMY Sponsor or its permitted transferees.

Additionally, the dMY Sponsor, or its permitted transferees, has the option to exercise the Private Placement Warrants on a cashless basis.

If the Private Placement Warrants are held by holders other than the dMY Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by us and exercisable by such holders on the same basis as the Public Warrants.

Additionally, pursuant to a lock-up agreement entered into with the dMY Sponsor in connection with the Business Combination, 2,966,667 of the Private Placement Warrants are subject to vesting conditions (the “Private Placement Vesting Warrants”).

The Private Placement Vesting Warrants vest in four equal tranches (i) when the closing price of our Class A common stock equals or exceeds $15.00, $17.00, $19.00 and $21.00, over any 20 trading days within any 30 day trading period prior to December 7, 2026 or (ii) if we consummate a change of control transaction prior to December 7, 2026 that entitles our stockholders to receive a per share consideration of at least $15.00, $17.00, $19.00 and $21.00.

Any right to Private Placement Vesting Warrants that remains unvested on the first business day after five years from the closing of the Business Combination will be forfeited without any further consideration.

We evaluated the Public Warrants and Private Placement Warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity (“ASC 815-40”), and concluded that they do not meet the criteria to be classified in stockholders’ equity.

Since the Public and Private Placement common stock warrants meet the definition of a derivative under ASC 815, we recorded these warrants as liabilities on the balance sheet at fair value, with subsequent changes in their respective fair values recognized in the consolidated statement of operations at each reporting date.

Additionally, pursuant to a lock-up agreement

entered into with the dMY Sponsor in connection with the Business Combination, 2,966,667 of the Private Placement Warrants are subject to vesting conditions (the “Private Placement Vesting Warrants”).

As of January 31, 2023, the Company had 6,899,982 Public Warrants and 5,933,333 Private Placement Warrants, including 2,966,667 Private Placement Vesting Warrants, outstanding.

The Public Warrants are traded on the NYSE and are recorded at fair value using the closing price as of the measurement date.

The fair value of the Private Placement Warrants (excluding the Private Placement Vesting Warrants) was estimated using the Black-Scholes option pricing model.

Due to the market condition vesting requirements, the fair value of the Private Placement Vesting Warrants was estimated using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the market condition targets may not be satisfied.

The fair value of the Private Placement Warrants (excluding the Private Placement Vesting Warrants) are estimated using the Black-Scholes option pricing model.

Due to the market condition vesting requirements, the fair value of the Private Placement Vesting Warrants are estimated using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the market condition targets may not be satisfied.

These valuation models require inputs such as the fair value of our Class A common stock, the risk-free interest rate, expected term, expected dividend yield and expected volatility.

value of our Class A common stock is the closing stock price on the NYSE as of the measurement date.

The fair value of our Class A common stock is the closing stock price on the NYSE as of the measurement date.

The risk-free interest rate assumption is determined by using the U.S.

Treasury rates of the same period as the expected term of the Private Placement Warrants, which is 5 years from the closing of the Business Combination.

We have historically been a private company and lacked sufficient company-specific historical and implied volatility information.

Therefore, we estimated our expected stock volatility based on the historical volatility of a publicly traded set of peer companies.

Changes in these assumptions can materially affect the estimate of the fair value of these instruments and ultimately change in fair value of Private Placement Warrants.

We had historically been a private company and lacked sufficient company-specific historical and implied volatility information.

Therefore, we estimate our expected stock volatility based on the historical volatility of a publicly traded set of peer companies.

Property and Equipment and Long-lived Assets

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Depreciation is computed once an asset is placed in service using the straight-line method over the estimated useful life of the asset.

Costs directly associated with design, construction, launch, and commissioning of satellites and systems are capitalized when the design and operation of the satellites and systems is at a sufficiently advanced stage such that we believe the recovery of the costs through future cash inflows to be probable.

Costs directly associated with design, construction, launch, and commissioning of satellites and systems are capitalized when the design of the satellites and systems is at a sufficiently advanced stage such that we believe the recovery of the costs through future cash inflows to be probable.

We capitalize materials, labor and launch costs (including integration and launch insurance costs) that are incurred and necessary for the satellites to be placed into service.

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When impairment indicators are present, the recoverability of the asset is measured by comparing the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset.

This evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, or an asset group.

This evaluation is performed at the lowest level for which identifiable cash flows are

largely independent of the cash flows of other assets and liabilities, or an asset group.

If the carrying amount of the asset or asset group is not recoverable, the impairment to be recognized is measured by the amount by which the carrying amount of each long-lived asset or asset group exceeds the fair value of the asset or asset group.

During the fiscal year ended January 31, 2022, the Company recognized impairment expense of approximately $1.1 million relating to capitalized costs for certain internal-use software development projects that were discontinued before the projects were completed.

During the fiscal year ended January 31, 2022, we recognized impairment expense of approximately $1.1 million relating to capitalized costs for certain internal-use software development projects that were discontinued before the projects were completed.

The impairment expense is included in research and development expenses within the consolidated statement of operations and comprehensive loss for the fiscal year ended January 31, 2022.

Other than as noted above, no events or changes in circumstances indicated the carrying amounts of our long-lived assets may not be recoverable during the fiscal years ended January 31, 2023, 2022 and 2021.

Business Combinations

We account for business combinations using the acquisition accounting method, which requires us to determine the fair value of net assets acquired, including intangible assets and related goodwill.

We allocate the fair value of purchase consideration to the assets acquired, liabilities assumed, and non-controlling interests in the acquired entity based on their fair values at the acquisition date.

Determining the fair value of assets acquired and liabilities assumed requires our judgment and involves the use of significant estimates, including projections of future cash inflows and outflows, discount rates, asset lives and market multiples.

There are different valuation models for each component, the selection of which requires judgment.

These determinations will affect the amount of amortization expense recognized in future periods.

We base our fair value estimates on assumptions we believe are reasonable but recognize that the assumptions are inherently uncertain.

Acquisition-related costs are accounted for as expenses in the period in which they are incurred.

The operating results of the acquired business are reflected in our consolidated financial statements as of the acquisition date.

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination.

Goodwill is not subject to amortization and is tested for impairment at least annually, during the fourth quarter of each fiscal year or more frequently if events or circumstances indicate that the asset might be impaired.

In assessing goodwill for impairment, the Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test.

In the qualitative assessment, the Company considers factors including economic conditions, industry and market conditions and developments, overall financial performance and other relevant entity-specific events in determining whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount.

Should the Company conclude that it is more likely than not that the recorded goodwill amounts have been impaired, the Company would perform a quantitative impairment test.

In assessing goodwill for impairment, we first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test.

In the qualitative assessment, we consider factors including economic conditions, industry and market conditions and developments, overall financial performance and other relevant entity-specific events in determining whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount.

Should we conclude that it is more likely than not that the recorded goodwill amounts have been impaired, or if we elect to bypass the optional qualitative assessment as provided for under U.S.

GAAP, we proceed with performing a quantitative impairment test.

Goodwill impairment exists when a reporting unit’s carrying value exceeds its fair value.

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We may recognize a tax benefit only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.

The tax benefits recognized in the financial

statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.

As of January 31, 2023, our estimated gross unrecognized tax benefits were $6.9 million , none of which, if recognized, would affect the effective tax rate.

We are subject to income tax in the United States and various foreign jurisdictions.

As of January 31, 2022, we had a net deferred tax asset of $0.1 million.

As of January 31, 2023, we had a net deferred tax liability of $0.2 million.

Our federal net operating loss (“NOL”) carryforward totaled $504.7 million, of which $259.2 million will expire at various dates through 2038 and $245.5 million has an indefinite carryforward.

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The NOL carryforwards may be available to offset future income tax liabilities.

JOBS Act Accounting Election

We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and have elected to take advantage of the benefits of the extended transition period for complying with new or revised accounting standards.

We expect to use this extended transition period for complying with new or revised accounting standards until the earlier of the date we (a) are no longer an emerging growth company or (b) affirmatively and irrevocably opt out of the extended transition period provided for in the JOBS Act.

This may make

it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

Refer to Note 2 in our consolidated financial statements included elsewhere in this Form 10-K for the recent accounting pronouncements adopted and the recent accounting pronouncements not yet adopted for the fiscal years ended January 31, 2022, 2021 and 2020.

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act.

Subject to certain conditions set forth in the JOBS Act, as an emerging growth company, we are not required to, among other things:

(a) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

(b) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act;

and (c) disclose certain executive compensation-related items such as the comparison of the Chief Executive Officer’s compensation to median employee compensation.

We will remain an emerging growth company under the JOBS Act until the earliest of (a) the last day of our first fiscal year following the fifth anniversary of dMY IV’s initial public offering, (b) the last date of the fiscal year in which our total annual gross revenue is at least $1.07 billion, (c) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates or (d) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.

Recent Accounting Pronouncements

Refer to Note 2 to our consolidated financial statements included elsewhere in this Form 10-K for more information regarding recently issued accounting pronouncements.

Refer to Note 2 to our consolidated financial statements included elsewhere in this Form 10-K for information regarding recently issued accounting pronouncements.

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What changed 10-K

Item 7. Management’s Discussion and Analysis