Q3 2024 Planet Labs PBC Earnings Call

Participants

Chris Genualdi; IR; Planet Labs PBC

William Marshall; Chairman of the Board, Chief Executive Officer, Co-Founder; Planet Labs PBC

Ashley Johnson; CFO & COO; Planet Labs PBC

Jason Gursky; Analyst; Citi

Trevor Walsh; Analyst; JMP Securities

Michael Latimore; Analyst; Northland

Ryan Koontz; Senior Analyst; Needham & Company LLC

Noah Poponak; Analyst; Goldman Sachs

Edison Yu; Analyst; Deutsche Bank

Jeff Van Rhee; Analyst; Craig-Hallum

Chris Quilty; Analyst; Quilty Space

Presentation

Operator

Hello everyone. Thank you for attending today's Planet Labs PBC third quarter of fiscal 2020 fourth earnings call. My name is Sarah, and I'll be your moderator today. (Operator Instructions) I would now like to pass the conference over to our host, Chris Genualdi, VP of Investor Relations with Planet Labs PBC. Please proceed.

Chris Genualdi

Thanks, operator, and hello, everyone. Welcome to Planet's third quarter of 2024 earnings call. Before we begin today's call, we'd like to remind everyone that we may make forward-looking statements related to future events or our financial outlook. We also reference qualified pipeline, which represents potential sales leads that have not yet executed contracts. Any forward looking statements are based on management's current outlook, plans, estimates, expectations and projections the inclusion of such forward-looking information should not be regarded as a representation by plan that the future plans, estimates or expectations will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions as detailed in our SEC filings, which can be found at www.SEC.gov. Our actual results or performance may differ materially from those indicated by such forward-looking statements, and we undertake no responsibility to update such forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
During the call, we will also discuss non-GAAP financial measures. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used by management in financial and operational decision-making. For more information on the non-GAAP financial measures, please see the reconciliation tables provided in our press release issued earlier this afternoon further, throughout this call, we provide a number of key performance indicators used by management and often used by competitors in our industry. These and other key performance indicators are discussed in more detail in our press release.
Before we jump in, I'd like to encourage everyone to refer to the slides we have posted on our Investor Relations website, which are intended to accompany our prepared remarks.
Finally, for each of the customer contracts reference during this call, please note that the revenue figures we cite will generally be recognized over the term of the contract, which can last multiple years further the terms of these counters comparing we may not realize our expected revenue.
At this time, I'd now like to turn the call over to Will Marshall, Planet's CEO, Chairperson, and Co-Founder. Over to you, Will.

William Marshall

Thanks, Chris, and hello, everyone. Thanks for joining the call today. For the third quarter of fiscal year 2024, we generated a record $55.4 million in revenue, representing a 11% year-on-year growth. Non-gaap gross margins was 51.5%, which is above the midpoint of our expected range. Our adjusted EBITDA loss for the quarter was $12 million, $1 million better than our guidance range, driven by cost discipline and reflecting our commitment to reaching adjusted EBITDA profitability by Q4 of next year.
Growth in the third quarter was driven by strength in the civil government and defense and intelligence markets, both of which saw revenue increase more than 20% year over year, partially offset by continued macro headwinds in the commercial sector. We've continued to add large seven and eight figure government opportunities across several government and defense and intelligence markets to our qualified sales pipeline. And while they take longer to close large government contracts can provide a reliable foundation of long-term revenue streams with significant potential for expansion as our business mix shifts towards government opportunities, our average sales cycles overall have naturally extended. This is just the nature of government procurement processes. In response, we have recently refocused our go-to-market strategy around those large opportunities and made additional improvements to support sales execution.
Let's quickly revisit the go-to-market improvements that we're implementing, which align with what we outlined in our prior earnings call and investor day. These include one focusing our sales force on our largest opportunities in our core markets to shifting smaller commercial opportunities in other market segments. To our partner network and low-touch channels, including our newly acquired central hub platform and three, streamlining and simplifying our sales processes. These go-to-market improvements aimed at supporting faster sales cycles, customer adoption and expansions over time.
Expanding further on our growth plan. In the near term, we see opportunities with several US government entities as one of our primary near-term growth drivers is worth noting that in our view, our relationship with the U.S. government has never been stronger, and we believe we're well-positioned to significantly expand our work with this important customer in this next fiscal year.
In addition, we are encouraged by the diverse global pipeline of opportunities that we've been cultivating, particularly with civil government customers. We've seen solid year-over-year growth in the civil government vertical throughout this year. These opportunities span all of our datasets and include additional services from our planetary variables, including our new carbon solutions and incremental capabilities provided by our acquisition of synergize.
Finally, in spite of the current macroeconomic headwinds, we continue to see the market opportunity in the commercial sector as a significant growth driver over the longer term. Our strategy for the commercial sector is focused around partner-led opportunities and efficient low touch sales motions. We see partners in a highly effective way of shortening sales cycles and speeding customer time to value with solutions and services tailored to a specific geographic market or commercial use case. And as mentioned, our central hub platform enables smaller customers to purchase data from Planet through a low touch channel.
Taking a step back, our go-to-market strategy is built around our core value proposition, enabling board area management at a global scale, not possible before the ability to understand change taking place in both areas of our planet is what differentiates us and fuels adoption of our solutions. As we work through our recent customer highlights, you'll hear how this is a common thread between customers across industries.
Let's turn now to some recent customer highlights. Starting with the civil government sector. During the quarter, we closed a seven figure ACV contract with IGAC. that Carta graphic agency of Colombia. The agency has a new customer and is using Planet scope and scale that data for a range of applications, including geographic studies, professional training as well as improved land use planning and risk management.
Across Colombia, we expanded our contract with Australian-based partner, NGIS., who uses Planet data provide critical geospatial services to Australian civil governments, supporting resource management and natural disaster response from wildfires and floods.
Turning to Defense and Intelligence market. During the quarter, we saw a seven figure ACV expansion with an Asian ministry of defense customer for high-resolution Sky's that tasking capabilities. It was great to see the customers' data consumption grow as we had expected in Latin America. We've added a government intelligence agency as a new customer. They're using our planet scope and scale that data for board area monitoring. We also closed a new contract with SI. analytics a South Korean based A. company through using our solutions to do anomaly detection in North Korea. SI. analytics originally started as a planet partner is now a customer as well as analytics uses Planet scope to run analytics for defense and intelligence customers.
More broadly, we're seeing growing interest from defense and intelligence customers globally for the capabilities unlocked when combining our deep data archive with artificial intelligence. We think of this combination as an incredibly powerful tool to scan search and monitor. We enable them to rapidly find new threats, monitor them on an ongoing basis and act as a powerful time machine for forensics of what happened in the past, all over large geographic areas of land or sea.
Turning to agricultural solutions, we recently renewed and expanded our seven figure contract with BASF digital farming. The European-based multinational chemical producer using current scope and our plans are variable solutions for board area management to deliver targeted and timely agronomic advice for their customers. We also signed a new contract with USDA's foreign agriculture service, FES links U.S. agriculture to the world to enhance export opportunities and global food security. They plan to use our board area management solutions to support the production of tight maps and area estimates overseas.
Also in the commercial vertical, we recently announced the addition of on X maps as a new customer. They're using plants base maps to provide outdoor enthusiasts with up-to-date energy of outdoor recreation landscapes is a great example of how Planet stages making its way into the hands of consumers on Axe was recognized by Time Magazine for having one of the best inventions of 2023. The recent energy product, which leverages Planet data one, the outdoors category.
Turning to product updates, where we've had three key launches. Firstly, on November 11th, we successfully launched 36 super hubs and our first Pelican tech demo into orbit onboard a Space X Falcon nine rocket. We established contact with all of the satellites within just a few hours of the launch. I'm pleased to report that the on all the testing we're conducting with the Pelican. Tekturna is going well, providing valuable insights and learnings about this new spacecraft design. This marks our 33rd successful launch of 569 satellite successfully launched and deployed.
I'd like to note that while we often take these accomplishments for granted, what our team does here is nothing short of remarkable plant's ability to rapidly build satellites, affordably and at scale is truly exceptional. I'd like to thank all of the team at Planet for their hard work and dedication in making this latest launch a success.
Secondly, as already mentioned, we launched Planet data and services on a central hub platform with transparent pricing and packaging, enabling low-touch or self-service sales for small deals and giving partners what they need to more flexibly and rapidly build solutions on top of our data.
Finally, last month, we launched our new forest carbon products, our 10-year data archive of global forest carbon is accurate, affordable and scalable, helping solve long-standing challenges associated with measuring forest carbon stock. We've launched the first carbon solution with open and affordable pricing to support faster customer adoption and early market capture. We're pleased with the early demand building for this new product, and we were very excited to win our first customer base, zero zero-carbon fees there is a column ratings agency, and they have adopted this groundbreaking solution to help their clients make more informed carbon credit investments. We're seeing strong interest from the carbon and project developers, carbon marketplaces, standard-setting bodies and others across the carbon value chain.
In summary, during Q3, we saw solid growth in our civil government and defense and intelligence markets. We focused on efficiency in our go-to-market execution. As outlined in our Investor Day. We also had a great product quarter, launching 37 satellites, bringing our new forest carbon product to market and enabling low touch access to Planet data by a central hub. The pace of innovation and development of Planet is truly incredible, and we're doing all this while maintaining disciplined spending to support our path to adjusted EBITDA profitability. Overall, our conviction in a significant opportunity for our solutions remains firm. The ability to understand change taking place in both areas of our planet is what differentiates us fuels adoption of our solutions. We continue to see the market for our solutions as enormous driven by the tailwinds of security, sustainability and digitalization worldwide.
I now turn to Ashley for review of our financials and our outlook. Over to you, Ashley.

Ashley Johnson

Thanks, Will, and thanks, everyone, for joining today. As Will mentioned, our revenue for the third quarter of fiscal '24 ending October 31 came in at a record $55.4 million, which represents 11% year-over-year growth. This was driven by strength in the civil government and defense and intelligence markets, both of which grew more than 20% year over year, partially offset by the continued headwinds we've seen in the commercial markets.
From a geographic perspective, we've continued to see a strong diversification of our customer base. Amir revenue growth was especially strong in Q3, up almost 70% year over year, while revenue in both Asia-Pacific and Latin America grew more than 20% year over year. North American revenue decreased by 11% on a year-over-year basis, primarily impacted by the discontinuation of the legacy contracts we've discussed previously. As Will mentioned, we've seen multiple significant growth opportunities with various US government entities in the near term, and we continue to build out our partner ecosystem to address the longer-term opportunity we see in the commercial markets.
As of the end of Q3, our end-of-period customer count was 976. This count does not include customers who are exclusively self-serve users on our central hub platform, which we acquired with the synergized business. Recurring ACV or annual contract value was 94% of our book of business and over 90% of our ACV book of business consists of annual or multiyear contracts. Our average contract length continues to be approximately two years weighted on an ACV basis year to date net dollar retention rate was 104% and net dollar retention rate with win-backs was 105%, both up slightly from the prior quarter.
Increases in net retention rate are typically driven by the timing of large expansion contracts with existing customers. And as we mentioned on the last call, we've seen longer sales cycles with some of our larger expansion opportunities. These opportunities remain active and our go-to-market changes are focused on capturing this business and improving our sales cycles.
Just as a reminder, as detailed in our quarterly earnings investor presentation. Our net dollar retention rate starts on day one of each fiscal year at 100% then develops through the course of the year towards our final full-year results.
Turning to gross margin, our non-GAAP gross margin for the third quarter of fiscal '24 was 51.5%. Similar to the prior quarter, non-GAAP gross margin during Q3 was impacted by the accelerated depreciation of two Sky set satellites. This impacted Q3 non-GAAP gross margin by approximately six percentage points. This accelerated depreciation expense will continue at a lower level in Q4 and reach completion by the end of this fiscal year.
Adjusted EBITDA loss was $12 million for the quarter, better than our guidance and marking another consecutive quarter of narrowing losses driven by cost management and our commitment to reaching adjusted EBITDA profitability by Q4 of next fiscal year.
During Q3, we incurred a nonrecurring restructuring charge of approximately $7.3 million, offset by a $1.5 million benefit and stock-based compensation; all related to our headcount reduction in August. In addition, we incurred a $2.3 million nonrecurring charge in the quarter, primarily impacting R&D related to the acquisition of synergize. These expenses are excluded from adjusted EBITDA. Capital expenditures, including capitalized software development, were $8.6 million for the quarter or approximately 16% of revenue.
Turning to the balance sheet, we ended the quarter with $315 million of cash, cash equivalents and short-term investments, which we continue to believe, provides us with sufficient capital to invest behind our core growth accelerating initiatives and achieve cash flow breakeven without needing to raise additional capital, and we still have no debt outstanding.
At the end of Q3, our remaining performance obligations or RPOs were approximately $153 million, of which approximately 82% applied to the next 12 months and 97% to the next two years. Please keep in mind that RPOs can fluctuate quarter to quarter as multiyear contracts come up for renewal. Also, remember that our reported RPOs exclude the value associated with the EOCL contract as well as other contracts that include a termination for convenience clause, which is common in our US federal contracts and occasionally found in other customer contracts as well.
For the fourth quarter of fiscal '24, we're expecting revenue to be between $56 million and $59 million, which represents growth of approximately 6% to 11% year over year. We expect non-GAAP gross margin for Q4 to be between 52% and 56%. We expect our adjusted EBITDA loss for the fourth quarter to be between negative $12 million and negative $9 million. We are planning for capital expenditures of approximately $14 million to $16 million.
For the full fiscal year ending January 31, 2024, we expect revenue to be between $218 millions and $221 million, a growth of 14% to 16% year over year, we expect our non-GAAP gross margin to be between 53% and 54%. We expect adjusted EBITDA loss to be between negative $58 million and negative $55 million, and we expect capital expenditures to range between $46 million and $48 million.
In summary, we are in a period of transition as we focus our go-to-market resources around the largest opportunities in front of us, which we expect in the near term to be predominantly in the government sectors.
On a dollar-weighted basis, we are expanding our partner ecosystem to continue to develop opportunities in the commercial markets as the macro tailwinds of digitization and sustainability continue to seed new opportunities for our data and analytics each day, we are aligning our investments to drive growth in the near term while carefully managing expenses and continuously exploring opportunities for greater internal efficiencies that we believe will make it easier to work with Planet as well our planet. As always, I want to thank our Planeteers around the globe for their continued execution and commitment.
Operator, that concludes our comments. We can now take questions.

Question and Answer Session

Operator

(Operator Instructions) Jason Gursky, Citi.

Jason Gursky

Good afternoon, everybody. And just wanted to dive a little bit more into the go-to-market strategy and have you discuss a little bit about this idea of whale on dog and going after really, really large contracts. Just kind of curious if there are any you're talking about seven figure potential contracts out there, but are there any eight or nine figure contracts that you have the opportunity to go after here? And maybe just talk a little bit about where you're seeing the greatest opportunities from a geographic perspective? Thank you.

William Marshall

Yes, great question. We are we have a number of eight figure deals. I think we previously mentioned that about eight we've continued to bring in more eight figure deals and seven-figure deals to through the year. And what we're mainly seeing them is in defense and intelligence, but also civil government. We've got real opportunities both And geographically, I would say a lot of it in the US, but we do have a number of these big deals for the rest of the world as well. And so it's primarily in those two sectors. Does that answer your question?

Jason Gursky

Yeah. I'm sorry, I'm at an airport. I'm going to leave it there at three weeks ago. So taking what was coming.

William Marshall

Okay. No worries.

Operator

Trevor Walsh, JMP Securities.

Trevor Walsh

Great. Hi, team. Thanks for taking my questions and congrats on a solid set of results. I will start with you if I can Congrats on the successful launch of Pelikan. It sounds like the initial and Demo Days helping you guys can give some good lessons learned. Just curious if I know in the last earnings call you reiterated or confirmed that there's not necessarily a revenue opportunity kind of driving from this Pelican one satellite.
But can you maybe help us understand a little bit better as to what the uplift potential within current accounts might be from the new set of spacecraft just being that they are in fact, you have just higher as higher revisit all the kind of technical abilities that are added are better with Pelican and then also the low cost, like just kind of how from a top line perspective that might how you guys are looking at that will move prices increase potentially there around those capabilities is how will customers kind of feel that I guess in terms of what they're what they're paying currently versus later? Thanks.

William Marshall

Yes, great question. And so firstly, we're very, very happy with the telecon spacecraft that is going really well with all of the commissioning is going well. And we're learning a huge amount of very, very good so far and it is a tech demo. So yes, this is not going to be revenue producing to confirm what you said and the capabilities. So it's going to be better on multiple axes. High-resolution. We took about 30 centimeters and higher revisit rates when we ultimately get our full fleet be higher revisit rates than our present tend to they are going up towards 30 per day.
And for the probably the biggest substantive increase is the fact that as we add a satellite to satellite communications on these vehicles, it enables us to lower latency and to your final point. And lower latency is something very differentiated and high value. And so you can definitely charge more so you can charge more for higher resolution, you can charge more for lower latency. And I think that that's the lower latency is almost a 10 times improvement on our current system. So that is a big deal getting, you know, as sub latency.
Does that answer your question or do you have another one?

Trevor Walsh

Yes, absolutely. I appreciate the color. And then if I could just one one follow-up maybe for Ashley, about the well, so feel free to chime in too good, good work on the new customer count, accelerating some kind of in the quarter. We just at least as we look at our model, it looked like the revenues for average number of customers may have ticked down and just wondering if that's a result of maybe a larger number of our smaller customers kind of entering the cohort of this quarter?
And if that is the right way to look at it is that kind of a signal of some of your go-to-market improvement efforts around whether it's the self-serve platform or some of the partner-led motions kind of bearing fruit and bringing some a smaller, smaller group of smaller customers into the into the mix this quarter? Thanks.

Ashley Johnson

Yes, I think thanks for the questions. I'd have to look at a little bit more closely to to answer the revenue per customer question more specifically, but I'd say, yes, we do have more customers coming onboard through the central hub platform. Now that the synergized acquisition has closed. And that is an opportunity for us to really scale up low touch and customer onboarding and also enable partners to create solutions on top of our data more easily through those APIs. So in terms of deal sizes, that's actually consistent.
So I would suspect if I were to dig into the details behind and the average revenue per customer would what we're probably seeing is a little bit of the impact from bringing on the synergized customers, but I'd have to get back to you are looking at that more specifically.

William Marshall

And if I can just add a tiny thing on the prior question, I forgot to mention. Of course, it wasn't just telecom that we launched. We also launched 36 superstores. And although we take that for granted because that's primarily continuing operations of that daily scan fleet. Essentially, that's our bedrock fleet. And because of that, the discounts are so differentiated.
And secondly, we take for granted being able to rapidly build and launch and operate large numbers of satellites like this. But basically, that's one of the very few companies in the world can do that. And really and we that's an incredibly strong differentiator and that we sort of take for granted sometimes.

Trevor Walsh

Great. Thank you both so much. Appreciate it.

Ashley Johnson

Thank you.

Operator

Michael Latimore, Northland.

Michael Latimore

Great. Thanks very much. What are you thinking about in terms of the and the our number for the fourth quarter?

Ashley Johnson

Yes, obviously, that's that's driven by the timing of when some of these larger expansions land that will impact where we end up landing on that number for the year. And as I said in the prepared remarks, we've ticked up quarter over quarter, and I feel very good about where we are on overall retention rates. And it's just a matter of that NBR. and ultimately depends on some of the larger expansion opportunities and the timing of when they come in.

Michael Latimore

Okay. And then you seem positive on the US government opportunities in the pipeline, can you mentioned a use case or two that might be in the mix there?

William Marshall

Yes. Actually, there's several I mean so we've got multiple opportunities both on civil government side on expansions and new partnerships there and on the defense and intelligence side. And and it's also both expansion and new new parties that you get. The U.S. government is not a monolith. It's really meant multiple agencies in both sectors that need our data. And we are also and in addition, seeing a lot of there's a lot of pull from them for mainstream mainstay products.
But we're also seeing a lot of new and heightened interest both from the U.S. government and international governments for a eye on top of our planet scope imagery that enables you to search and scan large areas for new threats or emerging changes. And that is proving to be a very strong pull as well. And that's something that's only possible very lately because of the large language models put on top of the planet scope imagery. And so that's providing an extra pool as well. But yes, the use cases vary a lot by the different agencies. I can't speak to all of them right this second, but it's strong pull in both sides.

Michael Latimore

Okay, great. Thanks so much.

Operator

Ryan Koontz, Needham & Company.

Ryan Koontz

Next question start with Ashley. Can you unpack the step-down in commercial we're seeing here? You mentioned the legacy contract churn there is that the prime reason here behind the step down there are things going on and this is just does this quarter mark, the kind of the end of that impact? Or is it going to continue to linger on for future quarters?

Ashley Johnson

Yes. Thanks, Ryan. And the primary driver on the revenue year over year comparison, commercial is that legacy contract that came came to an end in Q1 really, and that was just a small tail. So really as you as you point out Q4 and as the end of that year-over-year compare headwind. We did see some softness in some of the renewals a year ago. We talked about in the commercial market, and that also was a secondary headwind coming into the year. And commercial is continuing to see headwinds in terms of expanding those businesses.
So and we do anticipate a lot of the growth in the next year coming from the commercial sector, government sector. And but that said, we still are very big believers in the opportunity in the commercial space and just view it as an opportunity that we will and we're pursuing it with our partner ecosystem.

Ryan Koontz

That's great. And just a couple of quick product questions for Will. On the the forest carbon product, can you kind of walk us through that business model and how you productize that for these these sorts of customers, it would be really helpful.

William Marshall

Yes, absolutely. And so that's one of our new plants are variables on everyone's benefit, the it basically enables us to measure. I mean, we've been doing deforestation monitoring and helping countries with that for a long time. But this actually gets a quantifying the amount of carbon stock in for us and initially at a 30 meter level and next year, we'll be launching a three meter level, which is almost in individual tree level and very excited by that. We've seen a lot of interest. The that's the hope is that this will help underpin carbon markets.
We've been very pleasantly surprised by the amount of initial demand amongst both the sort of regulation side of this. The so the people that are checking the math, if you like, on everyone's carbon trading as well as the marketplaces that are trying to match make between buyers and sellers of carbon, which, of course, both sides wanted to check the math as well. And so on both fronts that we've seen demand. And we were, of course, I mentioned in my prepared remarks that our first customer there, the zero-carbon, which is a marketplace and that we are very proud to be seeing that interest so early in that term in that new product. So basically this is there is a carbon rating agency, as I say, is on the phone category.

Ryan Koontz

Got it. Real helpful. Thanks so much.

Ashley Johnson

Thank you.

William Marshall

Thank you.

Operator

Noah Poponak, Goldman Sachs.

Noah Poponak

Hello, everyone.

William Marshall

Hi.

Noah Poponak

With the SEC expanding defense and intel and Sylvo government opportunity set that you're referencing? Are there contract names you can cite that we can follow? Or is it some combination of smaller classified or extension or reprogrammed or something that we can't fault?

William Marshall

I mean, most of them have public procurement mechanisms you can follow. I would just say that and it takes a lot to follow the success. I mean, there's a lot of different agencies that you have to check, but but know that mostly public procurement, there's no huge one outstanding to just point out, like you'll see others, of course, than our mainstream mainstay a contract at the Hanover and there is opportunities for expansion, then you can watch that, but there's no big other one to just pull out and identify for you right, this second. But we earn and we're certainly perm and continue to monitor all of those. Of course, that's our that's our job.

Noah Poponak

We'll continue being the one or two largest, Stephen, you're understanding it's maybe a pool of with no single one that's much larger than the others. But whether it's size or just I think what's most exciting to you because of what it means for your future. Just something we could track, it could be helpful.

William Marshall

Yes. I mean, the two biggest ones that we presently have other NROs ERCO and there's lots of expansion opportunity there. That relationship is very good. And the other is on the civil side with NASA on which is called CSDA. and you can track that and the budgets are very healthy going into that. And so those are the two biggest ones I can name off the car for the car and get back to you if you want further details on that.

Noah Poponak

Okay. Great. From on the commercial side, actually you made a comment about working with your partner network kind of like while you wait for the end market to come back to you or the broader or the set of end markets come back to you or I guess maybe the macro to come back. Can you expand on that? Like what are you actually doing? Why are the why are the partner networks willing to do that? How does that help you want demand comes back.

Ashley Johnson

I think it's more about the fact that the market on the commercial side is still relatively immature. And especially when you think about the broader market opportunity and they will require solutions that incorporate our data and extract the value from the data for them because they're unlikely, for example, to have geospatial analysts on staff. So really it's about making it easier for our partners to develop those solutions that will effectively drive the value to the end customer so that that's effectively what I meant by really leaning in to the partner ecosystem to drive that ultimate value to the end customer in the commercial market to really get that market off the ground.

William Marshall

And if I can just add to keep our sales reps focused on the big deal opportunities, which have primarily worked the second and civil government and defense and intelligence. So we see a huge future in commercial. We continue to see that and we continue to do deals that I mentioned a few in my prepared remarks right now, but the biggest ones in defense and intelligence and civil government and so we want to focus our energies on that.
So it's both because they need solutions is actually you're saying, but also because we want to focus our attention on the pipe of opportunities and progressing them through to close and that's more in civil civil government and defense and intelligence.

Ashley Johnson

There are commercial markets that are more advanced and we'll obviously continue to sell until and including agriculture and insurance, for example.

Noah Poponak

Okay, great. Thank you so much. I appreciate it.

Ashley Johnson

Thank you.

Operator

Edison Yu, Deutsche Bank.

Edison Yu

Thanks for taking the questions. One doubts about the cadence of growth in 4Q. The implied is 6% to 11%. You think that represents perhaps the bottom given that some of the headwinds go away in the first quarter, do you see that sort of a bottom in terms of year-over-year growth?

Ashley Johnson

I think it's important to understand that one of the biggest headwinds that we had coming into this year was the legacy legacy contract that came to an end. So Q4 will mark the end of that headwind. We're obviously leaning into a lot of opportunity that we see and especially with large expansions with existing customers leaning into the opportunity in the government sector and the timing of when that business. Land lands obviously will determine ultimately how our growth accelerates going beyond Q4.
And we remain very optimistic about the ability of our teams to execute in the market. That's there for us just based on the continued pull that we feel and we've had challenges this year with timing of bringing that new business in and the longer sales cycles, but still remain very optimistic in our ability to reaccelerate growth.
Anything to add there, Will?

William Marshall

Yes. I mean, I would only say, of course, we're not satisfied with that sort of growth rate we want to continue to drive towards higher growth rates. We think that is possible. I firmly convinced that that's possible and we've got a huge pipeline that we're working on. We can we please tell you that it's progressing in stage. You know, we're moving things along and we're closing some deals. It is still taking a bit too long and it's our job to go close it.
You heard how we're focused and our efforts are really focused right now and to improve the execution, focusing on the big deals, trying to automate the small deals, making it easy to work upon. It just brings it trying to reduce time to value for customers so that we can land and expand them. The we're very focused on those efforts that Home Depot, the areas are in our control to improve win rates and so on and on that pipe that were wherever it has done and focused, we certainly think it's possible to It cannot be good.

Edison Yu

And just a couple of longer term question in terms of the commercial market, do you have a view on when that might kind of turnaround. I understand it's probably not anytime near term, but is this now a couple of years? Is it five years? Just when when do you think that can kind of reaccelerate meaningfully, if you want?

William Marshall

I would say say a few things. Some of the headwinds we saw a macro driven by the ag market was where we saw some headwinds that that is macro driven. And so you know, when that ends, but I also think that we are continuing to see deals I mentioned and some of the deals that we did on the commercial side. And and As Ashley mentioned, we have a lot of opportunities to make tooling and simplified ability to access that. We launched the central hub, our platform enables low touch access so that people have and hand tools so that they can start building products and services. And we're working closely with partners that have good solutions for specific vertical markets.
I'll just add Finally, that just like in the I mentioned earlier in the government sector, AI. is a strong tailwinds. I think the same is true here it's going to help a lot and because I helped skip a bunch of steps in getting to answers. So you can clear it gives it can as close to the vision that I had launched in total now 2018 and six years ago, five or six years ago, which I've spoke about his career with us. And that's a bit of a ultimate vision here that any commercial client could ask any question of the data, just like you can now ask questions about Texas, the Internet with GPC. four, that clearly will have vision is becoming closer to reality with these large language models.
And we've really seen that tick up, you know, a number of big companies from Microsoft or Google to others or releasing these multimodal large language months was the step from them treating just text on the Internet that also treating images and videos and audio track. And that plays to our strengths enormously because we have this massive proprietary archive of imagery data. So as those models get better at dealing with imagery and understanding the context in those images, the faster we can leverage that and to then provide answers to commercial clients who don't have big geospatial expertise. And so we really, again believe overall in the long term in the commercial market. It's a huge opportunity to go after.

Edison Yu

Got it. And just one last one for me. Housekeeping. Can you guys tell us what the or remind us what is the contribution from synergized in the in the full year number?

Ashley Johnson

I think last quarter we said we expected it to be somewhere between $4 million and $6 million on the year. And I think we're in line with that expectation. It's small enough that we are breaking it out some, but generally it's performing in line with our expectations.

Edison Yu

Okay. Thank you.

Ashley Johnson

Thank you.

Operator

Jeff Van Rhee, Craig-Hallum.

Jeff Van Rhee

Great, thanks. Just a couple of remaining here. On those sales changes, any measurable evidence you can you can share with respect to the sales changes working either, you know, concrete improvements in cycles or other measurables. I know you're focusing on the big deals, automation, making it easier to work with you but but any any even if they're green shoots, any concrete evidence that the changes are having positive impact?

William Marshall

Ashley, you want to speak to that?

Ashley Johnson

Yes, I'd say first of all, obviously, it's still early days. And I'd say the good news is we've seen a lot of those metrics really stabilize, and we're not seeing sales cycles go longer than what we talked about before. And obviously, we're focused on now bringing them in shorter. And similarly, I talked about the fact that deal sizes have generally stabilized. And as we lean into the larger deal opportunities, we would expect those to expand as well.
So and we're looking at the same types of metrics that you would expect us to be focused on making sure that we close the business in front of us, shorten the sales cycles going forward and as Will said, really make sure we drive that time to value for the customers so that we continue to land and expand. So that's where we're focused. We're in a transition, but we feel really good about what we've implemented so far and the early results we're seeing.

Jeff Van Rhee

Okay. And then one brief one on synergies. I know you just touched on it, the four to six for the year. Just curious if you'd expand or there's any other color to provide there any behavioral clues that have been provided by the existing synergized base the way they've reacted thus far? Any other indications of either upside or downside to what you thought you bought there?

William Marshall

We feel very positive about the acquisition and how the team is performing. And and we do see a lot of opportunities coming in related to the tools that we have there. A lot of it's things like automating the onboarding of those sorts of new capabilities further so that we can scale to more actors and with any given solution. So you have that that's goodness as far as I'm concerned, because that means that the demand in pulp.

Ashley Johnson

I am very, very pleased so far obviously, it is an incredible talent pool and a great platform. And we moved very quickly on the integration side to enable our customers to leverage those tools and their customers to access Planet data through the platform. And now we're continuing that integration process to create a more seamless experience across user base and to really push see the new capabilities and our sales teams.

Jeff Van Rhee

Okay. Fair enough. Thank you.

Ashley Johnson

Thanks, Jeff.

Operator

Chris Quilty, Quilty Space.

Chris Quilty

Thank you. I just wanted to follow up on just a little bit on the Pelican, congrats on that initial launch. And obviously beyond the normal first flight and calibration of the satellite, you've also got a different element to it, which is the altitude and altitude maintenance? And do you have an idea of how long you expect to go through validation before you can sort of make the decision to pull the trigger on the bigger commitment to the fleet?

William Marshall

I'd say yes, I mean, it takes normally of order months to fully understand these spacecraft in orbit, and we're very feeling very good about where we are on that right now, as I mentioned earlier. And then as you say, that helps determine sort of key decision points to then build the rest of the fleet that we are already, by the way, ongoing in building a bunch of those things, the exact timing, and we then pull in learnings into that as we build out.
So of course, we don't for sending the loan side before we really understood how that first one is working so that that construction process is already ongoing for the next step and the first block one, as we call it a spacecraft that overall I feel very good about the piece of that program right now.

Chris Quilty

Got you. And I'm sorry, I had that mobile phone problem. Are you still on taking in new customers on the early access program? And have you seen any growth in that pipeline?

William Marshall

You mean for tonnage I presume

Chris Quilty

Yes.

William Marshall

You mean for the hyperspectral mission? Yes. And I think it was a limited cohort, maybe that one or two that were added on that. But we have they have been progressing use cases and showing early demand of real deals and there and some And yes, so we feel good about that program as well. And and it's great that we've we have this JPL instrument in the lab and integrated into the spacecraft is very exciting to see the developments downstairs as well. So we are feeling good about that program as well.

Chris Quilty

And did you provide the expected CapEx on that program and over what time frame -- looking for first launch.

Ashley Johnson

So that program is categorized as an R&D program because it's the first time we've launched a hyperspectral satellite. And so and that has been in partnership with the team of our carbon map and NASA JPL. And we have funds that we've received for that program and those get recognized not as revenue, but is excellent, actually an offset to that contra R&D.
So you don't really see that show up as CapEx on our balance sheet and as a company that does agile aerospace, we're very different in that respect from what you might see from others where you see a lot more CIP. sitting on the balance sheet and for a program like this. And in terms of the overall sizes of that fleet and that program we and the timing, we haven't given a lot of specifics because we are still in the R&D phase. And as we get closer to the launch of that fleet, we'll share more details.

William Marshall

If I could just add one more thing, just like the carbon plant very, very well. I mentioned earlier, there's interest on both the regulatory side as well as the users that would use it to stop and get ahead of regulations or the commercial side, if you like. And And on that point, we've made a couple of announcements at Kopp.
The media is ongoing right now in Dubai relating to this because as we get better measurement of all of these and emissions, I'm guessing indirectly right now and helping this organization climate Trace, which tracks over $350 million facilities globally of renewable energy facilities and meters with our visual data.
And this will then add to that to be able to have more quantified emission amounts that data, which is all feeds into, if you like, the transparency and accountability and a lot of as we transition to a sustainable economy, it's a massive transition of many, many tens of trillion dollars as we transition to a sustainable economy.
But there's no way it's going to be possible without the cash flow measurement. As we've discussed before, whether that's the first carbon piece or the emission piece that we just talked about here. So we really care about it from a pure sustainability point of view. It fits our mission but there's a massive market opportunity as well. And so we're going after that.

Chris Quilty

Great. And final question. Just you talked about the latency with the RF cross links on the Pelican um, I think that was announced the other C-band SES, but you also had an announcement with Telesat and KA. on. Can you just give any color on how that's proceeding and do you need any specific FCC licenses to operate those cross links?

William Marshall

Yes, we we are pursuing two programs, one with ViaSat-1 with Telesat. I put both of them into supported by NASA, NASA CSP program that helps fund that R&D, and they're both proceeding according to plan. As far as I'm aware, I think they're more in the Ku-band and C-band, but I mean is that a nice boost, the soundtrack fact that and we can check for you and confirm the details.

Chris Quilty

Great. Thanks a bunch, guys.

Ashley Johnson

Thank you.

Operator

Thank you all for your questions. There are no questions waiting at this time. So I'll turn the conference over to Will Marshall, CEO, for closing remarks.

William Marshall

Well, look, overall, I feel that we had solid growth in both our civil and defense markets as we've been talking to. And we're very focused as a team on the go-to-market execution to close the opportunities in front of us to close faster and make customers successful and to land and expand and grow. We feel good about the multiple product, most milestones we mentioned, including the 37 satellites, the Pelican, we've been speaking a fair bit about forest carbon and getting low touch access to place data via the Sentinel hub system or the new platform that we acquired from synergize over the summer.
We also all doing all of this while and keeping a disciplined spending on our path to adjusted EBITDA profitability by Q4 of next year. And overall, I would say our conviction remains high in the opportunity in front of us. And so with that, we'll I look forward to seeing you next time.

Operator

That will conclude today's conference call. Thank you all for your participation. You may now disconnect your lines.