DMY TECHNOLOGY GROUP, INC. IV
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
Planet Labs PBCCondensed Consolidated Statements of Comprehensive Loss (Unaudited) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
(In thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance - December 31, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of Class A common stock subject to possible redemption amount | | | — | | | | — | | | | — | | | | — | | | | (24,137 | ) | | | (31,121,232 | ) | | | (31,145,369 | ) |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | (14,549,315 | ) | | | (14,549,315 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance - March 31, 2021 (Unaudited, as restated) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | (236,373 | ) | | | (236,373 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance - June 30, 2021 (Unaudited, as restated) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | (6,635,827 | ) | | | (6,635,827 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance - September 30, 2021 (Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended October 31, | | Nine Months Ended October 31, |
| 2022 | | 2021 | | 2022 | | 2021 |
Net loss | $ | (40,236) | | | $ | (41,541) | | | $ | (124,125) | | | $ | (91,159) | |
Other comprehensive income (loss), net of tax: | | | | | | | |
Foreign currency translation adjustment | (235) | | | 139 | | | 82 | | | 335 | |
Change in fair value of available-for-sale securities | (1,538) | | | — | | | (1,235) | | | — | |
Other comprehensive income (loss), net of tax | (1,773) | | | 139 | | | (1,153) | | | 335 | |
Comprehensive loss | $ | (42,009) | | | $ | (41,402) | | | $ | (125,278) | | | $ | (90,824) | |
TheSee accompanying notes are an integral part of theseto unaudited condensed consolidated financial statements.
DMY TECHNOLOGY GROUP, INC. IV
Planet Labs PBCUNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(In thousands, except share amounts) | | | | |
| | For the nine months ended | |
| | | |
Cash Flows from Operating Activities: | | | | |
| | $ | (21,421,515 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | |
General and administrative expenses paid by related party under promissory note | | | 1,000 | |
Income from investments held in Trust Account | | | (98,658 | ) |
Loss upon issuance of private placement warrants | | | 14,062,000 | |
Offering costs associated with derivative warrant liabilities | | | 710,745 | |
Change in fair value of derivative warrant liabilities | | | (705,000 | ) |
Legal expenses deferred until business combination | | | 2,361,156 | |
Changes in operating assets and liabilities: | | | | |
| | | (50,208 | ) |
| | | 74,281 | |
| | | 3,815,044 | |
| | | 150,050 | |
| | | | |
Net cash used in operating activities | | | (3,462,261 | ) |
| | | | |
Cash Flows from Investing Activities | | | | |
Cash deposited in Trust Account | | | (345,000,000 | ) |
| | | | |
Net cash used in investing activities | | | (345,000,000 | ) |
| | | | |
Cash Flows from Financing Activities: | | | | |
Proceeds from loans from related parties | | | 362,292 | |
Repayment of loans from related parties | | | (1,116,142 | ) |
Proceeds received from initial public offering, gross | | | 345,000,000 | |
Proceeds received from private placement | | | 8,900,000 | |
| | | (6,969,070 | ) |
| | | | |
Net cash provided by financing activities | | | 348,538,236 | |
| | | | |
| | | 75,975 | |
Cash - beginning of the period | | | 0 | |
| | | | |
| | | | |
| | | | |
Supplemental disclosure of noncash activities: | | | | |
Offering costs included in accounts payable | | $ | 39,194 | |
Offering costs included in accrued expenses | | $ | 85,000 | |
Offering costs paid by related party under promissory note | | $ | 439,100 | |
Prepaid expenses paid by related party under promissory note | | $ | 425,000 | |
Reversal of accrued expenses | | $ | 50,000 | |
Deferred underwriting commissions in connection with the initial public offering | | $ | 12,075,000 | |
Deferred legal fees | | $ | 2,361,156 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Convertible Preferred Stock | | Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Income | | Accumulated Deficit | | Total Stockholders’ Equity |
Shares | | Amount | | Shares | | Amount |
Balances at January 31, 2021 | 131,252,627 | | $ | 13 | | | 43,946,198 | | $ | 4 | | | $ | 745,630 | | | $ | 1,769 | | | $ | (639,905) | | | $ | 107,511 | |
Issuance of Class A common stock from the exercise of common stock options | — | | — | | 637,684 | | — | | 2,156 | | — | | — | | 2,156 |
Stock-based compensation | — | | — | | — | | — | | 3,243 | | — | | — | | 3,243 |
Change in translation | — | | — | | — | | — | | — | | 274 | | — | | 274 |
Net loss | — | | — | | — | | — | | — | | — | | (29,255) | | (29,255) |
Balances at April 30, 2021 | 131,252,627 | | $ | 13 | | | 44,583,882 | | $ | 4 | | | $ | 751,029 | | | $ | 2,043 | | | $ | (669,160) | | | $ | 83,929 | |
Issuance of Class A common stock from the exercise of common stock options | — | | — | | 2,358,627 | | — | | 1,724 | | — | | — | | 1,724 |
Stock-based compensation | — | | — | | — | | — | | 5,066 | | — | | — | | 5,066 |
Change in translation | — | | — | | — | | — | | — | | (78) | | — | | (78) |
Net loss | — | | — | | — | | — | | — | | — | | (20,363) | | (20,363) |
Balances at July 31, 2021 | 131,252,627 | | $ | 13 | | | 46,942,509 | | $ | 4 | | | $ | 757,819 | | | $ | 1,965 | | | $ | (689,523) | | | $ | 70,278 | |
Issuance of Class A common stock from the exercise of common stock options | — | | — | | 1,215,238 | | — | | 2,986 | | — | | — | | 2,986 |
Vesting of restricted stock awards | — | | — | | — | | — | | 896 | | — | | — | | 896 |
Issuance of recourse note to employee | — | | — | | — | | — | | (389) | | — | | — | | (389) |
Stock-based compensation | — | | — | | — | | — | | 4,824 | | — | | — | | 4,824 |
Change in translation | — | | — | | — | | — | | — | | 139 | | — | | 139 |
Net loss | — | | — | | — | | — | | — | | — | | (41,541) | | (41,541) |
Balances at October 31, 2021 | 131,252,627 | | $ | 13 | | | 48,157,747 | | $ | 4 | | | $ | 766,136 | | | $ | 2,104 | | | $ | (731,064) | | | $ | 37,193 | |
The
See accompanying notes are an integral part of theseto unaudited condensed consolidated financial statements.
Planet Labs PBC
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(In thousands, except share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Income | | Accumulated Deficit | | Total Stockholders’ Equity | | | | |
| | | | Shares | | Amount | | | | |
Balances at January 31, 2022 | | | | | 262,175,273 | | $ | 27 | | | $ | 1,423,151 | | | $ | 2,096 | | | $ | (777,029) | | | $ | 648,245 | | | | | |
Cumulative effect of adoption of ASU 2016-13 | | | | | — | | — | | — | | — | | (301) | | (301) | | | | |
Issuance of Class A common stock from the exercise of common stock options | | | | | 3,524,182 | | — | | 6,203 | | — | | — | | 6,203 | | | | |
Issuance of Class A common stock upon vesting of restricted stock units | | | | | 215,178 | | — | | — | | — | | — | | — | | | | |
Vesting of early exercised stock options | | | | | 91,911 | | — | | 896 | | — | | — | | 896 | | | | |
Class A common stock withheld to satisfy employee tax withholding obligations | | | | | (75,442) | | — | | (411) | | — | | — | | (411) | | | | |
Stock-based compensation | | | | | — | | — | | 20,259 | | — | | — | | 20,259 | | | | |
Change in translation | | | | | — | | — | | — | | 175 | | — | | 175 | | | | |
Net loss | | | | | — | | — | | — | | — | | | (44,360) | | | (44,360) | | | | | |
Balances at April 30, 2022 | | | | | 265,931,102 | | $ | 27 | | | $ | 1,450,098 | | | $ | 2,271 | | | $ | (821,690) | | | $ | 630,706 | | | | | |
Issuance of Class A common stock from the exercise of common stock options | | | | | 605,690 | | — | | 1,455 | | — | | — | | 1,455 | | | | |
Issuance of Class A common stock upon vesting of restricted stock units | | | | | 1,061,915 | | — | | — | | — | | — | | — | | | | |
Vesting of early exercised stock options | | | | | 91,911 | | — | | 896 | | — | | — | | 896 | | | | |
Class A common stock withheld to satisfy employee tax withholding obligations | | | | | (381,149) | | — | | (1,753) | | — | | — | | (1,753) | | | | |
Stock-based compensation | | | | | — | | — | | 21,033 | | — | | — | | 21,033 | | | | |
Net unrealized gain on available-for-sale securities, net of taxes | | | | | — | | — | | — | | 303 | | — | | 303 | | | | |
Other | | | | | — | | — | | 390 | | — | | — | | 390 | | | | |
Change in translation | | | | | — | | — | | — | | 142 | | — | | 142 | | | | |
Net loss | | | | | — | | — | | — | | — | | (39,529) | | (39,529) | | | | |
Balances at July 31, 2022 | | | | | 267,309,469 | | $ | 27 | | | $ | 1,472,119 | | | $ | 2,716 | | | $ | (861,219) | | | $ | 613,643 | | | | | |
Issuance of Class A common stock from the exercise of common stock options | | | | | 1,452,777 | | — | | 4,491 | | — | | — | | 4,491 | | | | |
Issuance of Class A common stock upon vesting of restricted stock units | | | | | 817,320 | | — | | — | | — | | — | | — | | | | |
Vesting of early exercised stock options | | | | | 91,911 | | — | | 896 | | — | | — | | 896 | | | | |
Class A common stock withheld to satisfy employee tax withholding obligations | | | | | (298,535) | | — | | (2,164) | | — | | — | | (2,164) | | | | |
Stock-based compensation | | | | | — | | — | | 19,810 | | — | | — | | 19,810 | | | | |
Net unrealized loss on available-for-sale securities, net of taxes | | | | | — | | — | | — | | (1,538) | | — | | (1,538) | | | | |
Other | | | | | — | | — | | (500) | | — | | — | | (500) | | | | |
Change in translation | | | | | — | | — | | — | | (235) | | — | | (235) | | | | |
Net loss | | | | | — | | — | | — | | — | | (40,236) | | (40,236) | | | | |
Balances at October 31, 2022 | | | | | 269,372,942 | | $ | 27 | | | $ | 1,494,652 | | | $ | 943 | | | $ | (901,455) | | | $ | 594,167 | | | | | |
See accompanying notes to unaudited condensed consolidated financial statements.
Planet Labs PBC
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
| | | | | | | | | | | |
| Nine Months Ended October 31, |
| 2022 | | 2021 |
Operating activities | | | |
Net loss | $ | (124,125) | | | $ | (91,159) | |
Adjustments to reconcile net loss to net cash used in operating activities | | | |
Depreciation and amortization | 33,997 | | | 33,865 | |
Stock-based compensation, net of capitalized cost of $1,261 and $514, respectively | 59,841 | | | 12,619 | |
Change in fair value of convertible notes and warrant liabilities | (5,369) | | | 11,429 | |
Deferred income taxes | 39 | | | 406 | |
Amortization of debt discount and issuance costs | — | | | 2,328 | |
Other | 516 | | | 140 | |
Changes in operating assets and liabilities | | | |
Accounts receivable | 15,237 | | | 32,336 | |
Prepaid expenses and other assets | (9,472) | | | (12,860) | |
Accounts payable, accrued and other liabilities | (8,649) | | | 2,061 | |
Deferred revenue | (19,382) | | | (17,401) | |
Deferred hosting costs | (1,751) | | | 6,759 | |
Deferred rent | — | | | (1,539) | |
Net cash used in operating activities | (59,118) | | | (21,016) | |
Investing activities | | | |
Purchases of property and equipment | (9,008) | | | (6,051) | |
Capitalized internal-use software | (1,737) | | | (2,678) | |
Maturities of available-for-sale securities | 13,000 | | | — | |
Purchases of available-for-sale securities | (239,321) | | | — | |
Other | (412) | | | (454) | |
Net cash used in investing activities | (237,478) | | | (9,183) | |
Financing activities | | | |
Proceeds from the exercise of common stock options | 10,909 | | | 6,866 | |
Class A common stock withheld to satisfy employee tax withholding obligations | (4,328) | | | — | |
Proceeds from the early exercise of common stock options | — | | | 17,928 | |
Payment of transaction costs related to the Business Combination | (326) | | | (5,281) | |
Other | 122 | | | — | |
Net cash provided by financing activities | 6,377 | | | 19,513 | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1,781) | | | (807) | |
Net decrease in cash, cash equivalents and restricted cash | (292,000) | | | (11,493) | |
Cash, cash equivalents and restricted cash at the beginning of the period | 496,814 | | | 76,540 | |
Cash, cash equivalents and restricted cash at the end of the period | $ | 204,814 | | | $ | 65,047 | |
See accompanying notes to unaudited condensed consolidated financial statements.
DMY TECHNOLOGY GROUP, INC. IV
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED)
11
Planet Labs PBC
Notes to Unaudited Condensed Consolidated Financial Statements
(1)Organization
Planet Labs PBC (“Planet,” or the “Company”) was founded to design, construct, and launch constellations of satellites with the intent of providing high cadence geospatial data delivered to customers via an online platform. The Company’s mission is to use space to help life on Earth, by imaging the world every day and making global change visible, accessible, and actionable. The Company is headquartered in San Francisco, California, with operations throughout the United States (“U.S.”), Canada, Asia and Europe. The Company has wholly-owned foreign subsidiaries in Canada, Germany, Luxembourg, Singapore and the Netherlands.
On July 7, 2021, Planet Labs Inc. (“Former Planet”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with dMY Technology Group, Inc. IV (the “Company” or “dMY(“dMY IV”) is, a blank checkspecial purpose acquisition company (“SPAC”) incorporated in Delaware on December 15, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of September 30, 2021, the Company had not commenced any operations. Allactivity for the period from December 15, 2020,
(inception) through September 30, 2021 relates to the Company’s formation, the initial public offering (the “Initial Public Offering”) described below and since the closing of the Initial Public Offering, the search for a target for its initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generatenon-operating
income in the form of interest income on investment held in Trust Account (as defined below).The Company’s sponsor is dMY Sponsor IV, LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on March 4, 2021. On March 9, 2021, the Company consummated its Initial Public Offering of 34,500,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), including 4,500,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $345.0 million, and incurring offering costs of approximately $19.6 million, of which approximately $12.1 million was for deferred underwriting commissions (Note 5).
Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 5,933,333 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds of $8.9 million (Note 4).
Upon the closing of the Initial Public Offering and the Private Placement, $345.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and will be invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule2a-7
promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting commissions) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
The Company will provide the holders of the Company’s Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially at $10.00 per Public Share). Theper-share
amount to be distributed to Public Stockholders who redeem their Public Shares will not be
DMY TECHNOLOGY GROUP, INC. IV
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). These Public Shares are recorded at a redemption value and classified as temporary equity in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”). The Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the initial stockholders (as defined below) agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the initial stockholders agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.
The Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20% or more of the Public Shares, without the prior consent of the Company.
The Sponsor and the Company’s officers and directors (the “initial stockholders”) agreed not to propose an amendment to the Certificate of Incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or with respect to any other material provisions relating to stockholders’ rights orpre-initial
Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.If the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or March 9, 2023 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at aper-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.The initial stockholders agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters agreed to waive their rights to the deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00. In order to protect the amounts held in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a letter of intent, confidentiality or other similar agreement
DMY TECHNOLOGY GROUP, INC. IV
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
or business combination agreement (a “Target”), reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or Target that executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) not will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s Independent Registered Public Accounting Firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Proposed Business Combination
On July 7, 2021, the Company entered into an agreement and plan of merger, by and among the Company, Photon Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of the CompanydMY IV (“First Merger Sub”), and Photon Merger Sub Two, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of the CompanydMY IV (“Second Merger Sub”), and Planet Labs Inc., a Delaware corporation (“Planet”) (as the same may be amended and/or restated from time. Pursuant to time, the “Merger Agreement”). The Merger Agreement and the transactions contemplated thereby were unanimously approved by the Company’s board of directors on July 6, 2021. Subject to the satisfaction or waiver of certain closing conditions set forth in the Merger Agreement, includingupon the approvalfavorable vote of the Merger Agreement and the transactions contemplated thereby by the Company’s and Planet’sdMY IV’s stockholders on December 3, 2021, on December 7, 2021, First Merger Sub will mergemerged with and into Planet (the “First Merger”) withFormer Planet (the “Surviving Corporation”), with Former Planet surviving the First Mergermerger as a wholly owned subsidiary of the Company,dMY IV (the “First Merger”), and atpursuant to Former Planet’s election immediately following the First Merger and as part of the same overall transaction as the First Merger, the Surviving Corporation may mergemerged with and into Second Merger Sub (the “Second Merger” and togetherdMY IV, with the First Merger, the “Business Combination”), with Second Merger SubdMY IV surviving the merger as a wholly owned subsidiary of(the “Business Combination”). Following the Company. In addition, in connection with the consummationcompletion of the Business Combination, dMY IV was renamed Planet Labs PBC. See Note 3 for further details of the Company will be renamedBusiness Combination.
Former Planet was incorporated in the state of Delaware on December 28, 2010. Former Planet was originally incorporated as
reasonably determined by Planet. SeeCosmogia Inc., and the
Current Report onForm 8-K, filed
with the SECname was subsequently changed to Planet Labs Inc. on June
1, 2021, for further information.24, 2013. Going Concern Consideration
As of September 30, 2021, the Company had approximately $76,000 in cash, approximately $99,000 of interest income available in the Trust Account to pay for taxes and a working capital deficit of approximately $3.7 million (not taking into account tax obligations of approximately $150,000 that may be paid using investment income earned in Trust Account). Further, the Company has incurred and expect to continue to incur significant costs in pursuit of its acquisition plans.
The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to purchase Founder Shares (as defined in Note 4), loan amount of $200,000 under the Note (as defined in Note 4) and an advance of approximately $791,000 from related parties. The Company fully repaid the Note balance and the advance from the related parties, for a total of approximately $991,000, on March 10, 2021. Subsequent to the consummation of the Initial Public Offering in March 2021, the Company’s liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account, and the advance of $37,000 from an officer in August 2021.
In connection with the Company’s assessment of going concern considerations in accordance with FASB Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the working capital deficit raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities.
Based on the foregoing, management believes that the Company will not have sufficient working capital to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.
DMY TECHNOLOGY GROUP, INC. IV
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2—Presentation and Summary of Significant Accounting Policies (as Restated)
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements are presentedunaudited; however, in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management they include all normal and recurring adjustments necessary for a fair presentation of the Company’s unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three and nine months ended September 30, 2021October 31, 2022 are not necessarily indicative of the results that may be expected through Decemberfor the fiscal year ending January 31, 20212023 or for any other future period.
Restatement of Previously Reported Financial Statements
In preparation of the Company’s unaudited condensed financial statements for the quarterly period ended September 30, 2021, the Company concluded it should restate its previously issued financial statements to classify all outstanding shares of Class A common stock subject to redemption in temporary equity. In accordance with
ASCredemption provisions not solely within the control of the Company, require shares subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its outstanding shares of Class A common stock in permanent equity. Although the Company did not specify a maximum redemption threshold, its charter currently provides that the Company will not redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. Previously, the Company did not consider redeemable shares classified as temporary equity as part of net tangible assets. Effective with these condensed financial statements, the Company revised this interpretation to include temporary equity in net tangible assets.In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections and has determined that the related impact was material to the previously filed financial statements that contained the error, reported in the Company’s Form8-K
filed with the SEC on March 15, 2021 (the“Post-IPO
Balance Sheet”) and the Company’s Form10-Qs
for the quarterly periods ended March 31, 2021, and June 30, 2021 (the “Affected Quarterly Periods”). Therefore, the Company, in consultation with its Audit Committee, concluded that thePost-IPO
Balance Sheet and the Affected Quarterly Periods should be restated to present all outstanding shares of Class A common stock subject to possible redemption as temporary equity and to recognize accretion from the initial book value to redemption value at the time of its Initial Public Offering. As such, the Company is reporting these restatements to those periods in this quarterly report. The previously presentedPost-IPO
Balance Sheet and Affected Quarterly Periods should no longer be relied upon.The change in the carrying value of the redeemable Class A common stock in the Post-IPO Balance Sheet resulted in a reclassification of approximately 1.6 million shares of Class A common stock from permanent equity to temporary equity. The impact of the revision to the Post-IPO Balance Sheet is as follows:
| | | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Class A common stock subject to possible redemption | | | 329,243,720 | | | | 15,756,280 | | | | 345,000,000 | |
| | | 0 | | | | 0 | | | | 0 | |
| | | 158 | | | | (158 | ) | | | 0 | |
| | | 863 | | | | 0 | | | | 863 | |
| | | 5,037,145 | | | | (5,037,145 | ) | | | 0 | |
| | | (38,163 | ) | | | (10,718,977 | ) | | | (10,757,140 | ) |
Total stockholders’ equity (deficit) | | | | | | | | | | | | |
Total Liabilities, Class A Common Stock Subject to Possible | | | | | | | | | | | | |
Redemption and Stockholders’ Equity (Deficit) | | | | | | | | | | | | |
DMY TECHNOLOGY GROUP, INC. IV
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The impact of the restatement on the financial statements for the Affected Quarterly Periods is presented below.
The change in the carrying value of the redeemable Class A common stock at March 31, 2021 resulted in a reclassification of approximately 5.1 million shares of Class A common stock from permanent equity to temporary equity. The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited balance sheet as of March 31, 2021:
| | | | | | | | | | | | |
As of March 31, 2021 (unaudited) | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Class A common stock subject to possible redemption | | | 294,328,910 | | | | 50,671,090 | | | | 345,000,000 | |
| | | 0 | | | | 0 | | | | 0 | |
| | | 507 | | | | (507 | ) | | | 0 | |
| | | 863 | | | | 0 | | | | 863 | |
| | | 19,549,351 | | | | (19,549,351 | ) | | | 0 | |
| | | (14,550,715 | ) | | | (31,121,232 | ) | | | (45,671,947 | ) |
Total stockholders’ equity (deficit) | | | | | | | | | | | | |
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit) | | | | | | | | | | | | |
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited statement of cash flows for the three months ended March 31, 2021:
| | | | | | | | | | | | |
| | For the three months ended
March 31, 2021 (unaudited) | |
| | | | | | | | | |
Supplemental Disclosure of Noncash Financing Activities: | | | | | | | | | | | | |
Value of Class A common stock subject to possible redemption | | $ | 294,328,910 | | | $ | (294,328,910 | ) | | $ | 0 | |
The change in the carrying value of the redeemable Class A common stock at June 30, 2021 resulted in a reclassification of approximately 5.1 million shares of Class A common stock from permanent equity to temporary equity. The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited balance sheet as of June 30, 2021:
| | | | | | | | | | | | |
As of June 30, 2021 (unaudited) | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Class A common stock subject to possible redemption | | | 294,092,540 | | | | 50,907,460 | | | | 345,000,000 | |
| | | 0 | | | | 0 | | | | 0 | |
| | | 509 | | | | (509 | ) | | | 0 | |
| | | 863 | | | | 0 | | | | 863 | |
| | | 19,785,719 | | | | (19,785,719 | ) | | | 0 | |
| | | (14,787,088 | ) | | | (31,121,232 | ) | | | (45,908,320 | ) |
Total stockholders’ equity (deficit) | | | | | | | | | | | | |
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit) | | | | | | | | | | | | |
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited statement of cash flows for the six months ended June 30, 2021:
| | | | | | | | | | |
| | For the period six months ended June 30, 2021
| |
| | | | | | | | |
Supplemental Disclosure of Noncash Financing Activities: | | | | | | | | | | |
Value of Class A common stock subject to possible redemption | | $294,092,540 | | $ | (294,092,540 | ) | | $ | 0 | |
DMY TECHNOLOGY GROUP, INC. IV
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In connection with the change in presentation for the Class A common stock subject to possible redemption, the Company has revised its earnings per share calculation to al
locate income and losses shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of shares participate pro rata in the income and losses of the Company. The impact to the reported amounts of weighted average shares outstanding and basic and diluted earnings per common share is presented below for the Affected Quarterly Periods: | | | | | | | | | | | | |
| | Earnings Per Share for Class A common stock | |
| | | | | | | | | |
Form 10-Q (March 31, 2021)—For the three months ended March 31, 2021 (unaudited) | | | | | | | | | |
Net loss | | $ | (14,549,315 | ) | | $ | 0 | | | $ | (14,549,315 | ) |
Weighted average shares outstanding | | | 7,787,500 | | | | | | | | 7,787,500 | |
Basic and diluted earnings per share | | $ | 0.00 | | | $ | (0.88 | ) | | $ | (0.88 | ) |
Form 10-Q (June 30, 2021)—For the three months ended June 30, 2021 (unaudited) | | | | | | | | | | | | |
Net loss | | $ | (236,373 | ) | | $ | 0 | | | $ | (236,373 | ) |
Weighted average shares outstanding | | | 34,500,000 | | | | | | | | | |
Basic and diluted earnings per share | | $ | 0.00 | | | $ | (0.01 | ) | | $ | (0.01 | ) |
Form 10-Q (June 30, 2021)—For the six months ended June 30, 2021 (unaudited) | | | | | | | | | | | | |
Net loss | | $ | (14,785,688 | ) | | $ | 0 | | | $ | (14,785,688 | ) |
Weighted average shares outstanding | | | 34,500,000 | | | | (12,770,718 | ) | | | 21,729,282 | |
Basic and diluted earnings per share | | $ | 0.00 | | | $ | (0.49 | ) | | $ | (0.49 | ) |
| | | | | | | | | | | | |
| | Earnings Per Share for Class B common stock | |
| | | | | | | | | |
Form 10-Q (March 31, 2021)—For the three months ended March 31, 2021 (unaudited) | | | | | | | | | | | | |
Net loss | | $ | (14,549,315 | ) | | $ | 0 | | | $ | (14,549,315 | ) |
Weighted average shares outstanding | | | 7,778,090 | | | | 846,910 | | | | 8,625,000 | |
Basic and diluted earnings per share | | $ | (0.06 | ) | | $ | (0.82 | ) | | $ | (0.88 | ) |
Form 10-Q (June 30, 2021)—For the three months ended June 30, 2021 (unaudited) | | | | | | | | | | | | |
Net loss | | $ | (236,373 | ) | | $ | 0 | | | $ | (236,373 | ) |
Weighted average shares outstanding | | | 8,625,000 | | | | 0 | | | | 8,625,000 | |
Basic and diluted earnings per share | | $ | (0.03 | ) | | $ | 0.02 | | | $ | (0.01 | ) |
Form 10-Q (June 30, 2021)—For the six months ended June 30, 2021 (unaudited) | | | | | | | | | | | | |
Net loss | | $ | (14,785,688 | ) | | $ | 0 | | | $ | (14,785,688 | ) |
Weighted average shares outstanding | | | 8,208,564 | | | | 0 | | | | 8,208,564 | |
Basic and diluted earnings per share | | $ | (1.80 | ) | | $ | 1.31 | | | $ | (0.49 | ) |
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
DMY TECHNOLOGY GROUP, INC. IV
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply tonon-emerging
growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.Principles of Consolidation
The unaudited condensed consolidated financial statements
and accompanying notes have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and include the accounts of
the
CompanyPlanet Labs PBC and its
wholly ownedwholly-owned subsidiaries.
Revenue for the three months ended October 31, 2022 includes an out of period adjustment of $2.1 million. All
significant inter-companyintercompany transactions and balances have been eliminated in consolidation.
The Company’s fiscal year end is January 31.Certain notes or other information that are normally required by U.S. GAAP have been condensed or omitted if they substantially duplicate the disclosures contained in the Company’s annual audited consolidated financial statements. Accordingly, the unaudited condensed consolidated financial statements should be read in connection with the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2022 (the “2022 Form 10-K”).
The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP, whereby dMY IV was treated as the acquired company and Former Planet was treated as the acquirer. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Former Planet issuing stock for the net assets of dMY IV, accompanied by a recapitalization. The net assets of dMY IV were stated at historical cost, with no goodwill or other intangible assets recorded.
Former Planet was determined to be the accounting acquirer based on the following predominant factors:
•Former Planet’s existing stockholders have the majority voting interest in the combined entity;
•Former Planet had the ability to nominate a majority of the initial members of the board of directors of the combined entity;
•Former Planet’s senior management became the senior management of the combined entity; and
ContentsFinancial instruments that potentially subject•Former Planet is the Companylarger entity based on historical operating activity and has the larger employee base.
The consolidated assets, liabilities and results of operations prior to concentrationsthe Business Combination are those of credit risk consistFormer Planet. The shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on shares reflecting the exchange ratio of cash accountsapproximately 1.53184 (the “Exchange Ratio”) established in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. As of September 30, 2021 and December 31, 2020,Business Combination. See Note 3, Business Combination, for additional details.
Liquidity
Since its inception, the Company has not experiencedincurred net losses on these accounts and management believesnegative cash flows from operations. The Company expects to incur additional operating losses and negative cash flows from operations as it seeks to expand its business. As of October 31, 2022 and January 31, 2022, the Company is not exposed to significant risks on such accounts.
Cashhad $199.1 million and Cash Equivalents
The$490.8 million of cash and cash equivalents, respectively. Additionally, as of October 31, 2022, the Company considers allhad short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had 0 cash equivalents$226.2 million which are highly liquid in nature and available for current operations. There were no short-term investments as of September 30, 2021 and DecemberJanuary 31, 2020.2022.
Investments Held in the Trust Account
The Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in income on investments held in the Trust Account in the accompanying unaudited condensed consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date ofin the financial statements and accompanying notes. The significant estimates and assumptions that affect the reported amountsCompany’s unaudited condensed consolidated financial statements include, but are not limited to, the useful lives of expenses duringproperty and equipment, capitalized internal-use software and intangible assets, allowances for credit losses, estimates related to revenue recognition, including the reporting periods. Actualassessment of performance obligations within a contract and the determination of standalone selling price (“SSP”) for each performance obligation, the fair value of common stock and other assumptions used to measure stock-based compensation, the fair value of convertible notes and warrants, the fair value of assets acquired, and liabilities assumed from business combinations, the impairment of long-lived assets and goodwill, the recognition, measurement and valuation of current and deferred income taxes and uncertain tax positions, and contingencies.
These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, due to the inherent uncertainties in making estimates, actual results could differ from those estimates.
estimates and such differences may be material to the unaudited condensed consolidated financial statements.MakingDue to the COVID-19 Coronavirus pandemic (“COVID-19” or “COVID-19 pandemic”), and current events involving Russia and Ukraine, there is ongoing uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require an update to its estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimateor assumptions or a revision of the effectcarrying value of a condition, situationits assets or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, couldliabilities. These estimates and assumptions may change in the near term duefuture, as new events occur and additional information is obtained.
Segments
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates in one or more future confirming events. Oneoperating segment and one reportable segment, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.
See Note 4, Revenue, for revenue by geographic region. See Note 7, Balance Sheet Components, for long-lived assets by geographic region.
Concentration of Credit Risk and Other Risks and Uncertainties
Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash, cash equivalents, short-term investments and accounts receivable. By their nature, all such financial instruments involve risks, including the credit risk of nonperformance by counterparties. The Company’s cash, cash equivalents and short-term investments are deposited with financial institutions in the U.S. and checking accounts with financial institutions in Canada, Germany, the Netherlands and Singapore that management believes are of high credit quality. The Company generally does not require collateral to support the obligations of the morecounterparties and deposits at financial institutions may, at times, be in excess of federal or national insured limits or deposit-guarantee limits in each of the respective countries. The Company has not experienced material losses on its deposits of cash, cash equivalents or short-term investments. The maximum amount of loss at October 31, 2022 that the Company
would incur if parties to cash, cash equivalents and short-term investments failed completely to perform according to the terms of the contracts is $424.5 million.
Accounts receivable are typically unsecured and are derived from revenue earned from customers across various countries. As of October 31, 2022, two customers accounted for 16% and 12% of accounts receivable, respectively. As of January 31, 2022, four customers accounted for 23%, 14%, 12% and 10% of accounts receivable, respectively.
For the three months ended October 31, 2022, one customer accounted for 23% of revenue. For the nine months ended October 31, 2022, two customers accounted for 18% and 10% of revenue, respectively.
The Company’s offerings depend on continued and new approvals from the Federal Communications Commission (“FCC”), National Oceanic and Atmospheric Administration (“NOAA”), and other U.S. and international regulatory agencies for the Company to continue its operations. There can be no assurance that the Company’s operations will continue to receive the necessary approvals or that such operations will be supported by the U.S. government or other governments. If the Company was denied such approvals, if such approvals were delayed, or if the U.S. government’s or other governments’ policies change, these events may have a material adverse impact on the Company’s financial position and results of operations.
The Company contracts with certain third-party service providers to launch satellites. Service providers who provide these services are limited. The inability of launch service providers to contract with the Company could materially impact future operating results.
Significant Accounting Policies
The Company’s significant accounting estimatespolicies are included in theseNote 2 of its Consolidated Financial Statements included in the 2022 Form 10-K. Updates to those policies are contained herein.
Short-term investments
The Company’s short-term investments are designated as available-for-sale and carried at fair value, which is based on quoted market prices for such securities, if available, or is estimated on the basis of quoted market prices of financial statementsinstruments with similar characteristics. Investments with original maturities greater than 90 days and remaining maturities of less than one year are classified within short-term investments on the Company’s condensed consolidated balance sheets. In addition, investments with maturities beyond one year at the time of purchase that are highly liquid in nature and represent the investment of cash that is available for current operations are classified as short-term investments.
Unrealized gains and losses of available-for-sale securities are excluded from earnings and are reported as a component of Other comprehensive income (loss), net of tax, until the determination ofsecurity is sold, the security has matured, or the Company determines that the fair value of the warrant liability. Accordingly,security has declined below its adjusted cost basis and the actual results could differ significantlydecline is not due to a credit loss. Realized gains and losses on short-term investments are calculated based on the specific identification method and would be reclassified from those estimates.accumulated other comprehensive income (loss) to other income (expense), net.
Short-term investments are evaluated for allowances and impairment quarterly. The Company considers various factors in determining whether an allowance for expected credit losses or an impairment charge should be recognized, such as the credit quality of the issuer, the duration, severity of and the reason for the decline in value, the potential recovery period, and the Company’s intent to sell. No allowances or impairment charges were recognized during the three and nine months ended October 31, 2022 and 2021.
Recently Adopted Accounting Pronouncements
The following section provides information about accounting pronouncements adopted during the nine months ended October 31, 2022.
In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”), which supersedes the guidance in former ASC 840, Leases. The new guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use (“ROU”) asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less may be accounted for similar to existing guidance for operating leases under Topic 840.
The Company adopted Topic 842 effective February 1, 2022 and applied the new guidance prospectively utilizing the modified retrospective approach. Comparative periods prior to the effective date were not adjusted and continue to be reported in accordance with the previous lease guidance under Topic 840.
The Company elected to utilize the package of practical expedients for transition which permitted the Company to not reassess its prior conclusions regarding whether a contract is or contains a lease, lease classification and initial direct costs.
Upon adoption, the Company recognized ROU assets and lease liabilities for operating leases of $8.4 million and $11.4 million, respectively. The difference between the ROU assets and lease liabilities resulted from deferred rent liability balances that were reclassified to ROU assets upon adoption. The Company currently has no finance leases.
The adoption of Topic 842 did not result in a cumulative effect adjustment to accumulated deficit, did not impact the Company’s previously reported financial results and did not impact the Company’s condensed consolidated statements of operations and comprehensive loss. Additionally, the adoption of Topic 842 had no impact on cash provided by or used in operating, investing or financing activities on the Company’s condensed consolidated statements of cash flows.
In June 2016, the FASB issued ASU 2016-13, Financial instruments, Credit Losses (“Topic 326”): Measurement of Credit Losses on Financial Instruments, which amends the guidance on the impairment of financial instruments by requiring measurement and recognition of expected credit losses for most financial assets, including trade receivables, available-for-sale debt securities, and other instruments that are not measured at fair value through net income. The Company adopted the new guidance effective February 1, 2022 utilizing the modified retrospective transition method and recorded a $0.3 million adjustment to the beginning accumulated deficit balance to reflect the cumulative effect of the accounting change. The adoption of the new guidance did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.
The Company’s accounts receivable include amounts billed and billable to customers as of the end of the applicable period and do not bear interest. Accounts receivable are stated net of an estimated allowance for credit losses. Effective February 1, 2022, the allowance is assessed by applying a historical loss-rate methodology in accordance with Topic 326, adjusted as necessary based on the Company's review of accounts receivable, specifically reviewing factors including the age of the balances, customer payment history, creditworthiness, and other factors. The Company also considers market conditions and current and expected future economic conditions to inform adjustments to historical loss data. If it is deemed certain that an amount is uncollectible, the amount is written-off.
In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, a new accounting standard update to simplify the measurement of goodwill by eliminating the Step 2 impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Company adopted ASU 2017-04 effective February 1, 2022 which did not impact the Company’s condensed consolidated financial statements and related disclosures.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes, which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. The Company adopted ASU 2019-12 effective February 1, 2022 which did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.
(3)Business Combination
As discussed in Note 1, the Company completed the Business Combination on December 7, 2021, pursuant to the Merger Agreement. Upon the consummation of the Business Combination, the following events contemplated by the Merger Agreement occurred, based on Former Planet’s capitalization as of December 7, 2021:
•all Former Planet convertible preferred stock converted into shares of Former Planet Class A common stock and all Former Planet convertible preferred stock warrants became warrants for Former Planet Class A common stock (see Note 10);
•the Venture Tranche B loans and the 2020 Convertible Notes converted into shares of Former Planet Class A common stock;
•each share of Former Planet capital stock (other than Former Planet Class B common stock) was converted into the right to receive shares of Planet’s Class A common stock after giving effect to the Exchange Ratio of approximately 1.53184 as calculated in accordance with the Merger Agreement;
•each share of Former Planet Class B common stock was converted into the right to receive shares of Planet’s Class B common stock after giving effect to the Exchange Ratio of approximately 1.53184 as calculated in accordance with the Merger Agreement;
•all granted and outstanding unexercised Former Planet stock options were converted into Planet stock options exercisable for shares of Planet’s Class A common stock with the same terms and vesting conditions except for the number of shares exercisable and the exercise price, each of which was adjusted by the Exchange Ratio;
•all granted and outstanding unvested Former Planet restricted stock units were converted into Planet restricted units for shares of Planet’s Class A common stock with the same terms and vesting conditions except for the number of shares, which was adjusted by the Exchange Ratio; and
•Former Planet Class A common stock warrants that remained outstanding subsequent to the closing of the Business Combination were converted into warrants for Planet’s Class A common stock with the same terms except for the number of shares exercisable and the exercise price, each of which was adjusted by the Exchange Ratio
Pursuant to the Merger Agreement, Former Planet equity holders, including Former Planet equity award holders, will have the right to receive up to an additional 27,000,000 shares in earnout consideration (the “Earn-out Shares”), of which up to 24,600,000 shares may be issued as shares of Class A common stock and up to 2,400,000 may be issued to William Marshall and Robert Schingler, Jr. (the “Planet Founders”) as shares of Class B common stock. The Earn-out Shares may be earned in four equal tranches (i) when the closing price of 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) when the Company consummates a change of control transaction prior to December 7, 2026 that entitles its stockholders to receive a per share consideration of at least $15.00, $17.00, $19.00 and $21.00. 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.
Approximately 5,540,990 shares of the Earn-out Shares were allocated to Former Planet equity award holders, which 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 remaining Earn-out Shares are accounted for as equity classified equity instruments, were included as merger consideration as part of the Business Combination, and recorded in additional paid-in capital.
Additionally, the shares of dMY IV Class B common stock automatically converted to 8,625,000 shares of the Company’s Class A common stock (the “dMY Sponsor Shares”), of which, pursuant to a lock-up agreement entered into with the dMY Sponsor in connection with the Business Combination, 862,500 shares are subject to vesting under conditions consistent with the Earn-out Shares discussed above (the “dMY Sponsor Earn-out Shares”). The dMY Sponsor Earn-out Shares are accounted for as equity classified equity instruments, were included as merger consideration as part of the Business Combination, and recorded in additional paid-in capital.
On July 7, 2021, in connection with the execution of the Merger Agreement, and on September 13, 2021, following receipt of interest expressed by additional subscribers after the announcement of the Business Combination, dMY IV entered into subscription agreements (collectively, the “Subscription Agreements”) with certain parties subscribing for shares of dMY IV’s Class A common stock (such parties, the “Subscribers”), pursuant to which the Subscribers agreed to purchase, and dMY IV agreed to sell to the Subscribers, an aggregate of 25,200,000 shares of dMY IV Class A Common Stock, for a purchase price of $10.00 per share. Immediately prior to the closing of the Business Combination, the Company issued and sold 25,200,000 shares of its Class A common stock to the Subscribers for aggregate gross proceeds to the Company of $252.0 million (the “PIPE Investment”).
In connection with the Business Combination transactions, the outstanding principal, accrued interest and repayment fees of $67.1 million of the credit agreement with SVB and Hercules was repaid (see Note 10).
The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP, whereby dMY IV was treated as the acquired company and Former Planet was treated as the acquirer. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Former Planet issuing stock for the net assets of dMY IV, accompanied by a recapitalization. The net assets of dMY IV were stated at historical cost, with no goodwill or other intangible assets recorded.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS16
The number of shares of the Company’s common stock outstanding immediately following the consummation of the Business Combination and related transactions is as follows: | | | | | |
| Number of Shares |
Former Planet stockholders - Class A Common Stock (1) | 172,161,152 | |
Former Planet stockholders - Class B Common Stock | 21,157,586 | |
dMY IV’s public stockholders - Class A Common Stock (2) | 33,810,330 | |
Holders of dMY IV’s sponsor shares - Class A Common Stock (3) | 7,762,500 | |
PIPE Investment - Class A Common Stock | 25,200,000 | |
Total shares of common stock immediately after Business Combination | 260,091,568 | |
| | | | | |
(1) | Excludes 1,746,296 shares of Class A common stock associated with the early exercise of unvested Former Planet stock options. |
| | | | | |
(2) | Upon the closing of the Business Combination, dMY IV’s public stockholders were offered the opportunity to redeem shares of dMY IV Class A common stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the closing) in the trust account. The table above reflects redemptions of 689,670 shares of Class A common stock that occurred. |
| | | | | |
(3) | Excludes 862,500 shares of Class A common associated with the dMY Sponsor Earn-out Shares that are subject to vesting requirements. |
(4)Revenue
Deferred Revenue
During the nine months ended October 31, 2022 and 2021, the Company recognized revenue of $50.4 million and $35.3 million, respectively, that had been included in deferred revenue as of January 31, 2022 and 2021, respectively.
Remaining Performance Obligations
The Company often enters into multi-year imagery licensing arrangements with its customers, whereby the Company generally invoices the amount for the first year of the contract at signing followed by subsequent annual invoices at the anniversary of each year. Remaining performance obligations represent the amount of contracted future revenue that has not yet been recognized, which includes both deferred revenue and non-cancelable contracted revenue that will be invoiced and recognized in revenue in future periods. The Company’s remaining performance obligations were $130.8 million as of October 31, 2022, which consists of both deferred revenue of $47.7 million and non-cancelable contracted revenue that will be invoiced in future periods of $83.1 million. The Company expects to recognize approximately 81% of the remaining performance obligation over the next 12 months, approximately 96% of the remaining obligation over the next 24 months, and the remainder thereafter.
Remaining performance obligations do not include unexercised contract options, firm orders where funding has not been appropriated and contracts which provide the customer with a right to terminate for convenience without incurring a substantive termination penalty.
Disaggregation of Revenue
The following table disaggregates revenue by major geographic region:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended October 31, | | Nine Months Ended October 31, |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
United States | $ | 27,191 | | | $ | 14,789 | | | $ | 71,672 | | | $ | 39,293 | |
Norway | 3,226 | | 2,100 | | 6,780 | | 10,914 |
Rest of World | 19,287 | | 14,811 | | 59,829 | | 43,856 |
Total revenue | $ | 49,704 | | | $ | 31,700 | | | $ | 138,281 | | | $ | 94,063 | |
No single country in the Rest of World accounted for more than 10% of revenue for the three and nine months ended October 31, 2022 and October 31, 2021.
Costs to Obtain and Fulfill a Contract
Commissions paid to the Company’s direct sales force are considered incremental costs of obtaining a contract with a customer. Accordingly, commissions are capitalized when incurred and amortized to sales and marketing expense over the period of benefit from the underlying contracts. The period of benefit from the underlying contract is consistent with the timing of transfer to the performance obligations to which the capitalized costs relate, and is generally consistent with the contract term.
During the three and nine months ended October 31, 2022, the Company deferred $0.2 million and $2.7 million of commission expenditures to be amortized in future periods, respectively. Amortization of commission expenditures was $0.5 million and $1.3 million for the three and nine month periods ended October 31, 2022, respectively.
During the three and nine months ended October 31, 2021, the Company deferred $0.1 million and $1.2 million of commission expenditures to be amortized in future periods, respectively. Amortization of commission expenditures was $0.4 million and $1.7 million for the three and nine month periods ended October 31, 2021, respectively.
As of October 31, 2022 and January 31, 2022, deferred commissions consisted of the following:
| | | | | | | | | | | |
(in thousands) | October 31, 2022 | | January 31, 2022 |
Deferred commission, current | $ | 1,867 | | | $ | 1,375 | |
Deferred commission, non-current | 1,964 | | 1,083 |
Total deferred commission | $ | 3,831 | | | $ | 2,458 | |
The current portion of deferred commissions are included in prepaid expenses and other current assets on the condensed consolidated balance sheets. The non-current portion of deferred commissions are included in other non-current assets on the condensed consolidated balance sheets.
(5)Fair Value of Financial Instruments
The warrants have an exercise price of $11.50 per share, subject to
adjustments and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connectionadjustment (the “Public Warrants”). Simultaneously with the closing of
its initial public offering, dMY IV completed the
initial Business Combinationprivate sale of 5,933,333 warrants to dMY Sponsor IV, LLC (the “dMY Sponsor”) at
an issue price oreffective issuea purchase price of
less than $9.20$1.50 per
warrant (the “Private Placement Warrants”). Each Private Placement Warrant is exercisable for one share of Class A common stock
(with such issue price or effective issue priceat $11.50 per share.Additionally, pursuant to
be determineda lock-up agreement entered into with the dMY Sponsor in
good faith byconnection with the
board of directors and, in the case of any such issuance to the initial stockholders or their affiliates, without taking into account any Founder Shares held by the initial stockholders or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the fundingof the initial Business Combination,
on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Class A common stock during the 20 trading day period starting on the trading day after the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described under “Redemption of warrants when the price per share of Class A common Stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price. The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise2,966,667 of the Private Placement Warrants
will not be transferable, assignable or salable until 30 days after the completion of a Business Combination,are subject to
certain limited exceptions. Additionally, thevesting conditions (the “Private Placement Vesting Warrants”). The Private Placement
Vesting Warrants
will benon-redeemable
so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.Redemption of warrantsvest in four equal tranches (i) when the price per share of Class A common stock equals or exceeds $18.00:
Once the warrants become exercisable, the Company may redeem the outstanding warrants for cash:
in whole and not in part;
at a price of $0.01 per warrant;
upon a minimum of 30 days’ prior written notice of redemption; and
if, and only if, the closing price of Class A common stock equals or exceeds
$18.00 per share (as adjusted) for$15.00, $17.00, $19.00 and $21.00, over any 20 trading days within
a30-trading
any 30 day
trading period
endingprior to December 7, 2026 or (ii) when the Company consummates a change of control transaction prior to December 7, 2026 that entitles its 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
third tradingfirst business day
prior toafter five years from the
date on whichclosing of the
Company sends the noticeBusiness Combination will be forfeited without any further consideration.As of redemption to the warrant holders.October 31, 2022 and January 31, 2022, there were 6,899,982 Public Warrants and 5,933,333 Private Placement Warrants, including 2,966,667 Private Placement Vesting Warrants, outstanding.
The Company will not redeem(12)Related Party Transactions
As of October 31, 2022 and January 31, 2022, Google owned greater than 10% of the warrants as described above unless an effective registration statement under the Securities Act covering theCompany’s common shares with a total investment of 31,942,641 shares of Class A common stock issuable upon exercisestock.
In March 2020, Google purchased $10.0 million of
2020 Convertible Notes (Note 10). Upon issuance of such 2020 Convertible Notes to Google, the
Company also issued warrants
is effective and a current prospectus relating to
thoseGoogle for the purchase of 213,119 shares of Series D preferred stock. In connection with the Business Combination, such 2020 Convertible Notes converted to shares of Class A common stock
is available throughout the30-day
redemption period. Redemption ofand such Series D preferred stock warrants converted to and were exercised for when the price per shareshares of Class A common stock equals or exceeds $10.00:
stock.Once the warrants become exercisable,In April 2017, the Company may redeemand Google entered into a five year content license agreement pursuant to which the outstanding warrants:
Company licenses imagery content to Google. In April 2022, the agreement automatically renewed for a period of one-year. The agreement will terminate in April 2023, unless it is extended for up to one year if the delivery
obligations are not met by the company, or it is otherwise renewed at Google’s discretion for an additional year, in wholeeach case in accordance with its terms. Additionally, Google may terminate the agreement prior to April 2023 once the Company’s outstanding delivery obligations are completed. As of October 31, 2022 and not in part;January 31, 2022, the deferred revenue balance associated with the content license agreement was $2.5 million and $12.2 million, respectively. For the three and nine months ended October 31, 2022, the Company recognized revenue of $3.3 million and $9.7 million, respectively, related to the content license agreement. For the three and nine months ended October 31, 2021, the Company recognized revenue of $1.5 million and $5.6 million, respectively, related to the content license agreement.
In addition, the Company purchases hosting and other services from Google, of which $14.4 million and $16.1 million is deferred as of October 31, 2022 and January 31, 2022, respectively. For the three and nine months ended October 31, 2022, the Company recorded hosting expense of $6.0 million and $17.7 million, respectively. For the three and nine months ended October 31, 2021, the Company recorded hosting expense of $5.0 million and $13.7 million, respectively. As of October 31, 2022 and January 31, 2022, the Company’s accounts payable and accrued liabilities balance included $2.5 million and $2.0 million related to hosting and other services provided by Google, respectively.
On June 28, 2021, the Company amended the terms of its hosting agreement with Google. The amendment, among other things, increases the aggregate purchase commitments to $193.0 million. The amended agreement commenced on August 1, 2021 and extends through January 31, 2028. See Note 9 for future Google hosting purchase commitments, including the amended commitments, as of October 31, 2022.
(13)Stock-based Compensation at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemptionthat holdersPrior to the Business Combination, the Company issued equity awards under the Planet Labs Inc. Amended and Restated 2011 Stock Incentive Plan (previously named the Cosmogia Inc. 2011 Stock Incentive Plan) (the “Legacy Incentive Plans”). In connection with the Business Combination, the Company adopted the Planet Labs PBC 2021 Incentive Award Plan (the “Incentive Plan”). No further awards will be ablegranted under the Legacy Incentive Plans. Directors, employees and consultants are eligible to exercise their warrants onreceive awards under the Incentive Plan; however, ISOs may only be granted to employees. The Company's plans are described in Note 13, Stock-based Compensation, in the Notes to the Consolidated Financial Statements in the 2022 Form 10-K.Stock-Based Compensation
The following table summarizes stock-based compensation expense recognized related to awards granted to employees and nonemployees, as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended October 31, | | Nine Months Ended October 31, |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
Cost of revenue | $ | 1,317 | | | $ | 226 | | | $ | 3,992 | | | $ | 688 | |
Research and development | 8,282 | | | 1,901 | | | 25,903 | | | 4,582 | |
Sales and marketing | 3,221 | | | 677 | | | 10,615 | | | 1,959 | |
General and administrative | 6,990 | | | 2,020 | | | 20,592 | | | 5,904 | |
Total expense | 19,810 | | | 4,824 | | | 61,102 | | | 13,133 | |
Capitalized to internal-use software development costs and property and equipment | (372) | | | (181) | | | (1,261) | | | (514) | |
Total stock-based compensation expense | $ | 19,438 | | | $ | 4,643 | | | $ | 59,841 | | | $ | 12,619 | |
Stock Options
A summary of stock option activity is as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Options Outstanding |
| Number of Options | | Weighted Average Exercise Price | | Weighted Average Remaining Term (Years) | | Aggregate Intrinsic Value (in thousands) |
Balances at January 31, 2022 | 41,907,551 | | $ | 4.63 | | | 6.71 | | |
Exercised | (4,893,120) | | $ | 2.23 | | | | | |
Forfeited | (968,342) | | $ | 5.82 | | | | | |
Balances at October 31, 2022 | 36,046,089 | | $ | 4.93 | | | 6.33 | | $ | 48,339 | |
Vested and exercisable at October 31, 2022 | 25,820,674 | | $ | 3.95 | | | 5.57 | | $ | 44,025 | |
As of October 31, 2022, total unrecognized compensation cost related to stock options was $35.4 million, which is expected to be recognized over a cashless basisperiod of 2.3 years.
Restricted Stock Units
A summary of Restricted Stock Unit (“RSU”) activity is as follows:
| | | | | | | | | | | |
| Number of RSUs | | Weighted Average Grant Date Fair Value |
Balances at January 31, 2022 | 5,439,736 | | $ | 9.42 | |
Vested | (2,094,413) | | $ | 7.16 | |
Granted | 13,962,454 | | $ | 4.91 | |
Forfeited | (933,977) | | $ | 5.73 | |
Balances at October 31, 2022 | 16,373,800 | | $ | 6.08 | |
During the nine months ended October 31, 2022, the Company granted 13,962,454 RSUs, which generally vest over four years, subject to the recipient’s continued service through each applicable vesting date.
Stock-based compensation expense recognized for RSUs during the three and nine months ended October 31, 2022 was $8.5 million and $26.2 million, respectively. As of October 31, 2022, total unrecognized compensation cost related to RSUs was $74.5 million which are expected to be recognized over a period of approximately 3.0 years.
RSUs granted in periods prior to redemptionthe Business Combination were subject to both time-based service and receive thatliquidity event vesting requirements. The liquidity event requirement was met upon the closing of the Business Combination on December 7, 2021 and recognition of stock-based compensation commenced on such date. Accordingly, there was no expense recognized for RSUs during the three and nine months ended October 31, 2021.
Early Exercises of Stock Options
The Legacy Incentive Plans provided for the early exercise of stock options for certain individuals as determined by the Company’s board of directors. Shares of common stock issued upon early exercises of unvested options are not deemed, for accounting purposes, to be issued until those shares vest according to their respective vesting schedules and accordingly, the consideration received for early exercises is initially recorded as a liability and reclassified to common stock and additional paid-in capital as the underlying awards vest. As of October 31, 2022, the Company had a $13.4 million liability recorded for the early exercise of unvested stock options, and the related number of unvested shares determined by referencesubject to an agreed table based onrepurchase was 1,378,654.
Earn-out Shares
Pursuant to the redemption date andMerger Agreement for the “fair market value” (as defined below)Business Combination, Former Planet equity award holders have the right to receive Earn-out Shares that are contingently issuable in shares of the Class A common stock; and
if, and only if,stock. The Earn-out Shares may be earned in four equal tranches (i) when the closing price of Class A common stock equals or exceeds
$10.00 per Public Share (as adjusted) for$15.00, $17.00, $19.00 and $21.00, over any 20 trading days within
the30-trading
any 30 day
trading period
ending three trading days beforeprior to December 7, 2026 or (ii) when the Company
sends noticeconsummates a change of
redemptioncontrol transaction prior to
December 7, 2026 that entitles its stockholders to receive a per share consideration of at least $15.00, $17.00, $19.00 and $21.00.No Earn-out Shares vested during the warrantthree and nine months ended October 31, 2022. As of October 31, 2022, there were 4,469,659 Earn-out Shares outstanding relating to Former Planet equity award holders.
DMY TECHNOLOGY GROUP, INC. IV
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
During the three and nine months ended October 31, 2022, the Company recognized $6.3 million and $20.6 million of stock-based compensation expense related to the Earn-out Shares, respectively. As of October 31, 2022, total unrecognized compensation cost related to the Earn-out Shares was $11.4 million. These costs are expected to be recognized over a period of approximately 1 year.(14) Income Taxes
The “fair market value”Company recorded income tax expense of $0.4 million and $0.9 million for the three and nine months ended October 31, 2022. The Company recorded income tax expense of $0.4 million and $0.8 million for the three and nine months ended October 31, 2021. For the three and nine months ended October 31, 2022 and 2021, the income tax expense was primarily driven by the current tax on foreign earnings. The effective tax rates for the three and nine months ended October 31, 2022 and 2021 differed from the federal statutory tax rate primarily due to the valuation allowance on the majority of the Company’s U.S. and foreign deferred tax assets and foreign rate differences.
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. There are two major corporate tax provisions included in the Act.
The IRA creates a 15% corporate alternative minimum tax (“CMAT”) on any corporation that has average annual “adjusted financial statement income” of a $1 billion or more for the three-year period preceding the tax year that exceeds $1 billion. The CMAT is effective for tax years beginning after December 31, 2022.
The IRA also imposes a 1% excise tax on the repurchase of stock by publicly traded US corporations. The excise tax is effective for stock repurchases after December 31, 2022.
The Company does not expect the aforementioned provisions in the IRA to have any impact on the Company’s financial statements.
Under the Tax Cuts and Jobs Act of 2017, qualified research expenses incurred after 2021 are no longer immediately deductible and must be amortized over 5 years for tax purposes. The Company does not expect this provision to have a material impact on the Company’s financial statements.
The Company evaluates its tax positions on a quarterly basis and revises its estimates accordingly. Gross unrecognized tax benefits were $6.5 million and $5.7 million as of October 31, 2022 and January 31, 2022, respectively. The gross unrecognized tax benefits, if recognized, would not affect the effective tax rate due to the valuation allowance against the deferred tax assets. The Company determined that no accrual for interest and penalties was required as of October 31, 2022 and January 31, 2022 and no such expenses were incurred in the periods presented.
The Company does not anticipate the total amounts of unrecognized tax benefits to significantly increase or decrease in the next twelve months.
The Company files U.S. federal, various state and foreign income tax returns. The Company is not currently under audit by any taxing authorities. All tax years remain open to examination by taxing jurisdictions to which the Company is subject.
(15)Net Loss Per Share Attributable to Common Stockholders
Net loss per share calculations for all periods prior to the Business Combination have been retrospectively adjusted for the equivalent number of shares outstanding immediately after the Business Combination to effect the reverse recapitalization.
The Company computes net loss per share of the Class A common stock shall meanand Class B common stock using the volume weighted average pricetwo-class method required for participating securities. Basic and diluted net loss per share are the same for each class of common stock because they are entitled to the same liquidation and dividend rights. The following table sets forth the computation of basic and diluted loss per Class A common stock duringand Class B common stock (amounts in thousands, except share and per share amounts):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended October 31, | | Nine Months Ended October 31, |
| 2022 | | 2021 | | 2022 | | 2021 |
Numerator: | | | | | | | |
Net loss attributable to common stockholders | $ | (40,236) | | | $ | (41,541) | | | $ | (124,125) | | | $ | (91,159) | |
Denominator: | | | | | | | |
Basic and diluted weighted-average common shares outstanding used in computing net loss per share attributable to common stockholders | 267,947,661 | | 47,137,377 | | 266,104,962 | | 46,360,220 |
Basic and diluted net loss per share attributable to common stockholders | $ | (0.15) | | | $ | (0.88) | | | $ | (0.47) | | | $ | (1.97) | |
Basic and diluted net loss per share was the 10 trading days immediately followingsame for each period presented as the date on which the noticeinclusion of redemption is sent to the holders of warrants. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares ofall potential Class A common stock per warrant (subject to adjustment).
If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
Note 7—Class A Common Stock Subject to Possible Redemption
The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events. The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of September 30, 2021, there were 34,500,000 shares of Class A common stock issued and outstanding, all of which are subject to possible redemption and classified outside of permanent equity in the condensed consolidated balance sheets.
The Class A common stock subject to possible redemption reflected on the condensed consolidated balance sheets is reconciled on the following table:
| | | | |
Gross proceeds | | $ | 345,000,000 | |
Less: | | | | |
Proceeds allocated to Public Warrants | | | (12,213,000 | ) |
Class A common stock issuance costs | | | (18,932,369 | ) |
Plus: | | | | |
Accretion of carrying value to redemption value | | | 31,145,369 | |
| | | | |
Class A common stock subject to possible redemption | | $ | 345,000,000 | |
| | | | |
Note 8—Stockholders’ Equity
—The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2021, there were 0 shares of preferred stock issued or outstanding.—The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to 1 vote for each share. As of September 30, 2021, there were 380,000,000 shares of Class A common stock, par value of $0.0001 per share, all of which are subject to possible redemption and classified in temporary equity (see Note 7). As of December 31, 2020, there were 0 shares of Class A common stock issued or outstanding.—The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. On December 16, 2020, the Company issued 7,187,500 shares of Class B common stock to the Sponsor. On March 4, 2021, the Company effected a 1:1.2 stock split of Class B common stock, resulting in an aggregate of 8,625,000 shares of Class B common stock outstanding. Of the 8,625,000 shares of Class B common stock outstanding
an aggregate of up to 1,250,000 shares of Class B common stock were subject to forfeiture to the Company by the initial stockholders for no consideration to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the initial stockholders would
collectively own 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. The underwriter exercised its over-allotment option in full on March 9, 2021; thus, these 1,125,000 shares of Class B common stock were no longer subject to forfeiture.have been anti-dilutive.
DMY TECHNOLOGY GROUP, INC. IV
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders except as required by law.
The Class B common stock will automatically convert into Class A common stock concurrently with or immediately following the consummation of the initial Business Combination on abasis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection with the initial Business Combination, the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on anas-converted
basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by Public Stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial Business Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion of Founder Shares will never occur on a less thanbasis.Note 9—Fair Value Measurements
The fair value of the Public Warrants issued in connection with the
Public Offering and Private Placement Warrants were measured at fair value using Black-Scholes and Monte Carlo simulation model. For the three months ended September 30, 2021, the Company recognized anon-operating
loss in the accompanying unaudited condensed consolidated statements of operations resulting from an increase in the fair value of derivative warrant liabilities of approximately $2.7 million. For the nine months ended September 30, 2021, the Company recognized anon-operating
gain in the accompanying unaudited condensed consolidated statements of operations resulting from a decrease in the fair value of derivative warrant liabilities of approximately $0.7 million.The following table presents information about the Company’s financial assets and liabilitiespotential common stock outstanding that are measured at fair value on a recurring basiswas excluded from the computation of diluted net loss per share of common stock as of September 30, 2021 by level within the fair value hierarchy:periods presented because including them would have been antidilutive:
| | | | | | | | | | | |
| As of October 31, |
| 2022 | | 2021 |
Convertible Preferred Stock | — | | 131,252,627 |
Convertible notes | — | | 8,096,863 |
Warrants to purchase Series B Convertible Preferred Stock | — | | 761,340 |
Warrants to purchase Series D Convertible Preferred Stock | — | | 2,261,713 |
Warrants to purchase Class A common stock | 1,065,594 | | — |
Common stock options | 36,046,089 | | 44,518,179 |
Restricted Stock Units | 16,373,800 | | 5,338,467 |
Earn-out Shares | 25,928,669 | | — |
dMY Sponsor Earn-out Shares | 862,500 | | — |
Public Warrants | 6,899,982 | | — |
Private Placement Warrants | 5,933,333 | | — |
Early exercised common stock options, subject to future vesting | 1,378,654 | | 1,746,297 |
Shares issued in connection with acquisition, subject to future vesting | 339,619 | | — |
| 94,828,240 | | 193,975,486 |
| | | | | | | | | | | | |
| | Quoted Prices in Active Markets (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Other Unobservable Inputs (Level 3) | |
| | | | | | | | | | | | |
Investments held in Trust Account—U.S. Treasury Securities (1) | | $ | 345,097,744 | | | $ | 0 | | | $ | 0 | |
| | | | | | | | | | | | |
Derivative warrant liabilities | | $ | 13,110,000 | | | $ | 0 | | | $ | 21,360,000 | |
| Excludes $914 of cash balance held within the Trust Account
|
Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period. The estimated fair value of the Public Warrants transferred from a Level 3 measurement to a Level 1 fair value measurement in April 2021, when the Public Warrants were separately listed and traded. As of September 30, 2021, the Public Warrants were publicly traded at $1.90 per warrant.
The estimated fair value of the Private Placement Warrants, and the Public Warrants prior to being separately listed and traded, is determined using Level 3 inputs. Inherent in a Black-Scholes and Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s common stock that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasuryzero-coupon
yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
DMY TECHNOLOGY GROUP, INC. IV
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:
| | | | |
| | | |
| | $ | 11.50 | |
| | $ | 9.91 | |
| | | 26.6% - 45.2 | % |
| | | 5.17 | |
| | | 1.0 | % |
| | | 0.0 | % |
The change in the fair value of the derivative warrant liabilities at level 3 for the nine months ended September 30, 2021 is summarized as follows:
| | | | |
Level 3—Derivative warrant liabilities at January 1, 2021 | | $ | 0 | |
Issuance of Public and Private Warrants | | | 35,175,000 | |
Change in fair value of derivative warrant liabilities | | | (495,335 | ) |
| | | | |
Level 3—Derivative warrant liabilities at March 31, 2021 | | $ | 34,679,665 | |
| | | (12,489,000 | ) |
Change in fair value of derivative warrant liabilities | | | (237,333 | ) |
| | | | |
Level 3—Derivative warrant liabilities at June 30, 2021 | | $ | 21,953,332 | |
Change in fair value of derivative warrant liabilities | | | (593,332 | ) |
| | | | |
Level 3—Derivative warrant liabilities at September 30, 2021 | | $ | 21,360,000 | |
| | | | |
Note 10—Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed consolidated financial statements were available to be issued, and determined that there have been no other events that have occurred that would require adjustments to the disclosures in the unaudited condensed consolidated financial statements, other than the restatement disclosed in Note 2.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Operations
References to the “Company,” “dMY IV,” “our,” “us” or “we” refer to dMY Technology Group, Inc. IV.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF PLANET
The following discussionManagement’s Discussion and analysisAnalysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the Company’s financial condition andreader understand the results of operations and financial condition of Planet Labs PBC. The MD&A is provided as a supplement and should be read in conjunction with the unaudited condensed consolidated financial statements and therelated notes thereto contained elsewhereincluded in Part I, Item I of this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form
10-Q
includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, , as well as all otherour audited annual consolidated financial statements other thanand related notes as disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022 (the “2022 Form 10-K”). This discussion contains forward-looking statements of historical fact included in this Form10-Q.
Factors that might cause or contribute to such a discrepancy include,and involves numerous risks and uncertainties, including, but are not limited to, those described in Part II, Item 1A, “Risk Factors” in this Quarterly Report and Part I, Item 1A, “Risk Factors” of our other Securities2022 Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.Business and Exchange Commission (“SEC”) filings.Overview
Our mission is to use space to help life on Earth, by imaging the world every day and making global change visible, accessible, and actionable. Our platform includes imagery, insights, and machine learning that empower companies, governments, and communities around the world to make timely decisions about our evolving world.
As a public benefit corporation, our purpose is to accelerate humanity toward a more sustainable, secure, and prosperous world, by illuminating the most important forms of environmental and social change.
We deliver a differentiated data set: a new image of the entire Earth landmass every day. 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.
To help further our mission, we have developed advanced satellite technology that increases the cost performance of each satellite. This has enabled us to launch large fleets of satellites at lower cost and in turn record over 2,000 images on average for every point on Earth’s landmass, a non-replicable historical archive for analytics, machine learning, and insights. We have advanced data processing capabilities that enable us to produce “AI-ready” data sets. As this data set continues to grow, we believe its value to our customers will further increase.
We currently serve over 800 customers across large commercial and government verticals, including agriculture, mapping, forestry, finance and insurance, as well as federal, state, and local government bodies. 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. Governments use our data to help deliver public services more effectively in disaster response. Mapping companies use our data to keep online maps up to date. Also, journalists and human rights organizations use our data to uncover and report the truth about events in hard-to-reach places.
Our proprietary data set and analytics are delivered pursuant to subscription and usage-based data licensing agreements and are accessed by our customers through our online platform and subscription APIs. We believe our efficient cost structure, one-to-many business model and differentiated data set have enabled us to grow our customer base across multiple vertical markets. As of October 31, 2022, our EoP Customer Count was 864 customers, which represented a 16% year-over-year growth when compared to October 31, 2021. 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 two years, weighted on an annual contract value basis.
The Business Combination
On July 7, 2021, Planet Labs Inc. (“Former Planet”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with dMY Technology Group, Inc. IV (“dMY IV”), a blank checkspecial purpose acquisition company (“SPAC”) incorporated in Delaware on December 15, 2020. We were formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). Our Sponsor is dMY Sponsor IV, LLC, a Delaware limited liability company.
The registration statement for our Initial Public Offering was declared effective on March 4, 2021. On March 9, 2021, we consummated our Initial Public Offering of 34,500,000 Units, including 4,500,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of $345.0 million, and incurring offering costs of approximately $19.6 million, of which approximately $12.1 million was for deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated the Private of 5,933,333 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds of $8.9 million.
Upon the closing of the Initial Public Offering and the Private Placement, $345.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a Trust Account located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and will be invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule2a-7
promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or March 9, 2023 (the “Combination Period”), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at aper-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. The issuance of additional shares in connection with a business combination to the owners of the target or other investors:
may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A common stock on a greater thanbasis upon conversion of the Class B common stock;may subordinate the rights of holders of Class A common stock if shares of preferred stock are issued with rights senior to those afforded our Class A common stock;
could cause a change in control if a substantial number of shares of our Class A common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and
may adversely affect prevailing market prices for our Class A common stock and/or warrants.
Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
our inability to pay dividends on our Class A common stock;
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
Proposed Business Combination
On July 7, 2021, we entered into an agreement and plan of merger, by and among us,2020, Photon Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of our companydMY IV (“First Merger Sub”), and Photon Merger Sub Two, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of our companydMY IV (“Second Merger Sub”), and Planet Labs Inc., a Delaware corporation (“Planet”) (as the same may be amended and/or restated from time. Pursuant to time, the “Merger Agreement”). The Merger Agreement and the transactions contemplated thereby were unanimously approved by our board of directors on July 6, 2021. Subject to the satisfaction or waiver of certain closing conditions set forth in the Merger Agreement, includingupon the approvalfavorable vote of the Merger Agreement and the transactions contemplated thereby by dMY IV’s and Planet’s stockholders on December 3, 2021, on December 7, 2021, First Merger Sub will mergemerged with and into Planet (the “First Merger”) withFormer Planet (the “Surviving Corporation”), with Former Planet surviving the First Mergermerger as a wholly owned subsidiary of dMY IV (the “First Merger”), and atpursuant to Former Planet’s election immediately following the First Merger and as part of the same overall transaction as the First Merger, the Surviving Corporation may mergemerged with and into Second Merger Sub (the “Second Merger” and togetherdMY IV, with the First Merger, the “Business Combination”), with Second Merger SubdMY IV surviving the merger as a wholly owned subsidiary of dMY IV. In addition, in connection with(the “Business Combination”). Following the consummationcompletion of the Business Combination, dMY IV willwas 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. GAAP. Under the guidance in Accounting Standard Codification 805, Business Combinations, dMY IV was treated as the “acquired” company for financial reporting purposes. Former Planet was deemed to be renamedthe accounting predecessor of the combined business, and Planet Labs PBC, as reasonably determined bythe 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. See
Upon the
Current Report onForm 8-K, filed
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 which closed substantially simultaneously with the
SECBusiness 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 June 1, 2021,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, further information.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.
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. 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 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.
Our Business Model
We primarily generate revenue through selling licenses to our data and analytics to customers over an entirely cloud-based platform via fixed price subscription and usage-based contracts. 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 that are monthly or 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. Deeper adoption from our customers comes in many forms, including more users, more area coverage, and more advanced software analytics capabilities.
Two key elements of our growth strategy include scaling in existing verticals and expanding into new verticals.
Scaling in Existing Verticals:
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.
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. We believe our increased investment in developing software analytics solutions has the potential to accelerate the usage of our data and analytics across broader audiences.
Factors Affecting the Results of Operations
We believe that our financial condition and result of operations have been, and will continue to be, affected by a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below, in Part II, Item 1A “Risk Factors” of this Quarterly Report and in Part I, Item 1A, “Risk Factors” of our 2022 Form 10-K.
Continuing to Acquire New Customers
Attracting new customers is an important factor affecting our future growth and operating performance. We believe our ability to attract customers will be driven by our ability to continue to improve our data and offer software and analytic solutions that make our data easier to consume and integrate into our customers’ workflows, our success in offering new data sets and products to solve customer problems, increases in our global sales presence and increases in our marketing investments. We plan to invest in making our data more digestible and accessible to non-technical business users and build solutions to address more use cases and expand our addressable market. As a result of this strategy, we anticipate our research and development expenditures will increase in the near term. In addition, to expand our reach with customers, we intend to partner with independent software vendors and solution providers who are building vertical market-specific solutions. While we have customers and partners today in many markets, we believe that our increased investment in developing software analytics solutions has the potential to accelerate the usage of our data and analytics across broader audiences.
Going Concern Consideration35
Retention and Expansion of Existing Customers
We are focused on increasing customer retention and expanding revenue with existing customers because this will affect our financial results, including revenues, gross profit, operating loss, and operating cash flows. To increase customer retention and expansion of revenue from existing customers, we are making a number of investments in our operations. Areas of investment that affect customer retention and expansion include our customer success function, continuous improvements to our existing data, and the software tools and analytic tools that make our data easier to consume. Additionally, customer retention and expansion is driven by the speed with which our customers realize the value of our data once they become customers, our ability to cross-sell our different products to our existing customers and our ability to offer new products to our customers. As a result of September 30, 2021,the foregoing, we had approximately $76,000 in cash, approximately $99,000anticipate our cost of interest income availablerevenue, operating expenses, and capital expenditures will continue to increase and consequently, we are likely to experience losses in the Trust Accountnear term, delaying our ability to payachieve profitability and adversely affecting cash flows.
Developing New Sensors and Data Sets
We expect that our ability to provide new data sets through new sensors and new proprietary data will be an important factor for taxesour long-term growth and a working capital deficitfuture 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. This may require significant investment in technology and personnel and result in increased research and development costs as well as costs of approximately $3.7 million (not taking into account tax obligationsrevenue.
Investment Decisions
We regularly review our existing customers and target markets to determine where we should invest in our product and technology roadmap, both for our space systems engineering to enable new geospatial coverage models, as well as our software engineering focused on providing sophisticated analytics models and tools to service an expanding set of approximately $150,000 that may be paid using investment income earned in Trust Account). Further, wemarkets and use cases. Our financial performance relies heavily on effective balance between driving continued growth, maintaining technology leadership, and improving margins across the business.
Seasonality
We have incurredexperienced, and expect to continue to incur significant costsexperience, seasonality in pursuitour business and fluctuations in our operating results due to customer behavior, buying patterns and usage-based contracts. For example, we typically have customers who increase their usage of our acquisition plans.
data services when they need more frequent data monitoring over broader areas during peak agricultural seasons, during natural disasters or other global events, or when commodity prices are at certain levels. These customers may expand their usage and then subsequently scale back. We believe that the seasonal trends that we have experienced in the past may occur in the future. To the extent that we experience seasonality, it may impact our operating results and financial metrics, as well as our ability to forecast future operating results and financial metrics. Additionally, when we introduce new products to the market, we may not have sufficient experience in selling certain products to determine if demand for these products are or will be subject to material seasonality.
Our liquidity needsKey Operational and Business Metrics
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.
ACV and EoP ACV Book of Business
In connection with the calculation of several of the key operational and business metrics we utilize, we calculate Annual Contract Value (“ACV”) for contracts of one year or greater as the total amount of value that a customer has contracted to pay for the most recent 12 month period for the contract. For short-term contracts (contracts less than 12 months), ACV is equal to total contract value.
We also calculate EoP ACV Book of Business in connection with the calculation of several of the key operational and business metrics we utilize. We define EoP ACV Book of Business as the sum of the ACV of all contracts that are active on the last day of the period pursuant to the effective dates and end dates of such contracts. Active contracts exclude any contract that has been canceled, expired prior to the consummationlast day of the Initial Public Offering were satisfied throughperiod without renewing, or for any other reason is not expected to generate revenue in the paymentsubsequent period. For contracts ending on the last
day of the period, the ACV is either updated to reflect the ACV of the renewed contract or, if the contract has not yet renewed or extended, the ACV is excluded from the EoP ACV Book of Business. We do not annualize short-term contracts in calculating our EoP ACV Book of Business. We calculate the ACV of usage-based contracts based on the committed contracted revenue or the revenue achieved on the usage-based contract in the prior 12-month period.
Net Dollar Retention Rate
| | | | | | | | | | | |
| Nine Months Ended October 31, |
| 2022 | | 2021 |
Net Dollar Retention Rate | 122.6 | % | | 98.0 | % |
| | | |
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. We define existing customers as customers with an active contract with Planet. We believe our Net Dollar Retention Rate is a useful metric for investors as it can be used to measure our ability to retain and grow revenue generated from our Sponsorexisting customers, on which our ability to purchase Founder Shares, loandrive long-term growth and profitability is, in part, dependent. We use Net Dollar Retention Rate to assess customer adoption of new products, inform opportunities to make improvements across our products, identify opportunities to improve operations, and manage go to market functions, as well as to understand how much future growth may come from cross-selling and up-selling customers. 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 increased to 122.6% for the nine months ended October 31, 2022, as compared to 98.0% for the nine months ended October 31, 2021, primarily due to higher renewal value of large government contracts and the expansion of large agricultural customers in the nine months ended October 31, 2022.
Net Dollar Retention Rate including Winbacks
| | | | | | | | | | | |
| Nine Months Ended October 31, |
| 2022 | | 2021 |
| | | |
Net Dollar Retention Rate including Winbacks | 124.5 | % | | 105.0 | % |
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 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 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. We believe this metric is useful to investors as it captures the value of customer contracts that resume business with Planet after being inactive and thereby provides a quantification of Planet’s ability to recapture lost business. Management uses this metric to understand the adoption of our products and long-term customer retention, as well as the success of marketing campaigns and sales initiatives in re-engaging inactive customers. 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 increased to 124.5% for the nine months ended October 31, 2022, as compared to 105.0% for the nine months ended October 31, 2021, primarily due to higher renewal value of large government contracts and the expansion of large agricultural customers in the nine months ended October 31, 2022.
EoP Customer Count
| | | | | | | | | | | |
| As of October 31, |
| 2022 | | 2021 |
EoP Customer Count | 864 | | 742 |
| | | |
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 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. We sell directly to customers, as well as indirectly through our partner network. 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 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. A customer with multiple divisions, segments, or subsidiaries are also counted as a single unique customer based on the parent organization or parent account. We believe EoP Customer Count is a useful metric for investors and management to track as it is an important indicator of the broader adoption of our platform and is a measure of our success in growing our market presence and penetration. Management applies judgment as to which customers are deemed to have an active contract in a period, as well as whether a customer is a distinct entity that uses our data or services. The EoP Customer Count increased to 864 as of October 31, 2022, as compared to 742 as of October 31, 2021. The increase was primarily attributable to the increased demand for our data as well as the acquisition of VanderSat in December 2021.
Percent of Recurring ACV
| | | | | | | | | | | |
| As of October 31, |
| 2022 | | 2021 |
| | | |
% Recurring ACV | 94.0 | % | | 94.0 | % |
Percent of Recurring ACV is the portion of the total EoP ACV Book of Business that is recurring in nature. We define Percent of Recurring ACV as the dollar value of all data subscription contracts and the committed portion of usage-based contracts divided by the total dollar value of all contracts in our ACV Book of Business at a specific point in time. We believe Percent of Recurring ACV is useful to investors to better understand how much of our revenue is from customers that have the potential to renew their contracts over multiple years rather than being one-time in nature. We track Percent of Recurring ACV to inform estimates for the future revenue growth potential of our business and improve the predictability of our financial results. 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.
Capital Expenditures as a Percentage of Revenue
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended October 31, | | Nine Months Ended October 31, |
| 2022 | | 2021 | | 2022 | | 2021 |
Capital Expenditures as Percentage of Revenue | 6.0 | % | | 8.9 | % | | 7.8 | % | | 9.3 | % |
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. We define Capital Expenditures as a Percentage of Revenue as the total amount of $200,000 undercapital expenditures divided by total revenue in the Note and an advancereported period. Capital Expenditures as a Percentage of approximately $791,000 from related parties. We fully repaid the Note balance and the advance from the related parties, forRevenue is a total of approximately $991,000, on March 10, 2021. Subsequent to the consummation of the Initial Public Offering, our liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account, and the advance of $37,000 from an officer in August 2021.
Based on the foregoing, management believesperformance measure that we will not have sufficient working capital to meet our needs through the earlier of the consummation of a Business Combination or one year from this filing. The accompanying unaudited condensed consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.
Our management continuesuse to evaluate the
impactappropriate level of
theCOVID-19
pandemic oncapital expenditures needed to support demand for our data services and related revenue, and to provide a comparable view of our performance relative to other earth observation companies, which may invest significantly greater amounts in their satellites to deliver their data to customers. We use an agile space systems strategy, which means we invest in a larger number of significantly lower cost satellites and software infrastructure to automate the
industrymanagement of the satellites and
has concluded that whileto deliver our data to clients. As a result of our strategy and our business model, our capital expenditures may be more similar to software companies with large data center infrastructure costs. Therefore, we believe it is
reasonably possible thatimportant to look at our level of capital expenditure investments relative to revenue when evaluating our performance relative to other earth observation companies or to other software and data companies with significant data center infrastructure investment requirements. We believe Capital Expenditures as a Percentage of Revenue is a useful metric for investors because it provides visibility to the
virus could havelevel of capital expenditures required to operate our business and our relative capital efficiency. Capital Expenditures as a
negative effect on our financial position, resultsPercentage of
our operations, and/or searchRevenue decreased to 6.0% and 7.8% for
the three and nine months ended October 31, 2022, as compared to 8.9% and 9.3% for the three and nine months ended October 31, 2021, respectively. The decrease in Capital Expenditures as a
target company,Percentage of Revenue was primarily attributable to an increase in revenue. Capital Expenditures for the
specific impact is not readily determinablethree and nine months ended October 31, 2022 as
ofcompared to the
date of this financial statements.three and nine ended October 31, 2021 increased. The
financial statements do not include any adjustments that might result from the outcome of this uncertainty.increase was primarily attributable to an increase in ground station assets, offset in part by a decrease in capitalized internal-use software.
Components of Results of Operations
Our entire activity since inceptionRevenue
We derive revenue principally from licensing rights to use our imagery that is delivered digitally through September 30, 2021our online platform in addition to providing related services. Imagery licensing agreements vary by contract, but generally have annual or multi-year contractual terms. The data licenses are generally purchased via a fixed price contract on a subscription or usage basis, whereby a customer pays for access to our imagery or derived imagery data that may be downloaded over a specific period of time, or, less frequently, on a transactional basis, whereby the customer pays for individual content licenses.
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 formation,imagery, data and technology. These revenues are recognized as the preparationservices are rendered, on a proportional performance basis for fixed price contracts or ratably over the Initial Public Offering,contract term for subscription professional services and sinceanalytics contracts. Training revenues are recognized as the closingservices 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. Employee-related costs include salaries, benefits, bonuses and stock-based compensation. To a lesser extent, cost of revenue includes costs from professional services, including costs paid to subcontractors and certain third-party fees.
We expect cost of revenue to continue to increase as we invest in our delivery organization and future product sets that will likely require higher compute capacity. As we continue to grow our subscription revenue contracts and increase the revenue associated with our analytic capabilities, we anticipate further economies of scale on our satellites and other infrastructure costs as we incur lower marginal cost with each new customer we add to our platform.
Research and Development
Research and development expenditures primarily include personnel related expenses for employees and consultants, hardware costs, supplies costs, contractor fees and administrative expenses. Employee-related costs include salaries, benefits, bonuses and stock-based compensation. 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 and funding for our performance of research and development services 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.
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. As a result of the Initial Public Offering,foregoing, we expect research and development expenditures to increase in future periods.
Sales and Marketing
Sales and marketing expenditures primarily include costs incurred to market and distribute our products. Such costs include expenses related to advertising and conferences, sales commissions, salaries, benefits and stock-based compensation for our sales and marketing personnel and sales office expenses. Sales and marketing costs are expensed as incurred.
We intend to continue to invest in our selling and marketing capabilities in the search forfuture 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 prospective initial Business Combination. We have neither engaged in any operations nor generated any revenuespercentage of total revenue may fluctuate from period to date. We will not generate any operating revenues until after completionperiod based on total revenue and the timing of our initial Business Combination. We generateinvestments.
non-operatingGeneral and Administrative
income in the formGeneral and administrative expenses include personnel-related expenses and facilities-related costs primarily for our executive, finance, accounting, legal and human resources functions. General and administrative expenses also include fees for professional services principally consisting of gain on investment (net), dividendslegal, audit, tax, and interest held in Trust Account. insurance, as well as executive management expenses. General and administrative expenses are expensed as incurred.
We expect to incur increasedadditional general and administrative expenses as a result of beingoperating as a public company, (for legal, financialincluding expenses related to compliance and reporting accountingobligations of public companies, and auditing compliance), as well asincreased costs for due diligence expenses.
For the three months ended September 30, 2021,insurance, investor relations, and professional services. As a result, we had a net loss of approximately $6.6 million, which consisted of approximately $3.9 million inexpect that our general and administrative expenses $50,000will increase in future periods and vary from period to period as a percentage of franchise taxrevenue, but we expect to realize operating scale with respect to these expenses over time as we grow our revenue.
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
anon-operating
lossamortization of
approximately $2.7 million resulting fromdebt issuance costs for our loans. Our debt as of October 31, 2021 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 in connection with the Business Combination and we had no debt outstanding as of October 31, 2022. Change in fair value of convertible notes and warrant liabilities
Change in fair value of liabilities includes the change in fair value of derivative 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. 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, primarily consists of net gains or losses on foreign currency.
Provision for Income Taxes
Our income tax provision consists of an estimate for U.S. federal and state income taxes, as well as those foreign jurisdictions where we have business operations, based on enacted tax rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We believe that it is more likely than not that the majority of the U.S. and foreign deferred tax assets will not be realized. Accordingly, we recorded a valuation allowance against our deferred tax assets in these jurisdictions.
Results of Operations
Three months ended October 31, 2022 compared to three months ended October 31, 2021
The following table sets forth a summary of our consolidated results of operations for the interim periods indicated and the changes between such periods.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended October 31, | | $ | | % |
(in thousands, except percentages) | | 2022 | | 2021 | | Change | | Change |
Revenue | | $ | 49,704 | | | $ | 31,700 | | | $ | 18,004 | | | | 57 | % |
Cost of revenue | | 24,728 | | | 20,811 | | | 3,917 | | | | 19 | % |
Gross profit | | 24,976 | | 10,889 | | | 14,087 | | | | 129 | % |
Operating expenses | | | | | | | | | |
Research and development | | 27,598 | | 14,959 | | | 12,639 | | | | 84 | % |
Sales and marketing | | 19,383 | | 12,441 | | | 6,942 | | | | 56 | % |
General and administrative | | 20,627 | | 11,800 | | | 8,827 | | | | 75 | % |
| | | | | | | | | |
Total operating expenses | | 67,608 | | 39,200 | | | 28,408 | | | | 72 | % |
| | | | | | | | | |
Loss from operations | | (42,632) | | (28,311) | | | (14,321) | | | | 51 | % |
| | | | | | | | | |
Interest income | | 2,853 | | 8 | | | 2,845 | | | | 35,563 | % |
Interest expense | | — | | (2,612) | | | 2,612 | | | | (100) | % |
Change in fair value of convertible notes and warrant liabilities | | (19) | | (10,172) | | | 10,153 | | | | (100) | % |
Other income (expense), net | | 1 | | (60) | | | 61 | | | | (102) | % |
| | | | | | | | | |
Total other income (expense), net | | 2,835 | | (12,836) | | 15,671 | | | | (122) | % |
| | | | | | | | | |
Loss before provision for income taxes | | (39,797) | | (41,147) | | | 1,350 | | | | (3) | % |
Provision for income taxes | | 439 | | 394 | | | 45 | | | | 11 | % |
| | | | | | | | | |
Net loss | | $ | (40,236) | | | $ | (41,541) | | | $ | 1,305 | | | | (3) | % |
| | | | | | | | | |
Revenue
Revenue increased $18.0 million, or 57%, to $49.7 million for the three months ended October 31, 2022 from $31.7 million for the three months ended October 31, 2021. The increase was primarily due to net expansion of existing customer contracts of $12.3 million and an increase in total customers worldwide of $5.7 million. EoP Customer Count increased approximately 16% to 864 as of October 31, 2022 from 742 as of October 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, and increased usage from our customers in the current period.
Cost of Revenue
Cost of revenue increased $3.9 million, or 19%, to $24.7 million for the three months ended October 31, 2022, from $20.8 million for the three months ended October 31, 2021. The increase was primarily due to a $2.1 million increase in employee related costs, partially due to increased headcount and a $1.1 million increase in stock-based compensation. The increase in stock-based compensation was primarily due to earn-out shares and restricted stock unit awards for which the recognition of expense commenced upon the closing of the Business Combination and increased headcount. The increase was also partially due to a $1.0 million increase in hosting costs associated with an increase in archive data and growth in our customer base and a $0.3 million increase in depreciation expense primarily due to an increase in value of depreciating assets in service resulting from additional satellites placed into service.
Research and Development
Research and development expenses increased $12.6 million, or 84%, to $27.6 million for the three months ended October 31, 2022, from $15.0 million for the three months ended October 31, 2021. The increase was primarily due to an increase of $11.6 million in employee related expenses, partially due to increased headcount and a $6.2 million increase in stock-based compensation. The increase in stock-based compensation was primarily due to earn-out shares and restricted stock unit awards for which the recognition of expense commenced upon the closing of the Business Combination and increased headcount.
Sales and Marketing
Sales and marketing expenses increased $6.9 million, or 56%, to $19.4 million, for the three months ended October 31, 2022, from $12.4 million for the three months ended October 31, 2021. The increase was primarily due to an increase of $6.4 million in employee related expenses associated with our sales and marketing teams, partially due to increased headcount, increased commission expense, and a $2.5 million increase in stock-based compensation. The increase in stock-based compensation was primarily due to earn-out shares and restricted stock unit awards for which the recognition of expense commenced upon the closing of the Business Combination and increased headcount.
General and Administrative
General and administrative expenses increased $8.8 million, or 75%, to $20.6 million for the three months ended October 31, 2022, from $11.8 million for the three months ended October 31, 2021. The increase was primarily due to an increase of $6.3 million in employee related expenses, partially due to increased headcount and a $5.0 million increase in stock-based compensation. The increase in stock-based compensation was primarily due to earn-out shares and restricted stock unit awards for which the recognition of expense commenced upon the closing of the Business Combination and increased headcount. The increase was also partially due to an increase of finance and accounting costs of $1.1 million, primarily due to accounting and consulting fees, an increase of $1.0 million in directors’ and officers’ insurance, and $0.5 million increase in lease expense.
Interest Income
Interest income was $2.9 million for the three months ended October 31, 2022 as compared to an immaterial amount for the three months ended October 31, 2021. The increase was primarily due to our short-term investment balances and an increase in interest rates.
Interest Expense
No interest expense was recognized during the three months ended October 31, 2022 because we had no debt outstanding during the period.
Interest expense for the three months ended October 31, 2021 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 liabilities was an immaterial loss for the three months ended October 31, 2022 as compared to a loss of $10.2 million for the three months ended October 31, 2021.
The change in fair value of convertible notes and warrant liabilities during the three months ended October 31, 2022 resulted from the revaluation of the liability classified public and private placement warrants that were assumed in connection with the Business Combination.
The change in fair value of convertible notes and warrant liabilities during the three months ended October 31, 2021 reflects a $6.0 million loss due to the revaluation of the 2020 convertible promissory notes and a $4.8 million loss due to the revaluation of the liability classified preferred stock warrants, offset by a $0.6 million gain due to the revaluation of the Venture Tranche B convertible note.
Other Income (Expense), net
Other income (expense), net, for both of the three month periods ended October 31, 2022 and 2021 primarily consisted of net gains or losses on foreign currency.
Provision for Income Taxes
Provision for income taxes was $0.4 million for both of three month periods ended October 31, 2022 and 2021. For the three months ended October 31, 2022 and 2021, the income tax expense was primarily driven by the current tax on foreign earnings. The effective tax rates for the three months ended October 31, 2022 and 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 foreign rate differences.
Nine months ended October 31, 2022 compared to nine months ended October 31, 2021
The following table sets forth a summary of our consolidated results of operations for the interim periods indicated and the changes between such periods.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended October 31, | | $ | | % |
(in thousands, except percentages) | | 2022 | | 2021 | | Change | | Change |
Revenue | | $ | 138,281 | | | $ | 94,063 | | | $ | 44,218 | | | | 47 | % |
Cost of revenue | | 73,333 | | | 59,757 | | | 13,576 | | | | 23 | % |
Gross profit | | 64,948 | | 34,306 | | | 30,642 | | | | 89 | % |
Operating expenses | | | | | | | | | |
Research and development | | 79,085 | | 39,521 | | | 39,564 | | | | 100 | % |
Sales and marketing | | 57,721 | | 33,691 | | | 24,030 | | | | 71 | % |
General and administrative | | 61,128 | | 31,939 | | | 29,189 | | | | 91 | % |
Total operating expenses | | 197,934 | | 105,151 | | | 92,783 | | | | 88 | % |
Loss from operations | | (132,986) | | (70,845) | | | (62,141) | | | | 88 | % |
Interest income | | 4,276 | | 12 | | | 4,264 | | | | 35,533 | % |
Interest expense | | — | | (7,750) | | | 7,750 | | | | (100) | % |
Change in fair value of convertible notes and warrant liabilities | | 5,369 | | (11,429) | | | 16,798 | | | | (147) | % |
Other income (expense), net | | 123 | | (325) | | | 448 | | | | (138) | % |
Total other income (expense), net | | 9,768 | | (19,492) | | | 29,260 | | | | (150) | % |
Loss before provision for income taxes | | (123,218) | | (90,337) | | | (32,881) | | | | 36 | % |
Provision for income taxes | | 907 | | 822 | | | 85 | | | | 10 | % |
Net loss | | $ | (124,125) | | | $ | (91,159) | | | $ | (32,966) | | | | 36 | % |
Revenue
Revenue increased $44.2 million, or 47%, to $138.3 million for the nine months ended October 31, 2022 from $94.1 million for the nine months ended October 31, 2021. The increase was primarily due to net expansion of existing customer contracts of $32.5 million and an increase in total customers worldwide of $11.7 million. EoP Customer Count increased approximately 16% to 864 as of October 31, 2022 from 742 as of October 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. The increase in revenue was also attributable to increased usage from our customers in the current period.
Cost of Revenue
Cost of revenue increased $13.6 million, or 23%, to $73.3 million for the nine months ended October 31, 2022, from $59.8 million for the nine months ended October 31, 2021. The increase was primarily due to a $7.6 million increase in employee related costs, partially due to increased headcount and a $3.3 million increase in stock-based compensation. The increase in stock-based compensation was primarily due to earn-out shares and restricted stock unit awards for which the recognition of expense commenced upon the closing of the Business Combination and increased headcount. The increase was also partially due to a $4.0 million increase in hosting costs associated with an increase in archive data and growth in our customer base and a $1.6 million increase in depreciation expense primarily due to an increase in value of depreciating assets in service resulting from additional satellites placed into service.
Research and Development
Research and development expenses increased $39.6 million, or 100%, to $79.1 million for the nine months ended October 31, 2022, from $39.5 million for the nine months ended October 31, 2021. The increase was primarily due to an increase of $35.1 million in employee related expenses, partially due to increased headcount and a $20.6 million increase in stock-based compensation. The increase in stock-based compensation was primarily due to earn-out shares and restricted stock unit awards for which the recognition of expense commenced upon the closing of the
Business Combination and increased headcount. The increase was also partially due to a $1.1 million increase in software and maintenance expenses and a $1.2 million increase in travel and entertainment expenses.
Sales and Marketing
Sales and marketing expenses increased $24.0 million, or 71%, to $57.7 million, for the nine months ended October 31, 2022, from $33.7 million for the nine months ended October 31, 2021. The increase was primarily due to an increase of $18.6 million in employee related expenses associated with our sales and marketing teams, partially due to increased headcount, increased commission expense and a $8.7 million increase in stock-based compensation. The increase in stock-based compensation was primarily due to earn-out shares and restricted stock unit awards for which the recognition of expense commenced upon the closing of the Business Combination and increased headcount. Also contributing to the increase was a $3.2 million increase in travel and entertainment expenses, a $0.6 million increase in software and maintenance expenses, and a $0.5 million increase in professional services fees.
General and Administrative
General and administrative expenses increased $29.2 million, or 91%, to $61.1 million for the nine months ended October 31, 2022, from $31.9 million for the nine months ended October 31, 2021. The increase was partially due to an increase of $20.8 million in employee related expenses, partially due to increased headcount and a $14.7 million increase in stock-based compensation. The increase in stock-based compensation was primarily due to earn-out shares and restricted stock unit awards for which the recognition of expense commenced upon the closing of the Business Combination and increased headcount. The increase was also partially due to an increase of $3.5 million in directors’ and officers’ insurance, an increase of finance and accounting costs of $2.4 million, primarily due to accounting and consultant fees, and a $0.8 million increase in software and maintenance expenses to support public company infrastructure.
Interest Income
Interest income was $4.3 million for the nine months ended October 31, 2022 as compared to an immaterial amount for the nine months ended October 31, 2021. The increase was primarily due to our short-term investment balances and an increase in interest rates.
Interest Expense
No interest expense was recognized during the nine months ended October 31, 2022 because we had no debt outstanding during the period.
Interest expense for the nine months ended October 31, 2021 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 liabilities increased $16.8 million to a gain of $5.4 million for the nine months ended October 31, 2022, from a loss of $11.4 million for the nine months ended October 31, 2021.
The change in fair value of convertible notes and warrant liabilities during the nine months ended October 31, 2022 reflects a $5.4 million gain due to the revaluation of the liability classified public and private placement warrants that were assumed in connection with the Business Combination.
The change in fair value of convertible notes and warrant liabilities during the nine months ended October 31, 2021 reflects a $9.1 million loss due to the revaluation of the 2020 convertible promissory notes and a $2.7 million loss due to the revaluation of the liability classified preferred stock warrants, offset by approximately $41,000 in interesta $0.4 million gain due to the revaluation of the Venture Tranche B convertible note.
Other Income (Expense), net
Other income (expense), net, for both of the nine month periods ended October 31, 2022 and 2021 primarily consisted of net gaingains or losses on investments held inforeign currency.
Provision for Income Taxes
Provision for income taxes was $0.9 million and $0.8 million for the Trust Account.
nine months ended October 31, 2022 and 2021, respectively. For the nine months ended September 30,October 31, 2022 and 2021, the income tax expense was primarily driven by the current tax on foreign earnings. The effective tax rates for the nine months ended October 31, 2022 and 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 foreign rate differences.
Non-GAAP Information
This Quarterly Report on Form 10-Q includes Non-GAAP Gross Profit and Adjusted EBITDA, which are non-GAAP performance measures that we use to supplement our results presented in accordance with U.S. GAAP. 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.
Non-GAAP Gross Profit and Adjusted EBITDA are non-GAAP measures, and are additions, 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. GAAP or as an alternative to cash flows from operating activities as a measure of liquidity. Further, Non-GAAP Gross Profit and Adjusted EBITDA are not based on any standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly-titled measures presented by other companies. We present Adjusted EBITDA because we believe it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry and facilitates comparisons on a consistent basis across reporting periods. Further, we believe it is helpful in highlighting trends in our operating results because it excludes items that are not indicative of our core operating performance.
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, which is required in accordance with U.S. GAAP. 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. GAAP. Adjusted EBITDA excludes certain expenses from net income (loss) that are required in accordance with U.S. GAAP. 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
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:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended October 31, | | Nine Months Ended October 31, |
(in thousands, except percentages) | | 2022 | | 2021 | | 2022 | | 2021 |
Gross Profit | | $ | 24,976 | | | $ | 10,889 | | | $ | 64,948 | | | $ | 34,306 | |
Cost of revenue—Stock-based compensation | | 1,317 | | | 226 | | | 3,992 | | | 688 | |
Amortization of acquired intangible assets | | 366 | | | — | | | 1,163 | | | — | |
Non-GAAP Gross Profit | | $ | 26,659 | | | $ | 11,115 | | | $ | 70,103 | | | $ | 34,994 | |
Gross Margin percentage | | 50 | % | | 34 | % | | 47 | % | | 36 | % |
Non-GAAP Gross Margin percentage | | 54 | % | | 35 | % | | 51 | % | | 37 | % |
Adjusted EBITDA
We define and calculate Adjusted EBITDA as net income (loss) before the impact of interest income and expense, income tax expense and depreciation and amortization, and further adjusted for the following items: stock-based compensation, change in fair value of convertible notes and warrant liabilities, gain or loss on the extinguishment of debt and non-operating income and expenses such as foreign currency exchange gain or loss, as outlined in the reconciliation below.
The table below reconciles our net loss (the most directly comparable U.S. GAAP measure) to Adjusted EBITDA for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended October 31, | | Nine Months Ended October 31, |
(in thousands) | | 2022 | | 2021 | | 2022 | | 2021 |
Net loss | | $ | (40,236) | | | $ | (41,541) | | | $ | (124,125) | | | $ | (91,159) | |
Interest expense | | — | | 2,612 | | — | | 7,750 |
Interest income | | (2,853) | | (8) | | (4,276) | | (12) |
Income tax provision | | 439 | | 394 | | 907 | | 822 |
Depreciation and amortization | | 10,785 | | 11,349 | | 33,997 | | 33,865 |
Change in fair value of convertible notes and warrant liabilities | | 19 | | 10,172 | | (5,369) | | 11,429 |
Stock-based compensation | | 19,438 | | 4,643 | | 59,841 | | 12,619 |
Other (income) expense | | (1) | | 60 | | (123) | | 325 |
Adjusted EBITDA | | $ | (12,409) | | | $ | (12,319) | | | $ | (39,148) | | | $ | (24,361) | |
There are a number of limitations related to the use of Adjusted EBITDA, including:
•Adjusted EBITDA 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 excludes depreciation and amortization expense and, although these are non-cash expenses, the assets being depreciated and amortized will have to be replaced in the future;
•Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us;
•Adjusted EBITDA does not reflect income tax expense that reduces cash available to us; and
•the expenses and other items that we exclude in our calculation of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from similar measures when they report their operating results.
Liquidity and Capital Resources
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 and borrowings under credit facilities, as well as cash received from our customers. We currently have no debt outstanding.
We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital and capital expenditure needs, contractual obligations, including debt obligations, and other commitments, with cash flows from operations and other sources of funding. Our current working capital needs
relate mainly to our continued development of our platform and product offerings in new markets, as well as compensation and benefits of our employees. Our ability to expand and grow our business will depend on many factors, including our working capital needs and the evolution of our operating cash flows.
As of October 31, 2022 and January 31, 2022, we had $199.1 million and $490.8 million, respectively, in cash and cash equivalents. Additionally, as of October 31, 2022, we had short-term investments of $226.2 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. We could also need additional cash resources due to significant acquisitions, an accelerated manufacturing timeline for new satellites, competitive pressures or regulatory requirements. To the extent that our resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders. 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. 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.
As of October 31, 2022, 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 6, 9, and 12 to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q 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.
Statement of Cash Flows
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 unaudited condensed consolidated statements of cash flows as presented within the unaudited condensed consolidated financial statements.
| | | | | | | | | | | | | | | | |
| | Nine Months Ended October 31, |
(in thousands) | | 2022 | | 2021 | | |
Net cash provided by (used in) | | | | | | |
Operating activities | | $ | (59,118) | | | $ | (21,016) | | | |
Investing activities | | $ | (237,478) | | | $ | (9,183) | | | |
Financing activities | | $ | 6,377 | | | $ | 19,513 | | | |
Net cash used in operating activities
Net cash used in operating activities for the nine months ended October 31, 2022, primarily consisted of the net loss of
approximately $14$124.1 million, adjusted for non-cash items and changes in operating assets and liabilities. Non-cash items primarily included depreciation and amortization expense of $34.0 million and stock-based compensation expense of $59.8 million, which
consistedwas offset by a change in fair value of
approximately $7.3 million in general and administrative expenses, approximately $150,000 of franchise tax expense, anon-operating
loss of approximately $14.1 million incurred upon the issuance of private placement warrants, and offering costs associated with derivative warrant liabilities of
approximately $0.7$5.4 million. The net change in operating assets and liabilities primarily consisted of a $19.4 million decrease in deferred revenue, a $8.6 million decrease in accounts payable, accrued and other liabilities and a $9.5 million increase in prepared expenses and other assets, which was offset by a $15.2 million decrease in accounts receivable. Net cash used in operating activities for the nine months ended October 31, 2021, primarily consisted of the net loss of $91.2 million, adjusted for non-cash items and changes in operating assets and liabilities. Non-cash items included depreciation and amortization expense of $33.9 million, stock-based compensation expense of $12.6 million and a change in fair value of warrant liabilities and convertible notes of $11.4 million. The net change in operating assets and liabilities primarily consisted of a $32.3 million decrease in accounts receivable, a $2.0 million increase in accounts payable, accrued and other liabilities and a $6.8 million increase in deferred hosting costs,
which was offset by a $17.4 million decrease in deferred revenue and $12.9 million increase in prepaid expenses and other assets.
Net cash used in investing activities
Net cash used in investing activities for the nine months ended October 31, 2022, primarily consisted of purchases of property and equipment of $9.0 million, capitalized internal-use software costs of $1.7 million and purchases of available-for-sale securities of $239.3 million, partially offset by maturities of available-for-sale securities of $13.0 million.
Net cash used in investing activities for the nine months ended October 31, 2021, primarily consisted of purchases of property and equipment of $6.1 million and capitalized internal-use software costs of $2.7 million.
Net cash provided by financing activities
Net cash provided by financing activities for the nine months ended October 31, 2022, primarily consisted of proceeds from the exercise of common stock options of $10.9 million, which was partially offset by approximately $99,000 in interest income and net gain on investments held inpayment of tax withholding obligations for vesting of restricted stock units of $4.3 million.
Net cash provided by financing activities for the Trust Account, and anon-operating
gainnine months ended October 31, 2021, consisted of approximately $0.7 million resultingproceeds from a decrease in fair value of derivative warrant liabilities. Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities