PLANET LABS PBC Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

DISCUSSION AND ANALYSIS OF MANAGEMENT’S FINANCIAL POSITION AND RESULTS

                              OPERATIONS OF PLANET

The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") is intended to help the reader 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 related notes included in Part
I, Item I of this Quarterly Report on Form 10-Q, as well as our audited annual
consolidated financial statements and 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 and involves
numerous risks and uncertainties, including, but 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 2022 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 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 not-for-profit company, our goal is to accelerate humanity’s journey to a more sustainable, safer, and more prosperous world by illuminating key 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.
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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 special purpose acquisition company ("SPAC") incorporated in
Delaware on December 15, 2020, Photon Merger Sub, Inc., a Delaware corporation
and a direct wholly owned subsidiary of dMY IV ("First Merger Sub"), and Photon
Merger Sub Two, LLC, a Delaware limited liability company and a direct wholly
owned subsidiary of dMY IV ("Second Merger Sub"). Pursuant to the Merger
Agreement, upon the favorable vote of dMY IV's stockholders on December 3, 2021,
on December 7, 2021, First Merger Sub merged with and into Former Planet (the
"Surviving Corporation"), with Former Planet surviving the merger as a wholly
owned subsidiary of dMY IV (the "First Merger"), and pursuant 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 merged with and into
dMY IV, with dMY IV surviving the merger (the "Business Combination"). Following
the completion of the Business Combination, dMY IV was renamed Planet Labs PBC.

The Business Combination was accounted for as a reverse recapitalization, with
no goodwill or other intangible assets recorded, in accordance with U.S. 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 the accounting predecessor of
the combined business, and Planet Labs PBC, as the parent company of the
combined business, is the successor SEC registrant, meaning that our reported
consolidated assets, liabilities and results of operations prior to the Business
Combination are those of Former Planet.
Upon the closing of the Business Combination, we received aggregate gross
proceeds of $590.4 million, including $252.0 million in gross proceeds from a
Private Investment in Public Equity financing which closed substantially
simultaneously with the Business Combination. We paid approximately $57.2
million of transaction expenses in connection with the Business Combination. We
also repaid our existing debt of approximately $67.1 million, including
repayment fees associated with the debt of approximately $2.0 million and
accrued interest, after the Business Combination was consummated. In addition,
immediately prior to the effective time of the Business Combination, Former
Planet's outstanding convertible notes were automatically converted into shares
of Class A common stock, and as such, the converted convertible notes are no
longer outstanding and ceased to exist at the effective time of the Business
Combination.

As a result of the Business Combination, we are an SEC-registered company listed
on the NYSE which requires us to hire additional personnel and implement
procedures and processes to address public company regulatory requirements and
customary practices. We expect to incur additional annual expenses as a public
company for, among other things, directors' and officers' liability insurance,
director fees, and additional internal and external accounting, legal, and
administrative resources, including increased personnel costs, audit and other
professional service fees. Our results of operations and statements of financial
position may not be comparable between periods as a result of the Business
Combination described above.

Effects 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.

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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 are scaling in existing industries and expanding into new ones.

Scaling in existing industries:

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 industries:

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 operating results

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.

Continue acquiring 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.
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Retaining and expanding 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 the foregoing, we anticipate our cost
of revenue, operating expenses, and capital expenditures will continue to
increase and consequently, we are likely to experience losses in the near term,
delaying our ability to achieve profitability and adversely affecting cash
flows.

Development of 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 our long-term growth and future
market penetration. We believe offering new data sets and fusing new data sets
with our existing data sets will enable us to deliver greater value to our
existing customers and help us attract new customers. This may require
significant investment in technology and personnel and result in increased
research and development costs as well as costs of revenue.

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 markets 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 experienced, and expect to continue to experience, seasonality in our
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 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.

Key operational and business metrics

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

ACV and EoP ACV ledger

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 last day of the period without renewing, or for any other reason is
not expected to generate revenue in the subsequent period. For contracts ending
on the last
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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
existing customers, on which our ability to drive 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 number 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 reporting period. For the purposes of this metric, we define a customer as a distinct entity that uses our data or services. We sell directly to customers and indirectly through our partner network. If a partner does not provide the name of the end customer, the

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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 expenditure 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 capital
expenditures divided by total revenue in the reported period. Capital
Expenditures as a Percentage of Revenue is a performance measure that we use to
evaluate the appropriate level of capital 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 management of the satellites and to 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 important 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 level of capital
expenditures required to operate our business and our relative capital
efficiency. Capital Expenditures as a Percentage of Revenue 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 Percentage of Revenue
was primarily attributable to an increase in revenue. Capital Expenditures for
the three and nine months ended October 31, 2022 as compared to the three and
nine ended October 31, 2021 increased. The increase was primarily attributable
to an increase in ground station assets, offset in part by a decrease in
capitalized internal-use software.
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Components of the earnings situation

revenue

We derive revenue principally from licensing rights to use our imagery that is
delivered digitally through our 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 imagery, data and technology. These revenues are recognized as the
services are rendered, on a proportional performance basis for fixed price
contracts or ratably over the contract term for subscription professional
services and analytics contracts. Training revenues are recognized as the
services are performed.

cost of sales

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
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.

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We intend to continue to invest in our selling and marketing capabilities in the
future and expect this expense to increase in future periods as we look to
upsell new product features and expand into new market verticals. Selling and
marketing expenses as a percentage of total revenue may fluctuate from period to
period based on total revenue and the timing of our investments.

General and administrative

General 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 legal, audit, tax, and
insurance, as well as executive management expenses. General and administrative
expenses are expensed as incurred.

We expect to incur additional general and administrative expenses as a result of
operating as a public company, including expenses related to compliance and
reporting obligations of public companies, and increased costs for insurance,
investor relations, and professional services. As a result, we expect that our
general and administrative expenses will increase in future periods and vary
from period to period as a percentage of revenue, but we expect to realize
operating scale with respect to these expenses over time as we grow our revenue.

interest income

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Interest income consists primarily of interest income on our cash, cash equivalents and short-term investments. Our portfolio of cash and short-term investments is invested with the aim of maintaining our access to capital and generally consists of money market funds, commercial paper, corporate debt and US government and US Government Debt.

Interest Expense

Interest expense primarily consists of interest expense associated with our
borrowings and amortization of debt issuance costs for our loans. Our debt as of
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 bonds and option liabilities

Change in fair value of liabilities includes the change in fair value of warrant
liabilities, including the change in fair value of the public and private
placement warrant liabilities assumed in connection with the Business
Combination, and the change in fair value of our convertible notes, which
converted into Class A common stock in connection with the Business Combination.
We expect to incur other incremental income or expense for fair value
adjustments resulting from warrant liabilities that remain outstanding.

Other income (expense), net

Other income (expense), net, consists primarily of net foreign exchange gains or losses.

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.


operating results

Three months passed October 31, 2022 compared to three months ended October 31, 2021

The following table summarizes our consolidated results of operations for the indicated interim periods and the changes between those periods.

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                                                             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                (19)         (10,172)           10,153                         (100) %

liabilities

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

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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 in the past three months October 31, 2022 because we had no outstanding debt 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 bonds and option 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 completed three month periods
October 31, 2022 and 2021 consisted primarily of net foreign exchange gains or losses.


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.
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Nine months came to an end October 31, 2022 compared to the past nine months October 31, 2021

The following table summarizes our consolidated results of operations for the indicated interim periods and the changes between those 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                     5,369         (11,429)            16,798                         (147) %

liabilities

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 sales

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
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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 in the past nine months October 31, 2022
because we had no outstanding debt 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 bonds and option 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 a $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 nine month periods ended
October 31, 2022 and 2021 consisted primarily of net foreign exchange gains or losses.


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Provision for income taxes

Provision for income taxes was $0.9 million and $0.8 million for the nine months
ended October 31, 2022 and 2021, respectively. For the 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 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 management uses them to evaluate our core operating performance and trends and to make strategic decisions regarding capital allocation 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 sales and non-GAAP gross margin percentage as non-GAAP gross profit as a percentage of sales, as described in the transition below.

The table below reconciles our gross profit (the most directly comparable US
GAAP measure) non-GAAP gross profit for the periods shown:

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                                                              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 US GAAP measure) to Adjusted EBITDA for the periods shown:

                                                    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
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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.

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