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Table of Contents
Click here for a thorough overview of Palantir’s business, where it provides value and how it makes money.
a. Key Points
- The U.S. Commercial business continues to deliver explosive, above-consensus growth.
- Margins continue to expand from lofty bases.
- Palantir is seeing real change in customer AI preferences that benefits its approach.
b. Demand
- Beat revenue estimates by 7.2% & beat guidance by 7.8%.
- Beat U.S. commercial revenue estimates by 6.7%.
- Beat U.S. government revenue estimates by 10.3%.
- Both International commercial and International government revenue were modestly ahead of expectations. U.S. performance drove the beat.
- Beat billings estimates by 10.4%.
- Roughly met client estimates.
- Net revenue retention (NRR) was 157% vs. 159% expected. While that’s technically a miss, it’s still so, so good. A 120%+ NRR is considered great for a company. A 130%+ NRR is elite. Again, Palantir’s NRR is well over 150%. This is the metric that shows its customers are going all in on PLTR’s technology and are sticking around for a long time too.
- Their rule of 40 score (revenue growth rate + EBIT margin) was 155 vs. 145 Q/Q and 94 Y/Y. It has been over 100 for 4 straight quarters. A score of 40 is considered very good.
c. Profits
- Missed 86.7% GPM estimates by 40 basis points (bps; 1 basis point = 0.01%). This was related to taking over cloud hosting responsibilities for a government customer. They believe this will “power faster time to value” with this client going forward.
- Beat EBIT estimates by 10.7% & beat guidance by 12.3%.
- Adjusted operating expenses (OpEx) rose by 37% Y/Y.
- GAAP OpEx rose by 39% Y/Y.
- GAAP operating income rose by 239% Y/Y thanks to explosive revenue growth and rapid operating leverage.
- Beat $0.35 EPS estimates by $0.06 or by $0.04 excluding equity gains from its SpaceX investment.
- Beat FCF estimates by 16%.
d. Balance Sheet
- $9.2B cash & equivalents.
- 0.2% Y/Y dilution.
- No debt.