Palantir Technologies Inc. (NYSE: NYSE:PLTR)

Palantir Technologies Inc. (NYSE: NYSE:PLTR) reported a significant 30% year-over-year revenue growth for Q3 2024, driven by increased demand for artificial intelligence (AI).

The company’s U.S. business saw a 44% growth, with the government and commercial sectors increasing by 40% and 54%, respectively. Cash flow from operations reached $420 million, while adjusted free cash flow was $435 million.

Palantir raised its full-year revenue guidance to $2.807 billion, indicating a 26% year-over-year growth rate. Its inclusion in the S&P 500 in September 2024 highlights its market leadership and profitability.

Key Takeaways

• 30% revenue increase year-over-year, with 44% growth in U.S. business.
• Secured 104 deals over $1 million each, summing to nearly $300 million in U.S. commercial contract value.
• Strongest growth in 15 quarters for U.S. government business with significant contract wins.
• Adjusted operating margin improved to 38% with a customer count of 629, up 39% year-over-year.
• Despite a 7% sequential contraction in international commercial revenue, important contracts, like a renewal with BP, were secured.

Company Outlook

• Q4 revenue expected to be between $767 million and $771 million.
• U.S. commercial revenue guidance raised to exceed $687 million, indicating at least 50% growth.

Bearish Highlights

• International commercial revenue contracted by 7% sequentially.

Bullish Highlights

• Adjusted operating margin reached 38%, marking eight consecutive quarters of expansion.
• Projects over $1 billion in adjusted free cash flow for 2024.
• Total contract value booked was $1.1 billion, up 33% year-over-year.

Misses

• Strategic commercial contracts now contribute only 1% of revenue and are deemed no longer relevant.

Q&A Highlights

• CEO Alex Karp emphasized the importance of managing large language models through Palantir’s infrastructure.
• The company focuses on deep relationships with high-impact clients instead of a broad customer base.
• Palantir’s boot camp program effectively converts potential customers into substantial deals.
• Leadership noted a market divide between companies quickly adopting AI and those that do not.
• Palantir is committed to enhancing AI capabilities while ensuring profitability amidst macroeconomic challenges.

In summary, Palantir Technologies showcases significant financial growth and a strategic focus on AI technology, with increases in contract wins and operational efficiency. The company’s emphasis on strong customer relationships positions it favorably amid evolving tech landscapes, though it faces challenges in international revenue.

InvestingPro Insights

InvestingPro data supports Palantir’s strong financial performance, with 30% year-over-year revenue growth, suggesting solid financial health. The firm holds more cash than debt, proving its ability to invest in AI developments and sustain operations. Notably, Palantir’s gross profit margin was an impressive 81.39%.

This robust financial framework underpins its S&P 500 inclusion, reflecting sustained profitability and operational efficiency in AI and data analytics.

Full transcript – Palantir Technologies Inc (PLTR) Q3 2024:

Ana Soro: Good afternoon. I’m Ana Soro from Palantir’s finance team, and I’d like to welcome you to our Third Quarter 2024 Earnings Call. We’ll discuss the results announced in our press release issued after the market closed and posted on our investor relations website. We will make forward-looking statements regarding our business that may differ from actual results due to risks and uncertainties.

Ryan Taylor: Our results are exceptionally strong. Revenue grew 30% year-over-year in Q3, driven by an intensifying AI revolution led by the U.S. business, which achieved 44% year-over-year growth.

Shyam Sankar: The divide between AI haves and have nots is rapidly accelerating in this winner-take-all AI economy.

David Glazer: Q3 was an exceptionally strong quarter, with revenue growth accelerating to 30% year-over-year, exceeding high-end forecasts. We generated cash from operations of $420 million.

Alex Karp: We plan to continue building our software product to strengthen America’s and its allies’ forces.

Ana Soro: Thank you. That concludes today’s call.

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