GuruFocus -
- Revenue Growth: 30% year-over-year increase in Q3.
- US Business Revenue Growth: 44% year-over-year and 14% sequential growth.
- US Government Revenue Growth: 40% year-over-year and 15% sequential growth.
- US Commercial Revenue Growth: 54% year-over-year and 13% sequential growth.
- Adjusted Operating Margin: Expanded to 38%.
- Cash from Operations: $420 million.
- Adjusted Free Cash Flow: $435 million, representing a 60% margin.
- Customer Count Growth: 39% year-over-year to 629 customers.
- Net Dollar Retention: 118%, a 400 basis point increase from last quarter.
- GAAP Net Income: $144 million, representing a 20% margin.
- Adjusted Earnings Per Share: $0.10.
- GAAP Earnings Per Share: $0.06.
- Cash and Equivalents: $4.6 billion at the end of the quarter.
- Q4 2024 Revenue Guidance: Between $767 million and $771 million.
- Full Year 2024 Revenue Guidance: Raised to between $2.805 billion and $2.809 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Palantir Technologies Inc (NYSE:PLTR) reported a 30% year-over-year revenue growth in Q3, exceeding prior guidance.
- The US business saw a significant 44% year-over-year revenue growth, driven by increased AI demand.
- The company achieved a 38% adjusted operating margin, marking the eighth consecutive quarter of expanding margins.
- Palantir Technologies Inc (NYSE:PLTR) generated over $1 billion in adjusted free cash flow on a trailing 12-month basis for the first time.
- The company was added to the S&P 500, highlighting its growth, profitability, and market leadership.
- International commercial revenue grew only 3% year over year, with a 7% sequential decline due to headwinds in Europe and the Middle East.
- Revenue from strategic commercial contracts is expected to decline significantly in Q4 2024.
- The company faces challenges in maintaining growth amidst macroeconomic uncertainties.
- Despite strong US growth, international government revenue saw a 5% sequential decline.
- There is a potential risk of accelerated stock-based compensation expenses if market-based vesting criteria are achieved earlier than expected.
A: Shyam Sankar, Chief Technology Officer, explained that while AI models are improving, they are also becoming more similar, and the cost of inference is dropping. Palantir's differentiation lies in its decade-long head start in building AI applications at scale, focusing on the ontology to drive AIP across applications. Alexander Karp, CEO, added that Palantir's ability to extract value from large language models in enterprise contexts is a key differentiator, as many clients have been skeptical about the practical utility of these models.
Q: How is Palantir balancing investments in new AI technologies with maintaining profitability and operating margins?
A: David Glazer, CFO, highlighted that Palantir is excelling in balancing growth and profitability. The company achieved 30% year-over-year revenue growth in Q3, with a 38% adjusted operating margin. Palantir is raising its guidance for adjusted free cash flow and operating income, while continuing to invest in technical talent and product development amidst the AI revolution.
Q: With boot camp conversions, has it surprised you how quickly potential customers convert to mega deals?
A: Ryan Taylor, Chief Revenue Officer, noted that the rapid conversion from boot camps to significant deals is indicative of the strong demand and impact of Palantir's offerings. The company is seeing multiple customers across industries moving from initial boot camps to seven-figure deals in less than two months, reflecting the urgency and decisiveness of AI adopters.
Q: What changed for US government partners like L3Harris and Anduril to want to partner with Palantir?
A: Shyam Sankar explained that Palantir's software infrastructure, such as Rubix and Apollo, acts as accelerants for partners to reach revenue and expand market access. Alexander Karp added that Palantir's strategy of opening up its products to defense tech startups and large integrators has shifted perceptions, making Palantir a preferred ally in tech innovation.
Q: Is there anything you'd like to say to individual investors before ending the call?
A: Alexander Karp expressed gratitude to individual investors, emphasizing their importance to Palantir's success. He reiterated the company's commitment to making America and its allies stronger and more secure, while ensuring that individual investors benefit from Palantir's growth and achievements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.