Palantir Technologies(PLTR) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Presents the company's unaudited condensed consolidated financial statements and related notes Item 1. Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and notes Condensed Consolidated Balance Sheets Details the company's financial position, including assets, liabilities, and equity, as of specific dates | Metric | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :---------------------------------- | :----------------------------------- | :-------------------- | :------- | | Assets | | | | | | Cash and cash equivalents | $929,547 | $2,098,524 | $(1,168,977) | -55.7% | | Marketable securities | $5,070,875 | $3,131,463 | $1,939,412 | 61.9% | | Accounts receivable, net | $747,484 | $575,048 | $172,436 | 30.0% | | Total current assets | $6,890,393 | $5,934,289 | $956,104 | 16.1% | | Total assets | $7,365,688 | $6,340,884 | $1,024,804 | 16.2% | | Liabilities and Equity | | | | | | Accounts payable | $10,774 | $103 | $10,671 | 10360.2% | | Accrued liabilities | $393,623 | $427,046 | $(33,423) | -7.8% | | Deferred revenue | $376,784 | $259,624 | $117,160 | 45.1% | | Total current liabilities | $1,089,640 | $996,018 | $93,622 | 9.4% | | Total liabilities | $1,340,124 | $1,246,477 | $93,647 | 7.5% | | Total equity | $6,025,564 | $5,094,407 | $931,157 | 18.3% | Condensed Consolidated Statements of Operations Reports the company's revenues, expenses, and net income over specific periods | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Revenue | $1,003,697 | $678,134 | $325,563 | 48.0% | | Cost of revenue | $192,934 | $128,562 | $64,372 | 50.1% | | Gross profit | $810,763 | $549,572 | $261,191 | 47.5% | | Income from operations | $269,317 | $105,339 | $163,978 | 155.7% | | Net income attributable to common stockholders | $326,727 | $134,126 | $192,601 | 143.6% | | Basic EPS | $0.14 | $0.06 | $0.08 | 133.3% | | Diluted EPS | $0.13 | $0.06 | $0.07 | 116.7% | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Revenue | $1,887,552 | $1,312,472 | $575,080 | 43.8% | | Cost of revenue | $365,904 | $244,818 | $121,086 | 49.5% | | Gross profit | $1,521,648 | $1,067,654 | $453,994 | 42.5% | | Income from operations | $445,365 | $186,220 | $259,145 | 139.1% | | Net income attributable to common stockholders | $540,758 | $239,656 | $301,102 | 125.6% | | Basic EPS | $0.23 | $0.11 | $0.12 | 109.1% | | Diluted EPS | $0.21 | $0.10 | $0.11 | 110.0% | Condensed Consolidated Statements of Comprehensive Income Presents net income and other comprehensive income components, reflecting total changes in equity from non-owner sources | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :------------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------------- | | Net income | $328,572 | $135,570 | $193,002 | | Foreign currency translation adjustments | $8,812 | $731 | $8,081 | | Net unrealized loss on available-for-sale securities | $(1,097) | $(53) | $(1,044) | | Comprehensive income attributable to common stockholders | $334,442 | $134,911 | $199,531 | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :------------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------------- | | Net income | $546,289 | $241,641 | $304,648 | | Foreign currency translation adjustments | $12,665 | $(1,168) | $13,833 | | Net unrealized loss on available-for-sale securities | $(2,333) | $(4,675) | $2,342 | | Comprehensive income attributable to common stockholders | $551,090 | $233,920 | $317,170 | Condensed Consolidated Statements of Equity Outlines changes in stockholders' equity, including stock issuance, repurchases, and net income over periods | Metric (in thousands) | Balance as of Dec 31, 2024 | Issuance of common stock from stock options | Issuance of common stock upon RSU/P-RSU release | Repurchases of common stock | Stock-based compensation | Other comprehensive income | Net income | Balance as of June 30, 2025 | | :-------------------------------- | :------------------------- | :---------------------------------------- | :---------------------------------------------- | :-------------------------- | :----------------------- | :------------------------- | :--------- | :-------------------------- | | Common Stock Amount | $2,339 | $19 | $14 | $0 | $0 | $0 | $0 | $2,372 | | Additional Paid-in Capital | $10,193,970 | $95,182 | $(14) | $(36,594) | $315,929 | $0 | $0 | $10,568,473 | | Accumulated Other Comprehensive Income (Loss), Net | $(5,611) | $0 | $0 | $0 | $0 | $10,332 | $0 | $4,721 | | Accumulated Deficit | $(5,187,423) | $0 | $0 | $0 | $0 | $0 | $540,758 | $(4,646,665) | | Total Palantir's Stockholders' Equity | $5,003,275 | $95,201 | $0 | $(36,594) | $315,929 | $10,332 | $540,758 | $5,928,901 | | Noncontrolling Interests | $91,132 | $0 | $0 | $0 | $0 | $0 | $5,531 | $96,663 | | Total Equity | $5,094,407 | $95,201 | $0 | $(36,594) | $315,929 | $10,332 | $546,289 | $6,025,564 | Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Net cash provided by operating activities | $849,514 | $273,766 | $575,748 | | Net cash used in investing activities | $(2,007,287) | $(660,123) | $(1,347,164) | | Net cash provided by (used in) financing activities | $(22,447) | $73,273 | $(95,720) | | Effect of foreign exchange on cash, cash equivalents, and restricted cash | $11,518 | $(4,948) | $16,466 | | Net decrease in cash, cash equivalents, and restricted cash | $(1,168,702) | $(318,032) | $(850,670) | Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements 1. Organization Describes the company's incorporation and core business of developing software platforms - Palantir Technologies Inc. was incorporated in Delaware on May 6, 2003, and builds and deploys software platforms that serve as central operating systems for its customers[26] 2. Significant Accounting Policies Details the key accounting principles and estimates used in preparing the financial statements - The financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim reporting, consolidating Palantir and its subsidiaries[27][28] - Management makes significant estimates and assumptions, including performance obligations, deferred tax assets, stock-based compensation, and accounts receivable collectability[30][31] | Cash, Cash Equivalents, and Restricted Cash (in thousands) | As of June 30, 2025 | As of June 30, 2024 | | :------------------------------------------------------- | :------------------ | :------------------ | | Cash and cash equivalents | $929,547 | $512,659 | | Restricted cash included in prepaid expenses and other current assets | $9,015 | $0 | | Restricted cash included in other assets | $12,672 | $19,416 | | Total cash, cash equivalents, and restricted cash | $951,234 | $532,075 | - Customer I represented 22% of total accounts receivable as of June 30, 2025, down from 26% as of December 31, 2024[38] - No single customer accounted for more than 10% of total revenue for the three or six months ended June 30, 2025 or 2024[39] - The FASB issued ASU 2023-09 (Income Taxes – Improvements to Income Tax Disclosures) effective for fiscal years beginning after December 15, 2024, and ASU 2024-03 (Income Statement – Expense Disaggregation Disclosures) effective for fiscal years beginning after December 15, 2026[40][41] - The Company is evaluating the impacts of these new standards[41] 3. Contract Liabilities and Remaining Performance Obligations Reports on contract liabilities and future revenue expected from remaining performance obligations | Metric (in thousands) | As of June 30, 2025 | As of December 31, 2024 | | :-------------------- | :------------------ | :---------------------- | | Contract liabilities | $685,900 | $566,400 | | Revenue recognized from contract liabilities (6 months ended June 30, 2025) | $403,600 | N/A | | Revenue recognized from contract liabilities (6 months ended June 30, 2024) | N/A | $362,400 | - Remaining performance obligations were $2.4 billion as of June 30, 2025[45] - Approximately 42% is expected to be recognized as revenue over the next 12 months, and 39% over the subsequent 13 to 36 months[45] 4. Investments and Fair Value Measurements Details the company's investments and their fair value measurements across different asset categories | Asset Category (in thousands) | As of June 30, 2025 (Fair Value) | As of December 31, 2024 (Fair Value) | | :---------------------------- | :------------------------------- | :--------------------------------- | | Money market funds (Level 1) | $477,208 | $1,823,046 | | Certificates of deposit (Level 2) | $4,822 | $4,826 | | U.S. Treasury securities (Level 2) | $5,022,804 | $3,110,687 | | Publicly-traded equity securities (Level 1) | $48,071 | $20,776 | | Total Fair Value Assets | $5,552,905 | $4,959,335 | | Debt Securities (in thousands) | Amortized Cost (June 30, 2025) | Fair Value (June 30, 2025) | Amortized Cost (Dec 31, 2024) | Fair Value (Dec 31, 2024) | | :----------------------------- | :----------------------------- | :------------------------- | :---------------------------- | :------------------------ | | U.S. Treasury securities | $5,024,728 | $5,022,804 | $3,110,278 | $3,110,687 | - Net unrealized gains from publicly-traded equity securities were $12.6 million for the three months ended June 30, 2025, compared to net unrealized losses of $6.6 million for the same period in 2024[51] - For the six months ended June 30, 2025, net unrealized gains were $1.9 million, compared to net unrealized losses of $12.2 million for the same period in 2024[51] - Privately-held equity securities (Level 3) totaled $122.9 million as of June 30, 2025, up from $64.9 million as of December 31, 2024[52] - Noncash consideration from equity securities was $16.8 million for the six months ended June 30, 2025, down from $30.3 million in the prior year period[53] - Revenue recognized from Strategic Commercial Contracts was $5.1 million for the three months ended June 30, 2025 (down from $9.2 million in 2024) and $10.2 million for the six months ended June 30, 2025 (down from $33.1 million in 2024)[56] 5. Balance Sheet Components Breaks down specific balance sheet components, including property, equipment, and accrued liabilities | Property and Equipment, Net (in thousands) | As of June 30, 2025 | As of December 31, 2024 | | :--------------------------------------- | :------------------ | :---------------------- | | Leasehold improvements | $92,401 | $85,284 | | Computer equipment, software, and other | $67,713 | $55,815 | | Furniture and fixtures | $15,052 | $13,906 | | Construction in progress | $6,533 | $7,632 | | Total property and equipment, gross | $181,699 | $162,637 | | Less: accumulated depreciation and amortization | $(138,176) | $(122,999) | | Total property and equipment, net | $43,523 | $39,638 | | Accrued Liabilities (in thousands) | As of June 30, 2025 | As of December 31, 2024 | | :------------------------------- | :------------------ | :---------------------- | | Accrued payroll and related expenses | $200,123 | $306,939 | | Accrued taxes | $63,765 | $42,243 | | Accrued other liabilities | $129,735 | $77,864 | | Total accrued liabilities | $393,623 | $427,046 | - Depreciation and amortization expense related to property and equipment, net was $5.4 million for the three months ended June 30, 2025 (down from $6.0 million in 2024) and $10.9 million for the six months ended June 30, 2025 (down from $12.1 million in 2024)[57] 6. Debt Provides information on the company's debt status and available credit facilities - As of June 30, 2025, the Company had no outstanding debt balances and $500.0 million in undrawn revolving commitments available under its 2014 Credit Facility, which matures on March 31, 2027[59][60] - The Company was in compliance with all associated covenants[60] 7. Commitments and Contingencies Discloses significant contractual commitments, legal proceedings, and potential contingent liabilities - The Company has committed to spend at least $1.95 billion over ten contract years through September 30, 2033, for cloud hosting services[62] - As of June 30, 2025, the $160.2 million commitment for the current contract year (ending September 30, 2025) was satisfied[62] - A securities class action (Cupat v. Palantir Technologies Inc., et al.) was dismissed with prejudice on April 4, 2025, but plaintiffs filed a Notice of Appeal on May 2, 2025[64] - A stockholder derivative action (Central Laborers' Pension Fund v. Karp, et al.) was dismissed in its entirety on April 25, 2025[65] - The Company provides warranties for software products and services and indemnifies customers against third-party intellectual property infringement claims[67][69] - No material warranty expense or infringement liability has been recorded as of June 30, 2025[70] 8. Stockholders' Equity Details stockholders' equity composition, including common stock classes and share repurchase activities | Common Stock Class (in thousands) | Authorized (June 30, 2025) | Issued and Outstanding (June 30, 2025) | Authorized (Dec 31, 2024) | Issued and Outstanding (Dec 31, 2024) | | :-------------------------------- | :------------------------- | :------------------------------------- | :------------------------ | :------------------------------------ | | Class A Common Stock | 20,000,000 | 2,273,764 | 20,000,000 | 2,242,389 | | Class B Common Stock | 2,700,000 | 97,078 | 2,700,000 | 95,401 | | Class F Common Stock | 1,005 | 1,005 | 1,005 | 1,005 | | Total | 22,701,005 | 2,371,847 | 22,701,005 | 2,338,795 | - The Company repurchased and retired 0.2 million shares of Class A common stock for $18.6 million during the three months ended June 30, 2025, and 0.4 million shares for $36.6 million during the six months ended June 30, 2025, under its $1.0 billion Share Repurchase Program[74][75] - Approximately $899.2 million remained available for future repurchases as of June 30, 2025[77] 9. Stock-Based Compensation Reports on stock-based compensation plans, including options, RSUs, and related expenses | Stock Option and SAR Activity (in thousands, except per share amounts) | Options Outstanding (Dec 31, 2024) | Options Outstanding (June 30, 2025) | SARs Outstanding (Dec 31, 2024) | SARs Outstanding (June 30, 2025) | | :---------------------------------------------------- | :--------------------------------- | :-------------------------------- | :------------------------------ | :----------------------------- | | Number of Awards | 178,109 | 158,910 | 6,437 | 7,228 | | Weighted Average Exercise Price Per Share | $9.26 | $9.77 | $55.75 | $65.31 | | Weighted Average Remaining Contractual Life (years) | 6.9 | 6.6 | 6.7 | 6.5 | | Aggregate Intrinsic Value | $11,821,740 | $20,109,743 | $127,976 | $522,117 | | RSU and P-RSU Activity (in thousands, except per share amounts) | RSUs Outstanding (Dec 31, 2024) | RSUs Outstanding (June 30, 2025) | P-RSUs Outstanding (Dec 31, 2024) | P-RSUs Outstanding (June 30, 2025) | | :---------------------------------------------------- | :------------------------------ | :------------------------------- | :-------------------------------- | :------------------------------- | | Unvested and outstanding | 65,236 | 53,162 | 577 | 225 | | Weighted Average Grant Date Fair Value per Share | $14.89 | $19.42 | $41.93 | $93.99 | - Total unrecognized stock-based compensation expense was $453.6 million for options and $60.6 million for SARs, expected to be recognized over a weighted-average service period of six years[78][82] - For RSUs, it was $800.2 million, expected over three years[82] - There was no unrecognized expense for P-RSUs[82] | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $14,973 | $12,402 | $29,989 | $22,818 | | Sales and marketing | $56,040 | $48,314 | $108,553 | $90,470 | | Research and development | $32,068 | $29,943 | $63,902 | $56,817 | | General and administrative | $56,890 | $51,105 | $112,866 | $97,310 | | Total stock-based compensation expense | $159,971 | $141,764 | $315,310 | $267,415 | 10. Income Taxes Discusses the company's income tax provision, effective tax rate, and impact of new tax standards | Provision for Income Taxes (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Provision for income taxes | $3,596 | $5,189 | $9,195 | $9,844 | - The effective tax rate differs from the U.S. statutory rate due to foreign income, non-deductible stock-based compensation, other non-deductible expenses, and valuation allowances on deferred tax assets (U.S. and U.K.)[84] - The Company maintains a full valuation allowance on U.S. and U.K. deferred tax assets due to a history of net operating tax losses[85] - The OECD's Pillar 2 global minimum tax rules became applicable to the Company in some jurisdictions starting January 1, 2024, but did not have a material impact on the financial statements[87] - The U.S. 'One Big Beautiful Bill Act,' signed July 4, 2025, is being evaluated but is not expected to have a material impact on consolidated financial statements[88] 11. Earnings Per Share Attributable to Common Stockholders Presents basic and diluted earnings per share calculations for common stockholders | EPS Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to common stockholders for diluted earnings per share (in thousands) | $326,727 | $134,126 | $540,758 | $239,656 | | Weighted-average shares (basic, in thousands) | 2,365,196 | 2,231,592 | 2,356,983 | 2,222,569 | | Weighted-average shares (diluted, in thousands) | 2,562,912 | 2,414,696 | 2,557,911 | 2,407,402 | | Basic EPS | $0.14 | $0.06 | $0.23 | $0.11 | | Diluted EPS | $0.13 | $0.06 | $0.21 | $0.10 | - Approximately 1.1 million and 0.8 million outstanding potentially dilutive RSUs were excluded from diluted EPS computation for the three and six months ended June 30, 2025 and 2024, respectively, due to their anti-dilutive effect[89] 12. Segment and Geographic Information Provides revenue and contribution data broken down by operating segments and geographic regions | Segment Contribution (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Government revenue | $552,983 | $370,767 | $1,039,946 | $706,140 | | Government contribution | $350,412 (63%) | $231,394 (62%) | $651,372 (63%) | $430,782 (61%) | | Commercial revenue | $450,714 | $307,367 | $847,606 | $606,332 | | Commercial contribution | $287,576 (64%) | $182,085 (59%) | $528,721 (62%) | $360,174 (59%) | | Total contribution | $637,988 (64%) | $413,479 (61%) | $1,180,093 (63%) | $790,956 (60%) | | Revenue by Geography (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $732,592 (73%) | $437,189 (64%) | $1,361,086 (72%) | $843,578 (64%) | | United Kingdom | $97,172 (10%) | $76,991 (11%) | $186,826 (10%) | $140,192 (11%) | | Rest of world | $173,933 (17%) | $163,954 (25%) | $339,640 (18%) | $328,702 (25%) | | Total revenue | $1,003,697 (100%) | $678,134 (100%) | $1,887,552 (100%) | $1,312,472 (100%) | 13. Intangible Assets Details the company's intangible assets and their expected amortization expense | Intangible Assets (in thousands) | As of June 30, 2025 (Net Carrying Amount) | As of December 31, 2024 (Net Carrying Amount) | | :------------------------------- | :---------------------------------------- | :------------------------------------------ | | Customer relationships | $4,853 | $5,893 | | Reacquired rights | $10,907 | $12,165 | | Total intangible assets | $15,760 | $18,058 | | Expected Amortization Expense (in thousands) | Amount | | :----------------------------------------- | :----- | | Remainder of 2025 | $2,299 | | 2026 | $4,597 | | 2027 | $4,250 | | 2028 | $2,517 | | 2029 | $2,097 | | Thereafter | $0 | | Total | $15,760 | 14. Related Party Transactions Discloses transactions with related parties, including expenses for executive aircraft use - The Company incurred $10.2 million in expenses related to the use of the Executive Aircraft, beneficially owned by CEO Alexander Karp, for business and personal travel during the six months ended June 30, 2025[100] SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Cautions investors about forward-looking statements, emphasizing inherent risks and uncertainties - Forward-looking statements cover expectations regarding financial performance, liquidity, revenue, operating expenses, profitability, cash flows, business and growth strategy, customer acquisition, platform integration, new product development, market share, competition, technology needs (especially AI), litigation, performance obligations, regulatory effects (taxation, privacy, AI), brand protection, third-party relationships, investments, stock repurchases, governance structure, macroeconomic conditions, and catastrophic events[102][107] - Investors are cautioned not to rely on forward-looking statements as predictions of future events, as outcomes are subject to risks, uncertainties, and other factors, including those in the 'Risk Factors' section[104][105] - The company undertakes no obligation to update these statements[105] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's analysis of financial performance, liquidity, capital resources, and critical accounting policies Overview Introduces Palantir's software platforms and their application in integrating data, decisions, and operations - Palantir builds software platforms (Gotham, Foundry, Apollo, and AIP) that integrate data, decisions, and operations for customers[109][110] - AIP, deployed in 2023, leverages existing machine learning with generative AI models to operationalize AI on enterprise data[111] Our Business Highlights key financial metrics, customer growth, and revenue distribution by segment and geography | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $1.0 billion | $678.1 million | $1.9 billion | $1.3 billion | | Revenue Growth Rate | 48% | N/A | 44% | N/A | | Income from Operations | $269.3 million | $105.3 million | $445.4 million | $186.2 million | | Adjusted Income from Operations (excl. SBC & payroll taxes) | $464.4 million | $253.6 million | $855.1 million | $480.0 million | | Gross Profit | $810.8 million | $549.6 million | $1.5 billion | $1.1 billion | | Gross Margin | 81% | 81% | 81% | 81% | | Gross Margin (excl. SBC) | 82% | 83% | 82% | 83% | - The Company had 849 customers as of June 30, 2025, an increase from 593 customers as of June 30, 2024[120][122] - Average revenue for the top twenty customers grew 30% to $74.7 million for the trailing twelve months ended June 30, 2025[122] - For the six months ended June 30, 2025, 55% of revenue came from government customers and 45% from commercial customers[123] - U.S. customers generated 72% of revenue and grew 55% in the trailing twelve months ended June 30, 2025[124] Expansion of Access to Platforms Anticipates accelerating customer reach and enhancing product development through faster platform deployment - The Company anticipates accelerating its reach among a broader set of commercial and government customers due to faster platform deployment[126] - This expansion is expected to enhance product and business development efforts[127] Macroeconomic Trends Monitors macroeconomic factors like geopolitical tensions and interest rates, assessing their potential business impact - The Company monitors macroeconomic impacts, including geopolitical tensions (Russia-Ukraine, Israel-Middle East conflicts), heightened interest rates, monetary policy changes, and foreign currency fluctuations[128][130][131] - These are not expected to have a material impact on current business or results of operations, but continued uncertainty could negatively affect customer acquisition, renewals, and collections[133][134] Key Business Measure Defines contribution margin as a non-GAAP measure for evaluating business efficiency after core operating costs - Contribution margin is a key non-GAAP measure defined as revenue less cost of revenue and sales and marketing expenses (excluding stock-based compensation), divided by revenue[136][137] - It evaluates business efficiency by capturing earnings after deployment, operation, and sales/marketing costs[138] Non-GAAP Reconciliations Reconciles non-GAAP financial measures, including contribution and adjusted operating income, to GAAP equivalents | Non-GAAP Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income from operations | $269,317 | $105,339 | $445,365 | $186,220 | | Add: R&D expenses (excl. SBC) | $102,975 | $78,838 | $206,030 | $162,004 | | Add: G&A expenses (excl. SBC) | $105,725 | $87,538 | $213,388 | $175,317 | | Add: Total stock-based compensation expense | $159,971 | $141,764 | $315,310 | $267,415 | | Total contribution | $637,988 | $413,479 | $1,180,093 | $790,956 | | Contribution margin | 64% | 61% | 63% | 60% | | Non-GAAP Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross profit | $810,763 | $549,572 | $1,521,648 | $1,067,654 | | Add: stock-based compensation | $14,973 | $12,402 | $29,989 | $22,818 | | Gross profit, excluding stock-based compensation | $825,736 | $561,974 | $1,551,637 | $1,090,472 | | Gross margin, excluding stock-based compensation | 82% | 83% | 82% | 83% | | Non-GAAP Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income from operations | $269,317 | $105,339 | $445,365 | $186,220 | | Add: stock-based compensation | $159,971 | $141,764 | $315,310 | $267,415 | | Add: employer payroll taxes related to stock-based compensation | $35,097 | $6,464 | $94,420 | $26,390 | | Adjusted income from operations | $464,385 | $253,567 | $855,095 | $480,025 | | Adjusted operating margin | 46% | 37% | 45% | 37% | Components of Results of Operations Breaks down various revenue and expense categories contributing to the company's financial results Revenue Explains revenue sources from cloud subscriptions, on-premises software, and professional services - Revenue is generated from Palantir Cloud subscriptions (hosted software with O&M), On-Premises Software (licenses with O&M), and Professional Services (on-demand user support, configuration, training, data modeling)[145][146][147] - Revenue is generally recognized ratably over the contract term for all three categories[148] Cost of Revenue Details the primary components of cost of revenue, including personnel, hosting, and subcontractor expenses - Cost of revenue primarily includes salaries, stock-based compensation, and benefits for O&M and professional services personnel, subcontractor expenses, third-party cloud hosting, hardware, and allocated overhead[149] - It is expected to increase in absolute dollars with revenue growth[149] Sales and Marketing Describes sales and marketing expenses, including personnel, compensation, and customer acquisition costs - Sales and marketing costs include salaries, stock-based compensation, variable compensation, cloud hosting for pilots, and marketing event costs[150] - These expenses are expected to increase as the Company invests in customer acquisition, business growth, and sales force expansion[151] Research and Development Outlines R&D costs for platform development, new features, and usability enhancements - Research and development costs are primarily for personnel involved in developing and refining platforms, including new features and modules, and enhancing usability[152] - These costs, including stock-based compensation and cloud hosting, are expensed as incurred and are expected to increase as investments continue[153] General and Administrative Covers G&A expenses for executive, finance, legal, HR, and administrative functions - General and administrative costs cover executive, finance, legal, HR, and administrative functions, including salaries, stock-based compensation, and professional services[154] - These expenses are expected to increase with additional personnel and enhanced systems to support business growth and public company compliance[155] Interest Income Explains interest income sources from cash, cash equivalents, and U.S. Treasury securities - Interest income is primarily derived from cash, cash equivalents, U.S. Treasury securities, and restricted cash balances[156] Other Income (Expense), Net Details other income and expenses, primarily from equity securities and foreign currency fluctuations - Other income (expense), net, primarily consists of realized and unrealized gains and losses from equity securities and foreign currency exchange gains and losses[157] Provision for Income Taxes Describes the provision for income taxes, including foreign, state, and withholding taxes - Provision for income taxes includes income taxes related to foreign and state jurisdictions and withholding taxes[158] Net Income Attributable to Noncontrolling Interests Represents the portion of income not attributable to the parent company - Net income attributable to noncontrolling interests represents the portion of income not attributable to Palantir Technologies Inc[159] Segments Defines the Commercial and Government operating segments and their contribution margin evaluation - Palantir operates two segments: Commercial (non-government industries) and Government (U.S. and non-U.S. government agencies)[160] - Segment profitability is evaluated based on 'contribution,' which is segment revenue less related cost of revenue and sales and marketing expenses (excluding stock-based compensation)[161] Results of Operations Analyzes overall financial performance, including revenue, cost of revenue, and operating expenses Overall Financial Performance Provides a percentage breakdown of revenue, costs, and income, illustrating financial performance trends | Metric (% of Revenue) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | 100% | 100% | 100% | 100% | | Cost of revenue | 19% | 19% | 19% | 19% | | Gross margin | 81% | 81% | 81% | 81% | | Sales and marketing | 24% | 29% | 26% | 30% | | Research and development | 14% | 16% | 14% | 17% | | General and administrative | 16% | 20% | 17% | 21% | | Total operating expenses | 54% | 65% | 57% | 67% | | Income from operations | 27% | 16% | 24% | 14% | | Net income attributable to common stockholders | 33% | 20% | 29% | 18% | Revenue Analysis Analyzes revenue growth by segment (Government and Commercial) and geographic region | Revenue Segment (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (in thousands) | % Change | | :----------------------------- | :------------------------------- | :------------------------------- | :-------------------- | :------- | | Government | $552,983 | $370,767 | $182,216 | 49% | | Commercial | $450,714 | $307,367 | $143,347 | 47% | | Total revenue | $1,003,697 | $678,134 | $325,563 | 48% | | Revenue Segment (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (in thousands) | % Change | | :----------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Government | $1,039,946 | $706,140 | $333,806 | 47% | | Commercial | $847,606 | $606,332 | $241,274 | 40% | | Total revenue | $1,887,552 | $1,312,472 | $575,080 | 44% | - U.S. government revenue increased to $426.1 million (Q2 2025) from $278.0 million (Q2 2024)[163] - U.S. commercial revenue increased to $306.5 million (Q2 2025) from $159.2 million (Q2 2024), a 92.5% increase[163] - Revenue from Strategic Commercial Contracts decreased by $4.1 million (Q2 2025) and $22.8 million (YTD Q2 2025)[164] Cost of Revenue and Gross Profit Analysis Examines changes in cost of revenue and gross profit, highlighting factors influencing gross margin | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :-------------------- | :------- | | Cost of revenue | $192,934 | $128,562 | $64,372 | 50% | | Gross profit | $810,763 | $549,572 | $261,191 | 48% | | Gross margin | 81% | 81% | 0% | 0% | | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Cost of revenue | $365,904 | $244,818 | $121,086 | 49% | | Gross profit | $1,521,648 | $1,067,654 | $453,994 | 43% | | Gross margin | 81% | 81% | 0% | 0% | - The increase in cost of revenue for Q2 2025 was primarily driven by increases in subcontractor expenses ($25.9 million), third-party cloud hosting services ($15.2 million), payroll ($7.5 million), and stock-based compensation ($6.6 million)[167] - Gross margin remained stable at 81% for both periods[168] Operating Expenses Analysis Details the changes in sales and marketing, R&D, and G&A expenses and their drivers | Operating Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (in thousands) | % Change | | :------------------------------- | :------------------------------- | :------------------------------- | :-------------------- | :------- | | Sales and marketing | $243,788 | $196,809 | $46,979 | 24% | | Research and development | $135,043 | $108,781 | $26,262 | 24% | | General and administrative | $162,615 | $138,643 | $23,972 | 17% | | Total operating expenses | $541,446 | $444,233 | $97,213 | 22% | | Operating Expense (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (in thousands) | % Change | | :------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Sales and marketing | $480,097 | $389,986 | $90,111 | 23% | | Research and development | $269,932 | $218,821 | $51,111 | 23% | | General and administrative | $326,254 | $272,627 | $53,627 | 20% | | Total operating expenses | $1,076,283 | $881,434 | $194,849 | 22% | - Sales and marketing costs increased by $47.0 million (24%) for Q2 2025, driven by stock-based compensation ($18.2 million) and payroll ($16.0 million)[172] - R&D costs increased by $26.3 million (24%), due to stock-based compensation ($10.3 million), cloud hosting ($6.9 million), and payroll ($4.8 million)[175] - G&A costs increased by $24.0 million (17%), primarily from stock-based compensation ($11.8 million) and payroll ($4.2 million)[178] Stock-Based Compensation Analysis Analyzes the trends and drivers behind stock-based compensation expense | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------------- | :------------------------------- | :------------------------------- | :-------------------- | :------- | | Total stock-based compensation expense | $159,971 | $141,764 | $18,207 | 13% | | Stock-Based Compensation Expense (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Total stock-based compensation expense | $315,310 | $267,415 | $47,895 | 18% | - The increase in stock-based compensation expense was driven by new grants of RSUs, P-RSUs, and SARs awarded since June 30, 2024, partially offset by reductions from fully vested equity awards and forfeitures[181] Interest Income Analysis Examines the factors contributing to changes in interest income | Interest Income (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (in thousands) | | :----------------------------- | :------------------------------- | :------------------------------- | :-------------------- | | Interest income | $56,255 | $46,593 | $9,662 | | Interest Income (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Interest income | $106,696 | $89,945 | $16,751 | - Interest income increased primarily due to an increase in interest-bearing cash, cash equivalents, and investments in short-term U.S. Treasury securities[182] Other Income (Expense), Net Analysis Analyzes the components and changes in other income and expense, net | Other Income (Expense), Net (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (in thousands) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :-------------------- | | Other income (expense), net | $6,596 | $(11,173) | $17,769 | | Other Income (Expense), Net (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (in thousands) | | :--------------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Other income (expense), net | $3,423 | $(24,680) | $28,103 | - The change in other income (expense), net, was primarily due to unrealized gains and lower realized losses from marketable securities[183] Provision for Income Taxes Analysis Discusses the changes in the provision for income taxes and the impact of recent tax legislation | Provision for Income Taxes (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (in thousands) | | :-------------------------------------- | :------------------------------- | :------------------------------- | :-------------------- | | Provision for income taxes | $3,596 | $5,189 | $(1,593) | | Provision for Income Taxes (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (in thousands) | | :-------------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Provision for income taxes | $9,195 | $9,844 | $(649) | - The provision for income taxes decreased by an immaterial amount for both the three and six months ended June 30, 2025, compared to the same periods in 2024[184] - The 'One Big Beautiful Bill Act,' signed July 4, 2025, is not expected to materially impact consolidated financial statements[185] Liquidity and Capital Resources Assesses the company's cash position, debt, and ability to meet financial obligations - As of June 30, 2025, Palantir had $6.0 billion in cash, cash equivalents, and short-term U.S. Treasury securities, with an accumulated deficit of $4.6 billion[186][187] - The Company believes it has sufficient liquidity for at least the next twelve months and the foreseeable future[187] - The Company has no outstanding debt and $500.0 million in undrawn revolving commitments under its credit facility[187] - Approximately $899.2 million remained available under the $1.0 billion Share Repurchase Program as of June 30, 2025[188] | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $849,514 | $273,766 | | Net cash used in investing activities | $(2,007,287) | $(660,123) | | Net cash provided by (used in) financing activities | $(22,447) | $73,273 | - The increase in net cash provided by operating activities was driven by revenue growth and timing of payments[191] - The increase in cash used in investing activities was primarily due to increased purchases of short-term U.S. Treasury securities[192][193] - Financing activities shifted from providing cash in 2024 to using cash in 2025, mainly due to taxes paid for equity award settlements and stock repurchases[194] Contractual Obligations and Commitments Summarizes significant contractual obligations, including lease and cloud hosting commitments - Contractual obligations primarily consist of operating lease commitments for facilities and non-cancelable purchase commitments for third-party cloud hosting services[195] - No material changes occurred since December 31, 2024, outside the ordinary course of business[195] Critical Accounting Policies and Estimates Highlights key accounting policies and estimates requiring significant management judgment - The preparation of financial statements requires management to make estimates and assumptions, including for revenue recognition, deferred tax assets, and stock-based compensation[196] - No material changes to critical accounting policies and estimates were noted compared to the 2024 Annual Report on Form 10-K[197] Recent Accounting Pronouncements References information on recently issued accounting pronouncements and their potential impact - Information on recently issued accounting pronouncements is referenced in Note 2. Significant Accounting Policies[198] Item 3. Quantitative and Qualitative Disclosures About Market Risk Discloses exposure to market risks, including investments, interest rates, and foreign currency Market Risk Discusses risks associated with equity investments and their susceptibility to market volatility - As of June 30, 2025, the Company held $48.1 million in publicly-traded equity securities and $122.9 million in privately-held equity securities[200][201] - These investments are subject to volatility from financial outcomes of issuers, global market conditions, and economic uncertainties, which could lead to impairment or downward adjustments[201] Interest Rate Risk Assesses exposure to interest rate fluctuations, primarily due to short-term financial instruments - Due to the short-term nature of its cash, cash equivalents, restricted cash, and available-for-sale debt securities, the Company has not been, and does not anticipate being, exposed to material risks from changes in interest rates[203][204] Foreign Currency Exchange Risk Explains exposure to foreign currency fluctuations and their potential impact on revenues and expenses - The Company's contracts are primarily in U.S. dollars, but expenses are in various currencies (JPY, Euro, GBP), leading to exposure to foreign currency exchange rate fluctuations[205] - A stronger U.S. dollar could unfavorably impact revenues and expenses from non-U.S. customers/vendors[205] - Foreign currency transaction gains and losses have not been material, and no hedging transactions have been engaged in[205] Inflation Risk Evaluates the impact of inflation on the company's business and financial condition - Inflation has not had a material effect on the Company's business, results of operations, or financial condition[206] - However, significant inflationary pressures could prevent offsetting costs through price increases, potentially harming the business[206] Item 4. Controls and Procedures Details the evaluation of disclosure controls and internal controls over financial reporting Evaluation of Disclosure Controls and Procedures Concludes on the effectiveness of the company's disclosure controls and procedures - Management, with CEO and CFO participation, concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[207][208] Changes in Internal Controls Over Financial Reporting Reports on any material changes in internal controls over financial reporting during the quarter - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[209] Inherent Limitations on the Effectiveness of Controls Acknowledges inherent limitations of internal control systems, providing reasonable, not absolute, assurance - The effectiveness of any internal control system is subject to inherent limitations, providing reasonable, not absolute, assurance[210] - Management recognizes that controls may become inadequate due to changing conditions or deteriorating compliance[210] PART II. OTHER INFORMATION Contains additional information not covered in financial statements, including legal proceedings and risk factors Item 1. Legal Proceedings Discusses ongoing legal proceedings and their potential, though not material, impact on financial statements - The Company believes that currently pending legal matters or claims are not expected to have a material adverse impact on its condensed consolidated financial statements, individually or in aggregate[66][213] - The results of litigation are uncertain, and unfavorable resolutions could materially affect future business[214] - Litigation can also negatively impact the Company due to defense and settlement costs and diversion of management resources[214] Item 1A. Risk Factors Details significant risks and uncertainties that could adversely affect business and financial performance Risk Factor Summary Provides an overview of key risks, including financial, operational, legal, and governance challenges - Key risks include historical net losses and anticipated expense increases, inability to sustain revenue growth, long and unpredictable sales cycles, customer concentration, fluctuating quarterly results, seasonality, complex platform implementation, challenges in developing new technologies (e.g., AI), dependence on third-party compatibility, difficulties in hiring/retaining personnel, maintaining brand/reputation, intense competition, managing company culture, mission/values alignment, exclusion from the China market, risks from joint ventures/partnerships, sales strategy execution, slow market development, financing/acquisition challenges, debt agreement restrictions, interest rate risk, investment losses, IP protection, data privacy/security breaches, AI-related liabilities, reliance on third-party infrastructure, legal/regulatory compliance, anti-bribery laws, trade controls, accounting changes, tax liabilities, NOL utilization, sales tax, government contract dependence, classified programs, security clearances, termination for convenience, evolving procurement policies, bid protests, non-commercial procurement, declining government budgets, stock price volatility, exclusive forum provisions, stock sales by insiders, share repurchase program effectiveness, anti-takeover provisions, analyst coverage, 'controlled company' status, no dividends, and the multi-class stock structure concentrating voting power with Founders[217][219][242][243][250][253][260][261][262][263][264][265][266][267][268][269][270][271][272][273][274][275][276][277][278][279][280][281][282][283][284][285][286][287][288][289][290][291][292][293][294][295][296][297][299][300][301][302][303][304][305][306][308][309][310][311][312][313][314][315][316][317][318][319][320][321][322][323][324][325][326][327][328][329][330][331][332][333][334][335][336][337][338][339][340][341][342][343][344][345][346][347][348][349][350][351][352][353][354][355][356][357][358][359][360][361][362][363][364][365][366][367][368][369][370][372][373][374][375][376][377][378][379][380][381][382][383][384][385][386][387][388][389][390][391][392][393][394][395][397][398][399][400][401][402][403][404][405][406][407][408][409][410][411][413][414][415][416][417][418][419][420][421][422][423][424][425][426][427][428][429][430][431][432][433][434][436][437][438][439][440][441][442][443][444][445][446][447][448][449][450][451][452][453][454][455][456][457][458][459][460][461][462][463][464][465][466][467][468][469][470][471][472][473][474][475][476][477][478] [Risks Related to Our Business and Industry](index