Accessible version Palantir Technologies Do not miss the 'Maven' voyage; Reiterate Buy and PO of $255 Reiterate Rating: BUY | PO: 255.00 USD | Price: 147.76 USD A warning to slow adapters, the clock is ticking Actions have consequences; for Palantir their intentional actions on how to go-to- market, develop products, and be an enabler of AI-decision making continues to be met with exponential growth. We view PLTR's 2025 rule of 40 score of 106% and 118% outlook for 2026 as a warning to peers, being an "AI c ...

Core Insights - Palantir reported a record revenue growth of 70% year-over-year in Q4 FY25, marking the highest growth rate since its IPO [1] - The company achieved an annual revenue of $4.475 billion for FY25, reflecting a 56% increase compared to the previous year [1] - Adjusted operating income for Q4 reached $798 million, with a profit margin of 57%, while the annual adjusted operating income was $2.3 billion, with a profit margin of 50% [1] - Total contract value (TCV) in Q4 hit a historical high of $4.3 billion, up 138% year-over-year [1] - The number of customers increased by 34% to 954, and remaining contract value grew by 105% to $11.2 billion [1] Financial Performance - For Q1 FY26, Palantir expects revenue between $1.532 billion and $1.536 billion, with adjusted operating income projected between $870 million and $874 million [2] - The median revenue forecast for FY26 is $7.19 billion, representing a 61% year-over-year growth [2] - U.S. commercial business revenue is anticipated to exceed $3.14 billion, with a minimum growth of 115% [2] - Adjusted operating income for FY26 is expected to be between $4.26 billion and $4.28 billion, with adjusted free cash flow projected between $3.925 billion and $4.125 billion [2] Market Position and Strategy - Company executives described the current performance as a "historic breakthrough," emphasizing the unique focus on scaling AI models for real-world value creation [2] - Palantir aims to transform clients from "AI adopters" to "AI-native enterprises," leveraging top-tier technology for exponential advantages [2] - The company is witnessing a shift in client attitudes, with more customers eager to understand how to accelerate the implementation of Palantir's solutions [4] Business Development and Client Engagement - Palantir's strategy involves rapidly demonstrating value to clients, resulting in larger and faster expansions in business engagements [3] - The company completed 61 transactions exceeding $10 million, indicating a growing recognition of the impact of its solutions [3] - There is a notable increase in clients restructuring their organizations to better integrate Palantir's products [4] Defense Sector Insights - Palantir has expanded its focus from defense to other sectors such as pharmaceuticals and data centers, indicating a broader industrialization strategy [5] - The company is receiving numerous inquiries about how to implement similar practices in government projects, reflecting its growing influence in defense [5] - There is a consensus that Palantir's competitors are not performing well, allowing the company to maintain strong relationships with industry leaders [6]

Core Insights - The article emphasizes that Palantir Technologies has achieved unprecedented revenue growth, with Q4 2025 revenue reaching $1.4 billion, a 70% year-over-year increase, and a 19% sequential increase [24][66] - The company's U.S. business is highlighted as a key driver, contributing $1.1 billion in revenue, a 93% year-over-year increase, and accounting for 77% of total revenue [11][66] - CEO Alexander Karp asserts that focusing on technology systems that create value is essential for survival in the industry, dismissing the trend of superficial AI hype [3][18] Financial Performance - Q4 2025 adjusted operating income was $798 million, representing a 57% margin, exceeding prior guidance by 500 basis points [66] - The total contract value (TCV) bookings for Q4 reached $4.3 billion, a 138% year-over-year increase, marking the highest quarter ever for TCV [70] - The company reported a net dollar retention rate of 139%, indicating strong customer expansion and retention [24] Business Segments - The U.S. commercial business grew 137% year-over-year and 28% sequentially, reaching $507 million in revenue for Q4 [73] - The U.S. government business also saw significant growth, with revenue increasing 66% year-over-year to $570 million in Q4 [78] - International commercial revenue grew 8% year-over-year to $171 million in Q4, but overall international growth remains limited compared to the U.S. market [76] Strategic Focus - The company is prioritizing the U.S. market due to strong domestic demand and is cautious about international expansion, citing technological constraints [25] - Palantir's strategy involves focusing on large-scale initial contracts, reflecting a shift in customer purchasing behavior towards significant AI deployments [25][74] - The company aims to transform clients into AI-native enterprises, enhancing their operational capabilities through its software platforms [41][43] Future Outlook - For Q1 2026, the company expects revenue between $1.532 billion and $1.536 billion, with full-year 2026 revenue guidance set between $7.182 billion and $7.198 billion, representing a 61% year-over-year growth [22][68] - The U.S. commercial revenue is projected to exceed $3.144 billion in 2026, with a growth rate of at least 115% [22] - The company anticipates continued strong demand for its AI solutions, particularly in the U.S. market, as it seeks to leverage its unique software capabilities [48][66]

Core Insights - Palantir Technologies' stock surged 8% in after-hours trading due to a revenue forecast for FY26 that significantly exceeded Wall Street estimates, projecting revenues of approximately $7.19 billion, a 61% increase [1] - The company reported a sales forecast of nearly $1.53 billion for the current quarter, also surpassing analyst expectations [1] Financial Performance - Palantir's Q4 earnings grew 70% to $1.41 billion, with earnings per share (EPS) of 25 cents, beating the average estimate of 23 cents [2] - The company reported $570 million in US government revenue, exceeding expectations of $521.5 million, and commercial revenue of $507 million, surpassing the average estimate of $478.7 million [3] Stock Market Reaction - Following the positive earnings report, Palantir's stock jumped 5%, closing at $147.77 [3] - Despite a previous decline of 29% from its November peak, the stock has rebounded significantly, reflecting strong market interest [4] Company Leadership and Strategy - CEO Alex Karp described the company's performance as "one of the truly iconic performances in the history of corporate performance or technology," emphasizing the unusual nature of these results for a company of Palantir's age [5] - The Chief Technology Officer highlighted the increased use of Maven, an AI-enabled system for the US military, indicating a strong role for Palantir in defense technology [5] Market Position and Controversies - Palantir has seen its shares rise nearly 800% over the past two years, adding approximately $315 billion in market value, benefiting from the AI boom [8] - The company's reliance on government contracts, particularly with ICE, has drawn criticism, especially in light of recent events involving federal agents [7][10]

Financial Data and Key Metrics Changes - In Q4 2025, overall revenue surged 70% year-over-year, marking the highest growth rate as a public company [4] - The Rule of 40 score reached 127, up 46 points year-over-year and 13 points quarter-over-quarter [4][17] - Full-year 2025 revenue grew 56% year-over-year, with guidance for full-year 2026 revenue at $7.190 billion, representing 61% growth year-over-year [17][29] - Adjusted operating income for Q4 was $798 million, representing a 57% margin, exceeding prior guidance by 500 basis points [18][26] - Full-year adjusted free cash flow was $2.3 billion, representing a 51% margin and 82% growth year-over-year [18] Business Line Data and Key Metrics Changes - U.S. commercial business grew 137% year-over-year and 28% sequentially, while U.S. government business grew 66% year-over-year and 17% sequentially [4][18] - Fourth quarter commercial revenue grew 82% year-over-year to $677 million, with full-year commercial revenue growing 60% year-over-year to $2.073 billion [21] - Fourth quarter government revenue grew 60% year-over-year to $730 million, with full-year government revenue growing 53% year-over-year to $2.402 billion [23] Market Data and Key Metrics Changes - U.S. revenue in Q4 grew 93% year-over-year to $1.076 billion, with full-year U.S. revenue growing 75% year-over-year to $3.320 billion [19] - International commercial revenue grew 8% year-over-year in Q4 to $171 million, while full-year international commercial revenue grew 2% year-over-year to $608 million [22] - Fourth quarter international government revenue grew 43% year-over-year to $160 million, with full-year international government revenue growing 47% year-over-year to $547 million [24] Company Strategy and Development Direction - The company focuses on delivering real-world value through AI, positioning itself as a leader in enterprise software that maximally leverages AI models [5][10] - The strategy includes moving customers from AI adopters to AI-native enterprises, emphasizing the importance of speed to production and transformational scale [8][10] - The company is committed to investing in product development and elite technical talent while maintaining GAAP profitability [26][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 with strong momentum, highlighting the convergence of two decades of development into current success [9] - The management noted that the demand for advanced software solutions is growing, particularly in the U.S. government sector, driven by global threats and budgetary pressures [9][41] - There is a recognition of the challenges in international markets, particularly in Europe, where adoption of advanced products is lagging [41][42] Other Important Information - The company closed its highest-ever quarter of TCV bookings at $4.3 billion, up 138% year-over-year [19][24] - Customer count grew 34% year-over-year to 954 customers, with revenue from the top 20 customers increasing 45% year-over-year to $94 million per customer [20][24] - The company ended Q4 with $11.2 billion in total remaining deal value, an increase of 105% year-over-year [25] Q&A Session Summary Question: How is the company thinking about its international business and potential reacceleration? - Management indicated that the challenge lies in the ability of allies to recognize the need for advanced products, with a focus on the U.S. market due to high demand [41][42] Question: Has there been a change in corporate hesitancy to implement AI? - Management noted that there is a shift towards customers recognizing the value of AI, with more serious inquiries and a willingness to engage in larger projects [47][51] Question: Is there potential for developing additional operational systems like ShipOS? - Management confirmed that there is interest in expanding the operational systems to other military applications, indicating a broad scope for future developments [58]

Financial Data and Key Metrics Changes - In Q4 2025, overall revenue surged 70% year-over-year, marking the highest growth rate as a public company [3] - The Rule of 40 score reached 127, up 46 points year-over-year and 13 points quarter-over-quarter [3][17] - Full year 2025 revenue grew 56% year-over-year to $4.475 billion, with Q4 U.S. revenue growing 93% year-over-year to $1.076 billion [18][19] - Adjusted operating income for Q4 was $798 million, representing a 57% margin, exceeding prior guidance by 500 basis points [18][26] - Full year adjusted free cash flow was $2.3 billion, representing a 51% margin and 82% growth year-over-year [18][29] Business Line Data and Key Metrics Changes - U.S. commercial business grew 137% year-over-year and 28% sequentially, while U.S. government business grew 66% year-over-year and 17% sequentially [18][24] - Fourth quarter commercial revenue grew 82% year-over-year to $677 million, with full year commercial revenue growing 60% year-over-year to $2.073 billion [21] - Fourth quarter government revenue grew 60% year-over-year to $730 million, with full year government revenue growing 53% year-over-year to $2.402 billion [23][24] Market Data and Key Metrics Changes - The U.S. business now accounts for 77% of total revenue, up 93% year-over-year [3] - Customer count grew 34% year-over-year to 954 customers, with trailing 12-month revenue from top 20 customers increasing 45% year-over-year to $94 million per customer [19][20] - International commercial revenue grew 2% year-over-year to $608 million, while international government revenue grew 47% year-over-year to $547 million [22][24] Company Strategy and Development Direction - The company focuses on leveraging AI to transform customer operations, moving them from AI adopters to AI-native enterprises [4][7] - Palantir aims to deliver real-world value by maximizing the use of AI models in production, distinguishing itself from competitors [4][5] - The company is committed to investing in product development and elite technical talent while maintaining GAAP profitability [26][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 with strong momentum, highlighting the convergence of two decades of development into current success [9] - The company anticipates continued demand for AI solutions, particularly in the U.S. government sector, driven by global threats and budgetary pressures [9][41] - Management acknowledged challenges in international markets, particularly in Europe, where adoption of advanced products is slower [41][42] Other Important Information - The company closed its highest-ever quarter of TCV bookings at $4.3 billion, up 138% year-over-year [19][24] - Adjusted gross margin for Q4 was 86%, with adjusted expenses increasing 34% year-over-year due to investments in AIP and technical hiring [26][27] - The company ended Q4 with $11.2 billion in total remaining deal value, an increase of 105% year-over-year [25] Q&A Session Summary Question: How is the company thinking about its international business and potential reacceleration? - Management noted that while there is significant demand in the U.S., challenges exist in international markets due to the need for advanced products and the purchasing structures of allied countries [41][42] Question: Is there a change in customer hesitancy towards AI implementation? - Management observed a shift in customer conversations, with more clients recognizing the effectiveness of Palantir's solutions and seeking to accelerate implementation [47][51] Question: Are there opportunities for new operational systems in defense? - Management confirmed ongoing discussions about expanding capabilities beyond current offerings, including potential applications in various military systems [58][59]

Core Insights - Palantir's CEO Alex Karp emphasizes the "Five Whys" methodology to identify root causes of issues, a principle inspired by Toyota's management practices [1][4][5] - Karp's leadership style and philosophical background have contributed to the company's innovative approach and success in the tech industry [3][4] - Palantir's unique corporate culture, which eschews formal titles and values customer engagement, is a key factor in its operational strategy [5] Company Strategy - The "Five Whys" approach is integral to Palantir's development process, focusing on continuous dialogue with customers and implementing feedback effectively [5] - Karp's philosophy aligns with the company's emphasis on understanding complex business problems, which has been a significant factor in attracting investment and partnerships [4][6] Financial Performance - Palantir's shares have increased over 100% year-to-date, reflecting strong market performance and investor confidence [7] - Karp's net worth is estimated at approximately $15.7 billion, indicating the financial success of both the company and its leadership [7]

Financial Data and Key Metrics Changes - For the second quarter, the company reported revenues of $150,000, driven by sales in the industrial verticals [21] - R&D and SG&A expenses for the second quarter were $14.1 million, with cash expenses at $11 million after backing out non-cash charges [21] - Year-over-year, expenses have been reduced by 44%, and the company expects to sustain current spending levels through the rest of the year [21][22] - The company finished the quarter with $91.4 million in cash and cash equivalents, with additional availability under current facilities [23][25] - Average daily trading volume has more than doubled to over 5.2 million shares during the second quarter compared to 2.6 million in the same period in 2024 [26] Business Line Data and Key Metrics Changes - The automotive vertical is expected to be the primary driver for high-volume recurring business, with a focus on cost competitiveness to drive adoption [18] - In the industrial vertical, the company is finalizing several engagements and has introduced an aftermarket product that can be retrofitted into existing forklift fleets [9][10] - The defense vertical presents significant opportunities, with plans to demonstrate an autonomous swarming drone system in the first half of next year [12][13] Market Data and Key Metrics Changes - Increased trading activity and institutional interest in LiDAR and automotive technology have been noted, with blue-chip institutions focusing on these sectors [15][16] - The company is well-positioned with its manufacturing partner in France, minimizing exposure to China-based manufacturing amid dynamic global tariffs [18][19] Company Strategy and Development Direction - The company aims to accelerate the global adoption of autonomous technologies across automotive, industrial, and military segments [14] - The go-to-market strategy focuses on OEMs with mass market product plans, emphasizing scalable and cost-competitive LiDAR products [8] - Partnerships with established prime defense contractors are targeted to enhance revenue growth in the defense sector [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the engagement with automotive OEMs and the potential for increased revenue from industrial and defense sectors [6][15] - The company is focused on developing advanced LiDAR sensors and sensor fusion technology to deliver actionable perception software [13][19] - Management highlighted the importance of cost competitiveness in driving higher LiDAR adoption among OEMs [18] Other Important Information - The company has raised approximately $35 million net from the ATM during the second quarter, bolstering its balance sheet [23][25] - The recent investment commitment of over $90 million from a single investor has significantly increased trading activity and visibility among institutional investors [26][27] Q&A Session Summary Question: Can you expand on specific use cases or customer types showing traction in the industrial pipeline? - The company is targeting AGV AMRs in logistics, focusing on higher safety levels and retrofittable solutions to existing installations [31][32] - Revenue is expected to materialize in the second half of this year and continue into 2026 [35] Question: Are there any specific programs or agencies in the defense vertical that you are aiming to engage with? - The company is actively working on partnerships and expects to demonstrate drone technology in the first half of next year [36][38] Question: How do you plan to compete with existing players in the industrial sector? - The company competes on technology, offering silicon-based sensors that provide a cost advantage and are designed for harsh environments [59][60] - The full software stack accompanying the sensors allows for tailored solutions to OEM needs, enhancing competitive positioning [62] Question: What is the status of the industrial OEM evaluating your technology? - There is no delay in decision-making; customers are in various levels of evaluation regarding integration into their systems [54][56] Question: What happened to the seven RFQs mentioned previously? - The RFQs are being reformulated by OEMs, and the quality of these RFQs has improved, indicating potential for real programs and revenue [80][84]

Financial Data and Key Metrics Changes - For Q4 2024, the company reported revenue of $1.7 million, up from $500,000 year-over-year, primarily driven by industrial vertical customers [26][27] - The company experienced a cash burn that remains one of the lowest in the marketplace, with a cash balance of $75 million at year-end [24][29] - The company has extended its cash runway into 2026 following two rounds of investments totaling over $90 million [24][30] Business Line Data and Key Metrics Changes - The company is focusing on automotive OEM programs with seven RFQs and several custom development proposals, while also engaging in industrial opportunities such as Automated Guided Vehicles (AGVs) and Autonomous Mobile Robots (AMRs) [6][9] - The total addressable market (TAM) for industrial applications is lower than automotive but offers faster revenue potential from multi-year programs [12][21] Market Data and Key Metrics Changes - The company is actively pursuing opportunities in the defense sector, anticipating increased defense spending under the current administration [15][21] - The competitive landscape includes challenges from Chinese automotive OEMs, which are driving U.S. and European OEMs to expedite their ADAS and EV initiatives [21] Company Strategy and Development Direction - The company aims to expand its near-term revenue opportunities in industrial and defense sectors while adapting to evolving timelines in the automotive industry [21][24] - The new CTO, Glenn De Vos, emphasizes the importance of delivering a complete perception system and advanced features suitable for various markets, including automotive and defense [20][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that automotive OEMs are adjusting their product launch timelines, which has affected revenue expectations [10][21] - The company remains optimistic about its engagements in the industrial sector and expects to see significant revenue from these partnerships in the near future [12][32] Other Important Information - The company has secured production commitments from its manufacturing partner, ZedF, to meet anticipated demand in the industrial vertical [50] - The company plans to maintain a disciplined cost management approach while focusing on operational excellence [23][24] Q&A Session Summary Question: How much of the $1.7 million revenue in Q4 was from commercial shipments versus R&D work? - The revenue was primarily derived from the sale of sensors to multiple customers, with minimal NRE expected to be pushed to 2025 [34][35] Question: Are the defense opportunities related to ground-based or aerial objects? - The focus is on ground-based applications, with the company working with partners in the military space [37][39] Question: What is the competitive nature of the commercial opportunities? - The company competes against various players but emphasizes its unique capabilities and the value of being a domestic supplier [41][43] Question: Can you clarify the $30 million to $50 million demand from ZedF? - This figure represents anticipated demand over the next 12 to 18 months, with secured production commitments to ensure supply [50] Question: What are the realistic timelines for RFQs converting into revenue? - The timelines for RFQs are elongating due to technical evaluations and the complexity of decisions within OEMs [54][56] Question: How does MicroVision plan to compete with FMCW LiDAR technology? - The company believes that while FMCW technology is gaining traction, it faces significant cost barriers and that its time-of-flight technology remains competitive [90][89]