UPDATED 19:52 EDT / NOVEMBER 12 2020

BIG DATA

Palantir raises revenue guidance, citing geopolitical uncertainty

Data analytics firm Palantir Technologies Inc. saw it stock bounce around today after reporting revenue growth of 52% in its first earnings call since going public in September.

The company a reported third-quarter profit before certain costs of 8 cents per share on revenue of $289 million. That was better than expected, with analysts modeling earnings of 3 cents per share on revenue of $279 million.

Palantir did, however, post a net operating loss of $847.8 million, blamed on what it said was an $847 million charge for stock-based compensation from its earlier listing.

The company also raised its full-year revenue guidance, from $1.06 billion to between $1.07 billion and $1.072 billion, which would represent 44% growth for the year.

“The demand for our software has increased steadily over the past year in the face of significant economic and geopolitical uncertainty in the United States and abroad,” Palantir said by way of explanation.

Investors didn’t really know what to make of it, with Palantir’s stock falling more than 8% in after-hours trading before reversing and gaining 1% at the time of writing.

Palantir was founded in 2003 by well-known technology investor Peter Thiel, along with Joe Lonsdale and its Chief Executive Officer Alex Karp. The company sells data analytics software and services primarily to government agencies, including the Defense Department, the U.S. Food and Drug Administration and several intelligence agencies. It also counts companies such as Airbus SE and bp plc among its customers.

Palantir went public via a direct listing on Sept. 30, and the stock has been well-received, with its shares climbing 46% since then. But investors are paying very close attention to Palantir’s small customer base, which numbered just 125 at the time it went public. The company has in recent months tried to expand its focus more on software and less on services to make it easier for new customers to start using its products. The idea is that this will expand its reach and lower sales costs.

It seems to be working, as Palantir said its “customer concentration is decreasing.” It noted that 61% of its revenue for the first nine months of the year was derived from its 20 biggest customers, down from 68% over the same nine-month period last year. Palantir didn’t update its customer count.

The company has some juicy new contracts in the offing too, including a $91 million deal it signed with the U.S. Army, a $36 million contract with the National Institutes of Health and a $300 million deal with an unnamed customer in the aerospace industry.

Palantir said sales to government agencies rose in the quarter by 68%, to $163 million. That means government clients now account for 56% of its total revenue, up from 54% before it went public.

Constellation Research Inc. analyst Holger Mueller said some of the cloth of secrecy around Palantir has come off since it became a publicly traded company. However, he said the lack of year-over-year comparisons and a quarter that was heavily influenced by the costs associated with going public means it’s still hard to gauge its performance.

“What is clear is that its business is growing well, and investors will be glad to see it’s reducing the impact of large customers,” Mueller said. “But Palantir still has to show it can control and manage expenses. The vendor only spent 44 cents on R&D for each dollar it spent on sales, marketing and G&A. That’s a low key performance indicator in the super-competitive and highly innovative industry it operates in.”

For the fourth quarter, Palantir is forecasting revenue of $299 million to $301 million, ahead of Wall Street’s estimate of $297 million.

Photo: Cory Doctorow/Flickr

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