Palantir Technologies Inc. today reported that its revenue in the third quarter ended Sept. 30 grew by 36% year-over-year, to $392 million, above the $385 million that analysts polled by Refinitiv had expected.

The data management and analytics provider’s earnings per share didn’t disappoint either, reaching four cents per share on an adjusted basis, in line with the Refinitiv forecast. For the next quarter, Palantir is anticipating sales of $418 million, above the $402 million that analysts had forecasted. 

Despite surpassing the consensus revenue estimate, Palantir’s stock declined more than 8% in trading today, indicating that investors had expected better financial performance. It’s possible that the share price decline may be related to the company’s revenue growth rate. The 36% sales increase that Palantir logged in the third quarter represents a slower growth rate than what it reported for the first half of the year: The company grew sales by 49% year-over-year in both the first and the second quarter. 

Palantir develops data management software that enables organizations to collect and analyze information from many different systems. The company also offers artificial intelligence capabilities as part of its feature set. 

Palantir launched more than a decade ago with an initial focus on the public sector, providing its software to customers such as the U.S. Department of Defense. Over the last few years, Palantir has expanded its business beyond the public sector by adding enterprise customers, which now account for a significant portion of its revenue.

In the third quarter, sales from U.S. commercial customers jumped 106%, growing at nearly triple the rate of Palantir’s total revenue. The sales increase was driven in part by new client wins. Palantir today reported that its commercial customer count increased 46% compared with the previous quarter.

One reason why Palantir has managed to grow its commercial business into a significant revenue stream is that its data management and analytics software supports a large number of use cases. That the software can be applied to many tasks means many different types of organizations can use it in their operations. 

According to Palantir, internet providers may leverage its technology to find technical issues in their networks. For wind turbine operators, Palantir promises to streamline maintenance tasks. Optimizing product pricing, reducing business expenses and increasing customer retention are among the other use cases that the company promises to facilitate with its software.

Much of Palantir’s revenue comes from large organizations. In the third quarter, the company closed 54 deals worth $1 million or more, including 33 contracts worth at least $5 million and 18 valued at $10 million or more.

Palantir also provides its software to early-stage startups through a program called Foundry for Builders that was announced earlier this year. The company is participating in the startup ecosystem as an investor as well. Over the last few months, Palantir has invested in multiple tech firms that are going public via SPAC, or special-purpose acquisition company, mergers.

Though it has built a significant commercial sector business in recent years, Palantir continues to generate over half its revenue from the public sector. Government clients accounted for $218 million of the $392 million in total revenue the company logged during the third quarter.

Revenue in the full 2021 fiscal year is expected to reach $1.53 billion, Palantir said, a 40% increase compared with 2020. The company also reaffirmed a previous estimate projecting that revenues will grow at a rate of 30% or more annually every year through 2025.

Palantir added that total remaining deal value, a metric of future revenue, rose 50% year-over-year, to $3.6 billion.

Photo: Cory Doctorow/Flickr