UPDATED 15:57 EST / NOVEMBER 02 2023

BIG DATA

Palantir shares jump on expectation-topping earnings and raised guidance

Shares of Palantir Technologies Inc. jumped more than 20% today after it posted third-quarter revenue and earnings that topped analyst expectations.

Palantir launched in 2003 to provide software for the intelligence community. Its flagship product, Gotham, is used by government agencies to collect and analyze data from multiple sources. Over the years, it has also established a presence in the private sector, which accounted for nearly as much revenue as its government business during the third quarter.

The company reported sales of $558 million for the three months ended Sept. 30, which represents a 17% improvement from a year earlier. Analysts were projecting a slightly lower $556.1 million. The company’s government business accounted for $308 million in sales, while commercial customers accounted for the remaining $251 million of its quarterly revenue.

Palantir’s commercial business has emerged as a key growth driver for the company. Commercial sales climbed 23% during the third quarter, which is nearly double the 12% growth rate the software maker achieved in the public sector. Commercial revenue in the U.S. rose at an even faster clip, increasing 33% year-over-year to $116 million.

The company credited the increased private sector sales partly to strong interest in its Artificial Intelligence Platform, or AIP, a software product that launched earlier this year. The platform promises to ease the task of deploying large language models on an organization’s internal infrastructure. AIP includes a code editor optimized for AI projects, a tool that can mitigate erroneous language model outputs and other specialized development tools.

“Excitement around Palantir’s AIP was seemingly validated by optimistic early adoption signs reported by management,” said Jordan Berger, an analyst at research firm Third Bridge. “If successful, AIP could ignite Palantir’s go-to-market motion in a transformational way. However, our experts caution that due to the complexity of the core technology deployment, the net benefit generated by AIP remains to be seen.”

AIP is the newest of the four software platforms that make up Palantir’s product portfolio. There’s also Gotham, the company’s flagship data processing platform for the public sector, as well as Foundry and Apollo. Foundry is a data management platform for private sector customers, while Apollo is a development toolkit that eases software engineering tasks such as rolling out application updates.

Palantir’s revenue momentum in the third quarter lifted its earnings. The company generated net income of $72 million compared with a $123.9 million net loss a year earlier. Adjusted earnings amounted to seven cents per share, one cent more than the consensus analyst estimate.

It has now achieved four consecutive quarters of profitability. According to the company, that makes it eligible to join the S&P 500 stock index.

For the full fiscal year, Palantir is projecting sales of $2.216 billion to $2.2 billion. That’s a slight increase over its previous forecast of $2.212 billion. Additionally, the company boosted its adjusted income from operations guidance to between $607 million and $611 million. 

Image: Palantir

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