Palantir delivered a massive third-quarter earnings report on Monday, with the press release highlighting that the results "crushed consensus expectations." Despite this, retail investors remained lukewarm, causing the stock to dip slightly on Tuesday due to signs of slowing enterprise sales.
The positive aspect for investors was a 96% year-over-year revenue increase to $2.31 billion, the first time the company surpassed the $2 billion threshold. Revenue grew 20% from the previous quarter, beating analyst expectations of $2.18 billion. Palantir also reported adjusted earnings per share of $0.44 versus the expected $0.41. The company raised its full-year revenue guidance, a move that typically drives a stock higher.
A major milestone was reached when Palantir’s U.S. commercial revenue surpassed its U.S. government revenue for the first time. The commercial sector reported $984 million in contracts, a 148% increase from the same quarter last year, compared to $953 million in U.S. government revenue.
The surge in enterprise interest is driven by demand for the company’s AI software, capable of running frontier models and securely custom-training open-weight models without sharing proprietary data. Palantir’s existing "forward-deployed" software engineering model further enhances its appeal.
However, a concerning trend emerged as enterprises favor speed over permanence. "What Ryan and I are seeing on the front line and commercial is this much quicker interaction, much quicker to deployment, shorter duration of the contract but then an ability to expand that contract dramatically," CEO Alex Karp told Wall Street analysts during the quarterly call.
This reflects a common phenomenon in the enterprise AI sector where companies are eager to test AI solutions without bureaucracy but are equally quick to cancel. Karp dismissed these concerns with metaphors, noting the influx of new prospects and stating, "Conversely, you know, once you go Palantir, you don't go back."
The contract value figures suggest the company is not yet fully successful in locking down long-term business. Although Palantir secured $1.46 billion in total contract value from U.S. enterprises, this represents a decline from the previous record of $2.13 billion.
The upcoming earnings report will determine if Palantir has solidified its position as a leading U.S. enterprise AI provider. With the holiday season typically bringing major tech purchases, the company remains optimistic, having raised its guidance for U.S. commercial revenue to "in excess of $3.559 billion," representing at least 143% growth.
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