Palantir Technologies reported strong third-quarter results, with revenue nearly doubling year over year, US commercial revenue surpassing government revenue for the first time in the company's history, and a substantial upward revision to full-year guidance that far exceeded Wall Street expectations.
In the third quarter, Palantir's revenue grew 96% year over year to $2.313 billion, surpassing the market expectation of $2.18 billion. US commercial revenue surged 148% year over year to $984 million, above the market expectation of $937 million, and exceeded US government revenue of $953 million for the first time. Adjusted earnings per share came in at $0.44, beating the market expectation of $0.41.
On the guidance front, Palantir raised its full-year revenue forecast to a range of $8.530 billion to $8.534 billion, a significant increase from the previous guidance of $8.150 billion to $8.158 billion, and above the market expectation of $8.2 billion. The company also projected fourth-quarter revenue between $2.649 billion and $2.653 billion, exceeding the market average estimate of $2.46 billion based on LSEG data.
Palantir shares fluctuated sharply in after-hours trading, rising about 1.6% as of the time of writing. Previously, concerns over the stock's elevated valuation had weighed on sentiment, with investors worried that intensifying competition and the high base effect from the prior year could pressure results.
Commercial Revenue Surpasses Government for First Time, a Significant Milestone
In the third quarter, Palantir's US commercial revenue reached $984 million, surpassing US government revenue of $953 million for the first time, marking a major turning point in the company's history.
Total US revenue grew 119% year over year and 23% quarter over quarter to $1.937 billion. US commercial revenue rose 29% quarter over quarter, while US government revenue grew 96% year over year and 18% quarter over quarter.
CEO Alex Karp said in his letter to shareholders that "our overall business has essentially doubled compared to the same period last year." He attributed the results in the announcement to a "sovereign AI movement" that is forcing every institution—whether governmental or commercial—to choose between technological autonomy and reliance on external providers, a trend he described as "tailor-made for Palantir."
Order Pipeline Expands, Customer Stickiness Strengthens
In the third quarter, Palantir signed 212 contracts worth at least $1 million each, 107 contracts worth at least $5 million each, and 64 contracts worth at least $10 million each.
Total contract value (TCV) for the quarter was $2.918 billion, up 6% year over year; US commercial total contract value was $1.463 billion, up 11% year over year.
US commercial remaining deal value (RDV) reached $6.517 billion, up 79% year over year and 4% quarter over quarter, indicating strong future revenue visibility.
The company's Rule of 40 score reached 158%, reflecting a business model combining high growth with high profitability.
Profitability Improves in Tandem, Ample Cash Reserves
Third-quarter revenue marked the first time Palantir's quarterly revenue exceeded the $2 billion threshold, with profitability metrics also broadly beating expectations.
On a GAAP basis, operating income was $1.085 billion, with an operating margin of 47%; net income was $1.128 billion, with a net margin of 49%. Adjusted operating income was $1.427 billion, with an adjusted operating margin of 62%.
Earnings per share (GAAP) was $0.44, and adjusted earnings per share was also $0.44, both surpassing the analyst average estimate of $0.41. Operating cash flow was $1.205 billion, and adjusted free cash flow was $1.216 billion. As of the end of the third quarter, the company held $10.4 billion in cash, cash equivalents, and US Treasury securities.
The company also raised its full-year adjusted operating income guidance to a range of $5.245 billion to $5.249 billion, and its adjusted free cash flow guidance to $4.8 billion to $5 billion.
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