Palantir: Brace For Impact

seekingalpha2022-04-29

SummaryPalantir will be reporting its Q1 FY22 results on May 9.The company is likely to post muted results for its government segment.Investors should pay attention to Palantir's customer count, its ...

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Comments

Pepermintpat
2022-05-27
Pepermintpat
Yes
Sogon
2022-05-23
Sogon
Nice breakdown
Ragz
2022-05-06
Ragz
Good watch
zuzuzigazag
2022-05-04
zuzuzigazag
okayy
T2huat
2022-05-02
T2huat
Ok
calebxiong
2022-04-30
calebxiong
Pls like

Leave a comment

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(NYSE:PLTR) is scheduled to report its Q1 FY22 earnings report on May 9. Investors are eagerly awaiting a large-enough revenue beat to reinvigorate its declining stock price. While that's one keyitem to track, investors may also want to closely monitor Palantir's customer count, remaining deal value, its bifurcated financials and its management's revenue outlook. These items will better highlight the company's near-term growth prospects and are likely to influence its share price in the coming days and weeks.Let's take a closer look to gain a better understanding of it all.Measuring Customer TractionAn oft-cited qualm when evaluating Palantir is the general concern that it has no real moat and that it's prone to a business slowdown. Therefore, for investors, the first order of business should be to closely examine if the company is showing any signs of operational or financial slowdown. We can track the former by looking at Palantir's customer count.See, if Palantir's business is indeed slowing down, then it'd be due to a saturating customer base or order book. On the contrary, if its customer base expands rapidly, then it suggests that the company's revenue growth is likely to remain at elevated levels, if not accelerating further. That's why it's important for us to keep tabs on Palantir's customer count. Any fluctuation here can provide us with leading insights about Palantir's growth momentum.BusinessQuant.comPalantir's management has done a fantastic job, especially in the past few quarters, in expanding their customer base rapidly. They've rolled out flexible payment terms to onboard more small and medium enterprises, offered free trials to large enterprises, and also expanded their sales team significantly. So, I expect them to continue adding new customers to the roster at a rapid rate in Q1 as well. My guesstimate is that they'd close Q1 with around 260 customers, up 74% year over year.But that's not all. After all, what good are the new customers if Palantir's order book is shrinking. It would, again, point to an inevitable slowdown in growth. So, to address this very concern, we must also track Palantir's remaining deal value. It's basically the dollar-value of all the orders that Palantir is yet to generate revenue on. It's akin to the order backlog figure that we commonly track in engineering firms.I think it's needless to say, but it's in the best interest of the company and its shareholders if Palantir's remaining deal value continues to expand. It'll point to a growing revenue pipeline and would present the possibility of a sales growth acceleration sometime in the future. An even better scenario would be if Palantir's remaining deal value growth outpaces its customer growth. It would mean that Palantir's growing customer base and actively signed contracts with the company increased their average contract value.BusinessQuant.comOnly time will tell what the actual scenario turns out to be. But for the time being at least, I'm expecting Palantir's remaining deal value to grow in tandem with its customer count at 74% during Q1 FY22. This would put the figure to be somewhere around $4.87 billion for the said quarter.But having said that, let's now shift attention to Palantir's financials.Bifurcated FinancialsPalantir segregates its revenue in two reportable segments, namely, government and commercial. Its government segment accounts for 55% of the overall top-line and comprises of contracts received from U.S. and international government agencies. Although this revenue stream has grown at 20%-plus rates in the past, its growth momentum has tempered of late due to the larger base effect and arguably also due to market saturation.BusinessQuant.comI expect Palantir's government revenue to grow marginally on a sequential basis this time around. See, Palantir hasn't won any major contracts from the federal government during Q1 -- its new orders have actually shrunk in the said time frame. The company, also, hasn't announced any major order wins that would trump this decline. This suggests that Palantir's government segment will be revenue challenged in Q1.Federal Procurement Data SystemWhat can potentially drive growth here, however, is that its existing government clients could ramp up their spending under their existing contracts. This won't be a big catalyst but it may be sufficient to nudge the company's government revenue higher on a sequential basis. So, I'm estimating Palantir's government revenue to grow marginally by 2%, quarter on quarter, with the revenue figure amounting to about $246 million in Q1.Moving on, Palantir's commercial segment accounts for the remaining 45% of its total sales. This particular revenue stream has been growing at a relatively faster rate largely on the back of aggressive sales and marketing efforts, such as offering free promotional access to its platforms, easier payment terms and by expanding its direct sales teams.Since these sales and marketing efforts are ongoing, rather than being one-time efforts, they're likely to continue bolstering Palantir's commercial revenue growth in coming quarters as well. However, we must also take into account that the segment has posted muted results in Palantir's prior Q1s. This indicates that there's a cyclical element at play which is likely to hamper Palantir's commercial revenue growth in its upcoming earnings report. So, as far as Q1 is concerned, I'm expecting Palantir's commercial revenue to come in at $202 million, up just 4% sequentially.BusinessQuant.comThis brings us to a company-wide revenue estimate of $445.5 million, which would be up 2.9% sequentially and up 30.6% YOY. Coincidentally, my revenue estimate lines up with the Street's average estimate of $443 million.But having said that, investors should also pay close attention to the management's revenue outlook for Q2 and for the rest of the year. Specifically, how is their revenue going to fare now that their customer count has risen significantly over the past year, whilst new contract wins from the US government have seemingly slowed down. This will be another key marker during the company's Q1 earnings report.Final ThoughtsPalantir's shares are down 55% over the last 6 months alone, and they seem to trade at a steep discount when compared with some of the rapidly growing software infrastructure companies. This makes it an attractive buy for growth-seeking investors, especially for those with a multi-year time horizon. So, in light of its attractive valuations and a range of initiatives to drive growth, I remain bullish on Palantir.BusinessQuant.comHaving said that, Palantir's upcoming earnings report might turn out to be a pivotal moment wherein we'll get clarity on whether the slowdown is behind us or if it's going to worsen in the coming quarters. So, as far as Q1 is concerned, investors may want to keep a close eye on Palantir's customer count, remaining deal value, its segment financials and management's revenue outlook for Q2. These items are likely going to dictate where its shares head next. Good Luck!","kind":"news","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9025388778,"gmtCreate":1653620892694,"gmtModify":1676535316613,"author":{"id":"4109504542406510","authorId":"4109504542406510","name":"Pepermintpat","avatar":"https://community-static.tradeup.com/news/0804feddbf156f8e808003b7ca831628","vip":1,"hat":"https://static.tigerbbs.com/0a8758340a08196056f8bc1e54805193","crmLevel":3,"crmLevelSwitch":1,"authorIdStr":"4109504542406510","idStr":"4109504542406510"},"htmlText":"Yes","listText":"Yes","text":"Yes","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9025388778","repostId":1146605260,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028425046,"gmtCreate":1653269400386,"gmtModify":1676535250631,"author":{"id":"3574595664255534","authorId":"3574595664255534","name":"Sogon","avatar":"https://static.tigerbbs.com/5f976e066a7b05d035ba174a06f3d8eb","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":4,"crmLevelSwitch":1,"authorIdStr":"3574595664255534","idStr":"3574595664255534"},"htmlText":"Nice breakdown","listText":"Nice breakdown","text":"Nice breakdown","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028425046","repostId":1146605260,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9068518397,"gmtCreate":1651793235719,"gmtModify":1676534969733,"author":{"id":"4114498221568562","authorId":"4114498221568562","name":"Ragz","avatar":"https://community-static.tradeup.com/news/b4ff9d535326b2e5c1e196c2eaee90d6","vip":1,"crmLevel":6,"crmLevelSwitch":1,"authorIdStr":"4114498221568562","idStr":"4114498221568562"},"htmlText":"Good watch&nbsp;","listText":"Good watch&nbsp;","text":"Good watch","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9068518397","repostId":1146605260,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9061721618,"gmtCreate":1651679762526,"gmtModify":1676534948441,"author":{"id":"3585482877303928","authorId":"3585482877303928","name":"zuzuzigazag","avatar":"https://community-static.tradeup.com/news/98c974e3d1ad2376d88d1edd791089d7","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":7,"crmLevelSwitch":0,"authorIdStr":"3585482877303928","idStr":"3585482877303928"},"htmlText":"okayy&nbsp;","listText":"okayy&nbsp;","text":"okayy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9061721618","repostId":1146605260,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9063555523,"gmtCreate":1651499298824,"gmtModify":1676534916451,"author":{"id":"4097408260137130","authorId":"4097408260137130","name":"T2huat","avatar":"https://static.tigerbbs.com/1a4dd163528b9498d56683bd49a808d2","vip":1,"crmLevel":5,"crmLevelSwitch":0,"authorIdStr":"4097408260137130","idStr":"4097408260137130"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9063555523","repostId":1146605260,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9069540088,"gmtCreate":1651323373926,"gmtModify":1676534889984,"author":{"id":"3573369466096628","authorId":"3573369466096628","name":"calebxiong","avatar":"https://static.tigerbbs.com/08d48582a3126a51d85cbec3a72f9923","vip":1,"crmLevel":9,"crmLevelSwitch":0,"authorIdStr":"3573369466096628","idStr":"3573369466096628"},"htmlText":"Pls like","listText":"Pls like","text":"Pls like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9069540088","repostId":1146605260,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":544,"commentSize":45,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; 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