Why Palantir Plunge After Beat Earnings?
$Palantir Technologies Inc.(PLTR)$ reported Q1 earnings, and while both the top line and bottom line beat consensus.
But post-market feedback was still negative, mainly due to lower-than-expected current billings and slower revenue growth in the U.S. commercial segment.
Meanwhile, guidance upgrades have been factored in by the market, falling short of positive pre-earnings funding expectations.
Investment Highlights:
1. U.S. commercial revenue growth slowed down, international revenue growth picked up. Palantir's U.S. revenue has always accounted for more than half of the revenue in the last quarter to achieve a rapid growth of 70% of the large exceeded expectations, Q1 growth rate fell rapidly to 40%, slowing down the expansion; while the international commercial revenue growth accelerated to 15%;
2. Current billings were lower than expected, with year-over-year growth of only 2%, below market expectations of 13%. The market is further concerned about a slowdown in short-term growth momentum, as Billings is able to be more forward-looking on short-term growth.
3. Q2 guidance has been adjusted upward, and AI will bring incremental growth. The company's revenue guidance for Q2 is $650 million, with growth expected to be 22%, and its full-year revenue guidance has been revised upward somewhat, slightly exceeding market expectations;
4. Palantir works with its clients over a long period of time, so fluctuations in the short term are not significant. the client penetration of AIP also increased in Q1, with the testing software serving 915 corporate organizations, compared to 465 disclosed in the previous quarter
5. Valuation is still not low and equity incentives are still weighing. Although the equity incentives in Q1 had some control and improved the company's profit margin, the overall equity incentives will put pressure on the stock price in the next few years. Meanwhile, the company's valuation has risen from 14x Forward PS in last year's Q3 to 17x currently, corresponding to an adjusted forward PE of 70x, which is still high.
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