To The Moon

$Palantir Technologies Inc.(PLTR)$ just released its Q1 financial report(FY2023Q2), surged 21% in after-hours trading. The stock price fell from around $9 to $7.5 before the financial report was released last month, but it has once again pushed the company's stock price to a new high since March.

What makes Q1 Earningoutstanding?

Revenue was $525 million, an increase of 18% year-on-year and better than market expectations of $506 million.

Net profit attributable to common shareholders was $16.802 million compared with a net loss of $101 million in the same period last year; GAAP operating profit was $4.1 million.

Diluted earnings per share were $0.05, higher than market expectations of $0.04 and compared with a loss per share of $0.05 in the same period last year.

Short-term deferred revenue increased by US$88.67 million, higher than market expectations of US$8.67 million.

The total number of customers is 391, higher than market expectations of 384.

In terms of revenue composition, government revenue is similar to market expectations at USD 289 million while commercial activity revenue is USD 236m which is up by 7% more than expected.

This indicates that the company's incremental growth in commercial activities exceeded expectations and also announced Q2 and full-year performance forecasts: estimated Q2 revenue will be between USD528-532mn slightly lower than market expectation for USD537mn; estimated full-year revenue will be between USD2.19-2 .24 billion slightly higher than market expectation for USD2bn.

In addition, the company estimates that it can achieve profitability every quarter this year.

Can Palantir Stock Price take the advantage?

The PLTR financial report has been well received by the markets due to several reasons:

1) Improved profitability and record free cash flow: Due to the higher-than-expected revenue growth this quarter, several profit indicators exceeded expectations. In addition, the company reduced administrative and R&D expenses, resulting in record net profits and free cash flow.

2) Improved commercialization growth: Government orders have always been a constant factor; therefore, commercial development is the lifeline of company growth. The market was not optimistic about its commercialization growth rate before as it fell to around 10% in Q3 and Q4 of 22 but returning to a 15% increase gives hope for future incremental gains.

In terms of valuation, PLTR's overall valuation is almost aligned with the industry average. Its current PS ratio is 8.2 times which is slightly higher than the technology industry average of 7.5 times but better than that of SaaS industry.

Looking at secondary market performance, when the company announced last quarter's financial report in February due to exceeding profit expectations and improving guidance it surged by 25% over two days but then wiped out all gains over the next two days and performed averagely during subsequent quarters since last year's Q1 financial report despite some fluctuations.

Therefore, unless there are more outstanding performances or an influx from institutional investors due to industry hype it will be difficult for Palantir Technologies Inc.to attract more funds than those flowing into general markets even though this Q1 financial report has brought its valuation level back up again.