Palantir 2nd consecutive GAAP +VE net income, sell on earnings
Palantir Technologies just reported its second consecutive quarter of Positive GAAP net income after reporting earnings on May 8 after the close. The stock popped after earnings and gained more than 20% in after hours trading.
Summarising their Q1 2023 highlights, Palantir recorded:
* GAAP net income of $17 million
-> representing second consecutive quarter of positive GAAP net income
* GAAP income from operations of $4 million, representing a margin of 1%, up 1,000 basis points year-over-year
-> representing first quarter of positive GAAP operating income
* GAAP earnings per share (“EPS”) of $0.01
* Adjusted EPS of $0.05
* Total revenue grew 18% year-over-year to $525 million
* US revenue grew 23% year-over-year to $337 million
PLTR Q1 2023 earnings presentation
Interestingly, stock based compensation remains high, but not as high before. As a percentage of revenue for the quarter, it works out to around 21% of total revenues of Q1 2023.
Looking at the income statement, gross margin for the quarter is around 79.5%, an improvement from 78.8% for the quarter one year ago. However, income from operations margin is only 0.7%, although the quarter from a year ago is a loss from operations. Also interest income for the quarter is $20.8 million, not a surprise as Palantir have roughly combined $2.9 billion in cash and cash equivalents.
Palantir income statement (in thousand)
Palantir still commands a high valuation
Palantir valuation (source Seeking Alpha)
In terms of valuation, Palantir is roughly 36 times non-GAAP forward earnings, 419 times GAAP forward earnings, 25 times EV-to-EBITDA, and 7.1 times forward price-to-sales, and 70 times operating cashflow.
Provided Palantir can continue to deliver GAAP income positive from operations for every quarter, and continue to tighten their cost structure and especially stock based compensation, it's hard to justify paying such levels for roughly 18% growth.
Also, management had previously guided 40% full year US commercial growth in their earnings call at the end of Q4 2022, but the first quarter growth of 26% year-on-year for US commercial revenue still remains a far distance from it’s target of 40%.
US commercial revenue growth
How to trade PLTR after earnings
Based on the gap up to $9.40 after earnings in after hours, it would be likely that traders would take short term profits and the price action would likely work its way down to attempt to close the gap. Level of support likely to form around $7.50, although there is still room to fall if it fails to deliver sufficient growth in 2023.
$Palantir Technologies Inc.(PLTR)$Modify on 2023-05-09 14:50
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no matter what happens in the next few days, the shorts have been warned....the stock is on an uptrend, and the company has guided accordingly. don;t listen to thier nonsense.
Buyers know that it is heading into the S&P 500 by the end of the year so these small moves upward are going to be the beginning not the end of the share price climbing.
Price is stabilize near $10. Late runs before closing will push this stock over $10.
Accumulating more at this level. Institutions are hooping back in. PLTR is now a profitable business. AI products rolling out soon. The demand will be high.
Although they have never been trustworthy which is a reason why they don’t upgrade PLTR.
People are taking bullish trend on $Palantir Technologies Inc.(PLTR)$ now.
$Palantir Technologies Inc.(PLTR)$ is rising now, let’s go. To the moon!
The volume shows Funds are once again ready to be part of the Palantir story.
And it’s time to break up to 10 USD now.