Palantir Technologies Q1 2025 Earnings Report

Palantir Technologies EPS Results

• Actual EPS: $0.13
• Consensus EPS: $0.13
• Beat/Miss: Met Expectations
• One Year Ago EPS: $0.08

Palantir Technologies Revenue Results

• Actual Revenue: $883.86 million
• Expected Revenue: $863.89 million
• Beat/Miss: Beat by +$19.96 million
• YoY Revenue Growth: +39.40%

Palantir Technologies Announcement Details

• Quarter: Q1 2025
• Date: 5/5/2025
• Time: Before Market Opens
• Conference Call Date: Monday, May 5, 2025
• Conference Call Time: 5:00PM ET

Palantir Technologies (NASDAQ:PLTR) is an SaaS company focused on AI and big data analytics. It was founded in 2003 in Denver, Co by well-known investors Peter Thiel and Stephen Cohen among others. The company’s goal is to augment human intelligence with data-gathering and analytic tools that can change the world for the better. As of 2022, Stephen Cohen, co-founder Alexander Karp, and Peter Thiel were president, CEO, and Chairman respectively.

Originally intended as a tool for the Federal Government, the company has since expanded to serve state and local governments as well as private corporations. The company’s name is based on J.R.R. Tolkien's Lord of the Rings trilogy. The palanteri are indestructible crystal globes used for seeing across great distances.

Today the company builds and deploys solutions for its clients based on three primary offerings. These are Palantir Gotham, Palantir Apollo, Palantir Foundry, and Palantir Metropolis. The goal is to generate alpha, or a competitive advantage, for its clients so they can succeed in a rapidly changing environment.

The company’s core offering is Palantir Gotham. Palantir Gotham was originally intended for the US intelligence community as a counter-terrorism tool but it has since been deployed by state and local governments as well as private enterprises as a global decision-making tool. Users are able to aggregate data from hundreds of inputs and funnel them into a single view for rapid decision-making and execution. The tool, which looks for and analyzes hidden patterns in deep data sets, has been used for “predictive policing” and has drawn some criticism because of it.

Palantir Apollo is an operating system designed to give continuous delivery and deployment of safe, secure Internet access across all operating environments. The system is 1 of 5 recognized by the Department of Defense as a Mission Critical National Security System and used by businesses and organizations for autonomous software deployment. Among its advantages, the system can speed up the development of new software by as much as 50% simply by securing access to sensitive information and networks.

 

Palantir Technologies Q1 2025 Earnings Call Transcript

Presentation

[Ana Soro, Office of the CFO at Palantir]

Afternoon. I'm Anna Sorrow from Palantir's finance team, and I'd like to welcome you to our first quarter twenty twenty five earnings call. We'll be discussing the results announced in our press release issued after the market closed and posted on our Investor Relations website. During the call, we will make statements regarding our business that may be considered forward looking within applicable securities laws, including statements regarding our second quarter and fiscal twenty twenty five results, management's expectations for our future financial and operational performance, and other statements regarding our plans, prospects, and expectations. These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially from actual results.

[Ana Soro, Office of the CFO at Palantir]

Information concerning those risks is available in our earnings press release distributed after the market closed today and in our SEC filings. We undertake no obligation to update forward looking statements except as required by law. Further, during the course of today's call, we will refer to certain adjusted financial measures. These non GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, GAAP measures. Additional information about these non GAAP measures, including reconciliation of non GAAP to comparable GAAP measures, is included in our press release and investor presentation provided today.

[Ana Soro, Office of the CFO at Palantir]

Our press release, investor presentation, and other earnings materials are available on our Investor Relations website at investors.palantir.com. Over the course of the call, we will refer to various growth rates when discussing our business. These rates reflect year over year comparisons unless otherwise stated. Joining me on today's call are Alex Karp, Chief Executive Officer Shyam Sankar, Chief Technology Officer Dave Glazer, Chief Financial Officer and Ryan Taylor, Chief Revenue Officer and Chief Legal Officer. I'll now turn it over to Ryan to start the call.

[Ryan Taylor, Chief Revenue Officer and Chief Legal Officer at Palantir]

Our first quarter of the year showcased incredible strength and remarkable momentum as revenue grew 39% year over year. Our story continues to be one of preeminence in The US. Our US revenue grew 55% year over year and now makes up 71% of our overall business. Our US commercial business's extraordinary momentum continued as revenue grew 71% year over year. Our foundational US Government business achieved compelling revenue growth of 45% year over year.

[Ryan Taylor, Chief Revenue Officer and Chief Legal Officer at Palantir]

Our results continue to redefine the Rule of 40, with our Rule of 40 score increasing from 81 in Q4 to 83 last quarter. While organizations may consider curtailing spending to drive efficiencies or weather heightened volatility, they find this is the moment they need Palantir the most. The time they turn to us asking, how can we help them adapt and solve their latest challenges? As AI models progress and improve, we continue enabling our customers to maximally leverage these models in production, capitalizing upon the rich context within the enterprise through the ontology. We remain differentiated in our elite execution to deliver quantified exceptionalism for our customers, ever widening their advantage over the AI have nots.

[Ryan Taylor, Chief Revenue Officer and Chief Legal Officer at Palantir]

As a result, unrelenting demand for AIP continues to drive outperformance despite Q1 historically being our slowest quarter due to business seasonality. Our US commercial revenue grew 19% sequentially to surpass the billion dollar annual run rate for revenue in Q1. We closed $810,000,000 in US commercial TCV with a 239% year over year growth rate on dollar weighted duration basis. And we closed twice as many deals of a million dollars or more compared to the same time period a year ago. I feel the demand in the conversations I'm having with customers.

[Ryan Taylor, Chief Revenue Officer and Chief Legal Officer at Palantir]

On the ground, things are accelerating. Customers are getting started, then expanding in quick succession. A large healthcare company did a boot camp with us in December and five weeks later converted to a five year, dollars twenty six million ACV enterprise agreement. A global bank started a pilot with us in Q4 twenty twenty four, signed a $2,000,000 engagement a month later, then expanded to a three year nineteen million dollars ACV engagement four months after that. A Fortune 500 healthcare company began working with us in Q2 twenty twenty four and last quarter signed a five year, ten million ACV conversion deal.

[Ryan Taylor, Chief Revenue Officer and Chief Legal Officer at Palantir]

The pace and magnitude of these deals are being driven by the quantified exceptionalism our customers see from day one working with us. We continue to hear from customers that our software's impact is remarkably apparent. A Walgreens executive recently highlighted Foundry and AIP allowed them to play AI powered end to end workflows in 4,000 stores within eight months, automating what would have amounted to three eighty four billion decisions every day if relying on humans. AIG recently highlighted that they expect the end to end adoption of tech advancements leveraging Palantir will double their five year CAGR. They noted, quote, It's an unbelievable outcome in terms of what we get.

[Ryan Taylor, Chief Revenue Officer and Chief Legal Officer at Palantir]

You could give underwriters unlimited time, two, three, four weeks. They still can't get the amount of data that I can get within two to three hours through Palantir. We are partnering with R1 RCM to develop intelligent automation solutions to create faster, more precise healthcare reimbursement outcomes. Their executive noted, quote, We believe there's a multi $100,000,000,000 opportunity here industry wide to put money back into the pockets of providers and physicians so they can better invest in patient outcomes. Our name is popping up across earnings calls around the world as companies like Citibank, BP, and L3Harris tout the ambition of their work with Palantir to their investors.

[Ryan Taylor, Chief Revenue Officer and Chief Legal Officer at Palantir]

Our US Government business continues to achieve impressive growth as we deliver towards the vital missions of the agencies we support. As the government focuses on efficiency, our commercially fielded battle hardened products stand alone. Last quarter, we closed deals expanding our work in the Department of Defense, including the critical impact we are delivering with Maven Smart System across the COCOMs and the services. The impact is far reaching. Internationally, we closed a deal to provide Palantir Maven Smart System to NATO to deploy our AI mission command solution across its 32 member states.

[Ryan Taylor, Chief Revenue Officer and Chief Legal Officer at Palantir]

Historically, in periods of turmoil, organizations both public and private have turned to Palantir. With the proliferation of AI, you see an even wider gap between the winners and losers. The winners won't be determined by size, but by adaptability. Many organizations are having to reimagine how their business does and should work in the future simply to survive. We are built to help companies embrace volatility.

[Ryan Taylor, Chief Revenue Officer and Chief Legal Officer at Palantir]

We expect more surprises, not less. And with the uncertainty ahead, we are more confident than ever in Palantir's ability to deliver tangible impact for our customers, to transform organizations with real workflows in production, and to help institutions adapt to survive. I'll now turn it over to Shyam.

[Shyam Sankar, CTO & Executive VP at Palantir]

Thanks, Ryan. We've been consistently saying that even while the LLMs are improving, the models, across both closed and open source, they're becoming more similar and that performance will converge, all while cost per token for inference continues to drop substantially. The market has been focused on AI supply, the models, while we have been focused on delivering on AI demand. It's now blindingly obvious to everyone after the first deep seek moment. Our foundational investments in ontology and infrastructure have positioned us to uniquely deliver on AI demand now and into the world ahead.

[Shyam Sankar, CTO & Executive VP at Palantir]

AIP has entered the next phase of product development and adoption focused on enterprise autonomy. As I mentioned last call, the normative value of AI is the self driving company. We're not talking about copilots that make you 50% more productive. We're talking about agents that make you 50 times more productive. AIP is increasingly owning the position of being the technology that translate the ever expanding raw capability of LLMs into business outcomes through ontology.

[Shyam Sankar, CTO & Executive VP at Palantir]

AIP is proving to be the best harness to build, test, evaluate, and deploy agents to eat the elephant of the enterprise. Everyday users are building their own agents to realize the potential of enterprise autonomy across both public and private sector. AI agents are operating as part of human AI teams leveraging the mix of workflow applications for mammals and code first approaches for AI agents. With ontology as that common intermediary representation of the state of the enterprise. Agents are having a transformative impact for our customers now, from targeting our enemies to targeting supply chain opportunities.

[Shyam Sankar, CTO & Executive VP at Palantir]

You can hear more about these stories not in our earnings call, but as Ryan mentioned in our customers' earnings calls. AIG, Citi, BP, l three Harris, Hertz all mentioned the transformative impact of AIP on their most recent calls. These agents represent AI users, the supply chain agent that works with your supply chain analysts, the intelligence AI agent that works with your human agents. AIP as a platform enables our customers to rapidly build and deploy AI agents that automate more and more of the enterprise in a continuous fashion. AIG announced the AI underwriting agent.

[Shyam Sankar, CTO & Executive VP at Palantir]

AI agents are processing vast volumes of intelligence reports in the Department of Defense, finding things humans missed. AI agents are monitoring for sepsis at Tampa General. As Ryan mentioned, our US business is on fire, and I want to again call out the continued strength with Warp Speed in particular, our modern American manufacturing operating system. Both the adoption and the rate of product development has exceeded expectations. These investments are powering America's reindustrialization not only with new defense entrants, but also with traditional defense industrial players and the broader manufacturing industry.

[Shyam Sankar, CTO & Executive VP at Palantir]

Turning to government. We delivered our first Titan vehicles to the US Army in q one on time, on budget. The army rated Titan as a top performing program. And everything about it is heretical, a military vehicle with a software company as the prime contractor. And it's built by a team of nontraditional defense innovators like Androl.

[Shyam Sankar, CTO & Executive VP at Palantir]

Maven smart system adoption continues to grow with usage doubling in the first nine months of 2024 and doubling again in the five subsequent months. The rate of adoption has really accelerated as Maven scales across more combatant commands and through the services and into more and more use cases. You commonly hear combatant commanders reference Maven in their posture hearings to Congress now, and Maven has reached Europe, with NATO adopting the capabilities of Maven's smart system as its c two operating system. Leadership at UCom said this platform, Maven, has become more than a common operating picture. It's a decision advantage environment that is rapidly transforming the command.

[Shyam Sankar, CTO & Executive VP at Palantir]

AI agents aren't just transforming The US commercial sector. They are transforming how we fight. AI agents are analyzing intelligence, finding targets, automating staff functions, and improving the understanding of the battle space. But we are just at the beginning. Our defense users are amongst the most creative and self sufficient developers.

[Shyam Sankar, CTO & Executive VP at Palantir]

Green suitors developed the Hurricane Helene rescue common operating picture in five days. Next time, they will have AI agents do it for them in five minutes. With that, I'll turn it over to Dave to take us through the numbers.

[David Glazer, CFO & Treasurer at Palantir]

Thanks, Shyam. We had an exceptional first quarter. Revenue growth accelerated to 39% year over year, exceeding the high end of our prior guidance by nearly three fifty basis points and representing an 1,800 basis point increase compared to the growth rate in Q1 of last year. We achieved another $1,000,000,000 milestone this quarter by surpassing $1,000,000,000 annual run rate in our U. S.

[David Glazer, CFO & Treasurer at Palantir]

Commercial business for the first time, which grew 71% year over year and 19% sequentially. On the back of this continued strength, we are raising our full year 2025 revenue guidance midpoint to $3,896,000,000 representing a 36% year over year growth rate and our U. S. Commercial revenue guidance to in excess of $1,178,000,000 representing a growth rate of at least 68%. The continued increase in demand for AIP drove the outperformance in our U.

[David Glazer, CFO & Treasurer at Palantir]

S. Business overall in the first quarter, which grew 55% year over year and 13% sequentially, including our U. S. Government business, which grew 45% year over year and 9% sequentially. We delivered these outstanding top line results at an adjusted operating margin of 44%, representing an 800 basis point increase compared to the first quarter of last year.

[David Glazer, CFO & Treasurer at Palantir]

Our revenue and profitability drove a two point sequential increase to our Rule of 40 score from 81 in the fourth quarter of twenty twenty four to 83 in the first quarter of twenty twenty five. We also had a strong cash flow quarter with adjusted free cash flow of $370,000,000 representing margin of 42%. Turning to our global top line results. First quarter revenue grew 39% year over year and 7% sequentially to $884,000,000 First quarter U. S.

[David Glazer, CFO & Treasurer at Palantir]

Revenue grew 55% year over year and 13% sequentially to $628,000,000 Excluding the impact of revenue from strategic commercial contracts, first quarter revenue grew 44% year over year and 7% sequentially, and first quarter U. S. Revenue grew 56% year over year and 14% sequentially. Customer count grew 39% year over year and 8% sequentially to seven sixty nine customers. Revenue from our largest customers continues to expand.

[David Glazer, CFO & Treasurer at Palantir]

First quarter trailing twelve month revenue from our top 20 customers increased 26% year over year to 70,000,000 per customer. Now moving to our commercial segment.

[David Glazer, CFO & Treasurer at Palantir]

First quarter commercial revenue grew 33%

[David Glazer, CFO & Treasurer at Palantir]

year over year and 7% sequentially to $397,000,000 Excluding the impact from strategic commercial contracts, first quarter commercial revenue grew 42% year over year and 8% sequentially. We closed $930,000,000 in commercial TCV bookings, representing 84% growth year over year. As I highlighted earlier, we achieved a $1,000,000,000 annual run rate in our U. S. Commercial business for the first time as AIP continues to drive both new customer conversions and existing customer expansions in The U.

[David Glazer, CFO & Treasurer at Palantir]

S.

[David Glazer, CFO & Treasurer at Palantir]

First Quarter US commercial revenue

[David Glazer, CFO & Treasurer at Palantir]

grew 71% year over year and 19% sequentially to $255,000,000 Excluding revenue from strategic commercial contracts, first quarter US commercial revenue grew 75% year over year and 22% sequentially. We had the strongest quarter of US commercial TCV booked at 810,000,000, representing growth of a 83% year over year. On a trailing twelve month basis, we closed over 2,000,000,000 of US commercial TCV bookings, highlighting the demand for AI production use cases. Total remaining deal value in our US commercial business grew 127% year over year and 30% sequentially. Our US commercial customer count grew to 432 customers, reflecting growth of 65% year over year and 13% sequentially.

[David Glazer, CFO & Treasurer at Palantir]

First quarter international commercial revenue declined 5% year over year and 11% sequentially to $141,000,000 The decline was driven by continued headwinds in Europe and by the one time revenue catch up in the fourth quarter of twenty twenty four that we noted on last quarter's call. For our international commercial business, we continue to capitalize on targeted growth opportunities in Asia, The Middle East and beyond, but remain focused on accelerating the growth in our U. S. Business. Revenue from strategic commercial contracts was $5,100,000 for the quarter.

[David Glazer, CFO & Treasurer at Palantir]

We anticipate second quarter twenty twenty five revenue from these contracts to be between 4,000,000 to $6,000,000 compared to $9,000,000 in the second quarter of twenty twenty four. We anticipate 2025 revenue from these contracts to continue to be approximately half of 1% of full year revenue. Shifting to our Government segment. First quarter Government revenue grew 45% year over year and 7% sequentially to $487,000,000 First quarter U. S.

[David Glazer, CFO & Treasurer at Palantir]

Government revenue grew 45% year over year and 9% sequentially to 373,000,000. This growth was driven by continued execution in existing programs and new awards reflecting the growing demand for AI in our government software offerings. First quarter international government revenue grew 45% year over year and 2% sequentially to $114,000,000 bolstered by our continued work in UK Healthcare and defense, as well as our new partnership with NATO. First quarter TCV booked was 1,500,000,000 up 66% year over year. Net dollar retention was 124%, an increase of 400 basis points from last quarter.

[David Glazer, CFO & Treasurer at Palantir]

The increase was driven both by expansions at existing customers and new customers acquired in Q1 of last year as we see the effect of the AI revolution. As net dollar retention does not include revenue from new customers that were acquired in the past twelve months, it has not yet fully captured the acceleration and velocity in our U. Business over the past year. We ended the first quarter with 5,970,000,000.00 in total remaining deal value, an increase of 45% year over year and 10% sequentially, and $1,900,000,000 in remaining performance obligations, an increase of 46% year over year and 10% sequentially. As a reminder, RPO is primarily comprised of our commercial business, as it does not take into account contracts with an initial term of less than twelve months and contractual obligations that fall beyond termination for convenience clauses, both of which are common in most of our government business.

[David Glazer, CFO & Treasurer at Palantir]

Turning to margin and expense. Adjusted gross margin, which excludes stock based compensation expense, was 82% for the quarter. Adjusted income from operations, which excludes stock based compensation expense and related employer payroll taxes, was $391,000,000 representing adjusted operating margin of 44%. Q1 adjusted expense was $493,000,000 up 8% sequentially and 21% year over year, primarily driven by our continued investment in AIP and technical hiring. We continue to expect to see a more significant increase in expense in 2025 as we invest in the most elite technical talent, the product pipeline, and AI production use cases, all delivering on our goals of sustained GAAP profitability.

[David Glazer, CFO & Treasurer at Palantir]

First quarter GAAP operating income was $176,000,000 representing a 20% margin. First quarter GAAP net income was $214,000,000 representing a 24% margin. First quarter stock based compensation expense was 155,000,000 and employer related equity tax expense was $59,000,000 First quarter GAAP earnings per share was $08 First quarter adjusted earnings per share was $0.13 Additionally, our combined revenue growth and adjusted operating margin accelerated to 83% in the first quarter, a two point increase to our Rule of 40 score from the prior quarter and our seventh consecutive quarter of an expanding Rule of 40 score. With the increase in our 2025 revenue and adjusted operating income guidance, we are now guiding to a Rule of 40 score of 80 for the full year. Turning to our cash flow.

[David Glazer, CFO & Treasurer at Palantir]

In the first quarter, we generated $310,000,000 in cash from operations and $370,000,000 in adjusted free cash flow, representing margins of 3542%, respectively. Through the end of the first quarter, we repurchased approximately 2,300,000.0 shares as part of our share repurchase program. As of the end of the quarter, we have $918,000,000 remaining of the original authorization. We ended the quarter with $5,400,000,000 in cash, cash equivalents and short term U. S.

[David Glazer, CFO & Treasurer at Palantir]

Treasury securities. Now turning to our outlook. For Q2 twenty twenty five, we expect revenue of between $934,000,000 and $938,000,000 adjusted income from operations of between $4.00 1,000,000 and $4.00 $5,000,000 For full year 2025, we are raising our revenue guidance to between 3,890,000,000.00 and $3,902,000,000 We are raising our U. S. Commercial revenue guidance to in excess of $1,178,000,000 representing a growth rate of at least 68%.

[David Glazer, CFO & Treasurer at Palantir]

We are raising our adjusted income from operations guidance to between 1,711,000,000.000 and 1,723,000,000.000 We are raising our adjusted free cash flow guidance to between 1,600,000,000.0 and $1,800,000,000 And we continue to expect GAAP operating income and net income in each quarter of this year. With that, I'll turn it over to Alex for a few remarks, and then Anna will kick off the Q and A.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

Welcome to our, earnings adventure. Palantir is on fire. We there's been a lot of discussions basically how we should talk about these numbers and people admonishing me to be a little more modest, and we'll try. It's the reality of what's going on is that this is a unvarnished, concaffony of, of the combination of twenty years of investment and a massive cultural shift in The US, which is generating numbers again, 71% growth in U. S.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

Commercial, 71%. We had journalists this morning that were asking me if it's a seven handle. 71% growth. We had 45% growth in in in our US government business. Every three days, you read a you read a headline about how our commercial business would be in danger because of pressure, necessary pressure put on the system to root out fraud, race, and abuse and to pen test systems to see if they create more value or much more value or less value or no value in the US government.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

We are seeing rapid expansion and and very significant demand for Maven, both in America and outside of America, as all part of our core mission to provide an unfair advantage to the noble warriors of the West. We see an increased recognition that large language models were commodities, that the value of, these commodities becomes, only realizable in the context of our ontology on top of foundry. As has been mentioned, the reindustrialization of America is happening in our software. The ability to reimagine your business, in a volatile situation happens in our software. The the if you take the 90% of our business that is outside of Europe, which is going through very structural change and doesn't quite get AI, maybe in the near future will get AI, we are hoping and praying, that part of our business grew 49%.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

Forty nine %. And we're doing this at a very significant scale. So we're we're we're we're we're we're we're saying we're gonna do close to $4,000,000,000 in revenue. And last, not least, we're doing this with double the gold standard on the rule of 40. The rule of 40 is a very important standard because it shows you the quality of your revenue and because it's hard to attain, especially if you have a rule of 83.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

And and, you know, one of the things that that Palantir is doing is we we we we want to bring our friends and our allies along with us on this winning ride. Those friends are largely in America, but also among allied countries. Those friends are inside Palantir, outside Palantir. And we are using ontology and AI or AIP to drive these successes. And I would say, well, you know, profitability is apparently, you know, unpopular.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

The numbers are driven by the fact that we are downstream from value creation. There's a consensus in the market that Palantir owns value creation. And what does that actually mean? It means that when you use our software, when you use AIP, you will get demonstrably more value than what you're paying for, and you will share some of that value with us. And then I would say, also, culturally, we are just don't see the resistance to the way we roll that we did in the past.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

We would show up, in the past, the freak show trying to get things to work, not with the wrong access to the wrong people at the wrong time. And that was by intent, and people were very uncomfortable at all levels of the enterprise working with us. And without going into specific names because, you know, these companies in many case, you know, are are in the middle of transform transforming itself. But it I'm on the front line with everyone here, and it used to be two years ago that we we might get a CEO. We might get a CIO.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

We might get someone in marketing. We might get someone who's willing to rebuild the business, but they had no power. Now we have the full stack engaged with us inside government, outside government on the most critical issues. And if you again, if you re if you look at the math in terms of where the action is, our business is growing 49%, ex Continental Europe. 40 9 Percent rule of 83.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

We were the freak show. And we spent twenty years for this moment, and we plan to have nose to the grindstone, focus on taking the best talent inside Palantir, managing them, the best clients, and make sure our clients and our partners, especially in national security, but also with a pretty significant focus on The US, win in the way we're winning. And that's why you get these results. And we're gonna just focus and focus and focus and focus on execution, and that's basically our plan for the rest of the year and into next year, and we're very, very optimistic about what's going on. And with that, we can kick it off to questions.

[Ana Soro, Office of the CFO at Palantir]

Thanks, Alex. We'll now turn to a few questions from our shareholders before opening up the call. Our first question is from Gabriel, who asks, how does Palantir plan to sustain its competitive advantage in AI, particularly in light of growing competition?

[Shyam Sankar, CTO & Executive VP at Palantir]

Thanks, Gabriel. Well, our advantage comes down to ontology. It it's really, an advantage on the AI demand side, and that has positioned AIP to be the platform that is able to capture the ever expanding capability of the raw LLMs and turn that into business value. AIP is that tool factory and the point of control for the orchestration with these models and those tools. You can see this in the sharp opinionation that we've earned in the field with our customers and how to get to value in days or weeks.

[Shyam Sankar, CTO & Executive VP at Palantir]

And most critically, you can see it in the insight that we have that to practically transform the enterprise, you actually need mixed human AI teams, and that is something that AIP is uniquely positioned for.

[Ana Soro, Office of the CFO at Palantir]

Thank you, Sean. We also received a few questions on this topic. How will the current US administration's focus on reducing federal spend as well as the February announcement of US Department of Defense budget cuts impact current contracts as well as future contract acquisition?

[Shyam Sankar, CTO & Executive VP at Palantir]

Well, the the first thing I'd say is, like, this is the right thing for the country. Like, we have way too much spend on things that do not work. The government has started to resemble a finely marbled Wagyu. The fake projects that do not deliver and will never deliver crowd out the and suffocate the things that could actually be excellent. And so we welcome Doge.

[Shyam Sankar, CTO & Executive VP at Palantir]

I mean, to me, these guys are heroes. They are world class technologists that could be choosing to do anything, and instead they are choosing to do this. And we believe deeply in the actual value that our software is creating both on an absolute basis on a and on a relative basis to the traditional labor based cost plus model that has failed to deliver for the American people.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

Often get variants of if if the institutions are in pressure, either we go through a difficult time in America or there's doge, how will that affect your software sales, basically? And Palantir does exceptionally well when things are pen tested. We like pressure on the system. We need pressure on the system. And then why is it better for America?

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

Because that pen testing at forces you to ask questions like, does the software work? How does it work? How does it manage ethical concerns? How does it manage data protection? How does it manage output?

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

Without pressure on the system, you know, one of the myths is that if you don't have pressure on the system, you just spend money, you somehow get a better system both in terms of output, in terms of ethics. But, actually, you get neither. And so in reality, we need pressure on the system. We need people to have to change. We need people to have to transform.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

This is why they put up with us. And once they see those results, they stick with us.

[Ana Soro, Office of the CFO at Palantir]

Thank you both. Our next question is from Dan with Wedbush. Dan, please turn on your camera, and then you'll receive a prompt to unmute your line.

[Daniel Ives, Managing Director, Global Head of Technology Research at Wedbush Securities]

Thanks. And, another amazing quarter.

[Daniel Ives, Managing Director, Global Head of Technology Research at Wedbush Securities]

I mean, it's just so my question is, the given that what we're seeing in the government, isn't that another opportunity where you could actually gain more share of budgets as you go to more meritocracy? Like, Palantir should actually gain more dollars within the budget of DOD and a lot of, you know, other agencies.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

We're very optimistic about what we're gonna do in The US. But the devil's in the details and, you know, we're running this business for you, with you as owners, which means, you know, it's like there's gonna be maybe lumpiness, but we we predict we're gonna do very, very well. Any basically, where you have pressure testing, you can assume AIP, AI foundry, ontology, Apollo, and the Palantir culture itself. I mean, we're we are a warrior culture. Like, that's why our whole culture is built around putting the exact right team and the exact right product at the final mile.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

And so where you have environments that are crucial and under pressure, you can expect and where meritocracy happens. It's like, we need meritocracy. How do you get meritocracy? Well, there's lots of ways to get meritocracy. One way is because you're scared.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

And then you buy the best product, you install the price product, and then the part that's anti or correlated different than people think is you also get the best ethics, the best execution, and that, of course and then you can ask a simple question. Why is this a moot? Okay. Well, I can tell you why it's a moot because heretofore, no one gets has gotten no one has gotten into these environments at scale under any circumstance. And when if they did get in, they got in with services.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

So now we have a single purpose, highly formed stack of software that is exactly right for this moment with a culture that's exactly right to implement it, which a culture that can teach people how to do this that is now charismatic for some. It's anti charismatic for others. And and that de facto, it's the compounding rate of return on that stack. And to Shyam's opinion, Shyam's with the opinionation we have about how to do this, It essentially allows you to express your tribal knowledge of your enterprise in a way you could never do it before on the terms of your enterprise with unit economics that are heretofore impossible to do. And that's what's happening in this country and really in 90% of our market, which explains, like, the 49% growth and the and the rule of 83 despite our what would be viewed on the outside as large ineptitudes in sales and go to market and how do we interact with people and our opinionation both on the outside, on the inside, and and and with the frontline customer, which is like, we're not agnostic to using our software as software.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

We are not in the shelfware business, which is another reason why pressure in the government really helps us. We've never done shelfware. We don't do shelfware. We don't think our personality can afford shelfware.

[Ana Soro, Office of the CFO at Palantir]

Thank you, Alex. Our next question is from Mariana with Bank of America. Mariana, please turn on your camera, and then you'll receive a prompt to unmute your line.

[Mariana Mora, Director at Bank of America]

Afternoon, everyone. So I have two questions. First one is on the European defense buildup. You mentioned warp speed and how that has been successful here. Like, are you interested on applying that as these European countries build up their own defenses and catch up on industrial capabilities that have been underinvested for, like, many, many years?

[Mariana Mora, Director at Bank of America]

And the second one is, I think investors are pretty familiar with this, like, software versus services type of, like, Palantir approach because you have been, like, actually leaders on that trend. But Titan is a great example how on how, like, software actually played a role that was more intuitively hard work. Where else you actually have opportunities for software to add value there? Like, is it Golden Dawn, space communications? Like, have you think about that?

[Shyam Sankar, CTO & Executive VP at Palantir]

Yeah. On the first one, Alex may have more to say as well, but we we would love to help Europe on, the manufacturing challenges around rearmament, and I think there are a lot of them to do. The precondition for warp speed is understanding that the existing manufacturing stack is broken. And so you could say, why did America get there first? Because you have all these people who are essentially the progeny of Elon who have learned and understood how to actually make things, the sort of brains that go from the Raptor one to the Raptor three engine, and that's proliferated around the community that's in El Segundo and even beyond.

[Shyam Sankar, CTO & Executive VP at Palantir]

That's, like, the basis of reindustrialization in America. And so it's it's when we work with the new defense champions, new industrial champions, like, it's it's a very short sales cycle because they recognize, like, that what we're doing with warp speed is exactly what they need in order to do it. When you work with some of the older manufacturing customers, even The US, it's heterogeneous. Some of them are already there. They get it.

[Shyam Sankar, CTO & Executive VP at Palantir]

They realize it. Some of them are gonna be there because it's just a reality. In Europe, there are some green shoots, like some very well known manufacturing companies have kind of said, like, oh, I now understand that my ERP thing doesn't work and warp speed maybe we should get warp speed. So I just don't wanna commit to I think a lot of it is where's the customer's head at, but we could obviously do a lot to help you.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

Look. Europe doesn't get AI yet. It at some point in the future, it will. And then as you know, Europe is not Europe. You have Eastern Europe.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

You have Germany, France. You have they're very different Europes. Europe that is scared understands that you're gonna have to do software, hardware, hybrid systems, and our products are very, very well known and different differentiated. It could take a couple years for Europe to understand that you just can't spend money. You're gonna have to spend it on things that actually work, and work means spending it on people that have actually done this on the battlefield.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

I I would say our plan is to continue to be roughly in the zone where 90% of our business is growing like it is now at 49% with this rule of 83 and somewhere in that range. We guided to rule of 80, and that's gonna be primarily driven by The US. I would say as a unknown variable, we're seeing very significant demand for our software, our government software around the world outside of Europe. And those are early days, but, you know, the demand the signal there is very strong.

[Shyam Sankar, CTO & Executive VP at Palantir]

And then on the Titan point, I

[Shyam Sankar, CTO & Executive VP at Palantir]

think that's an excellent point and is is gonna be a big part of the future where you're really thinking about how do you build your hardware around the software. You know, the there are some classified projects that that we have as well where the first step to building

[Shyam Sankar, CTO & Executive VP at Palantir]

the hardware is not to build the hardware.

[Shyam Sankar, CTO & Executive VP at Palantir]

It's actually to build the mission payload and the software that can execute the thing and then work backwards from that to figure out what is the hardware that you ought to have around that.

[Shyam Sankar, CTO & Executive VP at Palantir]

And this plays to this like, it's it

[Shyam Sankar, CTO & Executive VP at Palantir]

is actually a cultural impedance mismatch. Like, if you're a hardware company, you think about the world the way that a construction person would think about building the house. You you have to pour the foundation first. You can't do anything. But, actually, with software, you have to build the kitchen first.

[Shyam Sankar, CTO & Executive VP at Palantir]

If you don't, you're gonna you're gonna get it all wrong. And so there's I've seen a lot more of the next gen programs that are starting to think about how do we build the lethal software first, and we'll figure out how to wrap the hardware.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

One of the most interesting things about the current environment we're in is something Shyam is alluding to, which is and, again, it's a European versus America. People assume if you're world class at hardware, you'll be world class at software and they're interchangeable. It's just it's just not true at all. And, like, the skills and the the taste you need to do software is a completely different thing. And America's unique advantage is hybrid software, hardware, software.

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

And and any program that's trying to out outpace and beat our adversaries at should it basically is gonna have to begin with a software first or software, hardware, hybrid program because otherwise, we're at a disadvantage. And, also, it the the the the the resourcing and the way you organize is gonna be suboptimal in this country. Conversely, this is one of the challenges that, our some of our allies and our adversaries have. You know, the role of taste in in getting these things to work, tribal knowledge and ability to do it is really, really underestimated.

[Ana Soro, Office of the CFO at Palantir]

Thank you. Alex, as always, we have a lot of individual investors on the line. Is there anything you'd to say before we wrap up

[Ana Soro, Office of the CFO at Palantir]

the call?

[Alexander Karp, Co-Founder, CEO & Director at Palantir]

You know, this company is organized around giving our friends a really strong shot, I would say unfair advantage, and, you know, not helping our adversaries or enemies and, on occasion, hurting them. And, you know, a lot of you are scattered around the world and and helping us in many ways, and we are in a phase where we are very focused on scaling our company. And we really appreciate your support and the fact that you defend us. You know, our support of Western values is often under attack for somewhat idiotic reasons, our our belief that meritocracy will lead us to a better place, that competence is better than incompetence, that competence includes ethics, And the results the fruits of those labors are here today, but they would none of that would have been possible without your support. So thank you.

[Ana Soro, Office of the CFO at Palantir]

Thank you. That concludes q and a for today's call.

Participants

Executives

• Ryan Taylor, Chief Revenue Officer and Chief Legal Officer
• Shyam Sankar, CTO & Executive VP
• David Glazer, CFO & Treasurer
• Alexander Karp, Co-Founder, CEO & Director

Analysts

• Ana Soro, Office of the CFO at Palantir
• Daniel Ives, Managing Director, Global Head of Technology Research at Wedbush Securities
• Mariana Mora, Director at Bank of America