TLDR:
- Palantir reported 30% revenue growth in Q3, marking fifth straight quarter of acceleration
- U.S. commercial revenue jumped 54% to $179 million
- Government revenue rose 33% to $408 million
- Company raised full-year guidance to $2.805-2.809 billion
- Stock has nearly tripled in price year to date
Article: Palantir Technologies delivered strong third-quarter results, with revenue growth accelerating for the fifth consecutive quarter, pushing the company’s stock higher. The data analytics company reported a 30% increase in revenue, up from 27% in the previous quarter and 13% in the second quarter of 2023.
The company’s performance was particularly strong in its U.S. commercial segment, which saw revenue surge 54% to $179 million. Excluding strategic commercial contracts, U.S. commercial revenue growth was even more robust at 59%. This growth was largely attributed to increased demand for Palantir’s Artificial Intelligence Platform (AIP).
In the government sector, Palantir recorded substantial gains, with overall revenue rising 33% to $408 million. U.S. government revenue showed exceptional growth, increasing 40% year-over-year to $320 million, marking the strongest growth in 15 quarters from its largest customer.
However, international performance was mixed. International commercial revenue grew modestly at 3% to $138 million but declined 7% sequentially. The company attributed this decrease to reduced revenue from a Middle Eastern government-sponsored enterprise and ongoing challenges in Europe.
The company’s existing customer base showed strong engagement, with trailing-12-month net dollar retention reaching 118%. This metric indicates healthy growth among long-term customers after accounting for any customer churn.
Following these results, Palantir raised its full-year guidance. The company now expects revenue between $2.805 billion and $2.809 billion, up from its previous forecast of $2.742-2.750 billion. The adjusted operating income guidance was also increased to $1.054-1.058 billion.
For the fourth quarter, Palantir projects revenue of $767-771 million, representing 26-27% growth compared to the previous year. The company expects adjusted income from operations to range between $298-302 million.
Palantir’s AI Platform has emerged as a key growth driver, with the company reporting “unprecedented demand” within its U.S. commercial business. The platform is helping both attract new customers and expand relationships with existing clients.
The company’s stock price has reflected this strong performance, nearly tripling in value year to date. This surge has pushed Palantir’s forward price-to-sales ratio to 34 times next year’s analyst estimates, a notable increase from recent valuations.
In the government sector, Palantir credited its growth to new AI software contracts and expansion of existing programs. The company also benefited from favorable deal timing and government fiscal year-end dynamics.
Wall Street has taken notice of Palantir’s performance. Wedbush analyst Daniel Ives raised his price target to $57 from $45, citing increased confidence in the company’s AI Platform strategy and its potential over the next 12-18 months.
The number of hedge funds holding Palantir stock has reached 44, indicating growing institutional interest in the company’s growth story and AI capabilities.
For the upcoming quarter, analysts will be watching whether Palantir can maintain its growth momentum, particularly in its U.S. commercial and government segments.
Looking ahead, Palantir’s ability to continue expanding its AI Platform adoption while managing international market challenges will be key to sustaining its growth trajectory.
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