Palantir Soared 20.5% But Is It Just The Start?

Palantir Technologies (PLTR) has been in business for 20 years but it’s only recently that it’s accomplished one of its most impressive feats to-date, tripling the number of users of its artificial intelligence platform in a single quarter.

That spike in demand translated to a spectacular Q3 that blew away Wall Street’s expectations. Analysts had every right to be conservative in their forecasts given that the company posted a loss of over $120 million in the year ago quarter. But revenues came in higher by 17% year-over-year in the most recent earnings report and net income soared to $72 million, resulting in EPS popping to $0.07 per share.

Key Points

• Palantir’s Q3 saw a 17% YoY revenue increase, net income of $72 million, and an EPS of $0.07, bouncing back from a $120 million loss the previous year.
• The company’s Artificial Intelligence Platform (AIP) has been swiftly adopted by nearly 300 organizations, including the NYSE and Intuit.
• A shift to targeting corporate clients led to a 34% YoY customer base increase and an upward revenue guidance revision to $2.21-$2.22 billion.
• Eligibility for S&P 500 inclusion and a positive outlook on GAAP net income indicate strong future growth and product-market fit.

Why Did Palantir Shares Spike?

CEO Alexander Karp was downright ecstatic when declaring “the most significant profit in our company’s twenty-year history.” And there is one glaring reason for the success: Palantir’s artificial intelligence platform, or AIP for short, which incorporates large language models and other AI capabilities into clients’ private networks.

In spite of only launching five months ago, AIP has been onboarded by nearly 300 organizations, an adoption rate so high that it bodes very well for the firm’s market opportunity over coming years.

And it’s not just so-so firms adopting Palantir’s solution, the list of organizations is a who’s who of significant players, including the U.S. government, military, and commercial giants such as Intuit and the NYSE.

Strategy Shift is Working Wonders

Palantir’s customer base ballooned by 34% from the year ago quarter, reflecting the company’s strategic shift from relying primarily on government contracts to targeting the corporate world. The proof is in the pudding with commercial customers in the US rising by 37% to a total to 181.

Indeed, management has made it clear that the future appears bright too with the company’s adjusted revenue guidance undergoing an upward revision to a range of $2.21 billion to $2.22 billion.

Palantir’s recent earnings represent a snapshot in time but what may prove to be a more significant catalyst to share price is S&P 500 inclusion. The company’s eligibility for inclusion in the S&P 500, as noted by CEO Alex Karp, marks a significant milestone.

He also emphasized that the focus on profitability would not hinder the overall growth ambitions. Palantir’s impressive beat-and-raise performance is indicative of a company on the right track, and with the potential to seriously outperform in the coming years.

The firm’s outlook suggests an expectation of continued positive GAAP net income in each quarter of the year. Their offerings, such as Palantir Gotham for government agencies, Palantir Metropolis for financial entities, and Palantir Foundry for large companies, have seen expansion into sectors like health care, energy, and manufacturing.

Up now 181% year-to-date, Palantir is not a company to bet against over the remaining part of the decade. It has clearly demonstrated product-market fit and companies are enthusiastically embracing its solutions.

A Data-Driven Juggernaut

Palantir’s remarkable Q3 performance is a testament to the company’s strategic agility, technological prowess, and ability to tap into the massive potential of artificial intelligence.

By not just meeting but significantly exceeding analysts’ estimates, and broadening its customer base, Palantir has proven itself as a resilient player in data analytics with a product that companies are clamoring to test.

Its commitment to innovation, coupled with its strategic diversifications and surge in demand for its AI offerings, underscores a trajectory poised for sustained growth and profitability.