Palantir Q3 2023 Earnings Call Summary

Palantir's Q3 2023 earnings report highlights 17% YoY revenue growth, a 52% surge in U.S. commercial revenue, and record AI adoption with 140+ AIP bootcamps. Despite muted government growth, Palantir expects strong 2024 momentum driven by AI, defense, and enterprise expansion. Read the full breakdown of risks, opportunities, and outlook.

Author

Milan Reichl
February 3rd, 2025 • Reading Time: 3 minutes

Highlights

  • Revenue Growth: Total revenue grew 17% YoY to $558M, exceeding prior guidance.

  • U.S. Commercial Surge: U.S. commercial revenue accelerated to 33% YoY growth, or 52% YoY excluding strategic contracts.

  • Record Deals Closed: 80 deals over $1M, including 29 over $5M and 12 over $10M, across multiple industries.

  • AI-Powered Growth: AIP adoption continues to expand rapidly, nearly tripling the number of users in Q3.

  • Profitability Milestone: Fourth consecutive quarter of GAAP profitability, with $72M GAAP net income.

  • Bootcamps Driving Sales: 140+ AIP bootcamps conducted, significantly compressing sales cycles and accelerating deal conversions.

  • Raised Full-Year Guidance: Expected 2023 revenue of $2.216B - $2.22B, reflecting continued strong U.S. commercial momentum.

Risks

While Palantir continues to grow, several challenges remain:

  1. Government Revenue Lag: U.S. government revenue grew only 10% YoY, with uncertainties in budget approvals and contract timing.

  2. International Headwinds: European commercial revenue remains weak, affecting overall international growth.

  3. Competitive AI Landscape: Big Tech & AI startups continue expanding enterprise AI offerings, increasing competition.

  4. Scaling Challenges: Meeting surging AIP demand requires hiring & operational scaling, which could impact margins and efficiency.

  5. Stock-Based Compensation (SBC) Concerns: Rising SBC expenses could pressure margins as investments in AI talent and infrastructure increase.

Opportunities

Palantir is strategically positioned for significant future growth:

  1. Enterprise AI Expansion: AIP is transforming enterprise AI adoption, with rapid customer conversion & expansion.

  2. U.S. Commercial Growth Engine: 52% YoY growth in U.S. commercial revenue highlights strong product-market fit.

  3. Government AI Adoption: New $250M U.S. Army AI contract underscores growing AI-driven defense investments.

  4. Bootcamps Scaling Revenue: Bootcamps are compressing deal cycles and improving unit economics, leading to higher-margin growth.

  5. AI-Enabled Defense & Industrial Expansion: New Palantir Government Web Services (GWS) & FedStart initiatives are unlocking software monetization in defense & manufacturing.

Outlook

  • AI Adoption Acceleration: AIP adoption is driving fast-tracked enterprise AI deployment, creating long-term revenue potential.

  • Strong U.S. Market Momentum: Rapid commercial growth positions Palantir as a leader in AI-driven enterprise transformation.

  • International Expansion Challenges: While Asia & the Middle East show promise, European demand remains subdued.

  • Government AI Integration Growth: DoD & allied military AI investments will drive long-term revenue acceleration.

  • Sustained Profitability & Growth: With a Rule of 40 score of 46 and expanding GAAP profitability, Palantir is well-positioned for future scalability.

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The information is provided for educational purposes only and does not constitute financial advice or recommendation and should not be considered as such. Do your own research.