Palantir Technologies’ Stellar Q3 Report Sends Stock Soaring
Palantir Technologies (NYSE: PLTR) witnessed a remarkable 13.7% surge in its stock price during Monday’s after-hours trading, following the release of its impressive third-quarter 2024 report. The software-as-a-service (SaaS) company’s revenue and earnings exceeded Wall Street’s expectations, with its fourth-quarter revenue guidance also surpassing analyst estimates.
Commercial Business Growth Drives Success
Investors were likely pleased to see Palantir’s commercial business continue to grow rapidly, alleviating concerns about the company’s heavy dependence on government spending. This shift in focus has been a significant driver of the company’s success.
Q3 Performance Highlights
Palantir’s Q3 report showcased impressive growth, with:
- Revenue increasing by 30% to $726 million
- GAAP operating income rising by 183% to $113 million
- Adjusted operating income growing by 69% to $276 million
- GAAP net income surging by 100% to $144 million
- Adjusted net income increasing by 56% to $242 million
- GAAP earnings per share (EPS) growing by 100% to $0.06
- Adjusted EPS rising by 43% to $0.10
Cash Flow and Customer Growth
The company generated $420 million in operating cash flow, a 215% year-over-year increase. Its adjusted free cash flow was $435 million, up 209% from the previous year. Palantir ended the quarter with $4.6 billion in cash, cash equivalents, and short-term investments, and no long-term debt.
Commercial and Government Revenue
Commercial revenue grew 27% to $317 million, accounting for 44% of total revenue. Government revenue increased by 33% to $408 million, making up 56% of total revenue. By region, U.S. revenue grew 44% to $499 million, accounting for 69% of total revenue.
CEO Alex Karp’s Statement
“We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down. This is a U.S.-driven AI revolution that has taken full hold. The world will be divided between AI haves and have-nots. At Palantir, we plan to power the winners.”
Fourth-Quarter Guidance
Palantir provided guidance for Q4 revenue of $767 million to $771 million, implying growth of 26% to 27% year over year. Adjusted income from operations is expected to be $298 million to $302 million, representing growth of 42% to 44% year over year.
Annual Guidance
The company raised its full-year guidance, with total revenue expected to be $2.805 billion to $2.809 billion, implying growth of 26% year over year. U.S. commercial revenue is expected to grow by more than 50%, while adjusted operating income is anticipated to increase by 67% year over year.
Investor Takeaway
Palantir’s impressive Q3 report and guidance demonstrate the company’s continued growth momentum. With its focus on artificial intelligence and strong cash flow generation, Palantir remains an attractive option for investors seeking exposure to the AI space. However, its high forward price-to-earnings ratio may give some investors pause.
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