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Palantir Technologies Inc. (PLTR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue rose 39% YoY to $884M and 7% QoQ, with GAAP EPS $0.08 and adjusted EPS $0.13; management raised FY 2025 revenue guidance to $3.890–$3.902B and U.S. commercial revenue guidance to ≥$1.178B, citing strong AIP demand .
  • U.S. revenue grew 55% YoY to $628M, led by U.S. commercial +71% YoY to $255M and U.S. government +45% YoY to $373M; customer count reached 769 (+39% YoY) .
  • Cash generation remained robust: Cash from operations $310M (35% margin), adjusted free cash flow $370M (42% margin); adjusted operating margin expanded to 44% .
  • Results beat both prior guidance ($858–$862M) and Wall Street consensus for revenue ($862.1M*) and adjusted EPS ($0.129*)—management pointed to AIP-driven deal momentum and record U.S. commercial TCV ($810M) as catalysts .
  • Narrative drivers for the stock: raised FY guidance, accelerating U.S. commercial adoption of AIP and AI agents, strong government momentum (Maven, Titan) and high Rule of 40 score (83%) .

What Went Well and What Went Wrong

What Went Well

  • U.S. commercial inflection: revenue +71% YoY to $255M and +19% QoQ; record U.S. commercial TCV $810M (+183% YoY) and RDV $2.32B (+127% YoY) reflect rapid pipeline conversion and expansion .
  • Margin strength: adjusted operating margin 44% (800 bps YoY expansion); Rule of 40 rose to 83 on sustained growth and profitability; CFFO $310M (35% margin); adjusted FCF $370M (42% margin) .
  • Strategic momentum: management highlighted AIP “enterprise autonomy” and AI agents driving production outcomes; “Palantir is on fire… we’re going to do close to $4B in revenue” (CEO Karp) .

What Went Wrong

  • International commercial softness: revenue declined 5% YoY and 11% QoQ to $141M due to European headwinds and Q4 one-time catch-up effects; focus remains on targeted growth in Asia/Middle East .
  • Elevated SBC/taxes continue to weigh on GAAP margins; Q1 SBC $155M and employer payroll taxes $59M (though adjusted metrics exclude these) .
  • Concentration in U.S. market: management acknowledged 90% of growth outside continental Europe and slower adoption in Europe; execution risk if U.S. demand normalizes .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$634.3 $827.5 $883.9
GAAP EPS (Diluted) ($)$0.04 $0.03 $0.08
Adjusted EPS (Diluted) ($)$0.08 $0.14 $0.13
Adjusted Operating Income ($USD Millions)$226.5 $372.5 $390.7
Adjusted Operating Margin (%)36% 45% 44%
Cash from Operations ($USD Millions)$129.6 $460.3 $310.3
Adjusted Free Cash Flow ($USD Millions)$148.6 $517.4 $370.4
Adjusted EBITDA ($USD Millions)$234.9 $379.5 $397.3

Segment and Geography

Segment / GeographyQ4 2024 ($M)Q1 2025 ($M)
U.S. Revenue$558 $628
U.S. Commercial Revenue$214 $255
U.S. Government Revenue$343 $373
Commercial Revenue (Global)$372 $397
Government Revenue (Global)$455 $487

KPIs

KPIQ4 2024Q1 2025
Deals ≥$1M / ≥$5M / ≥$10M129 / 58 / 32 139 / 51 / 31
U.S. Commercial TCV ($M)$803 $810
Total TCV Booked ($B)$1.79 $1.5
Remaining Deal Value (RDV) ($B)$5.43 $5.97
Remaining Performance Obligations (RPO) ($B)$1.73 $1.9
Net Dollar Retention (%)120% 124%
Customer Count711 769

Consensus vs. Actuals

MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD Millions)862.1*883.9
Adjusted/Primary EPS ($)0.129*0.13

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD)Q2 2025N/A$934–$938M New
Adjusted Income from Operations ($USD)Q2 2025N/A$401–$405M New
Revenue ($USD)FY 2025$3.741–$3.757B $3.890–$3.902B Raised
U.S. Commercial Revenue ($USD)FY 2025≥$1.079B ≥$1.178B (≥68% YoY) Raised
Adjusted Income from Operations ($USD)FY 2025$1.551–$1.567B $1.711–$1.723B Raised
Adjusted Free Cash Flow ($USD)FY 2025$1.5–$1.7B $1.6–$1.8B Raised
GAAP Operating Income & Net IncomeFY 2025Each quarter Each quarter Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
AI demand vs. AI supply; OntologyEmphasized commoditization of models and Ontology as differentiator Reinforced convergence of LLMs; application/workflow value AIP “enterprise autonomy”; AI agents scaled in production Strengthening
U.S. Commercial momentum+54% YoY revenue; bootcamp-to-deal conversions +64% YoY; record U.S. commercial TCV $803M +71% YoY; record TCV $810M; RDV up 127% YoY Accelerating
Government (Maven, Titan, CJADC2)Army adoption; targeting/fires at 20-person scale Broad expansions across services/COCOMs; hurricane response apps Maven usage doubling; first Titan vehicles delivered; NATO adoption Broadening
International exposure (Europe)Headwinds in Europe; targeted Asia/Middle East focus International commercial up 3% YoY; one-time Asia catch-up International commercial −5% YoY; Europe headwinds Weak/volatile
Rule of 40 and profitabilityRule of 68; expanding margins Rule of 81; highest adjusted op margin (45%) Rule of 83; guiding FY Rule of 80 Improving

Management Commentary

  • CEO: “Palantir is on fire… we’re going to do close to $4 billion in revenue… double the gold standard on the rule of 40” .
  • CTO: “AIP has entered the next phase… enterprise autonomy… agents that make you 50x more productive” .
  • CFO: “Revenue growth accelerated to 39% YoY… raising FY revenue midpoint to $3.896B… adjusted operating margin 44%” .
  • CRO: “Unrelenting demand for AIP… U.S. commercial revenue grew 19% sequentially… closed $810M in U.S. commercial TCV” .

Q&A Highlights

  • Budget meritocracy opportunity: Dan Ives asked about gaining share as DoD budgets become more merit-based; management expects lumpiness but strong outcomes where systems are pressure-tested and Palantir’s full-stack execution wins .
  • Europe and Warp Speed: BofA’s Mariana Perez asked about applying Warp Speed to European rearmament; management sees opportunities but notes cultural/stack readiness differences; software-first hardware programs highlighted (Titan, classified initiatives) .
  • Government accountability and disruption: In prior quarter Q&A, management framed competition as ending “forever software projects,” welcoming disruption that forces meritocratic, outcome-based decisions (implication: tailwinds to Palantir) .

Estimates Context

  • Q1 2025 beat: Revenue $883.9M vs $862.1M consensus*; adjusted/primary EPS $0.13 vs $0.129*—a clean beat on both topline and EPS, with the “why” driven by AIP adoption, record U.S. commercial TCV, and broad U.S. government strength .
  • Q2 2025 setup: Company guided revenue to $934–$938M and adjusted OpInc to $401–$405M, implying continued sequential growth; consensus (at the time) should adjust upward given Q1 beat and raised FY guide .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • The quarter delivered a significant revenue and EPS beat vs. both prior guidance and Street, powered by accelerating U.S. commercial AIP deployments and record contract activity—estimate revisions are likely to trend higher .
  • Guidance raised across revenue, U.S. commercial, adjusted operating income, and adjusted FCF for FY 2025—management signals confidence in sustained demand and execution .
  • Government momentum (Maven, Titan, NATO) provides durable multi-year visibility; commercial AI agents and Ontology capabilities differentiate Palantir on the “AI demand” side .
  • International commercial (Europe) remains a drag; mix-shift to U.S. likely persists—watch for incremental wins in Asia/Middle East to offset .
  • Strong cash generation and expanding adjusted margins underpin quality of growth (Rule of 40 = 83) and support ongoing buyback authorization ($918M remaining at Q1) .
  • Tactical: Near-term stock catalysts include estimate revisions, incremental U.S. commercial wins, and government program expansions; monitor quarterly disclosures on TCV/RDV/RPO and AI agent adoption rates .
  • Strategic: Palantir’s positioning as the operating system for enterprise AI—with agentic workflows and governance via Ontology—underwrites a medium-term thesis of durable, high-margin growth even as model commoditization accelerates .

Additional Q1 2025 press releases of note: partnership with xAI and TWG Global targeting an outcome-based, AI-agent workforce model for financial services (supports commercial momentum narrative) .