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Palantir Technologies Inc. (PLTR)·Q2 2025 Earnings Summary

Executive Summary

  • Palantir delivered a breakout quarter: revenue reached $1.004B (+48% YoY, +14% QoQ), GAAP EPS $0.13 and adjusted EPS $0.16; adjusted operating margin expanded to 46% and Rule of 40 hit 94% . The company surpassed $1B in quarterly revenue for the first time .
  • U.S. strength drove upside: U.S. revenue +68% YoY to $733M; U.S. commercial +93% YoY to $306M and U.S. government +53% YoY to $426M .
  • Guidance was materially raised: Q3 revenue guided to $1.083–$1.087B; FY25 revenue raised to $4.142–$4.150B, U.S. commercial to ≥$1.302B (+85% YoY), adjusted operating income to $1.912–$1.920B, and adjusted FCF to $1.8–$2.0B .
  • Catalysts: record TCV bookings ($2.27B, +140% YoY), U.S. commercial TCV ($843M, +222% YoY), stronger NDR (128%, +400 bps QoQ), and raised outlook amid accelerating AIP demand .

What Went Well and What Went Wrong

What Went Well

  • U.S. commercial acceleration: +93% YoY, +20% QoQ to $306M, with record U.S. commercial TCV ($843M, +222% YoY) and RDV up 145% YoY . “LLMs simply don't work in the real world without Palantir” (Ryan Taylor) .
  • Profitability and cash generation: adjusted operating margin 46%, adjusted EBITDA margin 47%, adjusted FCF $569M (57% margin), cash from operations $539M (54% margin) .
  • Government momentum: U.S. Gov +53% YoY to $426M; key awards including $218M Space Force order, Maven ceiling +$795M, and a 10-year U.S. Army enterprise agreement up to $10B (contract consolidation) .

What Went Wrong

  • International commercial remained soft: declined 3% YoY and grew only 2% QoQ to $144M; management remained U.S.-focused for growth .
  • Seasonality and expense ramp ahead: management flagged a significant expense increase in Q3 due to hiring seasonality, even as margins are expected to continue expanding in 2H .
  • Strategic commercial contracts are de-emphasized: revenue expected $2–$4M in Q3 and <0.5% of FY25 revenue, limiting this source as a lever .

Financial Results

Headline Financials vs Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$828 $883.855 $1,003.697
Revenue YoY Growth %36% 39% 48%
Revenue QoQ Growth %14% 7% 14%
GAAP EPS ($USD)$0.03 $0.08 $0.13
Adjusted EPS ($USD)$0.14 $0.13 $0.16
GAAP Operating Margin %1% 20% 27%
Adjusted Operating Margin %45% 44% 46%
Cash from Operations ($USD Millions)$460 $310.263 $539.251
Adjusted Free Cash Flow ($USD Millions)$517 $370.377 $568.769

Segment Breakdown (Q2 2025)

Segment Metric ($USD Millions)Q2 2025
Total Commercial Revenue$451
U.S. Commercial Revenue$306
International Commercial Revenue$144
Total Government Revenue$553
U.S. Government Revenue$426
International Government Revenue$127
U.S. Revenue (Total)$733

KPIs and Bookings

KPIQ1 2025Q2 2025
Deals ≥$1M (count)139 157
Deals ≥$5M (count)51 66
Deals ≥$10M (count)31 42
Total TCV Booked ($USD Billions)—$2.27
U.S. Commercial TCV ($USD Millions)$810 $843
U.S. Commercial RDV ($USD Billions)$2.32 $2.79
Net Dollar Retention (%)120% (Q4) 128%
Customer Count (Total)—849

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025—$1.083–$1.087B New
Adjusted Income from OperationsQ3 2025—$493–$497M New
RevenueFY 2025$3.890–$3.902B $4.142–$4.150B Raised
U.S. Commercial RevenueFY 2025≥$1.178B (+68% YoY) ≥$1.302B (+85% YoY) Raised
Adjusted Income from OperationsFY 2025$1.711–$1.723B $1.912–$1.920B Raised
Adjusted Free Cash FlowFY 2025$1.6–$1.8B $1.8–$2.0B Raised
GAAP Op. Income & Net IncomeEach quarter in FY25Expected each quarter Continue to expect each quarter Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/Technology Initiatives (AIP, Ontology)Ontology as “secret” enabling LLMs in production; commoditizing models; enterprise autonomy push “LLMs don’t work without Palantir”; ontology web services; AI FD accelerates time-to-value Strengthening narrative and adoption
U.S. Commercial FocusRecord U.S. comm TCV; +64% YoY in Q4; Q1 +71% YoY to $255M +93% YoY to $306M; record U.S. comm TCV $843M Accelerating
Government (Maven, CJADC2)Broadening adoption; new expansions across services/commands Space Force $218M, Maven ceiling +$795M; 10-year Army E.A. up to $10B Scaling
International CommercialPockets of growth, large renewals (e.g., Rio Tinto) -3% YoY; +2% QoQ; Asia targeted but U.S. prioritized Mixed/soft
Profitability & CashRule of 40 81 in Q4; adj margin 45%; adj FCF $517M Rule of 40 94; adj margin 46%; adj FCF $569M Improving
Hiring/ExpensesPlanned 2025 expense increase for technical talent Q3 expense ramp due to seasonality; margins to expand in 2H Investment continuing

Management Commentary

  • Strategy and momentum: “We surpassed $1 billion in quarterly revenue… Rule of 40 score… 94%… U.S. commercial climbed to 93%” (Alex Karp) . “LLMs simply don't work in the real world without Palantir… our ontology is pure understanding concretized in software” (Ryan Taylor) .
  • Product platform positioning: “AIP isn’t just software our customers use; it’s software our customers are building their software on… replatforming on AIP has enabled customers to leapfrog their competition” (Shyam Sankar) .
  • Profit focus and cultural model: “We have a small sales force… our primary sales force… customers telling other customers… we are very focused on the value creation and then collecting later” (Alex Karp) .
  • Concrete customer outcomes: Top 20 customers now average $75M TTM revenue (+30% YoY); examples cited across Citibank, Fannie Mae, Nebraska Medicine, Lear .

Q&A Highlights

  • Go-to-market approach: Management reaffirmed reliance on product-led growth and customer advocacy over a large direct sales force; credibility and value creation drive expansion velocity (Dan Ives Q&A) .
  • Frontline AI impact: AI increases worker productivity across sectors; Palantir launching American Tech Fellowship to credential and train non-traditional talent (shareholder Q&A) .
  • Policy and talent: White House AI action plan seen as catalyzing implementation; Palantir attracts talent by offering problems that matter and rapid agency (Bank of America Q&A) .
  • Outlook clarity: CFO reiterated Q3 and FY25 guidance raises and continued expectation of GAAP profitability each quarter .

Estimates Context

Actuals vs Consensus

MetricQ1 2025 ConsensusQ1 2025 ActualBeat/(Miss)Q2 2025 ConsensusQ2 2025 ActualBeat/(Miss)
Revenue ($USD)$862,131,210*$883,855,000 +$21,723,790*$939,467,320*$1,003,697,000 +$64,229,680*
Primary EPS ($USD)$0.1286*$0.13 +$0.0014*$0.1385*$0.16 +$0.0215*
EBITDA ($USD)$374,493,440*$397,332,000 +$22,838,560*$411,584,420*$470,915,000 +$59,330,580*

Values retrieved from S&P Global.

Guidance vs Consensus

MetricQ3 2025 Company GuideQ3 2025 ConsensusFY 2025 Company Guide (mid)FY 2025 Consensus
Revenue ($USD)$1,083,000,000–$1,087,000,000 $1,091,644,120*$4,146,000,000 $4,406,136,880*
Primary EPS ($USD)—$0.1674*—$0.7239*
EBITDA ($USD)—$499,933,410*—$2,181,143,500*

Values retrieved from S&P Global.

Bold callouts: Q2 revenue and EPS were significant beats versus consensus; FY25 revenue guide raised materially.

Key Takeaways for Investors

  • U.S. commercial momentum remains the core driver: +93% YoY with expanding TCV and RDV, indicating durable demand for AIP-led production use cases .
  • Mix shift to U.S. benefits growth and profitability; international commercial softness remains a watch item but is not central to near-term trajectory .
  • Bookings and NDR strength support forward revenue visibility: record TCV ($2.27B), U.S. commercial TCV ($843M), NDR 128% (+400 bps QoQ), RPO $2.4B (+77% YoY) .
  • Margin profile is improving alongside growth: adjusted operating margin 46%, adjusted FCF margin 57%; management expects expense ramp in Q3 but continued margin expansion in 2H .
  • Guidance reset is a catalyst: Q3 guide implies >8% QoQ growth and 50% YoY; FY25 revenue and profitability targets were raised across the board .
  • Government pipeline appears robust (Army, Maven, Space Force), providing multi-year visibility and diversification beyond commercial .
  • Near-term trading implication: upside revisions and record KPIs should support positive estimate momentum; monitor Q3 expense seasonality and international commercial recovery .