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Palantir Technologies Inc. (PLTR)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered accelerating top-line and record profitability: revenue grew 63% y/y to $1.181B and 18% q/q, with adjusted operating margin reaching 51% (Rule of 40: 114). Management raised FY revenue guidance to $4.396–$4.400B and guided Q4 revenue to $1.327–$1.331B .
  • U.S. engine continued to power results: U.S. revenue +77% y/y to $883M; U.S. commercial +121% y/y to $397M; U.S. government +52% y/y to $486M. Commercial TCV hit $1.3B; total TCV a record $2.76B (+151% y/y) .
  • Strong beats vs consensus: Revenue $1.181B vs $1.091B* and adjusted EPS $0.21 vs EPS consensus $0.17*; GAAP EPS $0.18; cash from operations $508M (43% margin) and adjusted FCF $540M (46% margin) .
  • Guidance raised across all key metrics (FY revenue, U.S. commercial revenue, adjusted operating income, adjusted FCF) on broad-based AIP demand and expanding enterprise agreements; management reiterated sustained GAAP profitability each quarter in 2025 .

What Went Well and What Went Wrong

What Went Well

  • U.S. commercial growth and bookings: U.S. commercial revenue +121% y/y and +29% q/q to $397M; U.S. commercial TCV $1.3B (+342% y/y), with accelerating conversions and expansions to enterprise-wide deployments .
  • Record profitability and cash generation: Adjusted operating margin reached 51% (highest reported) and Rule of 40 rose to 114; cash from operations $508M (43% margin) and adjusted FCF $540M (46% margin) .
  • Product velocity driving value: Management highlighted AIFDE and AI HiveMind enabling rapid migration and solutioning, with enterprise autonomy as a core theme. “This is not a prototype. This is production… results are shocking” .

What Went Wrong

  • International commercial remained muted: International commercial revenue was $152M (+10% y/y, +5% q/q), with management noting Europe remains stagnant and a drag versus the U.S. momentum .
  • Elevated stock-based compensation persists: SBC was $172M in Q3; while unit economics improved, SBC remains a headwind to GAAP opex optics (offset by margin expansion) .
  • Expense growth expected in Q4: Management guided expenses to increase in Q4 to invest in product pipeline and elite technical hiring, though sustained GAAP profitability is reiterated .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$0.884 $1.004 $1.181
Revenue YoY Growth (%)39% 48% 63%
Revenue QoQ Growth (%)7% 14% 18%
GAAP EPS, Diluted ($)$0.08 $0.13 $0.18
Adjusted EPS, Diluted ($)$0.13 $0.16 $0.21
GAAP Operating Margin (%)20% 27% 33%
Adjusted Operating Margin (%)44% 46% 51%
Net Income Margin (%)24% 33% 40%
Cash from Operations ($USD Millions)$310 $539 $508
Cash from Operations Margin (%)35% 54% 43%
Adjusted Free Cash Flow ($USD Millions)$370 $569 $540
Adjusted FCF Margin (%)42% 57% 46%

Segment Breakdown

SegmentQ1 2025 ($M)Q2 2025 ($M)Q3 2025 ($M)
U.S. Revenue$628 $733 $883
U.S. Commercial Revenue$255 $306 $397
U.S. Government Revenue$373 $426 $486
Commercial Revenue (Total)$397 $451 $548
Government Revenue (Total)$487 $553 $633
International Commercial Revenue$141 $144 $152

KPIs

KPIQ1 2025Q2 2025Q3 2025
Total TCV ($B)$1.5 $2.27 $2.76
Deals ≥$1M / ≥$5M / ≥$10M (count)139 / 51 / 31 157 / 66 / 42 204 / 91 / 53
U.S. Commercial RDV ($B)$2.32 $2.79 $3.63
Customer Count769 849 911
Net Dollar Retention (%)124% 128% 134%
Remaining Performance Obligations ($B)$1.9 $2.4 $2.6
Total Remaining Deal Value ($B)$5.97 $7.1 $8.6

Actuals vs Street (S&P Global Consensus)

MetricQ3 2025 Consensus*Q3 2025 Actual
Revenue ($USD Billions)$1.091*$1.181
Primary EPS ($)$0.17*$0.21
Primary EPS – # of Estimates21*—
Revenue – # of Estimates21*—

Notes: Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)Q4 2025N/A (no prior Q4 guide provided)$1.327–$1.331 New
Revenue ($B)FY 2025$4.142–$4.150 $4.396–$4.400 Raised
U.S. Commercial Revenue ($B)FY 2025>$1.302 (≥85% y/y) >$1.433 (≥104% y/y) Raised
Adjusted Income from Operations ($B)FY 2025$1.912–$1.920 $2.151–$2.155 Raised
Adjusted Free Cash Flow ($B)FY 2025$1.8–$2.0 $1.9–$2.1 Raised
GAAP Operating Income & Net Income (each quarter)FY 2025Expect GAAP OI & NI each quarter Expect GAAP OI & NI each quarter Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q1)Current Period (Q3)Trend
AIP adoption & enterprise autonomyCEOs replatforming on AIP; AI FD enabling autonomous execution; agent-led workflows AIFDE/HiveMind enabling 5-day migrations; autonomous problem solving; Edge Ontology at far edge Accelerating
U.S. commercial momentum+93% y/y; strongest U.S. commercial TCV $843M +121% y/y; U.S. commercial TCV $1.3B; larger enterprise agreements Strengthening
International/EuropeIntl commercial -3% y/y (Q2); Europe headwinds Intl commercial +10% y/y; Europe “stagnant” per CEO Mixed; Europe lagging
Government programs (Maven, Army)Maven ceiling +$795M; US Army 10-year EA up to $10B Army memo to consolidate OnVantage; international allied momentum Expanding
Net dollar retention (NDR)128% (Q2), +400bps q/q 134%, +600bps q/q Improving
Cash flow and profitabilityAdj FCF margin 57% (Q2); sustained GAAP profitability $540M adj FCF; Rule of 40 114; sustained GAAP profitability reiterated Strong
Reindustrialization (Warp Speed)Strong adoption in defense/industrial; shipbuilding focus Broader uptake; frontline worker enablement via fellowship Broadening

Management Commentary

  • “We closed our highest TCV quarter ever at $2.8 billion… 204 deals ≥$1M, 91 ≥$5M, and 53 ≥$10M” – Ryan Taylor .
  • “AIFDE… unleashing incredible speed… two human FDEs… migrate off legacy data warehouse in five days… This is not a prototype. This is production.” – Shyam Sankar .
  • “These are arguably the best results that any software company has ever delivered… Rule of 40 of 114… growth is being held down by a stagnant Europe.” – Alex Karp .
  • “Adjusted operating margin… highest-ever reported at 51%… guiding Q4 revenue $1.327–$1.331B; raising FY revenue to $4.396–$4.400B.” – Dave Glazer .

Q&A Highlights

  • Accelerated sales cycles and enterprise-wide reorganizations: Customers move rapidly from single use cases to enterprise-wide AIP deployments; larger, faster expansions across C-suite-owned transformations .
  • Go-to-market model: Credibility and customer references drive adoption more than traditional large sales forces; increased leverage from successful deployments .
  • Government pipeline clarity: Opportunities across NGC2, MAVEN growth, multi-conflict demand signals; Army consolidation around OnVantage .
  • Internal productivity and scale: Headcount up ~10% while revenue up 63% due to AIFDE enabling FDE productivity; Army ‘green suiters’ becoming proficient developers .

Estimates Context

  • Q3 revenue and EPS materially beat Wall Street consensus: Revenue $1.181B vs $1.091B*; adjusted EPS $0.21 vs consensus $0.17*. Beat was driven by U.S. commercial acceleration, record TCV, and margin expansion from scaled AIP deployments .
  • Guidance likely to push estimate revisions upward across FY revenue, U.S. commercial revenue, adjusted operating income, and FCF given raised ranges and Q4 outlook .
    Notes: Values retrieved from S&P Global.*

Key Takeaways for Investors

  • AIP-driven U.S. commercial momentum is the primary growth vector: accelerating bookings, larger enterprise agreements, and rapid deployment cycles should support continued outsized growth into Q4 .
  • Profitability inflecting at scale: adjusted operating margin at 51% with sustained GAAP profitability and $2B TTM adjusted FCF; Rule of 40 at 114 underscores quality of growth .
  • Guidance raise is a catalyst: FY revenue lifted to $4.396–$4.400B, U.S. commercial raised to >$1.433B (≥104% y/y), adjusted op income to $2.151–$2.155B, FCF to $1.9–$2.1B .
  • Watch international/Europe trajectory: management cited Europe’s stagnation; targeting Asia/Middle East (e.g., Dubai JV “Aither”) could offset regional variability .
  • Investment in product and talent continues: expenses to increase in Q4 to sustain roadmap velocity (AIFDE/HiveMind/Edge Ontology); near-term margin supported by scale and operating discipline .
  • Near-term trading implications: strength in U.S. commercial, record TCV/RDV/RPO, and raised Q4/FY guidance are positive; monitor SBC optics and international mix as potential debates .
  • Medium-term thesis: Enterprise autonomy (agents + ontology) and manufacturing reindustrialization (Warp Speed) broaden TAM; government consolidation (OnVantage, MAVEN) deepens durable moats .

Additional Relevant Press Releases (Q3 context)

  • Lear five-year expansion deploying Foundry, AIP, and Warp Speed across global manufacturing; 11,000 users and >$30M savings in H1’25 .
  • Lumen partnership to accelerate AI-driven telecom transformation using Foundry and AIP .
  • Dubai Holding JV “Aither” established to scale AI across Dubai’s public and private sectors, following 18 months of operational collaboration .