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Palantir Technologies Inc. (PLTR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered accelerated top-line growth and record profitability metrics: revenue $0.828B (+36% Y/Y, +14% Q/Q), adjusted operating margin 45%, adjusted EPS $0.14; GAAP EPS $0.03 was impacted by one-time SAR-related stock comp expenses .
  • U.S. strength was the clear catalyst: U.S. revenue $0.558B (+52% Y/Y), U.S. commercial $0.214B (+64% Y/Y, +20% Q/Q), U.S. government $0.343B (+45% Y/Y, +7% Q/Q); record U.S. commercial TCV $803M (+134% Y/Y) and RDV $1.79B (+99% Y/Y) .
  • Guidance surprised positively: Q1 2025 revenue $858–$862M and FY 2025 revenue $3.741–$3.757B (+31% Y/Y) with U.S. commercial >$1.079B (+≥54% Y/Y), adjusted FCF $1.5–$1.7B; management stated results and FY25 guidance “eviscerating consensus estimates” (Street consensus via S&P Global was unavailable to us) .
  • Cash generation remained exceptional: Q4 cash from operations $460M (56% margin) and adjusted FCF $517M (63% margin); Rule of 40 reached 81, reflecting the combination of growth and margins .
  • Stock narrative catalyst: outsized U.S. commercial momentum and a materially above-consensus FY25 revenue outlook (per company) amid a pivot from AI model “supply” to Palantir’s application/workflow layer (ontology/AIP) execution .

What Went Well and What Went Wrong

What Went Well

  • U.S. commercial momentum at scale: $214M revenue (+64% Y/Y, +20% Q/Q), record U.S. commercial TCV $803M (+134% Y/Y), RDV $1.79B (+99% Y/Y); customer count +73% Y/Y to 382 in the U.S. commercial segment .
  • Profitability and cash flow: adjusted operating margin 45% (company record) and adjusted FCF margin 63% in Q4; Rule of 40 reached 81 as growth plus margin strengthened sequentially .
  • Execution in government and marquee renewals: U.S. government revenue $343M (+45% Y/Y), international government +28% Y/Y; Army Vantage $618.9M ceiling and SOCOM expansion support sustained DoD footprint .
  • Management quote: “Chat was always a dead end…the intermediary representation…is ontology, and that’s why it’s been the secret to our meteoric rise” — Shyam Sankar .

What Went Wrong

  • GAAP margins compressed by one-time SAR expense: GAAP operating income $11M (1% margin); EPS $0.03 vs $0.07 excluding SAR-related items .
  • International commercial softness: Q3 saw headwinds in Europe and a step down in Middle East; Q4 international commercial grew modestly (+3% Y/Y, +15% Q/Q) with some catch-up effects, indicating uneven non-U.S. trajectory .
  • Strategic commercial contracts are de minimis and declining: revenue from these contracts $9.6M in Q4 and expected $4–$6M in Q1 2025 (~0.5% of FY25 revenue), limiting contribution from this legacy program .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$678.134 $725.516 $827.519
YoY Revenue Growth (%)27% 30% 36%
GAAP EPS (Diluted) ($)$0.06 $0.06 $0.03
Adjusted EPS (Diluted) ($)$0.09 $0.10 $0.14
GAAP Operating Margin (%)16% 16% 1%
Adjusted Operating Margin (%)37% 38% 45%
Adjusted EBITDA Margin (%)39% 39% 46%
Cash from Operations ($USD Millions)$144.187 $419.772 $460.327
Adjusted Free Cash Flow ($USD Millions)$148.660 $434.543 $517.385

Segment breakdown

Segment Metric ($USD Millions)Q3 2024Q4 2024
U.S. Revenue$499 $558
Commercial (Global)$317 $372
Government (Global)$408 $455
U.S. Commercial$179 $214
U.S. Government$320 $343
International Commercial$138 $158
International Government$89 $112

KPIs and deal metrics

KPIQ3 2024Q4 2024
Deals ≥$1M (count)104 129
Total TCV Booked ($USD Billions)$1.10 $1.79
U.S. Commercial TCV Booked ($USD Millions)$297 $803
Remaining Deal Value (RDV) ($USD Billions)$4.50 $5.43
Remaining Performance Obligations (RPO) ($USD Billions)$1.60 $1.73
Customer Count (global)629 711
Net Dollar Retention (%)118% 120%
Rule of 40 (score)68 81

Non-GAAP adjustments (SARs): Q4 included accelerated SAR stock-based compensation $115.776M and related employer payroll taxes $15.528M; EPS excluding SAR-related expenses was $0.07 vs GAAP $0.03 .

Guidance Changes

Q4 2024 guidance vs actual

MetricPeriodPrevious GuidanceCurrent (Actual)Change
RevenueQ4 2024$767–$771M $827.5M Beat
Adjusted Income from OperationsQ4 2024$298–$302M $372.5M Beat

Current outlook (new issuance)

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ1 2025N/A$858–$862M New
Adjusted Income from OperationsQ1 2025N/A$354–$358M New
RevenueFY 2025N/A$3.741–$3.757B New
U.S. Commercial RevenueFY 2025N/A>$1.079B (+≥54% Y/Y) New
Adjusted Income from OperationsFY 2025N/A$1.551–$1.567B New
Adjusted Free Cash FlowFY 2025N/A$1.5–$1.7B New
GAAP Op Income & Net Income Each QuarterFY 2025N/AYes New

Earnings Call Themes & Trends

TopicQ2 2024 (prior)Q3 2024 (prior)Q4 2024 (current)Trend
AI/ontology vs model commoditizationFocused on AI-driven demand and rising profitability (record GAAP EPS) Emphasis on models converging and inference costs falling; value in application/workflow layer and ontology “Chat was always a dead end…ontology is the intermediary representation…secret to our meteoric rise” Strengthening conviction
U.S. commercial momentumUS commercial +55% Y/Y, +6% Q/Q US commercial +54% Y/Y, +13% Q/Q US commercial +64% Y/Y, +20% Q/Q; record TCV Accelerating
Government footprint (Maven, Titan, CJADC2)US gov +24% Y/Y, +8% Q/Q DoD acceleration; Maven/Titan expansions and CJADC2 investments Broader adoption across services and Combatant Commands; hurricane/airspace/security use cases Broadening
International trendGlobal growth but mixed Europe headwinds; Middle East step-down; targeted Asia/Mideast opportunities UK health care (NHS FDP) and defense strength; int’l gov +26% Q/Q Mixed, selective strength
Warp Speed & manufacturing OSN/AAnnounced Warp Speed to reindustrialize Warp Speed cohort live; 200x efficiency gains cited by customers Scaling
Developer platform & FedStartN/AJADC2 SDK; DevCon; green suitors building apps FedRAMP High for FedStart customers; accelerating federal market access Enabling ecosystem
Rule of 40 narrative64 in Q2 68 in Q3 81 in Q4; “over twice the Rule of 40” messaging Improving

Management Commentary

  • Strategic message: Palantir’s differentiation comes from operationalizing AI via ontology and workflow application, not model creation; models are commoditizing while enterprise autonomy and agent-led workflows drive real impact .
  • CEO tone: “We blew through…over twice the Rule of 40…We plan to be a cornerstone…in driving this revolution in the U.S. over the next 3 to 5 years” — Alex Karp .
  • Profitability discipline: “Adjusted operating margin to 45%, the strongest…in the company’s history,” while investing in technical hires and product pipeline .
  • Examples of quantified customer impact: Bank back-office processes reduced from 5 days to 3 minutes; underwriting from 2 weeks to 3 hours; CAD validation from 100 hours automated with human exception review .

Q&A Highlights

  • Sales cycle velocity: Management is “not surprised” by rapid prototype-to-production cycles; customers seek to replicate quick wins across workflows (e.g., telecom $40M TCV expansion) .
  • Government disruption/meritocracy: Potential for increased accountability and transparency benefiting Palantir; SOCOM, Army expansions highlight operational value .
  • Investment priorities: Focus on quality engineers and product depth rather than massive salesforce expansion; partnerships increasingly productive versus prior years .
  • Guidance clarifications: Strategic commercial contracts now de minimis (~0.5% of FY25 revenue); U.S. commercial and government expected to remain primary growth drivers .

Estimates Context

  • S&P Global Wall Street consensus data was unavailable at the time of this analysis (API request limit exceeded). As a result, we cannot provide numeric Street estimates or beats/misses relative to S&P consensus.
  • Company asserted FY25 guidance “eviscerating consensus estimates,” and Q4 results were described as an “extraordinary top line beat,” but investors should anchor on independent consensus sources when available .

Key Takeaways for Investors

  • U.S. engine is the growth and contract value flywheel: U.S. revenue +52% Y/Y; record U.S. commercial TCV and RDV point to sustained momentum into 2025 .
  • Profitability at scale: Adjusted operating margin 45% and adjusted FCF margin 63% in Q4 underpin valuation support amid growth; Rule of 40 at 81 strengthens quality-of-growth narrative .
  • One-time SAR impact: GAAP EPS and margins were dampened by accelerated SAR-related stock comp; EPS excluding SAR was $0.07 vs GAAP $0.03, clarifying underlying earnings power .
  • FY25 setup: Revenue guide $3.741–$3.757B (+31% Y/Y) with U.S. commercial >$1.079B (+≥54% Y/Y) and adjusted FCF $1.5–$1.7B establishes a high bar and likely Street revisions once consensus is refreshed .
  • International is mixed but improving selectively: UK healthcare and defense strength alongside pockets of Asia/Middle East growth, while Europe remains a relative headwind .
  • Government footprint expanding: Army Vantage extension and SOCOM Mission Manager deployment reinforce durable DoD revenue and strategic positioning in CJADC2/Maven/Titan .
  • Near-term catalyst: Company’s claim of FY25 guidance well above consensus and Q4 beat vs company guidance should support positive narrative; monitor Q1 execution and U.S. commercial TCV/RDV additions for confirmation .