Came across the news that Palantir reported Q3 and honestly the numbers are kind of insane. Revenue up 63% but U.S. commercial revenue grew 121%
Their CEO literally went on the earnings call saying they achieved “best performance in software history” and called out bearish analysts for being wrong at every price level. WOW.
What bothers me is when growth is THIS extreme, you’re either riding a massive wave or pulling forward demand. 121% doesn’t repeat easily and Palantir’s been around for years so this sudden explosion feels kinda bubble-ish.
That said their moat is legit with integrating LLMs into private defense/enterprise networks.
their ceo talks trash every earnings call but the numbers backed it up this time.
121% is a lot, yes, but check their customer concentration as well. If defense spending slows, that growth evaporates fast.
Palantir just delivered the kind of operating print that explains the multiple. Revenue came in at $1.18B, up 63% YoY and 18% sequentially while adjusted operating margin expanded to 51% which pushes the Rule of 40 to 114.
The engine is the U.S. business, especially commercial. U.S. revenue was $883M which is up 77% YoY and 20% QoQ. Inside that, U.S. commercial reached $397M, up 121% YoY and 29% sequentially, surpassing U.S. government for the fourth straight quarter, while U.S. government still grew 52% YoY and 14% sequentially to $486M. The bookings tape backs it up. Total contract value closed was $2.8B which is up 151% YoY with 204 deals at $1M or more, 91 at $5M or more and 53 at $10M or more. Remaining deal value in U.S. commercial reached $3.63B, up 199% YoY and 30% sequentially and net dollar retention rose to 134%, which tells you expansions are carrying the model while new logos pile on.
Guidance tightens the thesis when Q4 revenue is guided to ~$1.33B, which is 13% sequential growth and 61% YoY, the highest sequential step they have ever guided. Full-year revenue moves to about $4.4B, up 53% YoY with adjusted operating income raised to roughly $2.2B.
The product signal is clear. AIP is compressing sales cycles from pilots to enterprise-wide deployments, evidenced by record TCV and by anecdotes of customers jumping from a single use case to multi-year enterprise agreements within months. The operating leverage shows up in the numbers because headcount growth is modest while margins expand by 1,300 basis points YoY. That is why the Rule of 40 moves from 94 last quarter to 114 now and why the company is guiding to 102 for the full year. INSANE NUMBERS.
Palantir is now the bellwether for enterprise AI at scale. Backlog and remaining deal value suggest velocity can persist, cash generation funds continued product investment and the unit economics improve as cohorts expand. The overhang is valuation. At a surface level, it looks nose-bleed where a company with a $500B-plus market cap trading at over 100x P/S butut that framing misses what this print actually represents. When a software company posts 63% revenue growth with a 51% operating margin, that is not a normal company. Those are video-game numbers. The combination of scale, acceleration, and profitability is something the market almost never sees simultaneously. Palantir is compounding like a company half its size and monetizing like a company twice its age.