Palantir Technologies Inc. is having a moment. Its U.S. revenues increased by an amazing 93% in the last quarter! The firm focuses on developing data analytics and artificial intelligence tools. In fact, over the last five years its U.S. revenue has increased more than five-fold from $156 million to just under $733 million, almost quintupling its annual earnings. This expansion further cements Palantir’s huge presence in the tech market—especially with lucrative government contracts.
In the most recent quarter, government contracts accounted for 55% of all of Palantir’s revenues. U.S. government revenue exploded by 53%, to a remarkable $426 million. Additionally, Palantir’s U.S. revenues now make up about three-quarters of its total earnings, highlighting the company’s reliance on government partnerships amid fluctuating commercial international revenues, which declined by 3% last quarter.
The market’s response to Palantir’s recent string of victories has been nothing short of euphoric. That’s in large part because the company’s stock price has exploded—up almost 500% in just the last year alone. In the past five years, however, it has exploded over 1,700%. This remarkable increase has catapulted Palantir into the top 10 U.S. tech companies. It’s hard to believe that 19 years later it would achieve the success of being one of the nation’s top 20 most valuable companies. Now, investors have placed their confidence in Palantir’s future as they double-down on its revolutionary AI prowess.
Palantir’s recent financial accomplishments are nothing short of miraculous. Last quarter, they topped $1 billion in quarterly revenue, the first time of any public US company. This milestone is tremendously exciting! It happens to align with the award of a new $10 billion IDIQ contract, which aims to provide data and software solutions to improve efficiencies and increase military readiness.
In May, the Department of Defense made a historic move to better national defense. To that end, it upped its previous agreement with Palantir for AI-powered battlefield decision-making capabilities by $795 million. This partnership is evidence of the military’s increasing demand for cutting-edge technology that improves readiness and lethality.
Palantir’s cofounders, led by the ever-controversial venture capitalist Peter Thiel, have largely controlled the company’s direction. Current CEO Alex Karp has been a key figure in determining the company’s path. Karp expressed his pride in the company’s achievements during a recent statement, saying, “This is a once-in-a-generation, truly anomalous quarter, and we’re very proud. We regret to inform our haters that they are misinformed, but there are hundreds of quarters yet to be dismayed.
Despite its impressive year-on-year growth, the commercial sector is where some of Palantir’s challenges lie. The decline in international revenues suggests that while government contracts drive growth, the company must focus on enhancing its commercial offerings to secure a balanced revenue stream.
Unsurprisingly, over the last year, palantir’s market capitalization has increased precipitously. In reaction, its forward price-to-earnings ratio has now soared to more than 280 times. This robust valuation captures high investor hopes about the company’s ability to harness new AI tools and continue to deliver a superior product to mains streaming competitor Spotify.
Palantir, meanwhile, continues to grow in both the government and commercial spaces. The company’s philosophy is to constantly be pioneering what’s possible in data analytics and artificial intelligence. Alexander Karp reaffirmed this vision by stating, “We still believe America is the leader of the free world, that the West is superior. We have to fight for these values. We should give American corporations, and, most importantly, our government, an unfair advantage.”