Data software specialist Palantir Technologies (PLTR 1.22%) delivered a strong Q3 2024 financial performance on Monday, Nov. 4, topping analyst estimates and raising its outlook. Q3 revenue of $726 million came in well ahead of guidance for $703 million while adjusted earnings per share (EPS) of $0.10 finished just about $0.09 per share expectations.
Palantir's standout quarterly performance shows resilience, driven by high demand in U.S. markets, though international growth poses ongoing challenges.
| Metric | Q3 2024 | Analysts Expectation | Q3 2023 | Change (YOY) |
|---|---|---|---|---|
| Revenue | $726 million | $703.4 million | $558 million | 30% |
| Adj. income from operations | $276 million | N/A | $163 million | 69% |
| Net income | $149 million | N/A | $73 million | 104% |
| Adj. EPS | $0.10 | $0.09 | $0.07 | 43% |
| Adj. free cash flow | $435 million | N/A | $141 million | 209% |
Source: Palantir Technologies. Note: Analyst consensus estimates provided by FactSet. YOY = Year over year.
Overview of Palantir Technologies
Founded in 2003, Palantir Technologies specializes in software platforms designed for complex data integration, primarily servicing government and commercial sectors. Operating from its diverse array of platforms such as Gotham, Foundry, Apollo, and its enhanced Artificial Intelligence Platform (AIP), Palantir addresses the intricate needs of data management and decision-making across multiple domains.
Palantir has been concentrating its efforts on expanding the functionality and reach of its AI offerings, especially within the U.S. This focus has yielded impressive results, evidenced by significant growth in its U.S. government and commercial revenues. The company's ability to quickly deploy and integrate its solutions remains a key strength, capitalizing on strategic partnerships to enhance market presence.
Q3 2024 Performance Highlights
Palantir's ability to outperform revenue and adjusted EPS targets was largely fueled by its AIP success. U.S. commercial and government revenues experienced notable increases of 54% and 40% year over year, respectively. The demand for AI-driven solutions among existing and new clients drove revenue to $726 million, surpassing the expected ceiling of $701 million.
Operational efficiencies significantly improved Palantir's adjusted income from operations margin. The company's strategic initiatives across both U.S. markets made it possible to secure over 104 deals valued at more than $1 million during the quarter, reflecting strong product demand.
Despite the quarter's successes, Palantir's international commercial growth presents continued difficulties, with only a 15% year-over-year revenue increase. This underlines potential hurdles in regional expansion and competing effectively in international markets.
Forward-Looking Statements
Looking ahead, Palantir management upgraded its outlook for Q4 2024, anticipating revenue between $767 million and $771 million. The company remains confident in its AI strategy, raising its full-year revenue forecast to $2.805 billion - $2.809 billion. Palantir also projects U.S. commercial revenue to surpass $687 million, indicating a steady and positive growth rate of 50%.
Management's focus remains on enhancing AI capabilities, reinforcing their strategic positions in the U.S. market while navigating international growth obstacles. Investors will be keen on Palantir's continued expansion efforts, particularly in regions like Asia and the Middle East, as well as its ability to maintain momentum in AI innovation.
