Palantir (PLTR) Q2 Revenue Surges 48%

Palantir Technologies (PLTR 4.18%), a data analytics and artificial intelligence software company known for serving both governments and corporations, reported its second quarter 2025 earnings on August 4, 2025. The release delivered headline-grabbing results: GAAP revenue climbed to $1.00 billion, well ahead of the $937.7 million average analyst estimate (GAAP). Adjusted (non-GAAP) earnings per share landed at $0.16 versus the $0.14 consensus. With substantial beats on both top and bottom lines, with GAAP revenue and non-GAAP EPS both exceeding analyst estimates, Palantir’s second quarter marks another period of outperformance, with strong year-over-year growth in its core U.S. commercial (71%) and government (45%) customer base and significantly higher year-on-year profitability. The quarter was notable for record deal activity, robust cash generation, and the company’s most ambitious guidance yet for FY2025, even as International commercial revenue declined 5% year-over-year and 11% sequentially to $141 million, and international growth stayed sluggish.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Palantir Technologies: Business Overview and Strategic Focus

Palantir Technologies builds and deploys complex software platforms used to integrate, analyze, and manage data at scale. Its core offerings—including Gotham (government analytics software), Foundry (commercial operations platform), Apollo (deployment and management tool), and the Artificial Intelligence Platform (AIP)—help organizations transform massive data into actionable insights. Clients span government agencies, defense, healthcare, manufacturing, and financial services.

Currently, the company’s priorities include advancing its AI-powered software, driving adoption of AIP in commercial and public sectors, and deepening relationships with U.S. government entities. To succeed, Palantir depends on relentless technological innovation, acquiring and retaining customers with high-stakes data needs, and competing aggressively in both government and enterprise markets. Privacy compliance and regulatory alignment remain key for its reputation and long-term client trust.

Quarter in Detail: U.S. Strength, Record Pipeline, and Expanding Margins

The second quarter was shaped by extraordinary year-over-year growth in Palantir’s U.S. operations. Total U.S. revenue jumped 68% year-over-year to $733 million. U.S. commercial sales, driven by accelerated adoption of the Artificial Intelligence Platform, surged 93% year-over-year, and U.S. government revenue increased by 53% year-over-year. The company closed 157 deals of at least $1 million each, and overall contract value booked set a record of $2.27 billion, up 140% year-over-year. Customer count rose 43% year over year and 10% sequentially, indicating broad adoption across sectors.

yielding a strong 46% adjusted operating margin. GAAP net income more than doubled year over year. Adjusted free cash flow reached $569 million, up 282.7% year over year.

Palantir’s government business continues to build momentum. The Army contract, which unified dozens of smaller contracts into a single $10 billion agreement spanning the next decade, is expected to underpin government revenues for years. U.S. commercial remaining deal value reached $2.79 billion, up 145% year over year. Government work remains sensitive to policy shifts, but current results show strong demand for Palantir’s AI-powered solutions in defense, intelligence, and public health.

While U.S. growth and deal wins were the story of the quarter, international performance was less emphasized and presented as an area for improvement. Prior quarters hinted at weak or declining international commercial revenue in Europe (down 5% year-over-year and 11% sequentially) and mixed performance elsewhere. Management did not break out Q2 international figures in detail, reinforcing that U.S. business remains the principal growth engine. Concerns around international expansion, contract cancellation risk, and the impact of broader market volatility are still being monitored by market observers.

Technology and Product: AI and Platform Adoption

The period saw strong demand for Palantir’s Artificial Intelligence Platform (AIP), its enterprise-focused AI toolkit that turns large language models—software that can process and generate human-like text—into business productivity tools. Customers such as Walgreens and AIG have highlighted efficiency and operational gains from the technology. Gotham and Foundry also continue to serve as foundational analytics platforms for government and commercial users, while Apollo remains the critical backbone for software deployment and management.

New use cases emerged as AIP powered increasingly sophisticated “AI agents.” These tools harness data and models to automate business processes, decision-making, and even military operations. The quarter also underscored Palantir’s strength in integrating software with complex customer environments in defense and manufacturing. The company’s work with the Department of Defense, NATO, and Fortune 1000 firms is driving adoption beyond early pilot phases and into transformative enterprise deployments.

Management points to continuous improvement as essential for maintaining product leadership. Heavy investment in research and development—especially in AI, workflow automation, and data privacy—remains a core focus. The business model relies on platform scalability, proven customer outcomes, and the ability to continue converting pilot projects into large, sticky contracts.

Financial Outlook and Key Areas for Investors to Watch

Management responded to its record quarter by raising guidance for FY2025. For Q3 2025, Palantir expects GAAP revenue between $1.083 billion and $1.087 billion, and the largest sequential quarterly revenue growth in its history. Full-year revenue guidance was increased to $4.142–$4.150 billion for FY2025. The company now aims for U.S. commercial revenue in excess of $1.302 billion for FY2025, representing at least 85% growth, and raised its targets for adjusted income from operations and free cash flow to ranges of $1.912–$1.920 billion and $1.8–$2.0 billion, respectively, for FY2025.

This forward outlook reflects confidence in ongoing U.S. demand and expanded customer pipelines, especially with the continued roll-out of AI tools in major companies and government agencies. However, leadership did not offer detailed international guidance. Key variables to monitor for upcoming quarters include further customer expansion outside the U.S, trends in contract cancellations or deferrals, and the ongoing impact of stock-based compensation on per-share results.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.