Palantir Technologies (PLTR 7.94%) stock gained 4.6% in after-hours trading on Monday, following the artificial intelligence (AI)-powered data analytics company's release of its second-quarter 2025 earnings report.
The stock's rise is attributable to both revenue and earnings beating Wall Street's estimates -- with the top-line beat a big one -- and management raising its full-year 2025 guidance for several key metrics.
In the earnings release, CEO Alex Karp characterized the quarter as "phenomenal" -- and, indeed it was. As Karp said, Palantir continues "to see the astonishing impact of AI leverage."
Given the phenomenal report, some investors might wonder why the stock didn't gain even more after the release. The reason has to do with expectations. Palantir stock trades at a sky-high valuation and Wall Street's estimates were lofty, so high expectations were already largely factored into the stock price. As to the valuation, the stock was trading at about 278 times Wall Street's forward projected earnings per share (EPS) as of the close of Monday's regular-trading session.
Image source: Getty Images.
Palantir Technologies' key numbers
| Metric | Q2 2024 | Q2 2025 | Change* |
|---|---|---|---|
| Revenue | $678 million | $1.004 billion | 48% |
| GAAP operating income | $105 million | $269 million | 156% |
| Adjusted operating income | $254 million | $464 million | 83% |
| GAAP net income | $134 million | $327 million | 144% |
| Adjusted net income | $221 million | $405 million | 83% |
| GAAP earnings per share (EPS) | $0.06 | $0.13 | 117% |
| Adjusted EPS | $0.09 | $0.16 | 78% |
Data source: Palantir Technologies. GAAP = generally accepted accounting principles. Calculations by author except for revenue growth, which was provided by Palantir.
Investors should focus on the adjusted numbers, which exclude one-time items.
Wall Street was looking for adjusted EPS of $0.14 on revenue of $939.7 million, so Palantir exceeded both estimates, with the top-line beat particularly impressive. It also surpassed its own guidance, which was for revenue between $934 million to $938 million. The company doesn't issue earnings guidance.
Palantir generated cash of $539 million from running its operations during the quarter, up 274% from the year-ago period. Its adjusted free cash flow was $569 million, up 282% year over year. The company ended the quarter with cash, cash equivalents, and short-term investments of $6.0 billion, up from $5.4 billion last quarter. It has no long-term debt.
What happened with Palantir in the quarter?
All percentage growth figures are year over year.
- Commercial revenue grew 47% to $451 million, accounting for 45% of total revenue.
- Government revenue increased 49% to $553 million, or 55% of total revenue.
- By region, U.S. revenue rose 68% to $733 million, accounting for 73% of total revenue. (Non-U.S. revenue accounted for the other 27% of revenue.)
- Total customer count increased 43%.
- The company closed 157 deals over $1 million, 66 deals of at least $5 million, and 42 deals of at least $10 million.
- U.S. commercial revenue jumped 93% to $306 million.
- U.S. commercial customer count surged 64% to 485.
- U.S. commercial total contract value (TCV) deals closed soared 222% to $843 million.
- U.S. commercial remaining deal value rocketed 145% to $2.79 billion.
- U.S. government revenue grew 53% to $426 million. This market began with defense and intelligence agencies but now also includes other agencies.
Guidance issued for Q3 and raised for full-year 2025
Q3 guidance:
- Revenue of $1.083 billion to $1.087 billion. This equates to growth of 49% to 50% year over year.
- Adjusted income from operations of $493 million to $497 million. This equates to growth of 79% to 80% year over year.
Going into the release, Wall Street had been modeling for Q2 revenue of $981.8 million, or 35% growth, so Palantir's guidance crushed this expectation.
Annual guidance:
| Metric | Prior 2025 Guidance | Current 2025 Guidance |
Wall Street Estimate |
Change Implied by Guidance* YOY |
|---|---|---|---|---|
| Total revenue | $3.890 billion to $3.902 billion | $4.142 billion to $4.150 billion |
$3.9 billion |
45% (up from 36%) |
| U.S. commercial revenue | Greater than $1.178 billion | Greater than $1.302 billion | N/A | At least 85% (up from at least 68%) |
| Adjusted operating income | $1.711 billion to $1.723 billion | $1.912 billion to $1.920 billion | N/A |
69% to 70% (up from 51% to 52%) |
| Adjusted free cash flow | $1.6 billion to $1.8 billion | $1.8 billion to $2.0 billion billion | N/A |
44% to 60% (up from 28% to 44%) |
| GAAP operating income and GAAP net income | Both positive in every quarter | Same as prior guidance | N/A | -- |
Data source: Palantir Technologies. YOY = year over year. *Calculations by author except for total revenue and U.S. commercial revenue growth guidance, which Palantir provided.
Another stellar quarter
In short, Palantir turned in another stellar report. As I've written for about a year now, I believe Palantir stock will be a winning long-term investment. But given the stock's sky-high valuation, only those who truly have long investing horizons should consider buying it.
As I wrote last quarter, "if you do decide to buy it, it's imperative to dollar-cost-average (DCA) your way into your full position. That means investing the same dollar amount in the stock at some fixed interval, such as quarterly. This method will ensure that you don't risk buying all your shares in the stock right before a significant decline."
