Palantir Q3 revenue jumps 96% to $2.31 billion, but US enterprise deal value dips

Palantir reported third-quarter results on Monday that were strong enough for its press release to boast of "crushing consensus expectations." Revenue grew 96% from a year earlier and 20% from the previous quarter, to $2.31 billion, against analysts' expectations of $2.18 billion. It was the first time Palantir has topped $2 billion in a quarter. Adjusted earnings per share (profit per share, excluding certain one-time items) came in at 44 cents, compared with analysts' expectations of 41 cents. The company also raised its revenue guidance for the full year.

The milestone in the report: Palantir's U.S. commercial revenue surpassed U.S. government revenue for the first time. Commercial contracts brought in $984 million, up 148% from the year-ago quarter, versus $953 million in U.S. government revenue.

TechCrunch attributes the enterprise demand to Palantir's AI software, which can run frontier models and custom-train open-weight models securely, without customers sharing their data and business processes with outside AI labs. It adds that Palantir has long offered "forward-deployed" software engineering, in which its own engineers work directly with customers to customize the software.

Yet retail investors were lukewarm on Tuesday and the stock traded slightly down. The reason, per TechCrunch, is that enterprise sales, the company's big growth area, showed signs of slowing. Palantir itself revealed that even as enterprises move faster than ever, they are often signing short-term trials. CEO Alex Karp told analysts on the earnings call: "What Ryan and I are seeing on the front line and commercial is this much quicker interaction, much quicker to deployment, shorter duration of the contract but then an ability to expand that contract dramatically." TechCrunch describes this as one of the unique phenomena of AI in the enterprise: corporations will quickly try AI software, skipping the usual bureaucracy, but are also more willing to cancel contracts.

The contract numbers back up the caution. Palantir closed $1.46 billion of total contract value from U.S. enterprises in the quarter, a decline from the record $2.13 billion in the previous quarter. That suggests slowing sales, at least in the most recent quarter, and TechCrunch says the numbers do not yet confirm Palantir's long-term success.

Karp, by TechCrunch's account, was unconcerned and used off-color metaphors to say so. Describing the flow of prospective corporate customers, he said the company had "gone from being the most attractive person in the physics department to being the captain of the football team, kind of thing," and added that "once you go Palantir, you don't go back." The company increased its guidance for U.S. commercial revenue to be "in excess of $3.559 billion, representing a growth rate of at least 143%."

The next earnings report will show whether Palantir has solidified its role as a rising U.S. enterprise AI provider. Historically, many enterprises sign their biggest tech purchases in the final quarter of the year.

Key facts

Q3 revenue was $2.31 billion, up 96% year over year and 20% from the previous quarter, against analyst expectations of $2.18 billion; adjusted EPS was 44 cents versus 41 cents expected.
U.S. commercial revenue of $984 million (up 148% year over year) passed U.S. government revenue of $953 million for the first time.
U.S. enterprise total contract value closed in the quarter was $1.46 billion, down from the record $2.13 billion in the previous quarter.
Enterprises are often signing short-term trials; Karp says contracts are shorter but can expand dramatically.
Palantir raised full-year guidance, including U.S. commercial revenue "in excess of $3.559 billion," a growth rate of at least 143%. The stock traded slightly down on Tuesday.

Why it matters

Palantir's U.S. commercial business, selling AI software to corporations, is now bigger than its U.S. government business for the first time. That makes the quarter a test of whether enterprise AI demand is durable. The headline numbers are strong: $2.31 billion in revenue, 96% year-over-year growth and the first quarter above $2 billion. But the contract data points the other way. U.S. enterprise total contract value fell to $1.46 billion from the previous quarter's record $2.13 billion.

Who it affects

Palantir investors are the most direct audience: retail investors were lukewarm on Tuesday and the stock traded slightly down. The shift also touches enterprises buying AI software, which are moving faster and skipping the usual bureaucracy but signing shorter trials, and anyone tracking how corporations adopt AI. TechCrunch notes that Palantir's pitch is running frontier models and custom-training open-weight models without sharing data and business processes with outside AI labs.

How to use it

For anyone following Palantir or enterprise AI spending, the figures to watch are U.S. enterprise total contract value and the conversion of short trials into larger contracts, not only revenue. The next earnings report is the checkpoint: TechCrunch says it will show whether Palantir has solidified its role as a rising U.S. enterprise AI provider, and notes that many enterprises historically sign their biggest tech purchases in the final quarter of the year. The guidance of U.S. commercial revenue above $3.559 billion (growth of at least 143%) is the benchmark management has set.

How solid is it

The revenue, earnings and segment figures come from Palantir's reported results as relayed by TechCrunch, and the Karp quotes are from the quarterly earnings call. The reading that sales are slowing is TechCrunch's interpretation of the contract-value decline, and it is scoped to "at least the most recent quarter." The claim that shorter trials come with a dramatic ability to expand is Karp's own, not independently shown by the figures.

Risks and caveats

Shorter contracts mean customers are, in TechCrunch's words, also more willing to cancel. The article gives no figures on contract lengths or cancellations. The stock move is described only as "slightly down." The raised full-year total revenue guidance is not stated; only the U.S. commercial figure is given. One quarter of lower contract value does not establish a trend, and the article stresses that the numbers do not yet confirm Palantir's long-term success.

“Conversely, you know, once you go Palantir, you don’t go back, and that’s just how it is, and you see it in our numbers.”

— Alex Karp, CEO of Palantir