Palantir Technologies Inc. Q4 FY2024 earnings call

• 2024 was an incredible year for Palantir with Q4 results showing strong growth, including a 36% year-over-year revenue increase and 29% full-year growth.
• Rule of 40 score increased to 81 in Q4. U.S. business led the outperformance with U.S. commercial revenue growing 64% year-over-year in Q4.
• Notable customer examples: A large U.S. pharmacy signed a $67 million TCV engagement, an American telecom company expanded a $40 million TCV deal, and a leading global insurance organization expanded a nearly $11 million ACV deal.
• AIP is crucial, with Palantir transforming AI into high-value goods and services using ontology. Warp Speed cohort announced with customers using it for manufacturing improvements.
• Government business strong, with U.S. government revenue growing 45% year-over-year in Q4 and international government revenue growing 28% year-over-year in Q4.
• International commercial business saw growth with Rio Tinto extending partnership and network rail specialists using Palantir's software.

Commercial Segment

• Fourth quarter commercial revenue grew 31% year-over-year and 17% sequentially to $372 million. Full-year commercial revenue grew 29% year-over-year to $1.3 billion.
• Excluding the impact from strategic commercial contracts, fourth quarter commercial revenue grew 37% year-over-year and 18% sequentially, and full-year commercial revenue grew 36% year-over-year.
• Fourth quarter U.S. commercial revenue grew 64% year-over-year and 20% sequentially to $214 million. Full year U.S. commercial revenue grew 54% year-over-year to $702 million.
• Excluding revenue from strategic commercial contracts, fourth quarter U.S. commercial revenue grew 76% year-over-year and 19% sequentially, and full-year U.S. commercial revenue grew 69% year-over-year.
• Fourth quarter international commercial revenue grew 3% year-over-year and 15% sequentially to $158 million. Full-year international commercial revenue grew 9% year-over-year to $594 million.

Government Segment

• Fourth quarter government revenue grew 40% year-over-year and 11% sequentially to $455 million. Full year government revenue grew 28% year-over-year to $1.57 billion.
• Fourth quarter U.S. government revenue grew 45% year-over-year and 7% sequentially to $343 million. Full year U.S. government revenue grew 30% year-over-year to $1.2 billion.
• Fourth quarter international government revenue grew 28% year-over-year and 26% sequentially to $112 million. Full year international government revenue grew 23% year-over-year to $372 million.

• Q1 2025 revenue expected to be between $858 million and $862 million, adjusted income from operations between $354 million and $358 million.
• 2025 full-year revenue expected to be between $3.741 billion and $3.757 billion, U.S. commercial revenue in excess of $1.079 billion (at least 54% growth), adjusted income from operations between $1.551 billion and $1.567 billion, adjusted free cash flow between $1.5 billion and $1.7 million.
• Expect GAAP operating income and net income in each quarter of 2025.

• Competition with China in AI field, with China's AI model development and potential impact.
• Challenges in retaining unique company culture and talent.

Q: What is so unique about the ontology? How does it give you an edge over your competitors and why wouldn't any of them be able to recreate something similar?

A: Shyam Sankar said ontology is essential for building enterprise software across different sectors. It's the intermediary representation making enterprise accessible to AI securely. Alex Karp added it allows managing large language models at scale and re-segmenting data for exact results. Building it is hard due to the long path and deep understanding of enterprise data.

Q: Are you surprised at how quick these sales cycles are actually taking place from when a customer first meets Palantir to now deploying AI initiatives?

A: Ryan Taylor said he's not surprised due to the tangible impact seen on the ground with customers. Alex Karp mentioned American companies' pragmatic approach and the real results driving quick adoption.

Q: How is Palantir positioned to disruption like with the change of administration and focus on efficiencies, software modernization, digitalization?

A: Shyam Sankar was optimistic, seeing Palantir's commercial business as meritocratic and transparent. Alex Karp said disruption exposes issues and is good for Palantir. Dave Glazer and Shyam Sankar talked about investing in quality engineering, talent, and unique company culture to capture opportunities.