Palantir Technologies Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Revenue Growth: Overall revenue grew 63% Y/Y and 18% sequentially. U.S. commercial business grew 121% Y/Y and 29% sequentially. Closed highest TCV quarter ever at $2.8B, with 204 deals over $1M, 91 over $5M, and 53 over $10M.
• Product Developments: AI FDE and AI Hivemind are key product advancements. AI Hivemind orchestrates agents for problem solving. Edge Ontology enables mobile applications. U.S. Army directed consolidation on Vantage, a Palantir-based platform.
• Financial Metrics: Rule of 40 score soared to 114%. Adjusted operating margin was 51%. Generated $508M in cash from operations and $540M in adjusted free cash flow in Q3, with trailing 12-month adjusted free cash flow at $2B.

Segment Performance

• Overall Revenue: Grew 63% Y/Y and 18% sequentially. U.S. accounted for 3/4 of business, growing 77% Y/Y and 20% sequentially.
• Commercial Segment: Third quarter commercial revenue grew 73% Y/Y to $548M. U.S. commercial revenue grew 121% Y/Y to $397M, with $1.3B in TCV bookings. International commercial revenue grew 10% Y/Y to $152M. Revenue from strategic commercial contracts was $2.9M for the quarter.
• Government Segment: Third quarter government revenue grew 55% Y/Y to $633M. U.S. government revenue grew 52% Y/Y to $486M. International government revenue grew 66% Y/Y to $147M.

Guidance

• Q4 2025: Expect revenue of $1.327B - $1.331B and adjusted income from operations of $695M - $699M.
• Full Year 2025: Raised revenue guidance to $4.396B - $4.400B. Raised U.S. commercial revenue guidance to over $1.433B. Raised adjusted income from operations guidance to $2.151B - $2.155B and adjusted free cash flow guidance to $1.9B - $2.1B.

Risks

• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from projections. Risks include market uncertainties, competitive pressures, and execution risks related to product development and customer adoption.

Question and Answer

Q: What do you see as Palantir's unique differentiator that others may not understand?

A: Shyam Sankar mentioned that Palantir builds software that works for the world as it exists, not a theoretical world. It has a decade-old ontology, which is a prerequisite for leveraging LLMs in the enterprise. The focus is on solving customer problems, not just selling software.

Q: Can you walk through just the accelerated sales cycles that you're seeing from so many companies that have gone to the boot camps?

A: Ryan Taylor stated that U.S. commercial customers are coming to Palantir looking to deploy across their entire organization, not just a single use case. Customers are seeking to reorganize their operations around Palantir and AIP, driven by tangible results and the need for transformational impact.