PLTR Financial Analysis

Analysis Date: 2/3/2025

Business Model

Palantir Technologies Inc. generates revenue through its software platforms: Gotham for government clients and Foundry for commercial clients. These platforms enable data integration, analysis, and operational applications.

Revenue Sources

• Government contracts (US and international)
• Commercial contracts (US and international)
• Strategic Commercial Contracts

Income Statement Analysis

• Revenue increased by 14% quarter-over-quarter, indicating strong growth momentum.
• Adjusted Operating Income increased significantly by 35.20% quarter-over-quarter, reflecting improved operational efficiency.
• GAAP Operating Income decreased significantly due to one-time SAR-related expenses.

Balance Sheet Analysis

• Strong cash position of $5.2 billion, providing financial flexibility.

Capital Allocation

Palantir is focused on reinvesting in its business, particularly in R&D and sales & marketing, to drive growth. The company also engages in strategic acquisitions to expand its capabilities and market reach. While not explicitly mentioned in this presentation, Palantir has historically not paid dividends and has occasionally used share repurchases to manage dilution.

Management Commentary

US commercial revenue grew +64% Y/Y and +20% Q/Q.

US revenue grew +52% Y/Y and +12% Q/Q.

Adjusted operating income of $373 million; 45% margin.

Closed a record-setting $803 million of US commercial total contract value (“TCV”), +134% Y/Y and +170% Q/Q.

Q4 2024 GAAP operating margin was 1%, but 17% when excluding one-time SAR-related expenses.

One-time expenses related to Market-Vesting SARs impacted GAAP profitability.

Overall Sentiment: Positive. Management expresses strong optimism about growth, particularly in the US commercial sector, and highlights significant improvements in adjusted profitability. The negative impact of one-time expenses is acknowledged but framed as a result of successful achievements (delivery of Market-Vesting SARs).

Recommendation

Rating: Buy

Reason for Rating: Palantir demonstrates strong revenue growth, especially in its US commercial sector, and significant adjusted operating margin improvement. While GAAP profitability was impacted by one-time expenses, the underlying business momentum and cash flow generation are robust. The company's strategic focus on AIP and expansion in the US market positions it well for future growth.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.

Generated on: 2/3/2025, 9:16:49 PM