Palantir posts big Q3 growth, but some enterprise deals look shorter

In short: Palantir’s latest quarterly results were strong, but the company also signaled that some business customers are choosing shorter trial contracts.

What's going on

Palantir said its third-quarter revenue rose 96% from a year earlier to $2.31 billion. That is the first time it has passed $2 billion in a quarter. It also reported adjusted earnings per share of $0.44, compared with analysts’ expectations of $0.41.

One standout detail was where the money came from. Palantir said its US commercial revenue, meaning sales to private companies, reached $984 million, up 148% year over year. That beat its US government revenue of $953 million for the first time.

Palantir says companies are buying its AI software because they want to use powerful AI models while keeping their own information private. “AI models” are the systems that can write, summarize, and analyze, like a very advanced autocomplete. Palantir also sends engineers to help customers set up and tailor the software, like having a specialist help fit a suit instead of buying off the rack.

But on the earnings call, CEO Alex Karp said many companies are moving quickly and often starting with short-term trials. That can make revenue less predictable, since trials are easier to cancel.

There was also a hint of slower momentum in one metric. Palantir said it signed $1.46 billion in total contract value from US enterprises in the quarter, which was down from $2.13 billion in the prior quarter.

What to watch

The next quarter will matter because many big companies finalize large tech purchases at the end of the year. Investors will be watching whether Palantir’s short trials turn into longer, larger contracts, or whether more customers decide to walk away.

Source: TechCrunch AI