Summary
Palantir's second quarter revenue rose 49.1% year over year to $375.6 million, up from $251.9 million in the prior-year quarter. Gross profit rose 55.2% to $284.7 million, and gross margin reached 75.8%, which is 3.0 percentage points better than a year earlier. The first half followed a similar path. Revenue of $716.9 million rose 49.0% from $481.2 million, gross profit of $551.8 million rose 58.3%, and gross margin was 77.0%. Excluding stock-based compensation, gross margin was 82% for the quarter and 83% for the six months, against 80% and 78% in the comparable periods last year.
The GAAP loss lines moved the other way. The operating loss widened to $146.1 million from $99.1 million in the prior-year quarter, and the six-month operating loss widened to $260.2 million from $169.3 million. The quarterly operating margin was negative 38.9%, a 0.5 percentage point improvement from a year earlier, while the six-month operating margin of negative 36.3% was 1.1 percentage points worse. Net loss widened to $138.6 million from $110.5 million in the quarter and to $262.1 million from $164.7 million for the six months.
Diluted loss per share narrowed to $0.07 from $0.17 in the quarter and to $0.14 from $0.28 for the six months. Stock-based compensation drives most of the gap between the GAAP and non-GAAP results. Adjusted income from operations was $116.7 million in the quarter and $233.3 million for the six months, both excluding stock-based compensation and related employer payroll taxes, and adjusted EBITDA was $121.5 million at a 32% margin.
Cash generation was mixed. Operating cash flow was $22.8 million in the quarter, down 62.6% from the prior-year quarter, while the six-month figure of $139.6 million was up 161.7% from a $226.3 million use of cash a year earlier. Capital expenditures were $0.7 million in the quarter, down 76.2%, and $1.4 million for the six months, down 76.4%. Palantir reports adjusted free cash flow separately from operating cash flow, and that measure was $50 million for the quarter at a 13% margin and $201 million for the six months at a 28% margin. Deferred revenue was $555.5 million and remaining performance obligations were $671.9 million as of June 30, 2021.
Demand metrics point to widening adoption. Palantir closed 62 deals worth $1 million or more in the quarter, including 30 worth $5 million or more and 21 worth $10 million or more. It added 20 net new customers, total customers rose 13% quarter over quarter, and the commercial customer count rose 32% quarter over quarter and 61% since December 31, 2020. The 10-Q lists 169 customers as of the June 30, 2021 period, against 137 a year earlier. Contribution margin, a non-GAAP measure, was 58% in the quarter, up from 55%, and 59% for the six months, up from 48%.
The 10-Q notes that COVID-19 has pushed customers toward software that can be deployed quickly, and that travel and office spending fell during the period. Management expects those costs to rise as offices reopen, though not back to pre-pandemic levels. The company also says its existing cash and cash flows from operations should cover working capital needs for at least the next twelve months.
For the third quarter of 2021, management guided to $385 million of revenue and a 22% adjusted operating margin. For the full year 2021, it raised its outlook for adjusted free cash flow to more than $300 million from more than $150 million. Long term, the company repeats its expectation of annual revenue growth of 30% or greater for 2021 through 2025. Offsetting the growth, the filing lists a long and unpredictable sales cycle, customer contracts that can be terminated for convenience, the complexity and length of platform implementations, reliance on a growing direct salesforce, quarterly fluctuation in results, seasonality, and the risk of a breach of customer or third-party data. Palantir repaid its outstanding term loans in April 2021, ended the quarter with no balance outstanding under its credit facility, and has approved investment commitments totaling $250.0 million.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $375.6M | $341.2M | +10.1% | — | — |
| Gross profit | $284.7M | $267.1M | +6.6% | — | — |
| Gross margin | 75.8% | 78.3% | -2.5 pp | — | — |
| Research & development | $110.5M | $98.5M | +12.2% | — | — |
| Sales & marketing | $162.4M | $136.1M | +19.3% | — | — |
| General & administrative | $158.0M | $146.6M | +7.8% | — | — |
| Total operating expenses | $430.9M | $381.1M | +13.0% | — | — |
| Operating income (loss) | -$146.1M | -$114.0M | -28.2% | — | — |
| Operating margin | -38.9% | -33.4% | -5.5 pp | — | — |
| Net income (loss) | -$138.6M | -$123.5M | -12.2% | — | — |
| Net margin | -36.9% | -36.2% | -0.7 pp | — | — |
| Diluted EPS | -$0.07 | -$0.07 | ±$0.00 | — | — |
| Customers | 169 | 149 | +13.4% | — | — |
Risks
The multi-class structure, Founder Voting Trust Agreement, and Founder Voting Agreement concentrate voting power with the Founders, with Class F common stock potentially lasting until the last Founder's death and an Ownership Threshold of only 100,000,000 Corporation Equity Securities. The filing also flags novel provisions, possible index exclusion, and dilution of Class A voting power without diluting Founders.
Government customers were 61% of revenue for the six months ended June 30, 2021 and government revenue grew 71% year to date, but most contracts are terminable for convenience and the U.S. federal government cannot exercise options more than one year in advance. Remaining deal value was $2.8 billion as of December 31, 2020, yet the company historically has not realized all of it and cites budget delays, continuing resolutions, and appropriations lapses as risks.
Sales efforts involve considerable time and expense, with a sales cycle often six to nine months and sometimes a year or more, and a limited direct sales force relies on senior management. Pilots are often provided at no or low cost with no guarantee of moving into the Expand or Scale phases.
GAAP operating loss widened to $146.1 million in FY2021 Q2 from $99.1 million in FY2020 Q2, and net loss widened to $138.6 million from $110.5 million, while stock-based compensation was $232.7 million in the quarter. MD&A emphasizes adjusted income from operations excluding stock-based compensation, highlighting reliance on non-GAAP profitability.
Top three customers accounted for 19% of revenue for the six months ended June 30, 2021 and 29% for the six months ended June 30, 2020, and certain large customers have reduced spend or terminated agreements. Average revenue from the top twenty customers was $39.0 million for the trailing twelve months ended June 30, 2021, up 36% from the prior-year period.
Risk factors flag strategic investments in privately-held and publicly-traded companies and uncertainty of return. MD&A states that as of June 30, 2021 the company had approved and entered into investment commitments totaling $250.0 million, plus additional subsequent investments and commitments.
The company recently reimplemented its ERP system and has limited accounting and financial reporting personnel, with Section 404 auditor attestation beginning with the FY2021 Form 10-K. ERP or internal control failures could impair timely and accurate financial reporting or payments and billing.
The risk factor summary states that issues raised by the use of artificial intelligence in the platforms may result in reputational harm or liability.
Public criticism and activist protests at company properties arise from relationships with government customers and customers in sensitive industries, and confidentiality obligations may limit the company's ability to respond. This could harm relationships with customers, investors, and employees.
Historically the first quarter has relatively lower sales, with substantial increases in the third and fourth quarters ending September 30 and December 31, driven by government and commercial fiscal year ends. Seasonality may cause fluctuations in results and cash flows and prevent meeting quarterly or annual forecasts.
Operating cash flow was $22.75 million in FY2021 Q2, down 62.6% from $60.85 million in FY2020 Q2, even though year-to-date operating cash flow was up 161.7%. The filing notes that quarterly cash flows have fluctuated significantly and may continue to do so, with delayed customer collections or a large contract default potentially harming liquidity.
SaaS KPIs
All quarters →Adjusted Operating Margin
Adjusted free cash flow
Adjusted income from operations
Total Customers
Adjusted EBITDA
Gross margin, excluding stock-based compensation
Adjusted EPS, diluted
Summary, forecast, risks and KPIs are extracted from Palantir Technologies Inc.'s SEC filings for Q2 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.