Summary
Palantir's second quarter revenue rose 25.9% to $473.0 million from $375.6 million in the prior-year quarter. Gross profit climbed 30.2% to $370.8 million, and gross margin widened to 78.4% from 75.8%. The mix tilted toward commercial customers, where revenue grew 46%, while government revenue grew 13%. US commercial revenue rose 120% year over year, and US revenue overall rose 45%. US commercial customer count went from 34 in the second quarter of 2021 to 119, an increase of 250%.
The bottom line moved the other way. Palantir booked a net loss of $179.3 million for the quarter, wider than the $138.6 million loss a year earlier, and diluted loss per share was $0.09 against $0.07. Operating loss narrowed to $41.7 million from $146.1 million, and operating margin improved to negative 8.8% from negative 38.9%. The gap between the two lines came largely from other income (expense), net, which swung on unrealized and realized losses from investments in marketable securities. Adjusted income from operations, which strips out stock-based compensation and related employer payroll taxes, was $107.8 million at a 23% margin. Adjusted EBITDA was $112.7 million at a 24% margin, and adjusted net loss was $21.1 million. For the six months ended June 30, 2022, revenue was $919.4 million, up 28.2%, operating margin was negative 8.8% against negative 36.3%, and net loss widened to $280.7 million from $262.1 million.
Cash generation was solid in the quarter. Operating cash flow was $62.4 million, up 174.4% from the prior-year quarter, while operating cash flow for the six months ended June 30, 2022 was $97.9 million, down 29.9%. Capital expenditures were $5.5 million in the quarter, up 683.1%, and $20.7 million year to date, up 1371.4%. Adjusted free cash flow, a non-GAAP measure, was $60.9 million at a 13% margin. Total contract value closed of $792 million included $588 million of US TCV. Remaining performance obligations were $1.2 billion, up 78.6% from a year earlier, while deferred revenue fell 22.6% to $430.0 million. Palantir ended the period with 304 customers, up from 169 a year earlier, and for the six months government agencies supplied 55% of revenue against 45% from commercial customers.
Guidance points to slower top-line expansion. For the third quarter of 2022, management expects revenue of $474 million to $475 million and adjusted income from operations of $54 million to $55 million. For the full year 2022, the company now expects revenue of $1.9 billion to $1.902 billion and adjusted income from operations of $341 million to $343 million. That full-year outlook excludes any new major US government awards, which management calls its base case.
Several risks sit underneath those numbers. Large government customers face budget and spending uncertainty, and many contracts carry termination for convenience provisions, so total contract value is not guaranteed to convert into revenue. The sales cycle also stays long and unpredictable. Management flags the COVID-19 pandemic, Russia's invasion of Ukraine, foreign currency fluctuations, and rising inflation and interest rates as factors that could weigh on customers and on results. Cost of revenue keeps growing with cloud hosting usage and deployment headcount, and heavy stock-based compensation leaves a wide gap between GAAP results and the adjusted figures management highlights.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $473.0M | $446.4M | +6.0% | $375.6M | +25.9% |
| Gross profit | $370.8M | $352.0M | +5.4% | $284.7M | +30.2% |
| Gross margin | 78.4% | 78.8% | -0.5 pp | 75.8% | +2.6 pp |
| Research & development | $88.2M | $88.6M | -0.5% | $110.5M | -20.2% |
| Sales & marketing | $168.9M | $160.5M | +5.2% | $162.4M | +4.0% |
| General & administrative | $155.5M | $142.3M | +9.3% | $158.0M | -1.6% |
| Total operating expenses | $412.5M | $391.4M | +5.4% | $430.9M | -4.3% |
| Operating income (loss) | -$41.7M | -$39.4M | -5.8% | -$146.1M | +71.4% |
| Operating margin | -8.8% | -8.8% | +0.0 pp | -38.9% | +30.1 pp |
| Net income (loss) | -$179.3M | -$101.4M | -76.9% | -$138.6M | -29.4% |
| Net margin | -37.9% | -22.7% | -15.2 pp | -36.9% | -1.0 pp |
| Diluted EPS | -$0.09 | -$0.05 | -$0.04 | -$0.07 | -$0.02 |
| Customers | 304 | 277 | +9.7% | 169 | +79.9% |
Risks
MD&A cites significant macroeconomic impacts from the ongoing COVID-19 pandemic, the Russian invasion of Ukraine, and inflationary pressures. Risk factors warn that adverse economic conditions or reduced technology spending could cause longer sales cycles, lower prices, contract terminations, and reduced demand.
Government customers made up 55% of revenue for the six months ended June 30, 2022, and the filing notes these customers are subject to budget, spending priority, and regulatory uncertainties. The U.S. federal government is also prohibited from exercising contract options more than one year in advance.
Sales efforts are time-intensive and the sales cycle often lasts six to nine months but can extend to a year or more. Palantir typically closes a large portion of sales in the last several weeks of a quarter, making results difficult to predict.
The multi-class structure, Founder Voting Trust Agreement, and Founder Voting Agreement concentrate voting power with the Founders. The Founders may have voting power substantially greater than their economic interests and can achieve substantial liquidity without diminishing voting power.
Top three customers accounted for 16% of revenue for the six months ended June 30, 2022 and 19% for the six months ended June 30, 2021. Certain significant customers have in the past reduced spend or terminated agreements, which reduced anticipated future payments or revenue.
The company is highly dependent on CEO Alexander Karp and other key personnel, who are at-will employees. Difficulty hiring and retaining qualified personnel, including due to perceived value of equity awards, could harm sales and product development.
Other income (expense), net changed by $137.9 million for the three months ended June 30, 2022 and by $192.9 million for the six months ended June 30, 2022 primarily due to unrealized and realized losses from investments in marketable securities. Risk factors note strategic investments may not realize a return.
The risk factor summary includes issues raised by the use of artificial intelligence in Palantir's platforms that may result in reputational harm or liability.
Palantir faces intense competition from large enterprise software companies, government contractors, system integrators, and emerging companies. Some competitors have greater resources, broader product lines, or the ability to bundle products or sell at zero or negative margins.
As of December 31, 2021, total remaining deal value was $3.8 billion, but many contracts are subject to termination for convenience and option exercise is uncertain. The company historically has not realized all revenue from the full deal value of its customer contracts.
Seasonality historically causes relatively lower first-quarter sales and substantial increases in the third and fourth quarters, partly due to U.S. government customers having a September 30 fiscal year end. This may cause fluctuations in results of operations and cash flows.
SaaS KPIs
All quarters →Adjusted Operating Margin
Adjusted Free Cash Flow Margin
Adjusted free cash flow
Adjusted income from operations
Adjusted EBITDA Margin
Total Customers
Adjusted EBITDA
Contribution Margin
US Commercial Customer Count
Gross margin, excluding stock-based compensation
Cash from operations
Cash from Operations Margin
Summary, forecast, risks and KPIs are extracted from Palantir Technologies Inc.'s SEC filings for Q2 FY2022 (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.