Summary
Palantir's second quarter of fiscal 2024 showed strong commercial traction. Total revenue reached $678.1 million in the quarter, up 27.2% from the prior-year quarter. US commercial customer count rose 83% year over year and 13% quarter over quarter to 295 customers. US commercial remaining deal value grew 103% year over year and 11% quarter over quarter. The company closed 27 deals over $10 million. Customer count grew 41% year over year and 7% quarter over quarter, and the MD&A lists 593 customers for the period ended June 30, 2024, up from 421 a year earlier. Those customer metrics point to widening adoption across the base.
Profitability improved sharply. Gross profit was $549.6 million in the quarter, up 28.9% from the prior-year quarter, and gross margin was 81.0%, up 1.1 percentage points. Operating income reached $105.3 million, up 945.7% from the prior-year quarter, and operating margin was 15.5%, up 13.6 percentage points. Net income was $134.1 million, up 376.9%. Diluted EPS was $0.06, up $0.05, or 500.0%, from the prior-year quarter. On a non-GAAP basis, adjusted income from operations was $253.6 million, a 37% margin, and adjusted EBITDA was $261.6 million, a 39% margin. Adjusted net income was $221.4 million, and adjusted diluted EPS was $0.09. The Rule of 40 score was 64%, reflecting the combination of growth and adjusted operating margin.
Cash generation remained positive. Operating cash flow was $144.2 million in the quarter, up 59.9% from the prior-year quarter. For the first half, operating cash flow was $273.8 million, down 1.4% from the prior-year first half. Capital expenditures were $2.9 million in the quarter, down 26.8%, and $5.5 million for the first half, down 36.2%. Adjusted free cash flow was $148.7 million in the quarter, a 22% margin. Deferred revenue was $517.1 million, up 3.9%. Remaining performance obligations were $1.40 billion, up 44.7%. The RPO figure reflects contracted work that has not yet been recognized.
Guidance points to continued growth. For the third quarter of 2024, Palantir expects revenue of $697 million to $701 million and adjusted income from operations of $233 million to $237 million. For the full year 2024, the company raised revenue guidance to $2.742 billion to $2.750 billion. It also raised US commercial revenue guidance to more than $672 million, representing growth of at least 47%, and adjusted income from operations guidance to $966 million to $974 million. It continues to expect adjusted free cash flow of $800 million to $1 billion and GAAP operating income and net income in each quarter of the year. The full-year revenue target is a range, and the company also reaffirmed its expectation of positive GAAP operating income and net income for every quarter of 2024.
Risks include uncertainty around government budgets and spending priorities, regulatory and policy changes, long and unpredictable sales cycles, and seasonality. Macroeconomic and geopolitical tensions, including the Russia-Ukraine and Israel conflicts, could disrupt customers and operations, even though the company does not currently expect a material impact from those conflicts. Early- and growth-stage commercial customers may struggle to generate revenue or access financing, which could affect collections and the company's ability to realize the full value of those contracts. Foreign currency fluctuations, especially in the Euro, British pound sterling, and Japanese Yen, add another layer of uncertainty. Stock-based compensation also remains a significant expense. The quarter showed robust growth and margin expansion, but the company still faces execution and macro risks.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $678.1M | $634.3M | +6.9% | $533.3M | +27.2% |
| Gross profit | $549.6M | $518.1M | +6.1% | $426.4M | +28.9% |
| Gross margin | 81.0% | 81.7% | -0.6 pp | 80.0% | +1.1 pp |
| Research & development | $108.8M | $110.0M | -1.1% | $99.5M | +9.3% |
| Sales & marketing | $196.8M | $193.2M | +1.9% | $184.2M | +6.9% |
| General & administrative | $138.6M | $134.0M | +3.5% | $132.6M | +4.5% |
| Total operating expenses | $444.2M | $437.2M | +1.6% | $416.3M | +6.7% |
| Operating income (loss) | $105.3M | $80.9M | +30.2% | $10.1M | +945.7% |
| Operating margin | 15.5% | 12.8% | +2.8 pp | 1.9% | +13.6 pp |
| Net income (loss) | $134.1M | $105.5M | +27.1% | $28.1M | +376.9% |
| Net margin | 19.8% | 16.6% | +3.1 pp | 5.3% | +14.5 pp |
| Diluted EPS | $0.06 | $0.04 | +$0.02 | $0.01 | +$0.05 |
| Customers | 593 | 554 | +7.0% | 421 | +40.9% |
Risks
The filing and MD&A center on AIP and generative AI, but risk factors warn that competitors are investing more significantly in AI and may adopt or implement AI more successfully or at a quicker pace than Palantir. Failure to keep pace could make platforms obsolete and harm revenue growth.
Although revenue rose 27.2% in the quarter ended June 30, 2024 versus the prior-year quarter, risk factors state the revenue growth rate has declined in certain recent periods and may continue to decline. Slowing demand, competition, or contract terminations could cause growth to slow further.
Risk factors state the sales cycle often lasts six to nine months and can extend to a year or more, and Palantir often funds pilots and bootcamps at no or low cost with no guarantee of converting them to paid contracts. This makes revenue timing and expenses difficult to predict.
MD&A notes large government customers face budget, spending, and policy uncertainty, and risk factors highlight continuing resolutions and appropriations lapses. The U.S. federal government is prohibited from exercising contract options more than one year in advance, delaying certainty on revenue.
The company is highly dependent on CEO Alexander Karp, whose management experience would be difficult to replace, and all executive officers and many key personnel are at-will. Competition for engineering talent in major U.S. markets is intense and equity award value can affect retention.
The top three customers together accounted for 17% and 20% of revenue for the six months ended June 30, 2024 and 2023, and contracts often permit termination for convenience. Loss or reduction of a large customer could materially reduce revenue.
MD&A states current macroeconomic conditions have impacted and may continue to impact early- and growth-stage customers, including their ability to access financing and Palantir's ability to realize full contract value. Some early-stage Investee customers filed for bankruptcy or terminated contracts.
Risk factors state the first quarter generally has relatively lower sales, with substantial increases in the third and fourth quarters due partly to the U.S. government September 30 fiscal year end. This can cause continued or increased fluctuations in results of operations and cash flows.
The multi-class structure, Founder Voting Trust Agreement, and Founder Voting Agreement concentrate voting power with the Founders and can persist until the death of the last living Founder. Low-voting Class A stock may be excluded from certain indices and less attractive to some institutional investors.
Risk factors say unfavorable news or social media coverage, public criticism from activists, and protests at properties could damage Palantir's reputation and relationships with customers, employees, and investors. Confidentiality obligations may limit the company's ability to respond.
SaaS KPIs
All quarters →Adjusted Operating Margin
Adjusted Free Cash Flow Margin
Adjusted EBITDA Margin
Total Customers
Contribution Margin
Rule of 40
US Commercial Customer Count
Gross margin, excluding stock-based compensation
Summary, forecast, risks and KPIs are extracted from Palantir Technologies Inc.'s SEC filings for Q2 FY2024 (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.