Summary
Palantir reported FY2026 second-quarter revenue of $1.94 billion, up 92.8% from $1.00 billion in the prior-year quarter, and year-to-date revenue of $3.57 billion, up 89.0% from $1.89 billion. Margins expanded. Gross profit of $1.64 billion rose 102.1%, and gross margin of 84.7% was up 3.9 percentage points from 80.8%. Operating income of $912.00 million rose 238.6%, lifting operating margin to 47.1% from 26.8%. GAAP net income of $1.06 billion was up 225.0% from $326.73 million, and diluted EPS of $0.41 compared with $0.13 a year earlier.
Cash generation was the other headline. Operating cash flow of $1.22 billion in the quarter was up 125.5% from $539.25 million a year earlier, and operating cash flow of $2.12 billion for the six months was up 149.0% from $849.51 million. Capital expenditures of $14.55 million were up 90.6%. Deferred revenue reached $1.10 billion, up 60.4%, and remaining performance obligations were $4.90 billion, up 104.2%. The company ended June 30, 2026 with $9.2 billion in cash, cash equivalents, and short-term U.S. Treasury securities. Adjusted results, which exclude stock-based compensation and related employer payroll taxes, showed adjusted income from operations of $1.194 billion, a 62% margin, adjusted free cash flow of $1.220 billion, a 63% margin, and adjusted EPS of $0.41.
The mix kept tilting toward the United States. U.S. commercial revenue grew 149% year over year and 28% quarter over quarter, U.S. government revenue grew 90% and 18%, and total U.S. revenue grew 115% and 23%. Closed total contract value was $3.373 billion, up 49%, including a record $2.132 billion of U.S. commercial TCV, up 153%. U.S. commercial remaining deal value of $6.238 billion rose 124% year over year and 27% quarter over quarter. The quarter included 220 deals of at least $1 million, 98 of at least $5 million, and 73 of at least $10 million. The Rule of 40 score reached 155%. Palantir counted 1,049 customers, up from 849, and average revenue from its top twenty customers over the trailing twelve months was $124 million, up 67% from $75 million. Government customers brought in 52% of first-half revenue and commercial customers 48%, with 80% of revenue from U.S. customers. Contribution margin was 74%, up from 64%. Costs rose too. Stock-based compensation increased 66%, and sales and marketing, research and development, and general and administrative expenses were up 39%, 43%, and 20% in the quarter.
Guidance moved up across the board. For the third quarter of 2026, the company guided to adjusted income from operations between $1.292 billion and $1.296 billion, with revenue guided higher as well. For the full fiscal year 2026, it raised revenue guidance to $8.150 billion to $8.158 billion and U.S. commercial revenue guidance to more than $3.424 billion, a growth rate of at least 134%. Full-year adjusted income from operations guidance was raised to $4.889 billion to $4.897 billion, and adjusted free cash flow guidance was raised to $4.5 billion to $4.7 billion. Management continues to expect GAAP operating income and net income in each quarter of the year.
Risks look structural. Most contracts carry termination for convenience provisions, so total contract value and remaining deal value may not convert into revenue. Sales cycles are long and unpredictable, and government customers face budget, timing, and policy uncertainty. With 80% of first-half revenue from U.S. customers, a domestic downturn would hit hard. The 10-Q also flags global conflicts, including the Russia-Ukraine and Middle East hostilities, tariffs and other trade measures, currency moves in the euro, British pound, and Japanese yen, and risks tied to AI data access and model training. CEO Alex Karp called the quarter otherworldly and said demand for AI sovereignty has been unleashed.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.94B | $1.63B | +18.6% | $1.00B | +92.8% |
| Gross profit | $1.64B | $1.42B | +15.7% | $810.8M | +102.1% |
| Gross margin | 84.7% | 86.8% | -2.1 pp | 80.8% | +3.9 pp |
| Research & development | $192.5M | $161.0M | +19.6% | $135.0M | +42.6% |
| Sales & marketing | $339.5M | $319.2M | +6.4% | $243.8M | +39.3% |
| General & administrative | $194.6M | $182.6M | +6.6% | $162.6M | +19.7% |
| Total operating expenses | $726.6M | $662.8M | +9.6% | $541.4M | +34.2% |
| Operating income (loss) | $912.0M | $754.0M | +21.0% | $269.3M | +238.6% |
| Operating margin | 47.1% | 46.2% | +0.9 pp | 26.8% | +20.3 pp |
| Net income (loss) | $1.06B | $870.5M | +22.0% | $326.7M | +225.0% |
| Net margin | 54.9% | 53.3% | +1.5 pp | 32.5% | +22.3 pp |
| Diluted EPS | $0.41 | $0.34 | +$0.07 | $0.13 | +$0.28 |
| Customers | 849 | 769 | +10.4% | 849 | ±0.0% |
Risks
Palantir states that it and its peers and competitors are investing more significantly in AI, and that other companies may adopt and implement AI more successfully or at a quicker pace. Persistent customer reluctance to purchase products incorporating AI is also cited as a factor that could limit market acceptance of new platforms.
The top three customers together accounted for 16% of revenue for the six months ended June 30, 2026, consistent with 17% for the six months ended June 30, 2025. Many customer contracts permit termination for convenience, so loss of a large customer could materially reduce revenue.
The filing flags escalating hostilities from U.S. and Israeli strikes on Iran and retaliatory strikes, noting such conflicts have increased the risk that Palantir's systems, facilities, or third-party providers could be subject to physical or cyber attack.
Sales cycles typically last six to nine months but can extend to a year or more, and the company offers no-cost or low-cost pilot deployments and bootcamps that may not convert into revenue-generating contracts despite significant upfront expense.
The United States represented 80% of revenue for the six months ended June 30, 2026, and rising U.S. concentration increases exposure to U.S. macroeconomic conditions, interest rates, tariffs and trade relations. Revenue for the quarter was up 92.8% versus the prior-year quarter, but the company warns it may not sustain this growth.
The company is highly dependent on CEO Alexander Karp, whose management experience it says would be difficult to replace, and it cites difficulty hiring and retaining qualified personnel, including engineers in competitive U.S. markets, as a strain on growth.
Government and sensitive-industry customer relationships have drawn public criticism, activist protests at company and customer premises, and investor concerns over human rights implications, which could impair customer, employee, and institutional investor relationships.
Palantir warns that the first quarter generally has relatively lower sales with substantial increases in the third and fourth quarters, driven partly by the U.S. government's September 30 fiscal year end, and that this seasonality may become more pronounced and cause cash flow and results fluctuations.
SaaS KPIs
All quarters →Adjusted Operating Margin
Adjusted Free Cash Flow Margin
Adjusted EBITDA Margin
Total Customers
Contribution Margin
Rule of 40
Deals of at least $1 million
Deals of at least $10 million
Deals of at least $5 million
U.S. Commercial Remaining Deal Value (RDV)
Gross Margin (excluding stock-based compensation)
Total Contract Value (TCV)
U.S. Commercial TCV
Summary, forecast, risks and KPIs are extracted from Palantir Technologies Inc.'s SEC filings for Q2 FY2026 (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.