Summary
Palantir Technologies reported third quarter fiscal 2022 revenue of $477.9 million, up 21.9% from the prior-year quarter. Remaining performance obligations rose to $1.30 billion, up 48.8% from $873.9 million a year earlier. Deferred revenue was $460.8 million, down 9.7% from $510.3 million. Total contract value closed in the quarter was $1.3 billion, including $1.1 billion from US contracts. Customer count reached 337, compared with 203 a year earlier. US commercial customer count increased 124% year over year, from 59 customers to 132 customers. The press release added that customer count grew 66% year over year and 11% quarter over quarter.
Gross profit was $370.3 million, and gross margin was 77.5%, down 0.4 percentage points from 77.9%. Operating loss narrowed to $62.2 million from $91.9 million, and operating margin improved to negative 13.0% from negative 23.4%, up 10.4 percentage points. Net loss widened to $123.9 million from $102.1 million, and diluted EPS was negative $0.06 against negative $0.05. Adjusted income from operations was $81.3 million, adjusted EBITDA was $87.2 million, and adjusted EPS was $0.01. Adjusted operating margin was 17%, down from 30%.
Operating cash flow was $47.1 million, down 53.3% from $100.8 million. Adjusted free cash flow was $36.6 million, which the company described as its eighth consecutive quarter of positive adjusted free cash flow. Capital expenditures were $14.4 million, up 168.4% from $5.4 million. Over the first nine months of fiscal 2022, revenue was $1.40 billion, up 26.0% from the prior-year period. Year-to-date operating loss narrowed to $143.4 million from $352.1 million. Year-to-date net loss widened to $404.6 million from $364.2 million. Year-to-date operating cash flow was $145.0 million, down 39.7% from $240.4 million.
Palantir reaffirmed its full-year 2022 revenue guidance of $1.9 billion to $1.902 billion despite a negative $6 million currency impact since prior guidance. It raised its full-year 2022 outlook for adjusted income from operations to between $384 million and $386 million. For the fourth quarter of 2022, the company expects revenue of $503 million to $505 million, or $508 million to $510 million excluding a negative $5 million currency impact, and adjusted income from operations of $78 million to $80 million. Management pointed to the continued strength of the US dollar. Contribution margin was 52% for the quarter, down from 57%, and 55% year to date, down from 58%.
Risks remain heavy. The company carries an accumulated deficit, although the shareholder letter noted $2.4 billion in the bank and no debt. It faces macroeconomic uncertainty, foreign currency fluctuations, inflation, rising interest rates, the ongoing effects of Russia's invasion of Ukraine, and the COVID-19 pandemic. Government customers are exposed to budget and spending uncertainty, shifting priorities, and regulatory or policy changes. Many contracts include termination for convenience provisions, and the company has a long and unpredictable sales cycle. Total contract value depends on customers exercising options rather than terminating. The quarterly net loss also absorbed a swing in other income and expense, which changed by $56.5 million primarily on unrealized and realized losses from marketable securities. Operating cash flow may fluctuate between positive and negative in future periods.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $477.9M | $473.0M | +1.0% | $392.1M | +21.9% |
| Gross profit | $370.3M | $370.8M | -0.1% | $305.3M | +21.3% |
| Gross margin | 77.5% | 78.4% | -0.9 pp | 77.9% | -0.4 pp |
| Research & development | $100.9M | $88.2M | +14.4% | $94.3M | +6.9% |
| Sales & marketing | $182.9M | $168.9M | +8.3% | $153.4M | +19.2% |
| General & administrative | $148.7M | $155.5M | -4.4% | $149.5M | -0.6% |
| Total operating expenses | $432.5M | $412.5M | +4.8% | $397.3M | +8.9% |
| Operating income (loss) | -$62.2M | -$41.7M | -49.0% | -$91.9M | +32.4% |
| Operating margin | -13.0% | -8.8% | -4.2 pp | -23.4% | +10.4 pp |
| Net income (loss) | -$123.9M | -$179.3M | +30.9% | -$102.1M | -21.3% |
| Net margin | -25.9% | -37.9% | +12.0 pp | -26.1% | +0.1 pp |
| Diluted EPS | -$0.06 | -$0.09 | +$0.03 | -$0.05 | -$0.01 |
| Customers | 337 | 304 | +10.9% | 203 | +66.0% |
Risks
MD&A flags ongoing COVID-19, the Russian invasion of Ukraine, inflationary pressures, and foreign currency fluctuations; the risk factors note the strengthening U.S. dollar increased the real cost of platforms to non-U.S. customers and could reduce demand.
The sales cycle often lasts six to nine months and can extend to a year or more, with no or low cost pilot deployments and large sales closing in the last weeks of a quarter, making revenue and cash flow difficult to predict.
Top three customers accounted for 17% and 18% of revenue for the nine months ended September 30, 2022 and 2021, respectively, and customers may terminate for convenience or fail to renew or expand.
Government customers were 56% of revenue for the nine months ended September 30, 2022; budgets, spending priorities, continuing resolutions, the U.S. federal September 30 fiscal year, and termination for convenience provisions can delay or reduce revenue.
Other income (expense), net changed by $56.5 million for the three months and $249.4 million for the nine months ended September 30, 2022, primarily due to unrealized and realized losses from investments in marketable securities, and strategic investments may not produce a return.
As of December 31, 2021, total remaining deal value was $3.8 billion, with $2.6 billion commercial and $1.2 billion government; many contracts are subject to termination for convenience and Palantir historically has not realized all full deal value.
Palantir and certain officers and directors were recently sued in purported class action lawsuits, which the filing says could result in substantial costs and divert management attention; see Note 7.
The filing adds a risk factor that issues raised by the use of artificial intelligence in Palantir platforms may result in reputational harm or liability.
The risk factor expands on unfavorable news or social media coverage, public criticism and protests over government or sensitive-industry customers, and limited ability to respond due to confidentiality obligations.
Multi-class common stock, the Founder Voting Trust Agreement, and the Founder Voting Agreement concentrate voting power with the Founders; this may make shares ineligible for major indices such as the Russell 2000 and S&P 500 and depress valuation.
Palantir is highly dependent on Alexander Karp and key personnel, all executive officers and many key employees are at-will, and competition for engineering and sales personnel plus equity award volatility may harm hiring and retention.
Historically, first-quarter sales are lower and sales increase in each subsequent quarter with substantial increases in the third and fourth quarters, driven by the U.S. government September 30 fiscal year and commercial budget cycles, which can cause fluctuations in collections and recognized revenue.
Palantir recently reimplemented its enterprise resource planning system; if it does not work as planned, the company may be unable to timely or accurately prepare financial reports, pay suppliers and employees, or invoice and collect from customers.
Joint ventures and partnerships, including with IBM, SOMPO in Japan, and Airbus Skywise, involve significant investment and may limit Palantir's ability to independently sell or compete in certain markets, and may not be successful.
Palantir does not work with the Chinese communist party and does not host its platforms in China, which may limit growth in a large potential market and competitiveness against rivals that operate there.
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
Customer count growth
Summary, forecast, risks and KPIs are extracted from Palantir Technologies Inc.'s SEC filings for Q3 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.