Summary
Palantir's third quarter of fiscal 2024 showed strong top-line growth. Revenue came in at $725.5 million, up 30% from the prior-year quarter. U.S. revenue grew 44% year over year. U.S. commercial revenue grew 54% year over year, and U.S. government revenue grew 40% year over year. The company closed 104 deals over $1 million. Customer count reached 629, up 39% year over year. Rule of 40 score was 68%. These metrics point to broad-based demand for its AI platforms. Government revenue grew 33% and commercial revenue grew 27% for the quarter. The company generated 55% of its revenue from government customers and 45% from commercial customers in the first nine months of 2024. The company's AI platform, AIP, continues to drive demand. Palantir has built Gotham, Foundry, Apollo, and AIP platforms.
Profitability improved sharply. GAAP operating income was $113.1 million, up 183% year over year. GAAP net income was $143.5 million, up 100.7% year over year. Diluted GAAP EPS was $0.06, up 100% year over year. Gross profit was $578.9 million, up 28.6% year over year. Gross margin was 79.8%, down 0.9 percentage points year over year, as cost of revenue grew faster than revenue. Cost of revenue grew 36%. Sales and marketing expenses grew 19%. Research and development expenses grew 11%. General and administrative expenses grew 8%. Operating margin was 15.6%, up 8.4 percentage points year over year. On a non-GAAP basis, adjusted income from operations was $276 million, a 38% margin. Adjusted free cash flow was $435 million, a 60% margin. Adjusted EBITDA was $283.6 million, a 39% margin.
Operating cash flow was $419.8 million for the quarter, up 214.6% year over year. Capital expenditures were $4.0 million, up 154.6% year over year. Deferred revenue was $615.1 million, up 25.6% year over year. Remaining performance obligations (RPO) were $1.60 billion, up 62.0% year over year. For the first nine months of 2024, revenue was $2.04 billion, up 26.1% year over year. YTD gross profit was $1.65 billion, up 27.2% year over year. YTD gross margin was 80.8%, up 0.7 percentage points. YTD operating income was $299.4 million, up 452.6%. YTD operating margin was 14.7%, up 11.3 percentage points. YTD net income was $383.2 million, up 229.1%. YTD diluted EPS was $0.16, up 220%. YTD operating cash flow was $693.5 million, up 68.7%. YTD capital expenditures were $9.5 million, down 7.1% year over year. The company had no outstanding debt balances and $500.0 million available under its credit facility. During the nine months ended September 30, 2024, the company repurchased 1.8 million shares for $45.6 million under its share repurchase program.
Management raised full-year 2024 guidance. For the full year 2024, revenue guidance is now between $2.805 billion and $2.809 billion. U.S. commercial revenue guidance is in excess of $687 million, representing growth of at least 50%. Adjusted income from operations guidance is between $1.054 billion and $1.058 billion. Adjusted free cash flow guidance is in excess of $1 billion. For Q4 2024, revenue guidance is between $767 million and $771 million. Adjusted income from operations guidance is between $298 million and $302 million. The company continues to expect GAAP operating income and net income in each quarter of this year.
Several risks remain. Large government customers are subject to budget and spending uncertainties, changes in timing and priorities, and regulatory changes. Many customer contracts contain termination for convenience provisions, which could affect revenue realization. Macroeconomic conditions and geopolitical tensions, including the ongoing Russia-Ukraine and Israel conflicts, could disrupt operations. Foreign currency fluctuations, particularly in the Euro and British pound, could impact results. The general strengthening of the U.S. dollar relative to other major foreign currencies has had, and could in the future have, an unfavorable impact on revenues and expenses. Early- and growth-stage customers may face financing challenges, which could affect collections. Stock-based compensation remains a significant non-cash expense. The MD&A notes that current macroeconomic conditions have impacted, and may continue to impact, early- and growth-stage customers' ability to generate revenues or profitability.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $725.5M | $678.1M | +7.0% | $558.2M | +30.0% |
| Gross profit | $578.9M | $549.6M | +5.3% | $450.2M | +28.6% |
| Gross margin | 79.8% | 81.0% | -1.3 pp | 80.7% | -0.9 pp |
| Research & development | $117.6M | $108.8M | +8.1% | $105.7M | +11.2% |
| Sales & marketing | $209.5M | $196.8M | +6.4% | $176.4M | +18.8% |
| General & administrative | $138.7M | $138.6M | +0.0% | $128.2M | +8.2% |
| Total operating expenses | $465.7M | $444.2M | +4.8% | $410.3M | +13.5% |
| Operating income (loss) | $113.1M | $105.3M | +7.4% | $40.0M | +183.0% |
| Operating margin | 15.6% | 15.5% | +0.1 pp | 7.2% | +8.4 pp |
| Net income (loss) | $143.5M | $134.1M | +7.0% | $71.5M | +100.7% |
| Net margin | 19.8% | 19.8% | ±0.0 pp | 12.8% | +7.0 pp |
| Diluted EPS | $0.06 | $0.06 | ±$0.00 | $0.03 | +$0.03 |
| Customers | 629 | 593 | +6.1% | 453 | +38.9% |
Risks
A large share of revenue depends on government customers, which accounted for 55% of revenue in the nine months ended September 30, 2024. The filing cites risks from government budgets, spending priorities, delays in contract awards, and the fact that many contracts can be terminated for convenience and the U.S. federal government cannot exercise contract options more than one year in advance.
The top three customers together accounted for 17% of revenue for the nine months ended September 30, 2024. The filing warns that existing customers have expanded relationships and a limited number of customers account for a substantial portion of revenue, so reduced spend, non-renewal, or termination by a large customer could reduce revenue.
Sales efforts are time-intensive and the sales cycle often lasts six to nine months and can extend to a year or more, with a large portion of sales closing in the last several weeks of a quarter. The filing also says seasonality may cause fluctuations, with lower first-quarter sales and substantial increases in the third and fourth quarters.
The company and its competitors are investing more significantly in AI, and other companies may develop similar products or adopt and implement AI more successfully or at a quicker pace. The filing also cites reluctance of customers to purchase products incorporating generative AI, which could hurt market acceptance of AIP and related offerings.
Adverse economic conditions or reduced technology spending could cause customers to defer, reduce, or forego purchases, extend sales cycles, delay payments, or terminate contracts. MD&A cites heightened interest rates, monetary policy changes, foreign currency fluctuations, and geopolitical tensions including the Russia-Ukraine and Israel conflicts as ongoing uncertainties.
The company is highly dependent on Alexander Karp, its CEO, and says his management experience would be difficult to replace. It also cites difficulty hiring and retaining qualified personnel, especially engineering talent, and notes that volatility or lack of appreciation in the Class A common stock price may affect retention through equity awards.
MD&A says current macroeconomic conditions have impacted and may continue to impact early- and growth-stage customers, and the company may not realize the full value of commercial contracts with them. For the nine months ended September 30, 2024, commercial revenue growth included a decrease of $24.7 million of revenue from Strategic Commercial Contracts.
Many customer contracts are subject to termination for convenience, and the company historically has not realized all revenue from full deal value. Delays in the U.S. government budgeting process, continuing resolutions, or a lapse in appropriations could impair timely revenue recognition under certain government contracts.
The filing cites breach of third-party systems, customer systems, or internal systems and unauthorized access to data, plus dependence on third-party computing infrastructure that may experience errors, disruption, or failure. These risks are heightened by complex deployments and AI features.
The business is subject to complex and evolving U.S. and non-U.S. laws on privacy, data protection, technology protection, and AI. The filing specifically cites the EU AI Act and FASA as laws that could impact the business, along with legal, regulatory, and administrative inquiries and proceedings.
The multi-class structure, Founder Voting Trust Agreement, and Founder Voting Agreement concentrate voting power with Stephen Cohen, Alexander Karp, and Peter Thiel. The filing says this may make the stock less attractive to certain institutional investors and could keep the founder voting agreements in place until the death of the last living Founder.
The filing states there are no guarantees that the Share Repurchase Program will result in increased shareholder value. As of September 30, 2024, approximately $954.4 million remained available under the program, and repurchases may not support the stock price.
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
Rule of 40
Customer count growth (YoY)
Customer count growth (QoQ)
Summary, forecast, risks and KPIs are extracted from Palantir Technologies Inc.'s SEC filings for Q3 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.