Summary
Palantir closed fiscal 2023 with a fifth consecutive quarter of GAAP profitability. Fourth-quarter revenue was $608.35 million, up 19.6% from the prior-year quarter. Gross profit reached $499.71 million, up 23.6%, and the gross margin was 82.1%, up 2.7 percentage points. Operating income was $65.79 million, a swing to a profit from an operating loss a year earlier, and the operating margin was 10.8%, up 14.3 percentage points. Net income was $93.39 million, up 202.5%. Cash from operations was $301.17 million, up 282.4%. Adjusted income from operations, a non-GAAP measure, was $209 million, a 34% margin. Adjusted free cash flow, also non-GAAP, was $304.752 million, a 50% margin.
For the full fiscal year, revenue was $2.23 billion, up 16.7%. Gross profit was $1.79 billion, up 19.8%, with a gross margin of 80.6%, up 2.1 percentage points. Operating income was $119.97 million, a swing to a profit, and the operating margin was 5.4%, up 13.8 percentage points. Net income was $209.82 million, a swing to a profit from a net loss in the prior year. Diluted EPS was $0.09, up from a loss per share a year earlier. Cash from operations was $712.18 million, up 218.3%. Capital expenditures were $15.11 million, down 62.2%. Deferred revenue was $486.30 million, up 43.4%, and remaining performance obligations were $1.20 billion, up 23.4%. Adjusted income from operations was $632.776 million, a 28% margin, and adjusted free cash flow was $730.524 million, a 33% margin.
Operational momentum leaned on the US commercial business. US commercial revenue grew 70% year over year and 12% quarter over quarter. Commercial revenue grew 32% year over year and 13% quarter over quarter, while government revenue grew 11% year over year and 5% quarter over quarter. US commercial customer count reached 221, up 55% year over year and 22% quarter over quarter. US commercial total contract value was $343 million, up 107% year over year on a dollar-weighted duration basis. Total customer count grew 35% year over year. Palantir reported 497 customers for the period ended December 31, 2023, compared with 367 for the period ended December 31, 2022.
Total remaining deal value was $3.9 billion as of December 31, 2023, up 5% from $3.7 billion a year earlier. That measure excludes $4.1 billion of IDIQ contracts that the company has been awarded but where funding has not yet been determined. Cash, cash equivalents, and short-term US treasury securities totaled $3.7 billion. Palantir carried no outstanding debt and had $500.0 million of undrawn revolving commitments available.
Guidance points to more growth, with the profit ramp carried mostly by non-GAAP measures in the near term. For the first quarter of 2024, management guided to adjusted income from operations of $196 million to $200 million. For the full fiscal year 2024, it guided to adjusted income from operations of $834 million to $850 million and adjusted free cash flow of $800 million to $1 billion. Management also said it expects GAAP operating income and GAAP net income in each quarter of 2024. The outlook carries real risks. Palantir points to a long and unpredictable sales cycle, and many contracts include termination for convenience provisions. Government customers face uncertainty over budgets and spending levels, shifts in timing and priorities, and regulatory and policy change. Heightened interest rates, monetary policy changes, and foreign currency fluctuations could also pressure results, as could the Russia-Ukraine and Israel conflicts. Early- and growth-stage commercial customers may struggle to generate revenue or raise financing, which would hurt collections and the realization of contract value.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $608.4M | $558.2M | +9.0% | $508.6M | +19.6% |
| Gross profit | $499.7M | $450.2M | +11.0% | $404.3M | +23.6% |
| Gross margin | 82.1% | 80.7% | +1.5 pp | 79.5% | +2.7 pp |
| Research & development | $109.3M | $105.7M | +3.4% | $82.0M | +33.2% |
| Sales & marketing | $197.4M | $176.4M | +11.9% | $190.2M | +3.7% |
| General & administrative | $127.3M | $128.2M | -0.7% | $149.9M | -15.1% |
| Total operating expenses | $433.9M | $410.3M | +5.8% | $422.1M | +2.8% |
| Operating income (loss) | $65.8M | $40.0M | +64.6% | -$17.8M | +469.1% |
| Operating margin | 10.8% | 7.2% | +3.7 pp | -3.5% | +14.3 pp |
| Net income (loss) | $93.4M | $71.5M | +30.6% | $30.9M | +202.5% |
| Net margin | 15.3% | 12.8% | +2.5 pp | 6.1% | +9.3 pp |
| Diluted EPS | $0.04 | $0.03 | +$0.01 | -$0.18 | +$0.22 |
Risks
Our top three customers together accounted for 18% and 17% of revenue for the years ended December 31, 2023 and 2022, respectively. If existing customers do not make subsequent purchases, renew, or expand, revenue could decline.
Government customers represented 55% of revenue for the year ended December 31, 2023. Many government contracts are subject to termination for convenience, and the U.S. federal government is prohibited from exercising contract options more than one year in advance; $4.1 billion of IDIQ contracts were excluded from total remaining deal value because funding is not guaranteed.
Our sales cycle often lasts six to nine months and can extend to a year or more for some customers. We typically close a large portion of sales in the last several weeks of a quarter, which impacts our ability to plan and manage margins and cash flows.
We began deploying AIP in 2023, and issues raised by the use of AI in our platforms may result in reputational harm or liability. Customers may also be reluctant to purchase products incorporating generative AI, and competitors may introduce competing AI-based platforms.
Adverse economic conditions and reduced technology spending may cause customers to defer, reduce, or forego purchases. Current macroeconomic conditions have impacted early- and growth-stage customers, and some Investee customers recently filed for bankruptcy, which may prevent us from realizing the full value of commercial contracts with them.
We face intense competition from large enterprise software companies, government contractors, and system integrators, many with greater resources, broader product lines, and larger sales forces. Competitors may bundle products, sell at zero or negative margins, or offer closed technology platforms.
Our revenue growth rate has declined in certain recent periods and may continue to decline in future periods. We cannot rely on revenue from any prior quarterly or annual period as an indication of future performance.
We are highly dependent on Alexander Karp, our Chief Executive Officer, and other key personnel. We may experience difficulty hiring and retaining qualified personnel, and certain personnel require security clearances that may be delayed or unsuccessful.
The multi-class structure, Founder Voting Trust Agreement, and Founder Voting Agreement concentrate voting power with our Founders. This governance structure may make us ineligible for certain indices and may depress our valuation relative to similar companies without multi-class structures.
Historically, our first quarter generally has relatively lower sales, with sales increasing in subsequent quarters and substantial increases in our third and fourth quarters. This seasonality, driven by government and commercial fiscal year ends, may cause fluctuations in results of operations and cash flows.
As of December 31, 2023, total remaining deal value was $3.9 billion, including $2.1 billion from commercial customers and $1.8 billion from government customers. Many contracts are subject to termination for convenience, and we historically have not realized all revenue from full deal value.
We have changed and may continue to change pricing models due to competition, economic conditions, or customer demands. Larger organizations may demand different pricing structures or substantial price concessions, and government pricing guidelines may require changes.
Our platforms are complex and may have a lengthy implementation process. If customers do not use our platforms correctly or as intended, or if we fail to properly train customers, we may face contract terminations, reduced payments, negative publicity, or legal claims.
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
US Commercial Customer Count
Customer count growth (YoY)
Total remaining deal value
Commercial remaining deal value
Government remaining deal value
US Commercial Customer Count Growth (YoY)
Summary, forecast, risks and KPIs are extracted from Palantir Technologies Inc.'s SEC filings for Q4 FY2023 (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.