Palantir Grows Revenue 96% as New Deals Slow: Rapid Earnings Reaction
Key Points
Palantir raised its full-year revenue outlook again and now expects 91% growth for 2026.
U.S. commercial revenue passed U.S. government revenue for the first time in company history.
Profit margins widened sharply as operating costs rose far more slowly than sales.
Palantir Technologies (NASDAQ:PLTR) grew third-quarter revenue 96% to about $2.31 billion and raised its full-year outlook again. Shares were up about 2% in after-hours trading. The business is turning growth into profit at a rare pace. But new contract signings barely grew, so future growth depends on signings picking up.
Key numbers
- Revenue: $2.31 billion, up 96% from $1.18 billion a year ago.
- U.S. commercial revenue: $984 million, up 148% from a year ago.
- GAAP operating margin: 47%, up from 33% a year ago.
- Full-year revenue guidance: Raised to about $8.53 billion, or 91% growth.
What it means
U.S. commercial revenue passed U.S. government revenue for the first time, with government at $953 million. Government contracts are big and sticky, but budgets move slowly. Commercial customers can expand fast once one deployment pays off. That speeds growth but adds exposure to corporate spending cycles.
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Profit outran sales because most of Palantir's costs don't rise with revenue. Operating expenses grew about 46% while revenue nearly doubled. Software costs little to deliver once it's built, so most of each new dollar falls to profit.
The soft spot is new business. Palantir closed $2.92 billion in total contract value, up just 6% from a year ago. Revenue is recognized from contracts already signed. When signings grow far slower than sales, the company works through its backlog faster than it refills it. Big deals are lumpy, so one soft quarter isn't a trend yet.
What to watch next
The key number is U.S. commercial remaining deal value, which rose just 4% from last quarter while U.S. commercial revenue rose 29%. If that backlog doesn't speed up, today's growth rate will be hard to hold.
David Kretzmann has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.