- Revenue Growth: 27% year over year, exceeding prior guidance by 5%.
- Full-Year Revenue Guidance Midpoint: Increased to $2.746 billion, representing 23% year-over-year growth.
- Adjusted Operating Margin: Expanded to 37%.
- GAAP Net Income: $134 million, a record for the company.
- GAAP Operating Income: $105 million, another record.
- Revenue: $678 million, up 27% year over year and 7% sequentially.
- Customer Count: Grew 41% year over year to 593 customers.
- Commercial Revenue: $307 million, up 33% year over year.
- US Commercial Revenue: $159 million, up 55% year over year.
- US Government Revenue: $278 million, up 24% year over year.
- International Government Revenue: $93 million, up 21% year over year.
- Net Dollar Retention: 114%, an increase of 300 basis points from last quarter.
- Total Remaining Deal Value: $4.3 billion, up 26% year over year.
- Adjusted Gross Margin: 83%.
- Adjusted Income from Operations: $254 million.
- Adjusted Free Cash Flow: $149 million, representing a margin of 22%.
- Cash and Equivalents: $4 billion.
- Q3 2024 Revenue Guidance: Between $697 million and $701 million.
- Full-Year 2024 Revenue Guidance: Between $2.742 billion and $2.750 billion.
- US Commercial Revenue Guidance: Raised to an excess of $672 million, representing at least 47% growth.
- Adjusted Income from Operations Guidance: Between $966 million and $974 million.
- Adjusted Free Cash Flow Guidance: Between $800 million and $1 billion.
Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Palantir Technologies Inc (PLTR, Financial) reported a 30% year-over-year revenue growth, excluding strategic commercial contracts, and a 10% sequential growth in Q2.
- The company signed 27 deals worth $10 million or more and closed nearly $1 billion of total contract value (TCV) last quarter.
- US commercial revenue, excluding strategic commercial contracts, climbed 70% year over year.
- Palantir Technologies Inc (PLTR) achieved its seventh consecutive quarter of GAAP profitability, generating a record $134 million of GAAP net income.
- The company raised its full-year revenue guidance midpoint to $2.746 billion, representing a 23% year-over-year growth rate.
Negative Points
- Revenue from strategic commercial contracts declined to $9 million for the quarter, with further declines expected in the next quarter.
- International commercial revenue saw a 1% sequential decline due to continued headwinds in Europe.
- The company anticipates expenses to ramp through the back half of the year, which could impact profitability.
- Despite strong US commercial growth, international government revenue growth was primarily driven by additional funding from a partner nation, indicating potential dependency on specific contracts.
- The company faces challenges in convincing legacy manufacturers to adopt its new Warp Speed system, which aims to modernize manufacturing processes.
Q & A Highlights
Q: What is Palantir doing to be different from its AI competitors? And what is the company's plan to stay competitive?
A: Shyam Sankar, Executive Vice President, Chief Technology Officer: The value and market bottleneck is in transitioning from prototyping to production, where Palantir is most differentiated. This differentiation is built on over a decade of deep technical investments, including technologies like Ontology and OSDK. The market is realizing that creating AI prototypes is easy, but getting them into production is significantly harder. This is where Palantir excels, as evidenced by expansions with customers like Panasonic Energy and Tampa General.
Q: How does Foundry's role change with the introduction of LLMs?
A: Shyam Sankar, Executive Vice President, Chief Technology Officer: The market doesn't need point solutions; it needs a system that organizes and orchestrates the interaction of physical business with technology and AI. Foundry's OSDK in Ontology acts as an application development framework for the entirety of a business, allowing it to leverage LLMs effectively. Alex Karp, CEO, added that customers already understand the need for such a system, and Palantir is ahead of both customers and competitors in this space.
Q: Can you provide more details on the acceleration of conversions from Bootcamps to deals?
A: Ryan Taylor, Chief Revenue Officer, Chief Legal Officer: The numbers speak for themselves, with 27 deals worth more than $10 million each and $1 billion of TCV in the quarter. Bootcamps are exposing customers to new opportunities, but the focus is on deploying enterprise production AI software at scale. This is where Palantir is concentrating its efforts, leading to significant customer impact and demand.
Q: What is Warp Speed, and how does it relate to American industrialization?
A: Shyam Sankar, Executive Vice President, Chief Technology Officer: Warp Speed is conceived as an operating system for modern American manufacturers, interacting with ERP, MES, PLM, and PLCs. It aims to reimagine production software, focusing on the head of production rather than the CFO. The opportunity lies in integrating legacy systems and using Warp Speed for new investments. Alex Karp, CEO, added that every Western country faces challenges in military production, and Warp Speed aligns with Palantir's strengths in building sustainable, real production systems.
Q: What are the biggest barriers for US primes to adopt Palantir's solutions for reindustrialization?
A: Shyam Sankar, Executive Vice President, Chief Technology Officer: Legacy manufacturers have made historical investments and may not yet realize that the old software playbook doesn't work. However, new manufacturers, especially those from the Tesla and SpaceX alumni networks, understand the need for modern, integrated systems. These companies can't afford to build from scratch and see the value in Palantir's AIP and OSDK. Alex Karp, CEO, emphasized that the alignment with national defense and reindustrialization efforts makes Palantir's solutions highly relevant and likely to succeed.
Q: How is Palantir planning to support America and its allies in the Middle East amid potential violent interactions?
A: Alexander Karp, Chief Executive Officer, Co-Founder, Director: Palantir stands firmly in support of America and its allies, including Israel. The company is committed to providing the necessary technological support to ensure dominance and leadership in critical areas, both commercially and on the battlefield.
Q: What message do you have for individual investors?
A: Alexander Karp, Chief Executive Officer, Co-Founder, Director: Palantir appreciates the support from individual investors, especially during challenging times. The company is focused on growing its impact, size, and value, aligning with the values of making the West stronger and better. Investors are encouraged to support America and its allies in any way they can.
Q: What are the financial highlights from Q2 2024?
A: David Glazer, Chief Financial Officer, Treasurer: Q2 revenue grew 27% year over year, exceeding guidance. Full-year revenue guidance midpoint is raised to $2.746 billion, representing 23% growth. Adjusted operating margin expanded to 37%, with GAAP net income at $134 million and GAAP operating income at $105 million. US commercial revenue grew 55% year over year, driven by AIP. Total remaining deal value increased 26% year over year to $4.3 billion.
Q: How is Palantir addressing the challenges in deploying enterprise production AI software at scale?
A: Shyam Sankar, Executive Vice President, Chief Technology Officer: Palantir's deep technical investments and product pipeline are focused on solving the transition from prototyping to production. The company's unique capabilities in this area are driving significant customer expansions and new deals, as evidenced by the strong quarterly results.
Q: What is the outlook for Q3 and full-year 2024?
A: David Glazer, Chief Financial Officer, Treasurer: For Q3 2024, Palantir expects revenue between $697 million and $701 million and adjusted income from operations between $233 million and $237 million. Full-year 2024 revenue guidance is raised to between $2.742 billion and $2.750 billion, with US commercial revenue expected to exceed $672 million, representing at least 47% growth. Adjusted income from operations is expected to be between $966 million and $974 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
