Analyst(s): Mitch Ashley
Publication Date: November 5, 2026
Palantir’s US commercial business overtook its US government business for the first time, as management tied the acceleration to customer demand for AI models they own and control. Bookings and sequential guidance point to a more measured pace ahead, making contract expansion the test for the next several quarters.
What Is Covered in This Article:
- Palantir’s Q3 FY 2026 financial results
- Sovereign AI converts pilots into contracts
- Bookings growth trails revenue
- Government scales while international lags
- Guidance and Final Thoughts
The News: Palantir Technologies (NASDAQ: PLTR) reported results for its third quarter of fiscal year 2026 (Q3 FY 2026), ended September 30, 2026. Revenue was $2.31 billion, up 96% year on year (YoY) and 20% quarter on quarter (QoQ), ahead of the approximately $2.18 billion consensus estimate and the first quarter above $2 billion in company history. US revenue grew 119% YoY to $1.937 billion, led by US commercial revenue of $984 million (up 148% YoY), which surpassed US government revenue of $953 million (up 96% YoY) for the first time; total commercial revenue was $1.168 billion (up 113% YoY) and total government revenue was $1.146 billion (up 81% YoY). Income from operations under generally accepted accounting principles (GAAP) was $1.085 billion, a 47% margin, while adjusted (non-GAAP) income from operations, which excludes stock-based compensation and related employer payroll taxes, was $1.427 billion, a 62% adjusted operating margin compared with 51% a year earlier. GAAP net income attributable to common stockholders was $1.128 billion, a 49% margin, up from $475.6 million in Q3 FY 2025, and adjusted net income attributable to common stockholders was $1.142 billion. GAAP diluted earnings per share (EPS) and adjusted diluted EPS were both $0.44, compared with GAAP diluted EPS of $0.18 a year earlier.
“We had an outstanding third quarter. We delivered our highest-ever reported year-over-year revenue growth rate of 96% and our highest-ever reported sequential revenue growth rate of 20%. Quarterly revenue crossed the $2 billion mark for the first time, and we surpassed additional billion-dollar milestones in commercial revenue, government revenue, and GAAP operating income,” said David Glazer, Chief Financial Officer of Palantir Technologies, on the Q3 FY 2026 earnings call.
Palantir Q3 FY 2026 Earnings: US Commercial Revenue Overtakes US Government
Analyst Take: Palantir’s third quarter marks a shift in the company’s center of gravity, with US commercial revenue exceeding US government revenue for the first time. Management attributed the sequential acceleration in US commercial revenue to 29% QoQ to Sovereign AI, its term for post-training open-weight models on a customer’s own data inside the Artificial Intelligence Platform (AIP). Revenue growth of 96% and a 62% adjusted operating margin produced a Rule of 40 score, the company’s metric summing the two, of 158%, an unusual profile at this scale. Bookings tell a more measured story, with total contract value (TCV) up 6% YoY. Palantir now has to show that fast, short-duration commitments expand into the multi-year relationships its model depends on.
Sovereign AI Converts Pilots Into Large Commercial Contracts
Management framed Sovereign AI as the engine behind US commercial revenue growth of 148% YoY and 29% QoQ. Chief Technology Officer Shyam Sankar argued that the vast majority of economically valuable problems that large language models (LLMs) can solve can be solved with intelligence at or below the frontier, and that post-training on a customer’s operational data in Palantir’s Ontology delivers better-than-frontier performance on weights the customer controls. Management cited an industrial materials company that moved from a nearly $3 million pilot in Q2 FY 2026 to a $29 million annual contract value (ACV) deal in Q3. Chief Revenue Officer Ryan Taylor said L3Harris reported that a fine-tuned open-source model outperformed its prior frontier model and cut costs by 95% in preliminary results. US commercial customers rose 29% YoY to 686 while average trailing 12-month revenue per US commercial customer grew 88% YoY, and company-wide net dollar retention, a company-defined metric, rose 800 basis points QoQ to 165%. The combination of higher spending per US commercial customer and 165% company-wide net dollar retention points to substantial expansion within existing accounts, and Palantir is selling ownership of tuned models as a customer asset rather than intelligence as a metered service.
Bookings Growth Trails Revenue
Bookings lagged revenue by a wide margin and fell sequentially from Q2’s $3.373 billion, with TCV of $2.918 billion up 6% YoY and US commercial TCV of $1.463 billion up 11% YoY, while total commercial TCV rose 17% YoY to $1.652 billion. That implies government TCV of about $1.27 billion, down roughly 6% YoY based on the reported rounded growth rates, and that decline is what pulled aggregate bookings growth below commercial growth. Shorter commercial contract durations likely contributed as well. Chief Financial Officer David Glazer said multiple eight-figure deals were shorter in duration than usual and that management expects their duration and size to increase over time. Forward indicators flattened sequentially, as US commercial remaining deal value (RDV), the company’s measure of total remaining contract value, rose 79% YoY but only 4% QoQ to $6.517 billion, and remaining performance obligations (RPO) of $4.9 billion grew 88% YoY but were flat QoQ, and RPO excludes contracts with original terms of 12 months or less. Trailing 12-month US commercial TCV of $6.114 billion, up 62%, offers a steadier read. US commercial customer-count growth slowed to 5% sequentially from 6% in Q2, even as spending per customer rose sharply, making the balance between customer acquisition and account expansion worth watching. GAAP gross margin eased to 83.4% in Q3 from 84.7% in Q2. Short contracts suit a fast-moving market, but they also give customers more frequent exit points, so renewal and expansion rates matter more than headline TCV for now.
Government Scales While International Lags
Government revenue crossed $1 billion for the first time, with US government revenue of $953 million up 96% YoY and 18% QoQ. Management credited execution in existing programs and new awards, anchored by Maven. Maven now exceeds 100,000 users and is available to all of the military services beyond the combatant commands, and the Army awarded Palantir a prime agreement to produce eight TITAN systems in the quarter. The company also pointed to DORA, an embedded compute device that brings Maven capabilities to disconnected operations. International is slower, with commercial revenue up 21% YoY but just 1% QoQ to $184 million and government revenue up 31% YoY to $192 million. With the US generating 84% of revenue, Palantir benefits fully while domestic demand runs hot, but the concentration leaves it exposed if federal budgets or US enterprise AI spending cool.
Guidance and Final Thoughts
Palantir raised its FY 2026 revenue guidance to $8.530 billion to $8.534 billion, from $8.150 billion to $8.158 billion previously, with the $8.532 billion midpoint representing 91% YoY growth. It raised US commercial revenue guidance to in excess of $3.559 billion, a growth rate of at least 143%, from in excess of $3.424 billion previously; lifted adjusted income from operations guidance to $5.245 billion to $5.249 billion from $4.889 billion to $4.897 billion, and raised adjusted free cash flow guidance to $4.8 billion to $5 billion from $4.5 billion to $4.7 billion. For Q4 FY 2026, the company guided revenue of $2.649 billion to $2.653 billion and adjusted income from operations of $1.640 billion to $1.644 billion, and it continues to expect GAAP operating income and net income in each quarter of the year. The Q4 revenue midpoint implies sequential growth of about 15%, below Q3’s 20% QoQ pace and, per Bloomberg News, the slowest sequential growth since Q2 FY 2025. For enterprise technology leaders, the quarter is a strong data point for a thesis worth staking: in enterprise AI, workflow integration and data control are doing more of the value creation than raw model capability. On that reading, buyers should negotiate to own any models post-trained on their data rather than assume that ownership comes by default. Palantir’s next proof point is whether Q3’s short-duration contracts renew and expand into multi-year commitments. Bookings, contract duration, and retention will show how durable the growth is well before revenue does.
See the full press release on Palantir’s Q3 FY 2026 financial results on the company website.
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Author Information
Mitch Ashley is VP and Practice Lead for the CIO & Technology Buyers and Software Lifecycle Engineering practices at The Futurum Group. A multi-time CIO and CTO with 30+ years leading technical organizations, Mitch built and operated production systems spanning cybersecurity for the U.S. Department of Defense, PKI services for the broadband and 5G industries, SaaS platforms, large-scale telecom and banking systems, and a national broadband network. His work with AI began early, developing expert systems that diagnosed and repaired complex mainframe environments. That operator foundation grounds his analysis in operational consequence, covering the technology buyer's world of software engineering, cybersecurity, DevOps, cloud, and AI.
