The News: Palantir Technologies announced a 27% year-over-year revenue growth to $678 million in Q2 2024, driven by significant gains in the US commercial sector and strong demand for its AI platform. The company raised its annual revenue forecast to $2.74-$2.75 billion and reported its largest-ever quarterly profit, highlighting its successful pivot to commercial markets. Read the full earnings release here.
By the Numbers:
- Revenue Growth: Palantir Technologies reported a notable 27% year-over-year revenue growth, reaching $678 million in the second quarter of 2024. This includes a sequential growth of 7% compared to the previous quarter.
- US Commercial Sector: The US commercial business was a standout performer, growing by 55% year-over-year and 6% quarter-over-quarter, amounting to $159 million. This growth was driven by new customer acquisitions and expanded engagements with existing clients.
- Customer Expansion: Palantir’s customer count saw a significant rise, growing by 41% YoY and 7% QoQ, reflecting the company’s efforts in attracting and retaining a diverse range of clients across various sectors.
- Profitability: The company recorded its largest-ever quarterly profit, with adjusted income from operations expected to be between $966 million and $974 million for the full year. This marks a substantial increase from the previous forecast of $868 million to $880 million.
- Large Customer Growth: Closed 27 deals greater than $10m during the quarter.
Palantir Q2 Results: Revenue Up 27%, Raises Annual Forecast
Analyst Take: The AI marketplace is evolving rapidly, with data curation, preparation, and security becoming increasingly crucial as companies move from prototyping to deploying AI use cases. The surge in AI adoption is driven by the need for businesses to harness vast amounts of data to gain competitive advantages. However, the journey from developing AI models to implementing them in real-world applications is fraught with challenges, often referred to as the “AI deployment bottleneck.”
Data curation involves cleaning, organizing, and maintaining data sets to ensure they are suitable for AI models. Proper data preparation is essential for training effective AI systems, while robust data security measures are imperative to protect sensitive information and maintain compliance with regulations. As organizations strive to deploy AI at scale, these foundational elements are becoming critical.
Another Great Quarter for Palantir
On August 7th, 2024, Palantir Technologies announced its second-quarter financial results, highlighting significant achievements and upward revisions to its annual forecasts. The company reported revenue of $678 million, marking a 27% year-over-year increase and a 7% sequential rise. This growth was largely driven by the strong performance of its US commercial sector, which saw a 55% increase to $159 million.
Palantir’s AI platform has played a pivotal role in this success, helping companies bridge the gap between AI prototypes and production-ready solutions. The platform’s capabilities in testing, debugging, and evaluating AI scenarios have attracted numerous enterprise customers, seeking to leverage AI for business transformation.
The company also raised its annual revenue forecast to a range of $2.74 billion to $2.75 billion, up from the previous estimate of $2.68 billion to $2.69 billion. Additionally, Palantir increased its forecast for adjusted income from operations to between $966 million and $974 million, compared to the earlier projection of $868 million to $880 million.
This announcement comes amid a broader market context where AI and data analytics are gaining prominence. The demand for solutions that enable efficient data curation, preparation, and security is on the rise, as enterprises recognize the importance of these processes in deploying AI at scale.
Palantir’s stock responded positively to the announcement, rising 7% in premarket trading and more than 12% in extended trading. The company’s shares have gained over 39% year-to-date, reflecting strong investor confidence in its growth trajectory.
Chief Revenue Officer Ryan Taylor highlighted that Palantir is driving growth by helping companies overcome the significant bottleneck between AI application prototypes and finished products deployed to customers. The company’s ability to deliver enterprise AI solutions at scale is a key differentiator in the competitive AI marketplace.
Looking Ahead
Palantir’s strategic pivot toward the commercial sector bodes well for its continued growth. Historically known for its government contracts, the company has successfully expanded its footprint in the commercial market through its Foundry platform. This platform enables enterprises to integrate, manage, and analyze vast amounts of data, transforming it into actionable intelligence.
Two things I will be tracking in future quarters as I start my coverage of Palantir will be large customer wins and commercial sector growth. The company won 27 deals over $10m during the quarter, which is a good measure of “land and expand” and indicates that the company is able to handle and drive big transactions. The other measure of note is the commercial sector that offers significant growth potential for Palantir. By leveraging Foundry and expanding its customer base, Palantir can reduce its dependency on government contracts and achieve more diversified revenue streams. The recent success in the US commercial sector, with a 55% revenue increase, underscores the company’s ability to deliver value across diverse industries such as healthcare, finance, and manufacturing.
Strategic investments and partnerships are also crucial components of Palantir’s growth strategy. The company’s investments in special purpose acquisition companies (SPACs) and startups aim to create a network of enterprises that can leverage its technology, thereby broadening its ecosystem and embedding its software deeply within new and growing companies.
International expansion presents another substantial growth opportunity. By tailoring its solutions to meet regional needs and compliance requirements, Palantir can tap into new markets and drive further adoption of its platforms.
While challenges such as achieving sustainable profitability and managing public perception remain, Palantir’s consistent revenue growth, strategic investments, and expanding market presence provide a strong foundation for future success. The company’s ability to navigate the complex landscape of AI deployment and deliver impactful solutions positions it well for continued growth and leadership in the tech industry.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
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Author Information
Regarded as a luminary at the intersection of technology and business transformation, Steven Dickens is the Vice President and Practice Leader for Hybrid Cloud, Infrastructure, and Operations at The Futurum Group. With a distinguished track record as a Forbes contributor and a ranking among the Top 10 Analysts by ARInsights, Steven's unique vantage point enables him to chart the nexus between emergent technologies and disruptive innovation, offering unparalleled insights for global enterprises.
Steven's expertise spans a broad spectrum of technologies that drive modern enterprises. Notable among these are open source, hybrid cloud, mission-critical infrastructure, cryptocurrencies, blockchain, and FinTech innovation. His work is foundational in aligning the strategic imperatives of C-suite executives with the practical needs of end users and technology practitioners, serving as a catalyst for optimizing the return on technology investments.
Over the years, Steven has been an integral part of industry behemoths including Broadcom, Hewlett Packard Enterprise (HPE), and IBM. His exceptional ability to pioneer multi-hundred-million-dollar products and to lead global sales teams with revenues in the same echelon has consistently demonstrated his capability for high-impact leadership.
Steven serves as a thought leader in various technology consortiums. He was a founding board member and former Chairperson of the Open Mainframe Project, under the aegis of the Linux Foundation. His role as a Board Advisor continues to shape the advocacy for open source implementations of mainframe technologies.
