Palantir Technologies Inc. (PLTR), Financial Analysis

1 Revenue & Business Model

• Storyline: revenue growth rises for six quarters in a row, led by US commercial customers, while bookings growth slows and stock compensation rises. Chapters 2 to 4 cover the three revenue drivers: US commercial, US government and international.
• Four software platforms: Gotham (defense and intelligence), Foundry (data operations and the Ontology), Apollo (continuous delivery) and AIP (generative AI, launched 2023). Two reportable segments by customer type: government (54% of FY2025 revenue) and commercial (46%).
• Revenue FY2021 $1.54bn to FY2025 $4.48bn, a 30.5% CAGR; TTM Q3 2026 $7.29bn. Quarterly growth year on year rose from 39% in Q1 2025 to 95.9% in Q3 2026.
• Regions: United States 57% of FY2021 revenue, 74% of FY2025 and 84% of Q3 2026; United Kingdom $427m in FY2025. From Q2 2026 the 10-Q splits revenue only into US and non US.
• Customers: 1,090 on a trailing twelve month basis at 30 Sep 2026 against 911 a year earlier; the top 20 customers averaged $146m of trailing revenue, +76%; the top three customers were 16% of 9M 2026 revenue.
• Employees 4,634 at 30 Sep 2026 against 4,429 at 31 Dec 2025; revenue per employee on TTM revenue $1.57m.

2 US Commercial: Revenue Passes US Government for the First Time

• US commercial revenue $984m in Q3 2026, +147.9%, 42.5% of revenue, above US government ($953m) for the first time. Growth year on year as stated in the releases: Q1 2026 +133%, Q2 2026 +149%, Q3 2026 +148%.
• FY2026 US commercial guidance at least $3.559bn (+143%), raised from $3.144bn in February; FY2025 US commercial revenue was $1.465bn, +109%.
• Bookings: US commercial total contract value $1.463bn in Q3 2026, +11%, after a record $2.132bn in Q2 2026; US commercial remaining deal value $6.52bn, +79%, and +4% on Q2 2026.
• Commercial segment revenue $1.168bn, +113%; $407m of the $619m increase came from customers existing at 31 Dec 2025 (10-Q). Commercial contribution margin 77% against 66% a year earlier (company segment measure, before R&D, G&A and stock compensation).

How enterprise AI software is changing

• Application vendors report AI revenue as a separate line: Salesforce Agentforce ARR above $1.5bn, up more than 240% (Jul 2026 quarter); ServiceNow raised its 2026 AI ACV target to $1.7bn; Microsoft AI business above a $37bn annual run rate, +123% (Mar 2026 quarter).
• Data platforms: Snowflake revenue +35.1% in the Jul 2026 quarter with net revenue retention of 126%; C3.ai revenue fell 25.5% to $52.4m.
• Palantir risk factors: the Q3 2026 10-Q adds that AI agents may take unauthorized actions and names AIP and Sovereign AI as designed to reduce AI risks.

3 US Government: Defense Software Revenue Nearly Doubles

• US government revenue $953m in Q3 2026, +96.1%; Q4 2025 +66%, Q1 2026 +84%, Q2 2026 +90% (releases). 9M 2026 US government revenue $2.4bn against $1.3bn (10-Q).
• Government segment revenue $1.146bn, +81%, incl. international government; $484m of the $513m increase came from existing customers. Government contribution margin 70% against 66%.
• Contract terms: most government contracts allow termination for convenience and sit outside RPO; government remaining deal value was $4.4bn at 31 Dec 2025 (10-K).
• Hosting cost: cost of revenue rose 85% with third party cloud hosting (+$135m year on year in Q3 2026, 10-Q).

How defense software is changing

• Services contractors grow at single digit rates: Leidos Defense +3.4%, Booz Allen National Security +0.6% and CACI +8.2% (2.1% organic) in their latest quarters, against Palantir US government +96%.
• Backlogs and awards: Booz Allen backlog $40.9bn with a book to bill of 1.5x; CACI awards $4.8bn, book to bill 2.0x; Leidos cited demand for defense technology products (8-K Ex 99.1 filings, Oct and Nov 2026).
• Other software vendors: C3.ai lists agreements with the Department of War, the US Marine Corps and the Defense Logistics Agency; its revenue fell 25.5%.
• Palantir risk factors: the 2026 Forms 10-Q add physical and cyber threats tied to hostilities in Iran and protests that led some third parties to limit relationships with Palantir.

4 International: Slower Growth Outside the US

• International revenue $376m in Q3 2026, +26.0%, 16.3% of revenue against 25.3% a year earlier; non US customers were 19% of 9M 2026 revenue.
• International commercial $183.9m, +21.5%; growth year on year Q1 2026 +26%, Q2 2026 +25%; FY2025 about $608m, +2%.
• International government $192.5m, +31.2%, above international commercial in Q3 2026 for the first time since Q1 2025; the two were about equal at $181m in Q2 2026.
• United Kingdom: $427m in FY2025 (9.5% of revenue) and $130.1m in Q1 2026, the last quarter with a separate UK figure.

How software demand outside the US is changing

• Peer growth outside the US: ServiceNow EMEA +20.0% and Alphabet EMEA +14.7% in FY2025, against Palantir international commercial about +2% in FY2025; Microsoft outside the US +17.4% in FY2026 (to Jun 2026); Accenture EMEA +6.2% in the Aug 2026 quarter, against Palantir international commercial +21.5% in Q3 2026.
• Palantir 10-Q: a rising US share of revenue increases exposure to adverse US conditions; foreign currency effects were not material in 9M 2026; exposure is mainly to the yen, euro and pound.
• Regulation: the Q1 2026 10-Q adds South Korea's AI Basic Act (in force January 2026) and privacy law amendments with fines of up to 10% of total revenue.

5 Financial Analysis & Ratios

• Operating margin turned from (26.7%) in FY2021 to 31.6% in FY2025 and 45.6% TTM. Gross margin TTM 84.7%.
• Net income TTM $3.67bn, 50.3% of revenue, above operating income because of interest income ($296m TTM) and gains on private holdings in 1H 2026; income tax TTM $51m under a full valuation allowance on US deferred tax assets. A future release of the allowance would add a one time tax benefit.
• Free cash flow TTM $4.05bn (operating cash flow less capex), 55.6% of revenue; capex TTM $43m. Company adjusted free cash flow, a non GAAP measure that adds back employer payroll taxes on stock compensation, was $4.15bn TTM.
• Balance sheet at 30 Sep 2026: cash and marketable securities $10.56bn, no debt, $500m revolving facility undrawn; receivables $1.88bn against $1.04bn at Dec 2025, with one customer at 27%; contract liabilities $1.2bn against $0.8bn.
• Capital returns: the $1.0bn buyback program bought 600,446 shares for $75.0m in FY2025 and ended in January 2026; no dividend. Diluted shares 2.57bn in Q3 2026 against 2.57bn a year earlier.

Cost structure and profitability

• Costs (revenue less operating income) $1.229bn in Q3 2026, +55.9%, against revenue +95.9%; operating margin up 13.6 pts year on year and down 0.2 pts on Q2 2026.
• Cost of revenue 16.6% of revenue against 17.6% a year earlier and 13.2% in Q1 2026; gross margin 83.4%. Third party cloud hosting rose $135m year on year.
• Sales and marketing 17.1% of revenue, R&D 9.5%, G&A 9.9%, against 23.3%, 12.2% and 13.7% a year earlier.
• Stock based compensation $318.9m in Q3 2026 and $785.7m in 9M 2026 (+61%), driven by restricted stock unit, performance unit and stock appreciation right grants since Sep 2025; 15.3% of FY2025 revenue and 13.5% TTM.
• Operating cash flow $1.205bn, +137.3%; capex $8.0m; free cash flow $1.197bn, 51.7% of revenue, against $501m. Company adjusted free cash flow $1.216bn (non GAAP).
• Other income and expense, net ($25.8m) in Q3 2026 against $27.5m; interest income $88.9m.

FY2026 guidance raised three times

• Revenue guidance midpoint up $1.342bn (+18.7%) between February and November 2026: +$466m in May, +$498m in August and +$378m in November.
• Adjusted operating income guidance midpoint $5.247bn against $4.134bn, +26.9%; adjusted free cash flow range $4.8bn to $5.0bn against $3.925bn to $4.125bn (company non GAAP measures).
• Implied Q4 2026: guidance midpoint $2.651bn equals 14.6% above Q3 2026 revenue.

6 MD&A & Management Commentary

Q3 2026 results release

• Q3 2026 (8-K Ex 99.1 of 2 Nov 2026): revenue $2.313bn, +95.9% and +19.5% on Q2 2026; US revenue $1.937bn, +119%; GAAP and adjusted EPS both $0.44.
• Adjusted operating income $1.427bn (61.7% margin) equals GAAP operating income $1.085bn plus stock compensation $318.9m and related employer payroll taxes $23.1m.
• Q4 2026 guidance: revenue $2.649bn to $2.653bn, +88% on Q4 2025 at the midpoint; adjusted operating income $1.640bn to $1.644bn. GAAP operating income and net income are expected in every quarter of 2026.
• Q2 2026 (3 Aug 2026): revenue $1.935bn, +93%; US commercial total contract value $2.132bn, +153%, a record; FY2026 revenue guidance raised by $498m at the midpoint, the largest of the three raises.

Management and CFO commentary

• Q3 2026 release (2 Nov 2026), CEO Alex Karp: revenue +96% and a Rule of 40 score of 158%; FY2026 guidance raised for revenue, US commercial revenue, adjusted operating income and adjusted free cash flow.
• Q2 2026 release (3 Aug 2026): Rule of 40 score 155%; US commercial revenue +149%; cash and US Treasuries $9.2bn.
• Q1 2026 release (4 May 2026): Rule of 40 score 145%; growth of 85% the highest year on year rate to that date; FY2026 revenue guidance raised by 10 points to 71% growth.
• Q4 2025 release (2 Feb 2026): Rule of 40 score 127%; US revenue +93% and US commercial +137%; FY2026 revenue growth guided at 61%.
• Financial detail in the releases: stock compensation $318.9m and employer payroll taxes on it $23.1m in Q3 2026; 9M 2026 stock compensation $785.7m against $487.6m; cash and US Treasuries $10.4bn at 30 Sep 2026.

7 Peer Valuation & Sector Summary

• Sector: enterprise AI and data software, and defense software for governments. Peers in the table: ServiceNow, Salesforce, CrowdStrike and Microsoft; driver chapters add Snowflake, C3.ai, Leidos, Booz Allen Hamilton, CACI, Accenture and Alphabet.
• Growth (latest quarter): PLTR 95.9%, CRWD 25.8%, NOW 20.5%, MSFT 18.8%, CRM 10.8%.
• Operating margin TTM: MSFT 47.1%, PLTR 45.6%, CRM 19.9%, NOW 9.7%, CRWD (2.5%); FCF margin: PLTR 55.6%, CRM 34.5%, NOW 30.8%, CRWD 28.3%, MSFT 17.3%.
• Revenue growth plus FCF margin: PLTR 151.5, NOW 51.3, CRWD 54.1, CRM 45.3, MSFT 36.1; the company's own Rule of 40 uses adjusted operating margin and gives 158%.
• Valuation: PLTR 56.5x EV/Sales and 122.7x P/E against CRWD 45.7x, MSFT 11.1x and 27.0x, NOW 7.3x and 77.7x, CRM 4.8x and 18.9x.

8 Material Events & Contracts

• Six Forms 8-K from 3 Nov 2025 to 2 Nov 2026: five earnings releases and the annual meeting results.
• Cloud commitment: the largest new contractual obligation is the amended cloud services agreement of March 2026, disclosed in the Q1 2026 10-Q, with at least $5.6bn of spend over ten contract years; total purchase commitments were $1.76bn at 31 Dec 2025.

9 Ownership, Voting Power & Annual Meeting

• Three share classes; founders control close to half of all votes. Class A (1 vote, listed), Class B (10 votes) and Class F (variable votes held in the Founder Voting Trust) together give Karp, Cohen and Thiel 49.999999% of voting power; directors and officers held 50.8% of votes at the record date.
• 2026 annual meeting (3 Jun 2026): seven directors elected; support ranged from 85.5% (Alexander Moore) to 99.3% (Eric Woersching), with Alexander Karp at 93.1% and Peter Thiel at 86.9%; say on pay 84.8%; auditor ratification 99.5%. Three shareholder proposals failed: due diligence report 8.3%, human rights impact assessment 12.5%, political spending disclosure 26.2%.
• Insiders, 12 months to 28 Oct 2026: sales of about 5.9m shares for about $877m and no open market purchases. Largest sellers: Peter Thiel 2.0m shares for about $290m on 2 Mar 2026, Alexander Karp 1.79m shares for $272m, Stephen Cohen $144m, Shyam Sankar $102m, director Alexander Moore $34m. Monthly sales peaked in March 2026 ($292m).
• Trading plans adopted in Q3 2026 (10-Q): Karp up to 7,080,177 shares through 11 Jun 2027 and Sankar up to 1,450,000 shares through 11 May 2027, both pre arranged sale plans; PLTR Holdings II LLC, a Thiel entity, adopted a plan on 19 Aug 2026 to buy up to 4.0m shares through 16 Dec 2027.
• Institutions: BlackRock reported 158.2m Class A shares (6.9% of the class, 3.5% of votes) in the 2026 proxy; Vanguard Capital Management reported 166.9m Class A shares (7.28%) at 31 Mar 2026 in a Schedule 13G filed after the Vanguard Group realignment.

2026 annual meeting

• Virtual meeting of 3 Jun 2026: shareholder proposals came from the Presbyterian Church U.S.A. (defense due diligence), the Sisters of St. Joseph of Peace (human rights assessment) and the New York State Common Retirement Fund (political spending); the board opposed all three.

10 Risk Factors

• Item 1A of the FY2025 Form 10-K holds 83 risk factors against 84 in FY2024: none added, one removed (the share repurchase program), two materially reworded; each Form 10-Q of 2026 restates the full section with new text on Iran related security threats, activism, AI agents and billing terms.

How risk factors changed

• Comparison: 10-K FY2025 filed 17 Feb 2026 acc 0001321655-26-000011 against 10-K FY2024 filed 18 Feb 2025 acc 0001321655-25-000022.
• The FY2025 10-K has 83 risk factors against 84 a year earlier and total length rose less than 1%, from 43,981 to 44,306 words
• No factor was added in the 10-K; one on the share repurchase program was removed and two were reworded
• Tariffs appear in 5 risk factors against none in the FY2024 10-K, and 'agentic' AI appears for the first time in 2 factors
• Each 2026 10-Q restates the full risk factors; changes concentrate on reputation and activism, Iran related security threats, South Korean AI and privacy laws and AI agent risks
• Privacy and tax factors grew by about 330 and 130 words with new state, EU Data Act and OECD Pillar Two side by side items, without crossing the reworded threshold

11 Stock Price, Scenarios & Sensitivity

• PLTR closed at $175.40 on 3 Nov 2026, 17.6% below the 52 week high of $212.94 and 64.9% above the low of $106.37; 8.7% below the price of $192.07 a year earlier.
• Valuation: market value $422.6bn on 2.41bn shares of all classes; 122.7x TTM diluted EPS; free cash flow yield 0.96%; EV/Sales 56.5x.
• Scenario model: revenue grows from TTM Q3 2026 $7.29bn for three years; GAAP operating margin as stated; interest income $360m a year; 23% tax rate after a valuation allowance release; diluted shares 2.57bn plus 3%; price equals TTM Q3 2029 EPS times exit P/E.

Critical factors and core assumptions

• Revenue base TTM Q3 2026 $7.29bn; GAAP operating income $3.33bn (45.6%); FY2026 guidance midpoint $8.532bn.
• Best case: 50% revenue CAGR as US commercial growth stays above 60% and international commercial accelerates; 55% GAAP operating margin as stock compensation falls below 10% of revenue; 90x P/E.
• Base case: 35% revenue CAGR as growth slows from 91% in FY2026; 48% margin, near the Q3 2026 level; 60x P/E.
• Worst case: 18% revenue CAGR as slower bookings feed into revenue and government budgets slip; cloud costs and stock compensation hold the margin at 35%; 35x P/E.
• Tax rate 23% after a valuation allowance release (one time benefit excluded); interest income $360m a year on net cash; diluted shares up 3% over three years.

Scenarios, three years forward

Sensitivity analysis

Disclaimer

This analysis is for information only and is not financial advice. It is derived from public SEC filings retrieved via sec-api.io and is not a publication of the U.S. Securities and Exchange Commission. Scenario values are model outputs under stated assumptions and are not forecasts. Data as of 3 November 2026.

Sources

All company and peer figures are read from SEC filings retrieved through the sec-api.io MCP server.