Palantir Technologies Reports Surge in Third-Quarter Revenue
Key Highlights:
- Palantir’s third-quarter revenue reached $2.313 billion, marking a 96% increase year-over-year and exceeding projections by 7%.
- The company elevated its revenue forecast for 2026 to a range of $8.530 billion to $8.534 billion, indicating anticipated growth of approximately 91%.
- Despite revenue increases, total contract value rose a modest 6% to $2.918 billion, with the stock trading at $178.34, near 33 times analysts’ projected 2027 sales.
Palantir Technologies Inc. (PLTR) published its third-quarter financial results post-market on November 2. The company’s impressive revenue figure of $2.313 billion represents a robust growth rate of 96% compared to the previous year’s results, surpassing the company’s own expectations by 7%, as detailed in the earnings call transcript.
However, a particular area of concern emerged in the report: total contract value increased by only 6% to $2.918 billion. Given the stock’s closing price of $178.34 on November 2, a deeper examination of the disparity between growth rates is warranted.
Revenue Exceeds Guidance Expectations
Palantir had initially guided for a third-quarter revenue range of $2.160 billion to $2.164 billion but achieved $2.313 billion, exceeding the upper limit by 6.9%. This marks the tenth consecutive quarter in which the company has surpassed its forecast. The adjusted earnings per share stood at $0.44, beating analysts’ expectations of $0.41, according to Fortune.
The profit margins remained impressive, with an adjusted operating income of $1.427 billion, equating to a 62% margin. GAAP operating income registered at $1.085 billion, alongside a GAAP net income of $1.128 billion. Additionally, adjusted free cash flow for the quarter totaled $1.216 billion, culminating in cash and U.S. Treasuries amounting to $10.4 billion.
U.S. Commercial Sales Surpass Government Revenue
For the first time, U.S. commercial revenue outpaced government revenue, totaling $984 million—an increase of 148% from a year ago and 29% from the second quarter. In contrast, U.S. government revenue grew 96%, reaching $953 million.
| Segment | Q3 2026 Revenue | Year-over-Year Growth |
|---|---|---|
| U.S. Commercial | $984 million | +148% |
| U.S. Government | $953 million | +96% |
| International Commercial | $184 million | +21% |
| International Government | $192 million | +31% |
| Total | $2.313 billion | +96% |
Palantir now boasts 686 U.S. commercial customers, a 29% increase from last year, with a net dollar retention rate of 165%. CFO Dave Glazer noted that the demand for their sovereign AI offering, which allows customers to retain control over their data, is propelling U.S. commercial growth.
Fourth Quarter Forecast Indicates Continued Growth
Looking ahead, Palantir has projected fourth-quarter revenue between $2.649 billion and $2.653 billion. Compared to $1.407 billion recorded a year prior, this forecast suggests around 88% growth at the midpoint. The full-year guidance for adjusted operating income is set between $5.245 billion and $5.249 billion, while adjusted free cash flow is expected between $4.8 billion and $5.0 billion.
The U.S. commercial revenue forecast anticipates at least $3.559 billion, signifying a minimum 143% increase. To meet this target, Palantir needs at least $1.216 billion in the fourth quarter, closely mirroring the 29% growth achieved in the prior quarter.
Concerns About Contract Value Growth
Despite strong revenue figures, total contract value of $2.918 billion has only experienced a 6% rise year-over-year. The U.S. commercial contract value increased by 11% to $1.463 billion, while remaining deal value reached $13.4 billion, up 55% year-on-year but reflecting a 2% increase since the last quarter.
Management indicated that a higher number of shorter contracts impacted total value figures, linking flat remaining obligations to unique government contract structures. Nonetheless, there is optimism in U.S. commercial contract value, which saw a 62% increase over the last 12 months.
Market Implications of Current Stock Price
On November 2, Palantir’s stock closed at $178.34, down 3.1% for the day. This price represents a significant valuation at approximately 48 times the midpoint of the 2026 revenue guidance. Analysts previously estimated 2027 revenue to be around $12.39 billion, equating to a price-to-sales ratio near 33 times.
With about 2.30 billion shares outstanding, the current share price poses significant implications regarding market expectations for 2027 earnings. A decrease in valuation multiples, even without a change in revenue, could substantially impact the stock price.
Looking Ahead
Investors should remain vigilant regarding three critical factors leading up to the February report: the trajectory of total contract value growth relative to revenue growth, the steadiness of remaining deal value growth, and Palantir’s outlook for 2027 revenue.
A revenue guide exceeding analysts’ projections could lead to adjustments in stock multiples without affecting the price. Conversely, a lower guidance could heighten market fluctuations.
This article serves informational and educational purposes only. It does not constitute financial, investment, tax, or legal advice. Potential investors should consult licensed professionals before making investment decisions. The author does not hold positions in any securities mentioned as of publication. Investing involves risks, including the potential loss of principal. Past performance does not guarantee future outcomes.
Chief Editor of Quincy City Beat — Quincy, MA's independent investigative newspaper covering Greater Boston and the entire Commonwealth of Massachusetts with fearless public accountability and free access for all readers.
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