Palantir Q3 results: U.S. commercial revenue tops government
Palantir Q3 results showed revenue of $2.313 billion, up 96% from a year earlier, with U.S. commercial sales surpassing U.S. government revenue for the first time as the company raised full-year guidance.
The commercial side of the ledger finally outgrew Washington. Palantir Q3 results, released after Monday's close, showed U.S. commercial revenue ahead of U.S. government revenue for the first time, even as the shares slipped about 3% after hours on a tough tape for AI names.
What happened
Total revenue was $2.313 billion, up 96% year over year, according to the company's investor release. U.S. commercial revenue rose 148% to $984 million and climbed 29% from the prior quarter, surpassing U.S. government revenue of $953 million, which was up 96% year over year. Overall U.S. revenue reached $1.937 billion, up 119%.
On profits, Palantir reported GAAP and adjusted earnings of $0.44 a share and net income of $1.128 billion. CNBC, citing LSEG, said the print beat consensus estimates of $2.18 billion in revenue and $0.41 in adjusted earnings. The investor deck put the Rule of 40 at 158%.
Guidance moved higher. Full-year revenue is now expected at $8.530 billion to $8.534 billion, with fourth-quarter revenue of $2.649 billion to $2.653 billion. U.S. commercial revenue for the year is guided above $3.559 billion, implying growth of at least 143%. Cash and Treasuries stood at about $10.4 billion. The investor update also cited net dollar retention of 165%, up 8 points quarter over quarter, plus 212 closed deals of at least $1 million and total remaining performance obligations of about $2.60 billion, with adjusted free cash flow of $1.22 billion.
Why it matters
The crossover matters because Palantir has long been priced as a government software story that was only beginning to sell into industry. Our Palantir earnings preview noted that Street estimates had already climbed above the August guide; the actuals cleared that higher bar and raised it again.
CEO Alex Karp told CNBC the firm is posting "consistent results" in software AI without a traditional sales force. U.S. commercial revenue has more than quintupled over two years on the company's reckoning, which is the growth investors have been paying for.
The backdrop remains unforgiving. Chip and AI-linked stocks have been selling off into midterms week, a shift our Nasdaq worst month report tracked, and a beat-and-raise still left the shares lower after the bell.
Palantir Q3 results also sharpen the split between AI software vendors and the hardware suppliers absorbing CapEx skepticism: software bookings convert differently from GPU order books.
What's next
Investors will parse U.S. commercial bookings conversion, international commercial growth and whether the raised full-year band holds through the fourth quarter. The company's Q3 release lists the full guidance ranges.
The next test for Palantir Q3 results is whether the commercial lead over government widens again in Q4, or whether a softer enterprise spend cycle slows the crossover that defined this quarter.
Shares' after-hours dip shows how little room for disappointment remains even after a near-doubling of revenue.
This article is for information only and is not investment advice.