Palantir hikes sales forecasts after record stock run-up

[SAN FRANCISCO] Palantir Technologies raised its annual revenue outlook to US$4.4 billion and outpaced analyst estimates for third-quarter sales, citing “accelerating and otherworldly” growth for its artificial intelligence (AI) and data analytics products.

Palantir shares gained as much as 7 per cent in after-hours trading following the report, before giving up most of those gains. Investors had high expectations for the company and had sent shares up more than 150 per cent thus far this year. The stock was priced at 85-times sales expected over the next 12 months, as at Friday (Oct 31), making it by far the most expensive in the S&P 500 Index.

Revenue increased 63 per cent to US$1.18 billion in the period ended in September, the company said on Monday. Analysts, on average, estimated US$1.09 billion. In the current quarter, sales will be about US$1.33 billion, compared with an average projection of US$1.19 billion.

Palantir has reported revenue above analyst estimates for 21 consecutive quarters, according to data compiled by Bloomberg.

“We are in a nosebleed zone,” Palantir chief executive officer Alex Karp said on Monday. “No one else is here.”

Profit, excluding some items, was 21 US cents a share, compared with analysts’ average estimate of 17 US cents.

Palantir has been one of the biggest public beneficiaries of the AI boom. The company sells its AI software to both governments and companies, and has become a key provider to the US and its allies.

Founded in 2003 with backing from Peter Thiel and the venture arm of the CIA, Palantir’s software organises information from disparate data sources and prompts customers to make better decisions, using AI tools to make those calls more quickly. In corporate settings, this can mean finding ways to save money. On the battlefield, this can mean shortening the time from identifying a threat to neutralising it.

The company’s commercial business has been growing quickly, particularly in the US. Palantir’s quarterly sales to commercial customers in the country increased 121 per cent from the period a year earlier to generate US$397 million.

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Palantir’s government work in the US increased 52 per cent in the third quarter to US$486 million.

Since its market debut via a direct listing in 2020, Karp has built a dedicated following among retail investors who affectionately call him “Daddy Karp” on Reddit. At the same time, he has antagonised Wall Street and dismissed calls to reverse Palantir’s strong support for Israel and for US border enforcement.

In a characteristically bombastic letter to investors, Karp said that the company’s ascent to its US$488 billion valuation “has confounded most financial analysts and the chattering class, whose frames of reference did not quite anticipate a company of this size and scale growing at such a ferocious and unrelenting rate”.

Sounding a patriotic note, Karp also extolled the virtues of the US. In the investor letter, he quoted the poet William Butler Yeats, writing, “things fall apart; the centre cannot hold”. Adding, “Today, America is the centre, and it must hold.”

In addition to working on US defence projects, Palantir also has deals with US allies, including most recently Poland. The company is planning to work with the country on cybersecurity and AI. BLOOMBERG