Palantir Delivers Record Profits, Increases Guidance Amid Rising AI Demand

On By Littum

Palantir Technologies, Inc. (NYSE:PLTR) delivered impressive Q3 2024 earnings, supported by record profitability, strong cash flow and growing demand for AI solutions across both public and commercial sectors. With its recent inclusion in the S&P 500, Palantir continues to establish itself as a key player in the artificial intelligence landscape, and the stock responded with a 15% gain after market.

Earnings highlights for the third quarter of 2024

Palantir reported Q3 revenue growth of 30% year-over-year (YoY), reaching $725 million, with a 44% increase in US revenue. The company had a record revenue of $144 million, the biggest profit in two decades. GAAP EPS of $0.06 beat expectations by 50%, while Palantir’s adjusted operating margin reached 38% and earned a strong Rule of 40 score of 68%.

The US market remains a core driver with revenue totaling $499 million across commercial and government segments. US commercial revenue grew 54% year-on-year and 13% quarter-on-quarter, while US government revenue rose 40% year-on-year and 15% sequentially, underscoring robust demand from defense and intelligence agencies for secure AI applications.

Palantir closed 104 deals over $1 million, 36 deals over $5 million and 16 deals over $10 million, highlighting strong enterprise adoption. Additionally, the company generated $416 million in free cash flow, up 215% year over year, bringing cash reserves to $4.6 billion net of debt.

For FY 2024, Palantir raised its revenue guidance to $2,805$2,809 billion, beating consensus estimates. US commercial revenue is expected to grow by at least 50%, underscoring Palantir’s confidence in sustained AI demand.

Palantir’s inclusion in the S&P 500 reflects its strong fundamentals, although it currently trades at a high price-to-sales ratio of around 43x. With a year-to-date stock gain of over 150%, Palantir stands out as one of 2024’s top performers. This earnings report confirms Palantir’s long-term potential to capitalize on AI demand, reinforcing its leadership in AI-powered solutions for mission-critical applications.

This article first appeared on GuruFocus.