Palantir earnings reveal a major AI turning point

By Christine Ji

The U.S. commercial business brought in more money than the U.S. government segment in the third quarter

Palantir reported its first $2 billion revenue quarter in company history on Monday.

Palantir, a company long associated with government contracts, has entered a new phase of growth as its artificial-intelligence offerings find increased traction in the corporate world.

On Monday, Palantir (PLTR) reported a third-quarter earnings beat powered by the company's commercial momentum.

For the first time, U.S. commercial revenue of $984 million surpassed U.S. government revenue of $953 million. Overall revenue for the quarter grew 96% from a year before to reach $2.31 billion, beating the $2.18 billion expected by analysts. This marked Palantir's first quarter with more than $2 billion in revenue. Adjusted earnings of 44 cents also surpassed the FactSet consensus view of 41 cents.

"The dominant part of our business is now U.S. commercial," CEO Alex Karp told MarketWatch. Just two years ago, U.S. government revenue was nearly double that of the commercial segment.

"What you're seeing everywhere is a new world...Things that were not possible in the past are," Karp said, highlighting that Palantir grew its U.S. commercial segment by 148% from a year prior while keeping headcount flat.

Shares of Palantir have risen over 55% since July, beating out the broader iShares Expanded Tech-Software Sector ETF's IGV 13% gain. Palantir has differentiated itself from other AI solutions providers through its philosophy of "sovereign AI," or protecting the proprietary operational blueprint of the enterprise.

The goal is "deploying the right models for the right purpose...while protecting the privacy and security of what actually sets that organization apart," Chief Revenue Officer Ryan Taylor told MarketWatch.

The company's approach has received endorsement from Nvidia (NVDA), which announced a partnership in September to combine its Nemotron open models with Palantir's sovereign AI for complex supply-chain operations.

Over the past two quarters, the company has seen customers scale up from pilot engagements to larger deals, Taylor said. In the third quarter, Palantir closed 64 deals worth at least $10 million and closed total contract value of $2.92 billion, up 6% on a year-over-year basis.

For the fourth quarter, Palantir forecast revenue between $2.649 billion and $2.653 billion, clearing the FactSet consensus estimate, which was for $2.46 billion. The company also raised its full-year revenue forecast to between $8.53 billion and $8.534 billion, with full-year U.S. commercial sales now projected to exceed $3.559 billion.

-Christine Ji

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11-02-26 1609ET