Earlier today, Palantir reported positive Q3 results which beat Wallstreet’s expectations on a revenue and earnings per share basis. The company reported their quarterly Earnings per share (EPS) at $0.04, which beat consensus by 33%, while the companies revenues reached $392 Million for the quarter, representing a strong YOY growth rate of 36%.
Interestingly, the companies earnings presentation also focused on Palantir’s growth in commercial customers. Since PLTR stock listed on the New York Stock Exchange, investors were calling for more commercial growth as the company was primarily generating revenues from Government contracts. Similarly to Q2, the company reported a 37% increase in commercial contracts highlighting greater demand for Palantir’s products in the Corporate environment.
Palantir specialises in big data analytics, in particular within the realm of law enforcement and surveillance. The companies software platforms are split into three segments: Foundry, Gotham and Apollo. These platforms offer data configuration that can assist companies and agencies make mission critical decisions in a time effective manner. The companies Software as a Service (SaaS) runs seamlessly on a variety of configurations including classified servers.
Palantir’s Deal Value Pipeline grows to $3.6 Billion
Palantir continues to make strides in both the Commercial and Government segments. The company was able to close 18 ($10 Million+) deals in Q3 alone. Of course with more deals comes more customers, as Palantir added an additional 34 customers in the third quarter taking their total customer count to 203. These customers are typically large scale organisations and Government agencies, with the average spend per top 20 customer currently standing at $41 Million.
The companies aggressive contractual expansion has lead to greater revenue visibility for investors. The companies unearned pipeline currently holds $3.6 billion in deal value, an improvement YOY of 50%. The key driver in the companies vastly growing backlog is commercial customer growth. Out of the $3.6 Billion in the pipeline, $2.2 Billion is contributed by commercial customers. This commercial contribution has doubled since last year, and was a key concern facing Palantir stock.
As future cash flows remain a fundamental aspect of a companies valuation, clearer contractual revenues expected over the next few quarters allows for greater transparency for investors and institutions on Wallstreet.
Palantir expects Q4 revenues to reach $418 Million
In the Q3 report, Palantir posted improved revenue guidance for the last quarter of the calendar year. The company expects to generate $418 Million in revenue, which would beat Q3 revenues by 6.6%. The guidance brings Palantir’s expected annual revenue guidance to $1.527 Billion.
In the report, the company has also doubled down on their target to maintain a 30% annual growth rate of revenues through to 2025. However, Morgan Stanley analyst Keith Weiss highlighted some concerns earlier this year regarding the companies 30% revenue growth target. Weiss noted to investors that more questions needed to be answered surrounding the companies ability to sustain a 30% CAGR.
Final Thoughts – Palantir Stock Q3 review
Overall, Palantir continues to drive expansive contractual revenue growth across both the Government and Commercial sector. The company now boasts an even stronger pipeline of unearned revenues, which allows greater visibility for investors.
Future cash flows are an intricate part of a companies valuation and a growing pipeline of deals is definitely driving investor interest. However, as noted by Morgan Stanley analyst Keith Weiss, there still remains outlying questions regarding the companies sustainability of high revenue growth. Since the companies earnings release, PLTR stock is currently trading 8% lower in today’s trading session.
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The content above is strictly for informational purposes only and is not financial advice nor does it constitute a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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