Palantir is a software company that helps organizations make sense of their data, improve decision-making, and streamline operations. Originally founded in 2003 to assist U.S. intelligence agencies with counterterrorism efforts, the company later expanded to help businesses and government agencies facing similar challenges in managing large amounts of data.
What Does Palantir Do?
Palantir creates powerful software platforms that help organizations analyze and use their data effectively. These platforms include:
- Palantir Gotham – Used by defense and intelligence agencies to uncover insights from massive data sets. It helps in areas like national security, disaster response, and law enforcement.
- Palantir Foundry – Helps businesses and industries organize their data, making it easier to analyze and use for daily operations.
- Palantir Apollo – Ensures that Palantir’s software stays up-to-date and secure, no matter where it is being used (cloud, private servers, or government networks).
- Palantir AIP (Artificial Intelligence Platform) – Integrates AI technology, including advanced language models, into Palantir’s existing software to enhance decision-making.
Why Is This Important?
Many organizations struggle to use their data effectively because it is scattered across different systems. Palantir’s software pulls everything together, allowing companies and governments to quickly understand complex situations and make informed decisions.
Why Are Companies and Governments Choosing Palantir?
- Speed & Efficiency – Instead of waiting months or years to build custom software, organizations can start using Palantir’s solutions within days.
- Security & Compliance – Palantir ensures that AI and data tools operate within strict security, legal, and ethical guidelines.
- Real-World Impact – Palantir’s software is actively used in critical areas such as military defense, crisis management, and business operations.
Recent Developments
With growing global conflicts and economic uncertainty, many organizations have realized that traditional, slow-moving software development is not an option. Palantir’s ready-made solutions are increasingly being adopted because they provide immediate value.
For new investors or those unfamiliar with technology, think of Palantir as a company that builds “data command centers” for organizations, helping them navigate complex challenges quickly and securely.
Customers
Palantir works with some of the world’s largest government agencies and businesses, providing software solutions that help them manage and analyze data more effectively.
Who Uses Palantir’s Software?
As of December 31, 2024, Palantir had 711 customers across 90 industries worldwide. These customers use Palantir’s software for a wide range of tasks, including:
- Energy & Manufacturing – Oil and gas technicians, utility analysts, and automotive workers use Palantir’s tools to improve efficiency and safety.
- Healthcare & Pharmaceuticals – Researchers and public health officials in the U.S. and U.K. rely on Palantir to analyze medical data and manage health crises.
- Supply Chain & Logistics – Companies in South Korea and beyond use Palantir to optimize supply chains and improve delivery times.
- Defense & Government – Military personnel and special forces use Palantir to assist with operations and decision-making in the U.S. and internationally.
Where Does Palantir Make Its Money?
In 2024, Palantir generated $2.9 billion in revenue, with:
- 55% coming from government contracts (military, intelligence, public health, etc.).
- 45% coming from commercial businesses (finance, energy, healthcare, manufacturing, etc.).
A Global Presence
Palantir serves customers around the world, with:
- 66% of its revenue from U.S. customers.
- 34% from international customers.
Growth with Existing Customers
Palantir is deepening relationships with its biggest clients. In the past year, the average revenue from its top 20 customers increased to $64.6 million, up from $54.6 million in 2023. This growth shows that Palantir’s customers are expanding their use of the company’s software, further integrating it into their operations.
Why It Matters
Palantir’s software is used across industries and around the world, helping organizations make better decisions, operate more efficiently, and respond quickly to challenges. Its growing revenue and customer base highlight the increasing demand for its technology.
Sales and Marketing Approach
Palantir focuses on direct conversations with customers to understand their biggest challenges and show how its software can help. Instead of traditional advertising, Palantir builds relationships with organizations and tailors solutions to their needs.
In 2023, the company introduced AIP bootcamps, allowing potential customers to test the software with real-world scenarios. These hands-on sessions help businesses and governments quickly see the value of Palantir’s technology, speeding up adoption. Palantir continuously refines its approach to ensure its software meets the needs of both new and existing customers.
Competition
In the computer software industry, Palantir Technologies faces competition from several key players offering data analytics and integration solutions. Notable competitors include:
- Databricks: Specializes in data engineering and machine learning, providing a unified analytics platform that enables organizations to process large datasets and develop AI models.
- Snowflake: Offers a cloud-based data warehousing solution that allows businesses to store and analyze data seamlessly, facilitating efficient data management and analytics.
- Alteryx: Provides data preparation and analytics tools designed to simplify the process of data blending and advanced analytics, empowering users to derive insights without extensive coding.
- Samsara: Focuses on Internet of Things (IoT) data, delivering solutions that enhance operational efficiency across various industries by leveraging connected sensor data.
- IBM Watson Studio: Offers a suite of AI tools and services that enable organizations to build, train, and deploy machine learning models, supporting data-driven decision-making processes.
- Microsoft Azure Synapse Analytics: Provides an integrated analytics service that combines big data and data warehousing, allowing for scalable and unified data analysis solutions.
Risk to investing in PLTR
1. High Valuation Concerns
As of February 20, 2025, Palantir’s stock trades at $112.06 per share, reflecting a significant surge over the past year. This rapid appreciation has led to a price-to-sales ratio substantially higher than the industry average, raising concerns about the sustainability of such valuations.
2. Dependence on Government Contracts
A considerable portion of Palantir’s revenue is derived from government contracts, particularly with the U.S. Department of Defense. Recent directives to reduce defense spending by 8% annually over the next five years could adversely impact Palantir’s financial performance. The company’s stock experienced a 10% decline following these reports, highlighting its vulnerability to changes in government budgets.
3. Market Volatility and Competition
Palantir operates in a highly competitive industry with rapidly evolving technologies. The company’s high valuation, trading at approximately 300 times trailing earnings and 220 times projected FY’25 earnings, leaves little room for error. Any missteps or failure to meet growth expectations could result in substantial stock price corrections.
4. Dual-Class Share Structure
Palantir’s dual-class share structure grants significant control to its founders, potentially leading to decisions that may not align with the interests of common shareholders. This governance model can result in overzealous non-core investments without adequate checks and balances.
Q4 Earnings Report 2024:
Palantir Technologies reported strong financial results for the fourth quarter and the full year of 2024.
- Revenue Growth: Palantir’s total revenue grew by 36% compared to the same time last year, reaching $828 million.
- U.S. Revenue: Revenue from U.S. customers grew by 52%, totaling $558 million.
- Commercial vs. Government: The company had strong growth in both commercial (business) and government sectors. U.S. commercial revenue grew by 64%, reaching $214 million, and government revenue grew by 45%, reaching $343 million.
- Deals Closed: Palantir closed 129 large deals, many worth over $1 million each, including some multi-million dollar contracts.
- Cash Flow: They made a lot of money from operations, $460 million, and had strong free cash flow of $517 million.
- Profit: The company made a net income of $79 million. After adjusting for some special expenses, this went up to $165 million.
Key Points for the Full Year (2024):
- Total Revenue: Palantir’s total revenue for the year was $2.87 billion, a 29% increase from the previous year.
- U.S. Revenue: Revenue from the U.S. grew by 38%, reaching $1.90 billion.
- Profit: For the whole year, the company made a net income of $462 million. They had a strong income from operations of $310 million.
- Strong Cash Reserves: Palantir has a large amount of cash on hand—$5.2 billion—which helps them stay financially stable.
Overall Performance:
- Palantir showed significant growth in both revenue and the number of customers they serve.
- They are especially strong in the U.S. market, with impressive growth in their commercial sector.
- The company is in a solid financial position, with high profits and strong cash flow.
Q1 2025 Outlook:
- Revenue: Palantir expects to make between $858 million and $862 million in the first quarter.
- Adjusted Income from Operations: Expected to be between $354 million and $358 million.
Full Year 2025 Outlook:
- Revenue: Palantir expects total revenue between $3.741 billion and $3.757 billion for the year.
- U.S. Commercial Revenue: Expected to exceed $1.079 billion, growing by at least 54%.
- Adjusted Income from Operations: Expected to be between $1.551 billion and $1.567 billion.
- Adjusted Free Cash Flow: Expected to be between $1.5 billion and $1.7 billion.
- GAAP Income: Palantir expects to report operating income and net income in each quarter of the year.
This indicates Palantir anticipates continued growth, especially in its U.S. commercial business, with strong income and cash flow projections for 2025.
Sources:
Investopedia: What Donald Trump Had To Do With Palantir’s Stock Price Plunge Wednesday
Palantir Falls On CEO Share Sale Plan, Possible DOD Budget Cut
