Data-mining and analytics company Palantir (NYSE:PLTR) reported Q4 CY2024 results beating Wall Street’s revenue expectations , with sales up 36% year on year to $827.5 million. On top of that, next quarter’s revenue guidance ($860 million at the midpoint) was surprisingly good and 7.2% above what analysts were expecting. Its non-GAAP profit of $0.14 per share was 23.7% above analysts’ consensus estimates.
Revenue: $827.5 million vs analyst estimates of $775 million (36% year-on-year growth, 6.8% beat)
Adjusted EPS: $0.14 vs analyst estimates of $0.11 (23.7% beat)
Adjusted Operating Income: $372.5 million vs analyst estimates of $304.6 million (45% margin, 22.3% beat)
Management’s revenue guidance for the upcoming financial year 2025 is $3.75 billion at the midpoint, beating analyst estimates by 6.3% and implying 30.8% growth (vs 28.5% in FY2024)
Operating Margin: 1.3%, down from 10.8% in the same quarter last year
Free Cash Flow Margin: 55.3%, down from 59.9% in the previous quarter
Billings: $877 million at quarter end, up 40.3% year on year
Market Capitalization: $187.9 billion
“Our business results continue to astound, demonstrating our deepening position at the center of the AI revolution. Our early insights surrounding the commoditization of large language models have evolved from theory to fact,” said Alexander C. Karp, Co-Founder and Chief Executive Officer of
Company Overview
Started by Peter Thiel after seeing US defence agencies struggle in the aftermath of the 2001 terrorist attacks, Palantir (NYSE:PLTR) offers software as a service platform that helps government agencies and large enterprises use data to make better decisions.
Data Analytics
Organizations generate a lot of data that is stored in silos, often in incompatible formats, making it slow and costly to extract actionable insights, which in turn drives demand for modern cloud-based data analysis platforms that can efficiently analyze the siloed data.
Sales Growth
A company’s long-term sales performance signals its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Palantir’s 22.9% annualized revenue growth over the last three years was decent. Its growth was slightly above the average software company and shows its offerings resonate with customers.
Palantir Quarterly Revenue
This quarter, Palantir reported wonderful year-on-year revenue growth of 36%, and its $827.5 million of revenue exceeded Wall Street’s estimates by 6.8%. Company management is currently guiding for a 35.6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 22.3% over the next 12 months, similar to its three-year rate. This projection is noteworthy and implies the market is baking in success for its products and services.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Palantir’s billings punched in at $877 million in Q4, and over the last four quarters, its growth was impressive as it averaged 25.4% year-on-year increases. This alternate topline metric grew slower than total sales, meaning the company recognizes revenue faster than it collects cash - a headwind for its liquidity that could also signal a slowdown in future revenue growth.
Palantir Billings
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Palantir is extremely efficient at acquiring new customers, and its CAC payback period checked in at 16.9 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Palantir more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
Key Takeaways from Palantir’s Q4 Results
We were impressed by how significantly Palantir blew past analysts’ billings expectations this quarter. We were also excited its revenue and EPS outperformed Wall Street’s estimates by a wide margin. Looking ahead, the outlook provided was also encouraging, with the company's 2025 revenue guidance exceeding expectations. Zooming out, we think this was a very good quarter. The stock traded up 15.4% to $96.85 immediately after reporting.
Palantir put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
