Palantir Technologies Inc. (NYSE:PLTR) today announced financial
results for the third quarter ended September 30, 2023.
Q3 2023 Highlights
- GAAP net income of $72 million, representing a 13% margin
- Fourth consecutive quarter of GAAP profitability
- GAAP income from operations of $40 million, representing a 7%
margin
- Third consecutive quarter of GAAP operating profitability
- GAAP earnings per share (“EPS”) of $0.03
- Adjusted EPS of $0.07
- Revenue grew 17% year-over-year to $558 million
- Commercial revenue grew 23% year-over-year to $251 million
- US commercial revenue grew 33% year-over-year to $116
million
- Government revenue grew 12% year-over-year to $308 million
- Customer count grew 34% year-over-year
- US commercial customer count grew 37% year-over-year, from 132
customers in Q3 2022 to 181 customers in Q3 2023
- Adjusted income from operations of $163 million, representing a
margin of 29%
- Fourth consecutive quarter of expanding adjusted operating
margins
- Cash from operations of $133 million, representing a 24%
margin
- Adjusted free cash flow of $141 million, representing a 25%
margin
- Cash, cash equivalents, and short-term US treasury securities
of $3.3 billion
Q3 2023 TTM Highlights
- Revenue grew 16% year-over-year to $2.1 billion
- US commercial revenue grew 23% year-over-year to $403
million
- GAAP net income of $147 million, representing a 7% margin
- GAAP income from operations of $36 million, representing a 2%
margin
- Cash from operations of $490 million, representing a 23%
margin
- Adjusted free cash flow of $502 million, representing a 24%
margin
- Adjusted income from operations of $538 million, representing a
25% margin
Q3 2023 Financial Summary
(Amounts in thousands, except percentages
and per share amounts)
Third Quarter
Amount
Revenue
$
558,159
Year-over-year growth
17
%
Amount
Margin
Income from Operations
$
39,983
7
%
Adjusted Income from Operations
$
163,272
29
%
Cash from Operations
$
133,443
24
%
Adjusted Free Cash Flow
$
140,847
25
%
Net Income Attributable to Common
Stockholders
$
71,505
Adjusted Net Income Attributable to Common
Stockholders
$
155,019
Adjusted EBITDA
$
171,935
31
%
GAAP EPS, Diluted
$
0.03
Adjusted EPS, Diluted
$
0.07
Outlook
For Q4 2023, we expect:
- Revenue of between $599 - $603 million.
- Adjusted income from operations of $184 - $188 million.
- GAAP net income.
For full year 2023:
- We are raising our revenue guidance to between $2.216 - $2.220
billion.
- We are raising our adjusted income from operations guidance to
between $607 - $611 million.
- We continue to expect GAAP net income in each quarter of this
year.
CEO Letter
Palantir CEO Alex Karp’s quarterly letter to shareholders is
available through Palantir’s website at
https://www.palantir.com/q3-2023-letter.
Earnings Webcast
A live public webcast will be held at 6:00 a.m. MT / 8:00 a.m.
ET today to discuss the results for our third quarter ended
September 30, 2023 and financial outlook. The webcast can be
accessed by registering online at
https://palantir.events/palantir-earnings-q3-2023. A replay of the
webcast will be available at https://investors.palantir.com
following the event.
An investor presentation, including supplemental financial
information and reconciliations of certain non-GAAP measures to
their nearest comparable GAAP measures, will be available through
Palantir’s Investor Relations website at
https://investors.palantir.com.
Forward-Looking Statements
This press release and statements on our earnings webcast
contain “forward-looking statements” within the meaning of the
“safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, including, but not limited to, statements
regarding our financial outlook, product development and related
timing, distribution, and pricing, expected benefits of and
applications for our software platforms, business strategy and
plans (including strategy and plans relating to our Artificial
Intelligence Platform (“AIP”), sales and marketing efforts, sales
force, partnerships, and customers), investments in our business,
market trends and market size, opportunities (including growth
opportunities), our expectations regarding our existing and
potential investments in, and commercial contracts with, various
entities, our expectations regarding macroeconomic events, our
expectations regarding potential eligibility or inclusion in market
indices, our expectations regarding our share repurchase program,
and positioning. These forward-looking statements are made as of
the date they were first issued and were based on current
expectations, estimates, forecasts, and projections as well as the
beliefs and assumptions of management. Words such as “guidance,”
“expect,” “anticipate,” “should,” “believe,” “hope,” “target,”
“project,” “plan,” “goals,” “estimate,” “potential,” “predict,”
“may,” “will,” “might,” “could,” “intend,” “shall,” and variations
of these terms or the negative of these terms and similar
expressions are intended to identify these forward-looking
statements. Forward-looking statements are subject to a number of
risks and uncertainties, many of which involve factors or
circumstances that are beyond our control. Our actual results could
differ materially from those stated or implied in forward-looking
statements due to a number of factors, including but not limited to
risks detailed in our filings with the Securities and Exchange
Commission (the “SEC”), including in our annual report on Form 10-K
for the fiscal year ended December 31, 2022 and other filings and
reports that we may file from time to time with the SEC, including
our quarterly report on Form 10-Q for the fiscal quarter ended
September 30, 2023. In particular, the following factors, among
others, could cause our results to differ materially from those
expressed or implied by such forward-looking statements: our
ability to successfully execute our business and growth strategy;
the sufficiency of our cash and cash equivalents to meet our
liquidity needs; the demand for our platforms, product offerings,
and services in general; our ability to increase our number of new
customers and revenue generated from customers; our ability to
realize some or all of the total contract value of customer
contracts as revenue, including any contractual options available
to customers or contractual periods that are subject to termination
for convenience provisions; our long and unpredictable sales cycle;
our ability to successfully execute our channel sales and other
strategic initiatives with third parties; our ability to retain and
expand our customer base; the fluctuation of our results of
operations and our key business measures on a quarterly basis in
future periods; the seasonality of our business; the implementation
process for our platforms, which may be complex and lengthy; our
ability to successfully develop and deploy new technologies to
address the needs of our existing or prospective customers; our
ability to make our platforms and product offerings easier to
install, consume, and use; our ability to maintain and enhance our
brand and reputation; our ability to maintain and enhance our
culture as our business grows and as we pursue our business and
financial goals; news or social media coverage about us, including
but not limited to coverage that presents, or relies on,
inaccurate, misleading, incomplete, or otherwise damaging
information; the impact of recent or future global macroeconomic
and geopolitical events, such as the ongoing Russia-Ukraine
conflict and Hamas’ recent attack against Israel and ensuing
conflicts, rising inflation and interest rates in the U.S. and in
other countries, monetary policy changes, financial services sector
instability, and foreign currency fluctuations, on the business and
operations of our company or of our existing or prospective
customers and partners; issues raised by the use of artificial
intelligence in our platforms; and any breach or access to our or
customer or third-party data.
The forward-looking statements included in this press release
represent our views as of the date of this press release. We
anticipate that subsequent events and developments will cause our
views to change. We undertake no intention or obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events, or otherwise. These forward-looking
statements should not be relied upon as representing our views as
of any date subsequent to the date of this press release. Past
performance is not necessarily indicative of future results.
Additional Definitions
For the purpose of this press release and our earnings
webcast:
- Total contract value (“TCV”) is the total potential lifetime
value of contracts entered into with, or awarded by, our customers
at the time of contract execution and remaining deal value (“RDV”)
is the total remaining value of contracts as of the end of the
reporting period. Except as noted below, TCV and RDV each presume
the exercise of all contract options available to our customers and
no termination of contracts. However, the majority of our contracts
are subject to termination provisions, including for convenience,
and there can be no guarantee that contracts are not terminated or
that contract options will be exercised. Further, RDV may exclude
all or some portion of the value of certain commercial contracts as
a result of our ongoing assessments of customers’ financial
condition, including the consideration of such customers’ ability
and intention to pay, and whether such contracts continue to meet
the criteria for revenue recognition, among other factors.
- Remaining performance obligations (“RPO”) reflect the total
values of contracts that have been entered into with, or awarded
by, our customers and represent non-cancelable contracted revenue
that has not yet been recognized, which includes deferred revenue
and, in certain instances, amounts that will be invoiced. We have
elected the practical expedient, as permitted under Accounting
Standards Codification 606—Revenue from Contracts with Customers,
to not disclose remaining performance obligations for contracts
with original terms of twelve months or less.
- The term “strategic commercial contracts” is as defined in our
quarterly report on Form 10-Q for the fiscal quarter ended June 30,
2023.
- “Dollar-weighted duration basis” is the total value of
contracts closed in the applicable period, divided by the
dollar-weighted average duration of those same contracts.
- “Annualized run rate” is the revenue for the applicable
quarterly period, multiplied by four (representing four quarters to
illustrate the annualized rate). Our actual results in subsequent
periods may differ.
Non-GAAP Financial Measures
This press release and the accompanying tables, as well as our
earnings webcast, contain the non-GAAP financial measures adjusted
income from operations, which excludes stock-based compensation and
related employer payroll taxes; adjusted operating margin; adjusted
free cash flow; adjusted free cash flow margin; adjusted earnings
before interest, taxes, depreciation, and amortization (“adjusted
EBITDA”); adjusted EBITDA margin; adjusted net income attributable
to common stockholders; and adjusted earnings (loss) per share
(“EPS”), diluted.
We believe these non-GAAP financial measures and other metrics
described in this press release help us evaluate our business,
identify trends affecting Palantir’s business, formulate business
plans and financial projections, and make strategic decisions. We
exclude stock-based compensation, which is a non-cash expense, from
these non-GAAP financial measures because we believe that excluding
this item provides meaningful supplemental information regarding
operational performance and provides useful information to
investors and others in understanding and evaluating our operating
results in the same manner as our management team. We exclude
employer payroll taxes related to stock-based compensation as it is
difficult to predict and outside of Palantir’s control.
Our definitions may differ from the definitions used by other
companies and therefore comparability may be limited. In addition,
other companies may not publish these or similar metrics. Further,
these metrics have certain limitations as they do not include the
impact of certain expenses that are reflected in our consolidated
statements of operations. For example, adjusted free cash flow does
not reflect our future contractual commitments or the total
increase or decrease in our cash balances for a given period. Thus,
our non-GAAP financial measures should be considered in addition
to, not as a substitute for, or in isolation from, measures
prepared in accordance with GAAP.
We compensate for these limitations by providing a
reconciliation of each of these non-GAAP measures to the most
comparable GAAP measure. We encourage investors and others to
review our business, results of operations, and financial
information in their entirety, not to rely on any single financial
measure, and to view these non-GAAP measures in conjunction with
the most directly comparable GAAP financial measure.
A reconciliation table of the most comparable GAAP financial
measure to each non-GAAP financial measure used in this press
release is included at the end of this release. A reconciliation of
non-GAAP guidance measures to corresponding GAAP measures is not
available on a forward-looking basis without unreasonable effort
due to the uncertainty regarding, and the potential variability of,
reconciling items that may be incurred in the future, such as
stock-based compensation and related employer payroll taxes, the
effect of which may be significant.
Available Information
Palantir uses its Investor Relations website at
https://investors.palantir.com as a means of disclosing material
non-public information and for complying with its disclosure
obligations under Regulation FD. Accordingly, investors should
monitor Palantir’s Investor Relations website, in addition to
following our press releases, SEC filings, public conference calls,
and webcasts.
About Palantir Technologies Inc.
Foundational software of tomorrow. Delivered today. Additional
information is available at https://www.palantir.com.
Palantir Technologies Inc.
Condensed Consolidated Statements
of Operations
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenue
$
558,159
$
477,880
$
1,616,662
$
1,397,247
Cost of revenue (1)
107,922
107,611
322,466
304,238
Gross profit
450,237
370,269
1,294,196
1,093,009
Operating expenses:
Sales and marketing (1)
176,373
182,918
547,629
512,278
Research and development (1)
105,708
100,863
295,341
277,635
General and administrative (1)
128,173
148,679
397,054
446,471
Total operating expenses
410,254
432,460
1,240,024
1,236,384
Income (loss) from operations
39,983
(62,191
)
54,172
(143,375
)
Interest income
36,864
5,540
88,027
7,559
Interest expense
(742
)
(1,082
)
(3,334
)
(2,346
)
Other income (expense), net
3,864
(65,046
)
(8,021
)
(260,714
)
Income (loss) before provision for income
taxes
79,969
(122,779
)
130,844
(398,876
)
Provision for income taxes
6,530
1,096
10,382
5,707
Net income (loss)
73,439
(123,875
)
120,462
(404,583
)
Less: Net income attributable to
noncontrolling interests
1,934
—
4,028
—
Net income (loss) attributable to common
stockholders
$
71,505
$
(123,875
)
$
116,434
$
(404,583
)
Net earnings (loss) per share attributable
to common stockholders, basic
$
0.03
$
(0.06
)
$
0.05
$
(0.20
)
Net earnings (loss) per share attributable
to common stockholders, diluted
$
0.03
$
(0.06
)
$
0.05
$
(0.20
)
Weighted-average shares of common stock
outstanding used in computing net earnings (loss) per share
attributable to common stockholders, basic
2,162,530
2,073,265
2,134,045
2,054,926
Weighted-average shares of common stock
outstanding used in computing net earnings (loss) per share
attributable to common stockholders, diluted
2,325,600
2,073,265
2,281,347
2,054,926
—————
(1)
Includes stock-based compensation expense
as follows (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Cost of revenue
$
7,814
$
10,525
$
24,995
$
33,413
Sales and marketing
39,290
48,824
116,956
147,501
Research and development
21,952
25,113
65,068
76,996
General and administrative
45,324
55,846
136,276
177,490
Total stock-based compensation
$
114,380
$
140,308
$
343,295
$
435,400
Palantir Technologies Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
As of September 30,
As of December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
1,040,310
$
2,598,540
Marketable securities
2,243,264
35,135
Accounts receivable, net
430,269
258,346
Prepaid expenses and other current
assets
95,554
149,556
Total current assets
3,809,397
3,041,577
Property and equipment, net
50,133
69,170
Operating lease right-of-use assets
190,191
200,240
Other assets
143,696
150,252
Total assets
$
4,193,417
$
3,461,239
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
9,475
$
44,788
Accrued liabilities
174,753
172,715
Deferred revenue
223,507
183,350
Customer deposits
228,986
141,989
Operating lease liabilities
52,204
45,099
Total current liabilities
688,925
587,941
Deferred revenue, noncurrent
34,880
9,965
Customer deposits, noncurrent
2,234
3,936
Operating lease liabilities,
noncurrent
184,067
204,305
Other noncurrent liabilities
11,414
12,655
Total liabilities
921,520
818,802
Stockholders’ equity:
Common stock
2,174
2,099
Additional paid-in capital
8,938,050
8,427,998
Accumulated other comprehensive loss
(7,205
)
(5,333
)
Accumulated deficit
(5,743,004
)
(5,859,438
)
Total stockholders’ equity
3,190,015
2,565,326
Noncontrolling interests
81,882
77,111
Total equity
3,271,897
2,642,437
Total liabilities and stockholders’
equity
$
4,193,417
$
3,461,239
Palantir Technologies Inc.
Condensed Consolidated Statements
of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended September
30,
2023
2022
Operating activities
Net income (loss)
$
120,462
$
(404,583
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
25,382
15,149
Stock-based compensation
343,295
435,400
Noncash operating lease expense
34,810
30,130
Unrealized and realized (gain) loss from
marketable securities, net
11,810
260,720
Noncash consideration
(34,852
)
(7,971
)
Other operating activities
(13,328
)
9,001
Changes in operating assets and
liabilities:
Accounts receivable, net
(159,752
)
(154,591
)
Prepaid expenses and other current
assets
(75
)
(4,497
)
Other assets
1,941
10,490
Accounts payable
(32,387
)
(15,165
)
Accrued liabilities
2,552
(828
)
Deferred revenue, current and
noncurrent
64,464
(44,912
)
Customer deposits, current and
noncurrent
84,272
44,263
Operating lease liabilities, current and
noncurrent
(37,767
)
(27,437
)
Other noncurrent liabilities
184
(195
)
Net cash provided by operating
activities
411,011
144,974
Investing activities
Purchases of property and equipment
(10,254
)
(35,109
)
Purchases of marketable securities
(4,791,670
)
(124,500
)
Proceeds from sales and redemption of
marketable securities
2,608,898
41,101
Proceeds from sales of alternative
investments
51,072
—
Net cash used in investing activities
(2,141,954
)
(118,508
)
Financing activities
Proceeds from the exercise of common stock
options
166,829
72,108
Other financing activities
778
(269
)
Net cash provided by financing
activities
167,607
71,839
Effect of foreign exchange on cash, cash
equivalents, and restricted cash
(2,113
)
(12,470
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
(1,565,449
)
85,835
Cash, cash equivalents, and restricted
cash - beginning of period
2,627,335
2,366,914
Cash, cash equivalents, and restricted
cash - end of period
$
1,061,886
$
2,452,749
Palantir Technologies Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(unaudited)
Non-GAAP Reconciliations
Adjusted Income from Operations and
Adjusted Operating Margin (in thousands, except
percentages)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Trailing Twelve Months
Ended September 30,
2023
2022
2023
2022
2023
Income (loss) from operations
$
39,983
$
(62,191
)
$
54,172
$
(143,375
)
$
36,346
Add: stock-based compensation
114,380
140,308
343,295
435,400
472,693
Add: employer payroll taxes related to
stock-based compensation
8,909
3,133
25,954
14,464
28,646
Adjusted income from operations
$
163,272
$
81,250
$
423,421
$
306,489
$
537,685
Adjusted operating margin
29
%
17
%
26
%
22
%
25
%
Adjusted Free Cash Flow and Adjusted
Free Cash Flow Margin (in thousands, except percentages)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Trailing Twelve Months
Ended September 30,
2023
2022
2023
2022
2023
Net cash provided by operating
activities
$
133,443
$
47,066
$
411,011
$
144,974
$
489,774
Add: cash paid for employer payroll taxes
related to stock-based compensation
8,969
3,930
25,015
17,387
26,933
Less: purchases of property and
equipment
(1,565
)
(14,436
)
(10,254
)
(35,109
)
(15,172
)
Adjusted free cash flow
$
140,847
$
36,560
$
425,772
$
127,252
$
501,535
Adjusted free cash flow margin
25
%
8
%
26
%
9
%
24
%
Adjusted EBITDA and Adjusted EBITDA
Margin (in thousands, except percentages)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Net income (loss) attributable to common
stockholders
$
71,505
$
(123,875
)
$
116,434
$
(404,583
)
Add: net income (loss) attributable to
noncontrolling interests
1,934
—
4,028
—
Less: interest income
(36,864
)
(5,540
)
(88,027
)
(7,559
)
Add: interest expense
742
1,082
3,334
2,346
Add: other (income) expense, net
(3,864
)
65,046
8,021
260,714
Add: provision for income taxes
6,530
1,096
10,382
5,707
Add: depreciation and amortization
8,663
5,942
25,382
15,149
Add: stock-based compensation
114,380
140,308
343,295
435,400
Add: employer payroll taxes related to
stock-based compensation
8,909
3,133
25,954
14,464
Adjusted EBITDA
$
171,935
$
87,192
$
448,803
$
321,638
Adjusted EBITDA margin
31
%
18
%
28
%
23
%
Adjusted Earnings Per Share, Diluted
(in thousands, except per share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Net income (loss) attributable to common
stockholders
$
71,505
$
(123,875
)
$
116,434
$
(404,583
)
Add: stock-based compensation
114,380
140,308
343,295
435,400
Add: employer payroll taxes related to
stock-based compensation
8,909
3,133
25,954
14,464
Less: income tax effects and adjustments
(1)
(39,775
)
(3,491
)
(103,714
)
(5,613
)
Adjusted net income attributable to common
stockholders, diluted
$
155,019
$
16,075
$
381,969
$
39,668
Weighted-average shares used in computing
GAAP earnings (loss) per share, diluted
2,325,600
2,073,265
2,281,347
2,054,926
Adjusted weighted-average shares used in
computing adjusted earnings per share, diluted (2)
2,325,600
2,142,506
2,281,347
2,156,288
Adjusted earnings per share, diluted
$
0.07
$
0.01
$
0.17
$
0.02
————
(1)
Income tax effect is based on long-term
estimated annual effective tax rates of 23.0% and 22.2% for the
periods ended 2023 and 2022, respectively.
(2)
Includes an additional 69 million and 101
million dilutive securities for the three and nine months ended
September 30, 2022, respectively, that were excluded from a GAAP
perspective due to the Company’s net loss position.
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