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    PLTR
    Earnings call· Jun 2026(Q2 FY26)

    Palantir Technologies Q2 FY26 earnings call PLTR

    Aug 3, 2026 Source

    Executive summary

    Palantir Q2 FY26 — Unprecedented U.S. Commercial Growth and Sovereign AI Momentum

    Palantir delivered unprecedented Q2 FY26 results, driven by exceptional growth in its U.S. commercial and government segments, fueled by accelerating demand for its sovereign AI platform. The company emphasized its unique approach to AI, focusing on customer control over data and models, contrasting with "token maxing" models. Management expressed strong confidence in continued high growth rates, particularly in the U.S. market, while maintaining GAAP profitability and strong free cash flow.

    Highlights

    5

    • Total revenue grew 93% year-over-year to $1.935 billion, marking the highest ever reported growth rate.

    • U.S. commercial revenue accelerated to 149% year-over-year and 28% sequentially, reaching $764 million.

    • U.S. government revenue grew a remarkable 90% year-over-year to $809 million.

    • Adjusted free cash flow reached $1.22 billion, representing a 63% margin and 115% growth year-over-year.

    • The Rule of 40 score expanded to 155%, a 10-point increase from the prior quarter and the 12th consecutive quarter of expansion.

    Concerns

    2

    • Adjusted gross margin was 86%, reflecting an increase in costs associated with taking on cloud hosting for a government customer.

    • A significant ramp in expense is expected in Q3 due to the seasonality of new hire starts and other product and marketing initiatives.

    Guidance & targets

    8
    CategoryTargetConfidence
    Q3 2026 Revenue
    $2.16 billion to $2.164 billion
    high materiality
    High
    Q3 2026 Adjusted Income from Operations
    $1.292 billion and $1.296 billion
    medium materiality
    High
    Full Year 2026 Revenue
    $8.15 billion and $8.158 billion
    high materiality
    High
    Full Year 2026 U.S. Commercial Revenue
    in excess of $3.424 billion
    high materiality
    High
    Full Year 2026 Adjusted Income from Operations
    $4.889 billion and $4.897 billion
    high materiality
    High
    Full Year 2026 Adjusted Free Cash Flow
    $4.5 billion and $4.7 billion
    high materiality
    High
    Full Year 2026 GAAP Operating Income and Net Income
    expected in each quarter
    medium materiality
    High
    U.S. Commercial Growth Rate
    equal or above 149%
    high materiality
    Medium

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Total Company
    Highest ever reported year-over-year revenue growth rate.
    		$1.935B93%19%—
    U.S. Business
    Comprises over 81% of total revenue.
    % of total revenue: 81%
    		$1.573B115%23%—
    U.S. Commercial
    Accelerated growth in the U.S. market.
    		$764M149%28%—
    U.S. Government
    Extraordinary strength and momentum across both defense and civil.
    		$809M90%18%—
    Commercial Segment
    AI platform continues to dominate the U.S. market.
    		$945M110%22%—
    International Commercial
    		$182M26%2%—
    Government Segment
    		$990M79%15%—
    International Government
    		$181M42%5%—

    Operational metrics

    16
    Non-GAAP gross margin
    86
    Q2 FY26

    Reflects an increase in costs associated with taking on cloud hosting for one of our government customers.

    Adjusted income from operations
    $1.194B
    Q2 FY26

    Excludes stock-based compensation expense and related employer payroll taxes.

    Adjusted expense
    $741M14% sequentially; 37% year-over-year
    Q2 FY26

    Primarily driven by continued investment in AI platform and technical hiring.

    GAAP operating income
    $912M
    Q2 FY26
    GAAP net income
    $1.062B
    Q2 FY26
    Stock-based compensation expense
    $265M
    Q2 FY26
    Equity-related employer payroll tax expense
    $17M
    Q2 FY26
    GAAP EPS
    $0.41
    Q2 FY26

    Includes $0.03 tailwind from unrealized gains from SpaceX holdings.

    Adjusted EPS
    $0.41
    Q2 FY26

    Includes $0.02 tailwind from unrealized gains from SpaceX holdings.

    Cash and investments balance
    $9.2B
    Q2 FY26

    Cash, cash equivalents and short-term U.S. treasury securities.

    Revenue from strategic commercial contracts
    $400K
    Q2 FY26

    Expected to be less than $500,000 in each remaining quarter of this year.

    Department of War trailing 12-month revenue
    less than 25
    TTM
    American Tech Fellowship grads
    over 1,000
    current
    Production planning time reduction
    from 30-40 days down to less than 1 day
    current

    Achieved using an AI application built by an ATF grad.

    Maven builders
    over 25,000
    current

    Uniform service members, civilians, contractors and companies developing agents and applications.

    Top 20 customers TTM revenue
    $124M67% year-over-year
    TTM

    Industry KPIs

    7
    MetricValueDetails
    Revenue growth$1.935BUSD
    Rpo current rpo$4.9BUSD
    Bookings billings$2.132BUSD
    Customer account count653customers
    Large deal new logo metrics220deals
    Operating FCF margin rule of 40155%
    Net revenue net dollar retention157%

    Orderbook & backlog

    8
    U.S. commercial TCV bookings$2.132BQ2 FY26 end

    153% year-over-year; 81% sequentially

    Dollar-weighted duration basis.

    Commercial TCV bookings$2.337BQ2 FY26 end

    118% year-over-year

    U.S. commercial TCV bookings (past 12 months)$5.964BQ2 FY26 end

    117% increase from prior 12 months

    Government TCV bookings$3.4BQ2 FY26 end

    49% year-over-year

    Government TCV bookings (dollar-weighted duration)129%Q2 FY26 end

    year-over-year

    Total remaining deal value$13.1BQ2 FY26 end

    83% year-over-year; 11% sequentially

    Remaining performance obligations (RPO)$4.9BQ2 FY26 end

    103% year-over-year; 10% sequentially

    Primarily comprised of commercial business; does not include contracts with initial term of less than 12 months or obligations beyond termination for convenience clauses common in government business.

    Total remaining deal value (U.S. commercial)124%Q2 FY26 end

    year-over-year; 27% sequentially

    Product announcements

    2
    ProductTypeDetails
    Maven platformlaunch
    American Builder Summitmilestone

    Deals & partnerships

    5
    Multinational technology companyExpansion of platform use across full portfolio, converting from a pilot at one operating company.nearly $370M3-year

    Began working in Q4 last year at one operating company, expanded on success, converted to a 3-year nearly $370 million deal last quarter.

    Global asset management firmAsset management automation and investment life cycle intelligence across 4 verticals.$35M TCV3-year

    Started working in Q1, then converted last quarter to a 3-year $35 million TCV deal.

    Global software and services companyInitial deal signed after an agent camp.$15M5-month

    Signed an initial $15 million 5-month deal last quarter after an agent camp in May.

    Leading nonprofit health systemPartnership converted from a pilot.$37M TCV3-year

    Signed a pilot at the end of 2025 and then last quarter converted to a 3-year partnership at $37 million TCV.

    NVIDIAPartnership to expand application layer and fine-tune models.

    We built a partnership with NVIDIA. We're expanding our application layer. We are going to enter the market and already entering it in the classified space, as Shyam alluded to, of fine-tuning models.

    Risks & headwinds

    3
    Token maxing leading to IP migration and business commoditizationOngoing

    Breaking corporate budgets without results; companies paying to give away their most important secrets, contributing to commoditization.

    Mitigation: Palantir's sovereign AI approach, enabling customers to own operational definition of data, logic, actions, and security; building a stack that enables compounding of alpha.

    Enterprises locked into specific frontier modelsOngoing

    Potential for mission-critical systems to fail if models are pulled or become suboptimal; being beholden to a lab's models.

    Mitigation: Palantir's product allows customers to switch out models; focus on customer-specific benchmarking and leveraging open models to avoid vendor lock-in.

    Significant ramp in Q3 expensesQ3 FY26

    $741 million adjusted expense in Q2, up 14% sequentially and 37% YoY, with further ramp expected.

    Mitigation: Continued investment in AI platform and technical hiring, R&D for product pipeline and sovereign AI efforts, with a commitment to sustained GAAP profitability.

    What to watch in Q3 FY26

    4

    U.S. Commercial Revenue Growth Rate

    next 18 months (starting Q3 FY26)
    Current149% YoY
    TargetEqual to or above 149% YoY

    Why it matters

    Alex Karp set this as a very high goal for the business, indicating management's ambition and confidence in the U.S. market's potential.

    I am driving the business to grow at a rate equal or above to what we have in U.S. commercial for the next 18 months, which is a very high goal, but it is one we can actually get to because we are fully aligned with what's right and what's good and what actually works well in an enterprise.

    Q&A highlights

    3

    What unexpected insights or learnings came from the recent sovereign boot camp, given the overwhelming attendance?

    Alex Karp noted the massive demand for education from diverse attendees (CEOs, operational leads) on how to control their data and avoid 'token maxing.' He highlighted that even older partners, who had not engaged recently, attended, contributing to the strong Net Dollar Retention (NDR). He also mentioned the internal excitement within Palantir and the need to find technically competent partners to scale and meet the demand.

    “So like when you're working in enterprise, it's really important that the operational people are interested. So it was like CEOs, operational leads. And there's a huge educational component, and Shyam talks about this a lot, likely people understand that they need a way of controlling their alpha.”

    asked by Dan Ives · answered by Alexander Karp

    2 min read6 chapters

    Detailed Narrative

    01

    Sovereign AI and Market Shift

    Palantir highlighted an "abrupt market shift in LLMs" towards AI sovereignty, where enterprises demand control over their data, logic, actions, and security. The company positions its AIP platform as the solution, contrasting it with "token maxing" models that lead to data commoditization and budget overruns without clear value. This shift is driving customers to seek full ownership of their alpha, recognizing the dangers of transferring proprietary information to third-party models.

    02

    U.S. Business Dominance and Acceleration

    The U.S. market continues to be a primary growth driver, comprising over 81% of total revenue. U.S. commercial revenue saw significant acceleration, growing 149% year-over-year and 28% sequentially to $764 million. U.S. government revenue also demonstrated strong performance with 90% year-over-year growth and 18% sequentially, reaching $809 million, driven by continued execution in existing programs and new awards.

    03

    AIP Platform and FDE Differentiator

    The AIP platform is described as the "best, most ergonomic environment for AI in the enterprise," integrating mixed AI teams and delivering fast implementations. The company emphasized its unique "Forward Deployed Engineers" (FDEs) as a critical differentiator, enabling customers to turn tokens into economic value. This was exemplified by a $10 million ACV contract win where Palantir's FDEs and AIP platform succeeded against a frontier lab's deployment team.

    04

    Benchmarking vs. Benchmaxing

    Shyam Sankar introduced the concept of "benchmaking," where customers create specific benchmarks aligned with their business needs, rather than "benchmaxing" against generic frontier models. This approach allows customers to optimize for their own trade-offs in cost, performance, and latency, fostering continuous improvement. He noted that vanilla Nemotron Ultra models, without post-training, outperformed frontier models in 5 production tasks within 24 hours when tested against customer-specific benchmarks.

    05

    Record Customer Momentum and Deal Velocity

    Palantir reported record deal closures, including 220 deals worth $1 million or more, 98 deals over $5 million, and 73 deals over $10 million. U.S. commercial TCV bookings reached $2.132 billion, a 153% year-over-year increase, with customers converting pilots into multi-year, multi-million dollar contracts. Examples included a multinational technology company converting to a 3-year, nearly $370 million deal and a global asset management firm signing a 3-year, $35 million TCV deal.

    06

    Philosophical Alignment and Outsider Status

    Alex Karp articulated Palantir's philosophical alignment with partners, emphasizing building products that deliver value and rejecting "parasitic" software models. He attributed the company's success to its "colony of artists" culture, valuing early insights, and its "outsider" status which drives a need for superior results. This alignment, he stated, is crucial for transforming the U.S. and allied countries, fostering a future where production is more efficient and manufacturing thrives.

    AI-generated summary of the company’s earnings call. Not investment advice.