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    PLTR
    Earnings call· Sep 2025(Q3 FY25)

    Palantir Technologies Inc. PLTR

    Nov 3, 2025 Source

    Executive summary

    Palantir Q3 FY25 — Record Revenue Growth and Rule of 40 Score

    Palantir delivered exceptional Q3 FY25 results, driven by robust demand for its AIP platform, particularly within the U.S. commercial sector. The company emphasized its unique value proposition through ontology and AI applications, enabling enterprise-wide AI transformations and driving significant customer expansions. Management highlighted its focus on value creation and its distinct approach to software development and deployment.

    Highlights

    5

    • Overall revenue grew 63% year-over-year to $1.181 billion, exceeding prior guidance by 1,300 basis points.

    • U.S. commercial business revenue grew an incredible 121% year-over-year and 29% sequentially.

    • Rule of 40 score soared to an unprecedented 114%, up 20 points sequentially and 4 points year-over-year.

    • Closed highest TCV quarter ever at $2.8 billion, up 151% year-over-year, including 204 deals worth $1 million or more.

    • Adjusted operating margin reached 51%, exceeding the high end of prior guidance by 500 basis points.

    Concerns

    1

    • Stagnant Europe is holding down overall growth, despite strong U.S. performance.

    Guidance & targets

    10
    CategoryTargetConfidence
    Q4 2025 Revenue
    $1.327 billion to $1.331 billion
    high materiality
    High
    Q4 2025 Adjusted income from operations
    $695 million to $699 million
    medium materiality
    High
    Full Year 2025 Revenue
    $4.396 billion to $4.400 billion
    high materiality
    High
    Full Year 2025 U.S. commercial revenue
    excess of $1.433 billion
    high materiality
    High
    Full Year 2025 Adjusted income from operations
    $2.151 billion to $2.155 billion
    high materiality
    High
    Full Year 2025 Adjusted free cash flow
    $1.9 billion to $2.1 billion
    high materiality
    High
    Full Year 2025 GAAP operating income and net income
    expected in each quarter
    medium materiality
    High
    Full Year 2025 Rule of 40 score
    102%
    high materiality
    High
    Q4 2025 Revenue from strategic commercial contracts
    $2 million to $4 million
    low materiality
    High
    Full Year 2025 Revenue from strategic commercial contracts
    less than half of 1% of full year revenue
    low materiality
    High

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Overall
    Highest ever reported revenue growth rate.
    		$1.181 billion63%18%—
    U.S. Overall
    Accounts for 3/4 of overall business in Q3.
    		$883 million77%20%—
    Commercial
    Fourth consecutive quarter that commercial revenue has been larger than government business.
    		$548 million73%22%—
    U.S. Commercial
    Now accounts for 34% of overall revenue. Driven by demand and AIP scaling.
    		$397 million121%29%—
    International Commercial
    Focused on accelerating growth in U.S. business, but capitalizing on targeted opportunities in Asia, Middle East.
    		$152 million10%5%—
    Government
    		$633 million55%14%—
    U.S. Government
    Driven by continued execution in existing programs and new awards.
    		$486 million52%14%—
    International Government
    Bolstered primarily by continued work in the U.K.
    		$147 million66%16%—

    Operational metrics

    15
    Non-GAAP operating margin
    51%up 500 basis points vs. prior guidance high end
    Q3 FY25

    Highest ever reported adjusted operating margin.

    Adjusted gross margin
    84%
    Q3 FY25

    Excludes stock-based compensation expense.

    Adjusted income from operations
    $601 million
    Q3 FY25

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

    Adjusted expense
    $581 millionup 8% sequentially, 29% YoY
    Q3 FY25

    Primarily driven by continued investment in AIP and technical hiring.

    Stock-based compensation expense
    $172 million
    Q3 FY25
    Equity-related employer payroll tax expense
    $35 million
    Q3 FY25
    GAAP operating income
    $393 million
    Q3 FY25
    GAAP net income
    $476 million
    Q3 FY25
    GAAP earnings per share
    $0.18
    Q3 FY25
    Adjusted earnings per share
    $0.21
    Q3 FY25
    Shares repurchased
    2.6 million
    Q3 FY25

    As part of share repurchase program.

    Remaining share repurchase authorization
    $880 million
    end of Q3 FY25

    Remaining from original authorization.

    Cash and investments balance
    $6.4 billion
    end of Q3 FY25

    Includes cash, cash equivalents and short-term U.S. Treasury securities.

    Revenue from strategic commercial contracts
    $2.9 million
    Q3 FY25
    Headcount growth
    roughly 10%
    Q3 FY25

    While revenue grew 63%, indicating significant productivity gains from AI FDEs.

    Industry KPIs

    8
    MetricValueDetails
    Revenue growth$1.181 billionUSD
    Rpo current rpo$2.6 billionUSD
    Bookings billings$2.8 billionUSD
    Customer account count911customers
    Large deal new logo metrics204deals
    Operating FCF margin rule of 40114%%
    Ai product adoption monetizationAIPplatform
    Net revenue net dollar retention134%%

    Orderbook & backlog

    6
    Total TCV bookings$2.8 billionQ3 FY25

    up 151% YoY

    Highest ever quarter of TCV bookings, eclipsing prior highest quarter by nearly $0.5 billion.

    Commercial TCV bookings$1.4 billionQ3 FY25

    up 132% YoY, 32% sequentially

    U.S. commercial TCV bookings$1.3 billionQ3 FY25

    up 342% YoY

    Surpassing the $1 billion mark for the first time.

    U.S. commercial TCV bookings$3.8 billionTTM Q3 FY25

    up 217% from prior 12 months

    Highlighting demand for AI production use cases.

    Total remaining deal value$8.6 billionend of Q3 FY25

    up 91% YoY, 21% sequentially

    Remaining performance obligations (RPO)$2.6 billionend of Q3 FY25

    up 66% YoY, 8% sequentially

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

    Product announcements

    3
    ProductTypeDetails
    AI FDE (AIP native development agent)launch
    AI Hivemindlaunch
    Edge Ontologylaunch

    Deals & partnerships

    5
    Medical device manufacturerMultiyear expansion of AIP deploymentmultiyear

    Signed expansion just 5 months after initial contract, evolving from a single use case to an enterprise-wide AIP deployment.

    Leading insurance companyEnterprise-wide AI transformation with AIP

    CEO took personal ownership of AI transformation, reimagining functions from underwriting to claims processing.

    TWG GlobalVergence.ai partnership

    Thomas Tull noted AI as a 'competitive necessity'.

    U.S. ArmyConsolidation and centralization on Vantage (Foundry and AIP)

    Official public memo directing all army organizations to consolidate, viewed as a technical and cultural decision to enable data-driven decision-making and sunset legacy systems.

    LearAmerican Tech Fellowship program for employees

    Lear highlighted their fellowship in their recent earnings call, mirroring Palantir's program to train frontline workers in AI.

    Risks & headwinds

    3
    Stagnant Europe

    Holding down overall growth

    Mitigation: Company remains focused on accelerating growth in the U.S. business.

    Controversial nature of government workOngoing

    Involvement in ICE, defense of America, Ukraine, allies, Israel

    Mitigation: Management expresses pride in supporting these efforts and aligns with the 'average American' perspective.

    AI-driven job displacement for 'general specialists'Ongoing

    Positive destruction of capitalism putting 'commodity like high-trained elite institution, general specialists' under enormous pressure.

    Mitigation: Palantir's platform empowers vocationally trained Americans with specific knowledge, making them more valuable, thus spreading GDP growth to the American worker.

    What to watch in Q4 FY25

    5

    U.S. Commercial Revenue Growth

    Q4 FY25
    Current121% YoY in Q3 FY25
    TargetAt least 104% YoY for FY25

    Why it matters

    Continued acceleration in this segment is key to overall growth and thesis validation, as it's a primary driver of Palantir's outperformance.

    We are raising our U.S. commercial revenue guidance to an excess of $1.433 billion, representing a growth rate of at least 104%.

    Q&A highlights

    3

    What is Palantir's unique differentiator that others may not understand?

    Shyam Sankar explained that Palantir's unique moat comes from 20 years of building software that works, not just software that 'ought to work,' focusing on value creation for customers. This led to the development of ontology, a prerequisite for enterprise AI, and recent innovations like AI Hivemind and AI FDE. Alex Karp added that the company's approach forces it to tackle the most complex and valuable parts of the stack in every enterprise, ensuring they solve integral problems and stay relevant.

    “Our measure of success is not did we sell the software, it's did we solve the problem. And we have built an entire software stack over 2 decades, downstream of creating value for our customers.”

    asked by Shareholders · answered by Shyam Sankar

    2 min read6 chapters

    Detailed Narrative

    01

    Exceptional Q3 Performance and Outperformance

    Palantir reported a monumental third quarter, with overall revenue growing 63% year-over-year to $1.181 billion, significantly exceeding the high end of prior guidance by 1,300 basis points. The company achieved its highest-ever Rule of 40 score of 114%, a 20-point sequential increase, and an adjusted operating margin of 51%, surpassing guidance by 500 basis points. This strong performance was primarily driven by robust execution in the U.S. market.

    02

    U.S. Commercial Business Driving Growth

    The U.S. commercial business demonstrated exceptional strength, growing 121% year-over-year and 29% sequentially, now accounting for 34% of overall revenue. This growth was fueled by insatiable demand for AIP and accelerated sales cycles, with customers converting to larger enterprise agreements rapidly. The company closed $1.3 billion in U.S. commercial TCV bookings, a 342% year-over-year increase, reflecting C-suite driven AI transformations across various industries.

    03

    AIP and Ontology as Core Differentiators

    Palantir emphasized its unique competitive moat built on 20 years of foundational investments in ontology and infrastructure. The company highlighted its AI applications, including AI FDE (AI native development agent) and AI Hivemind, which orchestrates dynamic agents for complex problem-solving. These tools enable rapid data migration, bottleneck identification, and mission planning, positioning AIP as the only platform delivering transformational impact in enterprise AI by integrating LLMs, workflow, and software.

    04

    Government Business and Strategic Initiatives

    The U.S. government business grew 52% year-over-year and 14% sequentially, continuing to deliver mission-critical capabilities. The U.S. Army issued an official memo directing all organizations to consolidate on Vantage, built on Foundry and AIP, signifying a cultural shift towards data-driven decision-making. Initiatives like Warp Speed and the American Tech Fellowship are also bearing fruit, supporting reindustrialization and empowering American workers with AI skills.

    05

    Financial Strength and Capital Allocation

    Palantir generated $508 million in cash from operations and $540 million in adjusted free cash flow in Q3, with a trailing 12-month adjusted free cash flow reaching $2 billion for the first time. The company ended the quarter with $6.4 billion in cash, cash equivalents, and short-term U.S. Treasury securities. Palantir repurchased approximately 2.6 million shares during the quarter, with $880 million remaining in its share repurchase authorization.

    06

    Alex Karp's Vision and Company Culture

    CEO Alex Karp asserted that the results were 'arguably the best results that any software company has ever delivered,' attributing success to Palantir's commitment to the American Warfighter and worker, and its direct alignment with customers. He emphasized the company's unique, 'anti-woke' culture and internal focus on solving complex, valuable problems, which he believes drives superior financial performance and provides an 'unfair advantage' to its clients.

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