Executive Summary
Palantir Technologies Inc (PLTR) showcased remarkable resilience in Q1 2023, achieving significant revenue growth while crossing the profitability threshold for the second consecutive quarter. Driven by a robust performance in its U.S. commercial segment, the company reported total revenue of $525 million, representing an 18% year-over-year increase. The government segment also contributed with $289 million in revenue, up 20% from the previous year. With management highlighting a keen focus on artificial intelligence (AI) and innovative platforms like Foundry and Apollo, Palantir is well-positioned to capitalize on increasing demand across both commercial and government sectors. Management's strategic emphasis on profitability, combined with a solid cash position of $2.9 billion, suggests a strong foundation for future growth, ultimately benefiting investors in the long term.
Key Performance Indicators
QoQ: -123.08% | YoY:-110.43%
QoQ: -45.59% | YoY:-116.57%
QoQ: -45.95% | YoY:-116.06%
Key Insights
**Revenue Growth:** Palantir's revenue for Q1 2023 was $525 million, an 18% increase year-over-year and 3% sequentially. This performance is attributed to a 26% growth in U.S. commercial revenue, supplemented by a strong government segment.
**Profitability:** The company achieved a GAAP net income of $17 million, marking its second consecutive quarter of profitability. The operating income stood at $4 million through disciplined cost management, reflecting a focus on sustainable growth.
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Financial Highlights
Revenue Growth: Palantir's revenue for Q1 2023 was $525 million, an 18% increase year-over-year and 3% sequentially. This performance is attributed to a 26% growth in U.S. commercial revenue, supplemented by a strong government segment.
Profitability: The company achieved a GAAP net income of $17 million, marking its second consecutive quarter of profitability. The operating income stood at $4 million through disciplined cost management, reflecting a focus on sustainable growth.
Cash Flow: Palantir generated $187 million in cash from operations, leading to adjusted free cash flow of $189 million. The company ended the quarter with $2.9 billion in cash and cash equivalents, underpinning its financial flexibility.
Valuation Ratios: The price-to-earnings ratio (P/E) remains elevated at 265.01, indicative of market expectations for future growth despite current low profitability.
Investment in AI: Management emphasized the historical context and readiness of Palantir to leverage its unique AI capabilities, particularly through its AIP platform which sees burgeoning demand.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
525.19M |
17.66% |
3.26% |
| Gross Profit |
417.54M |
18.64% |
3.27% |
| Operating Income |
4.12M |
-110.43% |
-123.08% |
| Net Income |
16.80M |
-116.57% |
-45.59% |
| EPS |
0.01 |
-116.06% |
-45.95% |
Key Financial Ratios
operatingProfitMargin
0.78%
operatingCashFlowPerShare
$0.09
freeCashFlowPerShare
$0.09
priceEarningsRatio
265.01
Management Commentary
Growth Strategy: Alex Karp, CEO, articulated the company's distinctive product offerings that capitalize on a once-in-a-generation opportunity within AI, stating, "...we have our ability to launch products that are literally the only products on the market and that will... change your life..."
Market Positioning: Karp further noted, "This is just one of the most exciting times to be at Palantir... we are in a unique position to supply that platform and we have the resources..."
Income Guidance: Dave Glazer, CFO, projected sustained GAAP profitability throughout 2023, emphasizing the company's trajectory toward becoming a consistent profit generator: "On the back of these exceptional results... we now expect to be GAAP profitable in each quarter this year."
Customer Expansion: Ryan Taylor, CRO, highlighted customer growth dynamics: "Our U.S. commercial customer base, which stood at 155 at the end of Q1 2023, a seven-fold increase in customer count over just two years...".
"We have been taking steps across the company in recent months to refocus our efforts and optimize on the parts of our business that will drive even further growth alongside and sustain profitability."
â Ryan Taylor
"This accomplishment was a result of strong top-line growth, driven by the reacceleration of our U.S. commercial business, coupled with continued disciplined spend management."
â Dave Glazer
Forward Guidance
Management guidance for Q2 indicates expected revenue between $528 million and $532 million, with projected adjusted income from operations between $118 million and $122 million. The full year revenue guidance is raised to between $2.185 billion and $2.235 billion, showcasing management's confidence in maintaining growth momentum and achieving consistent profitability across quarters.