Palantir Technologies Inc Earnings - Q4 2025 Analysis & Highlights
Palantir Technologies reported historic Q4 2025 results with exceptional growth across all business segments, driven by accelerating AI adoption and enterprise transformation, while maintaining exceptional profitability and providing strong 2026 guidance.
Key Financial Results
Q4 2025 revenue surged 70% year-over-year, the highest growth rate as a public company, with full-year 2025 revenue growing 56% year-over-year to $4.475 billion.
US business revenue exceeded $1 billion for the first time, growing 93% year-over-year and 22% sequentially in Q4, now commanding 77% of total revenue.
Rule of 40 score reached 127% in Q4, up 46 points year-over-year and 13 points quarter-over-quarter, representing the 10th consecutive quarter of expanding Rule of 40 score.
Adjusted operating income of $798 million in Q4 with a 57% margin, exceeding prior guidance by 500 basis points, and full-year adjusted operating income of $2.3 billion representing a 50% margin.
Adjusted gross margin of 86% for Q4 and 84% for the full year.
Q4 GAAP net income of $609 million representing a 43% margin, with full-year GAAP net income of $1.625 billion representing a 36% margin.
Q4 adjusted earnings per share of $0.25 and full-year adjusted earnings per share of $0.75.
Closed highest TCV quarter ever at $4.3 billion, up 138% year-over-year and 54% sequentially.
Adjusted free cash flow of $2.27 billion for full year 2025, representing a 51% margin and 82% growth year-over-year.
Trailing 12-month revenue from top 20 customers increased 45% year-over-year to $94 million per customer.
Business Segment Results
US commercial revenue grew 137% year-over-year and 28% sequentially to $507 million in Q4, with full-year US commercial revenue growing 109% year-over-year to $1.465 billion.
US government revenue grew 66% year-over-year and 17% sequentially to $570 million in Q4, with full-year US government revenue growing 55% year-over-year to $1.855 billion.
Commercial segment revenue grew 82% year-over-year and 23% sequentially to $677 million in Q4, with full-year commercial revenue growing 60% year-over-year to $2.073 billion.
Government segment revenue grew 60% year-over-year and 15% sequentially to $730 million in Q4, with full-year government revenue growing 53% year-over-year to $2.402 billion.
International commercial revenue grew 8% year-over-year and 12% sequentially to $171 million in Q4, with full-year international commercial revenue growing 2% year-over-year to $608 million.
International government revenue grew 43% year-over-year and 9% sequentially to $160 million in Q4, with full-year international government revenue growing 47% year-over-year to $547 million.
US commercial customer count grew to 571 customers, reflecting growth of 49% year-over-year and 8% sequentially.
Net dollar retention reached 139%, an increase of 500 basis points from last quarter.
Total remaining deal value reached $11.2 billion, an increase of 105% year-over-year and 29% sequentially.
Remaining performance obligations of $4.2 billion, an increase of 144% year-over-year and 62% sequentially.
Capital Allocation
Company ended Q4 with $7.2 billion in cash, cash equivalents and short-term US Treasury securities.
Q4 adjusted free cash flow of $791 million representing a 56% margin.
Full-year adjusted free cash flow of $2.27 billion representing a 51% margin and 82% growth year-over-year.
No share repurchases or dividend payments mentioned in the earnings call.
Industry Trends and Dynamics
Rapid advancement of AI models continuing to drive commoditization of cognition, with differentiation between those supplying commoditization and those scaling leverage made possible by it.
Customers committing to AI at scale with Palantir as the driving force, moving from AI adopters to AI native enterprises.
Speed to production and transformational scale is existential, with Palantir remaining the only platform delivering that speed at enterprise scale.
Existing customers expanding faster and larger, with examples including a utility company expanding from $7 million ACV to $31 million ACV and an energy company expanding from $4 million ACV to over $20 million ACV.
New customers starting with substantial initial deals, including a healthcare company signing a $96 million deal and an engineering services company signing an $80 million deal.
US Navy awarded Palantir a contract worth up to $448 million to modernize the shipbuilding supply chain and accelerate delivery of naval vessels.
Government turning to software that actually works as speed, precision and decision advantage are paramount in era of intensifying global threats and budgetary pressure.
Competitive Landscape
Palantir is an N of one, the only enterprise software company that made a conscious choice to focus exclusively on scaling leverage made possible by AI models.
Customers view Palantir as delivering real world value by maximally leveraging AI models in production, with alternatives perceived as not great.
Management emphasizes that Palantir delivers magical implementations on the front line, with weapon software deployed in combat situations.
Palantir has deep and dense proximate relationships with leaders in almost every field of industry, providing high value products without circular pay relationships.
Macroeconomic Environment
US government facing intensifying global threats and budgetary pressure, turning to software that actually works for speed, precision and decision advantage.
Reindustrialization efforts across US government spanning defense, pharmaceuticals, data centers and other critical infrastructure.
Western Europe and Canada showing lack of adoption compared to Arab countries, Israel, and China, with hesitance to adopt advanced products outside America.
Political pressure on institutions regarding disproportion between AI haves and have-nots, with difficulty for political leaders to provide value in this environment.
Growth Opportunities and Strategies
AIP (Artificial Intelligence Platform) continues to fundamentally transform how quickly customers realize value, collapsing time from initial engagement to transformational impact.
Hivemind framework being applied to broader problem sets, enabling AI to develop novel solutions to emerging challenges and identify hidden opportunities.
AI FDE (Foundry Data Engine) now capable of powering complex SAP ERP migrations from ECC to S/4, years of work now done in as little as two weeks.
Maven usage at all-time highs, supporting simultaneous real world events across combatant commands in the Joint Force, with rollout continuing to all combatant commands.
Maven Edge agent called Mage enabling declarative statement of mission intent with fully onboard planning, reaction to emerging battlefield realities, and execution.
AIP becoming the default builder platform in the Department of War, with uniform service members, primes, and federally funded research centers building AI applications.
Gotham's new suite of integrated capabilities including Kairos for integrated planning, Nexus for dynamic command relationships, and Workbench to automate collections, fires, and battle damage assessment.
Warp Speed accelerating submarine production and sustainment, with planning reduced from 160 hours to 10 minutes and material review from weeks to less than an hour.
American Tech Fellowship launching exclusively for submarine industrial base, an eight-week course to upskill users at suppliers and shipyards.
Ship OS proving AI creates jobs through Jevons Paradox, enabling customers to add additional shifts due to increased shovel-ready work.
Palantir focusing on transforming large institutions and making significant revenue with them rather than pursuing volume-based approach.
Management shaping customer problems and footprints rather than just responding to customer requests, helping define how solutions are orchestrated.
Financial Guidance and Outlook
Q1 2026 revenue guidance of $1.532 billion to $1.536 billion with adjusted income from operations of $870 million to $874 million.
Full-year 2026 revenue guidance of $7.182 billion to $7.198 billion at the midpoint representing 61% growth year-over-year.
US commercial revenue in excess of $3.144 billion in 2026, representing a growth rate of at least 115%.
Full-year 2026 adjusted income from operations of $4.126 billion to $4.142 billion.
Full-year 2026 adjusted free cash flow of $3.925 billion to $4.125 billion.
GAAP operating income and net income expected in each quarter of 2026.
Rule of 40 score guided to 118% for full year 2026.
Strategic commercial contracts revenue anticipated to be less than $7 million in 2026, or less than 0.1% of full year revenue.
Company expects expenses to increase in 2026 while remaining committed to investing in product pipeline and elite technical talent, while delivering sustained GAAP profitability.
Product and Technology Innovation
Ontology identified as secret weapon enabling rapid feature development and replacement of third-party software functionality.
Foundry serving as operating system with 97% of employees using it daily.
Over 1 billion API gateway requests per week from applications built by customers on top of AIP with OSDK.
Maven coordinating with UAV assets through new Maven Edge agent enabling fully autonomous mission execution.
Root cause analysis coverage improved from less than 20% to over 99% in less than a week for mature weapon system.
40x improvement in throughput achieved for brand new weapon system still changing designs.
