Palantir Technologies Inc Earnings - Q4 2025 Analysis & Highlights
Palantir Technologies Inc. reported a historic Q4 2025 performance, with record revenue growth and expanding profitability, driven by the accelerating demand for its AI platform (AIP), particularly in the US commercial and government sectors. The company highlighted its unique position in leveraging AI for enterprise autonomy and its strategic focus on reindustrialization efforts, while also addressing the challenges and opportunities in international markets.
Key Financial Results
Overall revenue surged 70% year-over-year in Q4, reaching $1.407 billion, and 56% year-over-year for the full year 2025, totaling $4.475 billion.
Adjusted operating income in Q4 was $798 million, representing a 57% margin, exceeding prior guidance by 500 basis points.
Full-year 2025 adjusted operating income was $2.3 billion, with a 50% margin, an 1,100 basis point expansion compared to 2024.
Adjusted free cash flow for the full year was $2.3 billion, representing a 51% margin and 82% growth year-over-year.
GAAP operating income for Q4 was $575 million, representing a 41% margin, and for the full year was $1.414 billion, representing a 32% margin.
GAAP net income for Q4 was $609 million, representing a 43% margin, and for the full year was $1.625 billion, representing a 36% margin.
GAAP earnings per share (EPS) was $0.24 for Q4 and $0.63 for the full year.
Adjusted earnings per share (EPS) was $0.25 for Q4 and $0.75 for the full year.
The Rule of 40 score reached 127% in Q4, up 46 points year-over-year and 13 points quarter-over-quarter.
Total Contract Value (TCV) bookings reached a record $4.3 billion in Q4, up 138% year-over-year.
Customer count grew 34% year-over-year and 5% sequentially to 954 customers.
Trailing 12-month revenue from the top 20 customers increased 45% year-over-year to $94 million per customer.
Net dollar retention was 139%, an increase of 500 basis points from the prior quarter.
Total remaining deal value was $11.2 billion, an increase of 105% year-over-year and 29% sequentially.
Remaining performance obligations were $4.2 billion, an increase of 144% year-over-year and 62% sequentially.
Business Segment Results
US business revenue surpassed $1 billion for the first time in Q4, growing 93% year-over-year and 22% sequentially to $1.076 billion.
Full-year US revenue grew 75% year-over-year to $3.320 billion.
US commercial business revenue grew 137% year-over-year and 28% sequentially to $507 million in Q4.
Full-year US commercial revenue grew 109% year-over-year to $1.465 billion.
US government business revenue grew 66% year-over-year and 17% sequentially to $570 million in Q4.
Full-year US government revenue grew 55% year-over-year to $1.855 billion.
International commercial revenue grew 8% year-over-year and 12% sequentially to $171 million in Q4.
Full-year international commercial revenue grew 2% year-over-year to $608 million.
International government revenue grew 43% year-over-year and 9% sequentially to $160 million in Q4, bolstered by work in the UK.
Full-year international government revenue grew 47% year-over-year to $547 million.
Commercial TCV bookings were $2.6 billion in Q4, representing 161% growth year-over-year and 83% sequentially.
US commercial TCV bookings were $1.3 billion in Q4, representing 67% growth year-over-year, and $4.3 billion for the full year 2025, a 161% increase.
International commercial TCV bookings were $1.3 billion in Q4, driven by long-term renewals.
Industry Trends and Dynamics
The rapid advancement of AI models is driving the commoditization of cognition.
There is a need to differentiate between those supplying the commoditization of cognition and those scaling the leverage made possible by it.
The market is seeing a shift from AI adopters to AI native enterprises.
Speed to production and transformational scale is becoming existential for businesses.
In an era of intensifying global threats and budgetary pressure, governments are turning to effective software for speed, precision, and decision advantage.
There is a real hesitancy to adopt advanced AI products in the West outside of America, with China and America leading in adoption.
The reindustrialization of the US, particularly in military-related sectors, is a major effort.
Competitive Landscape
Palantir is positioned as the only enterprise software company focused on scaling the leverage of AI models in production, delivering real-world value.
The company considers itself an "N of one" in the enterprise software space.
Customers who have adopted Palantir's AI solutions are defining the future of their industries, while others are struggling for survival.
Palantir's ontology is highlighted as a secret weapon that allows customers to replace third-party software and develop new features rapidly.
The company emphasizes that its products are implementation and orchestration machines, not merely software.
Palantir's approach is seen as inverting the stack, proving that investment in its solutions can have a disproportionate impact on both top and bottom lines.
The company has direct relationships with clients in defense, intelligence, and commercial sectors, without intertwined economics or co-investments.
Growth Opportunities and Strategies
AIP continues to fundamentally transform how quickly customers realize value, collapsing the time from initial engagement to transformational impact.
Existing customers are expanding faster and larger, with examples of significant ACV increases.
New customers are starting with substantial initial deals, such as a $96 million deal with a healthcare company and an $80 million deal with an engineering services company.
The US Navy awarded Palantir a contract worth up to $448 million to modernize the shipbuilding supply chain.
Hivemind is being used to develop novel solutions to emerging challenges and identify hidden opportunities, with plans to invest in closing the loop between its output and autonomous execution.
AI FDE is capable of powering complex SAP ERP migrations and is being generalized for a broader set of problems.
Maven usage is at all-time highs in the Joint Force and is being rolled out to all combatant commands, with new capabilities like Maven Edge agent (Mage) for coordinating UAV assets.
AIP is becoming the default builder platform in the Department of War, with uniform service members and other entities building AI applications.
Gotham's new suite of integrated capabilities (Kairos, Nexus, Workbench) is transforming battlefield complexity into lethality.
Warp Speed is building momentum across American industry, with Ship OS accelerating submarine production and sustainment.
Palantir is launching an American Tech Fellowship to upskill users at suppliers and shipyards in the submarine industrial base to build their own AI applications.
The company is focused on transforming large institutions and generating significant revenue from them.
There are opportunities to apply the "OS" concept (like Ship OS) to other areas such as ammo, missiles, pharmaceuticals, and data centers.
Financial Guidance and Outlook
For Q1 2026, revenue is expected to be between $1.532 billion and $1.536 billion.
Adjusted income from operations for Q1 2026 is expected to be between $870 million and $874 million.
For full year 2026, revenue is expected to be between $7.182 billion and $7.198 billion, representing 61% growth year-over-year at the midpoint.
US commercial revenue for full year 2026 is expected to be in excess of $3.144 billion, representing a growth rate of at least 115%.
Adjusted income from operations for full year 2026 is expected to be between $4.126 billion and $4.142 billion.
Adjusted free cash flow for full year 2026 is expected to be between $3.925 billion and $4.125 billion.
The company anticipates GAAP operating income and net income in each quarter of 2026.
The Rule of 40 score for full year 2026 is guided to be 118%.
Revenue from strategic commercial contracts is anticipated to be between $1 million and $3 million in Q1 2026, and less than $7 million for full year 2026.
Expenses are expected to increase in 2026 due to continued investment in the product pipeline and elite technical hiring, while maintaining sustained GAAP profitability.
