Palantir Technologies Inc Earnings - Q3 2025 Analysis & Highlights
Palantir Technologies Inc's Q3 2025 earnings call highlighted exceptional financial results driven by strong US performance and AIP demand, a record Rule of 40 score, and raised full-year guidance. Key themes included US commercial growth, government sector contributions, and strategic investments in AI and workforce development.
Key Financial Results
Overall revenue grew 63% year-over-year and 18% sequentially.
US revenue increased 77% year-over-year and 20% sequentially.
The Rule of 40 score reached an unprecedented 114%, up 46 points year-over-year.
Closed the highest TCV quarter ever at $2.8 billion.
Adjusted operating margin of 51%.
Generated $2 billion in adjusted free cash flow on a trailing 12-month basis.
GAAP earnings per share was $0.18.
Adjusted earnings per share was $0.21.
Business Segment Results
US commercial business grew 121% year-over-year and 29% sequentially.
US commercial TCV reached $1.3 billion.
US government revenue grew 52% year-over-year and 14% sequentially.
Commercial revenue grew 73% year-over-year and 22% sequentially to $548 million.
Government revenue grew 55% year-over-year and 14% sequentially to $633 million.
US government revenue grew 52% year-over-year and 14% sequentially to $486 million.
International government revenue grew 66% year-over-year and 16% sequentially to $147 million.
Capital Allocation
Repurchased approximately 2.6 million shares as part of the share repurchase program.
Remaining authorization of $880 million for share repurchases.
Ended the quarter with $6.4 billion in cash, cash equivalents, and short term US Treasury securities.
Industry Trends and Dynamics
Demand for enterprise AI solutions is increasing, with organizations recognizing the need for enterprise-wide AI adoption.
Customers are converting to larger enterprise agreements in shorter timeframes.
AI is a strategic imperative owned at the C-suite level.
The US Army is consolidating and centralizing on Vantage, the Army data platform built on Foundry and AIP.
Competitive Landscape
AIP is positioned as the only platform delivering transformational impact in the enterprise AI market.
Palantir emphasizes its unique approach of sharing AI leverage with customers.
Palantir differentiates itself by focusing on value creation for customers.
Realizing value from AI in the enterprise requires the elegant integration of LLM's workflow and software, and this is only possible with ontology.
Macroeconomic Environment
Focus on re-industrialization in America through initiatives like Warp Speed and the American Tech Fellowship.
Emphasis on the American worker driving re-industrialization and American prosperity.
Discussion of GDP growth and the portion available to the American worker.
Growth Opportunities and Strategies
Focus on delivering production capabilities that turn AI from promise into performance.
Continued investment in AIP and technical hiring.
Expanding AIP to the far edge with Edge Ontology for mobile devices and embedded software.
Focus on targeted growth opportunities in Asia, the Middle East, and beyond for international commercial business.
Emphasis on US commercial growth.
The company is downstream from the value creation.
Financial Guidance and Outlook
Q4 2025 revenue is expected to be between $1.327 billion and $1.331 billion.
Q4 2025 adjusted income from operations is expected to be between $695 million and $699 million.
Full year 2025 revenue guidance is raised to between $4.396 billion and $4.400 billion.
Full year 2025 US commercial revenue guidance is raised to an excess of $1.433 billion, representing a growth rate of at least 104%.
Full year 2025 adjusted income from operations guidance is raised to between $2.151 billion and $2.155 billion.
Full year 2025 adjusted free cash flow guidance is raised to between $1.9 billion and $2.1 billion.
Expect GAAP operating income and net income in each quarter of this year.
Guiding to a Rule of 40 score of 102% for the full year.
