Palantir (NASDAQ: PLTR) is a stock market cult classic at this stage. With the eccentric and influential Alex Karp at the helm, the backing of industry veterans such as Peter Thiel, and a unique software product offering for multinational companies, it's no surprise it won over investors.
But after a spike and abrupt fall from highs, could there be a reversion to the mean following Palantir's Q4 earnings?
Total revenue in Q3 grew 36% to $392 million, and total U.S. commercial revenue increased by 103% from the year prior. Palantir added 34 new customers in Q3 bringing the total to 203 -- which may not sound like a lot -- but Palantir is targeting the largest companies in the world that will add millions in annual recurring revenue (ARR), not just any old startup that wants to use its services.
That's evident by the numbers too. From the deals closed in Q3, 55 were worth more than $1 million, 33 were worth more than $5 million, and 18 were worth more than $10 million. Some of the big names popping up in the customer line-up include multi-billion-dollar businesses such as Ferrari, Hyundai, and Airbus, as well as Palantir's well-known routes in classified intelligence and national security units.
Its Foundry platform is changing the way companies use data and analytics. It assists in the globalization and management of supply chains, accelerates research, and encourages organizational-wide collaboration for better decision-making in businesses.
Another key product is Apollo; coined the 'Cloud 2.0', which will allow companies to use multi-layered security and privacy for the cloud data and auto-scale solutions using artificial intelligence (AI) to create flexible and agile organizational infrastructure.
It's important to remember that Palantir is still in the early innings, only having joined the public markets 18 months ago. The company has been subject to meme stock circulation which has left its valuation very questionable at times, but the above results are showing promising potential so far -- and possibly -- for its upcoming results.
There are a few concerns though. The nature of Palantir's model is to attain meaningful contracts with large customers. That means that any single deal falling through can have a major impact on the business. Similarly, this can work in its favor, making it a key detail to watch out for in the earnings.
Palantir's customer base doesn't yet offer the diversification of revenue streams that you'd hope for from a company of its size, which makes it highly unpredictable in the short term. But in the long term, if Palantir demonstrates that its services are indispensable, then it could be on to a winner. We'll have to keep an eye on how customer relationships develop and revisit this one in the near future.
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