Palantir's revenue jumps 96%, but shorter enterprise contracts raise questions

Palantir, a U.S. software company that sells data analytics and artificial intelligence (AI) products, released its third-quarter results on Monday. Revenue rose 96% year over year to $2.31 billion, the first time quarterly revenue has topped $2 billion. Even so, the stock traded slightly down on Tuesday, as signs emerged that growth in its commercial business may be slowing.

Results beat forecasts

Revenue grew 20% from the previous quarter and exceeded analysts' expectation of $2.18 billion. Adjusted earnings per share came in at $0.44, against a forecast of $0.41. The company also raised its full-year revenue guidance.

For the first time, Palantir's U.S. commercial revenue ($984 million, up 148% from a year earlier) exceeded its U.S. government revenue ($953 million). Companies are choosing its AI software because it lets them run frontier models and custom-train open-weight models securely, without sharing data or business processes with outside AI labs. Palantir also provides engineers who work alongside customers to tailor the software.

A cautionary signal

CEO Alex Karp told analysts that in the commercial segment, deals are moving faster, deployment is quicker and contracts are shorter, but can be expanded significantly. Corporations are willing to try AI software quickly, without their usual bureaucracy, but they are also more ready to cancel contracts.

Total contract value from U.S. enterprises was $1.46 billion in the quarter, down from a record $2.13 billion in the previous one. That points to slower sales, at least for the latest quarter. Historically, many enterprises make their largest technology purchases in the final quarter of the year. The company raised its U.S. commercial revenue guidance to more than $3.559 billion, representing growth of at least 143%.