Earnings Season 11/7/24

Earnings Season 11/7/24

Violence and AI

Earnings Season Newsletter - Palantir Q3 2024

Sure your company has AI, but does it bring Violence?

In This Issue

• Palantir Q3 2024 Highlights: Detailed earnings performance, AI breakthroughs, and market positioning.

• Insights for CEOs: Key takeaways on AI, enterprise deployment, and government applications.

• Economic Calendar Highlights: Relevant dates for tracking tech sector momentum.

How to use Earnings Season: You are looking for one nugget you can share with an executive you are talking with or one talking point you can put in an email to set you apart from the crowd as an advisor. 

Palantir Q3 2024 Earnings Highlights

1. Date of Earnings Call & Quarter

Date: November 4, 2024
Quarter: Q3 2024

2. Earnings Summary

Palantir’s Q3 2024 results reflect impressive growth, with a revenue increase of 30% year-over-year. Adjusted EPS reached $0.10, while GAAP EPS was $0.06. This quarter highlighted substantial gains in both the U.S. commercial and government sectors, driven by Palantir’s AI platform, AIP, and its robust adoption across industries and government applications.

3. Key Financial Data

• Revenue: $726 million, up 30% YoY

• Adjusted EPS: $0.10

• GAAP EPS: $0.06

• Cash Flow: $420 million from operations, adjusted free cash flow of $435 million (60% margin)

• Full-Year Guidance: Raised to $2.805 billion - $2.809 billion, reflecting a 26% YoY growth rate​
  .

4. Notable Quotes from Management

• Ryan Taylor, CRO: "Revenue grew 30% year-over-year in Q3, driven by an intensifying AI revolution that the U.S. is rapidly driving. Our U.S. government business revenue growth accelerated to 40% year-over-year and 15% sequentially"​
  
  .

• Shyam Sankar, CTO: "The market has been focused on AI supply, the models... but more importantly, models across both open and closed source are becoming more similar, all while pricing for inference is dropping like a rock. This only strengthens our conviction that the value is in the application and workflow layer, which is where we excel"​
  
  .

• Alex Karp, CEO: "We made… a commitment to make America and its allies the dominant force in the world… to bring violence and death to our enemies, while making targeting and general issues of safety better for our allies and for Americans"​
  
  .

5. Significant Questions & Answers

• On AI Differentiation: Shyam Sankar emphasized the unique value of Palantir’s platform, noting, "The differentiation starts with the ontology... we have a decade-long head start"​
  
  .

• Bootcamp Conversions: David Glazer highlighted fast customer conversions, with clients moving from bootcamp to seven-figure contracts in less than two months. "We’re seeing that… in the conversations we have with customers and the expansions we're seeing at customers"​
  
  .

6. Economic Insights

Palantir’s strong U.S. commercial growth—54% year-over-year—mirrors an accelerating demand for AI-driven efficiency across industries. In a volatile global economy, AI adoption in essential sectors like defense and manufacturing provides Palantir with consistent demand, particularly from U.S. government agencies committed to technological advancement.

7. Business Insights

Palantir’s competitive edge is evident in its integration of AI into critical workflows, from military operations to enterprise automation. As CEO Alex Karp remarked, the platform’s success lies in Palantir’s focus on “infrastructure, not experiments,” creating meaningful differentiation in a competitive AI landscape​

.8. Assessment of Market Expectations

Palantir exceeded high expectations with its growth metrics and raised guidance, signaling strong market confidence. By delivering transformative AI solutions to both government and commercial sectors, Palantir continues to set itself apart as an AI leader.

9. Points of Interest for CEOs

• Enterprise Application of AI: Palantir’s focus on production-ready AI workflows rather than proof-of-concepts highlights a strategic shift relevant for enterprises looking to implement effective AI.

• U.S. Government Partnerships: CEO Alex Karp’s insights on defense highlight the importance of strategic partnerships with the U.S. government and allies to leverage AI capabilities for national security.

• Scaling with Quality Over Quantity: Palantir’s approach of securing deep, impactful partnerships rather than a large volume of clients sets an example for companies aiming to maintain high-value, sustainable growth​

Highlights from the Economic Calendar for November

November 7th: FOMC Interest Decision

November 13th: Consumer Price Index (CPI)

November 27th: Gross Domestic Product (GDP)