Palantir Technologies Inc. ((PLTR)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The latest Palantir Technologies Inc. earnings call radiated confidence as management celebrated an exceptional quarter marked by surging U.S. demand, record-setting AI-driven revenue momentum, expanding profitability, and robust cash generation, even while acknowledging lingering geographic concentration risks and slower adoption overseas.
Record Revenue Growth
Palantir posted its fastest growth as a public company with Q4 revenue up 70% year over year to $1.407 billion, outpacing even the 19% sequential lift; full-year 2025 revenue climbed 56% to $4.475 billion, underscoring a business scaling rapidly on the back of AI-powered demand.
US Business Surge
American customers fueled the acceleration: U.S. revenue hit $1 billion in the quarter—77% of the total—growing 93% year over year and 22% sequentially, while U.S. commercial revenue alone soared 137% year over year to $507 million in Q4.
Rule of 40 & Profitability Expansion
Operational efficiency remains a standout, as Palantir’s Rule of 40 score leapt to 127 in Q4, supported by a 57% adjusted operating margin that produced $798 million in adjusted operating income for the quarter and $2.254 billion for the year at a 50% margin.
Record TCV Bookings and Strength in Bookings
Bookings hit new highs with $4.3 billion in total contract value, up 138% year over year, including $2.6 billion from commercial clients; duration-weighted TCV surged 166%, reflecting deepening customer commitments across industries.
Customer Expansion & Strong Retention
The customer roster expanded 34% to 954 logos, yet the real story is wallet share: top-20 customers increased trailing-12-month revenue 45% to $94 million each, pushing net dollar retention to an impressive 139%.
Robust Cash Generation
Cash from operations reached $777 million in Q4 with $791 million in adjusted free cash flow, both surpassing 55% margins; the full year delivered $2.27 billion in adjusted free cash flow and left Palantir sitting on $7.2 billion in cash and equivalents.
Notable Customer Wins & Use-Case Scale
Management highlighted nine-figure and multiyear commitments across utilities, energy, healthcare, engineering services, and defense—including a U.S. Navy contract worth up to $448 million—showcasing the broadening range and scale of Palantir’s deployments.
Product Momentum — AIP, Hive Mind, AIFD, Warp Speed
AI Platform (AIP) innovations, from rapid SAP migrations via AIFD to Maven and AIP edge agents, are compressing time-to-value; one enterprise reported 97% of employees using Foundry daily, illustrating sticky, pervasive adoption.
Sluggish International Commercial Growth
Outside the U.S., momentum lagged: international commercial revenue rose just 8% year over year in Q4 and 2% for the full year, revealing adoption challenges abroad that management concedes will take time to overcome.
High US Concentration and Geographic Risk
The company’s reliance on America—now 77% of revenue—underscores concentration risk, with leadership citing limited bandwidth and slower uptake across Europe, Canada, and allied markets as a strategic vulnerability.
Rising Adjusted Operating Expenses
Adjusted operating expenses climbed 34% year over year in Q4 to $608 million as Palantir pours capital into AIP development and elite technical hiring, suggesting ongoing pressure to balance growth investments with margin discipline.
Stock-Based Compensation and GAAP Metrics
Despite blockbuster adjusted results, GAAP earnings remain modest—$0.63 EPS for the year—due to $684 million of stock-based compensation and related payroll taxes, an accounting drag investors must weigh.
Dependence on Large Customer Expansions
Growth is disproportionately driven by deepening relationships with existing giants; customer count rose a healthy 34%, yet revenue surged 70%, signaling continued exposure to a concentrated cohort of big spenders.
Strategic Commercial Contracts Contribute Negligibly
Strategic commercial agreements provided just $2.1 million in Q4 revenue, and management expects less than $7 million for all of 2026, highlighting how little these contracts matter to near-term results despite their strategic intent.
Forward Guidance
Palantir projects Q1 2026 revenue of $1.532–$1.536 billion with adjusted operating income near $872 million, while full-year 2026 guidance calls for roughly $7.19 billion in revenue, more than $4.13 billion in adjusted operating income, $3.925–$4.125 billion in free cash flow, a Rule of 40 score of 118%, and triple-digit growth in U.S. commercial sales, albeit with minimal contribution from strategic contracts.
The call culminated in a bullish tone: Palantir’s AI-focused U.S. engine is delivering record growth, profitability, and cash, even as management remains mindful of geographic and customer concentration risks that could temper the next leg of expansion.