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2017 IPO Prospects: Palantir Finally Mulling an IPO

Posted on Thursday, Feb 16th 2017

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According to a report by Zion Market Research, the Advanced Analytics Market is estimated to grow from $10.7 billion in 2015 to $60.44 billion in 2021. That translates to a compounded growth rate of 33% each year. Palo Alto-based Palantir leverages advanced analytics capabilities to help government and financial agencies ensure safety of citizens and their customers. After months of opposing the idea of going public, Palantir is finally expected to be considering a public listing.

Palantir’s Financials

Palantir was founded in 2004 by Peter Thiel, Nathan Gettings, and Joe Lonsdale who wanted to create a software that would be able to integrate, visualize, and analyze data while ensuring security. Palantir was initially set up as a government-supported initiative established to improve security globally. But soon the founders realized that the analytic software could be leveraged by organizations to secure their assets. Ultimately, Palantir evolved into a software that can be used by intelligence, defense, law enforcement, and financial communities for tasks such as fraud detection, tracking terrorists, human trafficking, financial crimes, and disease outbreaks.

Palantir is privately held and does not disclose any financials. Analysts estimate that the company’s revenues came in at over $1 billion in 2014 and grew to $1.7 billion in 2015. It was not profitable till last year, but believes that it will turn profitable this year.

Palantir has raised $2.4 billion in funding so far with investments from ARTIS Ventures, Benjamin Lang, Founders Fund, Glynn Capital Management, In-Q-Tel, IT Ventures, Jeremy Stoppleman, Keith Rabois, Kortschak Investments, L.P., Mithril Capital Management, Reed Elsevier Ventures, and Ulu Ventures. Its last round was held last month, but the company did not disclose details on the funding amount or valuation. Prior to that, it had raised $20 million in November at an undisclosed valuation. In December 2015 it had raised $880 million at a valuation of $20 billion.

Palantir’s founders have been vocal about not wanting to go public, because it believed that large public companies find it difficult to recruit talent. But the move ended up backfiring as existing employees were finding it difficult to cash out their options and were feeling dissatisfied. Employees were posting complaints about the company’s stock in private Facebook groups. Last year, some employees also tried to sell a block of shares. Palnatir believes that an IPO would help resolve some such issues.

Palantir’s Government Tie-Ups

Analysts are particularly hopeful that the company will go public soon in the current political scenario. Peter Thiel has been a close supporter of US President elect Donald Trump and is Trump’s closest tech advisor. Most tech billionaires have been vocal about their opposition to Trump. After he announced the immigration ban last month, many tech companies joined hands to oppose the ban. While his close ties with the current government may not necessarily mean anything significant for Palantir, it is no news that politics is becoming more and more integrated with economics in the United States. Additionally, Palantir’s counter-terrorism offerings, at times, do seem to rely on invasion of privacy, and will probably fit in line with the president’s own law-and-order beliefs.

Palantiir’s recent valuation is not known. As I said earlier, I would like to see its detailed financials before judging its valuation. Nonetheless, if indeed the company makes around $2 billion in revenues, then the ~$20 billion valuation could be justified.

Photo Credit: Cory Doctorow/Flickr.com

This segment is a part in the series : 2017 IPO Prospects

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