Cloud Stocks: Palantir Delivers through Government Contracts

Yesterday Palantir (NYSE: PLTR) announced its first quarter earnings that outpaced market expectations. Driven by strong government contracts, the company raised its outlook for the year as well. 

Palantir’s Financials

Palantir’s revenue for the quarter grew 39% to $884 million, ahead of the market’s expectations of $863 million. On an adjusted basis, net income came in at $0.13 per share, which was in line with the market’s forecast.

Its commercial revenues grew 71% to $255 million, while its government segment sales improved 45% to $373 million. 

Palantir expects its U.S. commercial revenues to grow to $1.178 billion this year. It also increased its full-year revenue outlook to between $3.89-$3.90 billion, ahead of an earlier outlook of $3.74-$3.76 billion. The company expects revenues of $934-$938 million in the current quarter. Analysts were looking for revenues of $3.75 billion for the year. 

Palantir’s Government Focus

Palantir is benefiting from the big inroads it has within Government agencies. According to recent reports, Palantir is part of the group working with the Department of Government Efficiency (DOGE) to build a “mega API” that will help DOGE access Internal Revenue Service (IRS) records. Reports suggest that DOGE is looking to put together a repository of data pulled from various agencies including the IRS, the Social Security Administration and Health and Human Services to accelerate some of its government overhauling plans. The API could be used to access, and then, migrate this data to the cloud. Palantir has not yet signed a contract with DOGE for the IRS records, and it is currently identifying the next steps to build this API.

Earlier this month though, Palantir announced that it had won a $30 million contract with the U.S. Immigration and Customs Enforcement (ICE) agency to create an immigration Lifecycle Operating System to be used in deportations. The Department of Homeland Security (DHS) contract with Palantir will provide the DHS and ICE with access to a big dataset that could help immigration officials more quickly identify who is undocumented in the US and potentially eligible for deportation.

Its stock is currently trading at $124.28 with a market capitalization of $287 billion. The stock had climbed to a 52-week high of $125.41 in February this year. It has grown significantly from the 52-week low of $20.50 that it was trading at a year ago.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

Photo Credit: Cory Doctorow/ Flickr

This segment is a part in the series : Cloud Stocks