Palantir Reports Record Q3 Revenue as Commercial Sales Surpass Government Contracts
Data analysis company Palantir reported strong third-quarter financial results on Monday, posting record quarterly revenue driven by significant growth in its commercial segment. The company's U.S. commercial revenue eclipsed its U.S. government revenue for the first time in its history. Despite exceeding Wall Street forecasts and raising full-year targets, Palantir's stock traded slightly lower on Tuesday as investors weighed signals of slowing growth in enterprise contract values.
Palantir's quarterly revenue rose 96 percent year-over-year and 20 percent from the preceding quarter to reach $2.31 billion, surpassing analyst projections of $2.18 billion. This marked the first quarter in which the company generated more than $2 billion in revenue. Palantir reported adjusted earnings per share of 44 cents, beating consensus estimates of 41 cents, and issued an upward revision to its full-year revenue guidance.
U.S. Commercial Business Outpaces Government Revenue
A central milestone in the third quarter was the performance of Palantir's U.S. commercial division. Commercial revenue reached $984 million, reflecting a 148 percent increase compared to the same period last year. In comparison, U.S. government revenue totaled $953 million.
Enterprise adoption has been driven largely by demand for Palantir's artificial intelligence software, which enables clients to run frontier models and custom-train open-weight models securely without sharing proprietary data or business processes with external AI laboratories. The company also continues to utilize its forward-deployed engineering model, placing its engineers directly with corporate clients to tailor software solutions.
Shorter Contracts Present Mixed Outlook
Alongside headline growth, the earnings report revealed changes in enterprise purchasing behavior. Corporate clients are increasingly opting for shorter-term trial arrangements. Palantir Chief Executive Officer Alex Karp discussed the dynamic during an earnings call with Wall Street analysts, noting that commercial interactions have become faster to deploy but involve shorter initial contract durations that carry the potential for subsequent expansion.
While enterprise clients are moving quickly to test AI deployments, total contract value closed from U.S. corporate clients stood at $1.46 billion for the quarter. This represented a drop from the record $2.13 billion recorded in the previous quarter, signaling a deceleration in total contract expansion during the period.
Raised Outlook for Full-Year Commercial Revenue
Addressing analysts on the call, Karp expressed confidence in the company's positioning within the enterprise market, characterizing customer retention and engagement as robust. Historically, enterprise technology vendors record their largest contract volume during the fourth quarter of the calendar year.
Looking ahead, Palantir raised its full-year outlook for U.S. commercial revenue, stating it expects the figure to exceed $3.559 billion, which would represent a annual growth rate of at least 143 percent.
