Palantir Earnings 📡
Palantir stock is up 20% today after its better than expected earnings report.
Palantir is a US software company specializing in big data analytics. It was founded in 2004 by Peter Thiel, Alex Karp and others and currently has a share price of roughly $20, giving it a market cap of $43.25 billion.
It works closely with the US Department of Defence, local governments and private companies, especially those in the healthcare and finance sectors.
Its earnings report yesterday was much better than analysts expected, let’s have a look.
Q4 2023 Highlights
Total revenue grew +20% Y/Y and +9% Q/Q to $608 million
US commercial customer count grew +55% Y/Y and +22% Q/Q
Ended the quarter with $3.7 billion in cash/cash equivalents and no debt.
Fifth consecutive profitable quarter and record net income of $93 million.
During the quarter Palantir agreed a strategic partnership with Israel to supply it with Palantir’s technology and “help the country’s war effort.”
The company was chosen to help the UK’s NHS deliver a data platform to “further enable doctors, nurses and other NHS professionals to make better use of data, helping to improve the care and services provided to patients.” It has already brought down waiting times at some hospitals by as much as 28%.
Full Year 2023 Highlights
US commercial revenue grew +36% Y/Y to $457 million.
Revenue grew +17% Y/Y to $2.2 billion.
Customer count increased +35%Y/Y to 497, up from 367 a year ago.
First profitable year with $210 million of net income; a 9% margin.
Thoughts
The earnings were much better than even the most optimistic analysts had expected. Jefferies raised its price target from $13 to $22 and Citi analysts raised it to $20, up from the previous $10. Dan Ives of Wedbush Securities now has a price target of $30 on the stock.
In a letter to shareholders, CEO Alex Karp, said that Palantir’s two decades of investment are finally starting to pay off and that demand for large language models is unrelenting.
He also said Palantir’s AIP (Artificial Intelligence Platform) can now be up and running in a few hours on a customer’s existing system. It once took weeks or months. AIP will be the future of the company.
The future for the company looks bright but it’s highly valued after its nearly 20% jump today. A market cap of $43 billion on $2.2 billion of revenue seems expensive, especially when it’s only expected to grow in the mid-teens on a percentage basis this year. But that’s what you have to pay for tech companies nowadays.
Its fourth straight quarter of profitability also now means it’s eligible for inclusion in the S&P 500. This, its large cash position coupled with no debt and a large moat means Palantir warrants further research. I won’t be adding to my position anytime soon as I feel I already hold enough but long-term investors might want to do more research into the company.
“Our results reflect both the strength of our software and the surging demand that we are seeing across industries and sectors for artificial intelligence platforms” - CEO, Alex Karp.
Thanks for reading 🙏
Harry
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I was trading $PLTR as the stock was closing its bottom. One thing bothers me, though, from a long-term perspective: There's very little institutional interest in $PLTR. The percentage of shares held by institutions is about 34% (you may check on nasdaq.com). I have no explanation for this but this is a big red flag for me. The trillion-dollar boys usually spot companies with large potential well before everyone else. If they're not invested, they're not convinced by $PLTR's growth perspectives. This is not to say it won't grow. But something looks suspicious.