Palantir logs earnings beat, but stock cools down in the wake of sharp rally

By Emily Bary

Palantir's revenue outlook for the second quarter exceeds expectations

Palantir Technologies Inc. shares ran up on Monday ahead of the software company's latest earnings report, but they were giving back those gains in the extended session after the results came out.

Shares of Palantir (PLTR) were off about 8% in after-hours trading Monday, partly reflecting a high investor bar - Palantir's stock is up 47% so far this year, and it gained 8% in Monday's regular session alone.

Palantir, though, cited continued strong traction for its artificial-intelligence platform, known as AIP, as it boosted its outlook on Monday.

The software company now expects to generate full-year revenue of $2.677 billion to $2.689 billion, whereas its prior forecast was for $2.652 billion to $2.668 billion. The second-quarter revenue forecast of $649 million to $653 million exceeded the consensus view, which calls for $643 million.

Palantir also now anticipates $868 million to $880 million in adjusted income from operations for the full year, whereas it was previously calling for $834 million to $850 million.

A "growing portion of the American corporate sector is now coming to us, more aware than ever of how significant artificial intelligence and large-language models will be in reshaping the industries within which they operate," Chief Executive Alex Karp said in a letter to shareholders.

The raised outlook comes on the heels of a better-than-expected first quarter for Palantir. The company reported revenue of $634 million, up from $525 million a year before, while analysts tracked by FactSet were expecting $615 million.

Net income came in at $106 million, or 4 cents a share, up from $17 million, or 1 cent a share, in the year-earlier period. This marked Palantir's sixth quarter in a row of GAAP profitability. Analysts were expecting 3 cents a share in GAAP earnings.

On an adjusted basis, the company reported 8 cents a share in earnings, in line with the FactSet consensus.

Chief Revenue Officer Ryan Taylor told MarketWatch that Palantir's software stands out in the field of generative AI. While other AI software offerings focus on chat applications, Palantir's product uses large-language models to drive operational outcomes based on customer data.

The company's U.S. commercial business grew 68%, excluding the impact of strategic investments. "It's worth noting that customers are looking for how do we do more, faster," Taylor said.

Meanwhile, Palantir's U.S. government business grew 12% from a year earlier and 8% from a quarter earlier, and it's in the midst of a reacceleration. Taylor called out the company's "obviously impactful" Titan deal with the U.S. Army that opens up "a whole new world of opportunities in U.S. government."

See more: Palantir's Army-contract win sends stock surging

In winning the Army award, Palantir became the first software company to win a prime contract for a hardware system, Taylor said.

-Emily Bary

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05-06-24 2010ET

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