Palantir signals $4.15B 2025 revenue target with 85% growth in U.S. commercial amid record-breaking Q2

Earnings Call Insights: Palantir Technologies Inc. (PLTR) Q2 2025

Management View

• Ryan D. Taylor emphasized the company’s “tremendous second quarter results” and noted that “U.S. business is the engine of this transformation.” U.S. commercial revenue climbed 93% year-over-year, surpassing U.S. government revenue growth of 53%. Taylor highlighted, “We surpassed $1 billion in quarterly revenue for the first time as our overall revenue growth continued to rapidly accelerate to 48% year-over-year growth in Q2.”
• Taylor noted that Palantir booked its “highest TCV and ACV ever last quarter with $2.3 billion in TCV and $684 million in ACV,” closing 157 deals worth $1 million or more, including 42 deals over $10 million. He reported expanding impact among top customers, with “our top 20 customers now average $75 million a year in trailing 12- month revenue, up 30% from a year ago.”
• Shyam Sankar described the “realization and acceleration of our vision of Ontology web services as an architectural concept for our customers.” Sankar detailed that “AIP isn’t just software our customers use, it’s software, our customers are building their software on,” and highlighted accelerating adoption among frontline workers and rapid deployment of AI-driven solutions in U.S. industries.
• David A. Glazer stated, “We had an unprecedented second quarter, surpassing $1 million of revenue in the quarter for the first time and delivering our highest Rule of 40 score ever of 94.” Glazer added, “Q2 revenue growth accelerated to 48% year-over-year, exceeding the high end of our prior guidance by nearly 1,000 basis points.”
• Alexander C. Karp reflected, “There’s no authentic way to be anything, but have enormous pride and gratefulness about these extraordinary numbers…if you look at a kind of more qualitative version of Palantir, we did this with no compromise in terms of what we believe.”

Outlook

• Glazer provided guidance for Q3 2025, stating, “we expect revenue of between $1.083 billion and $1.087 billion and adjusted income from operations of between $493 million and $497 million.”
• For full year 2025, Glazer announced, “we are raising our revenue guidance to between $4.142 billion and $4.150 billion. We are raising our U.S. commercial revenue guidance to an excess of $1.302 billion, representing a growth rate of at least 85%.”
• The company also raised its adjusted income from operations guidance to between $1.912 billion and $1.920 billion, and adjusted free cash flow guidance to between $1.8 billion and $2 billion.

Financial Results

• Palantir reported second quarter revenue of $1.004 billion, representing 48% year-over-year and 14% sequential growth.
• U.S. revenue reached $733 million, up 68% year-over-year and 17% sequentially.
• Adjusted operating margin expanded to 46%, with adjusted income from operations at $464 million.
• Adjusted free cash flow was $569 million, with a margin of 57%.
• GAAP net income totaled $327 million, representing a 33% margin, and GAAP earnings per share was $0.13. Adjusted earnings per share was $0.16.
• Customer count increased 43% year-over-year to 849.
• TCV bookings hit $2.3 billion, up 140% year-over-year, surpassing the prior high by nearly $0.5 billion.
• Net dollar retention rose to 128%, up 400 basis points from last quarter.

Q&A

• Christina asked about making AI more useful for frontline workers beyond LLMs. Shyam Sankar replied that “AI is giving the American worker superpowers…our lived experiences that some of those creative AI applications are coming from the blue-collar worker.” Sankar also discussed efforts to create the American tech fellowship to empower and credential these workers.
• Daniel Harlan Ives (Wedbush): “Can you just hit on — you’re basically doing this without a direct sales force…are you going to go down that path?” Alexander C. Karp explained, “We rejected an idea of like basically the way software is often done useless product that becomes parasitic…our primary sales force now, and I think likely in the future, are going to be current customers telling other customers.” Ryan D. Taylor added that customer leadership is now seeking enterprise-wide rollouts from the onset.
• Mariana Perez Mora (BofA): “One on the AI action plan that the White House put out…what excites you the most?…How do you make sure that you are ahead of everyone else and keep attracting the right people?” Sankar highlighted the focus on “implementation” and strong retention through “giving people access to problems that matter.” Karp emphasized Palantir’s unique culture, rapid onboarding, and the company’s credential in tech.

Sentiment Analysis

• Analysts maintained a positive tone, focusing on growth scalability and cultural differentiation, with Daniel Ives expressing interest in the go-to-market model and Mariana Perez Mora probing talent retention and policy impacts.
• Management displayed strong confidence in prepared remarks and Q&A, with Karp describing the quarter as “once in a generation truly anomalous” and Sankar repeatedly emphasizing the transformative impact of Palantir’s AI solutions.
• Compared to the previous quarter, both analysts and management exhibited heightened enthusiasm, with management’s tone more celebratory and analysts increasingly focused on the scale and sustainability of growth.

Quarter-over-Quarter Comparison

• Revenue growth accelerated from 39% year-over-year in Q1 to 48% in Q2.
• U.S. commercial revenue growth rose from 71% to 93% year-over-year.
• The Rule of 40 score increased from 83 in Q1 to 94 in Q2.
• Guidance for full-year revenue was raised from a midpoint of $3.896 billion in Q1 to $4.146 billion in Q2, while U.S. commercial revenue guidance increased from $1.178 billion to $1.302 billion.
• Customer count growth, net dollar retention, and total contract value also showed notable sequential improvement.
• Management’s confidence and bullish tone were more pronounced this quarter, with an emphasis on American industrial revitalization and global expansion.
• Analysts shifted from questions about competitive advantage and government spending in Q1 to sales strategy, AI adoption by frontline workers, and talent acquisition in Q2.

Risks and Concerns

• Management acknowledged a “significant ramp in expenses in the third quarter due to the seasonality of new hire starts.”
• International commercial revenue declined 3% year-over-year, suggesting ongoing regional headwinds outside the U.S.
• Taylor and Sankar noted that while targeted growth opportunities exist in Asia and the Middle East, the primary focus remains on the U.S. market.
• Management reiterated the importance of continued investment in “elite technical talent” and the need to “deliver on our goals of sustained GAAP profitability.”

Final Takeaway

Palantir’s second quarter marked a record-breaking performance, driven by surging U.S. commercial demand, exceptional growth in government contracts, and robust expansion of AI-powered solutions. With revenue surpassing $1 billion for the first time, improved margins, and a substantial raise in full-year guidance, the company is positioning itself as a key enabler of the American AI revolution. Management’s bullish outlook, reinforced by expanding top-tier customer relationships and a unique go-to-market strategy, signals confidence in sustaining growth through 2025 and beyond.

Read the full Earnings Call Transcript