Earnings Call Insights: Palantir Technologies Inc. (PLTR) Q3 2025
Management View
- CEO Alexander Karp described the quarter as delivering “arguably the best results that any software company has ever delivered,” emphasizing that “a normal enterprise company should not have a Rule of 40 above 100%.” Karp highlighted the company’s outperformance in U.S. commercial growth and the unique ability to generate both top-line and bottom-line expansion. He also stressed Palantir’s alignment with American workers and the focus on enabling value creation for customers, stating, “when our customers have a unique and triable way of doing something… we empower that.”
- Ryan Taylor, Chief Revenue Officer & Chief Legal Officer, reported “overall revenue grew 63% year-over-year and 18% sequentially,” with U.S. business accounting for 75% of total revenue and growing 77% year-over-year. He noted, “our Rule of 40 score soared to an unprecedented 114%, up 4 points year-over-year and a full 20 points since last quarter alone.” Taylor emphasized that U.S. commercial revenue increased 121% year-over-year and 29% sequentially.
- Taylor underlined that Palantir closed its highest TCV quarter ever at $2.8 billion, with 204 deals worth $1 million or more. He shared anecdotes of rapid contract expansion such as a “leading medical device manufacturer signed a multiyear expansion just 5 months after their initial contract, increasing ACV more than eightfold.”
- CTO Shyam Sankar highlighted the impact of AI Hivemind and AIP native development agent, stating “at 1 customer, 2 human FDEs spawned an army of AI FDEs to migrate a customer off their legacy data warehouse in 5 days.” Sankar also announced the U.S. Army’s public memo to consolidate on Vantage, the Army data platform built on Foundry and AIP.
- CFO David Glazer stated, “We had an outstanding third quarter achieving a Rule of 40 score of 114%, our highest ever by 20 points.” Glazer added, “third quarter revenue grew 63% year-over-year and 18% sequentially to $1.181 billion” and noted Palantir’s “highest ever reported adjusted operating margin of 51%.”
Outlook
- Glazer set Q4 2025 revenue guidance at $1.329 billion, representing 13% quarter-over-quarter growth and 61% year-over-year growth. Full year 2025 revenue guidance midpoint was raised to $4.398 billion, a 53% year-over-year increase and $252 million above last quarter’s guidance. U.S. commercial revenue guidance was raised to an excess of $1.433 billion, indicating at least 104% year-over-year growth—19 points above the previous quarter’s guidance.
- Glazer communicated raised guidance for adjusted income from operations between $2.151 billion and $2.155 billion and adjusted free cash flow between $1.9 billion and $2.1 billion. The company continues to expect GAAP operating income and net income in each quarter of 2025.
Financial Results
- Third quarter revenue was $1.181 billion, with U.S. revenue at $883 million. Commercial revenue grew to $548 million, outpacing government revenue of $633 million. Palantir closed $2.8 billion in TCV bookings for the quarter, a 151% year-over-year increase, and customer count reached 911, up 45% year-over-year.
- Net dollar retention rose to 134%, a 600-basis point increase from the previous quarter. Trailing 12-month revenue from top 20 customers increased to $83 million per customer.
- Adjusted gross margin was 84%. GAAP operating income was $393 million and GAAP net income was $476 million. GAAP earnings per share was $0.18, and adjusted earnings per share was $0.21.
- Cash from operations totaled $508 million, and adjusted free cash flow was $540 million for the quarter. Palantir ended the quarter with $6.4 billion in cash, cash equivalents, and short-term U.S. Treasury securities.
Q&A
- Daniel Ives, Wedbush Securities: “Can you just walk through just the accelerated sales cycles that you’re seeing from so many companies that have gone to the boot camps?” Taylor replied, “We closed $1.3 billion in TCV at 6x on a dollar-weighted duration basis from what it was a year ago,” and explained that customers are now approaching Palantir for enterprise-wide deployments rather than single use cases.
- Mariana Perez Mora, BofA Securities: Asked about changes in customer behavior and accelerated adoption, as well as internal adjustments to meet demand. Taylor responded, “Customers are seeing as we — it’s a continuation of what we’ve been doing, but going deeper and deeper with the customers on that impact.” Sankar highlighted productivity gains: “Our headcount has grown roughly 10%, but revenue grew 63%. How are we doing that? We’ve made our FDEs wildly more productive.”
Sentiment Analysis
- Analyst tone was positive and congratulatory, with questions focused on understanding the drivers of accelerated growth and the depth of enterprise adoption.
- Management maintained a highly confident and enthusiastic tone throughout, with Karp referring to the results as “wildly enthusiastic” and repeatedly highlighting the uniqueness and scale of the company’s performance.
- Compared to the previous quarter, both analyst and management sentiment became even more positive, with a heightened focus on transformational impact and rapid expansion.
Quarter-over-Quarter Comparison
- Palantir raised full-year 2025 revenue guidance from a midpoint of $4.146 billion in Q2 to $4.398 billion in Q3, and U.S. commercial revenue guidance increased from $1.302 billion to $1.433 billion.
- The Rule of 40 score advanced from 94% in Q2 to 114% in Q3, underscoring significant improvement in growth and margin.
- U.S. commercial growth accelerated from 93% year-over-year in Q2 to 121% in Q3, while customer count rose from 849 to 911.
- Management tone shifted from proud and bullish to overtly enthusiastic and celebratory, and analysts increased their focus on enterprise-wide deployments and customer expansion velocity.
Risks and Concerns
- Management acknowledged that growth in Europe remains a drag on overall results and noted, “that growth is being held down by a stagnant Europe, which is still a significant part of our business” (Karp).
- The company expects continued increases in expenses due to product pipeline investments and technical hiring, as noted by Glazer: “We continue to expect expenses to increase in the fourth quarter as we remain committed to investing in the product pipeline and the most elite technical talent.”
- Management also discussed maintaining internal cultural focus and avoiding the adoption of artificial processes, as Karp cautioned against “purchasing fake ways for us that are artificial for us.”
Final Takeaway
Palantir’s management emphasized that the third quarter of 2025 marked a defining moment for the company, with record-breaking revenue growth, margin expansion, and enterprise-wide adoption of its AI platforms. The company raised its full-year 2025 revenue guidance significantly, highlighted accelerating U.S. commercial momentum, and underscored the transformational impact of its technology across both commercial and government sectors. Management conveyed unwavering confidence in sustaining this trajectory while acknowledging the need for ongoing investment and cultural discipline to maintain its growth and competitive edge.