Overview
Since the Report + 29.1%
Revenue grew 93.0% year over year, EPS beat the estimate by 16.0%; the stock rose 29.0% in its first reaction.
- RevenueQ2
- $1.94B
- ▲ 93% YoY
- U.S. Commercial Revenue
- $764M
- ▲ 149% — Record
Verdict
BUYU.S. commercial revenue grew 149% year over year, total revenue rose 93%, and full-year guidance moved higher. The stock leapt 29% on August 4, yet at roughly 61 times sales the price has already paid in advance for years of that growth.
Close on Report DayAug 3
$155.92▲ 29.0%Report-Day Move
- Market Cap(Today)
- ≈ $484 B
- 1Y Return(At Report)
- − 10%
- P/E(At Today's Price · $1.20 · Trailing 12M)
- 167.8
- PEG(Next-year Consensus)
- 4.23
- Net Margin(Trailing 12M)
- 49.0%
Earnings Summary
In 30 Seconds- Revenue rose 93% to $1.94B, and adjusted EPS of $0.41 beat estimates by about 16%.
- U.S. commercial revenue grew 149% to $764M, and full-year revenue guidance was raised to $8.15B.
- The stock jumped 29% on August 4, but at about 61 times sales the price already assumes years of this growth.
The Numbers
Adjusted EPS
$0.41
16% Above Expectation
Adjusted Operating Margin
62%
Rule of 40: 155
Adjusted Free Cash Flow
$1.22B
63% Margin
FY Revenue Guidance
$8.15B
Raised · 82% Growth
Quarterly Revenue ($ Billion)
1.00
Q2 25 · $1.00 B
1.18
Q3 25 · $1.18 B · QoQ + 17.6%
1.41
Q4 25 · $1.41 B · QoQ + 19.1%
1.63
Q1 26 · $1.63 B · QoQ + 16.1%
1.94
Q2 26 · $1.94 B · QoQ + 18.5% · YoY + 92.7%
$2.160–$2.164B
Q3 26E · $2.160–$2.164B · QoQ + 11.7% · YoY + 83.1%
- Q2 25
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26E
Q3 2026 Company Guidance
- Revenue (Q3 26)2.160 – 2.164 billion2.160 billion2.164 billion2.160 – 2.164 billion
Midpoint $2.162 · Market Expectation $2.00Midpoint 8.1% Above Estimate ▲
- Adjusted Operating Income (Q3 26)1.292 – 1.296 billion1.292 billion1.296 billion1.292 – 1.296 billion
Midpoint $1.294 · Roughly 60% MarginHigh Margin Sustained ▲
- Revenue (FY 2026)8.150 – 8.158 billion8.150 billion8.158 billion8.150 – 8.158 billion
82% Annual Growth · From $7.182–$7.198 at the Start of the YearRaised 13.4% ▲ · vs Year-Start
- Adjusted Operating Income (FY 2026)4.889 – 4.897 billion4.889 billion4.897 billion4.889 – 4.897 billion
Midpoint $4.893 · Roughly 60% MarginMargin Target Held ▲
- Adjusted Free Cash Flow (FY 2026)4.5 – 4.7 billion4.5 billion4.7 billion
Midpoint $4.6 · Less Than Half of the Target Banked in the First HalfSecond-Half Weighted
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±8.6% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Government$990 MShare 51.2%▲ 79.0% YoY
- Commercial$945 MShare 48.8%▲ 109.8% YoY
Key Metrics
Closed Total Contract Value
$3.37 B
▲ 49.0% YoYPress Release
U.S. Commercial Remaining Deal Value
$6.24 B
▲ 124.0% YoYPress Release
Operating Cash Flow
$1.22 B
Press Release
Cash and Short-Term Treasuries
$9.20 B
Press Release
Shares are computed over the segment total: $1.94 B. Source: 10-Q.
Metrics come only from the company's own filings; each one names the document it was taken from.
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- Customer Ownership of Data and Models
- Standing Against Parasitic Software Models
- Growth Momentum for Another 18 Months
Summary and Review
Summary
Palantir reported second-quarter 2026 revenue of $1.935 billion after the close on August 3. Growth was 93%, ahead of the roughly $1.84 billion market expectation. Adjusted earnings of $0.41 per share beat by about 16%. The engine was U.S. commercial: revenue reached $764 million, up 149%, the segment's fastest growth ever. U.S. government revenue rose 90% to $809 million. GAAP net income cleared $1 billion for the first time at $1.062 billion, a 55% net margin.
The stock jumped 29% on August 4, nearly its best session ever. The size of the move owed as much to expectations as to the quarter. Before the print PLTR was down over twelve months, well below its $207.52 high. Some investors were pricing in a slowdown; the company showed the opposite. Full-year revenue guidance rose to $8.150-$8.158 billion, or 82% growth. U.S. commercial guidance rose above $3.424 billion, implying growth above 134%. Adjusted free cash flow guidance: $4.5-$4.7 billion.
We score the quarter 90 out of 100. Revenue, earnings, margins, cash flow and guidance all beat, and growth accelerated. The caveat is the price, not the quarter. As of August 6 the shares trade at $155.92, a market value near $375 billion. That is 61 times trailing sales and 135 times earnings. Those multiples assume years of today's pace. One quarter of deceleration could hit the price far harder than the financials. Our valuation guide explains those multiples.
Full Review
The U.S. commercial business is driving growth.
U.S. commercial revenue reached $764 million in the quarter, up 149% from a year earlier and 28% from the previous quarter. It is the fastest rate that segment has ever recorded, and the single line item that changes the picture. The U.S. commercial customer count rose to 653, 35% higher than a year ago. Growth is coming from a widening base as well as from existing customers spending more. Net dollar retention stood at 157%, meaning last year's cohort is spending roughly half again as much this year. That figure improved by 700 basis points in a single quarter. Management ties the momentum to enterprise AI models moving from pilots into production. The fragile part sits in the same place: compounding 149% off a $764 million base is a very different exercise than sustaining it off a $3 billion base.
Profitability now travels with growth.
In software, growth and margin usually eat each other; this quarter did the reverse. Adjusted operating income was $1.194 billion, a 62% margin; adjusted gross margin was 86%. The Rule of 40 score, which adds growth to operating margin, came in at 155. That is nearly four times the 40 threshold the industry treats as healthy, and 10 points better than the prior quarter. Cash tells the same story: $1.216 billion from operations and $1.220 billion of adjusted free cash flow, both at 63% margins. The balance sheet holds $9.2 billion in cash and short-term Treasury securities with no debt burden. CFO Dave Glazer framed the quarter simply: GAAP net income, adjusted operating income and adjusted free cash flow each crossed the $1 billion mark in the same three months.
The contract book is growing faster than revenue.
In a software company, quarterly revenue describes the past while the contract book describes the future. Palantir booked $3.373 billion of total contract value in the quarter, up 49% year over year. U.S. commercial TCV came to $2.132 billion, up 153% from a year ago and 81% from the prior quarter. Remaining deal value not yet recognized as revenue climbed to $13.1 billion, up 83%, while contracted remaining performance obligations rose 103% to $4.9 billion. The company closed 220 deals worth more than $1 million, 98 above $5 million and 73 above $10 million. Every one of those lines is growing faster than reported revenue, which means visibility into the next several quarters is materially better than it was a year ago.
Valuation is the harder argument, not the quarter.
Palantir's contested point has long been price rather than performance. As of August 6 the stock changes hands at $155.92 for a market value near $375 billion. That is roughly 61 times trailing sales and 135 times earnings; even the forward price-to-earnings ratio is around 84. For context, those multiples demand years of sustained high growth even from a company that just grew 93%. The curious detail: despite the 29% jump on August 4, the shares are still down about 10% over twelve months and below their $207.52 peak. The market had marked expectations down through the first half of 2026, and this quarter took that discount back. From here the price carries the weight, and the question of what growth scenario the market capitalization already contains will be asked again every quarter.
Concentration sits in two places: the U.S. and government.
Of $1.935 billion in total revenue, $1.573 billion — roughly 81% — came from the United States, leaving international revenue at $362 million, about a fifth of the total. That is the weakest link in the story. Palantir has not yet come close to reproducing its U.S. momentum in Europe or Asia; nearly all of the growth rests on a single geography. The second concentration is governmental: $809 million of U.S. government revenue is about 42% of the total. That business is high-margin and sticky, but it is exposed to budget cycles and political priorities, and a shift in defense or intelligence spending flows straight through to revenue. Share-based compensation lifts the share count roughly 1.8% a year, a small but continuous dilution. The line to watch in the November report: third-quarter revenue against the $2.160-$2.164 billion guide, and whether international revenue accelerates from $362 million.
Looking Ahead
Strengths and Risks
4 Strengths · 5 RisksStrengths
4- U.S. commercial revenue grew 149% year over year — the segment's fastest rate ever — while its customer count rose 35% to 653.
- A Rule of 40 score of 155Growth plus operating margin at nearly four times the 40 threshold the industry treats as healthy.
- $1.22 billion of adjusted free cash flow (63% margin) and $9.2 billion of cash on a debt-free balance sheet; growth needs no outside funding.
- Full-year revenue guidance lifted to $8.150-$8.158 billion, with $13.1 billion of remaining deal value compounding faster than revenue.
Risks
5- At roughly 61 times sales and 135 times earnings, one quarter of deceleration could correct the price far more violently than the financials.
- About 81% of revenue comes from the United StatesThe $362 million international business remains the weakest link in the story.
- U.S. government work is roughly 42% of revenue — budget cycles and shifting political priorities flow straight through to the top line.
- Share-based compensation lifts the share count about 1.8% a year, a small but continuous dilution of per-share value.
- The 52-week range runs from $106.37 to $207.52 — a single headline can move this stock by double digits; volatility belongs in position sizing.
What to Watch
4- Q3 2026 results (~early November 2026)Guidance of $2.160-$2.164 billion revenue — 12% above the second quarter — and $1.292-$1.296 billion of adjusted operating income.
- Fiscal year ending December 31, 2026Revenue guidance of $8.150-$8.158 billion (82% growth) and U.S. commercial revenue above $3.424 billion are the year's yardstick.
- Full-year cash target: adjusted free cash flow of $4.5-$4.7 billion, with less than half banked in the first half, leaving the second half heavily loaded.
- Analyst revisions: the average target across 32 analysts is $189.90, within an unusually wide $80-$255 band; whether post-earnings revisions narrow it is worth watching.
Upcoming Earnings
To Understand This