Overview
Since the Report − 2.5%
Revenue grew 95.9% year over year, EPS beat the estimate by 7.3%; the stock fell 3.8% in its first reaction.
- RevenueQ3
- $2.31B
- ▲ 96% Annual · 6.1% Above Estimate
- EPSAdjusted
- $0.44
- Estimate $0.41 · Beat by 7.3%
Verdict
BUYPalantir's revenue rose 96% to $2.31 billion, beating estimates by 6.1%, and U.S. commercial revenue overtook government for the first time. The stock rose after the release but reversed during the earnings call and fell 3.8% after hours. The number to watch next is whether new contract value, which slowed to 6% growth, picks up again.
Close on Report DayNov 2
$178.34▼ 3.8%Report-Day Move
- Market Cap(Today)
- ≈ $418 B
- 1Y Return(At Report)
- − 14%
- P/E(At Today's Price · $1.43 · Trailing 12M)
- 121.7
- PEG(Next Year Estimate)
- 2.66
- Net Margin(Trailing 12M)
- 49.0%
Earnings Summary
In 30 Seconds- Revenue rose 96% to $2.31 billion, beating estimates by 6.1%, while EPS beat by 7.3%.
- Fourth-quarter guidance is 7.8% above estimates, but total contract value closed grew only 6%.
- The stock rose 1.8% after the release but reversed during the earnings call and fell 3.8% after hours.
The Numbers
U.S. Commercial Revenue
$984M
▲ 148% Annual · First Time Above Gov't
Adjusted Operating Margin
62%
51% a Year Ago · Up 11 Points
Full-Year Revenue Outlook
$8.53B
Estimate $8.22B · 3.8% Above
Stock Reaction
▼ 3.8%
After Hours ~6 PM ET · First Move ▲ 1.8%
Quarterly Revenue ($ Billion)
1.18
Q3 25 · $1.18 B
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 + 18.6%
2.31
Q3 26 · $2.31 B · QoQ + 19.5% · YoY + 95.9%
2.649–2.653
Q4 26E · 2.649–2.653 · QoQ + 14.6% · YoY + 88.4%
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
- Q4 26E
Q4 2026 Company Guidance
- Revenue (Q4 26)2.649 – 2.653 B2.649 B2.653 B2.649 – 2.653 B
Midpoint 2.651 · Market Expectation 2.467.8% Above Estimate ▲
- Adjusted Operating Income (Q4 26)1.640 – 1.644 B1.640 B1.644 B1.640 – 1.644 B
Midpoint 1.642 · Margin ~62% · 62% in Q3Flat Trend
- Revenue (Full Year 2026)8.530 – 8.534 B8.530 B8.534 B8.530 – 8.534 B
Midpoint 8.532 · 8.154 in August · Market Expectation 8.223.8% Above Estimate ▲
- U.S. Commercial Revenue (2026)3.559 B
At Least · 143% Growth · 3.424 in AugustRaised 3.9% ▲
- Adjusted Free Cash Flow (2026)4.8 – 5.0 B4.8 B5.0 B
Midpoint 4.9 · 4.5–4.7 in AugustRaised 6.5% ▲
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 ±8.3% around the midpoint.
Company-Specific Metrics
U.S. Government Revenue
$953 M
▲ 96.0% YoYPress Release
Total Contract Value Closed
$2.92 B
▲ 6.0% YoYPress Release
U.S. Commercial Remaining Deal Value
$6.52 B
▲ 79.0% YoYPress Release
Deals Above $1 Million
212 deals
Press Release
Adjusted Free Cash Flow
$1.22 B
▲ 125.0% YoYPress Release
Cash and U.S. Treasuries
$10.4 B
Press Release
Metrics come only from the company's own filings; each one names the document it was taken from.
“Our somewhat crazy aspiration to take the whole market doesn't look that crazy right now. The weird thing here though is we really cannot satiate demand. We believe we have a moral imperative to be the dominant player in our industry, broadly defined.”
- Demand Outpacing Supply
- Taking the Whole Market
- Dominance in the Industry
Summary and Review
Summary
Palantir reported third-quarter revenue of $2.31 billion. Growth was 96%, and revenue beat the market expectation by 6.1%, so the revenue gate is open. Adjusted EPS of $0.44 beat estimates by 7.3%, so the profit gate is open too. The midpoint of fourth-quarter revenue guidance is $2.65 billion. That is 7.8% above estimates, so the guidance gate is also open. All three gates are open. The company also raised its full-year targets.
The stock closed the regular session down 3.1% at $178.34. Right after the release it rose 1.8% after hours. It reversed during the earnings call and fell 3.8% to $171.52 around 6:00 p.m. ET. The market did not read this report as a growth story; it read it as a valuation story. The stock has lost 13.9% over the past year. Even three open gates were not enough to lift the price.
Our view is 86 points and a buy; all three gates are more than 2% above estimates. Adjusted operating margin was 62%, and the company raised its full-year targets again. The call partly explained the contract caveat. The CFO said several 8-figure deals signed in the quarter were shorter in duration than usual. Net dollar retention also rose to 165%. International revenue lagging the U.S. is the other caveat that pulls the score down within its band.
Full Review
U.S. commercial overtook government for the first time.
U.S. commercial revenue was $984 million. It grew 148% from a year ago and 29% from the prior quarter. U.S. government revenue was $953 million, up 96%. For the first time in Palantir's history, commercial customers brought in more U.S. revenue than government. Total U.S. revenue rose 119% to $1.94 billion. The U.S. makes up 84% of total revenue. That single line changes the company's story. For years Palantir was seen as a defense and intelligence contractor. Today growth is driven by companies moving onto its AI platform, AIP. The company also raised its U.S. commercial target. It now expects at least $3.559 billion for the year, or at least 143% growth.
Margins and cash are growing in step.
Adjusted operating income was $1.43 billion, a 62% margin. A year ago that margin was 51%, so it widened by 11 points. GAAP operating income was $1.08 billion, a 47% margin. GAAP net income was $1.13 billion. Adjusted free cash flow was $1.22 billion, a 53% margin. That is more than double the $540 million of a year ago. The Rule of 40 score, the sum of revenue growth and adjusted operating margin, was 158. Stock-based compensation, however, rose 85% to $319 million from $172 million. That cost is excluded from adjusted profit, but shareholders still bear it through dilution. Cash and U.S. Treasuries reached $10.4 billion.
Contract signings are slowing.
Total contract value closed was $2.92 billion. Growth was only 6%. In the second quarter it was 49%, on $3.37 billion. In other words, newly signed business lagged far behind revenue growth. The U.S. commercial picture is better. There, contract value closed rose 11% to $1.46 billion. U.S. commercial remaining deal value was $6.52 billion, up 79% from a year ago. But that backlog grew only 4% from the prior quarter. The company closed 212 deals of at least $1 million. Of these, 64 exceeded $10 million. On the earnings call, the CFO offered one reason: several 8-figure deals signed in the quarter were shorter in duration than usual. Net dollar retention rose 8 points from the prior quarter to 165%.
International is still the weak link.
The company did not report international revenue separately. Subtracting U.S. revenue from the total leaves about $376 million. A year ago that figure was about $298 million, for growth of roughly 26%. Next to 119% growth in the U.S., that is very slow. International's share of the total fell to about 16%. In the release, Karp stressed the sovereign AI movement. That means countries wanting control over their own data and models. If that demand turns into revenue in Europe and Asia, international could become a second engine. For now the conversion is not visible. The company gave no separate international target on the call. The company made no separate deal announcement on earnings day. That sharpens the question about sales productivity outside the U.S.
Watch one line next quarter.
The company raised its full-year revenue target to $8.530-8.534 billion. In August the target was $8.150-8.158 billion. The new target is 3.8% above estimates and implies 91% growth. The adjusted free cash flow target rose to $4.8-5.0 billion. Here is the reader's rule. If total contract value closed grows more than 20% in the fourth quarter, the revenue story carries into 2027. If it stays below 10%, this quarter's pace is close to the peak. On valuation, see our valuation guide. The stock is down 13.9% over the past year, yet much of the expected growth is already in the price. The second measure is U.S. commercial remaining deal value. If that backlog keeps growing less than 4% a quarter, the commercial engine is slowing.
Looking Ahead
Strengths and Risks
6 Strengths · 5 RisksStrengths
6- U.S. commercial revenue rose 148% to $984 million and overtook government revenue for the first time.
- Adjusted operating margin of 62% was 11 points above 51% a year ago.
- Fourth-quarter revenue guidance came in 7.8% above the market expectation.
- The full-year revenue target was raised 4.6% from August and implies 91% growth.
- Adjusted free cash flow reached $1.22 billion, a 53% margin.
- Net dollar retention rose 8 points from the prior quarter to 165%.
Risks
5- Total contract value closed grew only 6%İn the second quarter it grew 49%.
- Remaining performance obligations of $4.9 billion rose 88% from a year ago but were flat from the prior quarter.
- International revenue grew about 26%, far behind the U.S.
- Stock-based compensation rose 85% to $319 million.
- The stock prices in high growth expectationsA single quarter of slowdown could trigger a sharp reaction.
What to Watch
2- Third-quarter 10-Q filing: total revenue split between the commercial and government segments.
- Early February 2027Q4 2026 results and the first revenue outlook for 2027.
Upcoming Earnings
To Understand This