Palantir's US commercial, government deals surge in Q1

Palantir continued to land enterprise accounts as its US commercial revenue jumped 133% in the first quarter.

The company reported better-than-expected first quarter results. Palantir reported first quarter earnings of $870 million, or 34 cents a share, on revenue of $1.63 billion, up 85% from a year ago. Non-GAAP earnings were 33 cents a share.

Wall Street was expecting Palantir to report non-GAAP first quarter earnings of 28 cents a share.

Key figures include:

• Palantir's Rule of 40 score is 145%.
• US revenue was up 104% to $1.28 billion.
• The company closed 206 deals of at least $1 million, 72 deals worth at least $5 million and 47 deals of at least $10 million.
• US government revenue was up 84% in the first quarter from a year ago to $687 million.
• US commercial revenue was up 133% from a year ago to $595 million.
• Palantir ended the first quarter with $8 billion in cash, cash equivalents and US Treasuries and no debt.

As for the outlook, Palantir said its second quarter revenue will be between $1.797 billion and $1.8 billion with adjusted income from operations between $1.063 billion and $1.067 billion.

For 2026, Palantir is projecting revenue of $7.65 billion and $7.662 billion with adjusted income from operations between $4.44 billion and $4.452 billion. Adjusted free cash flow will be between $4.2 billion and $4.4 billion.

Alex Karp, CEO of Palantir, said the following in the company's first quarter shareholder letter.

• "We almost doubled the size of our entire business, of all of our revenues generated across the government and commercial sectors, in the span of only twelve months."
• "We achieved this staggering growth with a hiring discipline that is too rare in the software industry today. This quarter, our revenue per employee rose to $1.5 million on an annualized basis. In the United States, that figure was $1.6 million."
• "We generated nearly as much in profit in the first quarter of the year as we did in revenue only twelve months ago."

On Palantir's earnings call, Karp said the company isn't a software company as much as a transformation enabler--via data, ontology and AI. Karp said Palantir isn't trying to make every company the same, but embrace how they're differentiated.

"We're going to end up with a different term for software. You can't lump what we're doing. We're really providing infrastructure and installation of AI infrastructure. Look, if your company is largely running around and offering steak dinners with something that someone can hack and rebuild in a week, yes, you're going to have a huge problem.

They're under huge pressure. And that's one of the reasons we're at the forefront. I mean, can you believe we're at the forefront of almost every discussion in the world. And it's simply because we're powering almost everything that works."

Shyam Sankar, CTO of Palantir, said the following on the earnings call:

• "Models are converging and the cost per token continues to drop precipitously. GPT-4 equivalent performance that cost $20 per million tokens in early 2023 is now approximately 1,000x cheaper 3 years later. Because of this increased efficiency, use case demand for tokens is exploding. Our AIP workflows today utilize vastly more tokens, agents orchestrating across the ontology, training, reasoning, pool use, retrieval and execution, and it's growing. This is Jevon's paradox. It's the single most important dynamic in enterprise software right now."
• "The more commodity cognition you consume, the more you need a system that can prevent the economic harm so you can harness the economic value. That system is AIP. That intermediary representation is the Ontology. This is also why we are seeing the death of legacy software. AIP replaces static workflows, not by replicating the playbook, but by eliminating the need for one."
• "We are the platform that you build applications and agents on. In the commercial world, people are replacing legacy software at a lightning fast pace. And we see that even internally at Palantir, where we've gotten rid of legacy software like CRM, built it very quickly on top of our platform to a user experience that our users love."