Data-mining and analytics company Palantir (NYSE: PLTR) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 48% year on year to $1.00 billion. On top of that, next quarter’s revenue guidance ($1.09 billion at the midpoint) was surprisingly good and 10.5% above what analysts were expecting. Its non-GAAP profit of $0.16 per share was 15.6% above analysts’ consensus estimates.
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Palantir (PLTR) Q2 CY2025 Highlights:
- Revenue: $1.00 billion vs analyst estimates of $939.6 million (48% year-on-year growth, 6.8% beat)
- Adjusted EPS: $0.16 vs analyst estimates of $0.14 (15.6% beat)
- Adjusted Operating Income: $464.4 million vs analyst estimates of $404.2 million (46.3% margin, 14.9% beat)
- The company lifted its revenue guidance for the full year to $4.15 billion at the midpoint from $3.90 billion, a 6.4% increase
- Operating Margin: 26.8%, up from 15.5% in the same quarter last year
- Free Cash Flow Margin: 56.7%, up from 41.9% in the previous quarter
- Market Capitalization: $364.1 billion
“This was a phenomenal quarter. We continue to see the astonishing impact of AI leverage. Our Rule of 40 score was 94%, once again obliterating the metric. Year-over-year growth in our U.S. business surged to 68%, and year-over-year growth in U.S. commercial climbed to 93%. We are guiding to the highest sequential quarterly revenue growth in our company’s history, representing 50% year-over-year growth,” said Alex C. Karp, Co-Founder and Chief Executive Officer of Palantir Technologies.
Company Overview
Started by Peter Thiel after seeing US defence agencies struggle in the aftermath of the 2001 terrorist attacks, Palantir (NYSE: PLTR) offers software as a service platform that helps government agencies and large enterprises use data to make better decisions.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last three years, Palantir grew its sales at a solid 25.4% compounded annual growth rate. Its growth surpassed the average software company and shows its offerings resonate with customers, a great starting point for our analysis.
This quarter, Palantir reported magnificent year-on-year revenue growth of 48%, and its $1.00 billion of revenue beat Wall Street’s estimates by 6.8%. Company management is currently guiding for a 49.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 28.3% over the next 12 months, an acceleration versus the last three years. This projection is eye-popping and indicates its newer products and services will spur better top-line performance.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Palantir is extremely efficient at acquiring new customers, and its CAC payback period checked in at 12.5 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Palantir more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
Key Takeaways from Palantir’s Q2 Results
This was a beat and raise quarter. We were impressed by how significantly Palantir blew past analysts’ operating profit expectations this quarter. We were also glad its revenue guidance for next quarter trumped Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 3.9% to $167.02 immediately after reporting.
Sure, Palantir had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
