PLTR (Trans): From 'Allaying Skepticism' to 'Faster Deployment' vs. 2 yrs ago

Dolphin Research's Trans of Palantir FY25 Q4 earnings call is below. For our earnings take, see 'Palantir: another hard-hitting print — can the AI apps leader return to its peak?'

I. Key financials recap

1.1 Overall results: Q4 revenue surged 70% YoY, the fastest since listing. FY25 revenue rose 56% YoY to $4.475bn.

1.2 Profitability: Q4 Adj. OP reached $798mn with a 57% OPM. Full-year Adj. OP was $2.3bn with a 50% OPM, and Adj. FCF was $2.3bn (+82% YoY).

1.3 Key operating metrics:

• Rule of 40: Improved to 127 in Q4 (revenue growth + OPM), expanding for the 10th straight quarter.
• TCV: Hit a record high of $4.3bn in Q4, +138% YoY.
• Large customer revenue: Top-20 customers' LTM quarterly rev. per customer rose 45% YoY to $94mn.
• Customer count: Up 34% YoY to 954.
• Remaining contract value: $11.2bn, +105% YoY.

II. Earnings call details

2.1 Executive highlights

1) Strategy and positioning

• Historic step-change and unique positioning: This quarter marked a 'historic breakthrough', proving that hyper growth and strong profitability can coexist. The company has created a unique niche, as the only enterprise software firm deliberately focused on putting AI models into production at scale to deliver real-world value.
• Leader in the era of AI ubiquity: The market is shifting from basic AI enablement to scaling impact from that ubiquity. Palantir focuses on the latter, helping clients move from AI adopters to AI-native enterprises, turning execution into exponential advantage.
• Value-creation logic: Real value accrues at the top of the stack (AI, ontology), not the bottom. With relatively modest investment, the company is driving outsized impact on rev. and profit, upending the traditional model.

2) Commercial progress

• Growth drivers: Growth is led by U.S. Commercial, which has 'outpaced traditional enterprise software trajectories'. AIP fundamentally accelerates time-to-value for customers.
• Customer examples:
  • Rapid expansion with existing clients: A utility scaled ACV from $7mn in FY25 Q1 to $31mn by year-end; an energy client grew ACV from $4mn to over $20mn.
  • Strong new logos: A healthcare company signed a $96mn deal after completing a boot camp; an engineering services firm signed an $80mn agreement.
  • Deep adoption: Turner-Kavanaugh Construction says it has gone all-in on AI, with 7% of staff using Foundry daily. It has become the firm's operating system and secret weapon, displacing third-party software.
• Intl Commercial: Q4 intl revenue grew 8% YoY and 12% QoQ. TCV orders reached $1.3bn, driven mainly by renewals with long-term clients.

3) Government progress

• Strong U.S. Gov.: Growth reflects mission impact across DoD components and accelerating momentum in civilian agencies. With rising global threats and tighter budgets, governments are pivoting to software that actually works.
• Key contracts and programs:
  • The U.S. Navy awarded up to $448mn to modernize the shipbuilding supply chain.
  • Maven hit record usage, supporting joint force exercises, and is pushing to the tactical edge via MACE, enabling live-fire exercises with UAV teaming.
  • The AI platform is becoming the default build platform for the Department of War, with operators building agents to transform concepts of operation.
• Intl Gov.: Q4 revenue rose 43% YoY, led by continued expansion in the U.K.

4) Product and tech

• AIP and Hivemind: Centered on enterprise autonomy and closed-loop co-evolution with AI. Hivemind autonomously proposes innovations and can tailor high-fit demos using only public data.
• AI productivity tools:
  • AI FDE: Powers complex SAP ERP migrations, compressing years of work into two weeks.
  • OSDK: Together with AIP, unleashes pro builders, handling over 1bn API gateway calls per week.
• Platforms and apps:
  • Foundry: Lauded as a secret weapon and core OS by clients.
  • ShipOS and the Warp Speed program: Accelerate submarine production and MRO. At one yard, planning time fell from 160 hours to 10 minutes, and materials reviews from weeks to under an hour.
  • AI creating jobs: Process optimization enabled a client to add a third shift. The company will launch a U.S. Technology Fellows program to train suppliers and yard users to build AI apps.
• Industrial and weapons systems: In mature programs, root-cause coverage rose from sub-20% to 99%+. In new programs, throughput improved by 40x.

5) Outlook

• Q1 FY26: Revenue of $1.532bn–$1.536bn; Adj. OP of $870mn–$874mn.
• FY26 revenue midpoint of $7.19bn (+61% YoY).
• U.S. Commercial revenue expected to exceed $3.14bn (+at least 115% YoY).
• FY26 Adj. OP of $4.26bn–$4.28bn and Adj. FCF of $3.925bn–$4.125bn.

2.2 Q&A

Q: How do you view intl business? Do you expect a near-term reacceleration, e.g., with European rearmament?

A: Operating outside the U.S. is very challenging. We lack bandwidth to take on complex non-U.S. efforts, and U.S. demand is massive. A core issue is whether allies accept they must buy products far superior to domestic offerings, which is hard given home-country bias.

More broadly, procurement systems must be able to buy the best product. We see broad adoption in the Arab world, Israel, and China, but generally limited adoption in Canada, the Nordics, and Europe.

The real challenge is justifying taking on these complex efforts if Palantir must carry the load. France understands the issues most clearly, but struggles on the how, especially when the solution implies buying American products.

We also hold our products to a standard of magical, not merely best-in-class. We have already delivered magical front-line programs that reshape perceptions of U.S. deterrence.

Q: On Commercial, many see 2026 as the year of AI show-me. Have you observed shifting dynamics among customers or partners? Has prior hesitation changed?

A: Our GTM is to show and deliver impact as fast as possible, and we see customers starting larger and scaling faster. We closed 61 deals over $10mn because of the impact we deliver.

In the U.S., customers now see proof points across peers and beyond single use cases. Two years ago the question was whether it worked; now it is I hear it works, but where does it fit for me.

Palantir is not a single-slot product; people know it works, works well, and works fast. Many now come with I know it works, what must I do to accelerate, and fewer say I do not understand how or why this works.

We have never been better positioned to shape whom we partner with. Some customers are even restructuring to absorb our products, and we aim to deepen these partnerships this year, prioritizing density over breadth.

Q: On defense beyond Shipbuilding OS, are there opportunities for a munitions or missile OS and other domains?

A: Reindustrialization has been a core focus for 2–3 years, starting in defense and spreading to pharma, data centers, and more, creating a flywheel. ShipOS began with the submarine fleet, but we are being asked to help across weapons systems, including fighters, surface ships, UAVs, and munitions, spanning production and sustainment.

Lethality and force delivery require end-to-end integration from factory to foxhole. Maven is a major investment changing how the Joint Force fights, and ShipOS with its warp speed core will revitalize shop floors and provide an integrated view to the Pentagon.

We are fielding many requests on how to scale such approaches across government.

Q: Across Commercial and Gov./defense, are you taking a larger share of budgets as mandates broaden from tasks to larger responsibilities?

A: If you study our data, revenue growth looks hard to explain while customer growth does not. Serious customers give us their most important problems, and we create outsized value.

It is not only about getting more problems, but solving them in ways that are decisive for the enterprise, which commands greater spend. There is also a view, rightly or wrongly, that competitors are not very good.

We have tight, dense, and direct relationships with leaders in nearly every industry, which are not simple paid gigs but high-value product partnerships. Our Rule of 40 at 127, 93% growth in the U.S., and 61% annual guide all attest to this, as we deliver at the front line and are paid accordingly.

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