Palantir announced outstanding quarterly results on Monday, exceeding analyst projections and fueling CEO Alex Karp's characteristic enthusiasm, despite the company's stock not mirroring this success.
In a video interview a few hours ahead of Palantir’s earnings, Karp flailed his arms excitedly as he spoke about the defense tech and AI software company’s results. “These numbers validate we were right. Please learn from us. That’s what these numbers mean,” Karp told Coins2Day in the interview.
“These are not normal results. These are not even strong results,” Karp continued later on Monday, during the company’s earnings call. “These aren’t extraordinary results. These are arguably the best results that any software company has ever delivered.”
After soaring roughly 400% over the past year, however, shares of Palantir took a time-out on Monday despite the strong results. The stock initially rose after the earnings were released on Monday, according to Bloomberg, but then slid about 3.5% in after-hours trading.
Palantir reported third-quarter earnings approaching $1.2 billion, marking a 63% increase compared to the same period last year and surpassing the $1.09 billion anticipated by analysts, as per Bloomberg. The firm's net earnings reached $476 million, a 40% rise from the previous year. Although Palantir's government contracts sector continues to perform well, its expansion in the third quarter was primarily fueled by its U.S. Commercial clients, which saw a 121% year-over-year surge to $397 million.
During Monday's earnings call, Karp characterized the figures as more typical of a venture-backed entity than a publicly traded one. He specifically pointed to the “Rule of 40” metric featured in Palantir's quarterly earnings report, which is derived from the combined year-over-year revenue growth rate and adjusted operating margin. Generally, a 40% performance is regarded as robust. This quarter, Palantir's Rule of 40 reached 114%, surpassing last quarter's 94% outcome.
Palantir's revenue remains quite small when contrasted with companies of comparable market value. The firm's substantial valuation has also fueled doubt among certain investors concerned about an AI bubble. Regulatory filings released on Monday indicate that Michael Burry, the renowned short-seller famous for his significant wager against the subprime mortgage market in 2008, has initiated a short position against both Palantir and Nvidia. Palantir and Nvidia revealed a partnership last week, through which Palantir will integrate Nvidia's chips and software with its technology platform for select clients. Palantir stated last week that Lowe's, a home improvement retailer, was already implementing this integration into its technology infrastructure, though the software firm declined on Monday to name additional companies that had adopted it.
As expected, Karp addressed a few sensitive topics during Monday's earnings call, such as the Trump administration's recent emphasis on drug traffickers in South America.
“Let me say something slightly political,” Karp said. “And I’m not saying other people agree with this, but when people are attacking our soldiers for stopping fentanyl from coming into this country, I want people to remember if fentanyl was killing 60,000 Yale grads instead of 60,000 working-class people, we’d be dropping a nuclear bomb on whoever was sending it from South America.”
Karp’s shareholder letter from this quarter—his 15th musing to shareholders and Palantir enthusiasts—was also biting. In the letter, Karp suggested that there had been a “rejection of any shared and defined sense of common culture, in this nation and others,” and that this “has had significant costs.”
Karp, however, appeared to relish the figures most of all, and in particular, flaunting them before those he believes have been overly doubtful.
“Some of our detractors have been left in a kind of deranged and self-destructive befuddlement,” he wrote in the letter, before going on to reference a British film director and later the poet William Butler Yeats.