Palantir’s Fourth-Quarter Results Showcase Strong Trends in Artificial Intelligence

Image: Palantir’s revenue continues to march higher, and the company’s performance continues to showcase the growing strength in artificial intelligence. Source: Palantir

By Brian Nelson, CFA

Palantir Technologies (PLTR) has three core software platforms called Gotham, Foundry, and Apollo that “provide the critical infrastructure needed to integrate (its) customers’ data and operations and run their software in virtually any environment (Form 10-K).” On February 5, the firm reported solid fourth-quarter results that showed revenue growing 20% on a year-over-year basis and GAAP net income coming in at $93 million, representing the fifth consecutive quarter that the firm has driven positive GAAP profits.

We liked Palantir’s quarterly results, but we wanted to bring to members’ attention the commentary surrounding artificial intelligence [AI]:

Our results reflect both the strength of our software and the surging demand that we are seeing across industries and sectors for artificial intelligence platforms, including large language models, that are capable of integrating with the tangle of existing technical infrastructure that organizations have been constructing for years.

The demand for large language models from commercial institutions in the United States continues to be unrelenting. Every part of our organization is focused on the rollout of our Artificial Intelligence Platform (AIP), which has gone from a prototype to a product in months. And our momentum with AIP is now significantly contributing to new revenue and new customers. 

During Palantir’s fourth quarter, the company’s U.S. commercial revenue grew 70% on a year-over-year basis, while its U.S. commercial customer count advanced 55%. Commercial revenue advanced 32% in the quarter on a year-over-year basis, while government revenue increased 11%. Adjusted free cash flow in the quarter came in at $305 million, representing an impressive free cash flow margin.

Looking to the full year 2024, Palantir’s U.S. commercial revenue is expected to grow 40%, while adjusted free cash flow is targeted in the range of $0.8-$1 billion, or roughly 34% of revenue at the targeted range of revenue for the year ($2.652-$2.668 billion). Palantir’s results showcase the traction artificial intelligence is gaining, and we remain bullish on the prospects for big cap tech and large cap growth.