Wednesday, 6 November 2024
by BD Banks
Shares of Palantir (NYSE: PLTR) were soaring today after the artificial intelligence (AI)-focused software stock posted better-than-expected results in its third-quarter earnings report last night, as revenue growth accelerated for the fifth quarter in a row. It posted strong margin expansion as well.
As of 10:02 a.m. ET, the stock was up 20.3% on the news.
Image source: Getty Images.
Palantir, which is known for its data fusion software that allows governments and businesses to find and integrate data from multiple sources to produce useful information, easily beat revenue estimates in the quarter, driven by strong growth in the U.S.
Overall revenue was up 30% to $725.5 million, well ahead of the consensus at $701.1 million. Revenue in the U.S. jumped 44% to $499 million, which included a 54% jump in U.S. commercial revenue to $179 million, and a 40% increase in U.S. government revenue to $320 million.
Driven by its new artificial intelligence platform (AIP), the company has now reported five straight quarters of accelerating revenue growth, showing it is establishing itself as a valuable software platform in the AI era.
On the earnings call, CEO Alex Karp described large language models as commodities, but said that institutions need the kind of tools that Palantir provides to leverage their data.
On the bottom line, margins expanded as the business scaled up. Palantir reported a generally accounting principles (GAAP) operating margin of 16% and an adjusted operating margin of 38%. Adjusted earnings per share rose from $0.07 to $0.10, ahead of the consensus at $0.09.
Karp said: “We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down. This is a U.S.-driven AI revolution that has taken full hold.”
Palantir has been one of the best-performing stocks on the market this year, as shares have now nearly tripled.
Investors were also encouraged by its guidance hike, as Palantir now sees full-year revenue of $2.805 million to $2.809 million.
The stock is expensive, but the company is clearly benefiting from AI momentum. If revenue growth remains strong, the stock still has a lot of upside potential from here.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.