Palantir Technologies Inc.

Palantir Technologies Inc. (Nasdaq: PLTR) sells software that helps businesses and government institutions combine data, decisions and operations. Its principal platforms include Gotham, Foundry, Apollo and AIP.

Third-quarter results

The table compares the three months ended September 30. Amounts are USD millions, except per-share figures.

Earlier forecasts and the higher annual outlook

In August, Palantir forecast Q3 revenue of $2.160 billion to $2.164 billion and adjusted operating profit of $1.292 billion to $1.296 billion. Actual revenue was $2.313 billion and adjusted operating profit was $1.427 billion, above both ranges.

The annual revenue forecast rose to $8.530 billion to $8.534 billion from $8.150 billion to $8.158 billion. Comparing midpoints gives a $378 million increase. Q3's roughly $151 million outperformance explains about 40% of that change, leaving approximately $227 million of higher expectations for Q4.

The new Q4 revenue forecast is $2.649 billion to $2.653 billion, with adjusted operating profit of $1.640 billion to $1.644 billion. Annual adjusted operating profit is expected at $5.245 billion to $5.249 billion, versus $4.889 billion to $4.897 billion in August.

U.S. commercial revenue overtakes government

U.S. commercial revenue was $984 million, versus $953 million from U.S. government customers, the first crossover according to Palantir. In Q2, the figures were $764 million and $809 million. A year earlier, they were $397 million and $486 million.

Palantir now expects more than $3.559 billion in annual U.S. commercial revenue, up from more than $3.424 billion in August. Total U.S. revenue reached $1.937 billion in Q3, versus $883 million a year earlier.

Profit measures and cash flow

Adjusted operating profit removes share-based compensation and related employer payroll taxes. Those exclusions were $318.9 million and $23.1 million in Q3. Reported operating profit was $1.085 billion; the adjusted figure was $1.427 billion.

Q3 operating cash flow was $1.205 billion and capital spending was $8.0 million. Palantir's adjusted free cash flow was $1.216 billion, which also adds back $19.5 million of cash payroll taxes tied to share-based compensation.

For the first nine months, operating cash flow was $3.320 billion, versus $1.357 billion a year earlier. Capital spending was $30.0 million, versus $20.6 million. The annual adjusted free-cash-flow outlook rose to $4.8 billion to $5.0 billion from $4.5 billion to $4.7 billion.

At September 30, cash and cash equivalents were $3.619 billion and marketable securities were $6.942 billion. No borrowing balance was shown on the September balance sheet.

Contract measures to follow

The potential lifetime value of contracts closed in Q3 was $2.918 billion, versus $2.760 billion a year earlier and $3.373 billion in Q2. U.S. commercial contract value was $1.463 billion, versus $1.310 billion a year earlier and $2.132 billion in Q2.

These contract values include optional periods and contracts that customers can terminate. U.S. commercial remaining deal value was $6.517 billion, versus $6.238 billion in Q2 and $3.630 billion a year earlier. It uses the same assumptions about options and continued contracts.