Palantir Q1 Earnings: Revenue Soars 85% to $1.63B, Karp Puts Defense First

Palantir Q1 earnings crushed Wall Street expectations on May 4, with revenue surging 85% year-over-year to $1.63 billion versus the $1.54 billion estimate. Adjusted earnings per share hit $0.33, beating the $0.28 consensus, while the Palantir stock price climbed 1.36% to $146.03 in regular trading. The company raised full-year guidance to $7.65 billion to $7.66 billion, implying 71% Palantir revenue growth and well above the prior $7.27 billion analyst consensus.

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US Revenue Doubles to $1.28B First Time Since 2020, Raises FY Guidance to 71%

Domestic Business Breaks Triple-Digit Growth

U.S. revenue jumped 104% year-over-year to $1.28 billion, marking the first time Palantir has achieved triple-digit growth since its 2020 public debut. Palantir government contracts brought in $687 million, up 84%, while U.S. commercial revenue climbed 133% to $595 million.

The company closed 206 deals worth at least $1 million during the quarter, including 72 deals of at least $5 million and 47 deals exceeding $10 million. Total contract value reached $2.41 billion, up 61% year-over-year.

CEO Alex Karp had this to say:

“Our financial results now demonstrate a level of strength that dwarfs the performance of essentially every software company in history at this scale.”

Record Margins and Profitability

Net income nearly quadrupled to $870.5 million, representing a 53% margin. GAAP operating income was $754 million with a 46% margin, while adjusted operating income hit $984 million at a 60% margin. The company’s Rule of 40 score soared to 145%, placing it alongside AI infrastructure leaders like Nvidia.

Adjusted free cash flow reached $925 million, a 57% margin, up from 42% a year ago. Palantir ended the quarter with $8.0 billion in cash and zero debt.

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Defense Remains Top Priority

Karp emphasized national security as the company’s core focus during the Palantir Q1 earnings call, stating:

“When we believe, or know because of our proximity, that the U.S. war fighter is in danger, we put the whole company against it.”

Palantir’s Maven Smart System is now deployed across the entire Department of War. Cameron Stanley, Chief Digital and AI Officer at the Department of War, stated:

“The system is critical to mission success and personnel safety.”

The company announced new deals with Airbus, Bain, GE Aerospace, and Stellantis during the quarter, demonstrating strong commercial traction alongside Palantir government contracts.

Raised Outlook Across All Metrics

Management lifted Q2 revenue guidance to roughly $1.8 billion versus the $1.68 billion consensus. Full-year adjusted free cash flow guidance was raised to $4.2 billion to $4.4 billion from the prior $3.925 billion to $4.125 billion range.

Despite the strong Palantir Q1 earnings results, the Palantir stock price remains down 18% year-to-date from its $207.52 high. HSBC analyst Stephen Bersey downgraded shares to neutral on May 4, citing competitive pressures from AI model companies.

Karp addressed competitive concerns in his shareholder letter, writing:

“There seems to be a rotation amongst AI model companies who engage in an intensely competitive race in which we have seen token costs suffer a thousandfold decline over just a few years and where winners and losers swap places every six months.”

He positioned Palantir as “building a juggernaut of a business that is delivering results to our partners in the world as it is today.”

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