Amid buzz over artificial intelligence, Palantir Technologies delivered first-quarter earnings that met views while revenue topped Wall Street targets. The data analytics software maker's revenue guidance for Palantir stock came in slightly above expectations.
Palantir earnings were reported after the market close on Monday. On the stock market today, PLTR stock tumbled 15.1% to close at 21.40.
"Palantir's Q1 top-line results came ahead of expectations," said Morgan Stanley analyst Keith Weiss in a report. "However, beneath the surface, results continue to tell a tale of two cities as the U.S. shows strength driven by a renewed go-to-market strategy, but the strength is offset by weakness in international."
For the quarter ended March 31, Palantir earnings using generally accepted accounting principles, or GAAP, were 8 cents a share, up 60% from a year earlier. Revenue rose 21% to $634 million, the software maker said.
Government Sales Top Views
Analysts had predicted Palantir earnings of 8 cents a share on revenue of $615 million.
Denver-based Palantir said government revenue rose 16% to $335 million, vs. estimates of $322 million in sales. In addition, commercial revenue rose 27% to $299 million, topping estimates of $292 million.
U.S. commercial revenue rose 40% compared with 70% in the fourth quarter of 2023. In addition, Palantir said it closed 136 U.S. commercial deals in the quarter, up from 70 in Q1 2023.
Meanwhile, Palantir reported $24 million of revenue related to investments in special purpose acquisition companies, or SPACs.
"The rebound in government was a pleasant surprise, although the commercial beat coming entirely from strategic commercial contracts was not," said Mizuho Securities analyst Gregg Moskowitz in a report. "More positively, management raised 2024 guidance by a little more than the Q1 beat."
Further, Palantir said it now expects "revenue in our U.S. commercial business to grow 45% or more in 2024 compared with 2023."
At Morgan Stanley, Weiss noted: "Adjusted free cash flow of $149 million was well below consensus at $203 million. Fiscal 2024 FCF guidance of $800 to $1,000 million was not raised despite the operating margin upside reflected in results and guidance."
Palantir Stock: AI Platform
At William Blair, analyst Louie DiPalma said in a report: "In our view, the stock is likely down because U.S. commercial revenue growth sharply decelerated to 40% from 70% last quarter. This is a focus for investors because of the AI (artificial intelligence) push."
For the current quarter ending in June, Palantir said it expects revenue of $651 million at the midpoint of guidance. Analysts had predicted sales of $643 million.
Palantir tweaked its 2024 revenue forecast slightly higher to a range of $2.68 billion to $2.69 billion.
"Looking ahead, revenue guidance for Q2 came in 1% above consensus and for the full year was lifted by a touch more than the magnitude of the Q1 beat," said Deutsche Bank analyst Brad Zelnick in a report. "While solid and signaling sustained 20%-plus overall growth, the ability to drive stronger acceleration in 2024 is being constrained by Palantir's government and international businesses that aren't yet seeing similar AI tailwinds."
Palantir Among AI Stocks To Watch
Heading into the Palantir earnings report, shares were up 44% in 2024. Palantir stock has jumped 233% over the past year amid buzz over generative artificial intelligence technology.
Also, Palantir rolled out its "Artificial Intelligence Platform" in early 2023. Further, Palantir is among AI stocks to watch.
"We are laser focused on the AI story playing out with AIP leading the way and Palantir delivered robust numbers on this front yet again," said Wedbush analyst Daniel Ives in a report. "We believe any modest sell-off post print is a golden buying opportunity for this pure play AI name."
Palantir has already mined the AI opportunity with government customers for intelligence gathering, counterterrorism and military purposes. Now Palantir aims to use generative AI to spur growth in the commercial market. The software maker has expanded into health care, energy and manufacturing.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
