Palantir Q1 Earnings: 71% U.S. Commercial Growth Drives Record Results

Rhea-AI Summary

Palantir Technologies (PLTR) reported exceptional Q1 2025 results, with total revenue growing 39% Y/Y to $884 million. The company demonstrated remarkable performance in the U.S. market, where revenue surged 55% Y/Y to $628 million, driven by 71% Y/Y growth in U.S. commercial revenue to $255 million. U.S. government revenue increased 45% Y/Y to $373 million. The company achieved strong profitability with GAAP income from operations of $176 million (20% margin) and adjusted income from operations of $391 million (44% margin). Palantir closed 139 deals worth $1M+, including 31 deals exceeding $10M. Based on strong performance, Palantir raised its FY2025 guidance, projecting total revenue between $3.89-3.90B and U.S. commercial revenue growth of at least 68%.

Positive

• Revenue grew 39% Y/Y to $884M, with U.S. commercial revenue surging 71% Y/Y
• Strong profitability with 20% GAAP operating margin and 44% adjusted operating margin
• Record U.S. commercial TCV of $810M, up 183% Y/Y
• Customer count increased 39% Y/Y
• Robust cash position with $5.4B in cash and equivalents
• Raised FY2025 guidance significantly above consensus expectations
• Generated $370M in adjusted free cash flow, representing 42% margin

Negative

• None.

Insights

Financial Analyst

Palantir delivered exceptional Q1 results with 39% revenue growth, 71% U.S. commercial growth, and raised full-year guidance, demonstrating accelerating enterprise AI adoption.

Palantir's Q1 2025 results showcase exceptional performance across all key metrics, with particularly strong momentum in their U.S. commercial business. Total revenue reached $884 million, growing 39% year-over-year, significantly outpacing the software industry average.

The standout story is U.S. commercial revenue, which surged 71% year-over-year to $255 million and now exceeds a $1 billion annual run rate. This segment's $810 million in total contract value (TCV) represents a staggering 183% year-over-year increase, while remaining deal value grew 127% to $2.32 billion, indicating strong future revenue visibility.

The company's government business remains robust as well, with U.S. government revenue growing 45% year-over-year to $373 million. This balanced growth across segments demonstrates Palantir's ability to successfully monetize both government and commercial markets.

Palantir's deal metrics reveal increasing enterprise adoption, with 139 deals worth at least $1 million, 51 deals worth at least $5 million, and 31 deals worth at least $10 million. Customer count grew 39% year-over-year, showing the company is successfully acquiring new customers while expanding relationships with existing ones.

Profitability metrics are equally impressive. Adjusted operating margin reached 44%, contributing to a "Rule of 40" score of 83% - more than double the benchmark that suggests healthy software companies should have combined growth rate and profit margin exceeding 40%. Adjusted free cash flow of $370 million (representing a 42% margin) demonstrates the capital efficiency of Palantir's business model.

Management's decision to raise full-year guidance to 36% revenue growth and 68% U.S. commercial growth signals confidence in sustained momentum. The company explicitly attributes this acceleration to AI adoption, positioning their platform as "the operating system for the modern enterprise in the era of AI."

These results indicate Palantir has reached an inflection point in commercial market penetration after years of building its enterprise platform. With $5.4 billion in cash and equivalents and expectations for GAAP profitability in every quarter this year, the company has both the financial resources and operational leverage to capitalize on the growing enterprise demand for AI capabilities.

Palantir Reports 39% Revenue Growth in Q1 2025, Significantly Raises Full-Year Guidance

Palantir Technologies Inc. (NASDAQ: PLTR) reported substantial growth across all key metrics for the first quarter of 2025, with total revenue increasing 39% year-over-year to $883.9 million, according to the company's quarterly financial results released on May 5, 2025. The data analytics software company's performance substantially exceeded market expectations, leading management to raise full-year guidance for revenue and profitability.

U.S. revenue showed exceptional strength, growing 55% year-over-year to $628 million. Particularly noteworthy was the company's U.S. commercial business, which grew 71% compared to the same period last year, reaching $255 million and surpassing a billion-dollar annual run rate for the first time.

Strong Financial Performance

Palantir reported robust profitability metrics for the quarter, with GAAP income from operations of $176 million, representing a 20% margin. On an adjusted basis, which excludes stock-based compensation and related employer payroll taxes, income from operations reached $391 million with a 44% margin.

The company generated $310 million in cash from operations during the quarter, representing a 35% margin. Adjusted free cash flow, which adds back cash paid for employer payroll taxes related to stock-based compensation and subtracts purchases of property and equipment, totaled $370 million with a 42% margin.

Net income attributable to common stockholders was $214 million or $0.08 per diluted share on a GAAP basis. Adjusted earnings per share reached $0.13, compared to $0.08 in the same quarter of the previous year.

The company highlighted its "Rule of 40" score—the sum of revenue growth rate and adjusted operating margin—which reached 83% for the quarter, demonstrating Palantir's ability to combine high growth with strong profitability.

Strong Deal Activity

Palantir reported significant momentum in new business acquisition during the quarter. The company closed:

• 139 deals of at least $1 million
• 51 deals of at least $5 million
• 31 deals of at least $10 million

The company's U.S. commercial business showed particularly strong deal activity, booking its highest quarterly total contract value (TCV) of $810 million, up 183% year-over-year. U.S. commercial remaining deal value (RDV) grew to $2.32 billion, up 127% from the prior year and 30% from the previous quarter.

Overall customer count increased 39% year-over-year and 8% quarter-over-quarter, indicating broad-based adoption of Palantir's platforms.

Raised Guidance

Following the strong quarterly performance, Palantir raised its guidance for the full year 2025. The company now expects:

• Total revenue between $3.890 billion and $3.902 billion, representing 36% year-over-year growth
• U.S. commercial revenue exceeding $1.178 billion, representing growth of at least 68%
• Adjusted income from operations between $1.711 billion and $1.723 billion
• Adjusted free cash flow between $1.6 billion and $1.8 billion

For the second quarter of 2025, Palantir projects revenue between $934 million and $938 million, with adjusted income from operations between $401 million and $405 million.

Executive Commentary

"Our Rule of 40 score increased to 83% in the last quarter, once again breaking the metric. We are in the middle of a tectonic shift in the adoption of our software, particularly in the U.S. where our revenue soared 55% year-over-year, while our U.S. commercial revenue expanded 71% year-over-year in the first quarter to surpass a one-billion-dollar annual run rate," said Alexander C. Karp, co-founder and chief executive officer of Palantir Technologies in the press release.

Karp attributed the growth to Palantir's position as "the operating system for the modern enterprise in the era of AI," which has driven the company to raise its full-year guidance significantly.

Segment Performance

Breaking down the revenue by segments shows the company's growth across different customer types:

• U.S. commercial revenue: $255 million, up 71% year-over-year and 19% quarter-over-quarter
• U.S. government revenue: $373 million, up 45% year-over-year and 9% quarter-over-quarter
• Total U.S. revenue: $628 million, up 55% year-over-year and 13% quarter-over-quarter

The company ended the quarter with $5.4 billion in cash, cash equivalents, and short-term U.S. Treasury securities, providing substantial financial flexibility for future investments and operations.

Understanding the Financial Metrics

Palantir reports both GAAP (Generally Accepted Accounting Principles) and non-GAAP financial measures. The non-GAAP measures, such as adjusted income from operations and adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), exclude stock-based compensation expense and related employer payroll taxes, which the company believes provides a clearer picture of operational performance.

The "Rule of 40" metric mentioned by the CEO is a benchmark commonly used for software companies that adds the percentage of revenue growth and profit margin. A score above 40% is generally considered strong performance in the software industry, making Palantir's 83% score particularly notable.

Total contract value (TCV) represents the potential lifetime value of contracts signed in the period, while remaining deal value (RDV) shows the total remaining value of all active contracts, providing insight into future revenue potential beyond current reported figures.

This article is based solely on information provided in Palantir Technologies Inc.'s press release dated May 5, 2025. The content is for informational purposes only and does not constitute financial, investment, legal, or tax advice. Stock Titan and its writers make no representations as to the accuracy, completeness, or timeliness of the information. Investors should conduct their own due diligence before making any investment decisions.

Source: Palantir

FAQ

What was Palantir's (PLTR) revenue growth in Q1 2025?

Palantir's revenue grew 39% year-over-year to $884 million in Q1 2025, with U.S. revenue growing 55% to $628 million.

How much did Palantir's U.S. commercial revenue grow in Q1 2025?

Palantir's U.S. commercial revenue grew 71% year-over-year and 19% quarter-over-quarter to $255 million in Q1 2025.

What is Palantir's updated revenue guidance for FY 2025?

Palantir raised its FY 2025 revenue guidance to between $3.890-3.902 billion, with U.S. commercial revenue expected to grow at least 68% to exceed $1.178 billion.

How profitable was Palantir in Q1 2025?

Palantir achieved GAAP income from operations of $176 million (20% margin) and adjusted income from operations of $391 million (44% margin) in Q1 2025.

How many major deals did Palantir close in Q1 2025?

Palantir closed 139 deals of at least $1 million, 51 deals of at least $5 million, and 31 deals of at least $10 million in Q1 2025.