Palantir Reports Record Third-Quarter Revenue But Shares Slip Amid Shorter Enterprise Contracts

Palantir reported a record third-quarter earnings report on Monday, with revenue growing 96% year over year to reach $2.31 billion, surpassing the $2 billion mark for the first time. The total revenue beat analysts' expectations of $2.18 billion, and the company also reported adjusted earnings per share of $0.44 compared to the expected $0.41, leading the company to raise its full-year revenue guidance.

Commercial Growth

For the first time ever, Palantir's U.S. commercial revenue surpassed its U.S. government revenue, bringing in $984 million in commercial contracts, which is up 148% from the year-ago quarter, compared to $953 million in U.S. government revenue. Enterprises are signing up for the company's AI software that can run frontier models and custom-train open-weight models securely without sharing data with outside labs, alongside its forward-deployed software engineering that helps customers customize the platform.

Potential Worries

Despite the strong financial results, retail investors were lukewarm on Tuesday and the stock traded slightly down because enterprise sales showed signs of slowing down. CEO Alex Karp told Wall Street analysts that while companies are moving faster than ever and deploying software quickly, they are often signing short-term trials rather than long-term commitments. Total contract value from U.S. enterprises dropped to $1.46 billion in the quarter from a record-setting $2.13 billion in the previous quarter, indicating decelerating sales.

Context

Palantir's shift from government contracts toward commercial enterprise software reflects the broader rush among businesses to adopt artificial intelligence tools while still testing short-term commitments. Companies often use trials to evaluate new technology before locking into long-term vendor agreements.