AI Progress Persists at Palantir: Sustainability and Stock Purchase Considerations Discussed
In a remarkable quarter, Palantir Technologies reported a significant surge in its revenue for Q2 2024. The data analytics company's total revenue jumped by 49% year over year, reaching $553 million, surpassing its own forecast of $934 million to $938 million set in Q2 2023.
The U.S. government revenue soared by 53% to $426 million, while international government revenue experienced a 37% increase, amounting to $127 million. This growth was driven by key contracts secured in the last quarters, including a $178 million deal with the US military and a $30 million contract with the US immigration agency ICE, as well as a strategic partnership with Elon Musk's xAI and TWG Global to develop AI solutions for the financial sector.
The company's U.S. commercial revenue increased by 93% to $306 million, and its international commercial revenue, while decreasing by 3%, still stood at $144 million. The growth is being led by U.S. commercial customers adopting Palantir's Artificial Intelligence Platform (AIP).
Palantir's net dollar retention rate also increased, reaching 128% in Q2 2024, up from 124% in the previous quarter. The company's adjusted earnings per share (EPS) for Q2 2024 were $0.16, ahead of the analyst EPS consensus.
Moreover, Palantir's quarterly revenue growth accelerated for the eighth straight quarter, going from 13% in Q2 2023 to 48% in Q2 2024. This acceleration suggests that Palantir could grow its revenue by more than 50% in Q3.
In a move that further boosted investor confidence, Palantir raised its full-year revenue guidance for 2024. The new range is now $4.142 billion to $4.150 billion, representing a 45% growth compared to the previous guidance.
It's worth noting that Palantir's stock price, PLTR, has seen a significant increase over the past 12 months, with a 575% increase ending on Aug. 6, 2023. However, even if the stock price were cut in half, its valuation would still be high, not exactly in the bargain bin.
The company's success is not limited to the U.S. market. International government revenue had its highest-ever bookings quarter, and Palantir's Q3 2024 revenue guidance is between $1.083 billion and $1.087 billion, representing nearly 50% growth at the midpoint.
Palantir is winning business across civil, intel, and defense contracts, including a recent $10 billion, 10-year contract with the U.S. Army. The company's stock trades at a forward price-to-sales (P/S) ratio of over 110 times the 2025 analyst estimates and more than 85 times the 2026 estimates.
In conclusion, Palantir Technologies' Q2 2024 financial results demonstrate a strong performance, with accelerating revenue growth and increased net dollar retention. The company's success is driven by its Artificial Intelligence Platform, which is being adopted by an increasing number of U.S. commercial customers, and its ability to secure key contracts across various sectors.
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