Palo Alto, California — Palantir Technologies Inc. reported impressive financial results for its latest fiscal quarter, highlighting robust growth and solid operational performance. The company announced a substantial 39% increase in year-over-year revenue, reaching $884 million. A significant contributor to this growth was the U.S. market, where revenue soared by 55%, totaling $628 million and now comprising 71% of Palantir’s overall business.
In a noteworthy achievement, Palantir’s U.S. commercial revenue rose by 71%, surpassing a $1 billion annual run rate for the first time. This surge underscores the company’s expanding footprint in the commercial sector as it capitalizes on increasing demand for its data analytics solutions. Overall, Palantir raised its revenue guidance for the full year 2025, projecting a midpoint of $3.896 billion, reflecting a 36% annual growth outlook.
The company also reported a healthy adjusted free cash flow of $370 million, equating to a 42% margin, indicating strong operational efficiency. Alongside this, Palantir’s customer base grew by 39% compared to the previous year, reaching 769 clients, which bodes well for its ongoing sales efforts.
While the domestic market flourishes, Palantir faces challenges internationally. The company experienced a 5% year-over-year decline in its international commercial revenue, attributed to ongoing difficulties in European markets, where the adoption of artificial intelligence remains sluggish. The company expects this downturn to continue, particularly regarding strategic commercial contracts in the second quarter of 2025.
Palantir also anticipates increased expenses in 2025 due to continued investments in human capital and artificial intelligence initiatives. Concerns about potential cuts to the U.S. Department of Defense budget could impact current and future contracts, posing challenges to Palantir’s government revenues, which grew by 45% year-over-year to $373 million.
In a recent earnings call, Shyam Sankar, Executive Vice President and Chief Technology Officer, emphasized Palantir’s unique competitive edge in AI through its Ontology system. He noted that this framework is pivotal for converting the capabilities of raw language models into tangible business value, particularly in mixed human-AI environments. CEO Alexander Karp highlighted that the current pressure on federal budgets could ultimately benefit Palantir, as it eliminates less effective projects and underscores the value of their software solutions.
Looking ahead, Palantir executives expressed optimism about their market position, particularly in the U.S. As federal agencies shift toward more meritocratic budgeting, the company believes it is well-suited to capture additional market share. On the topic of expanding into European defense capabilities, Sankar remarked that Europe must first acknowledge the limitations of existing manufacturing systems to effectively implement advanced solutions.
In the evolving landscape of defense technology, Karp emphasized the importance of integrating software with hardware. He asserted that developing hardware around robust software is crucial for future projects, emphasizing that some classified initiatives begin with mission-critical software before determining hardware needs. This approach is essential for optimizing performance in next-generation defense programs.
As Palantir continues to navigate both opportunities and hurdles, its latest financial results exemplify a company poised for growth despite a competitive and shifting landscape.