Palantir Technologies (NASDAQ:PLTR) shares surged by 18% during early post-market trading following the release of its fourth quarter 2024 earnings report, which outperformed expectations significantly across various segments. The data analytics firm posted adjusted earnings per share of $0.14, beating the consensus estimate of $0.11. Overall revenue for the fourth quarter grew 36% year-over-year, reaching $828 million, driven by strong performance from both government and commercial sectors.
Particularly noteworthy was the revenue growth from U.S. operations, which soared 52% year-on-year to $558 million. Within this, U.S. commercial revenue skyrocketed by 64% to $214 million, whereas U.S. government revenue increased by 45% to $343 million. This solid growth was accompanied by remarkable deal activity, with the company closing 129 deals totaling at least $1 million each, including 32 deals beyond $10 million. This performance underlines Palantir's strategic focus on enhancing its commercial presence.
Analyst Gil Luria from D.A. Davidson stated, "On the government side, Palantir's vision is very well aligned with the current administration," emphasizing the firm's effective positioning within government contracts. The strong demand for services, particularly from U.S. government entities, played a major role, with over 40% of quarterly sales attributed to this sector.
For 2025, Palantir projected revenue between $3.74 billion and $3.76 billion, significantly higher than the average analyst estimate of $3.52 billion. With the expectation of at least $1.08 billion from U.S. commercial revenue alone, the anticipated growth rate stands at 54%. This ambition reflects the firm's intent to expand its foothold across various sectors and reduce its historical dependency on government spending.
CEO Alexander C. Karp celebrated the company's transformation, stating, "Our business results continue to astound, demonstrating our deepening position at the center of the AI revolution. Our early insights surrounding the commoditization of large language models have evolved from theory to fact." Karp's confidence highlights how the company's product offerings are being increasingly recognized and adopted, especially as enterprise dependence on AI technologies grows.
Despite this impressive growth, Palantir recently cautioned its clients against utilizing AI models developed by the Chinese startup DeepSeek. Chief Revenue Officer Ryan Taylor stated, "We would strongly discourage it (DeepSeek) and don't think any customer in the U.S. government will be able to use it." This warning resonates amid concerns about the security and reliability of AI technologies from certain international sources.
Investors, analysts, and clients alike are keeping their eyes on how Palantir navigates the mixed dynamics of government and commercial engagements. The company’s Q4 earnings also showcased strong operational efficiency, highlighted by adjusted free cash flow of $517 million, representing a remarkable margin of 63%. Palantir's strategies, particularly its focus on high-margin commercial contracts, could serve as a hedge against potential market fluctuations.
Looking forward, Palantir's guidance for the first quarter of 2025 is equally promising, with revenues anticipated between $858 million and $862 million. Given the current analyst estimates, this projection indicates notable confidence as the company prepares for the fiscal year.
The combination of contractual wins, growth strategies, and warning against untrusted technologies paints Palantir's portrait as a proactive player aiming to secure its leadership role amid the rising tide of AI and analytics. Following the firm's recent earnings call, the broader technology and government sectors are likely to keep close tabs on Palantir's upcoming initiatives.