Palantir (NYSE:PLTR) Reports Q2 In Line With Expectations But Stock Drops 11% On Weak Guidance

Radek Strnad /
2022/08/08 7:05 am EDT
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Data-mining and analytics company Palantir (NYSE:PLTR) reported results in line with analyst expectations in Q2 FY2022 quarter, with revenue up 25.9% year on year to $473 million. However, guidance for the next quarter was less impressive, coming in at $474.5 million at the midpoint, being 6.63% below analyst estimates. Palantir made a GAAP loss of $179.3 million, down on its loss of $138.5 million, in the same quarter last year.

Is now the time to buy Palantir? Access our full analysis of the earnings results here, it's free.

Palantir (PLTR) Q2 FY2022 Highlights:

  • Revenue: $473 million vs analyst estimates of $471.7 million (small beat)
  • EPS (non-GAAP): -$0.01 vs analyst estimates of $0.03 (-$0.04 miss)
  • Revenue guidance for Q3 2022 is $474.5 million at the midpoint, below analyst estimates of $508.2 million
  • Free cash flow of $56.9 million, up 181% from previous quarter
  • Gross Margin (GAAP): 78.3%, up from 75.7% same quarter last year

Started by Peter Thiel after seeing US defence agencies struggle in the aftermath of the 2001 terrorist attacks, Palantir (NYSE:PLTR) offers software as a service platform that helps government agencies and large enterprises use data to make better decisions.

Organizations generate a lot of data that is stored in silos, often in incompatible formats, making it slow and costly to extract actionable insights, which in turn drives demand for modern cloud-based data analysis platforms that can efficiently analyze the silo-ed data.

Sales Growth

As you can see below, Palantir's revenue growth has been very strong over the last year, growing from quarterly revenue of $375.6 million, to $473 million.

Palantir Total Revenue

This quarter, Palantir's quarterly revenue was once again up a very solid 25.9% year on year. On top of that, revenue increased $26.6 million quarter on quarter, a very strong improvement on the $13.4 million increase in Q1 2022, which shows acceleration of growth, and is great to see.

Guidance for the next quarter indicates Palantir is expecting revenue to grow 21% year on year to $474.5 million, slowing down from the 35.5% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 29.2% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.


What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Palantir's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 78.3% in Q2.

Palantir Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.78 left to spend on developing new products, marketing & sales and the general administrative overhead. This is a good gross margin that allows companies like Palantir to fund large investments in product and sales during periods of rapid growth and be profitable when they reach maturity. It is good to see that the gross margin is staying stable which indicates that Palantir is doing a good job controlling costs and is not under pressure from competition to lower prices.

Key Takeaways from Palantir's Q2 Results

With a market capitalization of $23.4 billion, more than $2.45 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

Palantir delivered solid revenue growth and decent cash flow this quarter. On the other hand, it was unfortunate to see that Palantir's revenue guidance for the full year missed analyst's expectations. Overall, it seems to us that this was a complicated quarter for Palantir. The company is down 11.1% on the results and currently trades at $10.16 per share.

Palantir may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.