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Palantir (NYSE:PLTR) Surprises With Q4 Sales But Stock Drops 10.1%


Radek Strnad /
2022/02/17 6:13 am EST
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Data-mining and analytics company Palantir (NYSE:PLTR) announced better-than-expected results in the Q4 FY2021 quarter, with revenue up 34.3% year on year to $432.8 million. The company expects that next quarter's revenue would be around $443 million, which is the midpoint of the guidance range. That was a little above analyst expectations. Palantir made a GAAP loss of $156.1 million, down on its loss of $148.3 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) Q4 FY2021 Highlights:

  • Revenue: $432.8 million vs analyst estimates of $418 million (3.54% beat)
  • EPS (non-GAAP): $0.02 vs analyst expectations of $0.04 (44% miss)
  • Revenue guidance for Q1 2022 is $443 million at the midpoint, above analyst estimates of $439.6 million
  • Free cash flow of $87.5 million, roughly flat from previous quarter
  • Gross Margin (GAAP): 79.7%, up from 78.1% 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 impressive over the last year, growing from quarterly revenue of $322 million, to $432.8 million.

Palantir Total Revenue

And unsurprisingly, this was another great quarter for Palantir with revenue up 34.3% year on year. On top of that, revenue increased $40.7 million quarter on quarter, a very strong improvement on the $16.5 million increase in Q3 2021, and a sign of acceleration of growth.

Guidance for the next quarter indicates Palantir is expecting revenue to grow 29.8% year on year to $443 million, slowing down from the 48.7% year-over-year increase in revenue the company had recorded in the same quarter last year.

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Profitability

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 79.7% in Q4.

Palantir Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.79 left to spend on developing new products, marketing & sales and the general administrative overhead. Significantly up from the last quarter, 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.

Key Takeaways from Palantir's Q4 Results

With a market capitalization of $28 billion, more than $2.52 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.

It was good to see Palantir deliver strong revenue growth this quarter. And we were also glad to see the improvement in gross margin. Overall, we think this was a really good quarter, that should leave shareholders feeling very positive. But the market was likely expecting more and the company is down 10.1% on the results and currently trades at $12.55 per share.

Should you invest in Palantir 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.

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