What Happened:
Shares of data-mining and analytics company Palantir (NYSE:PLTR) jumped 28.5% in the morning session after the company reported fourth-quarter results with expectations for revenue growth to accelerate in the next fiscal year, highlighting growing demand for its new artificial intelligence platform (AIP), which was launched in 2023. It is also encouraging to learn that the company has improved the time it takes to deploy AIP and integrate with client's data from "weeks and months to as little as a few hours." The icing on the cake is adjusted operating income well above expectations, showing that the company is not sacrificing profits for the higher topline growth. Also, its revenue, billings, and free cash flow exceeded Wall Street's expectations in the quarter, and its gross margin improved. Notably, the US commercial business significantly contributed to the solid performance during the quarter, as revenue in the segment grew 70% year on year and 12% sequentially.
Looking ahead, the company expects the US commercial business to grow at least 40% in 2024. A minor negative was that revenue guidance for the next quarter missed analysts' expectations. Overall, this was a very solid quarter for Palantir.
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What is the market telling us:
Palantir's shares are very volatile and over the last year have had 42 moves greater than 5%. But moves this big are very rare even for Palantir and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 9 months ago, when the stock gained 15.1% on the news that the company reported first-quarter results that beat analysts' revenue, free cash flow, adjusted EBITDA, and earnings per share estimates. Customer growth also came in strong, rising by 41% year-over-year and 7% sequentially. However, revenue guidance for the next quarter came in below Consensus. Despite this, management noted that the company is expected to remain profitable every quarter through the end of the year.
Additionally, the company provided some updates on the adoption of its AI technology, stating that "the depth of engagement with and demand for Palantir's new Artificial Intelligence Platform (AIP) is without precedent." Overall, the company's Q1 results continued to highlight the improvements in cash management and profitability.
Palantir is up 26.4% since the beginning of the year, and at $20.96 per share it is trading close to its 52-week high of $21.34 from November 2023. Investors who bought $1,000 worth of Palantir's shares at the IPO in September 2020 would now be looking at an investment worth $2,206.
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