Palantir Technologies reported impressive quarterly earnings recently, exceeding analysts’ expectations and eliciting an enthusiastic response from CEO Alex Karp. Despite the positive financial results, the company’s stock did not reflect the upbeat news, sliding approximately 3.5% in after-hours trading after an initial rise.
In a spirited video interview preceding the earnings release, Karp expressed his excitement about the company’s performance while gesturing animatedly. He emphasized that the results validate Palantir’s strategy and urged others to learn from their success. “These numbers validate we were right,” he stated, adding that the quarterly results are not just strong but potentially the best ever reported by any software company.
For the third quarter, Palantir announced revenue of about $1.2 billion, marking a year-over-year increase of 63% and surpassing the average analyst forecast of $1.09 billion. Net income reached approximately $476 million, reflecting a 40% rise compared to the previous year. Notably, while the company’s government contracts continue to perform well, the most significant growth came from U.S. commercial clients, which expanded by 121% year-over-year to $397 million.
Karp pointed to the company’s “Rule of Forty” performance metric—combining revenue growth and adjusted operating margin—as a strong indicator of organizational health. This quarter, Palantir achieved a “Rule of Forty” score of 114%, significantly higher than the previous quarter’s 94%. Despite these accomplishments, industry analysts noted that Palantir’s revenue remains relatively small in comparison to companies with similar market capitalizations. Concerns regarding a potential AI bubble have also prompted skepticism among investors.
Adding to the intrigue, regulatory filings revealed that noted short seller Michael Burry has taken a short position in both Palantir and NVIDIA. This comes on the heels of a recent partnership between the two companies, wherein Palantir will integrate NVIDIA’s chips and software into its platform. Although Palantir mentioned that retailer Lowe’s is already utilizing this integration, specific details about other clients were not disclosed.
During the earnings call, Karp also touched on sensitive political issues, particularly the U.S. government’s focus on drug trafficking in South America. He provocatively suggested that societal reactions to drug-related deaths differ based on socioeconomic status, positing that if an affluent demographic were affected, the response would be substantially more severe.
In his shareholder letter, Karp reflected on broader societal themes, lamenting a “rejection of any shared and defined sense of common culture,” which he argued has led to significant costs. While he expressed a sense of triumph over the company’s results, he also criticized detractors, suggesting they have been left in a “deranged and self-destructive befuddlement.”
Karp’s mix of exuberance for Palantir’s financial success, his sharp critiques of societal issues, and his defiance toward skeptics underscore a complex narrative surrounding the company’s trajectory and its role in the tech landscape.
