Palantir delivered a third-quarter report on Monday that its own press release bragged was "crushing consensus expectations": $2.31 billion in revenue, up 96 percent year over year and 20 percent from the previous quarter, against analyst expectations of $2.18 billion. Adjusted earnings per share came in at $0.44 versus $0.41 expected. The company raised full-year guidance. Retail investors were lukewarm anyway, with the stock trading slightly down on Tuesday — because of a detail in the fine print of its growth business.
First, the good news. Palantir's US commercial revenue — the company's real growth story — hit $984 million, up 148 percent from a year earlier. For the first time in its history, that beat US government revenue of $953 million. Enterprises are signing up because Palantir lets them run frontier models and custom-train open-weight models securely without handing data and business processes to outside AI labs, and because it has always sold "forward-deployed" software engineering: engineers who sit with the customer and customise.
The less rosy finding: those enterprises are signing shorter contracts. "What Ryan and I are seeing on the front line and commercial is this much quicker interaction, much quicker to deployment, shorter duration of the contract but then an ability to expand that contract dramatically," CEO Alex Karp told analysts on the call.
That is a pattern now visible across enterprise AI: corporations are willing to try AI software fast, without their usual procurement bureaucracy — and are correspondingly willing to cancel. Karp spent much of the call framing this as strength rather than risk. "We've gone from being the most attractive person in the physics department to being the captain of the football team," he said of the inbound interest. "Once you go Palantir, you don't go back, and that's just how it is, and you see it in our numbers."
The numbers do not yet confirm that confidence. Palantir closed $1.46 billion of total contract value with US enterprises in the quarter — down from a record $2.13 billion in the prior quarter. That points to decelerating sales, at least for one quarter. The next report will show whether Palantir has cemented its role as the rising US enterprise AI provider; historically, many enterprises sign their largest technology purchases in the final quarter of the year.
Karp and his team are clearly betting on that seasonality. They raised guidance for US commercial revenue to "in excess of $3.559 billion, representing a growth rate of at least 143 percent". For the market, the interesting question is no longer whether enterprises will buy AI, but whether the contracts they sign are long enough to justify the multiple. The same question is being asked, much more loudly, in the credit markets where the buildout is financed.
