Palantir Technologies(PLTR) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue grew 39% year over year, exceeding prior guidance by nearly 350 basis points, and representing an 1,800 basis point increase compared to Q1 of last year [24] - Adjusted operating margin was 44%, an 800 basis point increase compared to the first quarter of last year [26] - Rule of 40 score increased from 81 in Q4 to 83 in Q1 [5][27] - Adjusted free cash flow was $370 million, representing a margin of 42% [41] Business Line Data and Key Metrics Changes - US revenue grew 55% year over year, making up 71% of overall business [4][28] - US commercial revenue grew 71% year over year and 19% sequentially, surpassing a billion-dollar annual run rate for the first time [24][25] - US Government revenue grew 45% year over year and 9% sequentially [26][35] - International commercial revenue declined 5% year over year and 11% sequentially [34] Market Data and Key Metrics Changes - Customer count grew 39% year over year to 769 customers [29] - Revenue from the top 20 customers increased 26% year over year to$ 70 million per customer [29] - Total remaining deal value in the US commercial business grew 127% year over year [33] Company Strategy and Development Direction - The company is focused on leveraging AI to drive business outcomes and enhance enterprise autonomy [15][18] - Continued investment in AIP and technical hiring is expected to increase expenses significantly in 2025 [39] - The company aims to capitalize on the growing demand for AI in both commercial and government sectors [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver tangible impact for customers amid economic uncertainty [13] - The company anticipates continued strong demand for its products, particularly in the US market [12][44] - Management highlighted the importance of adaptability in the current business environment [12][46] Other Important Information - The company closed $930 million in commercial TCV bookings, representing 84% growth year over year [31] - Adjusted gross margin was 82% for the quarter [39] - The company ended the quarter with$ 5.4 billion in cash and cash equivalents [41] Q&A Session Summary Question: How does Palantir plan to sustain its competitive advantage in AI? - The advantage lies in ontology, which positions AIP to capture the expanding capabilities of raw LLMs and turn them into business value [53][54] Question: How will the current US administration's focus on reducing federal spend impact contracts? - The government is focusing on eliminating ineffective spending, which could benefit Palantir as it provides effective solutions [55][56] Question: Is there an opportunity to gain more share of budgets in the government sector? - The company is optimistic about gaining more budget share as meritocracy increases within government agencies [61][62] Question: Are there opportunities for software to add value in European defense buildup? - The company is interested in helping Europe with manufacturing challenges related to rearmament, but recognizes that Europe is still catching up on AI [68][72]