Palantir beats its own forecast by 7% while new contract value slips from June quarter

Palantir Technologies (Nasdaq: PLTR) reported third-quarter revenue of $2.313 billion, up 96% from a year earlier and about 7% above the midpoint of its own forecast, in a results release filed with the SEC on Monday, November 2. The total value of contracts it signed in the quarter was lower than in the June quarter.

Revenue passed $2 billion and U.S. commercial passed U.S. government

Palantir said revenue grew 96% from a year earlier and 20% from the second quarter, and that quarterly revenue passed $2 billion for the first time. In August the company had forecast third-quarter revenue of between $2.160 billion and $2.164 billion, according to its second-quarter release. The $2.313 billion reported is about 7.0% above the midpoint of that range (computed).

U.S. revenue rose 119% from a year earlier to $1.937 billion. U.S. commercial revenue grew 148% to $984 million and U.S. government revenue grew 96% to $953 million, which the company said means U.S. commercial revenue surpassed U.S. government revenue for the first time. Chief Executive Alex Karp said in the release: "Our U.S. commercial revenue has surpassed our U.S. government revenue for the first time in our company’s history."

Profit measures held steady. GAAP income from operations was $1.085 billion, a 47% margin, the same margin as in the second quarter, and adjusted free cash flow was $1.216 billion, a 53% margin. Cash, cash equivalents and U.S. Treasury securities stood at $10.4 billion, against $9.2 billion at the end of June.

New contract value fell from the June quarter

Revenue is recognized as work is delivered, so it trails the contracts that come before it. On that measure the release is less one-sided. Palantir said it closed total contract value of $2.918 billion in the third quarter, up 6% from a year earlier. In the second quarter it had closed $3.373 billion, which makes the third-quarter figure 13.5% lower on the quarter (computed).

The drop is larger in the U.S. commercial business. Palantir closed $1.463 billion of U.S. commercial total contract value, up 11% from a year earlier, after what it called a record-setting $2.132 billion in the second quarter. That is a fall of 31.4% from the second quarter (computed).

The company defines total contract value as the total potential lifetime value of contracts at the time they are signed, and its definition assumes customers exercise all contract options. Single large deals can therefore move it from quarter to quarter. The count of large deals also changed: Palantir closed 64 deals of at least $10 million, against 73 in the second quarter.

U.S. commercial remaining deal value, the value of contracts still to be delivered at the end of the period, was $6.517 billion. It was up 79% from a year earlier and 4% from the second quarter. In the second quarter it had risen 27% from the first quarter and 124% from a year earlier.

Guidance moved up again, by more than the quarter's beat

For the fourth quarter Palantir expects revenue of between $2.649 billion and $2.653 billion, about 14.6% above the third-quarter figure at the midpoint (computed). For 2026 it raised its revenue guidance to between $8.530 billion and $8.534 billion, from between $8.150 billion and $8.158 billion in August. The midpoint rose by $378 million, or 4.6% (computed).

The company also raised its guidance for 2026 adjusted free cash flow to between $4.8 billion and $5.0 billion, from between $4.5 billion and $4.7 billion, and its guidance for adjusted income from operations to between $5.245 billion and $5.249 billion.

Stock-based compensation, which adjusted measures exclude, was $318.9 million in the third quarter against $172.3 million a year earlier, an increase of 85.1% (computed). Palantir held a webcast on the results at 5:00 p.m. ET on Monday.

Guidance now carries more of the story than the contracts signed

We think this report shows a company whose revenue is still being pulled by contracts signed in earlier quarters. Revenue beat its own forecast by about 7%, and the year's guidance rose by more than the quarter's beat, which fits our view that customers are paying for software that is already in use rather than for announcements.

The threat is in the signing figures. If total contract value stays below the June quarter's $3.373 billion for another quarter, we would expect revenue growth to slow in 2027 even if the fourth-quarter guidance of $2.649 billion to $2.653 billion is met. The opportunity is that contract value is lumpy and the company's U.S. commercial remaining deal value is still 79% higher than a year ago. We would watch the fourth-quarter contract figures and stock-based compensation before drawing a firmer conclusion, and our view would change if contract value rebounds above $3 billion.

The view in this final section is FinanceInTime's editorial opinion, for information only. It is not investment, tax, legal or other advice, and it does not take your circumstances into account. Forecasts are uncertain and past results do not guarantee future ones.