📌 WHAT HAPPENED

Palantir Technologies reported Q3 earnings with revenue rising 21% year-over-year to $558 million, exceeding Wall Street estimates of approximately $555 million. Earnings per share (EPS) came in at $0.07, aligning with consensus expectations. GAAP net income stood at $72 million, marking the company’s fifth consecutive quarter of GAAP profitability.

U.S. commercial revenue climbed 33% to $116 million, while government revenue rose a more modest 12% to $308 million. Total customer count jumped 34% year-over-year to 453, yet customer adds slowed sequentially. Operating margins narrowed slightly, raising concerns about the sustainability of Palantir’s profitability streak.

💡 WHY IT MATTERS

While Palantir's top-line growth and profitability are encouraging, the momentum in U.S. commercial bookings—once a key bullish catalyst—has decelerated, potentially tempering the company’s near-term growth runway. Operating leverage appears to have plateaued, and the stock dropped nearly 5% in after-hours trading, underscoring investor sensitivity to any signs of margin pressure.

Palantir also reaffirmed its full-year 2023 revenue guidance of $2.21–$2.22 billion and raised its full-year adjusted income from operations forecast to over $576 million, up from prior guidance of $576 million. Yet these updates were insufficient to assuage concerns around future growth velocity and expense control.

📈 INVESTMENT PERSPECTIVE

Palantir trades at a premium valuation, with investors pricing in significant commercial expansion and AI-related upside. The Q3 print supports long-term bullish arguments around government demand stability and commercial adoption, but also flags execution risks. Slowing U.S. business growth and margin compression could limit short-term upside.

Nevertheless, Palantir’s continued GAAP profitability marks a structural shift in the company’s financial profile. If it can reaccelerate commercial growth and demonstrate renewed margin discipline, the stock could regain momentum. Investors may consider accumulating on weakness, with a focus on multi-quarter execution.

🎯 BOTTOM LINE

Palantir delivered solid top-line growth and maintained GAAP profitability, but pressure on margins and slowing commercial traction raise short-term execution concerns. Long-term fundamentals remain intact, yet near-term caution may be warranted.