Palantir (PLTR) reported fiscal third quarter results that beat estimates on nearly every line.
The Numbers
EPS came in at $0.44 against an estimate of $0.41, a beat. Revenue was $2.31 billion versus the $2.17 billion estimate. Adjusted operating profit was $5.25 billion versus the $4.79 billion estimate.
Total revenue grew about 96% year-over-year. Commercial revenue grew 148% year-over-year, beating the roughly 130% the street expected. For the first time, commercial revenue passed government revenue. That matters because the commercial market is a bigger target than the government one.
Guidance Raised
Fourth quarter revenue is guided to $2.65 billion, above the consensus estimate of under $2.5 billion. Full fiscal year revenue outlook was raised to $8.53 billion, above the prior range of $8.15 to $8.16 billion.
Adjusted free cash flow guidance was raised to $4.8 to $5 billion from a prior range of $4.5 to $4.7 billion. Commercial revenue guidance for Q4 was raised to 143% year-over-year growth. That would be about a 5% slowdown from the Q3 growth rate.
The Muted Reaction
Despite the beats, the stock first moved slightly down, near the unchanged line, then turned around to trade up about 1 and 3/4 percent.
Why no big move higher given strong numbers? Expectations for PLTR have climbed because the company keeps beating in harder and harder conditions. Many past quarters were expected to be the peak growth quarter, and the prior quarter in particular was called that, yet the company pushed past it each time. That streak may have finally reached its limit.
On the size of the beat: in fiscal year 2026 the last two quarters beat EPS by an average of 18%. Today's beat was about 7%. A 7% beat still outperforms the market, where roughly 60% of names have reported and the aggregate earnings surprise is only about 3%, so PLTR roughly doubled the market. Against its own history, though, 7% is a step down from 18%.
This resembles 2022, when inflation fell and economists could not keep up with the numbers, but eventually caught up. Analysts now appear to be catching up to the Palantir story. They are still 7% below, but they had been 18% below for several quarters.
Single-digit beats at companies with very lofty expectations are starting to feel like in-line results. The business keeps surprising with its acceleration, yet the soft reaction may come down to expectations or positioning going into the print. One analyst earlier said some of the higher expectations had been toned down. PLTR has not escaped the broader pullback in technology.
The Bull Case and the Main Risk
Unlike many AI names still trying to prove return on investment, PLTR has already shown it can make money from AI. One view noted the company's time is much higher than its revenue right now.
Worries about the cost of capital in this market do not weigh on PLTR, because it is cushioned by government and commercial contracts, with 148% and 96% growth. It will always have companies and governments to work with.
The main risk is multiple compression. In a market where everything is being checked tightly, even good numbers may not be rewarded, because the stock is priced for a story set far into the future. The tone of CEO Alex Karp on the earnings call will shape whether the final reaction is positive or negative.
