Ok so Palantir torched it with continued re-acceleration in total plus Gov and Commercial revenues. US looks strong as a whole. $1bn in free cash flow in TTM. Large value deal count remains elevated:-
Q3 Non-GAAP EPS of $0.10 beats by $0.01.
Revenue of $725.52M (+30.0% Y/Y) beats by $21.83M.
Q4 Outlook: Revenue of between $767 - $771 million vs. consensus of $744.04M.
Adjusted income from operations of between $298 - $302 million.
2024 Outlook: Raised revenue guidance to between $2.805 - $2.809 billion vs. consensus of $2.76B.
Raised U.S. commercial revenue guidance to in excess of $687 million, representing a growth rate of at least 50%.
Raised adjusted income from operations guidance to between $1.054 - $1.058 billion.
Raised adjusted free cash flow guidance to in excess of $1 billion.
Q3 2024 Highlights
- Revenue grew 30% year-over-year and 7% quarter-over-quarter to $726 million (up 32% excluding strategic contracts)
- U.S. revenue grew 44% year-over-year and 14% quarter-over-quarter to $499 million
- U.S. commercial revenue grew 54% year-over-year and 13% quarter-over-quarter to $179 million (up 59% excluding strategic deals) and booked $297 million of U.S. commercial TCV, representing 13% growth sequentially. Total remaining deal value in our U.S. commercial business grew 73% year-over-year and 7% sequentially
- U.S. government revenue grew 40% year-over-year and 15% quarter-over-quarter to $320 million
- Third quarter Commercial revenue grew 27% year-over-year and 3% sequentially to $317 million. Excluding the impact from strategic commercial contracts, Commercial revenue grew 30% year-over-year and 3% sequentially. Third quarter Commercial TCV booked was $612 million, representing 52% growth year-over-year and 62% growth sequentially
- Closed 16 deals over $10m (down from 27), 36 deals over $5m (up from 33) & 104 deals over $1 million (up from 96 in Q2)
- Customer count grew 39% year-over-year and 6% quarter-over-quarter
- GAAP net income of $144 million, representing a 20% margin
- GAAP income from operations of $113 million, representing a 16% margin
- Adjusted income from operations of $276 million, representing a 38% margin
- Rule of 40 score of 68%
- GAAP earnings per share (“EPS”) grew 100% year-over-year to $0.06
- Adjusted EPS grew 43% year-over-year to $0.10
- Cash, cash equivalents, and short-term U.S. Treasury securities of $4.6 billion
- Cash from operations of $420 million, representing a 58% margin and $995 million on a trailing twelve month basis
- Adjusted free cash flow of $435 million, representing a 60% margin and over $1 billion on a trailing twelve month basis
- RPO increased 15% QoQ to over $1.57bn
- Billings increased 15% QoQ to $824m from $718m
- Third quarter TCV booked was $1.1 billion, up 33% year-over-year and 16% sequentially. Net dollar retention was 118%, an increase of 400 basis points from last quarter
- Revenue from strategic commercial contracts was $9.6 million for the quarter - and anticipate fourth quarter 2024 revenue from these customers to decline to between $6 million to $7.5 million compared to $20 million in the fourth quarter of 2023. “We continue to anticipate 2024 revenue from these customers to be less than 2% of full year revenue.”
Earnings Presentation:-
CEO Letter & Webcast:-
My take:-
A very strong print with very solid guidance. They have reaccelerated about as far as I could have hoped for to put them in as strong a position as possible pending lapping the AIP takeoff that occurred in Q4 a year ago.
They should continue to deliver decent double digit YoY growth underpinned by ongoing high single digit QoQ growth (and double digit QoQ growth in pockets) and supported by $1.57bn of RPO (equivalent of 2 quarters of revenue).
Positive Points of Note:-
- US commercial growth led by AIP
- US Gov growth now including AIP adoption
- Defence distribution agreement with L3Harris
- Implementation collaboration with Oracle
- AI LLM partnering with META
- Enhancements to complementary AIP tech features and sector specific deployment (supply chain, health, defence, oil and gas)
- Profitability and cash flow performance
- RPO and Total Remaining Deal Value growth
Concerns:-
- SBC at 19.6% of Revenues in Q3
- Ex US growth rates (sequentially negative)
- Imminent lapping of AIP takeoff and lowering of YoY growth rates
- Plateauing and softening of some growth, deal count, customer growth metrics
- Potential for US Gov market saturation
- Valuation levels