$PLTR Thoughts

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Feel free to beat me up in regards to the following conjectures. I have only posted a few times and wanted to get collective wisdom and thoughts from the group especially seeing Snowflake take such a beating today. I know that what Palantir does is quite different than Snowflake as I followed the thread a few weeks ago. However, they are definitely united in the data/data analysis category.

As I watched Snowflake tumble for what seems to be a looming deceleration, I pulled back up Palantir’s last earnings report. I know this is premature to make this conjecture, but the way I see it Palantir is going to win in the data analysis space. I know it is early, but I can’t ignore their acceleration in regards to specifically their commercial business. If you look at their acceleration in regards to Commercial Rev in general, and then in the micro on USA commercial Rev, I can’t help but spot that they are accelerating nicely. The problem I see is that the government contracts have been such a large part of their revenue for such a long time, that it seems to me that the market is missing that given a few more quarters of growth, Palantir will surpass government with commercial revenue.

Here are the QOQ numbers for 2021 in relation to 2020.
Q4 Q3 Q2 Q1
47% 37% 28% 19%

The US commercial numbers are even crazier, coming in at:
Q4 Q3 Q2 Q1
132% 103% 90% 72%

They also hired a specific head of sales from oracle for Europe, Asia, and ME. See this link: https://www.businesswire.com/news/home/20220126005383/en/Pal…

On the last earnings call they stated that they are hiring sales people as fast as possible, despite not wanting to hire a bunch of sales people in the past.

The only negative argument I have heard that makes sense is their use of a Forward Deployed Engineer, which means it is not a true Cloud/SAAS, but a hybrid model because an engineer needs to connect the data points for specific clients. Although, on their website they seem to be making their software into easily used “Archetypes” for certain industries, i.e. Health, Financial, Energy, etc. You can see the list here: https://www.palantir.com/offerings/

So my thesis is that eventually revenue from commercial businesses becomes their largest source of revenue and when that happens their valuation will pull away from snowflake and be considerably higher.

Also, they grew a total of 41% last year which I understand doesn’t quite make the hyper growth cut-off…but if they can push commercial rev acceleration, I could see them outpacing $ZI or $NET fairly soon (2023).

Thanks for any thoughts and don’t hold back.

Nate

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I made a previous post lightly covering Palantir here:

https://discussion.fool.com/millennialfalcon39s-palantir-fly-by-…

But along the way for my own awkward pleasure recently completed a deeper dive into the bear cases against it.

SNOW and PLTR are similar, but so different.

When it comes down to it, I think Palantir is still very much in the “prove it” phase and has a lot of work to do to show they can hold onto gov’t contracts and expand commercially, as well as support shareholders’ interest.

There are a couple key points in the story to me-- first, Karp is NOT a polished CEO and their earnings call was terrible from Q4-- I mean facilitated poorly (IMHO)-- I would describe Karp’s energy as “nervous.” That being said-- I do believe everything he said was authentic and honest.

http://www.palantir.events/palantirearnings-q42021

Gov’t customers stayed flat YoY at 90, though gov’t revenue did increase some 40+% YoY-- it also had some very challenging comps for the last two quarters as they signed a very large contract ($250M?) at the end of 2020.

Palantir’s “sale force” was more like a “sales farce” the past two years-- they moved from 4 (yes FOUR) “tenured” sales people to 25-- but overall they increased the sales team by more than 400% in 2021!.

Palantir made massive progress on FCF and operating margins, and increased commercial customers by 200% YoY-- but still only has a total customer count of 237-- a hard comparison to SNOW in that regard.

Palantir is founder-led, has maintained a debt free balance sheet with over $2B in cash (even before listing publicly they had $1.8B in cash), revenue is growing just over 40% and gross margins bounce just above and below 80% each quarter.

I don’t think the growth really appeals to this board. Commercial revenue is accelerating, but it will be hard to show over 40% growth with nearly $1B in gov’t revenue to compete with-- That being said-- Karp mentioned in the earnings that he believes USG revenue will double this year. I wrote to investor relations a few days ago to get clarity on his comment but haven’t heard back yet.

If you’re interested you can see what I put together here:

https://docs.google.com/document/d/1WpLB9-4GTbYCdAomRcS5OKZ-…

Unfortunately none of the graphics work on the google doc, so I can email it to you directly if you’d like.

Anyway-- all this to say, maybe not one for this board, but a $25B market cap
$1.54B in revenue last year (3x SNOW)
80% gross margins
Excellent DBNRR (131% overall, 150% US commercial, 103% int’l commercial only 6 tenured salespersons)161% int’l gov’t, 141% USG)
Debt Free
$2.3B in cash
Mission critical services

Their website is worth checking out, as well as their job postings as they are looking to roughly double the size of their sales team again this year.

https://www.palantir.com/

https://investors.palantir.com/files/Accompanying%20Remarks%…

I’m probably following the story and the mission too much on this one, but that’s how my “sleep number” works-- I still have a hard time maintaining a high conviction in a company growing faster with a product built around work-share and advertising tech-- so those are a couple of my big blind spots.

MillennialFalcon PLTR 17.7% gulp

(I usually end with a joke, but I’m sure there’s plenty of laughing surrounding my allocation so…)

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Sorry my revenue was wrong for SNOW-- I was looking at last years— companies reported different FYs always throws me–

Revenue very similar to PLTR this year–

but… I am just perusing SNOW’s numbers right now and I have to say they are ridiculous. I will look to take advantage of the unfounded pull-back.

RPO increased ~100% YoY to $2.6B
DBNRR 178%
projected revenue guidance pressing on $2B… I’m

Best of Luck.

MillennialFalcon

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