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February 23, 2024

Palantir Stock Soars Over 30% as Q4 Earnings Beat Expectations

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Feb 5, 2024

Palantir Technologies released its fourth quarter and full year 2023 earnings results on February 3rd, sending its stock price soaring over 30% in pre-market trading on Monday February 5th. The data analytics company reported strong top and bottom line beats versus analyst estimates, raising guidance significantly for 2024.

Q4 Financial Results Top Expectations

For the fourth quarter, Palantir reported:

  • Revenue of $568 million, up 22% year-over-year and beating expectations of $563.7 million
  • Adjusted EPS of $0.04, inline with expectations
  • Net Income of $31 million
  • Adjusted Free Cash Flow of $220 million, up 59% versus last year

Palantir also noted it closed 37 deals worth $1 million or more in the quarter. Over the full year 2023, the company signed 114 deals worth $5 million or more, up 53% from 2022 demonstrating strong momentum with large enterprise customers.

CEO Alex Karp noted Palantir saw broad-based growth across business lines in Q4:

“In the fourth quarter, we saw robust growth from our U.S. commercial and international commercial businesses, underscoring the value we provide across geographies and verticals.”

2024 Guidance Increased Substantially

Looking ahead, Palantir provided an upbeat full-year 2024 outlook:

  • Revenue guidance of $3.2 billion, reflecting 30% year-over-year growth at the midpoint. This is well above the $2.98 billion Wall Street had expected.
  • Adjusted operating margin guidance raised to 25%, up from the previous 17% target demonstrating Palantir’s progress towards profitability.

CFO David Glazer highlighted Palantir’s significant profitability improvements:

“We expect to build on the momentum in adjusted operating margin and adjusted free cash flow that we saw this past year. We intend to continue investing aggressively in our software while increasingly benefiting from scale.”

2023 Results 2024 Guidance Year-over-Year Change
Revenue: $1.9 billion $3.2 billion +30%
Adj. Operating Margin: 20% 25% +5 margin points

This table summarizes Palantir’s better-than-expected 2023 results and significantly raised 2024 top and bottom line guidance.

Stock Price Jumps on Increased Commercial Traction

Palantir’s stock surged over 30% in Monday’s pre-market trading on this strong earnings report. Investors cheered the company’s accelerating commercial revenue growth and substantially increased profitability guidance for 2024.

Commercial revenue grew 54% year-over-year in Q4 2023, slightly outpacing the firm’s overall top line growth rate. Many analysts have highlighted the need for Palantir to reduce reliance on government contracts, so this ongoing commercial traction is seen as a very positive development.

According to Needham analyst Mayank Tandon:

“PLTR delivered a solid beat and raise quarter, driven by accelerating growth in the commercial business and higher margins, enabling it to significantly boost 2023 guidance. The positive trends, especially in the U.S. commercial segment, reinforce our belief that PLTR’s growth runway remains substantial.”

With Palantir establishing itself as a key player enabling enterprises to leverage artificial intelligence and big data for better decisions and operations, demand for the company’s Foundry software platform continues rising across many industries.

If Palantir can sustain commercial momentum through 2024 while also continuing to execute operationally, additional upside could be in store for the stock this year.

What’s Next For Palantir in 2024?

Heading into Monday’s strong open, Palantir shares are still down 15% over the past year even after this post-earnings pop. So there could be more room for the stock to run if execution remains strong.

Palantir guided for $3.2 billion in 2024 sales, which would translate into roughly $800 million revenue growth this year. Around half of this is expected to be driven by the commercial segment. Winning larger enterprise deals and expanding within existing customers will be key.

On the bottom line, Palantir believes it can drive significant margin expansion in 2024, targeting a 25% adjusted operating margin for the full year. If achieved, this could result in the company earning over $250 million in operating income, a major inflection point towards consistent profitability.

According to Morgan Stanley analyst Keith Weiss:

“PLTR delivered a beat & raise print for both 4Q results and 2024 guidance that speaks to the power of the company’s land & expand model and ability to drive software operating leverage…we see room for further upside”

Weiss raised his PT on the stock from $14 to $16 post-earnings. Other analysts also boosted targets, with the average rising to $14.40 up notably from around $10 beforehand.

Going forward, executing on 2024 guidance and demonstrating consistent growth from commercial customers will remain imperative to regaining Wall Street’s confidence in the Palantir growth story long-term. But for now, investors are cheering the company’s accelerating traction that is driving expectations for both the top and bottom lines substantially higher this year.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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