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Palantir Stock Drops as Outlook Misses Estimates and Growth Slows

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Palantir Technologies

David Paul Morris/Bloomberg

Shares of


Palantir Technologies

dropped Monday after the data analytics software company provided guidance for both the September quarter and the full year that was shy of Wall Street estimates amid signs of softer demand from both government and international customers.

The good news is that for the second quarter ended in June,


Palantir

(ticker: PLTR) posted revenue of $473 million, up 26% from a year ago, and ahead of both the company’s target of $470 million and analysts’ consensus of $466 million. Palantir said commercial revenue was up 46% from a year agp, with U.S. commercial revenue up 120%. U.S. government revenue was up 27%; overall U.S. revenue rose 45% to $290 million. 

Based on previous disclosures, the second-quarter results imply international revenue of $183 million in the quarter, up just 4% from the year-earlier period, while overall government revenue was up 13%. In the March quarter, commercial revenue had expanded 54%, while government revenue grew 16%.

Palantir said second-quarter adjusted income from operations was $108 million, a margin of 23%, above the company’s target at 20%. Adjusted free cash flow of $61 million fell short of the Wall Street consensus of $82 million. The company posted an adjusted loss of 1 cent a share, vs. consensus of earnings of 3 cents, largely reflecting a loss of 4 cents a share on the company’s investment portfolio, mostly stakes in PIPEs, or private investment in public equity, in connection with companies that came public via mergers with special purpose acquisition companies. Palantir has suspended its SPAC investment program.

The company said that in the quarter it closed new business with $792 million in total contract value, including $588 million from U.S. customers. Palantir said its U.S. customer count has grown 250% from a year ago to 119 from 34.

David Glazer, Palantir’s chief financial officer, said in an interview that the current global geopolitical and macroeconomic uncertainty “lines up exceptionally well for us in the long term.” But he also noted that the company is “chasing very large deals” from government clients, and that timing on many of those projects “is more uncertain than we might like.”

Glazer noted that the international business was affected by the strength of the U.S. dollar, although the company doesn’t provide a currency adjusted figure. He added that Palantir is seeing some slowing business in Europe as a result of the strength of the dollar, which makes “upsells more challenging.”

For the third quarter, Palantir sees revenue of $474 million to $475 million, with operating income of $54 million to $55 million, falling shy of the Wall Street consensus of $500 million in revenue and $145 million in non-GAAP operating income.

Palantir projected full-year revenue of $1.9 billion to $1.902 billion, with adjusted operating income of $341 million to $343 million; analysts’ consensus has been $1.96 billion in revenue and non-GAAP operating income of $531 million. The new guidance implies full-year growth of 23%.

In previous quarters, Palantir had projected annual growth of 30% or better through 2025. Glazer confirmed that the company is not repeating that forecast in the results announced Monday.

The stock fell 14.3% to $9.81 in premarket trading Monday. For the year through Friday, Palantir shares have fallen 37%.

Write to Eric J. Savitz at eric.savitz@barrons.com

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