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Palantir Earnings Top Estimates. The stock rises.




Palantir posted better-than-expected results for the first quarter, while raising its guidance for full 2023. Meanwhile, the company continues to make a big push for its recently announced artificial intelligence platform, which it calls AIP.

The stock rose in late trading on Monday.

“We’re using all of our resources to capture one of the biggest opportunities in the world,” Karp said in an interview with Barron’s. And he said they intend to do so while remaining profitable under generally accepted accounting principles.

Karp added in a quarterly letter to shareholders that large language models, which are at the heart of generative AI tools, “will transform” enterprise software.

“The depth of engagement with and demand for our new AI platform is unprecedented,”[ads1]; he writes. The first version of AIP will be made available to select customers this month, says Palantir (ticker: PLTR).

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Palantir, which provides analytics software to both commercial and government customers, had first-quarter revenue of $525 million, up 18% from a year ago, topping both the company’s guidance range of $503 million to $507 million, and Wall Street- the consensus forecast for $506 million. On an adjusted basis, the company earned 5 cents per share, a penny better than Wall Street estimates.

The company had $17 million in GAAP net income, or one kroner per share – the second quarter in a row that Palantir has been GAAP profitable. Adjusted operating income of $125 million was ahead of the company’s forecast range of $91 million to $95 million. Adjusted free cash flow was $189 million, a quarterly record for Palantir.

Commercial revenue in the quarter was $236 million, up 15% from a year earlier and ahead of the Wall Street consensus forecast of $217 million tracked by FactSet. Chief Financial Officer David Glazer said in an interview that U.S. commercial revenue rose 39% sequentially from the December quarter, topping the $100 million level for the first time.

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Government revenue was $289 million, up 20%, in line with Wall Street estimates, including $230 million of U.S. government revenue, up 22%. Glazer said the results also reflect “discipline on the spending side.”

The company said customer numbers were up 41% from a year ago and 7% sequentially.

For the second quarter, Palantir sees revenue of $528 million to $532 million, slightly below the consensus forecast of $537 million, with adjusted operating income of $118 million to $122 million. The company expects to be GAAP profitable again in the June quarter, and to remain profitable on this basis in the third and fourth quarters.

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Palantir now expects full-year revenue of $2.185 billion to $2.235 billion, up slightly from the company’s previous forecast of $2.18 billion to $2.23 billion. The company now sees full-year adjusted earnings from operations of $506 million to $556 million, up from a previous range of $481 million to $531 million.

In his letter, Karp addressed some of the current security and privacy concerns surrounding generative artificial intelligence and large language models. “We have intentionally designed our software around the involvement and oversight of human operators before real-world action, including for example targeting operations in a military context, can be taken,” he writes. “The machine must remain subordinate to its creator.”

Talking with Barron’sKarp asserted that Palantir’s platform will be agnostic to which major language model customers want to use — and that the company’s software will help both commercial and government customers unlock the value in their data, “whether you’re changing your supply chain or taking someone’s life.” a reference to the company’s significant dealings with defense and intelligence agencies.

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Karp, who did Tai Chi movements during a video conference interview from the company’s headquarters in Denver, said AI is “generational” but that “nobody knows where this is going to land and when it’s going to be dangerous.”

He also claims that “very few people have a useful product in this area,” and that there is a “subset of people who want to slow it down.” He is not one of them.

Palantir shares jumped 27% in late trading after the earnings were announced. They were up around 4% in Monday’s regular session. The stock is up 20% so far this year.

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



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