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Palantir Technologies (PLTR) is trading lower today after reporting its Q3 results last night. The report was a blowout, but the sell-off appears more tied to valuation concerns than fundamentals. EPS surged 110% yr/yr to $0.21, while revenue jumped 63% yr/yr (+18% sequentially) to $1.18 bln, marking its highest reported growth rate. The company also guided Q4 revenue of $1.327-1.331 bln and raised FY25 revenue to $4.396-4.40 bln, both above consensus. Palantir has issued upside guidance for every quarter and full-year period since MayQ'24.

• The US commercial business continues to drive the story, now making up 34% of total revenue. Sales rose 121% from a year ago and 29% sequentially to $397 mln, fueled by what management called "insatiable" demand for AIP as customers scale across their operations. The company closed $1.3 bln in US commercial TCV bookings, up 342% from a year ago, with total remaining deal value up 199% year over year and 30% sequentially.
• The US government segment remained strong, growing 52% year over year and 14% sequentially to $486 mln. Growth was supported by continued execution across existing programs and new awards as demand for AI in defense and public sector applications accelerates.
• AIP remains the core catalyst, driving rapid enterprise adoption as customers move from single use cases to full company-wide deployments. Management said AIP is delivering measurable results in weeks, not years, highlighting its ability to create tangible value across industries.
• Record bookings and backlog provide strong visibility, with total TCV reaching a record $2.8 bln (+151% yr/yr), customer count up 45% yr/yr to 911, remaining deal value rising to $8.6 bln (+91%), and RPO climbing to $2.6 bln (+66%).
• Profitability and cash flow hit new highs, with adjusted operating margin of 51% and free cash flow of $540 mln (46% margin). Palantir's Rule of 40 score rose to 114%, its highest ever.

Briefing.com Analyst Insight

With the results that Palantir just delivered, one might think the stock would be moving higher, not lower. The sell-off looks tied to valuation concerns and some profit taking after a remarkable run. Even after the pullback, shares still trade at a lofty forward P/E above 230x and P/S near 100x, leaving little room for error. That said, the fundamentals are impressive. The US commercial business continues to fire on all cylinders, AIP adoption is accelerating, and the government business is posting strong, broad-based growth. With record bookings, expanding margins, and a deepening backlog, Palantir enters the final quarter of FY25 with strong momentum and excellent visibility into next year.