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  • Writer's pictureAmit Kukreja

Here's All 6 Questions Palantir Answered On Their Shareholder Call:

Palantir took questions from retail founders on their recent earnings call - here's the answers they gave:


1. Daniel L, a retail shareholder asks, "What will PLTR do to reduce share dillution?"

Dave Glazer, Chief Financial Officer, responds:

"This is actually something that is repeatedly misunderstood. If you take a look at last year, we only added 0.004% in fully diluted shares outstanding in the entire year. If you flip to the first quarter of this year, that fully diluted number actually declined for the quarter. So you literally ended Q1 with fewer shares than when it started."

2. Deepak C, a retail shareholder asks, "When is the company targeting to be GAAP profitable?'

Dave Glazer, Chief Financial Officer, responds: "We had a negative 9% GAAP operating margin in Q1, an improvement from negative 14% in Q4 and from negative 33% in Q1 2021. So we're making significant progress. And Q1 was our strongest gap quarter-to-date. And not to mention, last year, for the full year, we posted $424 million in adjusted free cash flow with a 31% adjusted operating margin. And we're already off to a strong start this year. But with that said, we're preparing for a world that has the highest chance of a nuclear war in my lifetime, let alone since my parents were kids. And as Alex discussed, the quality of our government revenue as viewed through growth margin performance, durability and resilience is unique to Palantir. We think this uniqueness will be incredibly important in the quarters to come."

3. Kurnish P, a retail shareholder asks, "Are there any new products you are looking to launch in the near future?"

Shyam Sankar, Chief Operating Officer, responds:

"We have released so much new product. Pipeline Builder has improved data integration productivity 2 to 3x at the NHS, autonomous sales and operation planning and execution, the hospital operation suite, MetaConstellation, Edge AI and Edge stream. And beyond new product, we are bringing to market 15 years of deep tech that we built to power Gotham and Foundry. Nexus Peering, our distributed data fabric is going to power the next decade of DoD programs. Apollo is going to take our customers from continuous deployment to autonomous deployment. And this is what we're focused on. Everything else, financials, performance, those are the consequences of our execution on this focus. We build software the world needs before the world knows it needs it. The prescience of our software arises from a deep love and respect for the institutions that are acquired for the world to function and a deep understanding of the macro and geopolitical shifts that some might say are coming, but we would say have already arrived. And the practicality of our software arises from the deep love of our users, the humans who are at the coal face who do the hard work day in and day out from the factory floors of Detroit to the cold concrete floors that refugees are sleeping on in Warsaw. We build software for the world as it is today to help our customers and their humans manage to get to the world that ought to be."

4. Jackson K, a retail shareholder asks, "Can you comment on the SPAC partnership strategy and its impact on the financials? What is the diligence level for initiating such an investment?"

Kevin Kawasaki, Global Head of Business Development, responds:

"Revenue from these contracts has peaked in Q1 at around $39 million. And we will not have additional new customers from this program as we've wound the program down. Going forward, expect about $30 million of revenue per quarter from these customers. Revenue in Q1 is higher as a result of some catch-up of about $9 million recognized in the quarter, reflecting work we started last year. We also saw roughly a negative $0.02 impact on earnings per share from the marketable securities. When you look at this by geography, you'll see continued strength and growth in the U.S. business, ex-SPACs, growing at 65% year-over-year and 9% sequentially quarter-over-quarter. We had our strongest quarter for winning new commercial customers overall. Commercial customer count up 25% sequentially and up 207% from a year ago. And in the United States, commercial customer count grew 368%. We expect continued growth in commercial customer acquisition. And as Alex mentioned, we see a path to double our U.S. commercial revenue again."

5. Noah A, a retail shareholder asks: "Alex Karp said "Bad times are good for Palantir". What is Palantir doing during this time of war, inflation, and hyper-partisanship to back up Karp's words? How is Palantir solving the worlds current greatest problems?"

Shyam Sankar, Chief Operating Officer, responds:

"This question is really important. The answer to it is literally Palantir. It is the reason that we exist. As Alex has mentioned many times, we have been building our company and our products for this world. As our customers confront rapidly escalating conflict in Eastern Europe, runaway inflation, disrupted supply chains and a new wave of refugees, our products have become more essential than ever. I've already talked about how we are helping governments respond to Russia's invasion and the resulting humanitarian disaster from MetaConstellation and Edge AI to powering refugee and relief operations. But it's also important to understand that a chain of events has been set in motion, a Rube Goldberg like set of bangs, boings and ricochets that extend and will continue to extend into every facet of the world. Food is short and prices are exploding. The availability of fertilizer required to grow more food is disrupted. Commodity prices are sky rocketing. Neon gas, CF46, palladium, all disrupted, all crucial in the semiconductor supply chain. Ukraine is a major regional center for clinical trials. All of those trials and the life-saving medicines behind them are now disrupted. Simple, but essential automotive components like wiring harnesses and seat belts are disrupted. All of this is coming on the back of a set of dynamic disturbances from COVID and the resulting supply and demand shocks people are still coping with and the emergent wave of shocks that will come from extended and severe lockdowns in China. To solve these problems, you cannot operate on software that was built to assume a stable world. In the stable world you can make plans and you edit it occasionally. The plan is static. The assumptions are fixed and immutable. In the real world, in this world, you only make a plan so you can change it. You need all of your data ontologized into your digital twin, flowing into dynamically delivered applications that connect to each other. You need your AI to move faster than the rate of disruption. When something goes wrong, it needs to tell the person at the coal face what to do next. Inflation flowing through your supply chain means you need an entirely different approach to manage suppliers, logistics, production and S&OP. Our work with Tyson Foods is delivering $10 million of value realization every week by moving them from legacy approaches like integrated business planning to autonomous sales and operations execution by moving from a static plan that was assumed to be right to autonomously planning where you go turn by turn as they are dynamically updated to navigate around unforeseen obstacles. Literally, every function of every business is breaking under the stress of these events, events where the aftershocks are strong and more profound than the initial earthquake. And Foundry was built for this."

6. Michael P, a retail shareholder asks, "In the FY2021 business update, there was reference to OpsPI as a Foundry capability or perhaps module. Could you elaborate on the problem this solves, and what value it delivers to its Foundry users?"

Shyam Sankar, Chief Operating Officer, responds:

"When you think about Foundry, there are really 3 high-level massively differentiated capabilities. The first is that Foundry makes the marginal cost of data integration approach zero, with software to solve data integration, with pipeline builder, with all this data integration technology, we have software that writes its own data pipelines for you. This gets you to the starting line quickly. It helps you answer the question, how am I going to bring all my data together? How long is that going to take? And how do I deal with the fact that there's new types of data created every single day? The second capability is that Foundry makes the marginal cost of application development approach 0, no code, WYSIWYG application builders for robust interconnected applications. Importantly, these are not dashboards. These are applications that read and write to your existing enterprise transactional systems like your ERP, your general ledger, your warehouse management system. And third, Foundry has native modeling and simulation capability that lets you interact with the digital twin of your enterprise. So yes, you can compute something like an optimized production plan. But even much more importantly, you can respond to real-world surprises in real time. The best analogy I have for this is that current technology is like most people are using something like MapQuest where you put in a destination and then you print out the map. Foundry is like Waze where, yes, you put in the destination, but we are dynamically computing the best way to get there all the time, turn by turn based on the ever-changing facts on the ground: traffic, construction, accidents, road closures. While the competition is stuck in the traffic jam, you're raising across the finish line. So all of this is possible because Foundry is a digital twin of your business, and that is powered by Foundry's ontology. So with our ontology, we're modeling not just the nouns, but also the verbs of your business, the actions that you can take. So that means you cannot only realize that there is a's problem with your production plan based on real-time data, but also compute the correct answer, the correct plan and push that transaction to your ERP system. And all of that amazing capability has historically only been available for applications built inside of Foundry. The OPIs, they change all of that. The power of the ontology can now be used by any application in the enterprise, whether it's first-party apps developed by IT or third-party apps developed by IT suppliers and independent software vendors. The OPIs are clean, syntactically sugary sets of restful APIs. I like to think about it as serverless enterprise orchestration. It's Lambda, but for your enterprise, simple abstractions that make the authentic complexity of the real-world businesses manageable and programmable."

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