Palantir Q2 Earnings Preview: A Deep Dive into the Numbers & Expectations
This article was edited by Andrew Salamon, head of content at Daily Palantir. You can follow him on twitter here
Introduction
The Q2 earnings season is here, and one of the most awaited reports is coming from Palantir Technologies, the public American software company. With the earnings set to be announced on August 7th, 2023, it feels akin to the Super Bowl for Palantir investors.
The anticipation is high, and expectations are running wild. But before diving into the Q2 forecasts, it is worth revisiting Q1 and understanding the company's journey thus far.
Revisiting Q1 - A Leap Towards Profitability
In the first quarter of 2023, Palantir marked a significant achievement by reaching GAAP (Generally Accepted Accounting Principles) profitability. With a GAAP EPS of 0.01 cents and net income of $17 million, the company demonstrated its ability to turn treasury bills into profit.
A striking highlight was the $4 million net income from business operations, something that raised eyebrows. If that can transform into seven to ten million dollars, it would be an impressive leap towards realizing actual profit from operations.
Steady Growth and Hopeful Predictions
Achieving GAAP operating profitability was a big deal for the company, with the operating margin increasing by one percent. Cash from operations came in at $187 million, and the adjusted free cash flow of $189 million was applauded for maintaining an above 30% margin.
The revenue also exhibited healthy growth, with a year-over-year increase of 18% to $525 million. Speculations about reaching closer to the $550 million mark are circulating, adding to the excitement surrounding Q2.
U.S. Revenue and Commercial Growth - The Real Game Changers
U.S revenue grew by 23% year-over-year to $337 million, and U.S commercial revenue exhibited a robust 26% growth year-over-year. The U.S customer count also surged by 50% year-over-year.
These figures are vital as U.S commercial growth is what allows Palantir to become GAAP profitable. Meeting or even exceeding the 26% to 30% quarter-over-quarter growth would be a remarkable feat for the company, indicating a thriving demand.
The Financials - A Closer Look
With projections to stay GAAP profitable at one cent per share, Palantir has made a giant leap from losing nine cents a share to turning profitable. The company aims for S&P 500 inclusion by early 2024.
Palantir’s U.S commercial revenue growth of 337 million, up 23% year over year, hints at increased demand from commercial clients in the United States. International growth remains comparatively modest, but expectations are that U.S business will continue to thrive.
While government revenue growth, especially from the U.S Special Operations Command and the U.S Space Systems Command, has been impressive, there is a growing expectation for commercial revenue to take the lead.
Palantir needs to ramp up commercial spending to realize its $40 billion valuation. With CEO Alex Carp signaling a ton of demand primarily from Enterprises, Q2 customer count will be crucial.
Customer Account Growth - A Critical Metric
The total customer account grew 41% year over year, reaching 391. Though the rate of growth is declining, the overall customer account growth remains pivotal. If the commercial customer account reaches around 430 or 440 by next quarter, it could be a significant win for Palantir.
A Critical Juncture for Palantir
Palantir is at a critical juncture. The Q2 earnings will not only reflect the company's current financial health but also set the tone for the future. From GAAP profitability to revenue growth, U.S commercial revenue growth, and customer account expansion, every figure will be under the scanner.
Investors are looking for strong signs of growth, profitability, and future potential. Will Palantir deliver the numbers that meet or even exceed expectations? The answer lies in the upcoming Q2 earnings, which are awaited with bated breath by the investment community.
As the clock ticks towards the announcement on August 7th, the stage is set for what promises to be one of the most closely-watched financial spectacles of the season. Palantir's Q2 earnings could either propel the company into a new era of growth and profitability or send shockwaves through the market. Either way, it’s a moment that no investor or market observer would want to miss.
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