Amit Kukreja
Read Alex Karp's Palantir Q2 Shareholder Letter

August 8, 2022
I.
A new company is emerging within the one we have built.
Our business in the United States alone generated $1.04 billion in revenue in the twelve-month period ending with our second quarter this year, representing a 42% increase over the prior twelve-month period.

The strength and momentum we are seeing with our customers in the United States is a reflection of the refinement and maturation of our software platforms, which we believe will continue leading to increasingly broad adoption across sectors.
We have found that commercial enterprises and government agencies in the United States have been the earliest adopters of new forms of technology.
The willingness of American institutions to experiment with novel software platforms, and to invest in the success and durability of their organizations over the long term, remains unparalleled.
Our quarterly revenue numbers in the U.S. market underscore the significant and unrelenting growth of our business in recent years.

A broader shift, if not return, to the United States is also underway.
The proportion of our revenue generated in the United States has increased substantially as compared to our total revenue worldwide.
In Q1 2019, for example, $55 million, or 38%, of our $146 million in total revenue for the quarter came from customers in the United States.
Three years later, however, in Q2 2022, the proportion of our revenue generated in the United States rose to 61%, with $290 million of our $473 million in revenue for the quarter coming from U.S. commercial customers and defense and intelligence agencies, as well as other government organizations.

We anticipate that the proportion of our revenue coming from customers based in the United States will continue to rise, even as our growth in Europe and other international markets accelerates.
II.
We believe that our most significant growth is still yet to come.
The development of the modern versions of our principal software platforms required an extended period of often intensive iteration with an early group of customers, in both the commercial and government sectors, in order to determine how best to address their needs.
We have only recently begun to capture the value of those more refined and productized software platforms, a process that we believe will continue to accelerate.
The revenue generated by our newest customers, for example, was nearly equivalent to the entire amount of revenue generated from customers acquired in prior periods combined, as of the twelve-month period that ended on June 30, 2022.

In the twelve-month period that ended on June 30, 2020, we generated a total of $901 million in revenue, $105 million of which came from our newest customers that we acquired on or after January 1, 2019, and $796 million of which came from customers that we had acquired previously.
(The analysis presented here, which focuses on the cumulative growth of our new business in recent years and therefore accounts for the continued adoption of new customers over time, relies on trailing twelve-month (TTM) periods ending with the second fiscal quarter of the year in order to provide revenue data for a full twelve-month period through our most recently reported financial results.)
A year later, in the twelve-month period that ended on June 30, 2021, our newest group of customers—that is, customers acquired on or after January 1, 2019—generated $415 million in revenue, compared with $913 million in revenue generated by our early customers.
And most recently, in the twelve-month period that ended on June 30, 2022, that newest group of customers generated $802 million in revenue, constituting 46% of our total revenue generated in the period.
After years of investment, a new high-growth software business has emerged.
III.
The trend is even more pronounced when assessing the recent growth of the adoption of our software by commercial customers in the United States.

Our commercial business in the United States generated $297 million in revenue in the twelve months that ended on June 30, 2022. Of that $297 million, $268 million, or 90%, came from our newest customers. The remainder of $29 million was from early customers.
A related development is that we are seeing former customers, including some of the world’s largest transportation, banking, and retail enterprises, return to our platforms in increasing numbers after periods of experimentation with other data integration and analytical platforms and approaches.
These customers are returning because they have tried other options and those options have failed. The product has brought them back.

The vast majority of enterprise software platforms that are currently available to large commercial enterprises and government agencies offer little if any return on investment.
The billions of dollars spent by organizations on data integration projects have yielded less than transformative results.
IV.
Our software products and platforms are at the center of so much in the world, including the distribution of vaccines to millions and an ongoing war in Eastern Europe.
Apollo has developed into a standalone offering that will become essential to commercial and government markets.
We believe that the demand from large enterprises for a software delivery and maintenance solution that is platform agnostic will be as significant as the demand for the underlying data integration and analytical capabilities themselves.
While our focus in the short term remains on making our principal software platforms available to increasingly broad segments of the market, we are working aggressively to identify additional component parts and products embedded within those platforms that have potential as commercial offerings on their own.
Our platforms consist of more than 700 component parts and 65 separate applications, such as Gaia, our collaborative map application for military partners, and Scenarios, our model for simulating varying operating conditions across businesses and other large organizations.
Each one of those component parts has the potential to become a dominant and standalone software product in its own right.
V.
We are building an enterprise software incumbent whose depth and reach will continue to emerge over time, and we remain focused on the long term.

As of the end of the last quarter, we had $2.4 billion in the bank and no debt, the combination of which will continue to secure our ability to develop highly differentiated software platforms notwithstanding the vicissitudes of the broader market and shifting macroeconomic conditions.
Our balance sheet is now also bolstered by the fact that our business generates hundreds of millions of dollars a year in additional cash on an adjusted basis.
After more than a decade of investment, we generated $424 million in free cash flow on an adjusted basis in 2021.

We repeatedly decided to raise and preserve capital when others were spending.