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Palantir Reports Its First Quarter of Positive GAAP Net Income, GAAP EPS of $0.01 in Q4 2022

By Business Wire

Business Wire
Overall Rating

DENVER--(BUSINESS WIRE)--Palantir Technologies Inc. (NYSE:PLTR) today announced financial results for the fourth quarter and fiscal year ended December 31, 2022.

“With this result, Palantir is profitable. This is a significant moment for us and our supporters,” said Alex Karp, co-founder and chief executive officer of Palantir Technologies.

Q4 2022 Highlights

  • GAAP net income of $31 million
    • This marks our first quarter of positive GAAP net income
  • GAAP earnings per share of $0.01
  • Adjusted earnings per share of $0.04
  • Total revenue grew 18% year-over-year to $509 million
    • US revenue grew 19% year-over-year to $302 million
  • Commercial revenue grew 11% year-over-year to $215 million
    • US commercial revenue grew 12% year-over-year to $77 million
  • Government revenue grew 23% year-over-year to $293 million
    • US government revenue grew 22% year-over-year to $225 million
  • Customer count grew 55% year-over-year and 9% quarter-over-quarter
    • US commercial customer count increased 79% year-over-year, from 80 customers in Q4 2021 to 143 customers in Q4 2022
  • Loss from operations of $(18) million, representing a margin of (4)%, up 1,000 basis points year-over-year
  • Adjusted income from operations of $114 million, representing a margin of 22%
  • Cash from operations of $79 million, representing a 15% margin
  • Adjusted free cash flow of $76 million, representing a 15% margin

FY 2022 Highlights

  • Total revenue grew 24% year-over-year to $1.91 billion
    • US revenue grew 32% year-over-year to $1.16 billion
  • Commercial revenue grew 29% year-over-year to $834 million
    • US commercial revenue grew 67% year-over-year to $335 million
  • Government revenue grew 19% year-over-year to $1.07 billion
    • US government revenue grew 22% year-over-year to $826 million
  • Loss from operations of $(161) million, representing a margin of (8)%, up 1,900 basis points year-over-year
  • Adjusted income from operations of $421 million, representing a margin of 22%
  • Cash from operations of $224 million, representing a 12% margin
  • Adjusted free cash flow of $203 million, representing a 11% margin

Q4 and FY 2022 Financial Summary

(Unaudited)

(Amounts in thousands, except percentages and per share amounts)

Fourth Quarter

Full Year 2022

Amount

Amount

Revenue

$

508,624

$

1,905,871

Year-over-year growth

18

%

24

%

Amount

Margin

Amount

Margin

Loss from Operations

$

(17,826

)

(4

) %

$

(161,201

)

(8

) %

Adjusted Income from Operations

$

114,264

22

%

$

420,753

22

%

Cash from Operations

$

78,763

15

%

$

223,737

12

%

Adjusted Free Cash Flow

$

75,763

15

%

$

203,015

11

%

Net Income (Loss) Attributable to Common Stockholders

$

30,878

$

(373,705

)

Adjusted Net Income

$

95,708

$

135,376

Adjusted EBITDA

$

121,637

24

%

$

443,275

23

%

GAAP Earnings (Loss) Per Share, Diluted

$

0.01

$

(0.18

)

Adjusted Earnings Per Share, Diluted

$

0.04

$

0.06

Outlook

For Q1 2023, we expect:

  • Revenue of between $503- $507 million.
  • Adjusted income from operations of $91 - $95 million.

For full year 2023, we expect:

  • Revenue of between $2,180 - $2,230 million.
  • Adjusted income from operations of $481 - $531 million.
  • GAAP net income.

CEO Letter

Palantir CEO Alex Karp’s annual letter is available through Palantir’s website at https://www.palantir.com/2023-annual-letter.

Earnings Webcast

A live public webcast will be held at 3:00 PM MT / 5:00 PM ET today to discuss the results for our fourth quarter and year ended December 31, 2022 and financial outlook. The webcast can be accessed by registering online at https://palantir.events/palantir-2022-q4. A replay of the webcast will be available at https://investors.palantir.com following the event.

An investor presentation, including supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, will be available through Palantir’s Investor Relations website at https://investors.palantir.com.

Forward-Looking Statements

This press release and statements on our earnings webcast contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook, product development, distribution, and pricing, expected benefits of and applications for our software platforms, business strategy, and plans (including strategy and plans relating to our sales and marketing efforts, sales force, partnerships, and customers), investments in our business, market trends and market size, opportunities (including growth opportunities), our expectations regarding our existing and potential investments in, and commercial contracts with, various entities, including special purpose acquisition companies and other privately-held or publicly-traded companies, our expectations regarding macroeconomic events and foreign currency fluctuations, and positioning. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. Words such as “guidance,” “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “plan,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” “shall,” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to risks detailed in our filings with the Securities and Exchange Commission (the “SEC”), including in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 and other filings and reports that we may file from time to time with the SEC, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. In particular, the following factors, among others, could cause our results to differ materially from those expressed or implied by such forward-looking statements: our ability to successfully execute our business and growth strategy; the sufficiency of our cash and cash equivalents to meet our liquidity needs; the demand for our platforms in general; our ability to increase our number of new customers and revenue generated from customers; our ability to realize some or all of the total contract value of customer contracts as revenue, including any contractual options available to customers or contractual periods that are subject to termination for convenience provisions; our long and unpredictable sales cycle; our ability to successfully execute our channel sales and other strategic initiatives with third parties; our ability to retain and expand our customer base; the fluctuation of our results of operations and our key business measures on a quarterly basis in future periods; the seasonality of our business; the implementation process for our platforms, which may be complex and lengthy; our ability to successfully develop and deploy new technologies to address the needs of our existing or prospective customers; our ability to make our platforms easier to install and consume; our ability to maintain and enhance our brand and reputation; our ability to maintain and enhance our culture as our business grows; news or social media coverage about us, including but not limited to coverage that presents, or relies on, inaccurate, misleading, incomplete, or otherwise damaging information; the impact of recent or future global macroeconomic and geopolitical events, such as the ongoing Russia-Ukraine conflict, foreign currency fluctuations, or rising inflation or interest rates in the U.S. and in other countries, on the business and operations of our company or of our existing or prospective customers and partners; and any breach or access to customer or third-party data.

The forward-looking statements included in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments will cause our views to change. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. Past performance is not necessarily indicative of future results.

Additional Definitions

For the purpose of this press release and our earnings webcast, total contract value (“TCV”) closed, remaining performance obligations, and total remaining deal value reflect the values of contracts that have been entered into with, or awarded by, our government and commercial customers.

TCV closed includes existing contractual obligations and presumes the exercise of all contract options available to our customers and no termination of contracts; however, the majority of our contracts are subject to termination provisions, including for convenience, and there can be no guarantee that contracts are not terminated or that contract options will be exercised.

Remaining performance obligations represent non-cancelable contracted revenue that has not yet been recognized, which includes deferred revenue and, in certain instances, amounts that will be invoiced. We have elected the practical expedient, as permitted under Accounting Standards Codification 606 - Revenue from Contracts with Customers - allowing us to not disclose remaining performance obligations for contracts with original terms of twelve months or less.

Total remaining deal value is the total remaining value of contracts and includes existing contractual obligations and unexercised contract options available to those customers. Total remaining deal value presumes the exercise of all contract options and no termination of contracts; however, the majority of our contracts are subject to termination provisions, including for convenience, and there can be no guarantee that contracts are not terminated or that contract options will be exercised. Total remaining deal value excludes all or some portion of the value of certain commercial contracts as a result of our ongoing assessments of customers’ financial condition, including the consideration of such customers’ ability and intention to pay, and whether such contracts continue to meet the criteria for revenue recognition, among other factors.

Non-GAAP Financial Measures

This press release and the accompanying tables contain the non-GAAP financial measures adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes; adjusted operating margin; adjusted free cash flow; adjusted free cash flow margin; adjusted earnings before interest, taxes, depreciation, and amortization (“adjusted EBITDA”); adjusted EBITDA margin; adjusted net income; and adjusted earnings per share (“EPS”), diluted.

We believe these non-GAAP financial measures and other metrics described in this press release help us evaluate our business, identify trends affecting Palantir’s business, formulate business plans and financial projections, and make strategic decisions. We exclude stock-based compensation, which is a non-cash expense, from these non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance and provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team. We exclude employer payroll taxes related to stock-based compensation as it is difficult to predict and outside of Palantir’s control.

Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Further, these metrics have certain limitations as they do not include the impact of certain expenses that are reflected in our consolidated statements of operations. For example, adjusted free cash flow does not reflect our future contractual commitments or the total increase or decrease in our cash balances for a given period. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP.

We compensate for these limitations by providing a reconciliation of each of these non-GAAP measures to the most comparable GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measure.

A reconciliation table of the most comparable GAAP financial measure to each non-GAAP financial measure used in this press release is included at the end of this release. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, reconciling items that may be incurred in the future, such as stock-based compensation and related employer payroll taxes, the effect of which may be significant.

Available Information

Palantir uses its Investor Relations website at https://investors.palantir.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor Palantir’s Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, and webcasts.

Here's another interesting article on Introduction To Software Development

About Palantir Technologies Inc.

Foundational software of tomorrow. Delivered today. Additional information is available at https://www.palantir.com.

Palantir Technologies Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

Three Months Ended December 31,

Years Ended December 31,

2022

2021

2022

2021

Revenue

$

508,624

$

432,867

$

1,905,871

$

1,541,889

Cost of revenue (1)

104,311

87,563

408,549

339,404

Gross profit

404,313

345,304

1,497,322

1,202,485

Operating expenses:

Sales and marketing (1)

190,233

162,593

702,511

614,512

Research and development (1)

82,044

84,176

359,679

387,487

General and administrative (1)

149,862

157,478

596,333

611,532

Total operating expenses

422,139

404,247

1,658,523

1,613,531

Loss from operations

(17,826

)

(58,943

)

(161,201

)

(411,046

)

Interest income

12,750

480

20,309

1,607

Interest expense

(1,712

)

(601

)

(4,058

)

(3,640

)

Other income (expense), net

44,637

(64,118

)

(216,077

)

(75,415

)

Income (loss) before provision for income taxes

37,849

(123,182

)

(361,027

)

(488,494

)

Provision for income taxes

4,360

33,006

10,067

31,885

Net income (loss)

$

33,489

$

(156,188

)

$

(371,094

)

$

(520,379

)

Less: Net income attributable to noncontrolling interests

2,611

2,611

Net income (loss) attributable to common stockholders

$

30,878

$

(156,188

)

$

(373,705

)

$

(520,379

)

Earnings (loss) per share attributable to common stockholders, basic

$

0.01

$

(0.08

)

$

(0.18

)

$

(0.27

)

Earnings (loss) per share attributable to common stockholders, diluted

$

0.01

$

(0.08

)

$

(0.18

)

$

(0.27

)

Weighted-average shares of common stock outstanding used in computing earnings (loss) per share attributable to common stockholders, basic

2,090,107

2,011,764

2,063,793

1,923,617

Weighted-average shares of common stock outstanding used in computing earnings (loss) per share attributable to common stockholders, diluted

2,203,733

2,011,764

2,063,793

1,923,617

—————

(1)

Includes stock-based compensation expense as follows (in thousands):

Three Months Ended December 31,

Years Ended December 31,

2022

2021

2022

2021

Cost of revenue

$

10,648

$

13,680

$

44,061

$

68,546

Sales and marketing

48,800

56,492

196,301

242,910

Research and development

16,875

27,322

93,871

150,298

General and administrative

53,075

69,413

230,565

316,461

Total stock-based compensation

$

129,398

$

166,907

$

564,798

$

778,215

Palantir Technologies Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

As of December 31,

2022

2021

Assets

Current assets:

Cash and cash equivalents

$

2,598,540

$

2,290,674

Restricted cash

16,244

36,628

Accounts receivable, net

258,346

190,923

Marketable securities

35,135

234,153

Prepaid expenses and other current assets

133,312

110,872

Total current assets

3,041,577

2,863,250

Property and equipment, net

69,170

31,304

Restricted cash, noncurrent

12,551

39,612

Operating lease right-of-use assets

200,240

216,898

Other assets

137,701

96,386

Total assets

$

3,461,239

$

3,247,450

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

44,788

$

74,907

Accrued liabilities

172,715

155,806

Deferred revenue

183,350

227,816

Customer deposits

141,989

161,605

Operating lease liabilities

45,099

39,927

Total current liabilities

587,941

660,061

Deferred revenue, noncurrent

9,965

40,217

Customer deposits, noncurrent

3,936

33,699

Operating lease liabilities, noncurrent

204,305

220,146

Other noncurrent liabilities

12,655

2,297

Total liabilities

818,802

956,420

Stockholders’ equity:

Common stock

2,099

2,027

Additional paid-in capital

8,427,998

7,777,085

Accumulated other comprehensive loss

(5,333

)

(2,349

)

Accumulated deficit

(5,859,438

)

(5,485,733

)

Total stockholders’ equity

2,565,326

2,291,030

Noncontrolling interests

77,111

Total equity

2,642,437

2,291,030

Total liabilities and equity

$

3,461,239

$

3,247,450

Palantir Technologies Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Years Ended December 31,

2022

2021

Operating activities

Net loss

$

(371,094

)

$

(520,379

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

22,522

14,897

Stock-based compensation

564,798

778,215

Deferred income taxes

(174

)

43,316

Non-cash operating lease expense

40,309

33,821

Unrealized and realized (gain) loss from marketable securities, net

272,108

73,311

Gain from step acquisition

(44,306

)

Other operating activities

6,677

2,722

Changes in operating assets and liabilities:

Accounts receivable, net

(77,519

)

(35,237

)

Prepaid expenses and other current assets

(25,997

)

(10,929

)

Other assets

6,033

(3,345

)

Accounts payable

(29,859

)

57,767

Accrued liabilities

5,527

15,245

Deferred revenue, current and noncurrent

(61,154

)

24,732

Customer deposits, current and noncurrent

(49,471

)

(104,944

)

Operating lease liabilities, current and noncurrent

(34,590

)

(32,156

)

Other noncurrent liabilities

(73

)

(3,185

)

Net cash provided by operating activities

223,737

333,851

Investing activities

Purchases of property and equipment

(40,027

)

(12,627

)

Purchases of marketable securities

(124,500

)

(308,315

)

Proceeds from sales and redemption of marketable securities

52,319

851

Business combinations, net of cash acquired

66,708

Purchases of alternative investments

(50,941

)

Purchases of privately-held securities

(23,009

)

Other investing activities

73

(3,871

)

Net cash used in investing activities

(45,427

)

(397,912

)

Financing activities

Principal payments on borrowings

(200,000

)

Proceeds from the exercise of common stock options

86,089

507,455

Other financing activities

(93

)

(708

)

Net cash provided by financing activities

85,996

306,747

Effect of foreign exchange on cash, cash equivalents, and restricted cash

(3,885

)

(3,918

)

Net increase in cash, cash equivalents, and restricted cash

260,421

238,768

Cash, cash equivalents, and restricted cash - beginning of period

2,366,914

2,128,146

Cash, cash equivalents, and restricted cash - end of period

$

2,627,335

$

2,366,914

Palantir Technologies Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited)

Non-GAAP Reconciliations

Adjusted Income from Operations and Adjusted Operating Margin (in thousands, except percentages)

Three Months Ended
December 31,

Years Ended December 31,

2022

2021

2022

2021

Loss from operations

$

(17,826

)

$

(58,943

)

$

(161,201

)

$

(411,046

)

Add: stock-based compensation

129,398

166,907

564,798

778,215

Add: employer payroll taxes related to stock-based compensation

2,692

16,069

17,156

106,283

Adjusted income from operations

$

114,264

$

124,033

$

420,753

$

473,452

Adjusted operating margin

22

%

29

%

22

%

31

%

Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin (in thousands, except percentages)

Three Months Ended
December 31,

Years Ended December 31,

2022

2021

2022

2021

Net cash provided by operating activities

$

78,763

$

93,427

$

223,737

$

333,851

Add: cash paid for employer payroll taxes related to stock-based compensation

1,918

16,614

19,305

102,903

Less: purchases of property and equipment

(4,918

)

(5,845

)

(40,027

)

(12,627

)

Adjusted free cash flow

$

75,763

$

104,196

$

203,015

$

424,127

Adjusted free cash flow margin

15

%

24

%

11

%

28

%

Adjusted EBITDA and Adjusted EBITDA Margin (in thousands, except percentages)

Three Months Ended
December 31,

Years Ended December 31,

2022

2021

2022

2021

Net loss

$

33,489

$

(156,188

)

$

(371,094

)

$

(520,379

)

Less: interest income

(12,750

)

(480

)

(20,309

)

(1,607

)

Add: interest expense

1,712

601

4,058

3,640

Add: other (income) expense, net

(44,637

)

64,118

216,077

75,415

Add: provision for (benefit from) income taxes

4,360

33,006

10,067

31,885

Add: depreciation and amortization

7,373

3,840

22,522

14,897

Add: stock-based compensation

129,398

166,907

564,798

778,215

Add: employer payroll taxes related to stock-based compensation

2,692

16,069

17,156

106,283

Adjusted EBITDA

$

121,637

$

127,873

$

443,275

$

488,349

Adjusted EBITDA margin

24

%

30

%

23

%

32

%

Adjusted Net Income and Adjusted Earnings Per Share, Diluted (in thousands, except per share amounts)

Three Months Ended
December 31,

Years Ended December 31,

2022

2021

2022

2021

Net income (loss) attributable to common stockholders

$

30,878

$

(156,188

)

$

(373,705

)

$

(520,379

)

Add: stock-based compensation

129,398

166,907

564,798

778,215

Add: employer payroll taxes related to stock-based compensation

2,692

16,069

17,156

106,283

Less: gain from step acquisition

(44,306

)

(44,306

)

Add (Less): income tax effects and adjustments (1)

(22,954

)

18,609

(28,567

)

(56,037

)

Adjusted net income attributable to common stockholders, diluted

$

95,708

$

45,397

$

135,376

$

308,082

Weighted-average shares used in computing GAAP earnings (loss) per share, diluted

2,203,733

2,011,764

2,063,793

1,923,617

Adjusted weighted-average shares used in computing adjusted earnings per share, diluted (2)

2,203,733

2,324,113

2,223,522

2,323,236

Adjusted earnings per share, diluted

$

0.04

$

0.02

$

0.06

$

0.13


Contacts

Investor Relations
investors@palantir.com

Media
media@palantir.com


Read full story here

First published on Tue, Feb 14, 2023

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