Palantir's Q3 2025 Earnings Call: Contradictions Emerge on Customer Engagement, Sales Model, and Government Opportunities

Date of Call: November 3, 2025

Financials Results

• Revenue: $1.181B, up 63% YOY and 18% sequentially
• EPS: $0.18 GAAP; $0.21 adjusted
• Gross Margin: 84% adjusted gross margin (excludes stock-based compensation)
• Operating Margin: 51% adjusted operating margin (highest ever; +500 bps vs prior guidance); GAAP operating margin 33%

Guidance:

• Q4 2025 revenue expected $1.327B–$1.331B (implied ~61% YOY; ~13% sequential).
• Q4 2025 adjusted income from operations $695M–$699M.
• FY2025 revenue raised to $4.396B–$4.400B (midpoint $4.398B; ~53% YOY).
• FY U.S. commercial revenue > $1.433B (at least 104% YOY).
• FY adjusted income from operations $2.151B–$2.155B; adjusted free cash flow $1.9B–$2.1B.
• Continue to expect GAAP operating income and net income each quarter.

Business Commentary:

• Revenue Growth and AI Impact:
• Palantir Technologies reported revenue of $1.181 billion for Q3 2025, up 63% year-over-year and 18% sequentially.

• The growth was driven by strong execution in the U.S., particularly in the U.S. commercial business, which increased by 121% year-over-year and 29% sequentially, attributed to the adoption of AI enterprise solutions like AIP.

• U.S. Government Business Growth:

• Palantir's U.S. government business revenue grew by 52% year-over-year and 14% sequentially to $486 million.

• This growth was driven by delivering mission-critical capabilities and supporting defense initiatives, reflecting increased demand for AI and government software offerings.

• Commercial Business Expansion:

• Commercial revenue grew by 73% year-over-year and 22% sequentially to $548 million.

• The expansion was primarily driven by existing customer expansions and new customer conversions, underscored by Palantir's unique approach to AI integration and value creation in enterprise settings.

• Customer Acquisition and Retention:

• Palantir's customer count increased by 45% year-over-year and 7% sequentially to 911 customers.
• This growth was supported by high net dollar retention of 134%, reflecting strong customer satisfaction and the scalability of Palantir's AI solutions across various industries.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly described the quarter as "monumental" and "shattering expectations," reporting 63% revenue growth, a record 114% Rule of 40, highest-ever 51% adjusted operating margin, $2.8B TCV bookings (up 151% YOY) and $2.0B trailing 12-month adjusted free cash flow — all signaling exuberant confidence and strong execution.

Q&A:

• Question from Daniel Ives (Wedbush Securities Inc., Research Division): Can you walk through the accelerated sales cycles you've seen — what surprised you from initial contact to launching deals and what you're seeing anecdotally?
  Response: Customers are coming from the C-suite seeking enterprise-wide AIP transformations, driving much larger, faster deals and reorganizations (e.g., $1.3B U.S. commercial TCV; many multi‑$M expansions).

• Question from Mariana Perez Mora (BofA Securities, Research Division): On commercial behavior changes and internal tech (AI agents/AIFDE) — what changed to accelerate adoption and how should we think about government opportunities like Golden Dome?
  Response: AI FDE materially boosts FDE productivity (headcount +10% vs revenue +63%), was productized for customers and is accelerating deeper enterprise deployments; government opportunity pipeline remains strong (e.g., Army Vantage consolidation) though specific programs not detailed.

Contradiction Point 1

Customer Engagement and Transformation Timeline

It involves differing perspectives on the timeline and nature of customer engagement and transformation, which are critical for understanding Palantir's growth strategy and customer success.

What sales cycle accelerations have you observed in boot camp participants? Can you describe changes in behavioral perspectives and customer engagement? - Daniel Ives (Wedbush Securities Inc., Research Division)

2025Q3: Customers coming from boot camps are now more strategically focused, wanting to deploy AIP across their entire organization and undergo a company-wide transformation. The focus has shifted from single use cases to enterprise-wide AI deployments. - Ryan Taylor(CRO & CLO)

How is Palantir making AI more useful for frontline workers and decision-makers beyond data scientists, beyond LLMs? - Christina

2025Q2: AI is providing superpowers to American workers, enhancing productivity and job capabilities. Examples include ICU nurses and factory workers. Palantir is empowering blue-collar workers with AI skills through the American Tech Fellowship. Talent retention is strong due to the focus on solving real-world problems, which attracts highly skilled individuals. - Shyam Sankar(CTO & Executive VP)

Contradiction Point 2

The Nature of Palantir's Sales Model

It involves differing descriptions of Palantir's sales model, which is crucial for understanding the company's growth strategy and market penetration.

What internal changes have driven increased adoption of Palantir by customers? - Mariana Perez Mora (BofA Securities, Research Division)

2025Q3: Palantir's strategy is built around value creation. The sales force is mainly current customers referring their peers. Credibility is growing, enabling more effective collaboration in enterprise implementations. This model is working well and is expected to continue, focusing on customer success and value creation over traditional sales efforts. - Alexander Karp(CEO & Director)

How is Palantir making AI more useful for frontline workers and decision-makers beyond just using LLMs? - Christina

2025Q2: AI is providing superpowers to American workers, enhancing productivity and job capabilities. Examples include ICU nurses and factory workers. Palantir is empowering blue-collar workers with AI skills through the American Tech Fellowship. Talent retention is strong due to the focus on solving real-world problems, which attracts highly skilled individuals. - Shyam Sankar(CTO & Executive VP)

Contradiction Point 3

Customer Engagement and Appetite for AI Transformations

It involves differing perspectives on customer engagement and appetite for AI transformations, which are critical for Palantir's growth and market positioning.

What are the accelerated sales cycles seen in companies that completed boot camps? - Daniel Ives (Wedbush Securities Inc., Research Division)

2025Q3: Customers coming from boot camps are now more strategically focused, wanting to deploy AIP across their entire organization and undergo a company-wide transformation. - Ryan Taylor(CRO & CLO)

With the focus on government efficiency and budget cuts, could Palantir gain more budget share due to meritocracy? - Dan Ives (Wedbush)

2025Q1: We're optimistic about opportunities in the US, leveraging Palantir's software, culture, and ability to deliver results under pressure. - Alex Karp(CEO)

Contradiction Point 4

Government Engagement and Opportunities

It involves differing expectations and opportunities in government engagement, which are crucial for Palantir's revenue growth and market expansion.

What are the accelerated sales cycles you see from companies through boot camps? - Daniel Ives (Wedbush Securities Inc., Research Division)

2025Q3: Customers are seeking to transform their businesses in months, emphasizing their need for private equity-like transformations. - Alexander Karp(CEO & Director)

With the emphasis on government efficiency and budget cuts, could Palantir capture more budget share through meritocracy? - Dan Ives (Wedbush)

2025Q1: We're optimistic about opportunities in the US, leveraging Palantir's software, culture, and ability to deliver results under pressure. - Alex Karp(CEO)

Contradiction Point 5

Accelerated Sales Cycles and Customer Engagement

It reflects differing perspectives on the acceleration of sales cycles and customer engagement with Palantir's AI solutions, which could impact strategic planning and investor expectations.

What accelerated sales cycles are you observing in companies that completed boot camps? Can you discuss changes in behavioral insights and customer engagement? - Daniel Ives (Wedbush Securities Inc., Research Division)

2025Q3: Customers coming from boot camps are now more strategically focused, wanting to deploy AIP across their entire organization and undergo a company-wide transformation. The focus has shifted from single use cases to enterprise-wide AI deployments. - Ryan Taylor(CRO, CLO)

Are you surprised by how quickly sales cycles are progressing from initial customer engagement to AI deployment? - Daniel Ives (Wedbush Securities Inc., Research Division)

2024Q4: I'm not surprised by the accelerated sales cycles because customers are experiencing significant results from Palantir's AI solutions. The speed at which customers are implementing and expanding AI initiatives is driven by the tangible value and impact shown. - Ryan Taylor(CRO, CLO)