Palantir rallies 16% following beat and raise report

Palantir Technologies (PLTR) reported Q2 earnings with an adjusted EPS of $0.09, surpassing analyst expectations of $0.08. Revenue for the quarter came in at $678.1 million, exceeding the anticipated $652.1 million. This represents a year-over-year growth of 27% and a quarter-over-quarter increase of 7%.

The commercial and government segments both showed significant growth. U.S. commercial revenue surged by 55% year-over-year and 6% quarter-over-quarter to $159 million, with the customer count increasing by 83% year-over-year to 295. Additionally, the remaining deal value (RDV) in the U.S. commercial sector grew by 103% year-over-year. On the government side, revenue grew by 24% year-over-year and 8% quarter-over-quarter to $278 million, highlighting strong demand for Palantir’s services across both segments.

Palantir provided updated guidance for Q3 and the full year 2024. For Q3, the company expects revenue between $697 million and $701 million, compared to the consensus estimate of $679.12 million. Adjusted operating income is projected to be $233 million to $237 million, higher than the expected $208.59 million. For the full year, Palantir raised its revenue guidance to $2.742 billion to $2.75 billion, up from the prior range of $2.68 billion to $2.69 billion. The adjusted operating income guidance was also increased to $966 million to $974 million, from the previous $883 million.

Key highlights from the earnings report included a GAAP net income of $134 million, representing a 20% margin, and an adjusted operating profit of $254 million, reflecting a margin of 37%. The company's cash and cash equivalents stood at $512.7 million, while cash from operations amounted to $144 million, showcasing strong liquidity and operational efficiency. Palantir's adjusted free cash flow for the quarter was $149 million, representing a 22% margin.

Shares of PLTR reacted positively as the stock has rallied from $24 to $28 in the after hours. The move sets up a key test for the markets after a couple of sessions of aggressive selling. PLTR's ability to hold gains will be paramount if traders are looking for clues of sellers exhaustion. If we see investors sell the stock on the pop then that would suggest a continuation of selling pressure as any push higher in shares will lead investors to the sidelines.

In summary, Palantir's Q2 earnings report highlighted solid growth in both its commercial and government segments, along with raised guidance for the upcoming quarter and full year. However, the stock’s sharp decline post-earnings reflects mixed investor sentiment and caution regarding the company's lofty valuation amidst broader market volatility.