Palantir Is Proving The Long-Term Business Model

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Kevin Dietsch

Palantir (NYSE:PLTR) is simply a large information analytic company, 1 that's built a revolutionary package for processing data. The company's stock value has remained incredibly volatile since its IPO arsenic investors struggle to find a adjacent valuation. However, nan institution has revamped its portfolio, which we expect will origin beardown shareholder returns.

Palantir 4Q and FY 2022 Highlights

The institution achieved beardown highlights successful nan astir caller quarter, highlighting its financial strength.

Palantir Investor Presentation

Palantir Investor Presentation

Palantir Highlights - Palantir Investor Presentation

The institution managed to execute GAAP profitability for nan first clip successful its history. It's worthy noting that nan GAAP EPS was a nominal $0.01 / share. The institution managed to turn gross by an awesome 18% YoY pinch 22% YoY maturation successful nan company's USG revenue. The institution achieved 22% successful adjusted operating margins and closed 261 deals up 20% YoY.

By each and each metric nan institution is continuing to turn rapidly. That's basal for its semipermanent goals of increasing gross and margins.

Palantir Financial Performance Growth

Palantir's occurrence is based connected continued beardown financial performance.

Palantir Investor Presentation

Palantir Investor Presentation

Palantir Financial Performance - Palantir Investor Presentation

The institution managed to turn its customer count by 55% YoY. The company's occurrence is based connected nan operation of increasing its customer guidelines and increasing its gross per customer. The institution proved an expertise to do that and pinch customer relationships increasing faster than gross it could moreover accelerate its description .

This is evidenced by nan company's increasing TTM gross per customer for nan apical 20 customers which grew by 13% YoY.

Palantir Deal Closing

For Palantir, nan metric for early occurrence is being capable to proceed closing larger and larger deals.

Palantir Investor Presentation

Palantir Investor Presentation

Palantir Deals - Palantir Investor Presentation

The institution managed to adjacent astatine slightest 55 deals successful 4Q 2022 which were worthy astatine slightest $120 cardinal successful gross astatine nan minimum. The institution has been progressively signing ample deals which will thief to support further gross growth. That will thief nan company's financial capacity to amended for nan agelong run.

Palantir Financial Guidance

For 2022, nan institution earned $1.9 cardinal successful gross pinch 115% dollar retention. That helps to item nan restitution of nan company's customers.

Palantir Investor Presentation

Palantir Investor Presentation

Palantir Financial Guidance - Palantir Investor Presentation

The company's guidance for FY 2023 is astir $2.2 cardinal successful revenue, representing astir 15% YoY growth. However nan institution does expect 1Q 2023 to beryllium successful statement pinch 4Q 2022 for revenue. The company's FY' 2022 adjusted operating income was $421 down by conscionable complete 10% YoY from $473 cardinal successful FY' 2021.

That was a consequence of a diminution successful nan company's margins from 31% to 22%. The institution is expecting margins of 23% successful 2023, implying a flimsy YoY summation successful nan company's margins from FY' 2022. The institution expects GAAP nett income from some its increasing gross and increasing margins though maturation rates are somewhat slowing down.

Our View

Palantir operates successful a trouble industry. Working pinch ample businesses is simply a slow process and it tin return years to some beryllium worth and for a institution to beryllium capable to turn its billings. Palantir has been astir for galore years and it's moving to turn its company. It's moving connected aggregate congruent income lines of some gaining caller customers and increasing income pinch existing customers.

The institution achieved GAAP nett income for nan first 4th successful its history and it looks apt to repetition that feat successful 2023. The institution expects YoY separator and gross improvement. Outside of nett cash, nan company's valuation of $16.5 cardinal is justifiable pinch nan company's semipermanent maturation and profit prospects.

Specifically it's nan company's financial performance. The company's gross grew 18% YoY from 2021 to 2022. The forecast to 2023 is astir 15%. We expect that nan institution tin make astir 15% successful annualized gross maturation going forward. That's arsenic nan institution continues to get caller contracts and caller gross from existing contracts.

At nan aforesaid time, we expect that nan company's margins will stay strong. Roughly 20-30% though it'll up and down arsenic nan company's expenses proceed to fluctuate. Let's look astatine wherever it'll beryllium successful 2030. With nan gross growth, that'll constituent to 2030 gross of astir $6 cardinal and operating rate travel astatine a midpoint of $1.5 billion.

We expect nan mostly of this will beryllium FCF for nan company, a comfortable return complaint for nan company's $16.5 cardinal marketplace capitalization. The institution is comparatively precocious risk, but arsenic we saw passim this article, it has important semipermanent potential. More truthful we expect nan institution to proceed having beardown maturation imaginable station 2030.

Long-term we spot nan company's package arsenic playing a defining guidelines domiciled for galore organizations and governments.

Thesis Risk

The largest consequence to our thesis is that Palantir recorded a profitable quarter, which mightiness make investors deliberation nan way is now clear for nonstop shareholder returns. However, its semipermanent occurrence is still limited connected important continued maturation for nan company. Until nan institution tin proceed doing that, while generating profits and proving its value, we expect it'll proceed to spot volatility successful its stock price.


Palantir had blowout net which helped to substantially boost nan company's stock price. The institution reported GAAP nett income for nan first clip successful its history connected nan ground of maintaining beardown margins and consistently increasing its revenue. The institution has continued to execute good pinch some uncovering caller customers and expanding nan gross per customer.

For 2023, nan institution is expecting a flimsy betterment successful margins. Additionally, nan institution is expecting a double-digit summation successful its revenue. This operation will alteration nan institution to execute GAAP nett income for nan year, and we expect nan institution to person important maturation past nan year. That makes nan institution a valuable investment.

Let america cognize your thoughts successful nan comments below.

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