Palantir has been one of the top-performing AI software stocks this year with a 156% YTD return, thanks to accelerating revenue growth and strong business momentum from its Artificial Intelligence Platform (AIP) released last year. (View Highlight)
AIP sets Palantir apart from the rest of the SaaS universe, driving visible AI-related growth and acceleration in multiple different metrics – at this time, other leading AI favorites such as Snowflake or MongoDB can’t say the same. Outside of the cloud hyperscalers, Palantir is one of the rare few that sees AI drive both real returns for its business and real value for its customers due to AIP. (View Highlight)
AIP has driven tremendous growth for Palantir’s business since its release, with primary impacts arising in the commercial segment. A clear inflection point in Palantir’s growth is visible following AIP’s release, while other ‘AI’ cloud peers can’t say the same about AI-driven growth. (View Highlight)
Palantir said that “US commercial continues to accelerate in Q2 2024 alongside [the] AIP revolution” with “unprecedented demand”, and the numbers to back this up: (View Highlight)
• 55% YoY revenue growth in US commercial to 159 million, accelerating from 40% YoY in Q1.
US Commercial revenue growth accelerated to 55% YoY in Q2 as revenue rose to 159 million. (View Highlight)
Here’s what the growth in US commercial customers looks like:
Palantir’s US Commercial customer growth has reaccelerated over the past few quarters thanks to AIP. (View Highlight)
US commercial customer growth began to stagnate through late 2022 and early 2023, but following AIP’s release in Q2 2023, customer count re-accelerated. There is a clear inflection point from where QoQ customer additions were decelerating – from 12 net adds in Q1 2023 to six net adds in Q2 2023. Following the AIP-driven acceleration, net adds rose to 20 QoQ in Q3 2023, then 40 QoQ in Q4 2023. (View Highlight)
Salesforce reported 8% YoY revenue growth in Q2, decelerating from 11% YoY in Q1, as subscription revenue growth decelerated to 9% YoY, down from 12% YoY in Q1. Salesforce sees Q3 revenue growth of 7%, another deceleration. The full-year revenue growth of just 8% to 9% translates to the SaaS giant struggling to realize AI gains. Furthermore, Salesforce’s more AI-aligned offerings, MuleSoft and Tableau, decelerated sharply in Q2, from 27% YoY to 13% YoY for MuleSoft and 21% YoY to 11% YoY for Tableau. (View Highlight)
In sharp contrast, AIP has helped Palantir drive a significant topline acceleration over the past four quarters.
AIP’s strong momentum has helped drive quarterly revenue growth to 27.2% YoY in Q2 2024, up from (View Highlight)
Palantir reported 27.2% YoY revenue growth in Q2, aided by strength in US commercial stemming from AIP as well as government revenue accelerating significantly. Palantir’s YoY revenue growth bottomed in Q2 2023 at 12.7%, the same quarter as AIP’s release, with revenue growth now 15 points higher. Despite guiding for a slight 2 percentage point deceleration in Q3 to 25.2% YoY growth, Palantir would only need to beat its guide by 1.5% to keep this revenue acceleration intact. (View Highlight)
Palantir’s standout performance so far in 2024 against SaaS peers can be attributed to the success of AIP, which, at its core, is a comprehensive AI platform that lets enterprises lever Palantir’s AI and machine learning tools and harness the power of the latest large language models (LLMs) within Foundry and Gotham. (View Highlight)
Gotham was the company’s first product and is built for government operatives in defense and intelligence sectors. The platform enables users to identify patterns hidden deep within datasets using semantic, temporal, geospatial and full-text analysis, with mixed reality capabilities to allow operations to be run in virtual environment as well. Graph allows data objects to be seen as nodes and edges, while Map track geo-located objects, run searches and display key data. (View Highlight)
Foundry was built for the commercial sector, and is centered around the three-layer Ontology Core, integrating semantic, kinetic, and dynamic layers for real-time data analytics and AI-powered decision making capabilities:
• The Semantic layer brings volumes of data into one place, and lets users generate detailed object properties
• The Kinetic layer brings operations and business behaviors into a real-time graph linked back to the Semantic layer, creating the basis for AI-driven analytics, real-time monitoring, identification of inefficiencies, and ability to optimize workflows
• The Dynamic layer connects models to objects and actions, reasoning across both the Semantic and Kinetic layers for AI-powered automation and AI-driven decision making, alongside multi-step simulations with AI predictive analytics to explore possibilities of changing actions or events (View Highlight)
AIP combines with Foundry’s data operations suite and Apollo’s autonomous software deployment capabilities as part of Palantir’s ‘AI Mesh’, providing enterprise and government customers with a full suite of AI products from the web to mobile to the edge. With the Ontology, linking data and logic into an AI-accessible environment, Palantir brings generative AI directly to an enterprise’s operations, delivering real-time AI-driven operational decision-making abilities. (View Highlight)
What further sets AIP apart is its scalability, interoperability and versatility. With AI Mesh, organizations can integrate AI across different operations and applications, while its design facilitates interoperability with existing enterprise software and systems. AIP is also extremely versatile, having been successfully and seamlessly integrated into enterprises spanning a wide range of industries from tech to healthcare to aerospace, while still driving value to customers. (View Highlight)
The uniqueness of Palantir’s AIP and value that it can quickly provide has driven growth for the company. CEO Alex Karp said in Q2 that “growth across the commercial and government markets has been driven by an unrelenting wave of demand from customers for artificial intelligence systems that go beyond the merely performative and academic.” (View Highlight)
Essentially, there is constant strong demand for an applicable, scalable, versatile AI platform that can drive real-time results with an instant value-add for an organization. Chief Revenue Officer Ryan Taylor added that Q2’s “exceptional results are a reflection of a market that is quickly awakening to a reality that our customers have already known, we stand alone in our ability to deliver enterprise AI production impact at scale.” (View Highlight)
While Palantir is undoubtedly seeing strong business momentum in the commercial sector, the government sector remains Palantir’s bread and butter, being that the government sector has funded the company and allowed it to aggressively invest in AIP while expanding margins, with a recent growth acceleration (View Highlight)
This included a production contract from the DoD, Chief Digital and Artificial Intelligence Office (CDAO) for an AI-enabled operating system for the DoD, with an initial 153millionorderandadditionalawardsforupto480 million over a 5-year period. (View Highlight)
Palantir’s US Commercial customer growth has reaccelerated over the past few quarters thanks to AIP. (View Highlight)
AIP’s strong momentum has helped drive quarterly revenue growth to 27.2% YoY in Q2 2024, up from (View Highlight)