William Blair Reaffirms ‘Market Perform’ Rating on Palantir
William Blair analyst Louie DiPalma reiterated a ‘Market Perform’ rating on Palantir Technologies.
“Palantir shares are trading over 3% higher after the company reported a major revenue growth acceleration from 39% for the March quarter to 48% for the June quarter.
This acceleration was especially impressive when considering Palantir was able to once again increase its margin to 46%, thereby producing a “rule-of-94” quarter.
Shares have increased by 91% since our March 5 upgrade to Market Perform, compared with the Nasdaq 100’s 14% increase.
DOGE has had zero negative impact on Palantir’s U.S. government business, which achieved its fastest growth rate since the second quarter of 2021.
Palantir is clearly benefiting from AI industry momentum across its government and commercial customer bases. For U.S. government, the Maven Smart System program continues to be a major contributor to growth.
Palantir’s struggles in its international commercial segment continued, but these have only been a small blip relative to the massive outperformance for the company’s other segments.
Our Dotted Line tracker indicated Palantir won $135 million in ARR second-quarter bookings, the highest mark in the company’s history.
Palantir’s overall bookings increased 140% relative to last year.
In our view, the biggest risk to Palantir’s stock performance is future incremental competition from OpenAI, Anthropic, and other LLM providers (Knocking on the Door?
OpenAI Wins $200 Million Department of Defense Prototype Contract).
(+) Second-quarter revenue was above consensus on 48% growth.
Palantir reported second-quarter revenue of $1.0 billion, compared to consensus of $939 million. Revenue growth was 39% last quarter.
(+) Second-quarter U.S. commercial revenue growth of 93% accelerated from 71% last quarter. U.S. commercial growth is a major focus for investors.
(+) Adjusted operating income of $464 million was above consensus of $404 million. The operating margin was 46% compared with 44% last quarter.
(+) Palantir raised its full-year guidance. The company now expects 45% full-year revenue growth, compared to its prior expectation for 36% growth.
Free cash flow guidance was raised by $200 million, to $1.9 billion.”
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