Palantir, citing global uncertainty, beats Wall Street’s Q3 expectations

The shadowy provider of data mining technology to three-letter-agencies said results are benefitting from a global rise in uncertainty amidst the coronavirus pandemic.

Shares of Palantir, the seventeen-year-old software maker based on Denver that supplies tools to defense and security agencies, declined slightly in late trading on Thursday despite the company reporting Q3 revenue and profit that topped expectations, and raising its year revenue outlook, citing a boost from global uncertainty. 

"The demand for our software has increased steadily over the past year in the face of significant economic and geopolitical uncertainty in the United States and abroad," said Palantir in a prepared statement.

The company said its "work with healthcare organizations across the federal government has accelerated this year, and we continue to expand our reach with the nation's defense and intelligence agencies, including the U.S. Army, Navy, and Air Force."

Palantir cited in particle the use of its software in the U.S.'s COVID-19 response. The National COVID Cohort Collaborative (N3C), run by the U.S. National Institutes of Health, used the company's software "to integrate clinical data from more than one million patients in the United States in a matter of weeks."

Revenue in the three months ended in September rose 52%, year over year, to $289 million, yielding EPS of 8 cents a share. 

Analysts had been modeling $279 million and 3 cents per share.

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In five years, this big data company has become the go-to for various intelligence and government branches, and if they ever go public, CEO and co-founder Alex Karp stands to make billions. Palantir's talent at taking large amounts of data and turning it into easily-understood visualizations help agencies like the CIA, NSA and U.S. military connect certain dots.  Plus, the rumorsthat they helped on the mission to kill Osama Bin Laden doesn't exactly hurt their reputation either.

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Sales from each customer are increasing, the company noted, on average. "The average revenue generated per customer through the first nine months of 2020 was $5.8 million, up from $4.2 million per customer, or 38%, from the same period the year before," it said.

As a result, the concentration of its business among its top twenty customers had declined from 68% in the first first nine months of 2019 to just 61% in the nine months so far this year.

On a GAAP basis, Palantir lost $847.8 million in the quarter because of stock-options expense, it said. Excluding that cost, the company would have made an operating profit of $73.1 million.

For the current quarter, the company sees revenue of $299 million to $301 million, higher than the consensus for $2097 million. That brings the total year outlook now to $1.07 billion to $1.072 billion, versus the forecast offered back on September 22nd by the company for a range of $1.05 billion to $1.06 billion, and the $1.06 billion the Street has been modeling.

Palantir's two software programs it sells, "Gotham," which is sold to government and defense and intelligence entities, and "Foundry," sold to corporations. Both are a blend of statistical and machine learning approaches that "identify patterns hidden deep within datasets." The company describes both programs as a "central operating system for data." 

Both programs run on an underlying SaaS infrastructure software suite that Palantir calls Apollo.

Palantir founders include PayPal co-founder Peter Thiel. 

Shares of Palantir are down 3% in late trading at $14.09. That is up 40% from the opening price of the company's public offering back on September 30th.