Business Context and Reporting Period
Company: Palantir Technologies Inc. (PLTR)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Palantir builds software platforms (Gotham, Foundry, Apollo, and AIP) that integrate data, decisions, and operations for government and commercial organizations. The company serves 954 customers as of year-end 2025, with revenue split between government (54%) and commercial (46%) segments. The company is a large accelerated filer incorporated in Delaware.
Key Financial Metrics
| Metric | 2025 (in millions) | 2024 (in millions) | Change |
|---|---|---|---|
| Revenue | $4,475.4 | $2,865.5 | +56% |
| Gross Profit | $3,686.3 | $2,299.5 | +60% |
| Gross Margin | 82% | 80% | +200 bps |
| Income from Operations | $1,414.0 | $310.4 | +355% |
| Net Income (Attributable to Common Stockholders) | $1,625.0 | $462.2 | +252% |
| Diluted EPS | $0.63 | $0.19 | +232% |
| Operating Cash Flow | $2,134.5 | $1,153.9 | +85% |
| Cash, Cash Equivalents, and Short-Term Investments | $7,177.0 | $5,230.0 | N/A |
| Debt | $0 | $0 | N/A |
Note: Cash and short-term investments calculated as Cash and cash equivalents ($1,423.8M) + Marketable securities ($5,753.2M).
Material Changes vs. Prior Period
- Revenue Growth: Total revenue grew 56% year-over-year, driven by 53% growth in the Government segment ($2.4B) and 60% growth in the Commercial segment ($2.1B). U.S. commercial revenue specifically grew 109%.
- Profitability Expansion: Operating income increased from $310.4 million to $1.4 billion. Adjusted income from operations (excluding stock-based compensation and related payroll taxes) reached $2.3 billion, up from $1.1 billion in 2024.
- Margin Improvement: Gross margin improved to 82% (84% excluding stock-based compensation). Contribution margin (revenue less cost of revenue and sales/marketing, excluding stock-based comp) increased to 66% from 60%.
- Customer Concentration: The average revenue from the top 20 customers increased 45% to $93.9 million. The top three customers accounted for 16% of total revenue in 2025.
- Deal Value: Total remaining deal value (including options) reached $11.2 billion, a 105% increase from $5.4 billion in 2024. Commercial remaining deal value grew 117% to $6.8 billion.
Guidance, Outlook, and Risks
Management Commentary & Outlook: Management highlights the successful deployment of the Artificial Intelligence Platform (AIP) and the acceleration of commercial customer adoption. The company expects U.S. customers to remain a significant source of revenue growth. Management does not provide specific forward-looking financial guidance in this filing but emphasizes the long-term nature of contracts and the potential for continued expansion within existing accounts.
Key Risks and Contingencies:
- Government Dependence: 54% of revenue comes from government customers, subject to budgetary constraints, procurement cycles, and termination for convenience clauses.
- Customer Concentration: A limited number of customers account for a substantial portion of revenue; loss of a major customer could materially impact results.
- AI and Cybersecurity: Risks associated with the deployment of AI models (hallucinations, bias, regulatory compliance) and potential cybersecurity breaches affecting customer data.
- Geopolitical Factors: Ongoing conflicts (Russia-Ukraine, Middle East) and trade relations could impact operations and customer demand.
- Stock-Based Compensation: Significant non-cash expense ($684 million in 2025) impacts GAAP profitability, though adjusted metrics exclude this.
Investor Verification Checklist
- Revenue Quality: Verify the sustainability of the 56% revenue growth rate, specifically the mix between new customer acquisition vs. expansion of existing contracts.
- Contract Durability: Assess the "Total Remaining Deal Value" of $11.2 billion against the risk of contract terminations for convenience, particularly in the government sector.
- Commercial Momentum: Confirm the 109% growth in U.S. commercial revenue is driven by recurring subscriptions rather than one-time professional services.
- Capital Allocation: Review the termination of the $1.0 billion share repurchase program in January 2026 and the company's future capital deployment strategy.
- Valuation Allowance: Monitor the $3.5 billion valuation allowance on deferred tax assets and the conditions required to release it, which could impact future effective tax rates.