Palantir Technologies Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter filing; the supplied filing does not provide a clear Q4-only financial summary. Amounts below are U.S. dollars.
Business context
Palantir sells software platforms for integrating organizational data and workflows: Gotham, Foundry, Apollo, and its Artificial Intelligence Platform (AIP), which began deployment in 2023. Revenue is generated primarily from subscriptions and related operations and maintenance services, generally recognized over contract terms. The company reported 497 customers at year-end, up from 367 in 2022; 55% of FY2023 revenue came from government customers and 45% from commercial customers.
Financial results and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $2.225 billion | $1.906 billion |
| Revenue growth | 17% | Not stated here |
| Gross profit / margin | $1.794 billion / 81% | $1.497 billion / 79% |
| Operating income (loss) | $120.0 million | $(161.2) million |
| Net income (loss) attributable to common stockholders | $209.8 million | $(373.7) million |
| Diluted earnings (loss) per share | $0.09 | $(0.18) |
| Cash from operating activities | $712.2 million | $223.7 million |
FY2023 gross margin was 82% excluding stock-based compensation. Adjusted operating income, excluding stock-based compensation and related employer payroll taxes, was $632.8 million, versus $420.8 million in 2022; these are non-GAAP measures. Stock-based compensation was $475.9 million, down 16% year over year.
At December 31, 2023, cash, cash equivalents, and short-term U.S. Treasury securities totaled approximately $3.7 billion. The company had no outstanding debt and had $500 million of undrawn revolving-credit commitments. Net cash used in investing activities was $2.711 billion, primarily reflecting purchases of marketable securities. Current assets were $4.139 billion and current liabilities $746.0 million. The company reported an accumulated deficit of $5.650 billion.
Changes versus FY2022
- Revenue increased 17%. Government revenue rose 14% to $1.222 billion; commercial revenue rose 20% to $1.003 billion.
- U.S. revenue was $1.378 billion, up from $1.161 billion. U.S. commercial revenue increased to $457.1 million from $335.1 million.
- Gross margin improved two percentage points to 81%, as revenue growth outpaced cost of revenue.
- Operating results moved from a $161.2 million loss to $120.0 million of income. Net income also benefited from $132.6 million of interest income, compared with $20.3 million in 2022, and a smaller net loss in other income (expense).
- Operating cash flow rose to $712.2 million from $223.7 million; the company attributed the increase partly to payment timing and higher interest income.
Outlook, commentary, risks, and unusual items
- The filing gives no specific numeric FY2024 revenue or earnings guidance. Management said existing liquidity should meet anticipated operating cash needs for at least the next 12 months, while noting forecasts are uncertain.
- Management highlighted AIP deployments and bootcamps as part of its customer-acquisition approach. Adoption, conversion of pilots to paid contracts, and the pace of commercial growth remain uncertain.
- Total remaining deal value was $3.9 billion, up 5% year over year: $2.1 billion commercial and $1.8 billion government. This measure assumes exercise of options and no contract terminations; $4.1 billion of awarded IDIQ government contracts with undetermined funding was excluded.
- Customer concentration and contract terms are material risks: the three largest customers generated 18% of revenue, and many contracts can be terminated for convenience. One customer represented 15% of year-end accounts receivable.
- A third-party cloud-hosting amendment includes a commitment to spend at least $1.95 billion over ten contract years through September 2033, subject to the agreement’s terms and usage commitments.
- The company authorized a $1.0 billion share-repurchase program in August 2023 but made no repurchases under it during 2023. It does not expect to pay dividends in the foreseeable future.
- Risks include long and variable sales cycles, seasonality, competition, reliance on government budgets and third-party cloud providers, cybersecurity and privacy threats, evolving AI regulation and risks, macroeconomic and geopolitical uncertainty, and potential investment losses. The company reported ongoing securities class-action and derivative litigation; it said it could not estimate reasonably possible losses and did not identify pending matters expected to materially affect the consolidated financial statements.
- Other income (expense) included equity-security valuation and sale effects; the 2022 comparison also included a $44.3 million gain from the Palantir Japan step acquisition. FY2023 net income should therefore be considered alongside operating income and cash generation.
Most important facts for investors to verify
- Whether AIP and commercial customer growth translate into durable revenue growth and improved GAAP operating profitability.
- How much of the $3.9 billion remaining deal value converts to revenue, given termination rights, unexercised options, and government funding contingencies.
- Cash-flow sustainability and the effect of the long-term cloud-hosting commitment on future costs and margins.
- Stock-based compensation, share issuance, and potential dilution; separately, whether any authorized repurchases are executed.
- Customer and receivables concentration, including the 15% receivables exposure, and developments in disclosed litigation and regulatory risks.