Business Context and Reporting Period
Company: Palantir Technologies Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: March 31, 2026
Business Overview: Palantir builds and deploys software platforms (Gotham, Foundry, Apollo, and AIP) serving as central operating systems for government and commercial customers. The company operates two segments: Government and Commercial.
Key Financial Metrics
| Metric (in thousands, except per share) | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $1,632,583 | $883,855 |
| Gross Profit | $1,416,785 | $710,885 |
| Gross Margin | 87% | 80% |
| Income from Operations | $753,998 | $176,048 |
| Net Income (GAAP) | $876,402 | $217,717 |
| Net Income Attributable to Common Stockholders | $870,527 | $214,031 |
| Diluted EPS | $0.34 | $0.08 |
| Operating Cash Flow | $899,165 | $310,263 |
| Cash, Cash Equivalents, and Restricted Cash | $2,324,859 | $1,015,005 |
| Total Assets | $10,199,183 | $8,900,392 |
| Total Liabilities | $1,642,902 | $1,412,381 |
Debt & Liquidity: As of March 31, 2026, the company had no outstanding debt under its $500 million revolving credit facility. Total liquidity (cash, cash equivalents, and short-term U.S. Treasury securities) totaled approximately $8.0 billion.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 85% year-over-year to $1.63 billion. Government revenue grew 76% to $858 million, while Commercial revenue grew 95% to $774 million.
- Profitability Expansion: Income from operations surged 328% to $754 million. Net income increased 303% to $876 million.
- Margin Improvement: Gross margin expanded from 80% to 87%. Operating margin improved from 20% to 46%.
- Cost Drivers: Cost of revenue increased 25%, primarily due to a $39 million increase in third-party cloud hosting services. Stock-based compensation expense rose 30% to $202 million.
- Customer Base: The number of customers grew to 1,007 in Q1 2026 from 769 in Q1 2025. Average revenue from the top 20 customers increased 55% to $108 million.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
- Management highlighted strong demand for its Artificial Intelligence Platform (AIP) and continued expansion in both government and commercial sectors.
- U.S. customers accounted for 79% of revenue, with U.S. commercial revenue growing 133% year-over-year.
- The company expects U.S. customers to remain a significant source of revenue growth.
- Remaining performance obligations were $4.5 billion as of March 31, 2026, with approximately 39% expected to be recognized over the next 12 months.
Risks and Contingencies:
- Cloud Commitments: In March 2026, the company amended a cloud services agreement, committing to spend at least $5.6 billion over ten years through 2036.
- Legal Proceedings: A securities class action appeal (Cupat v. Palantir) had oral arguments in March 2026; the company does not expect a material adverse impact.
- Geopolitical & Macroeconomic: Risks include geopolitical tensions (Russia-Ukraine, Middle East), fluctuating interest rates, and potential tariffs. The company does not currently have material operations in Russia or Palestinian territories.
- Customer Concentration: One customer represented 31% of accounts receivable as of March 31, 2026. No single customer represented more than 10% of total revenue for the quarter.
Key Facts for Investor Verification
- Revenue Quality: Verify the sustainability of the 85% revenue growth rate, specifically the mix between new customer acquisition vs. expansion within existing accounts ($367M of government growth and $352M of commercial growth came from existing customers).
- Cloud Cost Exposure: Assess the impact of the new $5.6 billion cloud hosting commitment on future operating margins and cash flow requirements.
- Stock-Based Compensation: Monitor the trajectory of stock-based compensation ($202M in Q1), which remains a significant non-cash expense impacting GAAP profitability.
- Government Dependency: Evaluate risks associated with government budget cycles and the 53% revenue reliance on government customers, including potential contract terminations for convenience.
- Liquidity Position: Confirm the stability of the $8.0 billion liquidity position and the company's ability to fund operations without external financing given the high cash burn from cloud commitments.