Palantir: An Investment For Your Decedents' Financial Future

Aug. 16, 2022 8:33 AM ETPalantir Technologies Inc. (PLTR)97 Comments


  • Palantir is profitable, beating out many other tech companies in their growth phase, showing the strength of its assets.
  • The company's commercial revenue is growing faster than its government revenue, but it still has the risk of market uncertainty.
  • We expect the company to meet its target of being to the next decade what AWS was for the last, driving massive shareholder returns.
  • Looking for higher risk/reward options trading ideas? I offer this and much more at my exclusive investing ideas service, The Retirement Forum. Learn More »

Palantir Technologies headquarters campus exterior view in Silicon Valley. - Palo Alto, California, USA - 2019

Michael Vi

Palantir Technologies (NYSE: NYSE:PLTR) is a public American software company with a market capitalization of $20 billion. The company has dropped roughly 70% from its 52-week high, joining in on a strong technology sell-off. However, despite that, the company continues to have substantial earnings potential, making it a valuable investment.

Palantir 2Q 2022 Highlights

Palantir had an impressive quarter despite the market's opinion on it.

Palantir 2Q 2022 earnings results

Palantir Investor Presentation

The company is still in growth mode and growing rapidly. Revenue grew to almost $500 million in the quarter with a customer count of more than 300. That's an almost doubling of the company's customer count. The company's U.S. business generated more than $1 billion in TTM revenue and the company's US commercial revenue has grown even faster.

The company, on nearly every metric worth tracking, had an incredibly strong quarter.

Palantir Asset View

Palantir takes all the latest technology and brings it to new scales to support enterprises without the same technological experience.

Palantir assets

Palantir Investor Presentation

The company has helped with numerous corporate problems across the world. The company has helped identify a massive money laundering operation, production ramp crises, and risk management. The company's unique technology, which has expanded significantly since going public, allows the company to provide peer-leading technology.

The company likes to say it'll be to the next decade as AWS was to the last. We believe it. AWS replaced the need for homegrown datacenters, which were tough to scale and expensive. We believe Palantir. Palantir will replace the need for homegrown software solutions which are expensive and tough and slow to customize.

Will the company ever replace Facebook's engineers. No, Facebook has the scale to do it itself. That's why Facebook has its own data centers instead of AWS. But we do expect it to replace complex SW engineering tasks for a multitude of governments and companies.

Palantir Financial Performance

Financially, Palantir performed well.

Palantir government and commercial revenue growth

Palantir Investor Presentation

The company ended the quarter with 119% in net dollar retention and more than $1 billion in TTM commercial revenue growth. The company's government revenue growth slowed down, although, to be fair, it was a tough time for governments around the world to operate and perform. The company did manage to grow customers by 10% QoQ.

Palantir deal value and remaining performance obligations

Palantir Investor Presentation

The company managed to achieve a more than 80% gross margin. The company ended the quarter with $3.5 billion in remaining deal value, up by the mid-single digits YoY, which represents <2 years of revenue but still a reasonable backlog. The company also managed to substantially grow its performance obligations YoY to $1.2 billion.

From a valuation perspective, the company has $2.4 billion in cash and no debt, representing a 12% net cash position on its market capitalization. The company's annualized FCF is $250 million, which represents a ~1.5% FCF yield, low, but also impressive for a company that has been growing rapidly by double-to-triple digits.

The company's revenue forecast for the next quarter is $475 million representing roughly constant revenue with the most recent quarter. Annualized revenue is expected to stay in line with that.

Palantir Expansion Model

We expect Palantir's expansion model to cause substantial shareholder returns.

The company has 3 phases. Acquiring new customers. Increasing revenue per customer. Growing the scope of business it handles for each customer. The company has proven the success of this model with its gross margins of more than 80% and the double strength of new customers and revenue growth per customer shows the company's overall financial strength.

The company's expansion model here is why we believe the company will be able to rapidly accelerate its FCF yield. Selling too other companies is tough, expensive, and slow work. However, the company does have a strong and successful history of growth and we expect that to continue growing going forward.

Palantir Thesis Risk

The largest risk to the company's thesis is that its future is based on continued growth. The company has reasonable FCF, but it needs that growth to continue to justify its valuation. With rumors of a recession, customers will be reluctant to start new contracts and deals which could work to significantly slowdown the pace of the company's growth.


Palantir has a unique portfolio of assets that we expect the company to be able to use to grow. The company says it'll be to the next decade what AWS was to the last, and we agree. The strength of the company's offerings portfolio means the ability to replace work and provide companies with better results and margins.

The company has an incredibly strong net cash position. The company is profitable in its growth phase, something that most tech companies don't manage to do. While the company needs growth in order to justify its valuation, it has continued to grow well, and we see that making the company a valuable long-term assets.

You Only Get 1 Chance To Retire, Join The #1 Retirement Service

The Retirement Forum provides actionable ideals, a high-yield safe retirement portfolio, and macroeconomic outlooks, all to help you maximize your capital and your income. We search the entire market to help you maximize returns.

Recommendations from a top 0.2% TipRanks author!

Retirement is complicated and you only get once chance to do it right. Don't miss out because you didn't know what was out there.

Only 4% of Americans Are Taking Advantage of This Smart Retirement Move | The Motley Fool

We provide:

  • Model portfolios to generate high retirement cash flow.
  • Deep-dive actionable research.
  • Recommendation spreadsheets and option strategies.

Click for our discounted 2-week free trial!

This article was written by

The Value Portfolio profile picture
The #1 Service for Retirement Success, Actionable Ideas + Model Portfolios!

The Value Portfolio focuses on deep analysis of a variety of companies with a primary focus on the energy sector. Occasional articles also focus on building a retirement portfolio or on other sectors (such as healthcare or technology).

Legal Disclaimer (please read before subscribing to any services):

Any related contributions to Seeking Alpha, or elsewhere on the web, are to be construed as personal opinion only and do NOT constitute investment advice. An investor should always conduct personal due diligence before initiating a position. Provided articles and comments should NEVER be construed as official business recommendations. In efforts to keep full transparency, related positions will be disclosed at the end of each article to the maximum extent practicable. The majority of trades are reported live on Twitter, but this cannot be guaranteed due to technical constraints.

My premium service is a research and opinion subscription. No personalized investment advice will ever be given. I am not registered as an investment adviser, nor do I have any plans to pursue this path. No statements should be construed as anything but opinion, and the liability of all investment decisions reside with the individual. Investors should always do their own due diligence and fact check all research prior to making any investment decisions. Any direct engagements with readers should always be viewed as hypothetical examples or simple exchanges of opinion as nothing is ever classified as “advice” in any sense of the word.

Disclosure: I/we have a beneficial long position in the shares of PLTR either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (97)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.