Daniel Pronk on $PLTR (Nov 4, 2026)

Today we will talk about Palantir. My notes are kept on another computer. Here we see that Palantir's commercial revenue has exceeded government revenue for the first time. This is very important for businesses because it demonstrates that they are able to expand into the commercial sector, rather than relying solely on US government business or overall government business.

So in my opinion this is a very important milestone for the company.

We see that US revenue grew 119% year-over-year and 23% quarter-over-quarter. US commercial revenue grew 148% year-over-year and 29% quarter-over-quarter. US government revenue increased by 96% year-over-year and 18% quarter-over-quarter.

They also said their quarterly revenue reached $2 billion for the first time.

However, the total contract value increased by only 6% year-on-year. And that's exactly why the stock initially sold off after the earnings report and has fallen nearly 19% in the past month.

The market did not take this well, because if the total contract value does not increase in line with revenue, it indicates that future growth rates could decline significantly.

But moving forward, we can see that Palantir's Rule of 40 score is now 158%, which is truly incredible. Generally, a score of 40% in the Rule of 40 is considered good. This is what the Rule of 40 means.

So the number 158% is almost unimaginable here. This is ridiculously good.

We then see that cash from operations came in at $1.205 billion, with a margin of 52%, and the company now has $10.4 billion in cash on its balance sheet, with virtually no debt.

So overall, these results from Palantir were remarkable. It was another amazing quarter for the company.

Moving on, the next screenshot is their forecast for the fourth quarter, where they expect revenue to be $2.65 billion, an 88% increase over last year. They also expect revenue of $8.53 billion and free cash flow of $4.9 billion for the full year.

This means Palantir expects to achieve a 58% free cash flow margin this year while growing the business at a rate of nearly 100%. Essentially, Palantir plans to double its business this year while maintaining a free cash flow margin of around 60%.

However, Palantir's fourth-quarter earnings forecast indicates that revenue growth is starting to slow, which is a natural consequence. No company can grow at a 100% growth rate forever.

So at some point, Palantir's business will start to slow down, and that will be quite good.

In fact, analysts are already expecting the revenue growth rate to slow sharply over the next 18 months and fall to around 30% annual growth by the end of 2028. This is still very good and 30% growth is certainly great for any business, but you can see that analysts are concerned that the growth rate will continue to decline and fall sharply again.

Now let's quickly look at Palantir's cash flow statement, which shows that operating cash flow has nearly tripled to $3.3 billion since the beginning of the year. Now what's interesting about this is that the company only increased their capital expenditure by $9 million.

That is, they increased capital expenditures by $9 million, but operating cash flow increased by $2.1 billion. This is incredible.

You can also see that accounts receivable is growing strongly, which is essentially creating future cash flow and that's great to see, especially for a software company. This is an incredible cash flow statement.

It is impossible to describe it in any other way. It is very transparent and Palantir is generating significant amounts of cash flow.

Palantir's earnings presentation also reported that their net revenue retention was 165%. This is very good. This means that existing customers are spending a lot more on Palantir over the years, and customers will only do so if they get a good return or ROI and achieve great results with Palantir, which indicates that Palantir's products are highly valuable and customers want to use them more.

The only problem I see with Palantir is that it is currently trading at 101 times free cash flow, which is a very high multiple for any business. Essentially, this means that Palantir will have to continue to grow at a very rapid pace to justify this multiple.

And I have run a brief DCF analysis on the stock to convince you. So, if Palantir can grow their free cash flow at a rate of 60% per year and trades at 40 times free cash flow, it would generate 15% compounded annual growth from today's share price.

This multiple will shrink as growth slows, and maintaining 60% free cash flow growth is a big deal for any business. And personally, I'm not confident enough to understand whether these numbers are optimistic or pessimistic.

And that's why I stay away from this stock, especially when it's being sold at such a high price.

But anyway, the business is doing incredibly well and these numbers were phenomenal. So, congratulations to all the investors who made a lot of money from this stock.