- Earnings call transcript Q3 2022

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Operator

Good morning. Welcome to Palantier's Third Quarter 2022 Earnings Call. We'll be discussing the results announced in our press release issued prior to the market open and posted on our Investor Relations website.

During the call, we will make statements regarding our business that may be considered forward-looking within applicable securities laws, including statements regarding our third quarter and fiscal 2022 results, management's expectations for our future financial and operational performance and other statements regarding our plans, prospects and expectations. These statements are not promises or guarantees, and are subject to risks and uncertainties, which could cause them to differ materially from actual results. is market our our open risks distributed press SEC those to prior today concerning available earnings in release filings. Information and in as no by undertake obligation update statements, We to law. except forward-looking required adjusted course of we to Further, during financial today's the measures. will call, refer certain substitute These a should not measures isolation in financial considered in or non-GAAP to, from, addition be as for GAAP measures.

included investor non-GAAP measures, to measures is non-GAAP presentation including comparable and release today. of these in reconciliation about press information Additional provided our GAAP

presentation filings SEC investor on available investors.palantir.com. Relations Investor release, our press Our and are at website

to of growth These Over call, unless the course the year-over-year reflect when we otherwise business. will our refer various discussing stated. comparisons rates rates

from Alex Legal Business Development. hear Joining Kawasaki, Ryan Apache, Financial Command. where To as Officer; well we'll Chief Foundry of begin today's Officer; Executive [Audio/Video call, representatives Chief Con, Officer; Tyson Global Chief with a from Space Head from Systems Glazer, Alex Re highlights me call Shyam Affairs and Business and Chief Jacobs, on few Taylor, are Foods, you'll Kevin and Presentation] Karp, open Operating as today's Swiss Sankar, Officer; William, Dave

Unidentified Company Representative

the Ryan. over now call I'll turn to

Ryan Taylor

increased We customer of our and U.S. QX, last end customers increase leading The from quarter, XX% row, our using free basis, past trailing eighth free $XXX XXX the surpassed a grew for $X software, and substantially revenue generated government U.S. count in uncertainty, government in ninth marking increased rising macroeconomic Despite on our year. significant rising and past the in flow. our commercial billion at mark XX-month consecutive time business cash the a XX% enterprises in XXX% commercial flow, of this commercial this million a this the million year-over-year. $XX adjusted quarter We of U.S. to adjusted revenue cash our quarter year-over-year. and overseas also positive business geopolitical quarter including number and

within both contract particular, footprint an market XX and at million total at those of million XX ability at were reflection this to relationships. expanded In value, year-over-year. of closed increase Our of least past representing we XX our deals X customers in $XX additional existing least the deals were reach were million. XXX a X least XX% is grow quarter and

We have come problems we hardest by and some that our the have as customers the world far since faced engaging consistently as have founding. of our with

not $X We recent deliver to contract Research billion our ML of but up path as it continue Shyam further is at with over FDA sector infant we from the the contract total third earlier across AI year. a to such with the supply top technology supply we to by expansion XX when integration chains, into forward. I'll the alone For bringing we linear, at and us, to hand the cutting of business The most capabilities shortages plans their to increasingly ahead, closed companies are other chain the talent lies which nearly always Army Heavy that and Lab XX million this quarter expansion includes powered that XXX in for Industries work million experienced data our billion, is example, supply in preclude in ecosystems This have X.X foundry's and one moving recruit started includes projects. workforces. time regarding strategy in opportunity our and discussion awards the the the that Hyundai new for modernize like alone, shipbuilding milestone government which of U.S. the over growth retain the year product partnership This to to value slashing our a work to our our DoD. contracts reached with the scaling resilience worth work have with is capabilities. food U.S. formula of we recognize

Shyam Sankar

Ryan. Thanks,

decades for the driving that and the in and us products spent seeing actually customers have from X We the our we're building it's last pandemic live. our around towards inflation, disruption The Ukraine, world software. which us to and uncertainty we

the to and their their decision-making struggle supply connect As world customers trade possible Palantir to with energy suppliers chain off chain, have instantly to and customers to use integrate of from their concurrent been able courses to continues within crises, foundry action. value

having Palo in More basis. Engineering reduced at generated is alone. energy events foundry, impact X/X of their and than in plant of XX their year shared of significant flagship regular employees software share shared Jacobs software for of X million our XXX wastewater by London industries. at months. plants. $XX has how our the a from Swiss first at $XXX to consumption customers Swiss with running its underscored use highlights the shared saw potential we than on Foods experiences first our each Executives million in Tyson to the our annualized Alto on just with annualized million Re they across Customers across You held savings they more other. how that saved $XXX use XX% generate software Re savings

on valuable to focus results Our factor decisive customers than market ontology These has of uncertainty, quickly. the been macroeconomic that the moment never differentiation our is delivering today. in consistently more

recognition as in Palantir software ranked AI the commercial by sales, Amazon increasing particularly the as beating also in and share Microsoft, across XXXX integration. has visionary received market Google. a the IDC platform worldwide strength, ranked #X Our IBM, Gartner data market industry. U.S. and us

become platforms. allied where intelligence to important than is and the impact more the as has leader kinetic time and on In is And organizations battlefield. government the sector, the there Gotham world. Forrester place no named around artificial for U.S. learning the machine Palantir choice in defense

Apollo for a on fraction to officially time the builds networks. IL-X companies SaaS now enable further And government Fed DoD and software start on achieve broader in at cost. We offering a authorization accreditation, of our milestone received business, new record enabling to have critical our offering secret our FedRAMP

In our the base. nations from U.S. with addition, at from it missing the From had the partner vehicle the industrial conference, kill on our was the links. no where positive to annual government, we over Dave reactions the TITAN us through display this AUSA met it results to financial supply chain, quarter. I'll turn that products ensure take there chain to and are

David Glazer

Our U.S. million, grew S. basis, be significant most of XX-month to growth. driver XXX year-over-year revenue business $X.XX trailing to revenue billion. grew continues U. on to XX% a the U.S. and our

and growth States government core our XX% excludes Our commercial sequentially. United our grew revenue XX% commercial in year-over-year count, XXX% than commercial net strategic quarter-over-quarter, $XXX year-over-year customer On X% to quarters XX% revenue, new increased million. U.S. consecutive to XX% revenue U.S. U.S. of which program, sequential million, grew and our X year-over-year and XX%. customers the greater $XX year-over-year marking investment grew

results. to global line Turning our top

guidance million, grew was in million our Third net year-over-year revenue issued dollar guidance. quarter-over-quarter. when since prior even to $XXX to additional XX% ahead an year-over-year XXX% increased $X. remaining X constant retention Overall of million. Commercial revenue quarter total factoring currency headwind we $XXX XX%

denominated dollars. Kingdom, Our the a U.S. macroeconomic of milestone our billion affected revenue and customers year-over-year dollar for on to quarter the XX-month the trailing number government contracts has Europe generated be international to United the for surpassing been another saw time. Asia major as cross a million. first basis, $X.XX increased $X We a Government business this XX% significant $XXX them. headwind billion and we mark dollar. and strengthening And into continues roughly business the commercial result, as in our enter flat A conditions strong by in both year-over-year was

third Our quarter, customer year-over-year XX and an count new significant customer commercial continues We which net to XX% count our increase XX% in bringing XXXX We QX net customers, XX added XX% represents increase. a to increase XXX, customers at a the quarter-over-quarter. sequential XX% growth and rate. new added year-over-year

customers revenue customers Our top to revenue per increased expand. our XX-month million Trailing $XX within XX% customer. our to continues existing from year-over-year XX also

Third $X.X U.S. quarter business. were quarter, million, U.S. or booked billings XX% value TCV our was to which billion. was third billion, the up of total XX% year-over-year. In was $XXX government TCV X.X attributable contract

to was figure U.S. and by significantly of which a existing driven funded renewals contracts, portion The quarter been expansions date. third of have already TCV government

increase $X.X driven XX% our growth ended in deal was by TCV. remaining quarter remaining For total quarter-over-quarter value a in deal performance total third strong with the value, unusually we The quarter-over-quarter. billion

funded remaining We all performance a executing As mentioned, previously I unfunded contract pass-through value. plan cancel government deal third commitments. ended both We $X.X and XX% remaining contracts and TCV quarter value, investment our in to remaining result with we're unfunded to value the as seeing year-over-year. this for obligations, saw to accounts of remaining strategic our previously on up U.S. deal headwinds billion total our announced of the

take both not which comprised As of obligations beyond a months business with that than less commercial into term contracts business. contractual as of common does reminder, of initial government is XX for termination our account primarily our convenience clauses, in and fall it are RPO

Turning and which stock-based gross was Adjusted to margins XX%. excludes expense. expense, compensation margin,

expenses headcount-related in hiring graduates year, we additions quarter. by largest increase net the XXX the expense adjusted including as XXX and quarter up primarily who joined our million, were sequentially. Third driven X% in new The was $XXX quarter headcount sequential had quarter, of

employer XXX prior quarter of Third operating compensation operations, million, basis excluding from payroll ahead representing adjusted was points taxes guidance. and related XX%, margin income stock-based of $XX adjusted our

deployment several efficiencies the factors, a but exceeded around representing G&A, $X certain significantly outperformance, across margin the million $XX of approximately operating and business, in primarily million result driven and adjusted Our particularly elimination as cloud spend discretionary our of representing of by outperformance. of guidance

in to the in continue disciplined in to see the environment. we'll and expect efficiencies macroeconomic approach to discretionary our fourth We remain spend quarter, this

a free This from Third flow from cash of third driven our free $XXX share entirely positive on in in and retain both quarter up our generated delayed $XX access ended XXX was draw free We million adjusted term revolving operations. our On flow impact million to through the marketable million, $XXX was a marks million remain basis, equivalents trailing quarter facility no quarter of and and billion losses eighth loan representing XX-month $XXX margin adjusted million consecutive $XX which which in cash a flow We additional of with undrawn. $X.X securities. cash $XXX and facility, includes flow. million debt. per adjusted We of cash cash and million and respectively. liquidity X%, to we in $X.XX adjusted $X.XX, XX% cash by earnings generated operations negative credit cash

leaves arise environment. positioned the in macro on may capitalize to opportunities sheet current balance that well Our us

billion Now prior turning guidance, negative since XXXX, impact guidance our to quarter's year our outlook, currency $X.XXX of the billion. between $X.X our we $X full revenue million for and despite reaffirming are a

between year of Excluding billion impact, and XXXX such $X.XXX $X.XXX we expect billion. revenue would full

income adjusted raising operations are from $XXX We expect our million. adjusted full operations from for We income year. for $XXX and outlook of the between now million

factoring million. million impact fourth million a the prior $X expect we quarter, and For in quarter's between after revenue $XXX negative guidance, currency $XXX since of our

Excluding impact, between expect quarter revenue million of $XXX would and we $XXX fourth million. such

We Q&A. turn the $XX to expect adjusted $XX million. million operations to income from Ana it With over that, start I'll to of

Unidentified Company Representative

begin from We'll with open before the up Dave. questions Thanks, X call. shareholders our we

Our competitive asks, like Ryan landscape all-in-one first out launched attempting comes how and elaborate solution platform, speak against data current from who an the are about Genie offer you Snowflake platform Microsoft stand foundry? question and can the that the products Salesforce newly to Palantir

Ryan Taylor

this? Tom, take want to you do

Shyam Sankar

is, the in map The these get Ryan. product. factor London around of the our that's really of the it's and Palo in to role value the get of the in it be happening Alto the to all actually to backdrop ontology, enterprise. the customers decisive investments investments. missing my apps the so within will. need is for X realize AI that why And terms there here. from has the be to ontology. of and events and quick. are clearly value were results value spent all that built turn making And It's and credited architecture things And that's our Sure. digital the quickly. required to where of of articulating core that's And they you against really the deep upon data what it to the the that's there capability and they continues as conclusion because really granted into cloud deepening throughout your data understand yet ontology, con that enterprise really from road And customers not far results platforms years should that's that deliver top component we're that's the investing XX actionable on We're the are twin offering the ahead delivering we've that the scale our competition what Well, to warehouses to in ontology focus something or link taken the main thanks, foundry operational competition. our remain or ontology, but the a It's answer is we're

And so here. key a focus I think, that's,

quickly ontology that they're production, Tinto, an of originally the that we set have Deutsche even mine on don't Palo the to opportunity Food ontology in reduced operations. top from to obviously initial got to which $XXX see for COVID an sources to there. data Oyu modeled at Tyson's in increased and Telekom, go increased able heard a bother the to they of a is $XX cases end effort You about In finally of worth connecting and because that set use million then won't where million But modeled heard risk use that they they free, heard about because business Alto, the value. Tolgoi that from where helped value in in got able outcome $XX and use in million they Rio they the to case were data We drive oncology build much talked they value quickly the front ontology. did they response to talked of them Mongolia, cases how for to from from then the use be of they so actually around

Alexander Karp

slightly stuff. PowerPoint ontology go spell whether people build can PG, maybe say, why augmentation cold our understands, of X, Nexus Shyam can. foundry decades we of lot lives -- one, that using people, efforts. would who a that That's XX technology are is supply honestly, your, problems last of a build Even to are been XXX,XXX people the It's can is easy used same why is work. these thin salespeople. underscores in are in people people it's Just as driven, class doing the spell that as companies foundry build. There But the if riff way, this was powering America. And any underestimate are different you for it like the -- way year's peering, that saying, can years. from what take need is product doesn't success this. the it's to or even world, going under why strong of different GAIA, the differently, products okay, at whether really powering it doing this data That explain the integration, by think slightly we And it And are of they USG. ontology, don't very assumption, kind are our gravely foundry, this. the we I was from discovering can it it's impose to big to We've offering Mostly was a we're this have wonderful on hidden and can other this COVID. That's under to decisions company well thousands not it like we to why take let's with It's otherwise in, you difficulty the this. successful competition technology chain, software just probably you you need and think year's chain. and died you the and it foundry you during

the in difficulty But to evangelism And market are You these why completely is underestimated. the galvanizing to discover the leading primarily clients that's the on problems. just the have results. our and U.S., tour,

Unidentified Company Representative

Shyam Thank Alex. and you,

are who grow challenging asks environment. to in business this what Garoff plans Palantir's next comes Our the question macro from

Alexander Karp

vertical prepared have got f-ed even though for. this. you the By and that's horizontal the quarter. need X -- way, are trenches. technical where should have latency more on products we think for a that's why low our long years That's for integration then coincidence, PowerPoint, thing. disjointed world, military I and mean in where this your cash do, you we don't in your flow? preparing world people how actually together? been a have they work results trenches deliver to an a XX the predicting the the you we we've systems built where other do years. we to totally last been XX they Why make even we is macro business it where context -- underlying what in challenging mean in were or say overnight, have built Do the and environment systems The of than free for you quarters it's I the work actually business a

have debt? living and metasphere. we've -- in do this bank have a company. we -- We like and We've We a in We're be rifle. no the in thought weren't been why world you way would the have We it's rucksack the a even and $X.X prepper we in were Xpreppers living -- billion this their look could been essentially prep. -- preparing as it at

GAIA, in PG, the and $X.X no have and billion company. debt. bank That's Foundry We our

Unidentified Company Representative

Our Jefferies. Brent next is question from with

Brent Thill

the Karp for of had government you beginning year, at aspiration business deals into pipeline. to a the bigger on the the come Dr.

back the down. the brought close this curious I half into government see 'XX. of you assumption I'm where a for pipeline think you year of the transactions

Alexander Karp

you breaking of purely we're a going. had world I okay, was It's but years to years, think, CAGR USG. included do were I well, that It -- flat. saying, the is revenue see government the -- we CAGR Look, think that Palantir's XX% in where financially. up, little bit the were positing a X

likes. growth lumpy of and flatness, kind have no to tend one we So which

will of XX% the traditional this positing line. is that? of proof it. XXs. how upper don't Okay, more look the What front don't tell are baseline used it. year We than like You that you could baseline being our We're of the future products like I the like on the of

are the TCV. probably You It's a legitimate Nexus you like, capture peering, There's that foundry, you be massive. And GAIA concluded answer. powering in That's massive have missions are just revenue? legitimate have because end yes, can to things GAAP our when which important then reading fully because those $X about. and relationships. world, This the we going you news, form question, and the can like no is we the may will contractual are you events of TCV missions capture is our billion. been read that to surmise that the in the on we in a most it USG and in up question there's contracts But funded, sitting see that do being

Unidentified Company Representative

Thanks, Alex.

Our next America. Mariana Bank of question with from is

Mariana Perez Mora

positive increased for a it's expectations So specifics and you're about understand how negative you catalyst I next But discussing discuss too with about probably year, outlook. the to XXXX thinking early global or would mind recession global recession from -- recession? are potential lower is way also it's disruption for increased needs challenged. Because and think but think operational I for probably a global I corporate efficiencies a for demand, profits Palantir it positive the and catalyst about

So are how thinking about that? you

Alexander Karp

world us. U.S. disruption driven commercial. that happening helping you are historically large that results I disambiguate see very is in been market into what driving Europe, outsized in for We Germany. by then the It's has is What and U.K. U.S. us Canada, the America, a think

$XXX XX months is growth. Our the XXX% million, last in roughly, LTM

the in see USG. TCV You number

You can means. that surmise what

XX% the to in is revenue of shortly. it side and U.S. ago. X used integral be the will XX%. It for It then XX% years the at fairly of range is So growing be us that positive

sluggishness us the much Germany especially motor disruption And impact less. the will negative of is impact Europe, of in greater/disruptive Europe's so effect

is negative Europe that dollar our we what people about to that because impact believe business. impacting However, see strong technologies to of other should talk impacts new are because of sluggishness adopt and our going I will It is business. in

just U.S. under is for took the you XX%. those results, If LTM our still business

going still our technology would just data that, to This but somebody to work. impinge than thin, to particularly -- environment this you work understands and those strong, is and just a it's lot is results environment And not the expect us. flying going not like are impinging us. to churn where impinge and in teeth. most market, in going mean, more you for people amount tech. you've would is I are commercial. great I going to took less. and in out show in dangerous essentially, you steak European your white going government be non-valuable It's so both continue be They're to if because who flimsy PowerPoint our be in to they got obviously, do -- a of Americans a an dinner barely that That's And think

rest may the us a the of for the fail opportunity world yes, near for other more will rest the a But term problem because also as long Now huge that's people that. in we succeed. of not will than and term. a and expect see world And the this problem both

Shyam Sankar

look, know don't what I for been has opportunity huge disruption always a us.

are where exactly that's right. And those geographies think we're focused. I

Unidentified Company Representative

Our is Gabriela next with from Sachs. Goldman question

Gabriela Borges

the studies savings your of tens foundry appreciate of realizing. con are case about some the that We millions customers of at

then about about the essentially us how initial model over capturing you value-based for is evolving One shift the price So customers flexibility the is thinking thinking on on pricing question Does my the commercial the away towards forward you're deployed are pricing you X is, that your an customers as giving deployed with your engineering ACV start model, from while And evolving engineering side? points? upside low that their value-based on a from questions update mix how model second give time? pricing how end. also value

Shyam Sankar

Yes.

of scale kind the can out come the to use into And like oncology of what figure jam, operations. that it, value-based across pricing So to that you evolve then we on experientially pricing start customers over their smaller I to and to enterprise kind going speak. is is the fit it's that that usage-based Tyson enterprise side, cases, where here, enterprise models we've in had so And time and think where power kind then that's That's pricing at mean, playing on the and their nibble small Like unlocks in enable plus, breadth the our where migrate I realize for pricing started. from contracts large the helpful for to they of have plus. think case case to customer scale COVID the they're then kind very meet usage-based plus, And enterprise S&OP as of use studies been And us, models response us. we from the showing to see a go. customers flexibility of out been starts who I where really at. with it's to

In in matters? like macroeconomic Am next? is engineering sensibility. so are that deck product -- like, to immense of people in in seeing in terms institution? who And can customers' that how does modulate What we're forward the that are idea my from doing map How to that software have our map mean the operations are And are at institution? time is deploy R&D like, tiers Mongolia driving engineers how we doing the the looking forward. do on it there like are folks phase going it actually shoes. this that deployed terms they're to as in as churning to little inflect a front just USG it really things with moving the there road are I matter is much come to this R&D of question And our I And of now? models, those and effing data, don't we at the so operations. mining the we I many as work does Titanic. is up ones we The between or those build challenge, the spending I happening my Europe, mean what of an Like happening move needle, the our saving our the of asking -- it our do relates working? think that's going room, bug, coal on in we're going am large-scale about always I the people hard time things And lines what road of more anything

Unidentified Company Representative

submitted Alex, we the Is had who before there to like say a lot the call? end line investors questions. on anything of we you'd individual

Alexander Karp

the company You to in times we war know for This that a anti-terror context, context, S. commercial The long-term get shines worse. We know, play. feel are are whether the times. we context, tough tough built when COVID Palantier the this they're really or the and U. going times bad. Palantir, context is it's

our market. appreciate We absorbed are your they're support. watching really products in and I the And how

investors And me. to to a into and to we lot planning us individual Our continue to mean every are go battle day.

your We are and up you poorer, works your you you world meta not and brain fake until this living that less world, in are in some may enjoy wake well hate you neighbor.

to if We you they country. West look don't We believe of ways to and our in. they and no We us to in really you. the things that open making like a we better and people in other country, America an buy ability We are ability that. present celebrate care and an [expletive] the and see be who are revenues to the size adapt give to work, quality matter depth and crazy, to they stronger

we our defending a allies. better much our could how We I its are it's West, enormously to be place. U.S. about proud of the much we and how the deliver the more of decades. wish scares technology products military tell doing it I pain the The go to and and because our by were What the through we win. much of our adversaries adversaries; we have quality scares to informational deliver underestimated built here, over commitment our transforming what we're adversaries. you How work world people the especially we and

Unidentified Company Representative

That call. today's concludes Thank you, Alex.

Palantir (PLTR) 7 Nov 222022 Q3 Earnings call transcript