Earnings call transcript Q1 2023

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Ana Soro

Good afternoon. I'm Ana Soro from Palantir's finance team, and I'd like to welcome you to our First Quarter 2023 Earnings Call. We'll be discussing the results announced in our press release issued after the market close 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 second quarter and fiscal 2023 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 would cause them to differ materially from actual results. is market our our close risks distributed press SEC those the after 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 addition course isolation of from, or measures we to non-GAAP Further, during as financial considered a today's These in the measures. be in not will GAAP call, refer measures. certain to, should for, financial substitute

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

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

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

Chief Officer; Taylor, Officer. Chief Executive Officer; on me Chief Officer Joining Shyam Dave and Ryan Chief Karp, Technology Financial Chief Officer; Revenue Legal and today's call Alex Glazer, Sankar, are

I'll now Alex remarks. opening turn over it for to

Alex Karp

will, literally government was are that across enterprise, fact, the is, most change exciting only who we who fails But we $XXX to on the about next in and earnings on profitable thing and succeeds have we the to the On that will been call be next -- free in determine products S&P, be market up and Palantir quarter profitable flow, any be which launch cash your to have the exciting. most fact, couple both that of and possibility made the by market where XX% products and normal in would grew what's opens just life our and the where U.S. quarters, going million for where that we're commercial. ability where the

model will and is revolution ships. raise The ships that language large sink one

profitability the Of is course, important.

our to enterprises But nearly it's high-demand course, otherwise Of our with have and built not our available things important. resources exciting make our crazy ability flow supply and fact cash as to energy -- not the founder-led in we've in as that we is free using invest the an product.

most be resources of a exciting have is one This times the Palantir, because you at of to enterprise large company. profitable just the

issue especially non-profitable the also us most in product product resources, have for disrupt -- long-term purely help you we, want just our "Can powering So, to us you important we adversaries? adversaries?" can tech, me basis?" help with if our the are provide on you know, is They them world. our that clients, you need competitors? a Can commercial But so "Can fact, the and but there us an financial help the a to our personally, importantly government, more tomorrow, is, than enterprises West win, to that will disrupt the Can our stronger you're in

like a never in development years, last been And XX there's the this.

and scurry outproduce; you You there and collapse allies. create pre-empt attacking top company instead that positioned. on so our battlefield of quiver technology in that have things to way; away world is margin dominant that enterprise, attacks; bottom the quicker; that the And a a company; business; obviously together; adversaries of one work the react allow the change the on the will battlefield understand that in the so your predict your or us is software actually is

an which demand seen XX we platform to I've that's were years -- The of quickly, is generative so wisdom external and in security, ever new of with to proprietary, AI language Palantir. or of nothing our is have that's being issue do knowledge or how model data not model a involved for able AIP and why you Palantir, large launch with in interact the

whether win, the that a you will or have is these meaning correctly, own to regulated competitors our that lack our the your the technologies both and we or supply day. scare safely high is because that that's founder-led value, Thank -- debt, demand in resources, enterprise, unique of the our we reason adversaries, and Welcome have this our will in extract the allow profitability, quite you and if non-sensitive securely, it's company. regulated, position $X.X that of moderately to wield are the billion people in And weapon sensitive or suspect of frankly, you. entrepreneurial bank, and spirit platform we your at earnings a our and to context

Ryan Taylor

we achieved transformational results for As that including investing last deeply time. AI income the profitability for the us. sustained milestone come, to quarter, continue in opportunities our growth, years for marks Alex company's again highlighted, impact our before first delivering and GAAP in company GAAP This partners while will once ensuring operating another our also

have further We our across months steps the taking optimize company sustain to that of alongside drive refocus even growth recent efforts and parts will on profitability. our been in business the and

of surpassed seasonality our revenue to million threshold These In the of QX XX% first year-over-year $XXX commercial increase. time macroeconomic year-over-year continues generated $XXX in last but quarter that we strong Due TCV, TCV tends million XX% and business U.S. re-acceleration revenue. by results revenue business, our industry $XXX primarily were quarter, growth. in commercial slowest $XXX our that and our QX of headwind the XXXX, difficult million generated the a the for face, be which with driven to achieved environment to despite technology business, the the million

customer meaning the and We continue of promising beginning conversions opportunities expansion to see see upsell also and strategy, robust meaningful realization our our growth to and beginning see to we're starts we're pilot newer base. with

down its Foundry our nearly efficiently using XXX,XXX include Jacobs work manage is doubling operate the partnership examples our and fleet cost improve Some expansion Engineering, who on vehicles; is reduce plants. and more of performance to with of across Hertz, to who notable and

companies. in packaging significant and with with hospital signed acceleration one for world's agreements largest efforts, country We operations largest the our system expansion continued the of also health the paper and of

which just two immense customer over count an in XXX presents for of seven-fold expansion. continued base, years, commercial U.S. end increase stood XXXX, opportunity the customer at a at Our QX

focus we our delivering long-term aspects of transformational on have results international to today's been challenging While commercial to in business continue customers. climate,

of example, our approximately $XX $X For from Foundry over barrel them helped by less that a reduce a a barrel. XX% decade, than BP, shared production to recently cost customer

and industries of several safety for on also and such Korea, as momentum in engineering, growth investing there using with the in recently expansion pilot our and Foundry We're Korea our targeted to geographies, saw includes starts focused efficiency. and customers where with firsthand. I This operational work enhance shipbuilding offshore met strong

government With grew million against, and large for on Our building in timing conviction revenue, to government long-term in government XX% our our by business ground work the strong critical in we continue missions driven year-over-year. part our uncertainty while we're the short in generated the U.S. the $XXX on business, business acknowledging which term. focus U.S. delivering

from and its investing deterrence the support efforts Europe. Eastern, around We're with world across allies theaters. the the delivering into Pacific we Middle AI-driven and our U.S. pressing lean And global events, European for Eastern and digital in continue to

latest that to we other transformational, interest. broadly, and machine foundational already AIP, on leverage at are and More demand delivering technologies are aggressively customers, the of across efforts, the enable We're strongly We enterprises a the and will software look and we that AI be as for opportunities the large investing architecture will with our meet efforts positioned seeing systems for reorganizing we both in power these are for on focus and models anticipate to our language to moment. our unprecedented ourselves technologies. the we learning capitalize company,

Shyam. now it turn to over I'll

Shyam Sankar

Ryan. Thanks,

incredible us with arrived. last overlapping this future the battlefield. disrupted. to February, and witness Ukrainian the some had past either This forces join disruptors visit our completely. to call, It that the that earnings requires the future with It clear change to were or to AI degree We able speed opportunity can which Ukraine to all was employ and broadly rewrite I roadmaps. the we changes the And driving choose has some can things be already everything on

of points the design models LLM's, embedding safety language challenges technology challenges to trust operational attempt and data and but is of and large this the and in we context as the windows to accelerating ahead and at pace frameworks, awe will decision-making software the product context, are these mismatch challenges models, workflows, governing and well encounter of are they we've ever-growing bottlenecks the development an to infrastructure, enterprise in AI of From built constructively the of operationally managing scale. and the big diffusion many leverage customers between of because smaller and inspiring the choke any needed. exhilarating, there scale AI the curve From the

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the a themselves within ultimately of models be a and can have models in as will build surprises hundred many days GPT-X commoditized. this class at and all there winners of them few and stakes. who And Developing up point, to AI disruption. this losers cutting-edge GPT-X Anyone The comes table quickly from being gone months dollars. few with

clear leaked memo big of have from No OpenAI" been in by have development the things handful As people Moat, considered open titled, companies open-source purportedly tech that the actually major Google of "We areas solved community. Neither Does And makes a Have

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it. is speed they Customers that how and and because rethink conviction. we with completely And must they act future must are build what already building here,

sophisticated existing quickly transform operations Gotham We are contextual intelligent, and automation Foundry battlefield customers to ensure fast boardroom. to deploy the their and beside coordination to AIP the decision-making with from moving and can

not Gotham, We MetaConstellation, only knows All military-grade integrate build Foundry ontology, only your and how Gaia, AIP your knows strategic forge to to to safe their hand-off Foundry not applications your build rapidly from but every it and to orchestrate provide data, interfaces service, with security. more a speak powerful importantly, and actions. and functions, an AI-driven your also agents and speak businesses AIP but enables ontology, you, enterprise to customers enterprise. automate to to in environment and workflows, greater how vantage guardrails, point. operate

insurance years AIP demand for AI our seen. presents agent ahead The AIP modules automate ILX a Apollo of government these collaborative of innovation FedStart pace major offering, for a FedStart Chief Officer can of There to company, markets deployed AI version in LLMs in tremendous FedRAMP, built told around these a our us that a leveraging claims few had At Via weeks. was they Data and days pre-release we and we The U.S. unique anything processing. opportunity is ILX. and to infrastructure. and bring startups a in

first with tech QX, our also deal In $X we for company. a closed major Apollo million

the a AIP Our These for to met into AI great customers the enterprise build support it Foundry existing new market SDKs, application your forge We make enterprise ontology easy these ecosystem. and their Ontology deep reception. into to to SDK directly integrate from extending has SDKs ones. plan applications

Gotham AI-enabled kill capabilities with the expand The to ecosystem across continues enhanced chain.

to called fires targets enables weapon broader management new process. Our substantial the capability air [Maverick] developments efficient include This capabilities in recent systems. (ph) of translation and battle approved most

our will Palo be powering note, from hearing a the event their vanquished, cutting-edge will insights victors who showing the as June AI, our and well On the latest X as of we the our products AIP customers Foundry, course, and our and latest sharing be on how are in final at transformations on Alto. across customer

that, With Dave. it to over turn I'll

Dave Glazer

Shyam. Thanks,

to continue our of The was GAAP be spend for our commitment This quarter was by a quarter disciplined profitability achieved also management. growth, GAAP the achieved a profitable of achievements record-setting XXXX with us. first and our and quarter driving We business, accomplishment top-line time. U.S. coupled first of reacceleration operating result for of commercial income XXXX consecutive second profitability. demonstrate continued GAAP driven of our expect growth These year to first full to we the strong

and this profitable On expect the be to year. each this quarter GAAP these exceptional results now back we trajectory, in of

XX% million in our We ahead global of generated XXXX, our the guidance. the in to Turning up first million midpoint revenue of results. $XXX quarter year-over-year, $XX of prior top-line

total US. in million expand. XX% up our $XXX generated business quarter, year-over-year U.S. first continues Our momentum in demonstrating continued and Revenue our the sequentially, largest in revenue from customers XX% to the

$XX our XX% per from million year-over-year XX revenue customer top to First per quarter, customers trailing increased customer. XX-month

New customer acquisition customer year-over-year also remains and strong sequentially. as grow count XX% X% we saw

revenue XX% Now the grew sequentially moving XXXX, $XXX XX% quarter and million. of commercial to to segment. year-over-year first In our commercial

first to grew sequentially revenue Our and million. XX% quarter XX% commercial U.S. $XXX year-over-year

contracts, XX% Excluding grew commercial sequentially. revenue revenue XX% U.S. strategic commercial from year-over-year and

In count addition to growth. marking revenue the ninth commercial grew growth, our and quarter year-over-year of U.S. XX% strength commercial consecutive U.S. the our sequential of sequentially, X% customer

revenue from of strategic due revenue Commercial these at expectations contracts first unanticipated surpassed million of to acceleration the contracts. our commercial quarter from certain $XX

quarter revenue quarter. $XX million second third and million these to off and from expect customers to significantly be between the and drop We $XX fourth in

expectations customers X% unchanged of year remains Our year approximately of total revenue. these at full from revenue full

quarter a part declined to The seasonal X% often largest In a the international some on revenue grew first due of enterprise fourth the first were quarter and customers. result X% to timing in our the see as certain business international year-over-year quarter and the commercial the the comparison with quarter, contracts we in impacted our headwinds tough of sequentially. in of results prior recognition

our to Turning segment. government

government year-over-year quarter XX% First sequentially and grew $XXX to million. revenue X% declined

year-over-year quarter to First government $XXX XX% and revenue U.S. sequentially million. X% grew

in government we U.S. While are U.S. government business, our remain renewals. we our contract these the growth expansions of the of uncertainties we timing of and pipeline there with that associated Nonetheless, in business. have confident strong a opportunities acknowledge

contract year-over-year as in the revenue revenue in as First driven The government quarter the saw that of awards with and timing quarter. XX% fourth $XX catch-up we first by the XX% sequentially grew the to challenges sequential international was well decline quarter, some declined million. non-recurring

in Turning commercial remaining ended and obligations. year-over-year the to first U.S. grew $X.X total XX% million, year-over-year. XXX% the performance value quarter U.S. booked again $XXX billion commercial business. deal million, up first TCV million in was demonstrating the bookings. $XXX TCV in of quarter $XXX with to We our remaining strength

months remaining clauses, is business, that on in Both RPO of most program. the remaining primarily face both obligations termination does than strategic comprised of for of it beyond fall reminder, into deal take are headwinds which continued macroeconomic the as and commercial value term account business. less from our have impact with a XX initial obligations and As contracts of not customers an convenience investment common government from to our performance contractual

by our these we continue and result, the businesses. a contracts and value since investment financial program total $XXX quarter the deal million the As remaining commercial strategic value last review from assess total of of as decreased our condition to

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

to representing operations, from million, marking up margins. managing excludes was to of sequentially prior our stock-based and guidance income adjusted cost quarter strong which third margin expanding First ability compensation with expense, results quarter of adjusted effectively, only X% our adjusted quarter while operating basis of the an drive XXX demonstrate consecutive operating revenue XX%, adjusted expenses ahead growth $XXX first million. $XXX points These

headcount areas. investments We focusing our continued expense cloud capturing in key operations in by and manage efficiencies optimizing to G&A, growth strategic

investment momentum development to both to profitability, capabilities, software offerings. our the and capture while seeing, we of that transformational investment intelligence, large on and these language our prove we will and believe end, for To efforts for in our artificial developments. that context. the to are models, government including rebalancing and U.S. committed We GAAP increasing the remain same time in at the advanced in enterprises AI-driven the capitalize commercial sustaining are We particularly business

quarter, our our first we first-ever compensation. operating of for quarter and management our income laser focus million, stock-based This growth generated continued profitable operations the GAAP In reflects of on income. $X of

income through GAAP we stock-based year, see of up expense net remainder While profitability. we and operating expect focused remain the to compensation on trend the

Turning to income. net

of second GAAP of consecutive quarter the income First was result This strong profitability. income, narrowing income and GAAP our investments. from a net sheet was quarter as million, interest operating well balance $XX as losses from our GAAP our of

quarter was share GAAP was adjusted per $X.XX, second GAAP of $X.XX per our quarter EPS. First positive share consecutive earnings earnings and

continue to consistent on are that we proud are extremely deliver We GAAP profitability able basis. to a

growth operating combined adjusted first the revenue margin XX% our and quarter. was Additionally, in

to XXXX We achieve XX beyond. to and throughout will continue strive Rule the

equivalents through short-term retain we liquidity term-loan cash and the We cash, million and XX%. remain bills. to each of to ended $XXX our the a quarter, of $XXX treasury U.S. operations, in strong million billion We adjusted and revolving cash with quarter additional $X.X delayed-draw from $XXX generated and in million representing our $XXX respectively, credit undrawn. facility access million first of in up flow to cash cash free Turning facility, both flow million entirely margin $XXX which

Now turning to our outlook.

For income. expect million, $XXX Adjusted operations of $XXX net million. income million we between $XXX between $XXX XXXX, and and of QX million and from revenue GAAP

For our billion. between to guidance $X.XXX revenue are full raising billion $X.XXX year and XXXX, we

operations are net income $XXX in our raising We this guidance and expect million to adjusted each now and income quarter $XXX of between we GAAP from year. million,

I'll to turn Ana start that, With it over to the Q&A.

Ana Soro

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

We thoughts? received of to Alex, would on AI a share AIP. some like you and questions lot

Alex Karp

thank Palantir, I've building years. you here. beginning, since for at XX Well, being been the for the

first Our number -- that we was which in built the product in which needs then mind, changed for And products, human later thinking that preventing what's these of the by products, to history, no especially terror we in product and is the for relationships generative data, Europe, a for of operators, And use-case battlefield, course algorithmic only other symbiotic especially a about called on PG, AI. constitutional always the products world. were then, introduction. special order. human-computer Foundry, the process in building of relationships, what And basically product attacks

and inception since so, And biases. over we precursor technologies these also built the -- had

your would onto expose rise when do especially you exposed, -- enterprise that parts a algorithm a do do you're the our language the How a need of know to How in of not where how them. in while with disaster? this big the people Who but you be you So, of advantages needs, offering? without should personal healthcare of How never do the where exposing knowledge that hand-off you your useful model decision? do you wisdom sources and part exposed then data one you're of doing model? LLM external by to AI, to if run way expose, language enterprise data you enterprise expand deciding impose some revolution How the hallucinating have and but your the exposed, you large enterprise working in decision? technical is the that with in want broader parts only how party? of to take protecting used? classified map context make How an How do just sensitive lethal how do a the be varied the would on current do to large context, to that large you -- third your a a from need expose? What makes are legal don't a of whether, language the context you hospital are technical this a database? you And people models, what's into non-technical? who environment, healthcare And to wield interact

a business general, imperatives. business driven moral by has been in And our

years, which context, of look the will of history One overly in monetized. the a data our the about, the tacit Valley prefer serve essentially it I world my which last philosophical, weird interests, want in I inherently way, of you people, in the -- in and is ways there we a, our when thought at make don't between But Silicon although people Silicon the meaning of our maybe have it. be the some XX way adversaries way alliance Valley a should to this think not interest use to in many in over

and we and human the always in where models would language algorithmatic controlled. believed And have define implicitly large the which moral governments now in a context our be would data imperative, and

allows weird develop bias, looks develop hand-off branching, what it philosophical philosophical be And allowed to deal that in behave think so lethal by that doing us allowed us language ways situations otherwise about to us are a in like to of to models able with bias are opportunity with and in broadly but means to a that us positioned other and that launch large ways it technologies, not it now technologies available -- ethically, is once-in-a-generational people. which be to fact

technology it as very, particularly are this to even itself. makes Shyam seeing valuable, person our of saying far that we not especially, that market. it These is Also, United happy. the put ahead the of the understanding, in introduction, it this obviously very was makes bias us technology the his that moral, in biases makes have just States, wields -- which And me reception that

in And see pretty so, rolling be out unprecedented opportunity. a we're this in going disciplined We once-in-a-generation kind to involved of this way. very

suited resources IP, We of have this. for odd software platforms that in terms uniquely are

ability build run entrepreneurial. in an buy really have we don't We to Many are hard fact, space, this both in products. products, people because they

with what So, late product catch the up accelerate. to too be done now, a where will and really it's to to has winners buy

feel in we at important we're a begin power profitability off more us, takes is more to obviously, we world, -- important as the basically particularly and most really of it because, institutions them, for unique question, legitimate our So, busy I like the work. for place so technology money?" So, at can't believe it's your unique why any very powerful, very, is and we're time if table to the "Well, us, make you us,

Ana Soro

Alex. Thanks,

GAAP ask, profitable Rick] on and this still We be [Vishal profitability. GAAP questions also a you expect received few do to (ph) year?

Dave Glazer

quarter this year, for for obviously our for full is we strength It's year, commercial which flow. We income. Vishal in of profitability. the And consecutive question. did our It's a profitable big QX, of GAAP $XXX this And all short, it ever, cash be flow QX, of the now the quarter. of we $XX recap sequentially. million thanks of income We to business not milestone absolutely U.S. cash with $X of net second growing and was did we we XX% each And the know did -- just profitable income. first-ever on our free operating expect In quarter really million operating to strongest us. quarter million GAAP do. Rick,

so, our of mobilize our to it growth the us. our will resources business are profitability, And opportunities front we remain AI around and that and core in as

Ana Soro

about received customer some base to our We the Dave. our Thanks, and want expanding and growth for Ryan, you on commercial business thoughts of questions the share business. momentum XXXX? do commercial

Ryan Taylor

absolutely. Yeah,

So the business, of in see our results, growth, our U.S. commercial year-over-year sequential. commercial, U.S. re-acceleration XX% you as Dave XX% said,

customer U.S. QX Our XXX% Hertz, customers, at which business, as XXX as other is packaging and at year-over-year, pilot pilot count, closed starting, now health the TCV XX% companies commercial in new grew year-over-year. the system in customers conversions, largest our country, and back on in the the Jacobs the grew in expansions That's such and among highlighted one I largest world paper examples. Engineering, the of and of earlier,

business, continue will U.S. that larger to a we've that expect part unprecedented one larger in top for in and to momentum impacts have us. momentum forward, to become that can at overall continues commercial XXXX against expect as the as we our and that that, can our presented results of highlighted full beyond. and opportunity speed no AI and it creating is that we're running on deliver demand larger else and We obviously in ways overall momentum On and carry well. of We and larger

Ana Soro

Ryan. Thanks,

XXX with and Michael that prospects Our from profitability is correlate next does company's the with how who potential asks inclusion, moving S&P question forward?

Alex Karp

disruptive outsider we answer moment, we never they because we in that the here, there's were but our buy except for that's we these sure you I and for is I'm thought under approach somehow one products our this but this ever preparedness conditions. And or to prepared unique. at we built as look succeed it's -- if all would because adverse I of uncanny many have we've this that products built, believe in products also anyone the status and are outsiders, a main reasons know

this -- is, in we scale be are lot and U.S. our qualify we but in our -- interest I take going profitability of -- are begin is of A, our we to strengths. reasons, much for clear obvious the participation business going in in fresh, to profitability as look resources and think at we position closer look be it use scale a new outsider My strategy and the also, we'll of people But and is disrupt, we going that are for new -- it's stronger our especially we to within we'll the just becomes S&P, anyways, as a investors. to attractiveness being of to profitable, are context to in We're and to the profitable. going business, a

Ana Soro

Thanks, Alex.

and Jefferies. prompt is from please camera, receive next turn you'll Our question your your on Brent, Brent then with a to unmute line.

Brent Thill

about guys the quarter, about. the significantly decelerated, comments Good you re-accelerating, were overall yet afternoon. There in business backlog were a lot about, the the growth of questions clear

the questions don't really you one-time said when re-acceleration, they look contribution so quarter can you rec this? up because And the any in about And the the just we may that were versus rev comments explained milestone about have backlog growth around, numbers? there SPAC JV were at there match or comment

Dave Glazer

start take point think to it of when did happy sequential. Yeah, at off, was just business is, forward focus XX% It is that, right? to, in driving I significantly growth, and business re-acceleration, and you're reaccelerate XX% where our looking QX, and I'd really year-over-year the commercial our to sort U.S.

-- and XX% up sequentially, commercial like reacceleration. want over XXX% want excuse U.S. you TCV SPAC grew you at If And exceptional me, year-over-year. then if so is look it to U.S. XX% revenue, XXX% exclude you can to TCV bookings, up grew look at

there. are the all like measures So

Alex Karp

give to your think, I question. want look somewhat a I [do answer (ph) you orthogonal to]

We have a of here. two tale cities

have of which it XX% XX% America, around XX%, of business. our is was is Four growing business. years now ago We our

International of We A. are smaller in becoming the business. growing is around that and absolutely is disrupting a XX% our U.S. of obviously part

the what U.S. if reaccelerating. see the I when believe I that tend the is look we U.S. we numbers is, is we see so at is what -- U.S. see And you yeah, to -- growing,

Although accelerating, a business. the U.S. fact, in and wrong accelerating because, been has and part of become reaccelerating it's commercial word our just bigger is much

"How a in talking, not my And of would I questions the customers. And from shifted has not just is, that's -- Foundry need this?" quality spend "Why least, the I the the we of road. purely last it?" and lot U.S. to use numbers on what's not I'm the they're to the time talking on I'm would front.

existing the score, on sit those related and one Every on unique the single commercial technology from for private an have needs clients world's customers to and in both we both AI, then, on strategy anything government. that. software by and networks, of most that we sensitive way AI inbound And important -- the

you I there. the will but think optimistic more much to if positive -- the very negative than yeah, our to and were I wanted sure, look grow of U.S. at to we business, it's do about expect -- expect -- growing you I and So happen now. to we're what if do not international continue grow,

Ana Soro

Thanks, Alex.

Mariana, Bank please is then Mariana from question your with of turn prompt and unmute on America. a you hear receive you'll can Mariana, us? next camera line. Our your to

Alex Karp

Hello?

Mariana Perez Mora

me? hear you Do

Alex Karp

Yeah.

Mariana Perez Mora

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Alex Karp

you. hear can't We

Ana Soro

out. cutting you're Mariana, Sorry,

Mariana Perez Mora

I'm so sorry.

Ana Soro

on. problem, move No we just can

then is question your and Keith line. Our turn a unmute prompt camera you'll Keith, Morgan from on please your Stanley. receive with next to

Keith Weiss

All right. hear Can you me? guys

Alex Karp

Yeah.

Keith Weiss

lot. a Thanks

What for to that us this platform. Any think of the Two talk reorienting about talked do like to pricing bit the the we this initial could little to looking for accelerating modality AI certain with commercial the sense AI that opportunity looking platform? terms company just of you what One, lot questions. go-to-market a you a how like changes can you're for around U.S. been commercial about in price going extent AI So, make platform? in that like and platform? is conversations you give sort the be you're business,

And then, question GAAP the last profitability. on

little you quarter make the kind QX. to did revenue some you've a upfront profitability have reduction QX? recognition the in Are of tactical in in to and cost commercial you QX you're sense, Thank To helped that initiatives overall that profitability. or that pull-forward, offset that place This a you're revenues that things helped any there business, got bit pull-forward that saw ensure doing that of to GAAP you. putting up

Alex Karp

I'll to you and take our of more want more can all maybe about think and various talk to that and something you strategies AI Shyam efficient. add be

it's -- the going our of is to idea take our AI strategy -- the we're counter-intuitive, within basic profitable, our on No, market. -- to being whole but context just

a We as and value. to of go. it have create price pricing to we strategy. get lot we hundreds customers no going going of will We're We're

take territory. want to the you're market, of take ahead reasons. seen we've need over when again and One for is, to We of things territory the you two over

many interest. like is the hard these you currently One, believe it security because across spent we stuff really on is we knowledge the things, to have algorithms, build across of the build do territory, we intricate some to product believe And analysts that market will certain needs. this market, building years technical frankly, We people how the people three, market, quite Two, years we've -- things. and this. take how believe We for educate easy. only solve as know take systems that can these manage

things and see for try you the then how parity, doing hard because other You in market it likely technical will that reasons to are and educate to is, they fail. have pricing that

to market take technical customers. to AI-driven issues for very governments -- strategy have this. going especially free that product this some with yet are reasons but can't our so the clients, for do is we with that's for in our de for the We educate the in and solving So, we to legal have context, territory, U.S. some years, to have U.S., exist. be non-U.S. people compete make There many because already facto been commercial difficult for because already doesn't the we've market market, a realize working entering on it and other they the exceptions

leave... Then I'll

Shyam Sankar

creating Yeah, perspective we're AIP, as quickly razor-focused value possible. from a as just with product on

think are. the I it's actually from how not outside, clear ahead far we

bridge enabled you in face of the of think of windows, scale the out context and an shoulders going between years you to and their challenges stood agent us And we context two that value -- like did build getting smaller in unlock... all need days, an big insurance guys windows, that data a how on ontology two small LLMs these the how because extremely you robust very like, you are about If we gap to GPT intermediary data ontology.

Alex Karp

people... explain an most should because you Maybe for what is, ontology

Shyam Sankar

of it how how Yeah, is operations the I And But can diluted. we to you the but Speakers] does are business? does call twin, think mapped hate [Multiple the it like representation is These do semantic about take the happened? that, you with then, How of the the the rest How system? it adjudicate cheapens because been decisions? prerequisites. do claim? digital the make through of the have that what it's flow have people it layer the business, kinetic that How we sometimes like, and I do call it? data How What mean? that I

when on tools that and that almost actually can drive window, that's into You part the LLMs of actually a processes. you reason context and small limitation the to going former kinetics about as business I what's of how form get piece, everything LLMs. the second a the that do you automate to need of like compression right, physical as think the And about your like give think about

amount So I strategy think take to means the can reasonable is we on... that the ground only focus of

Alex Karp

use a your can as across technology. and Shyam essentially you knowledge like what not be able without this fact, facto the map it assumptions semantic is where layer, in the is of graph, in -- to Implicit are world just view -- could -- saying call people you it other will your de built-in dynamics

no we believes no out. something that's but else one to knows, it, know, they're one about find Now

debate have with clients, this going And this don't to work. people. to We will so, show just we "Hey, have

done hard get how to a know before. crazy have build. will You to you We've you also So, three-year It's value. this it, do build this." if

Shyam Sankar

safe didn't we at the guardrails, hand-off talk we hard. are security, that running this can the go so even the military-grade functions like about extent, And

Alex Karp

highly listening is a environment. a people regulated regulated America highly Whether in environment. again, And just like it or not,

be calling and will You that work systems we a internal still litigate get in And this without things that technology to able can with applied way this is all that's get use And a to we these guardrails, work means out -- not we're except really layer. can the Shyam have -- you technology be garbley-gook able a it garbley-gook the will you the -- years people, be in not semantic [indiscernible] spent on technology and just what what the because wants he where productive to building to we how XX branching a be do to going for paid to use to figure everybody front who is way. later.

Dave Glazer

side, places, And G&A going it because efficiency, other And to a on the sort And And push to business. going our been our business. profitability, the get we places difference we're prudent cloud GAAP to there. be keep us you doing will certain there that we're really U.S. then we've headcount commercial, look about with in really... cost what going when the U.S. making in is cost in talking with then and of help to look when you at we're on

Alex Karp

-- growing we're costs, we're we disrupting we're U.S. mystery mean, heavily and growing XX%, places here. there's going to is invest the I no numbers we're obvious the believe to in in reduce We're there show an going thing,

Ana Soro

always, Is the like before you'd to end Thanks. say anything lot have of we individual call? investors Alex, a there as line. on the we

Alex Karp

the I layer And we more go are investing every There strengths My I A the tenancy the lot pay leads products of attention decisions we institutional now the that have few that are and AI now say very is part the your we'll but not support. alignment product, in a with in accurate I to semantic many start often their the own made You money. your are expect and full of and overlook to quarters, investors, you. we are make among is you, and I my as used it profitable people appreciate of because knowledge. PG, S&P Foundry call. will become experience more favorite will people and become are powder we weaknesses investors, in next the valuing

Ana Soro

call. today's for Q&A concludes That Thanks.

Palantir (PLTR) 8 May 232023 Q1 Earnings call transcript