# Palantir Technologies Inc. (PLTR) — Narrative

## Business

*From the FY2025 Annual Report on Form 10-K, accession 0001321655-26-000011.*

Palantir builds enterprise software that lets organizations integrate their data,
decisions, and operations at scale. Customers pay to use four principal platforms:
**Foundry**, the foundational data operations platform covering data management, logic
authoring, analytics, and workflow development; **AIP**, the generative AI platform that
provides secure connectivity to third-party large language models plus a development
toolchain for AI agents and automations, AI-enabled end-user applications, and an
evaluations framework for governing AI workflows in production; **Gotham**, which
integrates with the other platforms and the company's broader defense offerings to power
missions across allied defense and intelligence operations; and **Apollo**, a
cloud-agnostic continuous-delivery control layer that orchestrates upgrades and lets
customers run the software in virtually any environment. The **Palantir Ontology** — the
systematic mapping of data, logic, and actions into a representation of the organization —
sits at the heart of the platforms.

Revenue comes from three kinds of performance obligation: **Palantir Cloud** subscriptions
(hosted access, sold with stand-ready operations-and-maintenance services); **On-Premises
Software** (primarily term licenses deployed on the customer's own infrastructure or cloud
instance, bundled with O&M as a single performance obligation because the two are
interdependent); and **professional services** (on-demand user support, interface
configuration, training, and ongoing ontology and data-modeling support). Contracts are
generally one to five years, sometimes shorter, and revenue is generally recognized ratably
over the term. Many customer contracts contain termination-for-convenience provisions.

Palantir reports **two operating segments — government and commercial** — determined by
how the CEO, as chief operating decision maker, allocates resources. Segment profitability
is measured by *contribution* (segment revenue less related cost of revenue and sales and
marketing expense, excluding stock-based compensation) and contribution margin; research
and development, general and administrative, and stock-based compensation costs are managed
at the corporate level and not allocated to segments.

Scale and mix as of December 31, 2025:

- Revenue of **$4.5 billion** in 2025, of which **54% came from the government segment and
  46% from the commercial segment**; **74% from customers in the United States and 26%
  from abroad**.
- **954 customers**, up from 711 a year earlier, where a customer is an organization from
  which revenue was recognized in the trailing twelve months. Large government agencies are
  counted per contracting sub-agency.
- Average revenue for the **top twenty customers** over the trailing twelve months of
  **$93.9 million**, up 45% from $64.6 million a year earlier.
- **Total remaining deal value of $11.2 billion**, up 105% year over year — $6.8 billion
  commercial (up 117%) and $4.4 billion government (up 90%). This measure presumes exercise
  of all customer options and no terminations. It **excludes $12.3 billion of IDIQ
  government contracts** already awarded but not yet funded or guaranteed.
- **4,429 full-time employees**, 28% of them outside the United States. Other than a works
  council in France, no union or works council is recognized.

Go-to-market is deliberately aimed at large-scale, hard-to-execute problems at big
government and commercial institutions, on the theory that high installation cost, high
failure risk, and long sales cycles raise barriers to entry. Acquisition channels include
**AIP bootcamps** (delivering working workflows on real customer data in days), a
**Developer Tier** offering limited Foundry and AIP access in the U.S. and select
countries, an account-based **direct sales force**, **sector and industry operating
systems** (airline, space, shipbuilding, insurance, healthcare, telecommunications,
automotive, security and risk management, government), **cloud and channel partnerships**,
and **joint ventures** — for example, a strategic global partnership entered through
Palantir Technologies Japan KK with Fujitsu Limited, embedding Foundry and AIP in the data
infrastructure for Fujitsu Uvance. Sales are seasonal: many contracts are executed in the
third and fourth quarters, reflecting customer fiscal year ends and procurement cycles
(U.S. government fiscal year end September 30; many commercial customers December 31).

Competition is framed first as **the customer's own internal software development effort** —
patchworks of custom solutions, consultants, IT services firms, packaged and open-source
software, and internal IT — and second as large enterprise software companies, government
contractors, and system integrators. Principal competitive factors cited are platform
capability and functionality, data security and privacy, ease and speed of adoption, product
innovation, pricing and cost structure, customer experience, and brand.

Two commitments shape the addressable market. Palantir states that it **does not work with
the Chinese communist party and has chosen not to host its platforms in China**, which it
acknowledges may limit growth prospects. And it positions privacy and civil liberties as
product features rather than constraints: granular and purpose-based access controls,
dynamic data minimization (pseudonymization, obfuscation, encryption), sensitive-data
discovery, audit logging, retention and deletion tooling, data provenance, and AI governance
capabilities aimed at frameworks such as the EU AI Act. The company says it is not in the
business of collecting, mining, or selling data, and it maintains a Privacy and Civil
Liberties Engineering team supported by an external Council of Advisors.

Palantir was founded in 2003, initially building software for the U.S. intelligence
community for counterterrorism work, and later extended to commercial enterprises facing
similar data problems. It is incorporated in Delaware; Class A common stock trades on Nasdaq
under PLTR. Principal executive offices are at 19505 Biscayne Blvd., Aventura, Florida
(per the Form 10-Q cover, accession 0001321655-26-000041). Leased principal properties
include Denver, Colorado — described in the 10-K as the location of the corporate
headquarters — plus Palo Alto, New York City, Washington, D.C., and London, along with other
offices worldwide. Voting control is concentrated: Class A carries one vote, Class B ten
votes, and 1,005,000 shares of Class F common stock held in a voting trust established by
founders Stephen Cohen, Alexander Karp, and Peter Thiel generally give the founders the
ability to control up to 49.999999% of total voting power, so long as they and certain
affiliates hold a minimum of 100 million equity securities.

## Risks

*From the FY2025 Annual Report on Form 10-K, accession 0001321655-26-000011, with the
restated risk factors in the Form 10-Q for the quarter ended June 30, 2026, accession
0001321655-26-000041.*

**Growth durability and revenue concentration.** Revenue growth has fluctuated and may not
continue at current rates. The **top three customers accounted for 16% of revenue in 2025
and 17% in 2024**, and 16% and 17% of revenue in the six months ended June 30, 2026 and
2025 respectively; those three have been customers for an average of fifteen years. Some
customers, including significant ones, have already reduced spend or terminated agreements,
in some cases requiring refunds of previously paid amounts. Customers have no obligation to
renew, upgrade, or expand.

**Deal value may not convert to revenue.** Total remaining deal value presumes all options
are exercised and no contract is terminated. Many contracts are terminable for convenience;
the U.S. federal government cannot exercise options more than a year in advance; and
delays in the federal budget process, continuing resolutions, or a lapse in appropriations
have already affected, and could again affect, timely revenue recognition.

**Lumpy quarters and a long sales cycle.** The sales cycle often runs six to nine months
and can extend beyond a year. A large portion of sales closes in the final weeks of a
quarter, large individual sales have slipped into later quarters or not happened at all,
and because much of the cost base is fixed in the short term, a revenue shortfall flows
straight through. Seasonality compounds this: the first quarter is generally the weakest
and sales rise through the year.

**Costs rise ahead of revenue.** Operating expenses are expected to keep increasing.
Customer-acquisition and R&D costs are incurred up front while contract revenue is
recognized over the term, and the model historically required months of pilot deployments
at no or low cost — including bootcamps — that may produce no future revenue. Palantir
states it may not be able to maintain profitability.

**Government exposure cuts both ways.** A substantial portion of revenue comes from
governments, especially the U.S. government. Spending caps, shifts in budgetary priorities,
periodic reviews of U.S. defense strategy, a new administration's efforts to evaluate and
reduce overall government spending, and delays in contract or task-order awards have
affected and could further affect revenue. Government contracts carry rights and remedies
not typical of commercial contracts, audit and compliance obligations whose breach can cost
the ability to contract with governments at all, evolving procurement policies emphasizing
cost over performance, and rising bid-protest activity. A specific structural dependency:
Palantir sells commercial items and services and does not contract for non-commercial
developmental services, and it credits **enforcement of the Federal Acquisition Streamlining
Act (FASA)** — which requires the U.S. government to procure commercial items to the maximum
extent practicable — with a significant increase in its federal business. Any change to,
repeal of, or contrary judicial interpretation of FASA would adversely affect its competitive
position. Classified programs limit investor insight into portions of the business, and the
business depends on employees obtaining and keeping security clearances and on maintaining
facility clearances.

**Key person and talent.** Palantir describes itself as highly dependent on management and
particularly on CEO Alexander Karp, whose management experience it believes would be
difficult to replace; executives and many key personnel are at-will. Sales execution has
historically depended on direct involvement of senior management, including Mr. Karp. Stock
price volatility — or a lack of appreciation — affects retention, since much compensation is
equity. The company also flags difficulty maintaining a culture that emphasizes rapid
innovation, advancement of hires with limited prior industry expertise, and customer
outcomes over short-term financial results.

**Security, third-party infrastructure, and software defects.** Because customers use the
platforms to process proprietary, confidential, sensitive, personal-health, and
government-classified data, the software is an attractive target, and customers have low
tolerance for vulnerabilities. Exposure extends across customer environments, on-premises
deployments, and offerings such as **FedStart**, where customers deploy their own
applications in Palantir environments and Palantir has less control over configuration and
security. The company depends on third-party cloud infrastructure including **AWS and
Microsoft Azure**, which have no obligation to renew on commercially reasonable terms; a
forced migration would be costly and disruptive, and failing to meet minimum usage
commitments can trigger penalties or shortfall payments. Errors, defects, and bugs have
occurred and can trigger SLA credits, refunds, and reputational damage. Open-source
components carry license-compliance and copyleft exposure.

**AI-specific risk.** The 10-K carries a standalone risk factor that issues raised by use
of AI — machine learning, large language, and other generative or agentic models, and the
software that operationalizes them — in the platforms and business may result in
reputational harm or liability.

**Regulation, trade controls, and international operations.** The business is subject to
complex and evolving U.S. and non-U.S. privacy, data-protection, security, and
technology-protection laws subject to uncertain interpretation. Non-U.S. sales and
operations add regulatory burden; governmental trade controls (export and import controls,
sanctions, customs regimes) could create liability, cost contracting privileges, or limit
market access; anti-bribery and anti-corruption laws apply.

**Reputation and mission-based selectivity.** Palantir flags that news or social media
coverage or other external scrutiny of the company or its leadership may harm reputation
and business, and that it may decline relationships with potential customers whose
activities it considers inconsistent with its mission or values.

**Investments and strategic contracts.** Palantir has accepted securities as non-cash
consideration and made strategic investments, including in special purpose acquisition
companies and other private and public entities, though it does not currently anticipate
entering new SPAC investment agreements. Each such agreement came with a commercial contract
for access to its products — the **Strategic Commercial Contracts**, whose total value
(cumulative revenue recognized plus remaining deal value) was **$326.1 million as of
December 31, 2025, with no remaining contractual options**. Some of these counterparties have
been unable to generate sufficient revenue or raise financing, which has negatively affected
expected revenue and collections. The securities held are illiquid or speculative and have
produced realized losses.

**Litigation.** Palantir and certain officers and directors were named in putative
securities class actions filed in 2022 in the District of Colorado (*Cupat v. Palantir
Technologies Inc.*, consolidated with two related actions), alleging false and misleading
statements about the business and prospects under the Exchange Act and Securities Act. The
court dismissed the matter without prejudice on March 31, 2024 and plaintiffs filed a second
amended complaint on May 24, 2024; on April 4, 2025 the court dismissed the matter **with
prejudice** and entered judgment for the defendants the same day. Plaintiffs filed a Notice
of Appeal from the final judgment with the U.S. Court of Appeals for the Tenth Circuit on
May 2, 2025, and the Tenth Circuit held oral arguments on March 16, 2026. As of June 30,
2026 the company was not aware of any pending legal matter expected to have a material
adverse impact on its financial statements.

**Stock structure and governance.** The multi-class structure, the Founder Voting Trust
Agreement, and the Founder Voting Agreement concentrate voting power with the founders and
their affiliates; in certain circumstances their voting power could exceed 49.999999%. The
ownership threshold sustaining that power is a small minority of outstanding equity
securities, and future issuances dilute Class A voting power without necessarily diluting
the founders'. Some of these provisions are novel among multi-class structures, and the
governance structure may deter certain institutional investors. No dividends are expected
in the foreseeable future, and none had been declared as of June 30, 2026.

## Management's discussion — fiscal year 2025

*From the FY2025 Annual Report on Form 10-K, accession 0001321655-26-000011.*

**Revenue.** Revenue rose **$1.6 billion, or 56%, to $4,475.4 million** from $2,865.5
million in 2024 (2023: $2,225.0 million). Government revenue rose **$832.7 million, or
53%**, of which $774.0 million came from customers already in place at December 31, 2024;
U.S. government revenue was **$1.9 billion versus $1.2 billion**. Commercial revenue rose
**$777.3 million, or 60%**, of which $425.2 million came from existing commercial customers
— a figure that already absorbs a **$37.0 million decline in Strategic Commercial Contract
revenue**. U.S. commercial revenue was **$1.5 billion versus $702.3 million, up 109%**.
Revenue from U.S. customers over the trailing twelve months was **$3.3 billion, up 75%**.
Management attributes existing-customer growth to wider adoption inside those organizations.

**Gross profit.** Cost of revenue rose **$223.2 million, or 39%, to $789.2 million**, driven
by third-party cloud hosting (+$94.6 million), subcontractors (+$38.0 million),
field-service representatives (+$29.1 million), and payroll (+$26.9 million). Gross profit
was **$3,686.3 million** and **gross margin improved to 82% from 80%** — 84% excluding
stock-based compensation, against 83% in 2024.

**Operating expenses.** Sales and marketing rose **$169.1 million (19%)** on payroll
(+$76.4 million), marketing (+$18.3 million), and stock-based compensation and related costs
(+$16.4 million). Research and development rose **$49.8 million (10%)** on cloud hosting
(+$35.6 million) and payroll (+$19.0 million), partly offset by a $19.8 million decline in
stock-based compensation and related costs. General and administrative rose **$64.2 million
(11%)** on stock-based compensation and related costs (+$22.7 million) and payroll (+$19.4
million). Total operating expenses were **$2,272.3 million**, falling to **50% of revenue
from 69%**.

**Stock-based compensation** was **$684.0 million, down $7.6 million or 1%**, as expense
from SARs that fully vested in 2024 rolled off, partly offset by newer RSU, P-RSU, and SAR
grants.

**Profitability.** Income from operations was **$1,414.0 million — a 32% operating margin,
against $310.4 million and 11% in 2024**; adjusted income from operations, excluding
stock-based compensation and related employer payroll taxes, was **$2.3 billion versus
$1.1 billion**. Interest income rose $32.4 million to **$229.2 million** on larger
interest-bearing cash and short-term Treasury balances. Other income (expense), net swung
**$32.2 million to $14.2 million of income** from an $18.0 million expense, on upward
adjustments to privately held securities and smaller realized losses on marketable
securities, partly offset by larger unrealized losses. The tax provision was **$22.7
million**, an immaterial change. **Net income attributable to common stockholders was
$1,625.0 million versus $462.2 million.**

**Contribution margin**, the company's key non-GAAP business measure, was **66% versus 60%**,
on total contribution of **$2,942.7 million versus $1,719.9 million**.

**Liquidity and capital structure.** Principal sources of liquidity at December 31, 2025
were cash, cash equivalents, and short-term U.S. Treasury securities of **$7.2 billion**.
Operating cash flow was **$2.1 billion versus $1.2 billion**, on revenue growth and payment
timing. Investing used **$2.8 billion versus $0.3 billion**, chiefly more purchases of
short-term Treasuries and privately held securities. Financing used **$26.9 million**,
against $463.4 million provided in 2024; inflows were mainly option exercises, outflows
mainly taxes paid on net share settlement of SARs in the prior year and Class A repurchases.
Palantir had **no outstanding debt and $500.0 million of undrawn revolving commitments**.
Operating lease commitments are stated net of $71.4 million of sublease income and $63.2
million of imputed interest. Under the $1.0 billion share repurchase program authorized in
August 2023, the company repurchased and retired **0.6 million Class A shares for $75.0
million** during 2025; **the program was terminated in January 2026**.

**Backlog and market risk.** Remaining performance obligations — non-cancelable contracted
revenue not yet recognized — were **$4.1 billion at December 31, 2025**, with roughly 38%
expected as revenue within 12 months and 36% over the following 13 to 36 months. The company
held **$23.4 million of publicly traded and $170.0 million of privately held equity
securities**. Contracts are primarily U.S.-dollar denominated; currency effects (mainly JPY,
EUR, GBP) were not material, and no hedging was undertaken. Management does not believe
inflation has had a material effect.

**Macro framing.** The company cites geopolitical tension, interest rates, monetary policy,
currency, and possible tariffs as the macro variables it monitors. It has no offices in
Russia or the Palestinian territories and no revenue from entities headquartered there;
Ukraine- and Israel-related operations are not material, and management does not expect the
resulting macroeconomic conditions to have a material impact.

## Current quarter — three and six months ended June 30, 2026

*From the Form 10-Q for the quarter ended June 30, 2026, accession 0001321655-26-000041, and
the earnings release furnished on Form 8-K dated August 3, 2026, accession
0001321655-26-000039.*

**Growth accelerated sharply, and the mix tilted decisively toward the United States.**
Second-quarter revenue was **$1,935.5 million, up 93%** from $1,003.7 million; first-half
revenue was **$3,568.0 million, up 89%**. U.S. revenue reached **$1,573.0 million — 81% of
the total, up 115% year over year and 23% sequentially** — against 73% of total a year
earlier. U.S. commercial revenue grew **149% to $764 million** (up 28% sequentially) and
U.S. government revenue grew **90% to $809 million** (up 18% sequentially). For the first
half, 80% of revenue came from U.S. customers and 20% from abroad; trailing-twelve-month
U.S. revenue was **$4.8 billion, up 99%**. No single country outside the U.S. reached 10%
of revenue, and no customer exceeded 10% of revenue.

By segment, **government revenue was $990.0 million, up $437 million or 79%** ($428 million
of the increase from customers already in place at December 31, 2025), and **commercial
revenue was $945.4 million, up $495 million or 110%** ($407 million from existing
customers). Segment contribution margin rose in both: **government to 71% from 63%** and
**commercial to 78% from 64%**, for total contribution of **$1,436.1 million at a 74%
contribution margin**, against 64% a year earlier.

**Margins expanded with revenue.** Cost of revenue rose $104 million (54%) to $296.9
million — cloud hosting +$89 million, stock-based compensation and related +$13 million,
subcontractors −$13 million — so gross profit was **$1,638.6 million and gross margin 85%,
up from 81%** (86% excluding stock-based compensation). Operating expenses of $726.6 million
grew far slower than revenue: sales and marketing **$339.5 million (+39%)**, research and
development **$192.5 million (+43%)**, general and administrative **$194.6 million (+20%)**.
**Income from operations was $912.0 million, a 47% margin**, versus $269.3 million;
**adjusted income from operations was $1,194.5 million, a 62% adjusted operating margin**,
against 46%. Stock-based compensation rose $105 million (66%) to **$265.2 million** on new
RSU, P-RSU, and SAR grants.

Below the operating line, interest income rose $21 million to **$77.5 million**, and other
income, net rose $85 million to **$91.8 million** on a realized gain and upward adjustments
on privately held equity securities plus net unrealized gains on publicly traded ones. The
tax provision was **$15.4 million**, up $12 million on higher U.S. and foreign profits.
**Net income attributable to common stockholders was $1,061.9 million — a 55% margin — or
$0.41 per diluted share** ($0.44 basic), versus $326.7 million and $0.13 diluted. First-half
net income attributable to common stockholders was **$1,932.4 million, or $0.75 diluted**.

**Cash generation.** Second-quarter cash from operations was **$1,216.2 million (63% of
revenue)** and adjusted free cash flow **$1,220.4 million (63%)**. For the first half,
operating cash flow was **$2,115.3 million versus $849.5 million**; investing used $1,509.7
million (against $2,007.3 million) as larger proceeds from sales and redemptions of
marketable securities offset increased Treasury purchases; financing provided $8.4 million,
mainly option exercises, versus $22.4 million used a year earlier.

**Balance sheet.** Cash, cash equivalents, and short-term U.S. Treasury securities totaled
**$9.2 billion** at June 30, 2026. Total assets were $11,678.6 million against total
liabilities of $1,793.7 million; accounts receivable grew to $1,485.2 million from $1,042.1
million and contract liabilities (deferred revenue plus customer deposits) to **$1.1
billion from $0.8 billion**. The accumulated deficit narrowed to $1,630.0 million from
$3,562.4 million. There is **no outstanding debt**; the 2014 secured revolving credit
facility provides **$500 million of commitments, matures March 31, 2027**, requires minimum
liquidity of $50 million, and was in compliance. Holdings of publicly traded equity
securities were **$184 million** and privately held equity securities **$167 million**.
Shares outstanding at June 30, 2026 were 2,300.5 million Class A, 101.4 million Class B, and
1.005 million Class F — 2,402.9 million in total; as of July 27, 2026 the counts were
2,300,713,329, 101,340,151, and 1,005,000 respectively.

**Commercial momentum and commitments.** The earnings release reports **220 deals of at
least $1 million, 98 of at least $5 million, and 73 of at least $10 million** closed in the
quarter; **total contract value closed of $3.373 billion, up 49%**, including a record
**$2.132 billion of U.S. commercial TCV, up 153%**; and **U.S. commercial remaining deal
value of $6.238 billion, up 124% year over year and 27% sequentially**. Management cited a
"Rule of 40" score — revenue growth plus adjusted operating margin — of **155%**. Customer
count reached **1,049, from 849**, and average revenue from the top twenty customers over
the trailing twelve months reached **$124 million, up 67% from $75 million**. Remaining
performance obligations were **$4.9 billion**, with roughly 43% expected as revenue within
12 months and 36% over the following 13 to 36 months.

Against that, the cost side carries a new long-dated obligation: in **March 2026 Palantir
amended one of its third-party cloud services agreements, committing to spend at least
$5.6 billion over ten contract years through February 29, 2036**, with annual minimums of
**$268 million to $979 million**; all previous payment obligations under that agreement were
terminated concurrently. Cloud hosting is already the largest single driver of the increase
in cost of revenue and of research and development expense.

**Guidance issued August 3, 2026.** For the third quarter of 2026, Palantir expects revenue
of **$2.160–$2.164 billion** and adjusted income from operations of **$1.292–$1.296
billion**. For full-year 2026 it raised guidance to revenue of **$8.150–$8.158 billion**,
U.S. commercial revenue **in excess of $3.424 billion (growth of at least 134%)**, adjusted
income from operations of **$4.889–$4.897 billion**, and adjusted free cash flow of
**$4.5–$4.7 billion**, and it continues to expect GAAP operating income and net income in
every quarter of the year.

**Other items in the period.** Related-party expense for CEO Alexander Karp's use of an
aircraft he beneficially owns was $6 million in the first half of 2026, against $10 million
a year earlier. Management notes that if
the U.S. share of total revenue stays at current levels or rises further, the business
becomes more exposed to adverse U.S. conditions — a concentration that grew materially this
quarter.

## Subsequent events

*From the Form 10-Q for the quarter ended June 30, 2026, accession 0001321655-26-000041, and
the FY2025 Annual Report on Form 10-K, accession 0001321655-26-000011.*

The Form 10-Q for the quarter ended June 30, 2026 contains no subsequent-events note. Its
thirteen notes run from organization and significant accounting policies through related
party transactions, and none discloses an event after the June 30, 2026 period end — no
acquisition or divestiture, no financing or borrowing, no litigation outcome. Commitments
are addressed only backward-looking: as of June 30, 2026, apart from the March 2026 cloud
services amendment described above, there were no material changes outside the ordinary
course of business to the commitments disclosed in the FY2025 annual report. On legal
matters, as of June 30, 2026 the company was not aware of any pending matter or claim
expected to have a material adverse impact on its financial statements.

The one post-period disclosure is the **earnings release furnished on August 3, 2026 (Form
8-K, accession 0001321655-26-000039)**, which reported the second-quarter results and raised
full-year 2026 revenue, U.S. commercial revenue, adjusted operating income, and adjusted
free cash flow guidance, as set out in the preceding section.

The FY2025 annual report likewise has no subsequent-events note, but it does record one
event after its December 31, 2025 period end: **the share repurchase program authorized in
August 2023 was terminated in January 2026**, after 0.6 million Class A shares had been
repurchased and retired for $75.0 million during 2025.