Palantir Posts Strong Quarterly Revenues & Guidance; Shares Drop


Palantir Technologies Inc. (PLTR), an American software company specialized in big data analytics, has provided upbeat fourth-quarter revenue guidance after posting strong revenues for the third quarter of 2021.

Meanwhile, shares of the company declined almost 9.4% to close at $24.25 on Tuesday after the company anticipated a lower adjusted operating margin for the fourth quarter compared to the third quarter.

Total revenues of $392.1 million grew 36% year-over-year and surpassed analysts’ expectations of $385.02 million. Additionally, U.S. commercial revenue surged 103%.

The company registered third-quarter adjusted earnings per share of $0.04, in line with the consensus estimate. Adjusted income from operations margin stood at 30%.

While the company added 34 net new customers, its commercial customer count saw an increase of 135% since December 31, 2020. Furthermore, during the quarter, the company closed 54 deals of $1 million or more, including 33 deals of $5 million or more and 18 deals of $10 million or more. (See Palantir stock charts on TipRanks)

Outlook

For the fourth quarter of 2021, the company projects total revenues of $418 million against the consensus estimate of $402 million. Adjusted operating margin is expected to be 22%.

For 2021, the company expects total revenues to grow 40% to $1.527 billion. Additionally, adjusted free cash flow guidance has been increased to in excess of $400 million, up from the prior expectations of $300 million.

As per the long-term guidance policy provided by the CEO of Palantir, Alex Karp, annual revenue growth of 30% or greater is anticipated for 2021 through 2025.

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Wall Street’s Take

Following the third-quarter results, William Blair analyst Kamil Mielczarek maintained a Sell rating on the stock.

Mielczarek said, “While Palantir has done a great job driving free cash flow and has potential to maintain solid double-digit growth long term, we remained concerned about the business’s ability to maintain 30% organic growth over the near term.”

“Palantir offers a unique solution that has the potential to support growth rates in line with some of the most successful providers of enterprise software. However, we believe there are several risks to achieving this growth rate that are not currently priced into the stock,” the analyst added.

Overall, the Street is bearish on the stock and has a Moderate Sell consensus rating based on 1 Buy, 2 Holds and 4 Sells. The average Palantir price target of $23.33 implies 3.8% downside potential to current levels.

Risk Analysis

According to the new TipRanks’ Risk Factors tool, the Palantir stock is at risk mainly from two factors: Finance and Corporate and Ability to Sell, which contribute 42% and 21%, respectively, to the total 84 risks identified for the stock.

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