Mohit Oberoi
Palantir (NYSE: PLTR) stock is trading sharply higher in US premarkets today after the company posted better-than-expected revenues and profits in Q4 2022. It was the first time when the company posted GAAP profits.
Palantir posted revenues of $509 million in the fourth quarter of 2022 which is 18% higher YoY. The metric was ahead of the $502 million that analysts were expecting.
Looking at the breakup of revenues, its US revenues rose 19% YoY to $302 million. Its commercial revenues rose 11% YoY to $215 million while US commercial revenues rose 12% YoY to $77 million.
Palantir’s government revenues rose 23% to $293 million. Within the segment, revenues from the US government increased 22% YoY to $225 million.
Palantir used to get most of its revenues from governments but some stockholders were not too pleased with the over-reliance on government business. The company has gradually been increasing its revenue share from the Commercial business also which would help in a more diversified business model.
However, it has been quite candid about its business with governments despite apprehensions from some investors as well as employees.
Coming back to Palantir’s Q4 report, the company’s customer count rose a whopping 55% YoY in the quarter. Over the same period, its US consumers went up 79% to 143.
Palantir Stock Rises on Earnings Beat
Palantir posted a GAAP EPS of 4 cents which was one cent ahead of what the market was expecting. Importantly, it posted a GAAP profit of 1 cent which makes it the company’s first profitable quarter based on GAAP.
Palantir went public in 2020 and opted for a direct listing instead of a traditional IPO or SPAC reverse merger. Like all newly listed companies, Palantir stock has also crashed and trades at a fraction of its 2021 highs. The stock was also popular among Reddit traders who helped trigger a short-squeeze rally in the stock.
However, the meme stock rally has since faded as investors have been shying away from speculative stocks and richly-valued growth companies.
ContextLogic which was also once a quite popular meme stock has seen buying spree after Citron Research called it an “asymmetric opportunity.”
Citron also pointed to the low valuation of WISH and said that it trades at a negative enterprise value of $450 million. The research firm pointed to the $832 million of cash that ContextLogic had on its balance sheet at the end of the third quarter.
PLTR Expects to be Profitable in 2023 Also
Palantir expects to be profitable in 2023. The company’s CFO David Glazer said during the earnings call, “As we look ahead to 2023, we will continue to exercise spend discipline across the company, pace hiring while continuing to invest in high priority areas, including in our product offerings, building out our go-to-market strategy and technical roles.”
He added, “In addition to GAAP profitability for full year 2023, we anticipate improvement in our GAAP operating income margins over the course of the year.”
Notably, while Palantir posted adjusted as well as GAAP profits in Q4, it still posted an operating loss of $18 million.
The company has meanwhile been posting positive free cash flows. In Q4 2022, it reported adjusted free cash flows of $76 million which took its full-year cash flows to $203 million.
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This article was written for Business 2 Community by Mohit Oberoi.
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