AI momentum powers Palantir’s commercial breakthrough in Q1 2025

Overview

Palantir delivered a standout quarter in Q1 2025, fueled by surging U.S. commercial demand and significant margin expansion.

CEO Alex Karp emphasized the company’s transformational momentum, stating: “Our Rule of 40 score increased to 83% in the last quarter, once again breaking the metric. We are in the middle of a tectonic shift in the adoption of our software, particularly in the U.S. where our revenue soared 55% year-over-year, while our U.S. commercial revenue expanded 71% year-over-year in the first quarter to surpass a one-billion-dollar annual run rate. We are delivering the operating system for the modern enterprise in the era of AI. Consequently, we are raising our full-year guidance for total revenue growth to 36% and our guidance for U.S. commercial revenue growth to 68%.”

Q1 2025 vs. Q1 2024:

• Total revenue grew to $884m (+39% YoY and +7% QoQ), driven by both commercial and government segments, particularly in the U.S.
  • U.S. revenue rose to $628m (+55% YoY), with U.S. Commercial revenue of $255m (+71% YoY) and U.S. Government revenue of $373m (+45% YoY).
• The company closed 139 deals of at least $1m, 51 deals of at least $5m, and 31 deals of at least $10m.
• Also, the company had the highest-ever U.S. commercial TCV at $810m (+183% YoY).
• U.S. commercial remaining deal value (RDV) was $2.32bn (+127% YoY).
• GAAP net income from operations recorded a value of $176m (+118% YoY), with a 20% margin.
• Adjusted income from operations was $391m, representing a 44% margin.
• GAAP net income increased to $214m (+103% YoY), with a 24% margin.
• Adjusted EPS was $0.13 (compared to $0.08 in Q1 2024).
• Cash from operations grew to $310m (+139% YoY), with a 35% margin.
• Adjusted free cash flow increased to $370m (+149% YoY), representing a 42% margin (vs. 23% in Q1 2024).
• Cash, equivalents & U.S. treasuries reached to $5.4bn (+4% YoY).
• Adjusted EBITDA recorded a value of $397m (+69% YoY), representing a 45% margin (vs. 37% in Q1 2024).
• Total operating expenses increased to $535m (+22% YoY), with all categories growing at approximately the same rate.
• Stock repurchases doubled at $18m in Q1 2025.

Palantir raised its full-year 2025 revenue guidance to $3.89bn-$3.90bn (+36% YoY), with U.S. Commercial revenue expected to exceed $1.178bn (+68% YoY). The company also lifted its adjusted operating income forecast to $1.711bn-$1.723bn, and its adjusted free cash flow guidance to $1.6bn-$1.8bn. For Q2, revenue is expected to reach $934m-$938m, continuing the company’s momentum as AIP adoption accelerates across industries.

Although the results reported for the first quarter of this year beat Wall Street analysts’ estimates, it seems that investors reacted quite strongly immediately after the report was published, with PLTR’s share price falling by over -8% in the after-market session by the time of writing this news, still remaining well above the 50-day moving average. However, since the beginning of this year, the company’s stock price remains one of the most followed, this is because it has had a spectacular jump, with approximately +64.6% in the first 4 months of 2025, a remarkable performance in an extremely volatile economic environment in recent times.

Also, the chart below indicates a well-defined upward trend, supported by a growth channel and positive moving averages. The price remains above both the 50-day and 200-day averages, respectively, signaling a solid bullish structure. Currently, the stock is currently closing near the upper channel boundary (~$123-$125), which may act as resistance. The RSI slightly above 70 is in the overbought zone, suggesting a possible consolidation or correction, which may lead to a test of the support levels in the $105-$115 area. Thus, the technical context remains positive in the medium term, but in the short term, increased attention to possible corrections is warranted.

Author: Ionuț-Adrian Lazar