Palantir reports its second consecutive quarter of positive gaap net income; gaap eps of $0.01 in q1 2023
Denver--(business wire)--palantir technologies inc. (nyse:pltr) today announced financial results for the first quarter ended march 31, 2023. “we were profitable again this quarter... and we now anticipate that we will remain profitable each quarter through the end of the year,” alexander c. karp, co-founder and chief executive officer of palantir technologies inc., wrote in a letter to shareholders. “the depth of engagement with and demand for our new artificial intelligence platform (aip) is without precedent.” q1 2023 highlights gaap net income of $17 million this marks our second consecutive quarter of positive gaap net income this marks our second consecutive quarter of positive gaap net income gaap income from operations of $4 million, representing a margin of 1%, up 1,000 basis points year-over-year this marks our first quarter of positive gaap operating income this marks our first quarter of positive gaap operating income gaap earnings per share (“eps”) of $0.01 adjusted eps of $0.05 total revenue grew 18% year-over-year to $525 million us revenue grew 23% year-over-year to $337 million us revenue grew 23% year-over-year to $337 million commercial revenue grew 15% year-over-year to $236 million us commercial revenue grew 26% year-over-year to $107 million us commercial revenue grew 26% year-over-year to $107 million government revenue grew 20% year-over-year to $289 million us government revenue grew 22% year-over-year to $230 million us government revenue grew 22% year-over-year to $230 million customer count grew 41% year-over-year and 7% quarter-over-quarter us commercial customer count increased 50% year-over-year, from 103 customers in q1 2022 to 155 customers in q1 2023 us commercial customer count increased 50% year-over-year, from 103 customers in q1 2022 to 155 customers in q1 2023 adjusted income from operations of $125 million, representing a margin of 24% cash from operations of $187 million, representing a 36% margin adjusted free cash flow of $189 million, representing a 36% margin cash, cash equivalents, and short-term u.s. treasury securities of $2.9 billion q1 2023 financial summary (amounts in thousands, except percentages and per share amounts) first quarter amount revenue $ 525,186 year-over-year growth 18 % amount margin income from operations $ 4,115 1 % adjusted income from operations $ 125,114 24 % cash from operations $ 187,376 36 % adjusted free cash flow $ 188,897 36 % net income attributable to common stockholders $ 16,802 adjusted net income attributable to common stockholders $ 107,401 adjusted ebitda $ 133,434 25 % gaap eps, diluted $ 0.01 adjusted eps, diluted $ 0.05 outlook for q2 2023, we expect: revenue of between $528 - $532 million. adjusted income from operations of $118 - $122 million. gaap net income. for full year 2023, we expect: revenue of between $2.185 - $2.235 billion. adjusted income from operations of $506 - $556 million. gaap net income in each quarter. ceo letter palantir ceo alex karp’s quarterly letter to shareholders is available through palantir’s website at https://www.palantir.com/q1-2023-letter. earnings webcast a live public webcast will be held at 3:00 pm mt / 5:00 pm et today to discuss the results for our first quarter ended march 31, 2023 and financial outlook. the webcast can be accessed by registering online at https://palantir.events/palantir-earnings-q1-2023. a replay of the webcast will be available at https://investors.palantir.com following the event. an investor presentation, including supplemental financial information and reconciliations of certain non-gaap measures to their nearest comparable gaap measures, will be available through palantir’s investor relations website at https://investors.palantir.com. forward-looking statements this press release and statements on our earnings webcast contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the private securities litigation reform act of 1995, including but not limited to, statements regarding our financial outlook, product development and related timing, distribution, and pricing, expected benefits of and applications for our software platforms, business strategy, and plans (including strategy and plans relating to our artificial intelligence platform (“aip”), sales and marketing efforts, sales force, partnerships, and customers), investments in our business, market trends and market size, opportunities (including growth opportunities), our expectations regarding our existing and potential investments in, and commercial contracts with, various entities, our expectations regarding macroeconomic events and foreign currency fluctuations, and positioning. these forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. words such as “guidance,” “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “plan,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” “shall,” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to risks detailed in our filings with the securities and exchange commission (the “sec”), including in our annual report on form 10-k for the fiscal year ended december 31, 2022 and other filings and reports that we may file from time to time with the sec, including our quarterly report on form 10-q for the fiscal quarter ended march 31, 2023. in particular, the following factors, among others, could cause our results to differ materially from those expressed or implied by such forward-looking statements: our ability to successfully execute our business and growth strategy; the sufficiency of our cash and cash equivalents to meet our liquidity needs; the demand for our platforms, product offerings, and services in general; our ability to increase our number of new customers and revenue generated from customers; our ability to realize some or all of the total contract value of customer contracts as revenue, including any contractual options available to customers or contractual periods that are subject to termination for convenience provisions; our long and unpredictable sales cycle; our ability to successfully execute our channel sales and other strategic initiatives with third parties; our ability to retain and expand our customer base; the fluctuation of our results of operations and our key business measures on a quarterly basis in future periods; the seasonality of our business; the implementation process for our platforms, which may be complex and lengthy; our ability to successfully develop and deploy new technologies to address the needs of our existing or prospective customers; our ability to make our platforms and product offerings easier to install, consume, and use; our ability to maintain and enhance our brand and reputation; our ability to maintain and enhance our culture as our business grows and as we pursue our business and financial goals; news or social media coverage about us, including but not limited to coverage that presents, or relies on, inaccurate, misleading, incomplete, or otherwise damaging information; the impact of recent or future global macroeconomic and geopolitical events, such as the ongoing russia-ukraine conflict, rising inflation and interest rates in the u.s. and in other countries, monetary policy changes, financial services sector instability, and foreign currency fluctuations, on the business and operations of our company or of our existing or prospective customers and partners; and any breach or access to customer or third-party data. the forward-looking statements included in this press release represent our views as of the date of this press release. we anticipate that subsequent events and developments will cause our views to change. we undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. these forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. past performance is not necessarily indicative of future results. additional definitions for the purpose of this press release and our earnings webcast, total contract value (“tcv”) closed, remaining performance obligations, and total remaining deal value reflect the values of contracts that have been entered into with, or awarded by, our government and commercial customers. tcv closed includes existing contractual obligations and presumes the exercise of all contract options available to our customers and no termination of contracts; however, the majority of our contracts are subject to termination provisions, including for convenience, and there can be no guarantee that contracts are not terminated or that contract options will be exercised. remaining performance obligations represent non-cancelable contracted revenue that has not yet been recognized, which includes deferred revenue and, in certain instances, amounts that will be invoiced. we have elected the practical expedient, as permitted under accounting standards codification 606—revenue from contracts with customers—allowing us to not disclose remaining performance obligations for contracts with original terms of twelve months or less. total remaining deal value is the total remaining value of contracts and includes existing contractual obligations and unexercised contract options available to those customers. total remaining deal value presumes the exercise of all contract options and no termination of contracts; however, the majority of our contracts are subject to termination provisions, including for convenience, and there can be no guarantee that contracts are not terminated or that contract options will be exercised. total remaining deal value excludes all or some portion of the value of certain commercial contracts as a result of our ongoing assessments of customers’ financial condition, including the consideration of such customers’ ability and intention to pay, and whether such contracts continue to meet the criteria for revenue recognition, among other factors. non-gaap financial measures this press release and the accompanying tables contain the non-gaap financial measures adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes; adjusted operating margin; adjusted free cash flow; adjusted free cash flow margin; adjusted earnings before interest, taxes, depreciation, and amortization (“adjusted ebitda”); adjusted ebitda margin; adjusted net income; and adjusted eps, diluted. we believe these non-gaap financial measures and other metrics described in this press release help us evaluate our business, identify trends affecting palantir’s business, formulate business plans and financial projections, and make strategic decisions. we exclude stock-based compensation, which is a non-cash expense, from these non-gaap financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance and provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team. we exclude employer payroll taxes related to stock-based compensation as it is difficult to predict and outside of palantir’s control. our definitions may differ from the definitions used by other companies and therefore comparability may be limited. in addition, other companies may not publish these or similar metrics. further, these metrics have certain limitations as they do not include the impact of certain expenses that are reflected in our consolidated statements of operations. for example, adjusted free cash flow does not reflect our future contractual commitments or the total increase or decrease in our cash balances for a given period. thus, our non-gaap financial measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with gaap. we compensate for these limitations by providing a reconciliation of each of these non-gaap measures to the most comparable gaap measure. we encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-gaap measures in conjunction with the most directly comparable gaap financial measure. a reconciliation table of the most comparable gaap financial measure to each non-gaap financial measure used in this press release is included at the end of this release. a reconciliation of non-gaap guidance measures to corresponding gaap measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, reconciling items that may be incurred in the future, such as stock-based compensation and related employer payroll taxes, the effect of which may be significant. available information palantir uses its investor relations website at https://investors.palantir.com as a means of disclosing material non-public information and for complying with its disclosure obligations under regulation fd. accordingly, investors should monitor palantir’s investor relations website, in addition to following our press releases, sec filings, public conference calls, and webcasts. about palantir technologies inc. foundational software of tomorrow. delivered today. additional information is available at https://www.palantir.com. palantir technologies inc. condensed consolidated statements of operations (in thousands, except per share amounts) (unaudited) three months ended march 31, 2023 2022 revenue $ 525,186 $ 446,357 cost of revenue (1) 107,645 94,403 gross profit 417,541 351,954 operating expenses: sales and marketing (1) 187,093 160,485 research and development (1) 90,100 88,601 general and administrative (1) 136,233 142,307 total operating expenses 413,426 391,393 income (loss) from operations 4,115 (39,439 ) interest income 20,853 547 interest expense (1,275 ) (594 ) other income (expense), net (2,861 ) (59,870 ) income (loss) before provision for income taxes 20,832 (99,356 ) provision for income taxes 1,681 2,023 net income (loss) 19,151 (101,379 ) less: net income attributable to noncontrolling interests 2,349 — net income (loss) attributable to common stockholders $ 16,802 $ (101,379 ) net earnings (loss) per share attributable to common stockholders, basic $ 0.01 $ (0.05 ) net earnings (loss) per share attributable to common stockholders, diluted $ 0.01 $ (0.05 ) weighted-average shares of common stock outstanding used in computing net earnings (loss) per share attributable to common stockholders, basic 2,107,780 2,036,307 weighted-average shares of common stock outstanding used in computing net earnings (loss) per share attributable to common stockholders, diluted 2,217,439 2,036,307 (1) includes stock-based compensation expense as follows (in thousands): three months ended march 31, 2023 2022 cost of revenue $ 9,177 $ 11,677 sales and marketing 39,535 49,272 research and development 19,924 26,905 general and administrative 46,078 61,469 total stock-based compensation $ 114,714 $ 149,323 palantir technologies inc. condensed consolidated balance sheets (in thousands) (unaudited) as of march 31, as of december 31, 2023 2022 assets current assets: cash and cash equivalents $ 1,264,738 $ 2,598,540 marketable securities 1,639,797 35,135 accounts receivable, net 254,041 258,346 restricted cash 11,946 16,244 prepaid expenses and other current assets 85,625 133,312 total current assets 3,256,147 3,041,577 property and equipment, net 63,115 69,170 restricted cash, noncurrent 12,095 12,551 operating lease right-of-use assets 210,019 200,240 other assets 141,762 137,701 total assets $ 3,683,138 $ 3,461,239 liabilities and stockholders' equity current liabilities: accounts payable $ 4,530 $ 44,788 accrued liabilities 174,525 172,715 deferred revenue 229,551 183,350 customer deposits 139,741 141,989 operating lease liabilities 53,066 45,099 total current liabilities 601,413 587,941 deferred revenue, noncurrent 54,400 9,965 customer deposits, noncurrent 4,162 3,936 operating lease liabilities, noncurrent 206,422 204,305 other noncurrent liabilities 13,548 12,655 total liabilities 879,945 818,802 stockholders’ equity: common stock 2,117 2,099 additional paid-in capital 8,568,570 8,427,998 accumulated other comprehensive loss, net (4,318 ) (5,333 ) accumulated deficit (5,842,636 ) (5,859,438 ) total stockholders’ equity 2,723,733 2,565,326 noncontrolling interests 79,460 77,111 total equity 2,803,193 2,642,437 total liabilities and equity $ 3,683,138 $ 3,461,239 palantir technologies inc. condensed consolidated statements of cash flows (in thousands) (unaudited) three months ended march 31, 2023 2022 operating activities net income (loss) $ 19,151 $ (101,379 ) adjustments to reconcile net income (loss) to net cash provided by operating activities: depreciation and amortization 8,320 4,312 stock-based compensation 114,714 149,323 noncash operating lease expense 10,836 10,142 unrealized and realized (gain) loss from marketable securities, net 8,508 62,843 other operating activities (11,342 ) (2,754 ) changes in operating assets and liabilities: accounts receivable, net (628 ) (65,867 ) prepaid expenses and other current assets 1,973 (4,320 ) other assets (4,551 ) 2,891 accounts payable (39,921 ) (47,404 ) accrued liabilities 4,271 (5,334 ) deferred revenue, current and noncurrent 88,673 (16,335 ) customer deposits, current and noncurrent (2,112 ) 59,822 operating lease liabilities, current and noncurrent (10,536 ) (10,388 ) other noncurrent liabilities 20 (75 ) net cash provided by operating activities 187,376 35,477 investing activities purchases of property and equipment (4,755 ) (15,215 ) purchases of marketable securities (2,310,367 ) (89,500 ) proceeds from sales and redemption of marketable securities 709,459 8,247 proceeds from sales of alternative investments 51,072 — net cash used in investing activities (1,554,591 ) (96,468 ) financing activities proceeds from the exercise of common stock options 25,924 27,225 other financing activities 59 16 net cash provided by financing activities 25,983 27,241 effect of foreign exchange on cash, cash equivalents, and restricted cash 2,676 (727 ) net decrease in cash, cash equivalents, and restricted cash (1,338,556 ) (34,477 ) cash, cash equivalents, and restricted cash - beginning of period 2,627,335 2,366,914 cash, cash equivalents, and restricted cash - end of period $ 1,288,779 $ 2,332,437 palantir technologies inc. reconciliation of gaap to non-gaap financial measures (unaudited) non-gaap reconciliations adjusted income from operations and adjusted operating margin (in thousands, except percentages) three months ended march 31, 2023 2022 income (loss) from operations $ 4,115 $ (39,439 ) add: stock-based compensation 114,714 149,323 add: employer payroll taxes related to stock-based compensation 6,285 7,506 adjusted income from operations $ 125,114 $ 117,390 adjusted operating margin 24 % 26 % adjusted free cash flow and adjusted free cash flow margin (in thousands, except percentages) three months ended march 31, 2023 2022 net cash provided by operating activities $ 187,376 $ 35,477 add: cash paid for employer payroll taxes related to stock-based compensation 6,276 9,524 less: purchases of property and equipment (4,755 ) (15,215 ) adjusted free cash flow $ 188,897 $ 29,786 adjusted free cash flow margin 36 % 7 % adjusted ebitda and adjusted ebitda margin (in thousands, except percentages) three months ended march 31, 2023 2022 net income (loss) attributable to common stockholders $ 16,802 $ (101,379 ) add: net income attributable to noncontrolling interests 2,349 — less: interest income (20,853 ) (547 ) add: interest expense 1,275 594 add: other (income) expense, net 2,861 59,870 add: provision for income taxes 1,681 2,023 add: depreciation and amortization 8,320 4,312 add: stock-based compensation 114,714 149,323 add: employer payroll taxes related to stock-based compensation 6,285 7,506 adjusted ebitda $ 133,434 $ 121,702 adjusted ebitda margin 25 % 27 % adjusted net income attributable to common stockholders and adjusted earnings per share, diluted (in thousands, except per share amounts) three months ended march 31, 2023 2022 net income (loss) attributable to common stockholders $ 16,802 $ (101,379 ) add: stock-based compensation 114,714 149,323 add: employer payroll taxes related to stock-based compensation 6,285 7,506 less: income tax effects and adjustments (1) (30,400 ) (10,737 ) adjusted net income attributable to common stockholders $ 107,401 $ 44,713 weighted-average shares used in computing gaap earnings (loss) per share, diluted 2,217,439 2,036,307 adjusted weighted-average shares used in computing adjusted earnings per share, diluted (2) 2,217,439 2,209,310 adjusted earnings per share, diluted $ 0.05 $ 0.02 (1) (2)
