Palantir Q1 2025 slides: Revenue jumps 39% amid AI-driven expansion

Palantir Technologies Inc . (NYSE:NASDAQ:PLTR) reported strong first-quarter 2025 results on Monday, with total revenue increasing 39% year-over-year to $884 million, driven by accelerating growth in its U.S. business and continued AI adoption across industries. Despite the impressive results, shares fell approximately 8.75% in after-hours trading.

Quarterly Performance Highlights

Palantir’s first quarter demonstrated robust growth across key metrics, with the company’s U.S. business leading the charge. Total (EPA:TTEF) revenue reached $884 million, representing a 39% year-over-year increase and a 7% sequential improvement from the previous quarter.

As shown in the following comprehensive overview of the quarter’s performance:

The company reported adjusted operating income of $391 million, representing a 44% margin, while adjusted free cash flow reached $370 million with a 42% margin. Palantir closed 139 deals of at least $1 million during the quarter, including 51 deals of at least $5 million and 31 deals of at least $10 million.

On a GAAP basis, the company reported net income of $214 million, or $0.08 per share, compared to $105.5 million in the same quarter last year. Adjusted earnings per share came in at $0.13.

U.S. Business Acceleration

The standout performance came from Palantir’s U.S. operations, which grew 55% year-over-year and 13% quarter-over-quarter to $628 million. This growth was fueled by exceptional performance in both the commercial and government sectors.

The following chart illustrates the acceleration in Palantir’s U.S. commercial business:

U.S. commercial revenue surged 71% year-over-year and 19% quarter-over-quarter to $255 million. The company reported its highest-ever quarter of U.S. commercial total contract value at $810 million, representing a 183% year-over-year increase. U.S. commercial remaining deal value grew 127% year-over-year and 30% quarter-over-quarter to $2.3 billion.

The U.S. government sector also showed strong performance, as illustrated in the following breakdown of revenue by segment:

U.S. government revenue increased 45% year-over-year and 9% quarter-over-quarter to $373 million, reflecting Palantir’s continued success in securing and expanding government contracts.

The company’s overall revenue growth demonstrates the strong momentum across its business:

Customer Growth and Retention

Palantir continued to expand its customer base, particularly in the commercial sector. Total customer count reached 769, representing a 39% year-over-year increase and an 8% quarter-over-quarter improvement.

The company’s U.S. commercial customer count showed particularly strong growth, as illustrated in the following chart:

U.S. commercial customer count grew to 432, up 65% year-over-year and 13% quarter-over-quarter, highlighting Palantir’s success in penetrating the commercial market with its AI and data analytics solutions.

Financial Strength and Profitability

Palantir’s profitability metrics continued to improve, with the company achieving a Rule of 40 score of 83% in Q1 2025, up from 57% in Q1 2024. The Rule of 40 is a performance metric that combines revenue growth rate and profit margin.

The following chart shows the consistent improvement in Palantir’s Rule of 40 score over time:

The company’s adjusted operating income has also shown consistent growth, reaching $391 million in Q1 2025, up from $226 million in Q1 2024:

Palantir ended the quarter with $5.4 billion in cash, cash equivalents, and U.S. Treasury securities, with no debt, providing ample resources for continued investment and expansion.

Strategic Initiatives and Partnerships

Palantir highlighted several strategic initiatives and partnerships that demonstrate the company’s expanding impact across industries. The company’s AI-powered solutions are being deployed to solve high-stakes problems across various sectors.

As shown in the following slide highlighting Palantir’s impact across industries:

Key partnerships include R1 RCM (NASDAQ:RCM), which is partnering with Palantir to launch an advanced AI lab to transform healthcare workflows and potentially improve unit economics by up to 50%. Citi is leveraging Palantir’s technology to improve client experience in its Wealth division, while AIG (NYSE:AIG) expects its adoption of an AI-powered underwriting solution leveraging Palantir’s AIP to double its 5-year revenue CAGR from 10% to 20%.

The company also announced a partnership with Archer Aviation on AI development in next-generation aviation and highlighted the success of its Warp Speed platform in powering the re-industrialization of America through accelerating on-shore manufacturing capabilities.

Guidance and Outlook

Palantir provided guidance for both the second quarter and full year 2025, projecting continued strong growth:

For Q2 2025, the company expects:

• Revenue of $934-938 million
• Adjusted income from operations of $401-405 million

For the full year 2025, Palantir forecasts:

• Revenue of $3.890-3.902 billion
• U.S. commercial revenue in excess of $1.178 billion (growth rate of at least 68%)
• Adjusted income from operations of $1.711-1.723 billion
• Adjusted free cash flow of $1.6-1.8 billion
• GAAP operating income and net income in each quarter of the year

Market Response

Despite the strong results and guidance, Palantir’s stock fell approximately 8.75% in after-hours trading to $112.94, suggesting that market expectations may have been even higher or that investors were looking for more aggressive guidance. The stock had closed the regular trading session at $124.28, down 0.3% for the day.

The decline comes after a significant run-up in Palantir’s stock price over the past year, with the shares trading near their 52-week high of $125.41 prior to the earnings release. The stock’s 52-week low stands at $20.50, highlighting the substantial appreciation Palantir has experienced over the past year.

Palantir’s continued focus on AI-driven solutions and its strong performance in the U.S. market, particularly in the commercial sector, position the company for continued growth as organizations increasingly adopt AI technologies to transform their operations and decision-making processes.

Full presentation:

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