Palantir Q2 2025 slides: revenue tops $1B, Rule of 40 score hits 94%

Introduction & Market Context

Palantir Technologies (NYSE:NASDAQ:PLTR) delivered exceptional second-quarter results, crossing the billion-dollar quarterly revenue threshold for the first time while maintaining industry-leading profitability metrics. The data analytics and AI software company’s Q2 2025 business update, presented on August 4, 2025, revealed accelerating growth across all segments, with particularly strong performance in its US commercial business.

The company’s stock responded positively to the results, rising 4.14% in regular trading to $154.27, with an additional 2.88% gain to $158.71 in after-hours trading. This performance builds on Palantir’s already impressive stock run, which has seen shares climb from a 52-week low of $21.23 to a high of $161.40.

As shown in the following chart, Palantir’s Rule of 40 score—a key metric combining revenue growth and profitability—places it in an exceptional position compared to other enterprise software companies:

Quarterly Performance Highlights

Palantir’s Q2 2025 performance was highlighted by significant growth across all key metrics. Total (EPA:TTEF) revenue reached $1.004 billion, representing 48% year-over-year growth and 14% sequential growth from Q1 2025. This marks a substantial acceleration from the 39% year-over-year growth reported in Q1 2025.

The following slide summarizes the company’s impressive Q2 2025 performance metrics:

US revenue was the standout performer, growing 68% year-over-year and 17% quarter-over-quarter to $733 million. Within this segment, US commercial revenue showed the strongest growth, increasing 93% year-over-year and 20% quarter-over-quarter to $306 million. US government revenue also performed well, growing 53% year-over-year and 14% quarter-over-quarter to $426 million.

The following chart illustrates the substantial growth in US revenue:

Breaking down the US revenue by segment shows the exceptional growth in both commercial and government sectors:

Detailed Financial Analysis

Palantir’s profitability metrics were equally impressive in Q2 2025. The company reported GAAP net income of $326.7 million, up significantly from $214.0 million in Q1 2025 and $134.1 million in Q2 2024. GAAP earnings per share was $0.13.

The following chart shows Palantir’s GAAP net income trend:

GAAP operating income reached $269.3 million, representing a 27% margin and continuing the strong upward trend:

On an adjusted basis, operating income was $464 million with a 46% margin, demonstrating Palantir’s ability to drive significant operating leverage while continuing to invest in growth:

The company’s Rule of 40 score—which combines revenue growth rate and profit margin—reached an exceptional 94% in Q2 2025, up from 83% in Q1 2025 and significantly higher than the 64% reported in Q2 2024:

Palantir’s cash generation was equally impressive, with cash flow from operations of $539 million (54% margin) and adjusted free cash flow of $569 million (57% margin) in Q2 2025. The company ended the quarter with $6.0 billion in cash, cash equivalents, and US Treasury securities, with no debt.

As shown in the following chart, this represents a dramatic improvement from Q2 2024:

Strategic Initiatives

Palantir’s Artificial Intelligence Platform (AIP) continues to drive customer adoption and expansion across multiple industries. The company highlighted several key customer success stories during the presentation, including TeleTracking’s use of AIP to improve hospital operations, Fannie Mae (OTC:FNMA)’s implementation for mortgage fraud detection, and Nebraska Medicine’s deployment to drive operational efficiencies.

The company also announced new AIP tools released at DevCon 3, including AI FDE (for helping create functions, edit ontology, and build applications), AI Workbench (for developing, debugging, and monitoring automation workflows), and Ontology-as-Code (for access to Ontology in IDEs, tools, and agentic workflows).

Customer growth remains strong, with US commercial customer count increasing 64% year-over-year and 12% quarter-over-quarter to 485:

Overall customer count grew 43% year-over-year to 849, while commercial customer count increased 48% year-over-year to 692:

Deal activity was robust in Q2 2025, with Palantir closing 157 deals of at least $1 million, 66 deals of at least $5 million, and 42 deals of at least $10 million. The company achieved its highest-ever quarter of US commercial total contract value at $843 million, up 222% year-over-year, and its highest-ever quarter of total contract value at $2.3 billion, up 140% year-over-year.

Forward-Looking Statements

For Q3 2025, Palantir expects revenue between $1.083 billion and $1.087 billion, with adjusted income from operations between $493 million and $497 million.

For the full year 2025, the company raised its guidance to revenue between $4.142 billion and $4.150 billion, representing approximately 36% year-over-year growth. This is an increase from the previous guidance of $3.890 billion to $3.902 billion provided after Q1 2025 results.

Palantir expects US commercial revenue to exceed $1.302 billion for the full year, representing growth of at least 85%. The company also forecasts adjusted income from operations between $1.912 billion and $1.920 billion and adjusted free cash flow between $1.8 billion and $2.0 billion.

The company’s continued acceleration in growth and profitability metrics, particularly in the US commercial segment, suggests that Palantir’s AI-focused strategy is gaining significant traction in the market. With strong cash generation and a robust balance sheet, Palantir is well-positioned to continue investing in innovation while delivering exceptional financial results.

Full presentation:

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