Palantir reported third-quarter results on Monday that exceeded analyst forecasts, but its shares slipped slightly on Tuesday as investors focused on a slowdown in its enterprise sales, the company's key growth area. Revenue rose 96% from a year earlier to $2.31 billion, marking the first time the company has topped $2 billion in a quarter. The figure also represented 20% growth over the prior quarter and beat analysts' expectations of $2.18 billion. Adjusted earnings per share came in at $0.44, above the $0.41 analysts had expected, and Palantir raised its full-year revenue guidance.
The company attributed enterprise demand to its AI software, which can run frontier models and custom-train open-weight models securely without customers sharing their data or business processes with outside AI labs. Palantir also offers forward-deployed software engineering, which helps customers customize its products. Those offerings have drawn corporate customers at a faster pace than usual.
Alongside the strong results, Palantir disclosed a less favorable trend: enterprises are increasingly signing short-term trials. CEO Alex Karp told analysts on the quarterly call that the company is seeing quicker interactions and quicker deployments, with shorter contract durations that it then aims to expand substantially. Palantir is encountering a pattern in enterprise AI in which corporations try software quickly without their usual bureaucracy but are also more willing to cancel contracts.
Karp described the surge of prospective corporate customers with a colorful comparison, saying Palantir had gone from being the most attractive person in the physics department to being the captain of the football team. He added that once customers adopt Palantir, they do not go back, and he pointed to the company's numbers as evidence. The results do not yet confirm that long-term success.
Palantir closed $1.46 billion in total contract value from U.S. enterprises during the quarter, down from a record $2.13 billion in the previous quarter, a sign of decelerating sales. The company's next earnings report will indicate whether it has solidified its position as a rising U.S. enterprise AI provider. Many enterprises historically make their largest technology purchases in the final quarter of the year. Palantir raised its guidance for U.S. commercial revenue to more than $3.559 billion, a growth rate of at least 143%.
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