PLTR: Issues Fixed, Is the Cult Stock Back in Full Force?

$Palantir Tech(PLTR.US) Q2 results offset the blemish of a slower Q1 U.S. commercial growth and kept the acceleration on track, with both revenue recognition and backlog building sharply. This forcefully pushed back against the 'ghost stories' that Anthropic and other foundation models would displace it.

In detail:

1) Guidance raised again: Q2 revenue rose 93% YoY, continuing to accelerate. Management guides Q3 up ~83%, and lifted full-year revenue to over $8.1bn (implying +82% YoY), with Adj. OP and FCF also raised, both above the Street.

While the full-year guide implies some H2 growth moderation, this is not the first time. 'Prudent guidance' seems to be a standard playbook at Palantir, as Dolphin Research has seen over two years: the CEO’s swagger in shareholder letters contrasts with conservative financial guides.

2) U.S. market: commercial surges again, government provides the base

Reliance on the U.S. climbed to 81% in Q2. Beyond expanding government demand (reflecting broad Maven Smart System penetration across U.S. agencies), commercial demand stayed hot (revenue growth accelerated to 150%, and U.S. commercial TCV jumped by $950mn QoQ, likely tied to June’s AIPCon 10), with no obvious LLM cannibalization.

Management did not lift its 120%+ FY U.S. commercial revenue guide, implying H2 slows to ~68%. Given the company’s conservative stance and robust demand, we see little reason for undue concern.

3) Intl: steady growth overall, but a low ceiling

Intl revenue was about $360mn (+37% YoY). Intl commercial was roughly $180mn (+25%), flat QoQ, suggesting ongoing recovery; European enterprises still harbor data-security concerns over PLTR’s 'America-first' stance. Intl gov. was about $180mn (+43%), mainly consumption of existing U.K. awards based on trend.

Noise beyond underlying demand still exists. UK media continue to dog the NHS contract with Palantir; although the $60–65mn deal is <1% of 2024 revenue, public pressure could impede further cooperation. This is not unique: rising focus on national resource security may cap PLTR’s globalization.

4) Leading indicators: future growth still rides on U.S. enterprises

(i) Medium/long-term focus on TCV, RPO, customers: Q2 TCV reached $3.37bn, up $960mn QoQ, mainly from AIPCon-driven U.S. enterprise demand. RPO rose to $4.9bn, up $450mn; short-term RPO hit $2.09bn (+105%), rising faster and indicating a higher share of near-term revenue conversion.

Total customers rose by 42 to 1,049, driven mainly by U.S. commercial adds. Government customers rose by three, pointing to deeper Maven penetration across U.S. agencies.

5) Near-term, the market focuses on Billings and NDR: Q2 Billings were $2.07bn (+88% YoY). NDR reached 157%, up 7ppt QoQ, showing ongoing upsell from pilots to broader rollouts.

6) Faster delivery, deeper customer spend:

Completed orders show fulfillment accelerating and a surge in large deals (>$10mn). This suggests the stack is mature, with customers moving from bootcamps to scaled, deep deployments.

5) GPM steadily improving; high growth with strong efficiency: Q2 GPM rose 4ppt YoY and stayed stable QoQ. Higher ARPU reflects deeper, scaled collaboration, supporting ongoing YoY GPM gains.

Opex growth lagged revenue expansion and SBC also contracted. OP reached $910mn, OPM improved 1ppt to 47%, and ex-SBC OPM was 62%.

6) Key metrics and new orders

Dolphin Research View

This print temporarily punctures the short case that foundation models pose a major threat. While industry checks already indicated that traditional enterprises do not see LLMs as substitutes for Palantir, June’s AIPCon 10 and the disclosed order data seem to have narrowed the expectation gap.

In U.S. government, Palantir has a clear solution edge and mature channels. Beyond DoD, Maven is penetrating other agencies faster, and during the U.S.–Israel–Iran tensions in H1, Palantir was also active.

But the premium valuation rests mainly on U.S. enterprise demand trends. Hence, despite Anthropic’s two models and Agents still being at the 'ghost story' stage last quarter, the perceived risk to the core of the premium led investors to stay cautious into earnings.

In prior notes we discussed whether LLMs matter for Palantir. At least near to medium term, we think its hyper-growth dividend is not over and the growth boundary has not been reached; with a big enough pie, theoretical LLM impacts should not imminently disrupt Palantir.

Near to medium term, the debate remains valuation, i.e., growth durability. Assuming this year’s guide plus the customary beat (+5%), that implies ~$8.5bn revenue and ~$4.0bn OP; with yesterday’s close implying ~$301.2bn market cap, valuation stands at ~35x EV/Sales and ~88x P/E on 15% after-tax OP, or ~58x EV/Adj. EBIT.

Net-net, the pullback plus guide raise drove some valuation digestion vs. last quarter. It is not obviously cheap yet, but it can move toward a normal low-premium range. If revenue grows 60% next year, forward P/S could fall to ~22x, in line with ultra-high-growth software comps.

On trend, 60% next year does not look demanding for Palantir, but it assumes a similar competitive backdrop to 2024. Both geopolitical and enterprise demand remain elevated, so a pragmatic approach is to add on pullbacks during the 'LLM ghost story' phase.

Detailed analysis follows

I. Revenue: U.S. commercial and orders both re-accelerate

Q2 revenue was $1.94bn (+93% YoY, +19% QoQ), well above consensus (~$1.81bn). U.S. revenue reached $1.57bn (+115% YoY), lifting the U.S. share to 81% — a higher U.S. reliance that the market welcomed this time, as U.S. commercial re-acceleration is exactly what investors want.

1) By segment

(i) Government: Maven 'regularized', multi-branch penetration enters harvest phase

Q2 gov. revenue was $990mn (+79% YoY). The U.S. led growth: U.S. gov. revenue was $809mn (+90% YoY, +18% QoQ).

Q2 saw sequential landmark wins on the gov. side: Maven Smart System was formally listed as a DoD Program of Record (per Piper Sandler’s Jun 29 note: from the $480mn U.S. Army award in May 2024, to a $10bn Army enterprise agreement by Jul 2025, and 'regularization' this Mar). The USMC shifted to the ODIN system built on MSS starting Jul 7; moving from 'project' to 'program' institutionalizes funding and further de-risks gov. revenue.

Intl gov. revenue was about $180mn (+43% YoY), still mainly recognition of existing U.K. contracts, with few new awards.

(ii) Commercial: U.S. re-accelerates, intl steady

Q2 commercial revenue was $945mn (+110% YoY). U.S. commercial surged 150% to $764mn, far ahead of expectations; NDR reached 157% (implying existing customers spent 57% more over the past 12 months).

Q2 customer cases reflect both depth and breadth: Zeta Global rebuilt its marketing data cloud on Foundry; SAP embedded AIP in its migration toolchain with CEO Christian Klein appearing; Kirkland & Ellis built a PE fundraising platform on AIP; Centrus Energy rebuilt U.S. nuclear fuel capacity on AIP (identified nearly $300mn in cost savings); the USDA’s AIP system set a record 62 minutes after launch.

Intl commercial revenue was about $180mn (+25% YoY), flat QoQ — Q1’s 'surprise rebound' did not become a trend. As noted previously, under PLTR’s 'America-first' posture, intl enterprises still weigh corporate data security highly.

II. Leading indicators: commercial orders temporarily debunk LLM cannibalization

For software, forward growth drives valuation, but revenue recognition lags. We focus on new wins via RPO/TCV, Billings, and customer adds.

Overall, Q2 forward metrics looked solid. A 'commercial-led' mix should also strengthen investor conviction.

(i) RPO (non-cancellable): near $5bn, higher short-term mix

RPO rose to $4.9bn (+102% YoY), up $450mn QoQ. Short-term RPO was $2.09bn (+105%) vs. long-term $2.81bn, indicating a greater share convertible within 12 months and improving order 'quality'.

(ii) Billings & deferred revenue: healthy and accelerating

Billings were $2.07bn (+88% YoY, +18% QoQ), reflecting strong large-deal sign/collection cadence. NDR was 157%, up 7ppt QoQ, showing stickiness and continued expansion by existing customers.

(iii) TCV: U.S. enterprise demand leads

TCV reached $3.37bn, up over $900mn QoQ, mainly from U.S. enterprise. U.S. commercial TCV hit $2.13bn (+153% YoY), a record high, with the step-up likely linked to June’s AIPCon 10.

(iv) Customer adds: U.S. enterprise remains the main contributor

Net adds were 42 QoQ, including 41 commercial (38 U.S., 3 intl) and 1 gov. U.S. commercial customers reached 653 (+35% YoY); deals over $1mn were 220, over $5mn were 98, and over $10mn were 73, with large deals nearly doubling QoQ, marking a step-up in engagement depth.

III. Profitability: already high, further gains may slow

GAAP OP was $912mn in Q2 with 47% OPM, up 1ppt QoQ. Adj. OP (ex-SBC and related taxes of ~$280mn) was $1.19bn, with 62% OPM, up 2ppt QoQ, though incremental gains may be harder from here.

Cash flow tracks collection cadence and is seasonal. Q2 CFO was $1.22bn (more than doubled YoY); Adj. FCF was $1.22bn with a 63% margin (vs. 57% in Q1).

Cash and ST U.S. Treasuries were $9.2bn with zero interest-bearing debt at Q2-end. FY FCF guide was raised from $4.2–4.4bn to $4.5–4.7bn; Rule of 40 score was 155%.

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Dolphin Research on 'Palantir':

Earnings

May 5, 2026 call recap 'Palantir: differentiated enterprise service focus, truly autonomous execution'

May 5, 2026 earnings take 'Palantir: software doomsday narrative swells, even the strongest faith stock wobbles?'

Feb 3, 2026 call recap 'Palantir (minutes): from dispelling doubts to demanding faster deployment'

Feb 3, 2026 earnings take 'Palantir: another hard-core scorecard, can the AI app leader reclaim its peak?'

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