---
title: "Palantir conference call: AI brings \"extraordinary growth,\" the \"40 rule\" rarely breaks 100, CEO blasts Wall Street \"We delivered the best performance in software company history, yet you have always been wrong!\""
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/264114592.md"
description: "Palantir significantly raised its guidance for the fourth quarter and the full year of 2025, while the company's \"40 Rule\" score reached an impressive 114%, achieving a 63% revenue growth alongside a 51% adjusted operating margin, which is extremely rare in the software industry. The CEO was outspoken during the conference call, stating that the company achieved the \"best performance in the history of software companies,\" and directly criticized analysts who have been bearish on the company, saying they \"were wrong at every price point.\""
datetime: "2025-11-04T01:10:47.000Z"
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  - [en](https://longbridge.com/en/news/264114592.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/264114592.md)
---

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# Palantir conference call: AI brings "extraordinary growth," the "40 rule" rarely breaks 100, CEO blasts Wall Street "We delivered the best performance in software company history, yet you have always been wrong!"

Driven by the wave of artificial intelligence, software company Palantir delivered an unexpectedly strong third-quarter financial report and an extremely optimistic outlook for the future, with its CEO describing the growth as "extraordinary."

The core driver of the company's performance stems from the "endless demand" generated by its Artificial Intelligence Platform (AIP). The company's report shows a 63% year-on-year increase in third-quarter revenue, with a remarkable growth rate of 121% in its key U.S. commercial business, and it significantly raised its full-year revenue and profit guidance.

In the subsequent conference call, CEO Alex Karp was outspoken, claiming that the company achieved the "best performance in the history of software companies," and directly criticized financial analysts who have been bearish on the company, stating that they "were wrong at every price point." Karp attributed the company's success to its unique technological moat and its deep ties to U.S. national interests.

Palantir is a U.S. big data analytics service company that primarily provides big data monitoring and analysis software for the U.S. Department of Defense, financial institutions, and others. In April 2023, Palantir announced the launch of its core product—the Artificial Intelligence Platform (AIP), which is characterized by its ability to integrate large language models (LLMs) from companies like OpenAI and Google into private networks.

After the release of the latest financial report, the data analytics company’s stock price surged over 5% in after-hours trading, adding momentum to its astonishing increase of over 170% this year. The company's market capitalization is approaching $500 billion, making Palantir one of the best-performing stocks in the S&P 500, although its price-to-earnings ratio has reached extreme levels, far exceeding that of larger tech giants.

Several analysts have publicly expressed concerns, believing that the stock price is detached from its fundamentals. Even though the fourth-quarter guidance of $1.33 billion exceeded expectations, the full-year revenue of $4.4 billion remains moderate among tech stocks. If the AI boom fades or the growth of commercial clients slows, market sentiment could quickly reverse.

**Key Takeaways from the Conference Call:**

> -   **Performance Exceeds Expectations, Strong Guidance**: Palantir's third-quarter revenue grew 63% year-on-year to $1.181 billion, far exceeding market expectations; the company significantly raised its guidance for the fourth quarter and for the full year of 2025, expecting U.S. commercial business revenue to grow over 104% for the year, conveying strong confidence in future growth.
>     
> -   **"40 Rule" Breaks 100**: The company's "40 Rule" score reached 114%, achieving 63% revenue growth while maintaining a 51% adjusted operating profit margin, which is extremely rare in the software industry.
>     
> -   **AI Demand Ignites**: The core driver of performance growth comes from the "endless demand" for its Artificial Intelligence Platform (AIP), especially in the U.S. commercial market, where this business's revenue soared 121% year-on-year Customers are shifting from single use cases to enterprise-wide comprehensive deployment.
>     
> -   **International business performance is mediocre**: In the third quarter, international commercial revenue grew by 10% year-on-year and 5% quarter-on-quarter, reaching $152 million. Compared to the U.S. business, the growth of its international commercial business is relatively slow.
>     
> -   **Surge in contracts:** Driven by demand for the Artificial Intelligence Platform (AIP), the company's total contract value (TCV) in the third quarter reached a historic high of $2.8 billion, with significant increases in both the scale and speed of customer signings.
>     
> -   **CEO blasts Wall Street**: CEO Alex Karp was outspoken during the conference call, stating that the company achieved the "best performance in the history of software companies," and directly criticized analysts who have been bearish on the company for being "wrong at every price point."
>     

## **"Rule of 40" score exceeds 100, high growth coexists with high profits**

In the software industry, the "Rule of 40" (the sum of revenue growth rate and profit margin exceeding 40%) is regarded as a key indicator of a company's health. Palantir's "Rule of 40" score for this quarter reached an astonishing 114%, composed of a 63% revenue growth rate and a 51% adjusted operating profit margin.

This achievement is extremely rare among software companies that typically sacrifice profitability in pursuit of high growth. As noted by Barron's, other software companies may achieve similar sales growth rates but often fail to be profitable under Generally Accepted Accounting Principles (GAAP). In contrast, Palantir's GAAP profit margin in the third quarter reached 40%.

CEO Alex Karp emphasized during the conference call: "For a normal enterprise software company, the 'Rule of 40' should not exceed 100%." He believes this data demonstrates the uniqueness of the company's business model and its excellent unit economics. Based on this strong momentum, the company raised its fourth-quarter revenue guidance to $1.329 billion and increased its full-year U.S. commercial revenue growth guidance to no less than 104%.

## **CEO blasts Wall Street: "We were right, you were wrong"**

Equally noteworthy as the impressive financial figures is CEO Alex Karp's tough stance during the conference call. He did not hide his disdain for Wall Street analysts, stating that the company's rise "confuses most financial analysts and the chattering class." Karp bluntly said: "They (analysts) were wrong at every price point and every round of financing."

Karp attributed this "misjudgment" to analysts' inability to understand Palantir's uniqueness. He emphasized that the company's commitment to supporting the U.S. military, defending free speech, and its "anti-woke" stance ultimately brings venture capital-level returns to ordinary Americans. He stated: "We were right, you were wrong, and we will go deeper down this correct path because it is extremely beneficial for America."

According to Barron's, despite Palantir's rapid growth and substantial profits, its high valuation has led to significant disagreements among Wall Street analysts. The average rating for the stock is "hold," with a wide range of target prices, and the consensus target price even implies a substantial decline in the stock price. Karp's remarks are a direct response to this market divergence

## **AIP Ignites Demand, C-Level Executives Get Involved**

Palantir's growth engine is its Artificial Intelligence Platform (AIP). Chief Revenue Officer Ryan Taylor stated in a conference call that there is "endless demand" for AIP in the market, claiming that "real enterprise AI at scale requires Palantir." This demand is driving a fundamental shift in customer collaboration models.

A significant trend is that customers are rapidly moving from exploring individual AI use cases to enterprise-wide transformations driven by the C-suite.

Taylor cited an example of a leading medical device manufacturer that expanded its Annual Contract Value (ACV) by more than eight times just five months after signing the initial contract, with its CEO personally involved in jointly planning the enterprise-level AIP deployment. In another large insurance company, the CEO is personally overseeing its AI transformation, regularly meeting with the Palantir team to reconstruct every business process from underwriting to claims. This top-down impetus has enabled Palantir to achieve a record total contract value (TCV) of $2.8 billion in the third quarter.

## **Where is the "Moat"? Ontology and AI FDE**

When asked about the company's unique differentiating advantages, management repeatedly emphasized its technological "moat." Chief Technology Officer Shyam Sankar pointed out that the company's two decades of accumulation, particularly its foundational investment in "Ontology," is key to meeting current AI demands. Ontology integrates different sources and formats of data within enterprises, providing the foundation for large language models (LLMs) to create value in enterprise environments. He stated:

> **Realizing AI value in enterprises requires the elegant integration of large language models (LLMs), workflows, and software. This can only be achieved through "Ontology."**

Additionally, Palantir is further expanding its advantages through its new tools "AI FDE" and "AI Hivemind." AI FDE is an AI agent capable of understanding and executing tasks related to data integration, transformation, and application building, significantly enhancing development efficiency. Sankar revealed that in one case, two human engineers completed a client's data warehouse migration in just five days using AI FDE, a task that traditionally would take a systems integrator team two years. These internally developed tools not only enhance Palantir's own efficiency but are also beginning to empower customers.

## **Government Business Continues to Thrive, Strengthening Defense Foundations**

While commercial business is booming, Palantir's traditional strength—government business—remains robust. In the third quarter, its U.S. government business revenue grew by 52% year-over-year, and international government business grew by 66%. A milestone development is that the U.S. Army issued an official memorandum directing all Army organizations to unify and integrate into the Vantage data platform built on Palantir Foundry and AIP Karp reiterated the company's commitment to the United States and its allies during the conference call, making strong comments on controversial topics such as support for the U.S. Immigration and Customs Enforcement (ICE), Israel, and the fight against fentanyl. He stated that serving ordinary Americans is at the core of the company and expressed pride in participating in these "nationally beneficial" matters.

**Palantir Q3 2025 Earnings Call Transcript** (translated by AI tools):

> **Palantir Q3 2025 Earnings Call**
> 
> **Event Date:** November 3, 2025
> 
> **Company Name:** Palantir
> 
> **Source:** Palantir
> 
> **Ana Drmanovic Soro, Representative of the CFO's Office:**
> 
> Good afternoon, I am Ana Soro from the Palantir finance team, and I welcome everyone to our Q3 2025 earnings call. We will discuss the press release issued after the market close today and the performance posted on our investor relations website. During the call, we will make statements about our business that may be considered forward-looking statements under applicable securities laws, including statements regarding our Q4 and FY 2025 performance, management's expectations for our future financial and operational performance, and other statements regarding our plans, prospects, and expectations.
> 
> These statements are not commitments or guarantees and are subject to risks and uncertainties that may cause actual results to differ materially. Information about these risks can be found in the earnings press release issued after the market close today and in the documents we have filed with the U.S. Securities and Exchange Commission (SEC). We are not obligated to update forward-looking statements except as required by law.
> 
> Additionally, during today's call, we will refer to certain adjusted financial metrics. These non-GAAP financial metrics should be viewed as a supplement to, and not a substitute for, GAAP metrics and should not be considered in isolation. More information about these non-GAAP metrics, including a reconciliation of non-GAAP metrics to comparable GAAP metrics, is included in the press release and investor presentation we provided today.
> 
> Joining the call today are: CEO Alex Karp; CTO Shyam Sankar; CFO Dave Glazer; and Chief Revenue Officer and Chief Legal Officer Ryan Taylor. I will now turn the call over to Ryan to begin the meeting.
> 
> **Ryan Taylor, Chief Revenue Officer and Chief Legal Officer:**
> 
> We achieved a milestone in Q3, exceeding expectations once again. Our total revenue grew by 63% year-over-year and 18% quarter-over-quarter. We performed exceptionally well, primarily due to strong execution in the U.S. market, which accounted for three-quarters of our business in Q3, growing 77% year-over-year and 20% quarter-over-quarter
> 
> **Our "40 Rule" score has soared to an unprecedented 114%, a year-on-year increase of 46 percentage points, and a remarkable 20 percentage point increase just in the last quarter, solidifying our position as a defining enterprise software company of this generation. Our U.S. commercial business achieved an astonishing 121% year-on-year growth and a 29% quarter-on-quarter growth, driven by an insatiable demand and quantified excellence that encourages customers to expand AIP throughout their operations.**
> 
> Organizations are accepting an undeniable fact. Truly scalable AI enterprise applications require Palantir. We have repeatedly seen that the AI platform AIP (Artificial Intelligence Platform) is the only platform in this market capable of delivering transformative impact. Crucially, AIP is the only AI platform with a genuine plan to compound your enterprise AI leverage, rather than just being a model manufacturer for your leverage.
> 
> Sharing this leverage with our customers is our top priority. Our entire company is focused on creating value for customers, and I am proud to share the fruits of our labor with everyone. We achieved the highest total contract value (TCV) quarterly performance in history, reaching $2.8 billion. Behind this achievement, we closed an astonishing 204 deals worth $1 million or more, including 91 deals worth $5 million or more and 53 deals worth $10 million or more.
> 
> In our U.S. commercial business (currently accounting for 34% of total revenue), we achieved $1.3 billion in TCV, marking a milestone achievement in the fastest-growing area of our business, with a year-on-year growth rate exceeding six times when weighted by dollar duration. The growth trajectory is clear.
> 
> Customers are quickly shifting to larger enterprise agreements, reflecting both the expanding scope of their AI ambitions and the immediate impact our software brings. A leading medical device manufacturer signed a multi-year expansion agreement just five months after the initial contract, increasing their annual contract value (ACV) by more than eight times.
> 
> Two weeks after signing their initial contract, the conversation evolved from a single use case to pursuing the opportunity to become an "AI-first" enterprise. Their CEO reached out to me, hoping to establish a shared vision for enterprise-wide AIP deployment to transform their entire organization. This shift reflects a broader pattern we see among our customer base.
> 
> AI is a strategic priority led by the C-suite, with executives recognizing that enterprise-wide AI applications are the decisive factor distinguishing "AI owners" from "AI deprived." We see AI transformations driven by top management among our customers. At a leading insurance company, the CEO personally oversees their AI transformation, regularly meeting with our team to plan a company-wide transformation around AIP, reimagining every function from underwriting to claims processing, which has led to a significant expansion of our collaboration
> 
> Our partnership with TWG Global (named Virgins.ai) continues to gain momentum, as noted by TWG's Thomas Toll: "What was once a competitive advantage is now a necessary condition for competition. Companies that fail to integrate AI into their core business will be surpassed by those that do." These examples highlight the situation we are witnessing: we are the only platform bringing truly transformative impact to the AI enterprise market.
> 
> Speaking of our U.S. government business, revenue grew 52% year-over-year and 14% quarter-over-quarter, as we continue to provide critical mission capabilities. We remain steadfastly committed to our founding mission of supporting the U.S. government and are honored to provide truly effective transformative software for the nation.
> 
> We focus on delivering the world's most advanced defense capabilities to the U.S. government and allied partners around the globe. The momentum we carry into the fourth quarter is extraordinary. As we look toward the end of the year, our mission is clear: to deliver production capabilities that leverage the compound AI effects of AIP, transforming AI from promise to performance, serving those companies that define the future of their industries. I will now hand the call over to Shyam.
> 
> **Shyam Sankar, Chief Technology Officer and Executive Vice President:**
> 
> Thank you, Ryan. Two decades of hard work have built a unique moat and an ever-expanding lead. Our products are designed for this moment, and the data continues to prove it. **Realizing AI value in enterprises requires the elegant integration of large language models (LLMs), workflows, and software. This can only be achieved through "Ontology."**
> 
> Our foundational investments in "Ontology" and infrastructure uniquely position us to meet the current and future AI demands of the world. The most significant product development is the accelerated progress of our AIP internal AI application (i.e., AIP FDE). AIP FDE is our native AIP development agent that understands how to connect data sources, how to integrate and transform data, how to create ontologies and functionalities, and how to build applications.
> 
> It unleashes incredible speed and productivity for our human FDEs and customer developers alike. At one client, two human FDEs spawned an army of AI FDEs, migrating the client from its legacy data warehouse in five days. This work, if handed to an army of system integrators (SIs), could take up to two years. This is not a prototype; this is a production environment.
> 
> Among our clients, the results are staggering. \*\*AI Hivemind is a new AIP capability that coordinates a group of dynamically generated agents to solve problems, generate and refine ideas, and produce executable proposals that are integrated with the ontology, thus understanding the context of your business. AI Hivemind was initially developed to tackle extremely complex problems in classified domains, but it has been used to help our commercial clients identify bottlenecks in their supply chains, proactively formulate possible solutions, and then encode them into actual solutions using AI FDE \*\*
> 
> In the government sector, AI Hivemind can acquire its proposals and directly generate complex task plans in GAIA and Maverick. Our focus on AIP has always been enterprise autonomy, which is our normative view on the value of AI in enterprises. Hivemind now enables AI to develop novel solutions for emerging challenges and identify hidden opportunities, while the rest of AIP allows you to transform these ideas into realized realities. Enterprises achieve closed-loop evolution with the help of AI, made possible by AIP and ontology.
> 
> We continue to invest in enabling enterprises to extend AIP to the farthest edge. "Edge Ontology" is a new lightweight ontology implementation that can run on mobile devices, allowing customers to build mobile applications or embedded software for hardware such as drones and robots, fully integrated with your enterprise's AIP instance.
> 
> Turning to battlefield-oriented updates: **The U.S. Army has released an official public memorandum directing all Army units to integrate and consolidate into Vantage—a data platform for the Army built on Foundry and AIP.** The Army views this not just as a technical decision but as a cultural decision aimed at achieving data-driven decision-making, continuing to make our Army the most powerful military in the world. This directive will enable the Army to quickly phase out legacy systems and invest more in the future forces, concepts, and systems of the Army.
> 
> The "Warp Speed" initiative and the "American Tech Fellowship" are our early investments to support American manufacturing and re-industrialization, which are now beginning to bear fruit. The "Warp Speed" initiative was initially launched to help new defense entrants meet their surging production goals and is now being rapidly adopted by the traditional defense industrial base and maritime industrial base. The second cohort of "American Tech Fellowship" fellows will conclude in the coming weeks.
> 
> We launched the "American Tech Fellowship" because we noticed that many of our best builders are frontline workers. They do not come from traditional consulting backgrounds and do not have formal computer science backgrounds. A few examples: Mason, a civil engineer from Louisiana, is building AI applications for more accurate estimates for large construction projects, a job that will only increase with our re-industrialization.
> 
> Michael, who works on a potato farm in North Dakota, is streamlining its operations. Then there's Cody from Georgia, a utility expert, who is building applications in Foundry to provide safe and reliable energy across the Southern region. These Americans are the true faces of innovation, emphasizing that AI-equipped American workers will drive re-industrialization and prosperity in America
> 
> Our clients have noticed this and have asked us to create a "U.S. Technology Scholarship" program specifically for their employees, including Lear Corporation, which emphasized their scholarship program during their recent earnings call. With that, I will hand the call over to Dave to walk us through the financial data.
> 
> **David Glazer, Chief Financial Officer and Head of Finance:**
> 
> Thank you, Shyam. We had an outstanding performance in the third quarter, achieving a "Rule of 40" score of 114%, which is the highest score we have ever recorded, exceeding the previous high by 20 points. We also achieved the highest revenue growth rate ever reported, with a year-over-year increase of 63%, surpassing the high end of our prior guidance by 1,300 basis points, and improving by 3,300 basis points compared to the growth rate in the third quarter of last year.
> 
> **Based on this extraordinary strong performance, we expect fourth-quarter revenue to reach $1.329 billion, a quarter-over-quarter increase of 13%, which is our highest quarterly sequential revenue growth guidance to date, representing a year-over-year growth of 61%.** We have also raised the midpoint of our full-year 2025 revenue guidance to $4.398 billion, representing a year-over-year growth rate of 53%, and an increase of 8 percentage points (or $252 million) compared to the full-year 2025 revenue guidance we provided last quarter.
> 
> Additionally, we have raised our full-year U.S. commercial revenue guidance to over $1.433 billion, representing at least a 104% year-over-year growth rate, an increase of 19 percentage points compared to the guidance we just provided last quarter. The demand for accelerated growth in AIP continues to drive the overall outstanding performance of our U.S. business, which grew 77% year-over-year and 20% quarter-over-quarter in the third quarter.
> 
> Our U.S. commercial business grew 121% year-over-year and 29% quarter-over-quarter; our U.S. government business grew 52% year-over-year and 14% quarter-over-quarter. While achieving these outstanding top-line results, we also achieved the highest adjusted operating margin ever, reaching 51%, exceeding the high end of our prior guidance by 500 basis points, highlighting the unit economics of our business at scale.
> 
> Our revenue and profitability drove our "Rule of 40" score up 20 points quarter-over-quarter, from 94 points in the second quarter to 114 points in the third quarter. Over the past 12 months ending in the third quarter, we generated $2 billion in adjusted free cash flow for the first time. Turning to our global top-line performance: third-quarter revenue grew 63% year-over-year and 18% quarter-over-quarter, reaching $1.181 billion.
> 
> Third-quarter U.S. revenue grew 77% year-over-year and 20% quarter-over-quarter, reaching $883 million. Excluding the impact of strategic commercial contract revenue, third-quarter revenue grew 65% year-over-year and 18% quarter-over-quarter; third-quarter U.S. revenue grew 78% year-over-year and 20% quarter-over-quarter. We achieved the highest TCV signing amount ever in a quarter, reaching $2.8 billion, a year-over-year increase of 151%. This exceeded the nearly $500 million prior high TCV signing amount we just set last quarter
> 
> The number of customers increased by 45% year-on-year and 7% quarter-on-quarter, reaching 911 customers. The revenue from our largest customer continues to expand. In the third quarter, the revenue from our top 20 customers increased by 38% year-on-year over the past 12 months, reaching $83 million per customer.
> 
> Now turning to our commercial segment. Third-quarter commercial revenue increased by 73% year-on-year and 22% quarter-on-quarter, reaching $548 million. This marks the fourth consecutive quarter where our commercial business revenue has exceeded that of U.S. government business revenue. Excluding the impact of strategic commercial contracts, third-quarter commercial revenue increased by 77% year-on-year and 22% quarter-on-quarter.
> 
> We completed $1.4 billion in commercial TCV contracts, a year-on-year increase of 132% and a quarter-on-quarter increase of 32%. AIP continues to drive expansion among existing U.S. customers and conversion of new customers. Third-quarter U.S. commercial revenue increased by 121% year-on-year and 29% quarter-on-quarter, reaching $397 million. Excluding revenue from strategic commercial contracts, third-quarter U.S. commercial revenue increased by 126% year-on-year and 29% quarter-on-quarter.
> 
> In the third quarter, we completed $1.3 billion in U.S. commercial TCV contracts, a year-on-year increase of 342%, and for the first time surpassed the $1 billion mark. Over the past 12 months, we completed $3.8 billion in U.S. commercial TCV contracts, a 217% increase compared to the previous 12 months, highlighting the demand for AI use cases. The total remaining transaction value of our U.S. commercial business increased by 199% year-on-year and 30% quarter-on-quarter.
> 
> The number of our U.S. commercial customers grew to 530, a year-on-year increase of 65% and a quarter-on-quarter increase of 9%. **Third-quarter international commercial revenue increased by 10% year-on-year and 5% quarter-on-quarter, reaching $15.2 million. For international commercial business, we continue to leverage targeted growth opportunities in Asia, the Middle East, and other regions, but the focus remains on accelerating growth in the U.S. business.**
> 
> Revenue from strategic commercial contracts this quarter was $2.9 million. We expect revenue from these contracts in the fourth quarter of 2025 to be between $2 million and $4 million, compared to $9.6 million in the fourth quarter of 2024. We anticipate that revenue from these contracts in 2025 will be less than 0.5% of total annual revenue.
> 
> Turning to our government segment: third-quarter government revenue increased by 55% year-on-year and 14% quarter-on-quarter, reaching $633 million. Third-quarter U.S. government revenue increased by 52% year-on-year and 14% quarter-on-quarter, reaching $486 million. This growth was driven by the continued execution of existing projects and new awards reflecting the growing demand for AI in our government software products.
> 
> Third-quarter international government revenue increased by 66% year-on-year and 16% quarter-on-quarter, reaching $147 million, primarily due to our ongoing work in the UK. As mentioned earlier, we achieved the highest quarterly TCV contract amount ever, reaching $2.8 billion, a year-on-year increase of 151%. The net dollar retention rate was 134%, an increase of 600 basis points from the previous quarter. This growth was driven by the expansion of existing customers and new customers acquired in the third quarter of last year, as we witnessed the impact of the AI revolution
> 
> Since the net dollar retention rate does not include revenue from new customers acquired in the past 12 months, it has not fully captured the acceleration and momentum of our U.S. business over the past year. The total remaining transaction value at the end of the third quarter was $8.6 billion, an increase of 91% year-over-year and 21% quarter-over-quarter; the remaining performance obligations (RPO) were $2.6 billion, an increase of 66% year-over-year and 8% quarter-over-quarter.
> 
> It is important to note that RPO is primarily composed of our commercial business. This is because it does not consider contracts with initial terms of less than 12 months and contract obligations that fall outside the scope of "termination for convenience," both of which are common in most of our government business. Moving on to margins and expenses: the adjusted gross margin (excluding stock-based compensation) for this quarter was 84%.
> 
> Adjusted operating income (excluding stock-based compensation and related employer payroll taxes) was $601 million, representing an adjusted operating margin of 51%. Adjusted expenses for the third quarter were $581 million, an increase of 8% quarter-over-quarter and 29% year-over-year, primarily driven by our continued investment in AIP and technology recruitment. We continue to expect expenses to increase in the fourth quarter as we remain committed to investing in our product pipeline and top-tier technical talent while achieving our ongoing goal of GAAP profitability.
> 
> GAAP operating income for the third quarter was $393 million, representing a margin of 33%. GAAP net income for the third quarter was $476 million, representing a margin of 40%. Stock-based compensation expense for the third quarter was $172 million, with employer payroll tax expenses related to stock compensation at $35 million. GAAP earnings per share for the third quarter were $0.18. Adjusted earnings per share for the third quarter were $0.21.
> 
> Additionally, our revenue growth and adjusted operating margin combined accelerated to 114% in the third quarter, and our "Rule of 40" score improved by 20 points from the previous quarter, marking the ninth consecutive quarter of expansion for our "Rule of 40" score. With the increase in our revenue and adjusted operating income guidance for 2025, we now expect an annual "Rule of 40" score of 102%. Turning to our cash flow: in the third quarter, we generated $508 million in operating cash flow and $540 million in adjusted free cash flow, representing margins of 43% and 46%, respectively.
> 
> Furthermore, we achieved the milestone of $2 billion in adjusted free cash flow over the past 12 months for the first time. As of the end of the third quarter, we repurchased approximately 2.6 million shares as part of our stock repurchase program. As of the end of the quarter, there was $880 million remaining in the original authorization. We ended the quarter with $6.4 billion in cash, cash equivalents, and short-term U.S. Treasury securities.
> 
> Now turning to our outlook: for the fourth quarter of 2025, we expect revenue to be between $1.327 billion and $1.331 billion, and adjusted operating income to be between $695 million and $699 million. For the full year of 2025, we have raised our revenue guidance to between $4.396 billion and $4.4 billion. We have raised our U.S. commercial revenue guidance to over $1.433 billion, representing a growth rate of at least 104%
> 
> We are raising our guidance for adjusted operating revenue to between $2.151 billion and $2.155 billion. We are also raising our guidance for adjusted free cash flow to between $1.9 billion and $2.1 billion, and we continue to expect to achieve GAAP operating income and net income in every quarter this year. With that, I will hand the call over to Alex for a few comments, and then Ana will start the Q&A session.
> 
> **Alexander Karp, Co-founder, CEO, and Director:**
> 
> Hello everyone.
> 
> By any normal or even reasonable standard, these are not normal results. These are not even strong results. **These are extraordinary results. You could say these are the best results delivered by any software company in history. This is not an exaggeration. Even though your analyst friends may want you to believe otherwise—because they have been wrong at every price point, wrong in every round—they are certainly very persuasive, and they are not investing their own money.**
> 
> However, a normal enterprise software company should not have a "Rule of 40" score of over 100%. A normal enterprise company of our scale should not have over 100% U.S. business growth, nor should it have 77% growth in the U.S. By the way, this growth is being dragged down by stagnation in Europe, which remains an important part of our business.
> 
> Therefore, the purely unvarnished numbers are: achieving 77% growth on a large and important base while generating very substantial cash flow, with the company's "Rule of 40" score reaching 114%. If there is still a bit of sanity left in this world, everyone in finance should stop and ask: how did this happen? How did a company that has always supported American combat personnel, Marines, special operators, and covert operatives, defending our right to free speech, and is indeed the first company to be fully anti-"wokeism"—how did this company manage to support American combat personnel while actually delivering venture capital-level returns to ordinary Americans?
> 
> One of the issues we have with the "truth arbiters" is: we support American workers, we help enrich American workers. And the "truth arbiters" somehow are not involved because they are such professionals. Of course, these numbers indicate that doing so, and moving forward with American workers in a way that foreshadows the future—FDA, ontology, Foundry, allowing each specific agency, allowing American combat personnel to fight in their inherent way.
> 
> Empowering the principles of freedom and the ability to do creative things in a battlefield context, and then taking over enterprises, not selling them parasitic, commoditized software with large sales teams, where those slow-moving, jargon-filled leaders provide you with steak, dinner, and other things we won't mention in exchange for you handing over your high-value enterprise revenue to them—we have built direct alliances with our customers
> 
> What does this mean? It means that when our clients have unique and tribal ways of doing things, whether it's underwriting, fighting, or making workers more valuable, we bring in the FDA, we orchestrate an ontology. We understand the tribal knowledge of their business, the specific nature that makes it unique, valuable, and powerful, and then we empower it. How do we get involved? Unlike the seemingly obvious ways, we are downstream in value creation.
> 
> So when you see 141%, or 77% or 63%, you might ask—by the way, our employee growth is not linearly proportional to this growth, and the sales team is actually shrinking, which seems incredible—the reason it works is that we are enabling our clients to make more money, or to be more dominant on the battlefield, and then they pay us a portion of that. That’s why these numbers are so extraordinary.
> 
> The sociological and political version should be: wait a minute. How can we learn from this? How can we build such institutions? By the way, for all those talking about AI bottlenecks, I will tell you what 114% proves: there is a huge part of the AI market that truly cares about value creation, and that part is owned by us.
> 
> We own that part because to do this, you must have FDA orchestration, you must have an ontology, you must have Foundry, and you must be able to access this game. You must deeply understand how to do this, and you must have been doing it through products (by the way) for a very, very long time, and then the products get better and better. I will let Shyam talk about our actions on the battlefield as much as possible, but you see a very similar trajectory; we are giving the U.S., whether in industry or government, a huge unfair advantage.
> 
> Again, you can see, if you look at our numbers, how poorly Europe is performing. Look at how well the U.S. is doing. Look at how we are achieving this. Again, this is not just top-line growth. **The 114% "Rule of 40" score we have shows top-line and bottom-line growth that is unique, massive, and unparalleled.**
> 
> Besides that, there is a problem in the U.S. that all of us at Palantir are concerned about: of the GDP growth we are lucky to have in this country—defined, assisted, and supported by AI—what proportion can American workers access? So when we talk about AI, GDP availability for American workers, it means whether they are participating in this growth, or if it’s just the people around this table getting richer and richer?
> 
> Then you see our platform on the battlefield, as Shyam mentioned, the people coding in AIP are trained, smart Americans with specific knowledge. They do not—actually—the same goes for the people in factory workshops. Truck drivers across the country, anyone with specific domain expertise, are more powerful and valuable in our products than they were yesterday
> 
> In fact, the real misalignment of AI is with those generalized experts from elite institutions who have commoditized and highly trained backgrounds. That is no longer as valuable as it used to be. Yes, the positive destructiveness of capitalism will put immense pressure on that type of person—often those who are skeptical of Palantir.
> 
> However, what I see from these numbers, and what I think we see from these numbers—if I may be a bit over the top—is that we are right, you are wrong, and we will go very, very deep down the path of our correctness because it is extremely beneficial for America, extremely beneficial for the American economy, and equally beneficial for American workers. You know what? I really enjoy turning on the TV and **seeing some analysts explain why other companies are better than us, simply because they haven't made money in our company and probably never will. And we will just keep moving forward, forward, and forward.**
> 
> Obviously, we will not be making predictions for next year. But I want to say, if you are thinking about what the future of this company will look like, look at our ability to create value, look at our ability to generate revenue at the top line, look at the unit economics of our business. If you are a technical expert evaluating companies, please compare these numbers with any other company you have seen and then make your decision. But yes, I am incredibly enthusiastic. I think we are all incredibly enthusiastic, and thank you to those of you who are with us, enjoying these numbers, especially the Palantir employees who work day and night to deliver this kind of performance.
> 
> **Unnamed Speaker:**
> 
> Thank you, Alex. Before we open the floor for questions, we will first address questions from shareholders. We have received several questions asking: What do you think is Palantir's unique differentiating advantage that others may not understand?
> 
> **Unnamed Speaker:**
> 
> Well, Alex just mentioned a point. In fact, it has become quite popular for many companies to start hiring FDEs. The Financial Times had an article saying this is the most sought-after new job title. But you will find that they do not really understand it. It is just mimicking behavior. Everything Alex just said, like, we build software that works, not software that should work.
> 
> We build software for the real world that exists, not for a world that has never existed. And this ability to discover the truth comes from FDEs. Our measure of success is not whether we sold software, but whether we solved problems. Over the past twenty years, we have built a complete software stack downstream to create value for our customers.
> 
> This led to the emergence of "ontologies" more than a decade ago, which is the fundamental premise for extracting value from LLMs and enterprises. And in the past year, it has led to the emergence of AI Hivemind and AI FDE.
> 
> **Unnamed Speaker:**
> 
> Another implicit thing is that our way of working forces us to respond to increasingly complex chains every day. Therefore, we are dealing with the most painful, core, and valuable parts of each enterprise Precisely because this is how we actually deploy and coordinate FDE capabilities. This is how we make our products stronger. Frankly, this is how we generate these numbers.

Because the closer you get to the front line of a black box that was never supposed to solve, and cannot solve, very complex problems—and by now, everyone knows that believing it can solve them is a joke—that's where you are. By the way, this is also the safest position for us because, as a company, we always believe we are outsiders. We need to be where the most valuable problems are being solved because only then can we ultimately stay and solve tomorrow's problems, which is also how we get rewarded.

**Unnamed Spokesperson:**

Thank you both. Our next question comes from Dan at Wedbush. Dan, please turn on your camera, and you will receive a prompt to unmute. After that, I see you.

**Unnamed Spokesperson:**

Mr. Dan, we don't see you.

**Daniel Ives:**

Hello.

**Unnamed Spokesperson:**

You have appeared.

**Daniel Ives:**

Yes, great. Obviously, it’s another amazing quarter for you. Congratulations. My question is for Alex and the team; can you elaborate on the accelerated sales cycles you've seen from so many companies that participated in the boot camp? For example, from initial contact to actually closing deals, what surprised you? Perhaps you can talk about the phenomena you've observed in all the cases you've seen.

**Chief Revenue Officer and Chief Legal Officer Ryan Taylor:**

Great. Thank you, Dan. I think we look at the U.S. commercial business, **we completed $1.3 billion in total contract value (TCV), weighted by dollar term, which is a sixfold increase from a year ago. Among these deals, 83 were worth over $1 million, 40 were worth over $5 million, and 21 deals were worth over $10 million.**

I was directly involved in many of these deals. I can feel firsthand from customers the question you asked. The situation now is that from the executive level down through the entire company, customers come to us not just saying, "Let's do a use case." The customers where we have the greatest impact come to us saying, "How do we deploy this across the entire organization? How do we restructure our entire organization around Palantir and AIP?" This is what is happening on the front line.

**We focus on delivering value to customers. That is our go-to-market strategy. How to get the product into their hands and deliver value.**

**Unnamed Spokesperson:**

Ryan is indeed on the front line, and he faces two questions: one is how many customers come to you. I think the biggest shift we are seeing is that those customers who come to us quickly want to transition to "How do I change my business to express the most value in your product in my way?" "Then they want to, literally want to restructure. A shorthand we often use is that in the past, you had to privatize a company to change its unit economics.

> Basically, just like we have provided venture capital-level, high-end venture capital-level returns for ordinary investors over the past few years, what we are actually doing in enterprises is providing a private equity-like transformation in the public market, in the public domain, under the existing leadership. This is basically why they are the best reason. By the way, Ryan will also tell you another thing, our new clients have higher expectations of us. They are basically saying, I want to transform my business.
> 
> I want to complete it in a few months. I want to do it in the public eye, in the public market, mostly like this, but not entirely. I hope you not only work on the product side but also tell us how you will actually implement AI, Foundry, ontology, FDE models, and our tribal knowledge to achieve this. This is completely another matter. In the past, we had to beg, for example, when we first started talking, we were pleading to work on the edge of issues that could affect parts of the business.
> 
> By the way, Shyam, unfortunately, can only tell you about 1% of what he is involved in, but this is exactly the same situation with the U.S. government and around the world. What we are dealing with and studying is extremely, extremely important; they are not downstream issues, they are the issues themselves. And we are reshaping them.
> 
> **Ana Drmanovic Soro, Representative of the CFO Office:**
> 
> Thank you both. Our next question comes from Mariana at Bank of America. Mariana, please turn on your camera, and you will receive a prompt to unmute.
> 
> **Mariana Perez Mora:**
> 
> Good afternoon, everyone.
> 
> **Unnamed Speaker:**
> 
> Hello.
> 
> **Mariana Perez Mora:**
> 
> As usual, I have a couple of questions, one about business and one about defense or government. Regarding the business aspect, I want to follow up on Dan's question. Can you discuss what has changed from the perspective of customer behavior that has led to this accelerated willingness to adopt, not only accelerating the growth in customer numbers but also existing customers moving upstream in the value chain? What changes have occurred internally? We saw these recently during a visit, for example, with AI agents or AI FDEs. How are you integrating technology internally to accelerate and keep up with this demand?
> 
> On the government side, the growth of your U.S. government business by over 50% is indeed impressive. How do you view future opportunities like "Golden Dawn" layering onto this growth?
> 
> **Unnamed Speaker:**
> 
> Who will answer these questions? I think the external question is, how does it feel? This is obviously you (Ryan). The internal question is a very subtle one; I don't know, anyone can chime in. Obviously, Shyam should talk about that
> 
> **Shyam Sankar, Chief Technology Officer and Executive Vice President:**
> 
> Okay, sure.
> 
> **Unnamed Speaker:**
> 
> Do you want to start with business?
> 
> **Shyam Sankar, Chief Technology Officer and Executive Vice President:**
> 
> Sure, okay. I think externally, what we’re seeing is a deeper collaboration with customers, achieving more tangible results, creating network effects, where customers share the impact we’re generating and the direct impact we’re having with them. Customers see that as we... this is a continuation of what we’ve always been doing, but we’re collaborating more deeply with customers on impact. What we’re seeing is that more and more customers are now coming to us and, particularly those with the greatest impact, are saying, let’s do more—
> 
> **Alexander Karp, Co-founder, CEO, and Director:**
> 
> Ryan is best at being an excellent... let me give a cruder version. Our customers realize that those choices are terrible; basically, they’ve tried a lot of things that haven’t worked. And we have business in many verticals. For example, in the 252nd vertical, we’ve achieved dominance for a certain customer.
> 
> People see that. Then they think, well, maybe I can try something, I don’t know, a knockoff, something half-baked. And many people still don’t understand and are trying that long migration process, thinking that large language models (LLMs) will operate like LLMs and Ontology, thinking that LLMs are not a commodity. But then in the market, they see the end results of others using Ontology, Foundry, FDE. Then they think, wait a minute.
> 
> You know, I spent hundreds of millions and got nothing. And that guy across the street, whom I kind of look down on, is way ahead of me; their unit economics changed overnight. This completely changes the conversation because we say, well, if you want it to work, you’re going to need to do these five things. These things are like, you need to talk to Ryan, you need to, I don’t know, meet with me occasionally.
> 
> You really need to allow us to bring in engineers. We need to really solve the problems that are valuable to your business. And also look at the costs that are dragging you down. By the way, for most businesses, costs are not just the actual money they waste. That wasted money creates a waste ecosystem. They’ve been talking to all these vendors about all these things that will never succeed instead of solving problems. It’s like... so getting rid of these pathogens from their business is a real issue. Now they are very, very interested in that. Then, internally, I want to say we have to double down. Internally for us, the most important thing is that in the face of all this success, we don’t want to give up Palantir’s unique attributes to buy something that is artificial and fake for us. So, ensuring we are very, very close to the problems, ensuring everyone here... if you listen to our internal conversations, it’s more like, who’s in the factory floor? What are we doing internally? How do we ensure that our products keep getting better? How do we ensure, for example, that Shyam is a genius at walking around and identifying underlying technical issues? How do we ensure we have the best product team and find the most suitable match for every deployment we care about, especially for tasks that we highly, highly value in terms of time and effort? And how do you ensure that Palantir maintains the tribal, fervent, and unique nature it had 20 years ago? How do we double or triple our efforts in this regard? How do we recruit the right people? And then internally we have... look, we support ICE (U.S. Immigration and Customs Enforcement).

I don't know why these are controversial, but many people find them controversial. Okay, so how do you get people to focus on these things in a way that benefits both us and our clients? These are all very difficult and tricky questions that we spend a lot of time thinking about, and I would say, as an overarching thing, because we find that the more we focus on our internal dynamics, the better our numbers get. That's why we have fewer salespeople but achieved 77% growth in 75% of our market and 121% growth in our U.S. commercial business. Please tell your friends this. I don't even understand how they can look at these numbers without dropping their keys from their Motel 6.

And then just say, I mean, these numbers are amazing, but this is... this is internal focus.

**Unnamed Speaker:**

I will boldly try to speak after Alex, just want to say, on the internal side, regarding AI FDE, this is exactly why we initially built it. Our employee count has grown by about 10%, but revenue has grown by 63%. How did we do it? We made our FDE (Frontline Deployment Engineer) productivity extremely efficient. I mean, efficient to the point that we decided to hand it over to our clients, and we have already started making our clients more efficient as well. When you have a memo like Army Vantage, where the Army is integrating into the Army Data Platform, you now have a bona fide Army, a team of soldiers who need to become proficient developers of this software. And you have a generation of soldiers whose first interaction with this software will be through AI FDE. They will be superheroes from day one. I think this is accelerating adoption, accelerating understanding, like, the depth of adoption, not just "are you using it," but "how much are you really using it?" How much can you understand? And then quickly responding to your comment about U.S. government business, yes, there are many opportunities there.

I can't comment on all the opportunities you mentioned, but whether it's NGC2 or Maven's continued growth, I mean, we are, of course, involved in three conflicts around the world right now, from Europe, the Middle East to our own hemisphere. Things are getting a bit tricky

> **Unnamed Spokesperson:**
> 
> By the way, let me say something slightly political. I'm not saying others agree with this, but when people attack our soldiers for stopping fentanyl from entering this country, I hope people remember that if fentanyl were killing 60,000 Yale graduates instead of 60,000 working-class people, we would have dropped a nuclear bomb on those bringing it from South America long ago.
> 
> So, it's a bit like... at Palantir, we stand with the ordinary American people, who sometimes get screwed because all the sympathy goes to the elites, with none for those who are actually dying on our streets. That's why, just like when you have an open border, it means ordinary poor Americans earn less. I know my progressive colleagues believe that open borders will make things better, but that's because they actually represent the elites, not the working class. The same goes for South America; we, like, believe it's crazy that our Constitution doesn't give us the right to stop the deaths of 60,000 working-class men and women every year.
> 
> And this company, this country, stopping that is right. I am very proud. I don't know all the efforts we're involved in, but to the extent that we are involved in these efforts, I and most Palantir employees are very proud of it.
> 
> **Unnamed Spokesperson:**
> 
> Please go ahead.
> 
> **Unnamed Spokesperson:**
> 
> Thank you, Alex. As always, there are many individual investors online. Do you have anything else to say before we end the call?
> 
> **Unnamed Spokesperson:**
> 
> We're charging ahead. Please turn on traditional television and see how unhappy those who haven't invested in us are—enjoy it, grab some popcorn. They're crying. We are making this company better every day, and we do this for this country, for our allies. Also, I never liked the term "retail investors." What about those rational people who put their own money on the line and fight for us? By the way, you are fighting for what should work for this country. Meritocracy, relative to the lethal technology of our opponents, and products that spread GDP to working-class men and women by increasing their value creation. By the way, there's also your bank account. Thank you for that.
> 
> **Ana Drmanovic Soro, Representative of the CFO's Office:**
> 
> Thank you. The Q&A session of today's conference call has concluded. The event is now over.
> 
> This transcript may not be 100% accurate and may contain spelling errors and other inaccuracies

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