Palantir (PLTR) Q4 2025 earnings review
70% Growth, Rule of 127, and a 61% Guide — Palantir Rewrites the Rules
Palantir delivered its most explosive quarter ever as a public company. Revenue surged 70% YoY to $1.41B, accelerating from 63% in Q3, 48% in Q2, and 39% in Q1 — a textbook compounding acceleration through all four quarters. The U.S. business crossed $1B in a single quarter for the first time, growing 93% YoY and now commanding 77% of total revenue. GAAP net income hit $609M (43% margin), up from $79M a year ago. The Rule of 40 score reached an absurd 127% (70% growth + 57% adjusted operating margin). Perhaps most staggering: FY2026 revenue guidance of $7.19B implies 61% growth — double the 31% guide issued at the start of FY2025. The company closed a record $4.3B in TCV, up 138% YoY. Adjusted free cash flow for the full year was $2.27B (51% margin). Cash and treasuries ended at $7.2B. No buyback acceleration was announced; $880M remains on the authorization.
🐂 Bull Case
Revenue growth has accelerated every single quarter in FY2025: 39% → 48% → 63% → 70%. U.S. commercial followed the same pattern: 71% → 93% → 121% → 137%. This isn't a one-time pop — it's a sustained, broadening growth engine with visible runway into FY2026.
TCV of $4.3B (+138% YoY) eclipsed the prior record set just one quarter earlier by $1.5B. U.S. commercial remaining deal value grew 145% YoY to $4.38B, providing multi-year revenue visibility. Net dollar retention expanded to 139%, up 500bps QoQ.
Revenue guidance of $7.19B implies 61% YoY growth, with U.S. commercial guided to $3.14B+ (115%+ growth). Adjusted operating income guidance of $4.13B implies a 57% margin. Adjusted free cash flow guided to $3.9–4.1B. The company is guiding to a full-year Rule of 40 of 118%.
🐻 Bear Case
International commercial revenue grew just 8% YoY in Q4 and only 2% for the full year, totaling $608M. This segment is effectively flat while the U.S. business triples. The company has 77% geographic concentration in a single country, with management openly deprioritizing non-U.S. markets.
At ~$250B+ market cap with FY2025 revenue of $4.5B, Palantir trades at roughly 55x trailing revenue. Even with 61% guided growth, the stock is priced for flawless execution for years. Any deceleration, even to 40-50% growth, could trigger a sharp repricing.
Accounts receivable surged to $1.04B from $575M a year ago, an 81% increase vs. 70% revenue growth. While partially explained by the explosive booking activity and large deals closing near quarter-end, this growing gap between revenue and AR growth deserves ongoing scrutiny.
⚖️ Verdict: 🟢🟢
Exceptional. Palantir delivered the strongest quarter in its public history by virtually every metric. Revenue growth is accelerating, profitability is expanding, bookings are at records, and FY2026 guidance demolished expectations. The international business is a clear weakness, and AR growth bears watching, but the core U.S. engine is performing at a level unprecedented for an enterprise software company of this scale.
Key Themes
U.S. Commercial Revenue in Hypergrowth Mode
U.S. commercial revenue reached $507M in Q4, up 137% YoY and 28% QoQ. The growth trajectory across FY2025 was staggering: 71% → 93% → 121% → 137% — compounding acceleration through every quarter. Full-year U.S. commercial revenue hit $1.465B, up 109% from $702M in FY2024. U.S. commercial TCV was $1.34B in Q4 (+67% YoY), bringing the full-year total to $4.3B (+161% YoY). Customer examples illustrate the depth of engagement: a utility expanded from $7M to $31M ACV within the year; an energy company went from $4M to $20M+ ACV; a healthcare company signed a $96M deal after two summer boot camps; an engineering firm signed $80M after fall demos. FY2026 guidance targets $3.14B+ in U.S. commercial revenue (115%+ growth), implying this segment alone will exceed total company FY2025 revenue.
U.S. Government Revenue Reacceleration
U.S. government revenue grew 66% YoY and 17% QoQ to $570M, accelerating from 52% in Q3, 53% in Q2, and 45% in Q1. Full-year U.S. government revenue reached $1.855B, up 55% YoY. Key wins include a $448M U.S. Navy contract for shipbuilding supply chain modernization, continuing expansion of Maven across combatant commands, and broad civil agency adoption. Management highlighted that Maven is 'pushing to the edge' with the MAGE capability — enabling autonomous UAV coordination with declarative mission intent. The Warp Speed manufacturing program expanded via Ship OS across submarine production and sustainment, with one shipbuilder reducing planning from 160 hours to 10 minutes. The government segment benefits from both expanding existing programs and the structural shift toward software-defined military capabilities.
Operating Leverage Expanding with Scale
Adjusted operating margin reached 57% in Q4, up from 45% in 24Q4, and expanded 1,100bps for the full year to 50%. GAAP operating income hit $575M (41% margin), compared to just $11M (1% margin) a year ago — a 52x increase. GAAP net income was $609M (43% margin) vs $79M (10% margin) in 24Q4. The company achieved this with only modest expense growth: Q4 adjusted expense was $608M, up 34% YoY against 70% revenue growth. Stock-based compensation declined to $196M from $282M in 24Q4, falling to 14% of revenue from 34%. Management guided FY2026 adjusted operating income of $4.13B (57% margin), implying margins hold even as the company scales aggressively. The Rule of 40 expanded from 81 → 83 → 94 → 114 → 127 over five consecutive quarters.
International Commercial Growth Near Zero
International commercial revenue grew just 8% YoY and 12% QoQ to $171M in Q4. Full-year international commercial revenue was $608M, up only 2% from $596M in FY2024. This segment now represents just 12% of total revenue, down from 21% two years ago. Management is openly deprioritizing non-U.S. markets. CEO Karp stated the company 'really doesn't have the bandwidth to do anything that's difficult outside of America' and noted that European allies 'tend to want to buy products from themselves.' While $1.3B of international commercial TCV was booked in Q4 (driven by long-term renewals), the underlying growth trajectory remains anemic and the company is making no visible effort to accelerate it.
Accounts Receivable Growing Faster Than Revenue
Accounts receivable reached $1.04B at year-end, up 81% from $575M a year ago, outpacing the 70% Q4 revenue growth and 56% full-year revenue growth. AR as a percentage of quarterly revenue rose to 74% from 69% a year ago. While accelerating bookings and large enterprise deals naturally create timing gaps between revenue recognition and cash collection, this warrants monitoring. Cash from operations of $777M in Q4 (55% margin) provides some reassurance, but the AR build was a $450M cash use for the full year versus $211M in FY2024 — more than doubling.
AIP and Ontology as Enterprise Operating System
The AIP platform continues to drive the growth engine. Key Q4 developments include: Hivemind framework generating bespoke customer demos from public data alone; AIFD enabling complex SAP ERP migrations (ECC to S/4) in two weeks instead of years; OSDK powering over 1 billion API gateway requests per week from customer-built applications. The company closed 180 deals over $1M, 84 over $5M, and 61 over $10M in Q4 — up from 129, 58, and 32 respectively a year ago. Customer count grew 34% YoY to 954, but revenue per top-20 customer grew 45% to $94M TTM, showing deepening engagement outpacing customer acquisition. Net dollar retention reached 139%, up 1,900bps YoY from 120%.
Defense and Reindustrialization Pipeline Expanding
Palantir's defense technology portfolio saw significant expansion in Q4. Ship OS rolled out across submarine production, with one shipbuilder reducing planning from 160 hours to 10 minutes and a shipyard cutting material review from weeks to under an hour. One customer added a third shift because AI-driven planning made more work 'shovel-ready.' Maven usage hit all-time highs, supporting real-world events across combatant commands, with MAGE enabling autonomous UAV coordination. New Gotham capabilities — KIros for integrated planning, NexSys for dynamic command relationships, and Workbench for automated fires and battle damage assessment — were deployed. Management is launching an American Tech Fellowship for the submarine industrial base. Warp Speed wins span mature weapon systems (20% to 99% root cause analysis coverage) to new designs (40x throughput improvement).
Customer Concentration Deepening
Revenue per top-20 customer reached $94M TTM, up 45% YoY. While customer count grew 34% to 954, the company's revenue growth (70%) significantly outpaced customer growth, meaning the average customer is paying substantially more. U.S. commercial customer count grew 49% to 571, but U.S. commercial revenue grew 137% — nearly 3x the customer growth rate. This deepening concentration creates execution risk if any large customer reduces spend. The $96M healthcare deal and $80M engineering deal closed in Q4 illustrate the large-deal dependency.
Stock-Based Compensation Declining as % of Revenue
SBC fell to $196M in Q4 from $282M in 24Q4, a 30% reduction even as revenue grew 70%. As a percentage of revenue, SBC dropped from 34% to 14%. Full-year SBC was $684M (15% of revenue) vs. $692M (24% of revenue) in FY2024. This improving SBC ratio is a meaningful positive for GAAP earnings quality. The gap between GAAP and adjusted operating income narrowed: GAAP operating margin was 41% vs. adjusted 57%, a 16-point spread, down from 44 points a year ago. Employer payroll taxes on SBC also declined to $27M from $80M in 24Q4.
Other KPIs
Up 56% from $2.87B in FY2024. Revenue acceleration throughout the year — from 39% in Q1 to 70% in Q4 — is rare for a company at this scale. U.S. revenue was $3.32B (75% growth), with international at $1.16B (19% growth). Commercial segment revenue was $2.07B (+60%), government was $2.40B (+53%). Excluding strategic commercial contracts (winding down to immaterial levels), revenue grew 59%.
Up 82% from $1.25B in FY2024. Q4 alone generated $791M (56% margin). The FY2025 conversion from GAAP net income ($1.63B) to adjusted FCF ($2.27B) was healthy, with SBC ($684M) as the primary add-back and AR build ($450M) as the primary offset. Capital expenditures remained minimal at $34M, reflecting the asset-light software model. FY2026 FCF guidance of $3.9–4.1B implies 73-81% growth.
All three booking metrics hit records. TCV of $4.3B was up 138% YoY and 54% QoQ, eclipsing the prior record by $1.5B. On a dollar-weighted duration basis, TCV grew 166% YoY. Total remaining deal value reached $11.2B (+105% YoY, +29% QoQ). RPO surged to $4.2B (+144% YoY, +62% QoQ), boosted by significant long-term international renewals. U.S. commercial RDV of $4.38B (+145% YoY) alone provides 3x the segment's Q4 run rate in contracted value.
Up 252% from $462M in FY2024. Q4 GAAP net income of $609M was bolstered by the operating leverage and lower SBC. GAAP EPS was $0.63 for the year and $0.24 for Q4. Adjusted EPS was $0.75 for the year, applying a 23% normalized tax rate. The company has now delivered eight consecutive quarters of GAAP profitability and guides for GAAP operating income and net income in every quarter of FY2026.
Guidance
Accelerating. Midpoint of $1.534B implies approximately 75% YoY growth (vs. $884M in 25Q1), accelerating from 70% in Q4. Sequential growth of ~9% from $1.407B is consistent with the quarterly ramp pattern. This guidance exceeded the prior quarter's implied trajectory and market expectations.
Accelerating. Midpoint of $7.19B implies 61% YoY growth, a dramatic step-up from initial FY2025 guidance of 31% which was repeatedly raised throughout the year. Given the pattern of guidance raises in FY2025 (initial $3.75B → final $4.40B → actual $4.48B), the FY2026 guide may similarly prove conservative. Implied Q2-Q4 2026 revenue of ~$5.66B requires average quarterly revenue of ~$1.89B, representing continued acceleration.
Accelerating. From $1.465B in FY2025, this implies more than doubling. This segment alone is guided to exceed total company FY2024 revenue ($2.87B). The 115% floor is above the 109% full-year FY2025 growth rate, signaling management's conviction that the U.S. commercial flywheel is still gaining momentum, not plateauing.
Stable. Margin guided at 57%, equal to Q4 2025 and up from 50% for full-year FY2025. This implies $1.87B incremental revenue drives roughly $1.88B incremental adjusted operating income, or near 100% incremental margin on the next dollar of revenue. Combined with the 61% revenue growth guide, this produces a guided Rule of 40 score of 118% for FY2026.
Accelerating. Midpoint of $4.03B implies 77% growth from $2.27B in FY2025 and a 56% FCF margin. The FCF growth exceeding revenue growth (77% vs. 61%) signals improving cash conversion as the business scales. This provides significant capacity for share repurchases and strategic investments while maintaining the $7.2B cash position.