Palantir's earnings exceed expectations with strong growth, increased guidance, and successful AI Boot Camps

From Morningstar: 2024-08-06 06:13:00

1. Palantir’s fair value estimate has been raised to $19 after strong second-quarter results and an increase in guidance for fiscal 2024. The company’s economic moat is narrow. The stock is currently trading at an enterprise value/sales multiple of around 20 times, making it the most expensive software company in Morningstar’s coverage.

2. Palantir saw sales increase by 27% year-on-year in the second quarter, with US commercial sales up 55% and government sales up 23%. The company’s AI Boot Camps have been successful in showcasing its capabilities to customers, leading to 96 deals worth over $1 million in the quarter.

3. Palantir’s net retention rate increased to 114% in the second quarter, showing its ability to upsell existing customers. The company’s boot-camp-led sales model has helped improve profitability, with adjusted operating margins at 37%. The firm is also optimistic about long-term margin expansion as it scales up.

4. In a hypothetical bull case scenario, Palantir could achieve a $26 fair value estimate with accelerated commercial sales and higher margin expansion. The company raised its guidance for fiscal 2024 to $2.75 billion in sales and $970 million in adjusted operating income. Strong demand in the US commercial market is expected to drive growth.



Read more at Morningstar: Palantir Earnings: AI Momentum Lifts Sales and Guidance