5 Nov 2025
Palantir reported robust Q3 earnings, significantly exceeding revenue and EPS expectations, driven by a 134% dollar-net retention rate and strong growth in both US commercial sales and government contracts. Despite its stock reaching an all-time high with a high price-to-sales ratio, leading some analysts to suggest overvaluation, investors remain optimistic, anticipating continued substantial growth, even in the absence of Q4 2026 financial guidance.
Palantir's recent earnings report indicates a strong financial position, with its dollar-net retention rate growing by 134% year-over-year. Revenue exceeded predictions by $90 million, and earnings per share (EPS) were 4 cents higher than market expectations.
The company provided financial guidance for the fiscal year 2025, forecasting revenue of $4.14 billion, which represents a 53% annual growth. The adjusted profit margin is projected at 49%, 3% higher than previous estimates; however, no guidance was given for FY2026, which disappointed some investors.
Palantir has consistently operated beyond expectations, showing strong revenue growth, high customer retention, and increased profitability. This performance has prompted the company to significantly raise its financial outlook for the entire upcoming year.
Palantir's stock initially rose by 7% pre-earnings but then experienced a 3% drop in post-market trading. Year-to-date, the stock has grown by over 150%, reaching an all-time high of $20.7. Its price-to-sales (P/S) ratio stands at 8.5, which is the highest among S&P 500 companies.
Analysts suggest the stock might be overvalued due to its unprecedented P/S ratio. Despite this, investors continue to purchase the stock, anticipating significant future growth, even in the absence of financial projections for 2026.
The reported sales reached approximately $1.3 billion, surpassing the market's average prediction of $1.1 billion. Palantir has now reported revenue exceeding analyst estimates for 21 consecutive quarters.
The company's growth has been particularly strong in the United States market, which accounts for the majority of its revenue. However, international growth has been weaker, especially in Europe, where some operations face economic recession.
In the third quarter, Palantir's sales to US commercial clients increased by 121% year-over-year, reaching $397 million. Concurrently, US government contracts grew by 52%, totaling $486 million.
Palantir has been a major beneficiary of the artificial intelligence boom, supplying AI-based software to governments and corporations. It stands as a key technology provider for the US and its allies.
The company gathers and organizes data from various sources, utilizing AI for effective categorization to enable faster and more precise decision-making in corporate settings. This technology fosters cost savings and can reduce the time from threat identification to neutralization in critical scenarios like warfare.
Palantir shares (ticker: PLTR) were initially introduced to financial club clients around $90 in March 2024, now trading around $20.7, reflecting its substantial growth.
Beyond US defense projects, Palantir engages in extensive collaborations with US allies, with recent contracts including Poland for cooperation in cybersecurity and AI.
Palantir consistently outperforms expectations, demonstrating strong revenue growth, high customer retention, and increased profitability, leading to a significant increase in its full-year financial outlook.
| Metric | Value | Notes |
|---|---|---|
| Net Dollar Retention Growth (YoY) | 134% | Indicates strong customer retention and expansion. |
| Q3 Revenue Outperformance | $90 Million | Amount by which revenue exceeded analyst predictions. |
| Q3 EPS Outperformance | 4 Cents | Amount by which EPS exceeded market expectations. |
| FY2025 Revenue Forecast | $4.14 Billion | Represents 53% annual growth. |
| Adjusted Profit Margin (FY2025) | 49% | 3% higher than previous estimates. |
| Year-to-Date Stock Growth | >150% | Significant share price appreciation. |
| All-time High Stock Price | $20.7 | Reached recently. |
| Price-to-Sales (P/S) Ratio | 8.5 | Highest among S&P 500 companies, suggesting potential overvaluation. |
| US Commercial Sales (Q3 YoY Growth) | +121% ($397 Million) | Strong growth in the domestic commercial sector. |
| US Government Contracts (Q3 YoY Growth) | +52% ($486 Million) | Significant increase in government sector engagement. |
