Data-mining and analytics company Palantir (NYSE:PLTR) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 48% year on year to $1.00 billion. On top of that, next quarter’s revenue guidance ($1.09 billion at the midpoint) was surprisingly good and 10.4% above what analysts were expecting. Its non-GAAP profit of $0.16 per share was 15.6% above analysts’ consensus estimates.
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Palantir (PLTR) Q2 CY2025 Highlights:
- Revenue: $1.00 billion vs analyst estimates of $939.5 million (48% year-on-year growth, 6.8% beat)
- Adjusted EPS: $0.16 vs analyst estimates of $0.14 (15.6% beat)
- Adjusted Operating Income: $464.4 million vs analyst estimates of $404.2 million (46.3% margin, 14.9% beat)
- The company lifted its revenue guidance for the full year to $4.15 billion at the midpoint from $3.90 billion, a 6.4% increase
- Operating Margin: 26.8%, up from 15.5% in the same quarter last year
- Billings: $1.07 billion at quarter end, up 49.8% year on year
- Market Capitalization: $443.6 billion
StockStory’s Take
Palantir delivered results in Q2 that surpassed Wall Street’s expectations, with significant momentum in its U.S. commercial and government businesses driving the positive market reaction. Management highlighted that the company’s software platforms, particularly those integrating artificial intelligence (AI), have seen rapid adoption by both existing and new customers. CEO Alex Karp emphasized the “anomalous” growth in U.S. commercial revenue, pointing to the company’s ability to deliver measurable operational improvements for clients in sectors ranging from healthcare to manufacturing.
Looking forward, Palantir’s raised full-year outlook is anchored in continued demand for its AI-powered platforms and expanding government contracts. Management believes that its investments in ontology and infrastructure, as well as ongoing product developments like the AIP platform, will further differentiate Palantir’s offerings. CTO Shyam Sankar noted, "Our foundational investments in ontology and infrastructure have positioned us to uniquely deliver on the AI demand, both now and in the world ahead," while cautioning that ongoing hiring and technical investments remain a focus to sustain growth.
Key Insights from Management’s Remarks
Management attributed Q2’s outperformance to strong AI-driven adoption, expansion in U.S. commercial verticals, and several major government contract wins.
- U.S. commercial surge: Palantir’s U.S. commercial business grew 93% year-over-year, with management citing accelerated adoption of the AIP (Artificial Intelligence Platform) as a primary driver. Customers are increasingly using AIP not just for analytics but as a core software infrastructure, leading to deeper and faster expansion within organizations.
- Government contract momentum: The company secured significant new deals, including a 10-year enterprise agreement with the U.S. Army valued up to $10 billion, and expanded its involvement with the U.S. Space Force and the Maven Smart System. These contracts consolidate multiple legacy deals and are expected to provide long-term revenue visibility.
- AI for frontline workers: Management emphasized that Palantir’s AI tools are delivering tangible productivity gains for a broad range of users, including nurses, factory workers, and administrators, not just data scientists. Real-world examples included reducing fraud detection for Fannie Mae from months to seconds and enabling hospitals to operate more efficiently.
- Customer-driven sales model: CEO Alex Karp attributed much of the company’s growth to a unique, customer-led sales approach, relying on word-of-mouth and results rather than a large direct sales force. This approach has allowed Palantir to scale rapidly while maintaining high credibility with new clients.
- Talent and product moat: Management underscored retention of top technical talent as a strength, explaining that Palantir’s environment and opportunities to work on impactful problems are key differentiators. Ongoing investments in ontology, AIP, and AI-driven development environments are seen as critical to maintaining this advantage.
Drivers of Future Performance
Palantir’s outlook is shaped by continued AI-driven demand, scaling of U.S. commercial and government contracts, and ongoing investment in technical talent and product development.
- AI platform expansion: Management expects accelerating demand for Palantir’s AIP and ontology-based solutions to drive future commercial and government revenue. The company believes its platforms enable customers to realize value from AI more quickly than competitors, and cites increasing customer expansions as evidence.
- Scaling government partnerships: The long-term nature and scale of recent government contracts, such as the U.S. Army agreement, are expected to underpin revenue visibility and support growth. Management indicated these contracts consolidate prior agreements and position Palantir as a core technology provider in U.S. defense and intelligence.
- Sustained technical investment: Palantir plans to continue investing in hiring elite technical talent and advancing product features, particularly in AI and automation. While this will increase operating expenses in the near term, management believes it is necessary to sustain innovation and maintain leadership in the evolving enterprise AI landscape.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of adoption and scaling of Palantir’s AI platforms, especially in commercial verticals; (2) execution and revenue recognition from large-scale government contracts such as the U.S. Army agreement; and (3) the impact of ongoing technical investments and hiring on both product development and operating margins. Continued evidence of customer expansion and new large deal wins will be critical markers of execution.
Palantir currently trades at $187.28, up from $160.77 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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