Palantir Q4 2025 Earnings Summary: AIP Demand Drives Breakout Growth
Palantir Proves It Can Scale Hyper-Growth and Elite Profitability
Palantir delivered a blowout Q4, posting its fastest growth rate as a public company while also expanding profitability to levels that are rare in enterprise software. Revenue surged 70% year-over-year to $1.41 billion, beating expectations, and the company paired that growth with an adjusted operating margin of ~57% and adjusted free cash flow margins in the mid-50s.
The headline theme was simple: the U.S. business is accelerating hard. U.S. revenue reached $1.08 billion (+93% y/y)and now represents ~77% of total revenue, as AIP (Artificial Intelligence Platform) continues to shorten the time from “pilot” to “production” and drive unusually fast customer expansion. Management framed the moment as a market separation between AI “haves” (companies putting AI into production at scale) and AI “have-nots” (still stuck testing), with Palantir positioning itself as the platform enabling the former.
Key Financial Highlights
Revenue: $1.41B (+70% y/y; vs. ~$1.34B consensus)
Adjusted Operating Income: $798M (vs. ~$701M consensus)
Adjusted Operating Margin: ~56.8% (well above consensus)
Adjusted Gross Margin: 86%
Adjusted Free Cash Flow: $791M (vs. ~$594M consensus)
Rule of 40: 127% (new high)
Customer Count: 954 (+34% y/y; +5% q/q)
Net Dollar Retention: 139% (up 500 bps q/q)
Total Contract Value (TCV): $4.3B (+138% y/y)
Remaining Deal Value (RDV): $11.2B (+105% y/y; +29% q/q)
Cash / equivalents / T-bills: $7.2B
U.S. Commercial: Growth Is Accelerating, Not Slowing
U.S. commercial remains the engine of the story. The segment grew 137% year-over-year and 28% sequentially, with management emphasizing that this is compounding acceleration rather than a one-off spike. Palantir highlighted a clear pattern:
Existing customers are expanding rapidly as new use cases scale faster than legacy software rollouts.
New customers are starting bigger, with multiple examples of large deals signed quickly after “boot camps” and demos.
AIP is the catalyst here, collapsing implementation timelines and helping customers move from experimentation to enterprise-wide deployment. The commentary around “ontology” and “closed-loop execution” (Hivemind + AIP + Foundry) reinforced Palantir’s positioning as an operating layer for AI in production, not a tools vendor.
U.S. Government: Mission-Critical Demand Keeps Building
The U.S. government business also remained strong, up 66% year-over-year and 17% sequentially, supported by expanding usage across defense and civil agencies. Management cited large and strategically important programs, including a U.S. Navy shipbuilding supply chain modernization award (up to $448M), as evidence that the government is increasingly prioritizing software that works in production under budget and geopolitical pressure.
The company also emphasized rising usage of Maven and broader adoption across combatant commands, with continued rollout planned across government networks.
International: Stable, But the U.S. Is the Center of Gravity
International commercial growth was modest, while international government performed better, supported in part by large renewals. Management’s tone suggested that the U.S. is where the AI production wave is breaking first, with a sharper adoption curve than many overseas markets. The numbers show it: U.S. revenue now dominates the mix, and guidance implies U.S. commercial is set to expand further as a share of the business.
Bookings and Pipeline: The Backlog Picture Is Explosive
The quarter featured record TCV of $4.3B, and Palantir ended Q4 with a sharply higher backlog profile:
RDV up 105% y/y, reflecting broader demand and larger deal sizes
RPO up 144% y/y, supported by long-term renewals in international markets
NRR at 139%, showing strong expansion behavior even before fully capturing the velocity of newer customer cohorts
This combination (bookings + retention + customer growth) is a major reason investors reacted strongly: it signals a business that may still be early in a scaling cycle rather than late.
Guidance: Far Above Consensus and Implies Sustained Hyper-Growth
Management issued guidance that came in meaningfully above expectations:
Q1 2026
Revenue: $1.532–$1.536B (well above consensus)
Adj. Operating Income: $870–$874M
FY 2026
Revenue: $7.182–$7.198B (implies ~61% growth y/y at midpoint)
U.S. Commercial Revenue: > $3.144B (implies 115%+ growth)
Adj. Operating Income: $4.126–$4.142B
Adj. Free Cash Flow: $3.925–$4.125B
Management reiterated expectations for GAAP operating income and net income each quarter.
Here’s Our Take
Palantir’s Q4 was the kind of quarter that forces a re-rating discussion: 70% growth at $1.4B of revenue, a 57% adjusted operating margin, record bookings, and guidance that resets the baseline for 2026. The core takeaway is that Palantir is no longer just “benefiting from AI hype” — it is showing repeatable production adoption that drives both durable expansion and exceptional profitability.
That said, the flip side of a quarter like this is that expectations and valuation risk rise quickly. When a stock is priced for continued perfection, any sign of slowing — especially in U.S. commercial growth or booking conversion — can matter.
But based on this earnings report, the company looks increasingly like a platform catching a rare wave: enterprise AI moving from demos to production, with Palantir positioned as an execution layer that can scale across industries and government. If that adoption curve holds, the company’s “growth + profitability” profile may remain unusually strong for longer than many investors expect.
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