After a rough week for software stocks, Palantir Technologies Inc. beat expectations with its latest quarterly revenue performance, but the data software company’s stock fell in Monday trading.
Shares of Palantir
PLTR,
fell 12% in midday trading on Monday as analysts and investors saw a number of negatives in the company’s most recent results, including a slowdown in revenue and a decline in sales. decrease in income index compared to a year ago.
The company generated $477.9 million in revenue in the third quarter, up from $392.1 million a year earlier, while analysts expected $474.7 million.
“The continued increase in interest rates and orders for our software products, especially in the United States, is not in spite of but due to times of austerity and tight credit conditions. now,” CEO Alex Karp said in a letter to shareholders.
However, William Blair analyst Kamil Mielczarek noted that Palantir’s 22% growth in the most recent period marked a deceleration from the second and third quarters of the previous year.
U.S. sales rose 31% to $297 million. U.S. commercial revenue was up 53% from a year ago, while U.S. government revenue was ahead by 23%.
Director of business affairs Ryan Taylor told MarketWatch that Palantir has “seen the mission where we are focusing on the government side and then the momentum and scale on the commercial side of the US.”
But the US commercial business also decelerated, William Blair’s Mielczarek noted. It grew 120% in the second quarter.
“Palantir’s commercial revenue growth has been driven by
SPAC invested in Q3 and Q4 of 2021, but that source of growth is gone,” he wrote.
Palantir executives on the company’s pre-earnings call expressed frustration at the timing of major government transactions. This time, Chief Financial Officer David Glazer told MarketWatch that the company’s government revenue, which exceeded $1.02 billion on a 12-month basis later in the third quarter, largely reflected the extension, opening broad and “the things we’re looking forward to,” rather than “some of the work we hope to come.”
Karp added on the earnings call that Palantir has had “a localized and uneven pattern of growth, which no one likes,” but he thinks US government revenue will return to “same as baseline.” traditionally 35% of the baseline for this over 20 years old.”
Executives reiterated their full-year revenue forecast, which ranges from $1.9 trillion to $1.902 billion, “despite a negative currency impact of $6 million since last quarter’s guidance from the company. we.”
For the fourth quarter, executives predict revenue of $503 million to $505 million after “factoring in negative monetary impact of $5 million since our last quarter guidance.” Without those monetary impacts, the company would be able to predict revenue between $508 million and $510 million, it said in the earnings announcement.
FactSet consensus is $507 million in fourth-quarter revenue.
“This implies that revenue growth will continue to decelerate to 17% in the fourth quarter,” Mielczarek wrote.
RBC Capital Markets analyst Rishi Jaluria added that “Palantir’s revenue guidance is disappointing” as the fourth quarter guidance fell below consensus and the full-year forecast remained in place, although he acknowledges that the company is seeing an impact from foreign exchange.
The company reported a net loss of $123.9 million, or 6 cents a share, while Palantir recorded a net loss of $102.1 million, or 5 cents a share, for the first quarter. before. Palantir posted adjusted earnings per share of 1 cent, while analysts expected 2 cents.
The company also generated adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $87.2 million, down from $119.2 million a year earlier but prior to the consensus of the company. FactSet, is $60.2 million.
Mielczarek writes: “Palantir is experiencing profit pressure as it pursues complex Defense Department programs and as it increases its reliance on partners.
Palantir executives now forecast adjusted earnings of $384 million to $386 million, compared with their previous projection of $341 million to $343 million.
According to Glazer, from the fourth quarter and next year, the company will “manage with discipline”.
Executives cite Palantir’s financial positioning and business focus as strengths in the current landscape. Glazer said Palantir has $2.4 billion in debt-free cash and eight-quarters of positive free cash flow. Additionally, “some of the biggest catalysts for business are during really tough times.”
While executives “can’t talk about it too much,” Palantir “is involved in the events going on in Europe,” he noted.
