Palantir Q2 revenue jumps 93% as enterprise AI gap widens vs Salesforce

Palantir Technologies reported Q2 revenue of $1.935 billion, up 93% year over year and beating the $1.81 billion consensus, widening its enterprise AI lead over Salesforce.

"This quarter was otherworldly... the sovereign AI revolution makes us very optimistic about the future," Chief Executive Alex Karp said on the earnings call.

U.S. commercial revenue rose 149% to $764 million, about 39% of total revenue, while U.S. government revenue climbed 90% to $809 million. Adjusted operating income reached $1.194 billion, a 62% margin, and adjusted free cash flow hit $1.22 billion, a 63% margin. The company posted a 155% Rule of 40 score and net dollar retention of 157%, an all-time high.

Palantir closed 220 deals of at least $1 million, including 98 above $5 million and 73 above $10 million, with total deal value of $3.37 billion, up 49% from a year earlier. U.S. commercial remaining deal value rose 124% to $6.24 billion, meaning the company has years of contracted work even if new bookings slow.

Management raised full-year revenue guidance to $8.15 billion, up 82%, and lifted U.S. commercial guidance to $3.424 billion, up 134%. Adjusted operating income guidance rose to $4.89 billion, with adjusted free cash flow guided to $4.5 billion to $4.7 billion. Third-quarter revenue is expected between $2.160 billion and $2.164 billion.

Shares jumped about 30% on Aug. 4 to near $162, erasing billions in short-seller losses, before consolidating around $156. Citi raised its price target to $245 and Mizuho to $215. The stock trades at 107x earnings and roughly 50x forward sales, among the highest multiples in software.

The contrast with Salesforce's enterprise AI push is stark. Palantir's accelerating commercial adoption and raised guidance signal management expects AI demand to keep compounding, while Salesforce faces questions over how quickly its AI-driven growth converts to revenue. Investors will watch Palantir's Q3 earnings call on Nov. 3 for updated segment margins and whether the $154 breakout level holds.

This article is for informational purposes only and does not constitute investment advice.