Palantir Technologies reported third-quarter results on Monday, November 2, that showed a company long associated with defense and intelligence work crossing a line it had never crossed before. Revenue for the quarter ended September 30 rose 96 percent year over year to $2.313 billion, up 20 percent from the previous quarter and past the $2 billion mark for the first time. Inside that total, U.S. commercial revenue climbed 148 percent to $984 million, overtaking U.S. government revenue of $953 million for the first time in the company's history.
The U.S. business drove nearly all of the growth. Total U.S. revenue reached $1.937 billion, up 119 percent and accounting for 84 percent of sales. U.S. government revenue still grew 96 percent, while international revenue totaled $376 million. Palantir closed 212 deals worth at least $1 million in the quarter, including 64 worth at least $10 million, and its U.S. commercial customer count rose 29 percent to 686.
Profitability kept pace with the growth. GAAP net income attributable to common stockholders was $1.128 billion, a 49 percent margin, and both GAAP and adjusted earnings came in at $0.44 per diluted share. Adjusted income from operations was $1.427 billion, a 62 percent margin, and adjusted free cash flow reached $1.216 billion, or 53 percent of revenue. The results came in ahead of the consensus figures cited in analyst summaries, which had expected about $2.18 billion in revenue and $0.41 a share in adjusted earnings. Net dollar retention, a measure of how much existing customers expand their spending, rose to 165 percent.
Management credited the surge to adoption of its Artificial Intelligence Platform and to what it calls Sovereign AI, the idea that companies and governments want to fine-tune and post-train models on their own data, on their own infrastructure, rather than send sensitive information to a shared service. The earnings call offered examples of pilots expanding quickly: an industrial materials company turned a pilot worth nearly $3 million into a $29 million annual contract value deal within a quarter. U.S. commercial bookings told a similar story over a longer window, with $1.463 billion closed in the quarter and $6.114 billion over the trailing twelve months, up 62 percent.
Palantir raised its outlook again. For the fourth quarter it expects revenue between $2.649 billion and $2.653 billion. For the full year it now projects revenue of $8.530 billion to $8.534 billion, representing about 91 percent growth, with U.S. commercial revenue above $3.559 billion and adjusted free cash flow of $4.8 billion to $5.0 billion. Total remaining deal value stood at $13.4 billion at the end of the quarter, up 55 percent year over year, with U.S. commercial remaining deal value up 79 percent to $6.517 billion.
Investors, notably, did not cheer. The shares slipped in extended trading after the report and were down about 5 percent in premarket trading on Tuesday, even after the beat and the raised guidance. The figure drawing scrutiny was total contract value, which rose only about 6 percent year over year to $2.918 billion, far more slowly than revenue, although the prior-year quarter had included a then-record level of U.S. commercial bookings. That gap is now the central question around the stock: whether the commercial business that just passed the government business can keep compounding at anything close to this pace.