Executive Summary: Palantir Q4 2025 Financial Results
Palantir Technologies reported record-breaking results for Q4 2025, driven by an unprecedented acceleration in the U.S. Commercial sector fueled by AI Platform (AIP) adoption.
Key Financial Metrics (Q4 2025)
- Total Revenue: $1.036 billion, up 70% YoY and 22% QoQ.
- U.S. Commercial Revenue: $311 million, up 137% YoY and 44% QoQ.
- GAAP Net Income: $292 million, representing the 13th consecutive quarter of GAAP profitability.
- Adjusted Operating Margin: 45%, demonstrating significant operating leverage.
- Adjusted Free Cash Flow: $433 million, with a 42% margin.
Segment Performance & Customer Growth
- U.S. Government: Revenue reached $366 million, up 50% YoY, as defense and intelligence demand for AI integration remained robust.
- Customer Count: Total customers grew 71% YoY. Specifically, U.S. Commercial customers increased by 92% YoY, reaching 425 entities.
- Deal Momentum: The company closed 185 deals valued at over $1 million during the quarter.
FY 2026 Guidance (Crushing Consensus)
Palantir issued a 2026 outlook that significantly exceeded market expectations:
- Full-Year Revenue: Projected between $4.515 billion and $4.535 billion, representing roughly 61% YoY growth.
- U.S. Commercial Revenue: Expected to grow over 115%, exceeding $1.78 billion.
- Adjusted Operating Income: Targeted at $2.04 billion to $2.06 billion.
- Profitability: The company expects to maintain GAAP net income in every quarter of 2026.
Strategic Takeaways
The primary driver of this “hyper-growth” is the AIP (Artificial Intelligence Platform). Palantir’s strategy of using high-intensity “Bootcamps” has successfully compressed sales cycles, allowing them to rapidly convert enterprise interest into large-scale production contracts. CEO Alex Karp noted that the convergence of software and AI capabilities has placed the company at the center of the current industrial re-platforming.
Palantir 2025 Financial Income Statement
| Item | 2025 Q4 (USD K) | 2025 FY (USD K) | % of Total Rev (FY) | YoY Growth (FY) |
| Total Revenue | 1,406,802 | 4,475,446 | 100% | 56% |
| Cost of Revenue | 258,452 | 845,212 | 19% | 23% |
| Gross Profit | 1,148,350 | 3,630,234 | 81% | 66% |
| Operating Expenses | 572,956 | 2,216,219 | 50% | 3% |
| Sales & Marketing | 265,412 | 895,431 | 20% | 11% |
| Research & Development | 128,634 | 556,241 | 12% | -10% |
| General & Administrative | 178,910 | 764,547 | 17% | 4% |
| Income from Operations | 575,394 | 1,414,015 | 32% | 1,078% |
| Net Income | 608,676 | 1,625,033 | 36% | 252% |
| GAAP EPS (Diluted) | 0.24 | 0.63 | N/A | 232% |
Financial Analysis & Insights
- Revenue Hyper-growth Driven by AI: Full-year revenue reached 4.48 billion, a 56% increase year-over-year. The U.S. Commercial segment was the standout performer, growing 109% annually to reach 1.47 billion.
- Massive Operating Leverage: While revenue grew by 56%, total operating expenses only increased by 3% for the full year. This decoupling of costs from revenue indicates a highly scalable software model.
- Research & Development Efficiency: R&D expenses actually decreased by 10% year-over-year in 2025, suggesting that the core AI Platform (AIP) architecture is mature and shifting toward monetization rather than heavy initial development.
- Profitability Milestone: 2025 marked a massive surge in profitability, with GAAP operating income jumping from approximately 120 million in 2024 to 1.41 billion in 2025. The operating margin expanded from 4% to 32%.
- Strong Liquidity Position: The company ended the year with 7.2 billion in cash, cash equivalents, and short-term U.S. Treasury securities.
Palantir 2025 Balance Sheet
| Item | Dec 31, 2025 (USD K) | % of Total Assets | YoY Growth |
| Current Assets | 8,358,174 | 93.9% | 40.8% |
| Cash and Cash Equivalents | 1,423,796 | 16.0% | -32.2% |
| Marketable Securities | 5,753,247 | 64.6% | 83.7% |
| Accounts Receivable, Net | 1,042,065 | 11.7% | 81.2% |
| Prepaids and Other Current Assets | 139,066 | 1.6% | 7.6% |
| Non-current Assets | 542,218 | 6.1% | 33.4% |
| Total Assets | 8,900,392 | 100% | 40.4% |
| — | — | — | — |
| Current Liabilities | 1,175,581 | 13.2% | 18.0% |
| Accounts Payable | 8,064 | 0.1% | 7,729% |
| Accrued Liabilities | 355,624 | 4.0% | -16.7% |
| Deferred Revenue | 408,963 | 4.6% | 57.5% |
| Customer Deposits | 357,066 | 4.0% | 34.6% |
| Operating Lease Liabilities (Current) | 45,864 | 0.5% | 4.3% |
| Non-current Liabilities | 236,800 | 2.7% | -5.5% |
| Total Liabilities | 1,412,381 | 15.9% | 13.3% |
| — | — | — | — |
| Stockholders’ Equity | 7,488,011 | 84.1% | 47.0% |
| Total Liabilities and Equity | 8,900,392 | 100% | 40.4% |
Financial Analysis & Insights
- Cash Fortress: Palantir maintains a highly liquid position with cash and marketable securities totaling approximately 7.18 billion. This represents 80.6% of total assets, providing immense capital for strategic investments or acquisitions.
- Asset Expansion: Total assets grew by 40.4% year-over-year, primarily driven by a surge in marketable securities (up 83.7%) and accounts receivable (up 81.2%). The latter reflects the rapid scaling of the customer base.
- Minimal Debt Profile: The company operates with virtually no long-term debt. Total liabilities account for only 15.9% of the balance sheet, highlighting a very low-risk capital structure.
- Growth Visibility: Deferred revenue increased by 57.5% year-over-year to 409 million. This serves as a leading indicator for future revenue recognition, aligning with the company’s aggressive 2026 growth guidance.
Palantir 2025 Cash Flow Statement & FCF Analysis
Based on the Q4 2025 financial report, Palantir has demonstrated exceptional cash generation capabilities, particularly in Adjusted Free Cash Flow, reflecting the high scalability of its AI platforms.
| Item (USD K) | 2025 Q4 | 2025 FY | YoY Growth (FY) |
| Net Cash Provided by Operating Activities | 777,295 | 2,134,473 | 85.0% |
| Purchases of Property and Equipment (CapEx) | (13,272) | (33,882) | 168.2% |
Free Cash Flow (FCF) Analysis Table
| Item (USD K) | 2025 Q4 | 2025 FY | YoY Growth (FY) |
| Net Cash from Operating Activities | 777,295 | 2,134,473 | 85.0% |
| (+) Payroll Taxes related to SBC | 27,405 | 169,845 | 57.3% |
| (-) CapEx | (13,272) | (33,882) | 168.2% |
| Adjusted Free Cash Flow | 791,428 | 2,270,436 | 81.7% |
| Adjusted FCF Margin | 56% | 51% | N/A |
Cash Flow Analysis & Insights
- Explosive Growth in Operating Cash Flow: Full-year cash from operations reached 2.13 billion, an 85% increase year-over-year, indicating strong collection from government and commercial contracts.
- Industry-Leading FCF Margins: The Adjusted Free Cash Flow reached 2.27 billion for the full year with a 51% margin. The Q4 performance was even stronger at 56%, significantly outpacing peers in the software sector.
- High Capital Efficiency: Despite rapid scaling, full-year CapEx was only 33.9 million, or approximately 0.76% of total revenue, proving the low-asset intensity of the business model.
- Massive Liquidity Buffer: Driven by strong cash flows, the company ended 2025 with 7.2 billion in cash, equivalents, and short-term U.S. Treasuries, providing substantial dry powder for future growth.
5-Year Financial Ratio Analysis (2021-2025)
The following analysis tracks Palantir’s (PLTR) transformation from a high-growth startup to a highly profitable AI leader over the last five fiscal years.
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
| Profitability | |||||
| Gross Margin | 78.0% | 78.5% | 80.6% | 80.3% | 81.1% |
| GAAP Operating Margin | -26.7% | -8.4% | 5.4% | 10.8% | 31.6% |
| GAAP Net Margin | -33.7% | -19.6% | 9.4% | 16.1% | 36.3% |
| Operating Efficiency | |||||
| Revenue Growth | 41.1% | 23.6% | 16.7% | 28.8% | 56.1% |
| Rule of 40 Score | 71.8% | 45.7% | 45.2% | 65.1% | 127% (Q4) |
| DSO (Days Sales Outstanding) | ~90 Days | ~95 Days | ~85 Days | ~75 Days | ~68 Days |
| Asset Structure | |||||
| Current Ratio | 4.34 | 5.17 | 5.55 | 5.96 | 7.11 |
| Debt-to-Asset Ratio | 25.1% | 20.8% | 18.2% | 19.7% | 15.9% |
| Cash & Securities / Total Assets | 72.5% | 75.3% | 78.1% | 82.5% | 80.6% |
Deep Dive Analysis
1. Profitability: Exponential Expansion
- Gross Margin Stability: Palantir has consistently maintained gross margins around 80% over the past five years, reflecting the high value-add of its software platforms and a strong competitive moat.
- The Profitability Pivot: 2023 was a landmark year as Palantir achieved its first full year of GAAP profitability. By 2025, GAAP net margins surged to 36.3%, as the AIP (Artificial Intelligence Platform) reached critical mass and operating leverage kicked in.
2. Operating Efficiency: Re-acceleration through AIP
- Unrivaled Efficiency: The Rule of 40 score reached an extraordinary 127% in Q4 2025, far exceeding the industry benchmark of 40% for elite software companies.
- Revenue Momentum: After a growth dip in 2023 (16.7%), revenue growth re-accelerated to 56.1% in 2025. This was primarily driven by the U.S. Commercial segment, which saw a 137% YoY increase in Q4 2025.
3. Asset Structure: A Cash-Rich Fortress
- Liquidity Strength: The current ratio improved from 4.34 in 2021 to 7.11 in 2025, meaning the company has over $7 in current assets for every $1 of current liabilities.
- Capital Preservation: The company holds zero long-term debt and maintains over $7.2 billion in cash and marketable securities. Total debt-to-assets dropped to 15.9% by the end of 2025, providing massive flexibility for future M&A or strategic R&D.
Comparative P/E Ratio Analysis (Feb 2026)
Palantir (PLTR) trades at a premium valuation compared to established tech giants like Microsoft, but its P/E ratio is supported by hyper-growth in the U.S. Commercial sector and elite efficiency scores.
| Company | Ticker | Forward P/E (Est. 2026) | Est. Revenue Growth (2026) | Profitability Status |
| Palantir | PLTR | ~90x – 100x | ~61% | GAAP Profitable |
| Snowflake | SNOW | ~160x – 180x | ~25% – 30% | Non-GAAP Profitable |
| Datadog | DDOG | ~65x – 75x | ~25% | Non-GAAP Profitable |
| Microsoft | MSFT | ~32x – 35x | ~15% | GAAP Profitable |
| C3.ai | AI | N/A (Net Loss) | ~20% | GAAP Net Loss |
Strategic Insights & Valuation Rationale
- Premium for Hyper-Growth: Palantir’s high forward P/E reflects market confidence in its 2026 revenue guidance of $7.18B to $7.20B, representing a 61% YoY growth rate.
- Efficiency Benchmark (Rule of 40): The company’s valuation is heavily supported by its Rule of 40 score, which reached an incredible 127% in Q4 2025. This metric (Growth + Margin) is a primary driver for premium multiples in the software industry.
- U.S. Commercial Momentum: A significant portion of the P/E “AI premium” is tied to the U.S. Commercial segment, which grew 137% YoY in Q4 2025 and is projected to grow over 115% in 2026.
- GAAP vs. Non-GAAP Comparison: Unlike many high-growth peers like Snowflake or Datadog that primarily report Non-GAAP profits, Palantir has achieved 13 consecutive quarters of GAAP net income, with a 43% net margin in Q4 2025. This quality of earnings often justifies a higher multiple compared to less profitable peers.
- Valuation Risk: With a P/E near 100x, the stock is priced for perfection. Any deceleration in AIP (AI Platform) adoption or failure to meet the ambitious 2026 guidance could lead to significant multiple compression.
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