Palantir Technologies Inc

Previous wording

We have built four principal software platforms, Gotham, Foundry, Apollo, and our Artificial Intelligence Platform (“AIP”). Gotham and Foundry enable institutions to transform massive amounts of information into an integrated data asset that reflects their operations, and AIP leverages the power of our existing machine learning technologies alongside large language models (“LLMs”) directly within Gotham and/or Foundry to help connect AI to enterprise data. For over a decade, Gotham has surfaced insights for global defense agencies, the intelligence community, disaster relief organizations and beyond. Foundry is becoming a central operating system not only for individual institutions but also for entire industries. Apollo, which we began offering as a commercial solution in 2021, is a cloud-agnostic, single control layer that coordinates ongoing delivery of new features, security updates, and platform configurations, helping to ensure the continuous operation of critical systems. Apollo allows our customers to run their software in virtually any environment.

Current wording

We have built four principal software platforms, Gotham, Foundry, Apollo, and our Artificial Intelligence Platform (“AIP”). Gotham and Foundry enable institutions to transform massive amounts of information into an integrated data asset that reflects their operations, and AIP leverages the power of our existing machine learning technologies alongside generative AI models, including large language models (“LLMs”), directly within Gotham and/or Foundry to help operationalize AI on enterprise data. For over a decade, Gotham has surfaced insights for global defense agencies, the intelligence community, disaster relief organizations and beyond. Foundry is becoming a central operating system not only for individual institutions but also for entire industries. Apollo, which we began offering as a commercial solution in 2021, is a cloud-agnostic, single control layer that coordinates ongoing delivery of new features, security updates, and platform configurations, helping to ensure the continuous operation of critical systems. Apollo allows our customers to run their software in virtually any environment.

Previous wording

In 2023, we began deploying our newest offering, AIP, which is designed for customers across the commercial and government sectors, enabling them to derive value from recent breakthroughs in artificial intelligence via the combination of our existing software platforms with LLMs. We believe AIP uniquely allows users to connect LLMs and other AI with their data and operations to facilitate decision-making within the legal, ethical, and security constraints that they require.

Current wording

In 2023, we began deploying our newest offering, AIP, which is designed for customers across the commercial and government sectors, enabling them to derive value from recent breakthroughs in artificial intelligence via the combination of our existing software platforms with generative AI models, including LLMs. We believe AIP uniquely allows users to connect LLMs and other AI with their data and operations to facilitate decision-making within the legal, ethical, and security constraints that they require.

Previous wording

For the three months ended March 31, 2024, we generated $634.3 million in revenue, reflecting a 21% growth rate from the three months ended March 31, 2023, when we generated $525.2 million in revenue.

Current wording

For the three months ended June 30, 2024, we generated $678.1 million in revenue, reflecting a 27% growth rate from the three months ended June 30, 2023 when we generated $533.3 million in revenue. For the six months ended June 30, 2024, we generated $1.3 billion in revenue, reflecting a 24% growth rate from the six months ended June 30, 2023 when we generated $1.1 billion in revenue.

Previous wording

In the three months ended March 31, 2024, we generated income from operations of $80.9 million, or adjusted income from operations of $226.5 million when excluding stock-based compensation and related employer payroll taxes. In the three months ended March 31, 2023, we generated income from operations of $4.1 million, or adjusted income from operations of $125.1 million when excluding stock-based compensation and related employer payroll taxes.

Current wording

In the three months ended June 30, 2024, we generated income from operations of $105.3 million, or adjusted income from operations of $253.6 million when excluding stock-based compensation and related employer payroll taxes. In the three months ended June 30, 2023, we generated income from operations of $10.1 million, or adjusted income from operations of $135.0 million when excluding stock-based compensation and related employer payroll taxes. In the six months ended June 30, 2024, we generated income from operations of $186.2 million, or adjusted income from operations of $480.0 million when excluding stock-based compensation and related employer payroll taxes. In the six months ended June 30, 2023, we generated income from operations of $14.2 million, or adjusted income from operations of $260.1 million when excluding stock-based compensation and related employer payroll taxes.

Previous wording

In the three months ended March 31, 2024, our gross profit was $518.1 million, reflecting a gross margin of 82%, or 83% when excluding stock-based compensation. In the three months ended March 31, 2023, our gross profit was $417.5 million, reflecting a gross margin of 80%, or 81% when excluding stock-based compensation.

Current wording

In the three months ended June 30, 2024, our gross profit was $549.6 million, reflecting a gross margin of 81%, or 83% when excluding stock-based compensation. In the three months ended June 30, 2023, our gross profit was $426.4 million, reflecting a gross margin of 80%, or 81% when excluding stock-based compensation. In the six months ended June 30, 2024, our gross profit was $1.1 billion, reflecting a gross margin of 81%, or 83% when excluding stock-based compensation. In the six months ended June 30, 2023, our gross profit was $844.0 million, reflecting a gross margin of 80%, or 81% when excluding stock-based compensation.

Previous wording

We define a customer as an organization from which we have recognized revenue during the trailing twelve-month period. During the period ended March 31, 2024, we had 554 customers, including companies in various commercial sectors and government agencies around the world. During the period ended March 31, 2023, we had 391 customers.

Current wording

We define a customer as an organization from which we have recognized revenue during the trailing twelve-month period. During the period ended June 30, 2024, we had 593 customers, including companies in various commercial sectors and government agencies around the world. During the period ended June 30, 2023, we had 421 customers.

Previous wording

We have built lasting and significant customer relationships and partnerships with some of the world’s leading government institutions and companies. Our average revenue for the top twenty customers during the trailing twelve months ended March 31, 2024 was $55.5 million, which grew 9% from an average of $50.9 million in revenue from the top twenty customers during the trailing twelve months ended March 31, 2023, demonstrating our expanding relationships with existing customers.

Current wording

We have built lasting and significant customer relationships and partnerships with some of the world’s leading government institutions and companies. Our average revenue for the top twenty customers during the trailing twelve months ended June 30, 2024 was $57.3 million, which grew 9% from an average of $52.6 million in revenue from the top twenty customers during the trailing twelve months ended June 30, 2023, demonstrating our expanding relationships with existing customers.

Previous wording

Organizations in the commercial and government sectors face similar challenges when it comes to managing data, and we intend to expand our reach in both markets moving forward. Our decisions about which customer relationships require further investment may change over time, based on our assessment of the potential long-term value that our software can generate for them. We conduct pilots and bootcamps with customers, generally at our own expense and without a guarantee of future returns, in order to access a unique set of opportunities that others may pass over for lack of resources and shorter investment horizons. We manage customers at the account level, not by industry or sector, so that we can optimize on the specific growth opportunities for each customer. In the three months ended March 31, 2024, 53% of our revenue came from government customers and 47% came from commercial customers.

Current wording

Organizations in the commercial and government sectors face similar challenges when it comes to managing data, and we intend to expand our reach in both markets moving forward. Our decisions about which customer relationships require further investment may change over time, based on our assessment of the potential long-term value that our software can generate for them. We conduct pilots and bootcamps with customers, generally at our own expense and without a guarantee of future returns, in order to access a unique set of opportunities that others may pass over for lack of resources and shorter investment horizons. We manage customers at the account level, not by industry or sector, so that we can optimize on the specific growth opportunities for each customer. In the six months ended June 30, 2024, 54% of our revenue came from government customers and 46% came from commercial customers.

Previous wording

Our U.S. customers have been a meaningful source of revenue growth for our business. In the three months ended March 31, 2024, we generated 64% of our revenue from customers in the United States and the remaining 36% from non-U.S. customers. Revenue from our U.S. customers during the trailing twelve months ended March 31, 2024 was $1.4 billion, which grew 18% from the prior twelve-month period. We expect that U.S. customers will continue to be a source of significant revenue growth for us.

Current wording

Our U.S. customers have been a meaningful source of revenue growth for our business. In the six months ended June 30, 2024, we generated 64% of our revenue from customers in the United States and the remaining 36% from non-U.S. customers. Revenue from our U.S. customers during the trailing twelve months ended June 30, 2024 was $1.6 billion, which grew 23% from the prior twelve-month period. We expect that U.S. customers will continue to be a source of significant revenue growth for us.

Previous wording

Our contracts with customers and vendors are primarily denominated in U.S. dollars. However, the general strengthening of the U.S. dollar relative to other major foreign currencies (primarily the Euro and British pound sterling (“GBP”)) has had, and could in the future have, an unfavorable impact on our revenues and expenses from certain non-U.S. customers or vendors whose contracts are denominated in currencies other than U.S. dollars. Additionally, certain of our U.S. and non-U.S. subsidiaries may hold monetary assets and liabilities in currencies other than their functional currency (primarily the Japanese Yen (“JPY”), Euro, and GBP), which could subject our results of operations and cash flows to adverse fluctuations due to changes in such foreign currency exchange rates as compared to the U.S. dollar. For the three months ended March 31, 2024 such impacts were not material to our financial position or results of operations.

Current wording

Our contracts with customers and vendors are primarily denominated in U.S. dollars. However, the general strengthening of the U.S. dollar relative to other major foreign currencies (primarily the Euro and British pound sterling (“GBP”)) has had, and could in the future have, an unfavorable impact on our revenues and expenses from certain non-U.S. customers or vendors whose contracts are denominated in currencies other than U.S. dollars. Additionally, certain of our U.S. and non-U.S. subsidiaries may hold monetary assets and liabilities in currencies other than their functional currency (primarily the Japanese Yen (“JPY”), Euro, and GBP), which could subject our results of operations and cash flows to adverse fluctuations due to changes in such foreign currency exchange rates as compared to the U.S. dollar. For the six months ended June 30, 2024 such impacts were not material to our financial position or results of operations.

Previous wording

The following table provides a reconciliation of contribution margin for the three months ended March 31, 2024 and 2023 (in thousands, except percentages):

Current wording

The following table provides a reconciliation of contribution margin for the three and six months ended June 30, 2024 and 2023 (in thousands, except percentages):

Previous wording

The following table provides a reconciliation of gross profit and gross margin, excluding stock-based compensation for the three months ended March 31, 2024 and 2023 (in thousands, except percentages):

Current wording

The following table provides a reconciliation of gross profit and gross margin, excluding stock-based compensation for the three and six months ended June 30, 2024 and 2023 (in thousands, except percentages):

Previous wording

The following table provides a reconciliation of adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes for the three months ended March 31, 2024 and 2023 (in thousands):

Current wording

The following table provides a reconciliation of adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes for the three and six months ended June 30, 2024 and 2023 (in thousands):

Previous wording

Cost of revenue primarily includes salaries, stock-based compensation expense, and benefits for personnel involved in performing O&M and professional services, as well as field-service representatives, third-party cloud hosting services, hardware costs, travel costs, allocated overhead, and other direct costs.

Current wording

Cost of revenue primarily includes salaries, stock-based compensation expense, and benefits for personnel involved in performing O&M and professional services, as well as subcontractor expenses, field-service representatives, third-party cloud hosting services, hardware costs, travel costs, allocated overhead, and other direct costs.

Previous wording

Comparison of the Three Months Ended March 31, 2024 and 2023

Current wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

Revenue increased by $109.2 million, or 21%, for the three months ended March 31, 2024 compared to the same period in 2023. Revenue from government customers increased by $46.3 million, or 16%, for the three months ended March 31, 2024 compared to the same period in 2023. Of the increase, $41.9 million was from existing government customers as of December 31, 2023. Generally, increases in revenue from our existing customers are related to increased adoption of our products and services within their organizations. Revenue from U.S. government customers was $256.7 million for the three months ended March 31, 2024 compared to $229.8 million for the same period in 2023. Revenue from commercial customers increased by $62.8 million, or 27%, for the three months ended March 31, 2024 compared to the same period in 2023. Of the increase, $49.5 million was from existing customers as of December 31, 2023, which includes an offsetting decrease of $9.5 million of revenue from Strategic Commercial Contracts. For additional information, see Note 4. Investments and Fair Value Measurementsin our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Revenue from U.S. commercial customers was $149.7 million for the three months ended March 31, 2024 compared to $107.1 million for the same period in 2023, a 40% increase.

Current wording

Revenue increased by $144.8 million, or 27%, for the three months ended June 30, 2024 compared to the same period in 2023. Revenue from government customers increased by $69.3 million, or 23%, for the three months ended June 30, 2024 compared to the same period in 2023. Of the increase, $58.5 million was from government customers existing as of December 31, 2023. Revenue from U.S. government customers was $278.0 million for the three months ended June 30, 2024 compared to $225.0 million for the same period in 2023. Revenue from commercial customers increased by $75.6 million, or 33%, for the three months ended June 30, 2024 compared to the same period in 2023. Of the increase, $56.8 million was from commercial customers existing as of December 31, 2023, including a decrease of $10.2 million of revenue from Strategic Commercial Contracts. Revenue from U.S. commercial customers was $159.2 million for the three months ended June 30, 2024 compared to $103.0 million for the same period in 2023, a 55% increase.

Previous wording

Cost of revenue for the three months ended March 31, 2024 increased by $8.6 million, or 8%, compared to the same period in 2023. The increase was primarily due to increases of $6.5 million in third-party cloud hosting services, $3.7 million in field service representatives and other direct costs, and $3.2 million for stock-based compensation expense and related expenses. These increases were partially offset by a decrease of $4.2 million in hardware. For additional information related to stock-based compensation expense, see the section titled“Stock-Based Compensation” below.

Current wording

Cost of revenue for the three months ended June 30, 2024 increased by $21.7 million, or 20%, compared to the same period in 2023. The increase was primarily due to increases of $14.4 million in third-party cloud hosting services and $10.8 million in subcontractor expenses. These increases were partially offset by a decrease of $7.8 million in field service representatives and hardware costs.

Previous wording

Our gross margin for the three months ended March 31, 2024 increased from 80% for the same period in 2023 to 82% as a result of revenue growth outpacing costs of revenue. The primary cause of this growth rate variation was due to decreases in hardware in cost of revenue and lower growth in third-party cloud hosting relative to revenue growth as compared to the prior year.

Current wording

Our gross margin for the three months ended June 30, 2024 increased to 81% from 80% for the same period in 2023 as a result of revenue growth outpacing costs of revenue. This growth rate variation was primarily due to the decreases in field service representatives and hardware costs in cost of revenue relative to revenue growth as compared to the prior year.

Previous wording

Stock-based compensation expenses increased by $10.9 million, or 10%, for the three months ended March 31, 2024 compared to the same period in 2023. The increase was driven by expense from new grants awarded since March 31, 2023, including RSUs, P-RSUs, and SARs, partially offset by lower expense under the accelerated attribution method for restricted stock units (“RSUs”) granted prior to September 30, 2020, the date of our direct listing, and the vesting and cancellation of options and RSUs.

Current wording

Stock-based compensation expenses increased by $27.6 million, or 24%, and $38.5 million, or 17%, for the three and six months ended June 30, 2024 compared to the same periods in 2023, respectively. The increase was driven by expense from new grants awarded since June 30, 2023, including restricted stock units (“RSUs”), performance-based RSUs (“P-RSUs”), and stock appreciation rights (“SARs”), partially offset by a reduction in expense from awards that became fully vested and lower expense under the accelerated attribution method for RSUs granted prior to September 30, 2020, the date we completed the direct listing of our Class A common stock on the New York Stock Exchange (“NYSE”).

Previous wording

Interest income increased by $22.5 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to higher U.S. interest rates and increases in our interest-bearing cash and cash equivalents, and our investments in short-term U.S. treasury securities.

Current wording

Interest income increased by $16.3 million and $38.8 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to an increase in our interest-bearing cash, cash equivalents, and our investments in short-term U.S. treasury securities.

Previous wording

Other income (expense), net changed by $9.4 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to an increase in net realized and unrealized losses from our shares held in equity securities.

Current wording

Other income (expense), net changed by $0.8 million and $10.2 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to an increase in net realized and unrealized losses from our shares held in equity securities.

Previous wording

Provision for income taxes increased by $3.0 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily related to higher foreign income taxes as the result of higher foreign taxable income.

Current wording

Provision for income taxes increased by $3.0 million and $6.0 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to increased foreign tax expense as a result of higher foreign taxable income and withholding taxes, as well as increases in state taxes.

Previous wording

We generated positive cash flow from operations for the three months ended March 31, 2024. We had cash, cash equivalents, and short-term U.S. treasury securities totaling $3.9 billion available as of March 31, 2024. We believe that cash flows generated from operations, cash, cash equivalents, marketable securities, available funds, and access to financing sources, including our credit facility, will be sufficient to meet our anticipated operating cash needs for at least the next twelve months. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. While we have generated income from operations and positive cash flows from operations for the three months ended March 31, 2024, the amounts may fluctuate for the foreseeable future.

Current wording

We generated positive cash flow from operations for the six months ended June 30, 2024. We had cash and cash equivalents and short-term U.S. treasury securities totaling $4.0 billion available as of June 30, 2024. We believe that cash flows generated from operations, cash, cash equivalents, marketable securities, available funds, and access to financing sources, including our undrawn credit facility, will be sufficient to meet our anticipated operating cash needs for at least the next twelve months. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. While we have generated income from operations and positive cash flows from operations for the six months ended June 30, 2024, the amounts may fluctuate for the foreseeable future.

Previous wording

As of March 31, 2024, our accumulated deficit balance was $5.5 billion, and our principal sources of liquidity were cash, cash equivalents, and short-term U.S. treasury securities totaling $3.9 billion.

Current wording

As of June 30, 2024, our accumulated deficit balance was $5.4 billion, and our principal sources of liquidity were cash and cash equivalents and short-term U.S. treasury securities totaling $4.0 billion.

Previous wording

As of March 31, 2024, we had no outstanding debt balances and additional available and undrawn revolving commitments of $500.0 million under our credit facility. For more information, see Note 6. Debt in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

As of June 30, 2024, we had no outstanding debt balances and additional available and undrawn revolving commitments of $500 million under our credit facility. For more information, see Note 6. Debt in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

In August 2023, the Company’s Board of Directors authorized a stock repurchase program of up to $1.0 billion of the Company’s outstanding shares of Class A common stock (the “Share Repurchase Program”). The Company has and may continue to repurchase shares of its Class A common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act in accordance with applicable securities laws and other restrictions. The timing and the amount of stock repurchases under the Share Repurchase Program will be determined by the Company’s management, based on its evaluation of factors including business and market conditions, corporate and regulatory requirements, and other considerations. The Share Repurchase Program does not obligate the Company to repurchase any specific number of shares and may be discontinued at any time.

Current wording

In August 2023, the Company’s Board of Directors authorized a stock repurchase program of up to $1.0 billion of the Company’s outstanding shares of Class A common stock (the “Share Repurchase Program”). For additional information on our Share Repurchase Program, see Note 8. Stockholders’ Equity in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

During the three months ended March 31, 2024, the Company repurchased and subsequently retired 0.4 million shares of its Class A common stock for an aggregate amount, including commissions, of $9.0 million under the Share Repurchase Program.

Current wording

During the six months ended June 30, 2024, the Company repurchased and subsequently retired 1.2 million shares of its Class A common stock for an aggregate amount, including commissions, of $26.7 million under the Share Repurchase Program. As of June 30, 2024, approximately $973.3 million of the originally authorized amount under the Share Repurchase Program remained available for future repurchases.

Previous wording

Net cash provided by operating activities was $129.6 million and $187.4 million for the three months ended March 31, 2024 and 2023, respectively. The decrease was primarily driven by timing of payments to vendors and timing of the receipt of payments from our customers, partially offset by an increase in interest income.

Current wording

Net cash provided by operating activities was $273.8 million and $277.6 million for the six months ended June 30, 2024 and 2023, respectively. The decrease was primarily driven by timing of the receipt of payments from our customers and timing of payments to vendors.

Previous wording

Net cash used in investing activities was $0.5 billion and $1.6 billion for the three months ended March 31, 2024 and 2023, respectively. The decrease in cash used in investing activities was primarily due to purchases of marketable securities, primarily comprised of short-term U.S. treasury securities, partially offset by proceeds from sales and redemptions of marketable securities.

Current wording

Net cash used in investing activities was $660.1 million and $1.9 billion for the six months ended June 30, 2024 and 2023, respectively. The decrease in cash used in investing activities was primarily due to fewer purchases of marketable securities, primarily comprised of short-term U.S. treasury securities compared to the prior year.

Previous wording

Net cash provided by financing activities was $75.2 million and $26.0 million for the three months ended March 31, 2024 and 2023, respectively, each of which primarily consisted of proceeds from the exercise of common stock options partially offset by share repurchases of $9.0 million.

Current wording

Net cash provided by financing activities was $73.3 million and $116.7 million for the six months ended June 30, 2024 and 2023, respectively, each of which primarily consisted of proceeds from the exercise of common stock options, partially offset by share repurchases of $26.7 million during the six months ended June 30, 2024.