PLTR Palantir Technologies 10-Q 2026-09-30 section summaries

Palantir Technologies — Q3 and nine months ended September 30, 2026

Palantir’s rapid growth translated into substantially stronger operating leverage. Q3 revenue grew 95.9% year over year, while operating income grew 175.9%; for the first nine months, revenue grew 91.7% and operating income 228.0%. Gross and operating margins also expanded.

Consolidated results

*Calculated as revenue less gross profit. Other income/expense included a Q3 expense of $25.8 million, compared with income of $27.5 million a year earlier; 9M other income was $134.3 million versus $30.9 million. Q3 interest income was $88.9 million versus $59.8 million.

Segments — Q3

Commercial revenue grew faster than government revenue. Contribution is segment revenue less related cost of revenue and sales and marketing; it excludes corporate-managed and noncash expenses.

Geography — Q3

No individual non-U.S. country accounted for at least 10% of revenue.

Cash flow and balance sheet

Increased accounts receivable used $843.4 million of cash in 9M 2026, versus $423.0 million; contract liabilities provided $397.0 million, versus $160.2 million.

Cash, cash equivalents and restricted cash totaled $3,652.8 million at September 30, 2026, up from $1,451.4 million at year-end 2025. Recurring fair-value assets totaled $9,942 million, primarily money-market funds and U.S. Treasuries; all were Level 1 or Level 2, with no Level 3 assets. Treasury securities with fair value of $5.9 billion were in an unrealized-loss position, primarily reflecting interest-rate changes. None had been in a continuous loss position for more than 12 months, and no credit losses were recorded.

Common shares outstanding were 2,391.192 million at the start and 2,409.153 million at the end of 9M 2026, compared with 2,338.795 million and 2,383.314 million, respectively, in 9M 2025. Class A shares carry one vote, Class B ten votes, and Class F arrangements can give founders up to 49.999999% of total voting power while ownership conditions are met.

Contract visibility, compensation and risks

Contract liabilities were $1.2 billion, versus $0.8 billion at year-end; $718 million of revenue was recognized from opening contract liabilities in 9M 2026, versus $507 million in 9M 2025. Remaining performance obligations were $4.9 billion: approximately 44% expected within 12 months and 37% in months 13–36. Many contracts can be terminated for convenience on less than 12 months’ notice, and cancelable revenue and customer deposits are excluded from RPO. Customer I represented 27% of receivables, versus 25% at year-end; no customer exceeded 10% of revenue.

Stock-based compensation was $318.889 million in Q3 and $785.690 million in 9M, versus $172.318 million and $487.628 million, respectively. At quarter-end, outstanding options totaled 146.841 million with $25.974 billion aggregate intrinsic value, and SARs totaled 18.511 million with $1.178 billion aggregate intrinsic value. Unrecognized compensation was $343 million for options, $252 million for SARs, and $1.4 billion for 35.503 million unvested RSUs, indicating meaningful future expense and potential dilution.

Palantir had no borrowings under its $500 million revolving credit facility, which matures March 31, 2027, and complied with its $50 million minimum-liquidity covenant. A cloud-hosting commitment requires at least $5.6 billion of spending over ten contract years through February 29, 2036. The company maintained full valuation allowances on U.S. and U.K. deferred tax assets, though recent and anticipated earnings could support future releases. Management reported no pending legal matter expected to materially adversely affect the financial statements. Forward-looking risks include growth and customer demand, competition—particularly in AI—cybersecurity and platform availability, regulation, macroeconomic and geopolitical conditions, tariffs, and foreign exchange.

Palantir — Q3 and first nine months of 2026

Palantir reported exceptionally rapid growth and sharply higher profitability in the three and nine months ended September 30, 2026. Revenue growth came from both government and commercial customers, with wider adoption among existing customers a major contributor. The company sells subscriptions and related services through hosted and on-premises offerings; contracts generally run one to five years, though some are shorter and many can be terminated for convenience.

Consolidated results

Revenue increased 96% in Q3 and 92% in 9M. Gross profit rose 98% in Q3 and 100% in 9M. Growth in revenue was accompanied by improved gross margins despite higher cloud-hosting costs.

Segment revenue

Government revenue grew 81% in Q3 and 79% in 9M; commercial revenue grew 113% in Q3 and 107% in 9M. U.S. government revenue in Q3 was $953M versus $486M, while U.S. commercial revenue was $984M versus $397M, up 148%. For 9M, U.S. government revenue was $2.4B versus $1.3B, and U.S. commercial revenue was $2.3B versus $1.0B, up 144%. Of the Q3 increase, $484M in government and $407M in commercial revenue came from customers already on board as of December 31, 2025, reflecting broader adoption within existing organizations.

Profitability, costs and compensation

Cost of revenue increased 85% in Q3 and 56% in 9M, mainly due to higher third-party cloud hosting costs, including increases of $135M in Q3 and $263M in 9M. Higher hosting costs and compensation did not prevent gross-margin expansion. Management expects sales and marketing, R&D, and G&A expenses to increase in absolute dollars as it invests in personnel, product development, compute and systems.

Stock-based compensation increased 85% in Q3 and 61% in 9M, reflecting newer grants of RSUs, performance RSUs and stock appreciation rights, partly offset by vesting and forfeitures. 9M stock-based compensation included $86.687M in cost of revenue, $306.440M in sales and marketing, $159.952M in R&D, and $232.611M in G&A.

The company also reported non-GAAP profitability measures. Adjusted operating income, which adds back stock-based compensation and related employer payroll taxes, was $1,426.8M versus $600.540M in Q3 and $3,604.9M versus $1,455.6M in 9M; adjusted operating margin was 62% versus 51% and 61% versus 47%, respectively. Contribution was $1,694.8M versus $778.09M in Q3 and $4,323.2M versus $1,958.2M in 9M, with contribution margins of 73% versus 66% and 74% versus 64%. These company-defined non-GAAP measures supplement, rather than replace, GAAP results.

Interest income rose to $88.936M from $59.762M in Q3 and to $232.835M from $166.458M in 9M, primarily reflecting higher interest-bearing cash and Treasury investments. Other income (expense), net shifted to a Q3 loss of $25.780M from income of $27.483M, while 9M income was $134.265M versus $30.906M. Results reflected equity-security gains and valuation changes, as well as Q3 marketable-security losses.

Cash flow and liquidity

Higher operating cash flow primarily reflected revenue growth, partly offset by the timing of customer billings and payments. Lower investing outflow mainly reflected fewer purchases of Treasury securities. At September 30, 2026, cash, cash equivalents and U.S. Treasury securities totaled $10.4B; Palantir had no outstanding debt and $500M available under an undrawn revolving credit facility. Management believes liquidity is adequate for at least the next twelve months and the foreseeable future. Contractual commitments include facility leases and non-cancelable third-party cloud-hosting purchases.

Customers, strategy and risks

Customers increased to 1,090 from 911. Average trailing-12-month revenue from the top 20 customers rose 76% to $146M from $83M. For 9M, government customers generated 51% of revenue and commercial customers 49%; U.S. customers generated 81% and non-U.S. customers 19%. U.S. revenue for the trailing 12 months was $5.9B, up 109% year over year.

Palantir is expanding access to Gotham, Foundry, Apollo and AIP across government and commercial markets. AIP connects customer data and operations with third-party AI and large language models, while the Ontology links data, logic and actions to operational workflows. The company is also exploring standalone commercial offerings from platform components. Customer pilots and bootcamps—often funded by Palantir without guaranteed returns—support customer development and adoption.

Government sales remain exposed to budget uncertainty, procurement timing, policy shifts and contract awards. Termination-for-convenience provisions, renewal and collection risks, and upfront pilot investments may affect revenue durability and returns. The growing U.S. revenue concentration increases exposure to adverse U.S. economic conditions; a stronger dollar could also weigh on non-U.S. results. Management said current impacts from geopolitical conflicts were not expected to be material, but worsening conflicts or broader disruption could still adversely affect the business. The company may seek equity or debt financing for growth, customer acquisition and retention, product development, or potential acquisitions and partnerships; financing may not be available on acceptable terms. No material changes to critical accounting policies and estimates were reported versus the FY 2025 Form 10-K, except as described in Note 2.

Market risk and other exposures

As of September 30, 2026, Palantir held $185 million in publicly traded equity securities and $217 million in privately held equity securities, or $402 million combined. Public holdings, which often involve early- or growth-stage companies with limited trading histories, are exposed to issuer prospects and market volatility, including geopolitical conflicts, interest-rate movements, tariffs, and other trade impacts. Private-company valuations are more uncertain because liquidity and market data are limited; adverse market or issuer developments could lead to impairments or downward valuation adjustments. Securities received as consideration or acquired through investments may also increase volatility in Palantir’s condensed consolidated statements of operations. The company has sold, and may continue to sell, some or all of its publicly traded holdings.

Palantir considers its interest-rate exposure immaterial because cash, cash equivalents, restricted cash, and available-for-sale debt securities are invested in short-term instruments, including U.S. Treasuries, money-market funds, and certificates of deposit. Its investment objective is capital preservation and liquidity.

Most customer contracts are denominated in U.S. dollars, while operating expenses are generally denominated in local currencies, primarily in the U.S., U.K., and other jurisdictions. Results and cash flows are particularly exposed to movements in the Japanese yen, euro, and British pound. Foreign-currency remeasurement gains and losses have not been material to date, and Palantir has not used foreign-currency hedges; exposures could change as business practices and economic conditions evolve.

Palantir reported no material impact from inflation to date, but cautioned that significant cost inflation might not be fully offset by price increases, potentially harming its business, financial condition, or results.

Disclosure Controls and Internal Control

As of quarter-end, PLTR’s CEO and CFO concluded that its disclosure controls and procedures were effective at a reasonable-assurance level. No quarterly changes to internal control over financial reporting materially affected, or were reasonably likely to materially affect, those controls.

The company cautions that controls cannot provide absolute assurance: they rely on judgment, cannot eliminate misconduct, are subject to resource constraints, and may become inadequate as conditions change or compliance deteriorates. PLTR intends to monitor and improve controls as appropriate, but cannot assure that future improvements will be sufficient.

Palantir — Item 1A: Risk Factors

Palantir’s principal risks arise from uncertain sales conversion and customer spending, complex and sensitive deployments, reliance on government and third-party infrastructure, and founder-controlled governance. The filing provides no current-period financial results in this section, but identifies the following material exposures:

Demand, customer concentration, and revenue conversion

Remaining deal value is not guaranteed revenue: customers may terminate, renegotiate, or fail to exercise options, and government budget delays or lapses can defer or prevent realization. Palantir has historically not recognized all revenue represented by deal value. Many contracts permit termination for convenience; past terminations or reduced spending have sometimes required refunds of amounts previously paid.

Sales cycles typically last six to nine months and can exceed a year, particularly for large enterprises and government customers. Free or low-cost pilots and bootcamps require time and resources but may not convert to paid deployments. Customer budgeting, internal IT preferences, approvals, procurement delays, macroeconomic conditions, and competing products can delay or derail sales. Revenue recognized over contract terms may lag changes in sales, renewals, pricing, or customer demand. Large sales often close late in a quarter, and seasonality—including government procurement ahead of the September 30 fiscal year-end and commercial year-end budgeting—adds volatility to revenue and cash flows.

Growth depends on expanding existing deployments, winning larger customers, scaling sales, and entering new industries and geographies. These efforts require upfront hiring, R&D, infrastructure, implementation, and sales spending; revenue may not grow quickly enough to offset rising costs. Complex implementations and ongoing support can be costly, and poor service, defects, or missed service levels could lead to lower usage, refunds, penalties, contract losses, or claims.

Technology, cybersecurity, and infrastructure

Palantir depends on its platforms for substantially all revenue and must continually develop products—including AI capabilities—to meet changing customer needs. R&D may not produce timely products that customers adopt; competitors may commercialize AI or other technologies faster, while AI outputs can be inaccurate, biased, insecure, or legally problematic. AI governance measures may not prevent harmful outcomes, privacy or IP violations, or reputational damage. Expanded AI use may also increase energy costs or constrain resources.

Platforms handle sensitive and mission-critical data and operate across customer-controlled, on-premises, edge, and cloud environments. Palantir has experienced cyberattacks, although known prior attacks have not materially affected results. Future incidents, including those affecting vendors or customers, could cause data loss, outages, remediation expense, litigation, regulatory penalties, customer terminations, or loss of certifications. Conflict-zone exposure, including hostilities involving Iran and conflicts in Ukraine and the Middle East, heightens cyber, supply-chain, and operational risks.

Palantir relies on AWS, Microsoft Azure, other service providers, purchased hardware, and licensed and open-source technology. Outages, price increases, minimum-usage commitments, unfavorable terms, security failures, or loss of licenses could raise costs, disrupt service, constrain product functionality, or require costly migration or redevelopment. Open-source license disputes could also require disclosure of proprietary code, re-engineering, or suspension of sales.

Government, regulatory, and international exposure

Government customers are a significant source of revenue, particularly the U.S. government. Appropriations lapses and shutdowns (including the federal shutdown in Q4 2025), changing priorities, procurement protests, spending reductions, clearance delays, and contract terminations can delay awards or payments. Government contracts may be reduced or terminated for convenience; audits, investigations, bid protests, pricing pressure, or suspension and debarment could impair future business. Classified work also limits public visibility into related risks.

Expanding internationally exposes Palantir to changing privacy, cybersecurity, AI, export-control, sanctions, employment, and other requirements. Compliance can increase costs or limit sales; violations may lead to fines, litigation, market exclusion, or loss of government contracting privileges. Examples of potential penalties include GDPR fines of up to 4% of prior-year worldwide revenue or €20 million, whichever is higher; EU AI Act fines of up to €35 million or 7% of worldwide annual turnover; and South Korean privacy fines of up to 10% of total revenue. Export-control violations may also carry significant civil and criminal penalties. Currency movements, particularly in EUR, JPY, and GBP, can affect overseas demand, translated revenue, and local operating costs.

Financing, contracts, and investors

Palantir expected available funds, operating cash flows, and financing sources to cover at least the next 12 months. The facility is secured by substantially all assets and contains restrictive covenants; borrowing is variable-rate, and default could permit foreclosure or trigger cross-defaults. Strategic Commercial Contract counterparties can include early-stage companies with limited financing prospects, increasing risk of termination, nonpayment, or unrealized contract value.

The stock may be volatile and future equity or convertible-security issuance could dilute shareholders. As of September 30, 2026, common shares outstanding totaled 2,409,153,214. Outstanding awards included options on 17,851,316 Class A and Class B shares, RSUs on 35,975,316 Class A and Class B shares, SARs on 18,530,721 Class A shares, and P-RSUs on 139,562 Class A shares. Approximately 0.83 million options were due to expire through December 2026 unless exercised.

Palantir’s multi-class structure gives Class A shares one vote and Class B shares ten votes. Class F mechanisms can give the Founders’ voting bloc 49.999999% of voting power on relevant matters, while the Founder Grants cover 207.0 million Class B shares. These arrangements can preserve founder influence despite changes in economic ownership and constrain public-stockholder influence; the company could become a Nasdaq “controlled company.” Palantir has never paid cash dividends and does not expect to do so in the foreseeable future.

Legal, controls, and reputation

Palantir faces potential litigation, regulatory inquiries, and reputational harm related to privacy, cybersecurity, AI, IP, government contracting, employment, securities, and customer relationships. Public criticism of sensitive or controversial work can affect recruiting, renewals, partner relationships, and sales. The company’s mission-based choices about customers may also limit market access.

As the company grows, public-company reporting and internal-control requirements demand additional systems, accounting personnel, and management oversight. Past control deficiencies could recur; ineffective controls could result in late filings, restatements, adverse assessments, loss of investor confidence, or Nasdaq delisting.

Item 5 — Insider trading arrangements

During the quarter ended September 30, 2026, the company reported the following Rule 10b5-1 trading-plan activity:

Each plan is subject to price and/or other conditions and may end earlier if covered transactions are completed or the plan expires. The share totals are maximums across possible conditions, not assured transaction volumes. The company reported no other director or officer adoption or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter.