tapebrief
PLTR · Q3 2025

PLTR · Q2 2025 Earnings

Bullish

Palantir

Reported August 4, 2025

30-second summary

Revenue grew 48% YoY to $1.00B in Q2 with U.S. commercial up 93% and the Rule of 40 score hitting 94. Management raised the FY25 revenue guide midpoint to $4.146B — a nine-point lift in implied growth rate to 45% — and guided Q3 to 50% YoY, the highest sequential growth guide in company history. The quarter answers the "can growth and margin both expand at scale" question with an unambiguous yes; the open question is whether the multiple already prices it in.

Headline numbers

EPS

Q2 FY2025

$0.16

Revenue

Q2 FY2025

$1.00B

+48.0% YoY

Gross margin

Q2 FY2025

80.8%

Free cash flow

Q2 FY2025

$0.57B

Operating margin

Q2 FY2025

26.8%

Key financials

Q2 FY2025
MetricQ2 FY2025YoY
Revenue$1.00B+48.0%
EPS$0.16—
Gross margin80.8%—
Operating margin26.8%—
Free cash flow$0.57B—

Guidance

Prior quarter data unavailable — comparison not possible.

Segment performance

Q2 FY2025
SegmentQ2 FY2025YoY
U.S. Government Revenue$0.426B+53.0%
U.S. Commercial Revenue$0.306B+93.0%

Platform metrics

Q2 FY2025
SegmentQ2 FY2025
Total Contract Value (TCV)$2.27 billion
U.S. Commercial TCV$843 million
U.S. Commercial Remaining Deal Value (RDV)$2.79 billion
Customer Count Growth43% YoY, 10% QoQ
Large Deals (>$1M)157 deals closed

Profitability

Q2 FY2025
SegmentQ2 FY2025
Rule of 40 Score94%
Adjusted Operating Margin46%
Adjusted Free Cash Flow Margin57%

Other KPIs

Q2 FY2025
SegmentQ2 FY2025YoY
U.S. Revenue$0.733B+68.0%

Management tone

Karp's posture has hardened from confident to combative-triumphalist. Three shifts stand out.

Ontology reframed as the only viable enterprise AI architecture, not a Palantir advantage. In prior quarters AIP was sold as Palantir's edge in an AI race; this quarter Karp declared "LLMs simply don't work in the real world without Palantir. This is the reality fueling our growth." The shift moves the competitive narrative from "we're winning" to "there is no alternative" — a much stronger structural claim that will be tested as hyperscalers push their own enterprise AI stacks.

AIP recast as a replatforming layer, not a product. Management described software companies "replatforming away from the highly unopinionated services and building blocks of the hyperscaler stack onto AIP." That language reframes the TAM from "AI applications" to "the substrate other software runs on" — a far larger and stickier wedge if the customer evidence holds.

Open swagger toward skeptics. Karp: "This is a once-in-a-generation, truly anomalous quarter, and we're very proud, and we're sorry that our haters are disappointed, but there are many more quarters to be disappointed." Unusual even by Karp's standards. The combative tone signals high conviction that the print isn't a one-quarter spike — but it also raises the bar for Q3, since management has explicitly told the market to expect more of the same.

Recurring themes management leaned on this quarter:

Ontology as foundational competitive moat irreplaceable by LLMs aloneAIP as replatforming architecture driving exponential customer expansionU.S. commercial acceleration and dominance outpacing government segmentAI-driven productivity transformation delivering quantified customer impact (9 days to seconds, 2 months to seconds)American exceptionalism and blue-collar worker empowerment through AI agencySimultaneous revenue growth and margin expansion defying historical trade-offs

Risks management surfaced:

Forward-looking statements subject to risks and uncertainties that could cause material differences from actual resultsInternational commercial revenue declined 3% year-over-year despite strategic focusSeasonal expense ramp expected in Q3 from new hire starts could pressure marginsStrategic commercial contracts declining significantly (from $10M to $2-4M in Q3 2025)Reliance on continued U.S. government demand and spending momentum

Q&A highlights

Dan · Wedbush

How is Palantir thinking about building a direct sales force given massive growth with minimal direct sales infrastructure?

Management explained their strategy relies primarily on customer-to-customer referrals rather than traditional direct sales. They rejected the traditional software sales model, believing strong product value creates organic demand. Current customers serve as the primary sales force, with credibility from peer recommendations allowing Palantir to enter deals with higher trust. They maintain a small, nimble sales team but focus on customers approaching them proactively asking how to roll out solutions enterprise-wide.

Primary sales force are current customers referring other customersCustomers increasingly approaching company asking how to deploy enterprise-wideSmall, established sales team handling large dealsStarting from higher credibility level allows faster ramp and expansion within customers

Mariana · Bank of America

What excites you about the White House AI action plan and how is Palantir approaching talent acquisition and retention in competitive market?

Management expressed enthusiasm about the AI action plan removing regulatory brakes and shifting focus to implementation over hand-wringing. On talent, they emphasized providing access to high-impact problems and rapid path from hiring to meaningful work (3 months to production impact). Key differentiator is Palantir's credential value independent of educational background—internal reputation matters more than school pedigree, creating meritocratic culture attractive to top talent.

White House AI action plan removes brakes on AI development and deployment3-month timeline from hire to production work with visible impactStrong retention rates, no comparable company for accessing meaningful problemsPalantir credential now valued as top credential in tech, independent of educational background

What to watch into next quarter

Whether Q3 revenue lands above the $1.087B high end. Management explicitly framed the guide as the highest sequential growth in company history; anything at or below the midpoint will be read as deceleration given the tone.

Whether U.S. commercial growth holds above 85% YoY. The FY guide of >$1.302B at ≥85% growth is the load-bearing number for the bull thesis; a print below that line would signal the AIP replatforming story is overstated.

Adjusted operating margin trajectory in 2H. Management flagged "a significant ramp in expenses" from new hire starts; watch whether the 46% Q2 margin compresses or holds.

International commercial revenue (-3% YoY in Q2). Either it inflects positive on AIP momentum or it becomes a multi-quarter drag that limits the global TAM narrative.

Maven Smart System disclosure. Usage reportedly doubled since February; explicit revenue or contract-value disclosure next quarter would convert qualitative momentum into a quantifiable defense vertical.

Sources

  1. Palantir Q2 2025 press release, filed with SEC: https://www.sec.gov/Archives/edgar/data/1321655/000132165525000105/a2025q2ex991pressrelease.htm
  2. Palantir Q2 2025 earnings call prepared remarks and Q&A (transcript not publicly linked)

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