Palantir Plunges After Earnings, Outlook Spook Investors

(Bloomberg) — Palantir Technologies Inc. shares fell 13%, the most in almost a year, after the data software company reported financial results that illustrated a continued lack of net profit.

Most Read from Bloomberg

The stock fell 13% in intraday trading Thursday. Palantir shares have lost about half their value over the past 12 months.

“We need to work on Europe,” Palantir Chief Operating Officer Shyam Sankar said during an interview with Bloomberg. The region needed “to re-open” from Covid-19 restrictions, he added. Sankar said he expects to add about 175 salespeople this year, with many focusing on European commercial clients.

Peter Thiel and Alex Karp started Palantir almost two decades ago to sell software to U.S. government agencies and their allies. The company has worked furiously in recent years, especially during the past year, to bring on more corporate customers. It has added hundreds of salespeople, simplified its software products and even spun up a program to take equity stakes in small startups that agree to be customers.

Key Takeaways:

Palantir said it will deliver a 23% adjusted operating margin on $443 million in revenue during the quarter ending in March, falling short of average analyst estimates of 26.6% compiled by Bloomberg.
Losses decreased to $59 million in the fourth quarter, from $91 million in the previous period.
The company said it expects its operating margin to increase to 27% for the fiscal 2022.
Adjusted earnings were 2 cents per share in the fourth quarter, short of analysts’ expectations of 3 cents. The net loss was 8 cents a share.
Net income is “within sight,” Karp said on a conference call with analysts, without providing a date.
Total full-year revenue increased 41% to $1.5 billion in 2021 in line with estimates.
Government business increased 47% to $897 million while commercial business increased 34% to $645 million.
Although the number of commercial customers tripled during 2021 to 147, most of that came from U.S. customers.
Revenue growth last year was 41%, beating the 40% rate it pledged late last year.
Deals with biotech startup Dewpoint Therapeutics Inc. and pipeline operator Kinder Morgan Inc. contributed to total fourth-quarter revenue of $433 million.

Palantir’s sometimes-controversial government work remains core to the company’s future operations. Along with assisting more than a dozen governments in battling the Covid-19 pandemic, the software is used to power military operations.

“We are not ambivalent about the side we have chosen when it comes to supporting the defense of the United States,” wrote Karp, Palantir’s chief executive officer, in his annual letter to shareholders. “Everything we have accomplished, and everything we have built, has been made possible by the country in which our company was founded.”

Continuing to expand its commercial segment is critical to sustaining the 30% annual revenue growth Palantir promised investors when it went public, according to Mandeep Singh, an analyst at Bloomberg Intelligence.

(Updates with shares starting in the first paragraph.)