Palantir profit miss, downbeat revenue forecast send shares tumbling

By Chavi Mehta

-Palantir Technologies Inc forecast second-quarter revenue below Wall Street expectations on Monday, indicating slowing sales growth, and missed first-quarter profit estimates, sending shares down 15% in premarket trading.

The company, known for its work with the U.S. Army and the Central Intelligence Agency, said it still sees a “wide range” of potential upside to its forecast from “developing geopolitical events”.

But slowing revenue growth at the software maker’s government business, which rose 16% in the first quarter, also raised concerns.

Palantir forecast adjusted operating margin of 20% for the current quarter, compared with 31% a year earlier, as it ramps up spending on its salesforce to help the company close more deals.

The company expects second-quarter revenue to be $470 million, implying a growth of just 25% year-over-year, compared with 49% growth a year earlier. Analysts on average expected a revenue of $483.9 million.

Palantir’s Chief Operating Officer Shyam Sankar said the Ukraine war had no incremental impact on its first quarter, but the company has been working and investing in anticipation of contract awards from governments and expects “marginal impact” in the second quarter and more growth beyond that.

But RBC Capital Markets analyst Rishi Jaluria said some of that impact should realistically start to show up as backlog. He added that not getting immediate government business by now despite the war in Ukraine was not a good sign.

Palantir reported first-quarter revenue of $446.4 million, above Refinitiv IBES estimates of $443.4 million, driven by strength in its U.S. commercial business.

Excluding items, it earned 2 cents per share, missing estimates of 5 cents per share. COO Sankar said the company saw 2 cents of loss per share related to Palantir’s investments.