Palantir delivered a blockbuster Q3 2025: revenue accelerated, U.S. commercial rocketed triple-digits, margins expanded, and record TCV set the stage for a strong Q4. Management raised full-year guidance across the board, citing sustained AI demand and deal momentum.
Key Results (Q3 2025)
- Revenue: $1.181B (+63% Y/Y, +18% Q/Q)
- U.S. revenue:$883M (+77% Y/Y, +20% Q/Q)
- U.S. Commercial: $397M (+121% Y/Y, +29% Q/Q)
- U.S. Government: $486M (+52% Y/Y, +14% Q/Q)
- Profitability: GAAP op margin 33%; Adjusted op margin 51%
- EPS: GAAP $0.18; Adjusted $0.21
- Cash: Operating cash flow $508M; Adjusted FCF $540M
- Backlog/Deals: Record TCV $2.76B (+151% Y/Y); 204 deals ≥ $1M
Why it matters: The quarter shows broad-based strength in the U.S., led by commercial AIP deployments, with profitability and cash generation scaling in step with growth.
Guidance (Raised)
- Q4 2025 revenue: $1.327–$1.331B (≈ +61% Y/Y)
- FY 2025 revenue: $4.396–$4.400B (raised)
- FY adjusted operating income: $2.151–$2.155B (raised)
- FY adjusted FCF: $1.9–$2.1B (raised)
- FY U.S. commercial revenue: > $1.433B (≥104% Y/Y)
Read-through: Management’s outlook implies continued sequential growth into year-end and a durable 2026 pipelineas AIP projects move from pilots to scaled production.
What Drove the Beat
1) U.S. Commercial Flywheel
AIP adoption in industries like financial services, healthcare, aerospace, and logistics continues to scale, translating into larger deal sizes, faster expansions, and a surge in remaining deal value.
2) Government Resilience
U.S. government posted strong double-digit growth as mission-critical programs expand and multi-year awards ramp, providing high-visibility revenue and utilization.
3) Operating Leverage & Cash
With 50%+ adjusted operating margin and robust free cash flow, Palantir is demonstrating software-model economicsat scale—key for justifying a premium multiple.
4) Record TCV Sets the Pace
The $2.76B TCV high-water mark reflects broadening demand and increased win rates, de-risking near-term growth and supporting management’s elevated FY outlook.
Segment Takeaways
- U.S. Commercial: The star of the show—+121% Y/Y—powered by AIP deployments and faster land-and-expand dynamics.
- U.S. Government: +52% Y/Y, steady and diversified across defense, intel, and civil agencies.
- International: Healthy, but the U.S. remains the growth engine and margin anchor.
What to Watch Next
- Deal conversion & ramp: How quickly record TCV turns into revenue, especially in U.S. commercial.
- Unit economics at scale: Margins staying ~50% adjusted as implementation teams scale and usage expands.
- 2026 color: Early signals on next year’s growth algorithm—net expansion, new logos, and AIP attach across verticals.
Stock Setup (Not Investment Advice)
- Bull case: Elevated FY guide + sustained U.S. commercial momentum + margin resilience ⇒ supports multiple durability.
- Bear case: High expectations and valuation mean any slowdown in TCV-to-revenue conversion or softness in new logo adds could trigger volatility.
Conclusion
Palantir’s Q3 2025 checks every box: fast growth, fatter margins, record TCV, and a raised guide. With U.S. commercial demand compounding and government steady, the company enters Q4 with clear momentum and a strengthening long-term runway for AIP-led expansion.
FAQ
Did Palantir beat on growth and profitability?
Yes—revenue grew 63% Y/Y with 51% adjusted operating margin and strong free cash flow.
What stood out most?
U.S. commercial surged 121% Y/Y, and record TCV ($2.76B) points to sustained demand.
What does guidance say?
Management raised full-year revenue, adjusted operating income, and FCF, and guided Q4 to ~61% Y/Y growth.
Is government still contributing?
Yes—U.S. government +52% Y/Y, providing stability alongside commercial acceleration.
Disclaimer
This article is for information and educational purposes only and does not constitute investment advice or a solicitation to buy or sell any security. Investing involves risk, including loss of principal. Do your own research or consult a licensed financial professional. Financial figures and times referenced are as of November 3, 2025 (Europe/Berlin) and may change.
