Palantir Technologies Grow Revenue and Losses in Q3

By Bruce Harpham Monday, November 16, 2020

Palantir Technologies Inc. (NYSE: PLTR) reported significant losses in the third quarter. For the nine months ended in September 2020, the company had a $1 billion net loss. That's more than double the net loss of $420 million the company reported in the first nine months of 2019. Despite the mounting losses, there are a few bright notes in the company’s report. The company's stock price has risen from $10 in September 2020 up to $15.80 on November 13.

Palantir’s Q3 Results by the Numbers

Palantir, known for its specialization in highly sensitive data, managed some signs of growth in Q3.

  • Revenue is growing year over year. The company grew total revenue to $770 million for the first nine months of 2020, an increase over the $513 million earned in the same period of last year.
  • Sales and marketing costs are soaring. The company's focus on complex deals requires significant sales and marketing efforts. With $309 million spent on sales and marketing in the first three quarters of 2020 compared to $49 million in 2019, this activity’s cost is soaring. Investors may be hoping that the company's massive spending to acquire customers will pay off in the long run. In the third quarter of 2020, the company announced in a press release that it had “closed fifteen deals with new and existing customers, each worth $5 million or more in total contract value.”
  • Reducing customer concentration. When companies depend on a small number of customers, there is an increased risk of business disruption. Historically, Palantir has struggled with this measure of business health. In the third-quarter results, customer concentration came down. The top 20 customers generated 61% of total revenue in the first nine months of 2020, down from 68% in the same period of 2019.
  • Palantir is managing cash effectively. With more than $1.8 billion in cash and cash equivalents, Palantir has a cushion to keep the lights on if it loses business.

Major Government Contracts in the US and UK

Processing and analyzing large volumes of government data remains Palantir’s bread and butter. The company won a two-year contract worth $91 million with the US Army Research Laboratory. This Army research contract will focus on “artificial intelligence and machine learning capabilities for military planning and defense operations.” Furthermore, Palantir also works with the US Army, Navy, and Air Force, and intelligence agencies.

Aside from the military, health care demand is powering the business. Specifically, governments seek better insights into the COVID-19 pandemic, which has caused over 244,000 deaths in the United States according to data from Johns Hopkins University as of mid-November 2020.

In the United Kingdom, the National Health Service used Palantir software to allocate over two billion items of personal protective equipment.

Palantir Contributes to COVID-19 Fight

Palantir’s technology capabilities, honed in the national defense world, are now contributing to health care. In September 2020, Palantir won a $36 million contract to provide software to the National Center for Advancing Translational Sciences (NCATS) in Bethesda, Maryland. The planned use of the software will focus on several goals, including cancer research and coronavirus research.

The National COVID Cohort Collaborative (N3C) has bought Palantir software to analyze data from over one million patients in the United States in a matter of weeks.

Palantir Lands Large Commercial Contracts

Palantir has reported several big wins in signing contracts with large companies and organizations. They also recently signed a five-year deal with an unnamed aerospace customer worth $300 million — the largest commercial contract in company history. Palantir also reports that an energy company found a $315 million cost savings opportunity using Palantir software.

If Palantir continues to land more large contracts, it may reduce its controversial dependence on US government contracts.

Palantir Moves Away From Silicon Valley

Until recently, Palantir was based in California, like many of the nation’s high tech firms. The company’s connections with established tech firms go deep. Peter Thiel, an early investor in Facebook, is one of the co-founders of the company. Unlike consumer-focused technology companies, Palantir has a long-standing connection with government agencies.

The company’s move to Colorado in 2020 is partly seen as a move to distance itself from other technology companies who have backed away from working with the US government. Google has faced protests from its employees about US government agencies like the US Immigration and Customs Enforcement. In contrast, Palantir has had funding and contracts with intelligence agencies like the Central Intelligence Agency (CIA) since its founding.

About the Author


Headshot for author Bruce Harpham

Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.

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