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Most companies slow down as they scale. More customers and more contracts usually mean growth gets harder to sustain, not easier. Palantir’s latest quarter didn’t follow that pattern.
The data analytics company reported second quarter revenue growth of 93% year on year, its fastest pace in years, even as it crossed 1,000 customers and closes in on $2 billion in quarterly revenue.
The headline numbers
Revenue came in at $1.94 billion, ahead of the roughly $1.80 billion analysts had expected. Adjusted earnings were 41 cents a share against an expected 35 cents. Net income was $1.07 billion, up from about $329 million in the same quarter last year.
The stock rose sharply after the results, at one point surging as much as 14% in after hours trading.
Government and commercial, both up
Palantir built its business selling software to governments and militaries, and that segment is still growing. US government revenue rose 90% year on year to $809 million, a period when many governments have been increasing defence and security spending.
Commercial revenue grew even faster. US commercial revenue was up 149% from a year ago to $764 million, and has grown 380% since 2024 on a compounding basis.
Net dollar retention, a measure of how much more existing customers are spending compared to a year ago, came in at 157%. Of the 220 deals worth at least $1 million closed this quarter, 73 were worth more than $10 million, up from smaller average contract sizes in earlier periods.
Why contract sizes are climbing
A common pattern behind the larger deals: a customer starts with a smaller pilot contract, and once the software demonstrates measurable savings, the contract gets expanded. Palantir pointed to Centrus as one example this quarter, where the disclosed savings ran into the hundreds of millions of dollars.
Guidance raised again
Palantir raised its full year revenue guidance to a range of $8.15 billion to $8.16 billion, up from $7.65 billion to $7.66 billion previously. US commercial revenue guidance for the year was raised to more than $3.42 billion, from $3.22 billion.
For the current quarter, the company guided to revenue between $2.16 billion and $2.164 billion, also above the analyst consensus of around $2 billion.
Things to watch
Stock based compensation, the equity companies grant employees instead of cash, grew faster than operating income on a quarter on quarter basis, even though operating income grew faster than this expense over the full year. It’s a cost that dilutes shareholders even when it doesn’t appear as cash spent.
Valuation also remains a point of debate. Palantir trades at a significant premium to most software peers, one that assumes continued high growth for years. Some overseas customers have also moved away from Palantir. France’s domestic intelligence agency is reportedly replacing its Palantir tools with a French rival, and a UK police contract has faced legal pushback.
The bigger picture
Palantir shares had fallen sharply earlier this year amid broader concerns about AI software spending slowing down. This quarter’s results ran counter to that narrative, and the company’s leadership said on the earnings call that it expects the current pace of growth to continue for at least another 18 months.
Whether that pace holds, and whether it’s enough to justify the stock’s valuation, will likely shape how the next few quarters are read.
