Palantir delivered a record‑breaking Q3 2025 earnings, beating both revenue and earnings expectations. Total revenue reached $1.18 billion, up 63 % from $725.52 million in Q3 2024, while adjusted earnings per share climbed to $0.21 from $0.10, surpassing the consensus estimate of $0.17 by $0.04 (24 %). The beat was driven by disciplined cost control, a higher mix of high‑margin AI platform contracts, and the company’s ability to scale its services without proportionally increasing operating expenses.
U.S. commercial revenue exploded 121 % to $397 million, driven by AI platform deployments in data centers and cloud services. The commercial segment’s surge was fueled by new contracts in the enterprise sector, where clients are adopting Palantir’s AI platform to accelerate data‑driven decision making. U.S. government revenue also grew 52 % to $486 million, reflecting continued demand for Palantir’s analytics solutions in federal agencies.
Operating margin expanded to 51 %, a 18‑point lift from 33 % in Q3 2024, reflecting higher mix of high‑margin AI contracts and operational leverage. The margin improvement was achieved through efficient scaling of the AI platform, which delivers higher gross margins, and through cost discipline that kept operating expenses from rising in line with revenue growth.
Management raised Q4 revenue guidance to $1.327 billion–$1.331 billion and full‑year revenue to $4.396 billion–$4.400 billion, up from $4.14 billion–$4.15 billion, signaling confidence in sustained AI demand. The company also lifted its adjusted free‑cash‑flow guidance to $1.9 billion–$2.1 billion from $1.8 billion–$2.0 billion, underscoring its expectation of strong cash generation as the AI platform matures.
Total contract value reached $2.76 billion, with U.S. commercial TCV $1.31 billion, and backlog climbed to $2.6 billion, underscoring a robust long‑term revenue pipeline. The backlog growth reflects a steady stream of new and renewal contracts, indicating that demand for Palantir’s AI‑enabled analytics is likely to continue expanding.
CEO Alex Karp hailed the quarter as "arguably the best results any software company has ever delivered," highlighting the transformative impact of the AI platform. Karp emphasized that the 114 % Rule‑of‑40 score—combining 63 % revenue growth and 51 % operating margin—demonstrates the company’s ability to generate both growth and profitability simultaneously.
Market reaction was mixed; while the earnings beat spurred a brief uptick, valuation concerns tempered enthusiasm, reflecting the premium investors already priced into Palantir’s growth prospects. Analysts noted that the company’s high valuation multiples mean that even strong results can be met with caution, as investors weigh the sustainability of AI‑driven growth against potential macroeconomic headwinds and competitive pressures.
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