Palantir Technologies Inc.
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ITEM 1. BUSINESS
Overview
We build software that empowers organizations to effectively integrate their data, decisions, and operations at scale.
We were founded in 2003 and started building software for the intelligence community in the United States to assist in counterterrorism investigations and operations. We later began working with commercial enterprises, who often faced fundamentally similar challenges in working with data.
We have built four principal software platforms, Palantir Gotham (“Gotham”), Palantir Foundry (“Foundry”), Palantir Apollo (“Apollo”), and our Artificial Intelligence Platform (“AIP”). Foundry is our foundational data operations platform, which provides the core capabilities for data management, logic authoring, systemic mapping development through Palantir Ontology (“Ontology”), analytics, and workflow development. AIP is our generative artificial intelligence (“AI”) platform, which provides secure connectivity to third-party-provided large language models (“LLMs”), a development toolchain for building AI-powered agents and automations, an array of AI-enabled end user applications, a broad evaluations framework for governing AI workflows in production, and more. Apollo is our continuous delivery platform, enabling the orchestration of upgrades of services and assets every day to manage the underlying infrastructure that hosts our other platforms. Gotham
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integrates with our other platforms, as well as our broader defense offerings, to power a wide array of missions across allied defense and intelligence operations.
For over a decade, Gotham has surfaced insights for global defense agencies, the intelligence community, disaster relief organizations and beyond. Foundry is becoming a central operating system not only for individual institutions but also for entire industries. Apollo is a cloud-agnostic, single control layer that coordinates ongoing delivery of new features, security updates, and platform configurations, helping to ensure the continuous operation of critical systems. Apollo allows our customers to run their software in virtually any environment.
In 2023, we began deploying our newest offering, AIP, which is designed for customers across the commercial and government sectors, enabling them to derive value from recent breakthroughs in AI via the combination of our existing software platforms with generative AI models, including LLMs. We believe AIP uniquely allows users to connect LLMs and other AI with their data and operations to facilitate decision-making within the legal, ethical, and security constraints that they require.
The Ontology has continuously evolved over time, serving as the heart of our platforms by activating data and analytics inside operations, enabling real-time connectivity between data, analytics, and operational teams, as well as AI. Ontology generally refers to the systematic mapping of data to meaningful context. The Palantir Ontology goes far beyond the traditional concept by integrating the elements of a decision—the data, logic, and actions—into a foundational representation of the organization, and allowing users to build interconnected workflows, turning specialized expertise into shared infrastructure to dynamically optimize decision-making across the enterprise. The Ontology can help create a shared understanding across all users in a data ecosystem regardless of technical skills, enabling organizations to scale more efficiently and rapidly.
Recent crises and systemic shocks, including global conflicts, have made clear to many of our customers that accommodating the extended timelines ordinarily required to realize results from implementing new software solutions is not a viable option. As a result, customers are increasingly adopting our software, which can be ready in days, over internal software development efforts, which may take months or years. See further discussion in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Macroeconomic Trends.”
Our Platforms
We have built four principal software platforms: Gotham, Foundry, Apollo, and AIP. Our software platforms provide the critical infrastructure needed to integrate our customers’ data and operations and run their software in virtually any environment.
The vertically integrated nature of these platforms allows users of varying technical abilities to collaborate effectively in our platforms. Using the Ontology, users can build out and integrate data, logic, and action into a decision-centric architecture, where data engineers can integrate new data sources, analysts can clean and transform data, data scientists can write models, business users can conduct daily workflows, and senior leaders can make critical decisions. With AIP, trusted data from relevant sources within an organization’s Ontology can be integrated into business logic, machine-language models, optimizers, and other computations spread across varying environments to power enterprise and government processes and help drive critical decisions. Customers may bundle these platforms together as a single ecosystem.
Data, analyses, decisions, and the metadata around each are secured with fine-grained access controls that propagate from source data to shared analyses. Each platform is comprised of user-facing applications that may be targeted to the specific industries and sectors in which they are used.
Despite their differences, Gotham and Foundry both serve as central operating systems for our customers. While they vary in specific functionality, they align in approach. AIP provides an integrated architecture to Gotham and Foundry that can bring AI to every decision. These platforms, backed by Apollo and with Ontology at their heart, can be deployed in almost any environment.
Similarly, customers can now use Apollo to enable continuous deployment, configuration management, and central software operations management across almost any environment for their own software products.
Gotham
Gotham integrates with our other platforms, as well as our broader defense offerings, and enables users to see, understand, and act in the modern battlespace, from operations centers to the tactical edge, by integrating data from across domains and sensors in near real-time, improving situational awareness and accelerating operational decision-making. It also facilitates the hand-off between analysts and operational users, helping operators plan and execute real-world mission plans while maintaining a complete operational picture across echelons. Gotham is used broadly across government functions.
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Foundry
Foundry transforms the ways organizations operate by creating a central operating system for their interconnected data, logic, and action. Individual users can integrate and analyze the data they need in one place, connecting models across workflows, teams, and organization units for continuous decision optimization. The speed with which users can experiment and test new ideas is what makes the software stick.
Data projects often fail because data pipelines are often devoid of value creation and disconnected from analytical and operational domains. The Ontology aims to solve the root of this problem, by providing a common system for data, analytics, and operations. Foundry’s multimodal interfaces allow users to build data pipelines, perform high-scale analytics, and build rich operational applications – all through intuitive graphical interfaces, fully-featured application programming interfaces, and software development kits. All of our commercial customers now use it, as do many of our government customers.
AIP
AIP enables responsible AI-advantage across the enterprise and government by using primary, core components built to effectively activate LLMs and other AI within any organization. It provides unified access to open-source, self-hosted, and commercially available LLMs that can transform structured and unstructured data into LLM-understandable objects and can turn organizations’ actions and processes into tools for humans and LLM-driven agents. AIP can allow organizations to power operational use of AI and LLMs with interfaces for decision making, feedback, and safe hand-off among AI agents and human operators with wide-spectrum security and audit controls, which allow for granular control over model usage and integrated human review checkpoints throughout the workflows. AIP is seamlessly bundled with existing Palantir offerings such as the Foundry, Gotham, and Apollo platforms.
Apollo
We have always prioritized meeting our customers wherever they need us most. We originally built Apollo to enable the continuous delivery of our software wherever our customers are: in the cloud, on-premises, or even more rugged environments. Today, Apollo enables the rapid, secure delivery of our software and updates across our business, and also enables our customers to securely deploy their own software in virtually any environment. Apollo provides a single control layer to coordinate ongoing delivery of new features, security updates, and platform configurations.
Our Customers
We work with many of the world’s leading government and commercial institutions. As of December 31, 2025, we had 954 customers.
Our software is used across many industries around the world. It is applied to a variety of use cases by users across various business functions and levels of organizations, including by utility operations analysts, automotive manufacturing workers, oil and gas technicians and operators, and pharmaceutical researchers in the United States; supply-chain managers in South Korea; public health administrators in the United Kingdom and the United States; and special forces personnel and military officials in the United States and abroad.
Of the $4.5 billion in revenue that we generated in 2025, 54% came from customers in the government segment, and 46% came from customers in the commercial segment.
Our business continues to have a global presence. In 2025, we earned 74% of our revenue from customers in the United States, and 26% from those abroad.
The average revenue for our top twenty customers during the trailing twelve months ended December 31, 2025 was $93.9 million, and is up from 2024, when the average revenue from our top twenty customers during the trailing twelve months ended December 31, 2024 was $64.6 million, demonstrating our expanding relationships with existing customers.
Sales and Marketing
Our approach to sales and marketing is built around discussions with existing and prospective customers in order to understand the principal challenges our customers face and identify ways in which our software platforms can provide long-term value and results. We continue to evaluate and refine our sales and marketing approach as we develop relationships with existing and prospective customers.
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Customer Acquisition
Our customer acquisition strategy generally targets large-scale, hard-to-execute opportunities at large government and commercial institutions. The high installation costs, high failure risks, complexity of data environments, and the long sales cycles associated with these opportunities raise the barriers to entry for competition. The larger, more complex, and more technologically demanding the problem, the more likely we are to succeed. Additionally, our focus in the short term remains making our principal software platforms available to an increasingly broad swath of our potential market. We believe that every institution faces challenges that our platforms and products were designed to address.
Across both the public and private sectors, there is a history of failures when investing in new technologies. One U.S. military department spent more than $1 billion building an enterprise resource planning system from scratch. The system was never delivered, and the project was terminated.
Many of our customers have had similar experiences investing millions — even billions — of dollars in digital transformation projects, enterprise data warehouses, and digital twin initiatives that never really worked.
These failures have made both software buyers and vendors highly risk-averse. Institutions often doubt that any vendor can implement a working solution and are unwilling to invest. On the other hand, smaller technology companies are often unable to compete for complex, large-scale opportunities because installation costs and the risks of failure are too high, and the sales cycles too long.
These are precisely the opportunities we target. Rather than reject projects with risky and resource intensive installation requirements, we actively seek them out.
There are a number of sales and marketing strategies that have accelerated our ability to acquire customers in recent years:
Expansion of Access to Platforms
The speed with which our platforms can be deployed has significantly expanded the range of potential customers with which we plan on partnering over the long term. One example of this is our use of AIP bootcamps, which allow us to deliver real workflows on actual customer data in days. Another way we expand access to our platforms is our Developer Tier offering, which provides limited access to Foundry and AIP in the United States and select countries. This allows developers to explore, innovate, and develop without significant upfront enterprise costs.
We embed directly with customers across numerous industries, tackling complex challenges while continuously enhancing our platforms’ capabilities, allowing us to extend our reach to a broad set of customers while maintaining the depth needed for mission-critical operations.
We anticipate that these and other strategies, aided by our sales and marketing approaches, will enable us to continue to expand the number of customers we can serve in both our commercial and government sectors.
Direct Sales Force
We have invested and may continue to invest in an account-based sales force to identify and capture new customers and opportunities.
We believe that our decision to build our sales force in recent years has resulted in multiple new customers, and the broadening and expansion of our commercial customer base and relationships with leading government agencies around the world.
Sector and Industry Operating Systems
In addition to supporting individual institutions, our platforms have become central operating systems for entire industries and sectors. We are developing industry operating systems to help companies and government agencies manage operations across their entire organizations. These operating systems allow our software to be distributed at scale to institutions within given industries. We have developed, and are continuing to develop, partnerships in industries such as airline, space, shipbuilding, insurance, healthcare, telecommunications, automotive, security and risk management, and government, which we anticipate will have a significant impact on our business moving forward.
U.S. Government
We continue to believe we are uniquely positioned to provide commercially available software to the U.S. federal government. Our government customers remain a meaningful source of revenue for our business. We intend to capture an even greater share of U.S. federal government spending on software systems.
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See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Our Customers” for a discussion of the terms of our government contracts.
Channel Sales & Cloud Partnerships
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements based upon current plans, expectations, and beliefs, involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. You should review the section titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and the section titled “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Overview
We build software that empowers organizations to effectively integrate their data, decisions, and operations at scale.
We were founded in 2003 and started building software for the intelligence community in the United States to assist in counterterrorism investigations and operations. We later began working with commercial enterprises, who often faced fundamentally similar challenges in working with data.
We have built four principal software platforms, Gotham, Foundry, Apollo, and our Artificial Intelligence Platform (“AIP”). Foundry is our foundational data operations platform, which provides the core capabilities for data management, logic authoring, systemic mapping development through our Ontology, analytics, and workflow development. AIP is our generative AI platform, which provides secure connectivity to third-party-provided large language models (“LLMs”), a development toolchain for building AI-powered agents and automations, an array of AI-enabled end user applications, a broad evaluations framework for governing AI workflows in production, and more. Apollo is our continuous delivery platform, enabling the orchestration of upgrades of services and assets every day to manage the underlying infrastructure that hosts our other platforms. Gotham integrates with our other platforms, as well as our broader defense offerings, to power a wide array of missions across allied defense and intelligence operations.
For over a decade, Gotham has surfaced insights for global defense agencies, the intelligence community, disaster relief organizations and beyond. Foundry is becoming a central operating system not only for individual institutions but also for entire industries. Apollo, which we began offering as a commercial solution in 2021, is a cloud-agnostic, single control layer that coordinates ongoing delivery of new features, security updates, and platform configurations, helping to ensure the continuous operation of critical systems. Apollo allows our customers to run their software in virtually any environment.
In 2023, we began deploying our newest offering, AIP, which is designed for customers across the commercial and government sectors, enabling them to derive value from recent breakthroughs in artificial intelligence via the combination of our existing software platforms with generative AI models, including LLMs. We believe AIP uniquely allows users to connect LLMs and other AI with their data and operations to facilitate decision-making within the legal, ethical, and security constraints that they require.
The Ontology has continuously evolved over time, serving as the heart of our platforms by activating data and analytics inside operations, enabling real-time connectivity between data, analytics, and operational teams, as well as AI. Ontology generally refers to the systematic mapping of data to meaningful context. The Palantir Ontology goes far beyond the traditional concept by integrating the elements of a decision—the data, logic, and actions—into a foundational representation of the organization, and allowing users to build interconnected workflows, turning specialized expertise into shared infrastructure to dynamically optimize decision-making across the enterprise. The Ontology can help create a shared understanding across all users in a data ecosystem regardless of technical skills, enabling organizations to scale more efficiently and rapidly.
While our focus in the short term remains on making our software platforms available to increasingly broad swaths of the market, we are also working to identify additional component parts and products embedded within those platforms that have potential as commercial offerings on their own.
We believe that every institution faces challenges that our platforms and products were designed to address. Our approach with all our clients is to establish a partnership that transforms the way they use data in pursuit of their goals.
We regularly evaluate partnerships and investment opportunities in complementary businesses, employee teams, technologies, and intellectual property rights in an effort to expand our product and service offerings.
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Our Business
Our customers pay us to use the software platforms we have built. While we generally offer contract terms of one to five years in length, our customers sometimes enter into shorter-term contracts. Revenue is generally recognized ratably over the contract term. Many of our customer contracts contain termination for convenience provisions.
For the three months ended March 31, 2026, we generated $1.6 billion in revenue, reflecting a 85% growth rate from the three months ended March 31, 2025, when we generated $0.9 billion in revenue.
In the three months ended March 31, 2026 and 2025, we generated income from operations of $754 million and $176 million, respectively, or adjusted income from operations of $984 million and $391 million, respectively, when excluding stock-based compensation and related employer payroll taxes.
In the three months ended March 31, 2026 and 2025, our gross profit was $1.4 billion and $0.7 billion, respectively, reflecting a gross margin of 87% and 80%, respectively, or 88% and 82%, respectively, when excluding stock-based compensation.
For more information about our adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes; and gross profit and gross margin, when excluding stock-based compensation; as well as reconciliations from income from operations and gross profit, see the section titled “Non-GAAP Reconciliations” below.
Our Customers
We define a customer as an organization from which we have recognized revenue during the trailing twelve-month period. During the period ended March 31, 2026 and 2025, we had 1,007 and 769 customers, respectively, including companies in various commercial sectors and government agencies around the world.
For large government agencies, where a single institution has multiple divisions, units, or subsidiary agencies, each such division, unit, or subsidiary agency that enters into a separate contract with us and is invoiced as a separate entity is treated as a separate customer. For example, while the U.S. Food and Drug Administration, Centers for Disease Control and Prevention, and National Institutes of Health are subsidiary agencies of the U.S. Department of Health and Human Services, we treat each of those agencies as a separate customer given that the governing structures and procurement processes of each agency are independent.
We have built lasting and significant customer relationships and partnerships with some of the world’s leading government institutions and companies. Our average revenue for the top twenty customers during the trailing twelve months ended March 31, 2026 was $108 million, which grew 55% from an average of $70 million in revenue from the top twenty customers during the trailing twelve months ended March 31, 2025, demonstrating our expanding relationships with existing customers.
Organizations in the commercial and government sectors face similar challenges when it comes to managing data, and we intend to expand our reach in both markets moving forward. Our decisions about which customer relationships require further investment may change over time, based on our assessment of the potential long-term value that our software can generate for them. We conduct pilots and bootcamps with customers, generally at our own expense and without a guarantee of future returns, in order to access a unique set of opportunities that others may pass over for lack of resources and shorter investment horizons. We manage customers at the account level, not by industry or sector, so that we can optimize on the specific growth opportunities for each customer. In the three months ended March 31, 2026, 53% of our revenue came from government customers and 47% came from commercial customers.
Our U.S. customers have been a meaningful source of revenue growth for our business. In the three months ended March 31, 2026, we generated 79% of our revenue from customers in the United States and the remaining 21% from non-U.S. customers. Revenue from our U.S. customers during the trailing twelve months ended March 31, 2026 was $4.0 billion, which grew 87% from the prior twelve-month period. We expect that U.S. customers will continue to be a source of significant revenue growth for us.
We continue to believe that our government customers remain a meaningful source of revenue for our business, particularly during periods of economic uncertainty. However, large government customers, in particular, are generally subject to a number of uncertainties regarding budgets and spending levels, changes in timing and spending priorities, and regulatory and policy changes, which can make it difficult to predict when, or if, we will make sales to such customers or the size and scope of any contract awards. See also the discussion of “Risks Related to Relationships and Business with the Public Sector” within “Item 1A. Risk Factors” included in this Quarterly Report on Form 10-Q.
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Expansion of Access to Platforms
The speed with which our platforms can be deployed has significantly expanded the range of potential customers with which we plan on partnering over the long term. We anticipate that our reach among an increasingly broad set of customers, in both the commercial and government sectors, will accelerate moving forward. We believe that, as these new partners grow, we will grow with them.
Our proximity to these businesses and the industries in which they are operating has enhanced, and is expected to continue enhancing, our own product and business development efforts, as we continue expanding access to our platforms to the broadest possible set of customers.
Macroeconomic Trends
As a corporation with an international presence, we are subject to risks and uncertainties caused by significant events with macroeconomic impacts, including, but not limited to, geopolitical tensions, fluctuating interest rates, monetary policy changes, foreign currency fluctuations, and the potential or actual imposition of tariffs or other impacts on trade relations. Additionally, these macroeconomic impacts have disrupted, and may continue to disrupt, the operations of our customers and prospective customers. We continuously monitor the direct and indirect impacts of these circumstances on our business and financial results, as well as the overall global economy and geopolitical landscape.
See the section titled “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q for further discussion of the impact of macroeconomic trends on our business.
Geopolitical Tensions
Our business operations are subject to interruption by events that are beyond our control, including geopolitical tensions. We continue to closely monitor the impact of various geopolitical tensions and their global impacts on our business. While the ongoing Russia-Ukraine, Israel, and broader Middle East conflicts, including the escalation of hostilities resulting from the recent strikes by the United States and Israel on Iran and retaliatory strikes related thereto, and other global conflicts are still evolving and the outcomes remain highly uncertain, we do not expect that the resulting challenging macroeconomic conditions will have a material impact on our business or results of operations.
We do not currently have office locations in Russia or Palestinian territories and none of our revenues came from sales to entities headquartered in those countries or territories. Our current operations related to Ukraine, Israel, and broader Middle East regions are not material to our financial position or results of operations. If the respective conflicts continue or worsen, leading to greater disruptions and uncertainty within the technology industry or global economy, our business and results of operations could be negatively impacted.
Foreign Currency Exchange Rates
Exchange rates are subject to significant and rapid fluctuations due to a number of factors, including interest rate changes, monetary policy changes, and political and economic uncertainty which may adversely affect our results of operations or financial position.
Our contracts with customers and vendors are primarily denominated in U.S. dollars. However, when the U.S. dollar strengthens compared to other currencies (primarily the Euro (“EUR”) and British pound sterling (“GBP”)), it has had, and could in the future have, an unfavorable impact on our revenues and expenses from certain non-U.S. customers or vendors whose contracts are denominated in currencies other than the U.S. dollar. Additionally, certain of our U.S. and non-U.S. subsidiaries may hold monetary assets and liabilities in currencies other than their functional currency (primarily the Japanese Yen (“JPY”), EUR, and GBP), which could subject our results of operations and cash flows to adverse fluctuations due to changes in such foreign currency exchange rates as compared to the U.S. dollar. For the three months ended March 31, 2026 such impacts were not material to our financial position or results of operations.
Customer Impacts
Macroeconomic conditions have impacted, and may continue to adversely impact, our customers’ businesses. With economic uncertainty, we may experience additional negative impacts on new customer acquisition, customer renewals, and customer collections, among other things, which could negatively impact our business and results of operations.
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Key Business Measure
In addition to the measures presented in our condensed consolidated financial statements, we use the following key non-GAAP business measure to help us evaluate our business, identify trends affecting our business, formulate business plans and financial projections, and make strategic decisions.
Contribution Margin
We believe that the revenue we generate relative to the costs we incur in order to generate such revenue is an important measure of the efficiency of our business. We define contribution margin as revenue less our cost of revenue and sales and marketing expenses, excluding stock-based compensation, divided by revenue.
Revenue is allocated to each customer account directly. The cost of revenue and sales and marketing costs include both the costs associated with the deployment and operation of our software as well as expenses associated with identifying new customers and expanding partnerships with existing ones. Our software engineers working with existing customers often manage the deployment and operation of our platforms as well as identify new ways that those platforms can be used. To calculate the contribution by segment, we allocate cost of revenue and sales and marketing expenses, excluding stock-based compensation, to an account pro rata based on headcount and time spent on the account during the period. To the extent certain costs or personnel are not directly assigned to a specific account, they are allocated pro rata based on total headcount staffed during such period. Direct costs, such as third-party cloud hosting services, are directly allocated to the account to which they relate. Allocated revenues and expenses are then aggregated into a segment based upon the customer account to which they relate.
Contribution margin, both across our business and segments, is intended to capture how much we have earned from customers after accounting for the costs associated with deploying and operating our software, as well as any sales and marketing expenses involved in acquiring and expanding our partnerships with customers or potential customers, including allocated overhead. We exclude stock-based compensation as it is a noncash expense.
We believe that our contribution margin provides an important measure of the efficiency of our operations over time. We have included contribution margin because it is a key measure used by our management to evaluate our performance, and we believe that it also provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team. Our calculation of contribution margin may differ from similarly titled measures, if any, reported by other companies. Contribution margin should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
For more information about contribution margin, including the limitations of this measure, and a reconciliation to income from operations, see the section titled “Non-GAAP Reconciliations” below.
Non-GAAP Reconciliations
We use the non-GAAP measures contribution margin; gross profit and gross margin, excluding stock-based compensation; and adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes, to help us evaluate our business, identify trends affecting our business, formulate business plans and financial projections, and make strategic decisions. We exclude stock-based compensation, which is a noncash expense, from these non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance and provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team. Additionally, we exclude employer payroll taxes related to stock-based compensation as it is difficult to predict and outside of our control.
Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Further, these metrics have certain limitations, as they do not include the impact of certain expenses that are reflected in our condensed consolidated statements of operations. Thus, our non-GAAP contribution margin; gross profit and gross margin, excluding stock-based compensation; and adjusted income from operations should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP.
We compensate for these limitations by providing reconciliations of these non-GAAP measures to the most comparable GAAP measures. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measures.
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Contribution Margin
The following table provides a reconciliation of contribution margin for the three months ended March 31, 2026 and 2025 (in thousands, except percentages):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Income from operations | $ | 753,998 | $ | 176,048 | |||||||
| Add: | |||||||||||
Research and development expenses (1) | 124,436 | 103,055 | |||||||||
General and administrative expenses (1) | 112,341 | 107,663 | |||||||||
| Total stock-based compensation expense | 201,592 | 155,339 | |||||||||
| Total contribution | $ | 1,192,367 | $ | 542,105 | |||||||
| Contribution margin | 73 | % | 61 | % | |||||||
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(1) Excludes stock-based compensation.
Gross Profit and Gross Margin, Excluding Stock-Based Compensation
The following table provides a reconciliation of gross profit and gross margin, excluding stock-based compensation for the three months ended March 31, 2026 and 2025 (in thousands, except percentages):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Gross profit | $ | 1,416,785 | $ | 710,885 | |||||||
| Add: stock-based compensation | 17,906 | 15,016 | |||||||||
| Gross profit, excluding stock-based compensation | $ | 1,434,691 | $ | 725,901 | |||||||
| Gross margin, excluding stock-based compensation | 88 | % | 82 | % | |||||||
Adjusted Income from Operations and Adjusted Operating Margin
The following table provides a reconciliation of adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes for the three months ended March 31, 2026 and 2025 (in thousands, except percentages):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Income from operations | $ | 753,998 | $ | 176,048 | |||||||
| Add: stock-based compensation | 201,592 | 155,339 | |||||||||
| Add: employer payroll taxes related to stock-based compensation | 27,955 | 59,323 | |||||||||
| Adjusted income from operations | $ | 983,545 | $ | 390,710 | |||||||
| Adjusted operating margin | 60 | % | 44 | % | |||||||
Components of Results of Operations
Revenue
We generate revenue from the sale of subscriptions to access our software platforms in our hosted environment along with ongoing operating and maintenance (“O&M”) services (“Palantir Cloud”), software subscriptions in our customers’ environments with ongoing O&M services (“On-Premises Software”), and professional services.
Palantir Cloud
Our Palantir Cloud subscriptions grant customers the right to access the software functionality in a hosted environment controlled by Palantir and are sold together with stand-ready O&M services, as further described below. We agree to provide continuous access to our hosted software throughout the contract term. Revenue associated with Palantir Cloud subscriptions is
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generally recognized over the contract term on a ratable basis, which is consistent with the transfer of control of the Palantir services to the customer.
On-Premises Software
Sales of our software licenses, primarily term licenses, grant customers the right to use functional intellectual property, either on their internal hardware infrastructure or on their own cloud instance, over the contractual term and are also sold together with stand-ready O&M services. O&M services include critical updates and support and maintenance services required to operate the software and, as such, are necessary for the software to maintain its intended utility over the contractual term. Because of this requirement, we have concluded that the software licenses and O&M services, which together we refer to as our On-Premises Software, are highly interdependent and interrelated and represent a single distinct performance obligation within the context of the contract. Revenue is generally recognized over the contract term on a ratable basis.
Professional Services
Our professional services support the customers’ use of the software and include, as needed, on-demand user support, user-interface configuration, training, and ongoing ontology and data modeling support. Professional services contracts typically include the provision of on-demand professional services for the duration of the contractual term, which may be coterminous or non-coterminous with a Palantir Cloud subscription or the On-Premises Software. Professional services are on-demand, whereby we perform services throughout the service period; therefore, the revenue is recognized over the related term.
Cost of Revenue
Cost of revenue primarily includes salaries, stock-based compensation expense, and benefits for personnel involved in performing O&M and professional services, as well as subcontractor expenses, field-service representatives, third-party cloud hosting services, hardware costs, and other direct costs.
We expect that cost of revenue will increase in absolute dollars as our revenue grows and will vary from period to period as a percentage of revenue.
Sales and Marketing
Our sales and marketing efforts span all stages of our sales cycle, including personnel involved with sales functions, and executing pilots at new or existing customers. Sales and marketing costs primarily include salaries, stock-based compensation expense, variable compensation, including commissions, and benefits for our sales force and personnel involved in sales functions, executing on pilots, and customer growth activities; as well as third-party cloud hosting services for our pilots, travel costs, and marketing and sales event-related costs. Sales and marketing costs are generally expensed as incurred.
We expect that sales and marketing expenses will increase in absolute dollars and may vary from period to period as we continue to invest in our potential and current customers, in growing our business, in our sales force, and in enhancing our brand awareness.
Research and Development
Our research and development efforts are aimed at continuing to develop and refine our offerings, including adding new platforms, features, and modules, increasing their functionality, and enhancing the usability of our platforms. Research and development costs primarily include salaries, stock-based compensation expense, and benefits for personnel involved in performing the activities to develop and refine our platforms and products, as well as third-party cloud hosting services and other IT-related costs. Research and development costs are expensed as incurred.
We plan to continue to invest in personnel to support our research and development efforts. As a result, we expect that research and development expenses will increase in absolute dollars for the foreseeable future as we continue to invest to support these activities.
General and Administrative
General and administrative costs include salaries, stock-based compensation expense, and benefits for personnel involved in our executive, finance, legal, human resources, and administrative functions, as well as third-party professional services and fees.
We expect that general and administrative expenses will increase in absolute dollars as we hire additional personnel and enhance our systems, processes, and controls to support the growth in our business as well as our continuing compliance and reporting requirements as a public company.
25
Interest Income
Interest income consists primarily of interest income earned on our cash, cash equivalents, U.S. Treasury securities, and restricted cash balances.
Other Income (Expense), Net
Other income (expense), net consists primarily of realized and unrealized gains and losses from equity securities and foreign currency exchange gains and losses.
Provision for Income Taxes
Provision for income taxes consists of income taxes related to foreign and state jurisdictions in which we conduct business and withholding taxes.
Net Income Attributable to Noncontrolling Interests
Net income attributable to noncontrolling interests represents the share of income that is not attributable to the Company.
Segments
We have two operating segments, commercial and government, which were determined based on the manner in which the chief operating decision maker, who is our Chief Executive Officer, manages our operations for purposes of allocating resources and evaluating performance. Various factors, including our organizational and management reporting structure and customer type, were considered in determining these operating segments.
Our operating segments are described below:
•Commercial: This segment primarily serves customers working in non-government industries.
•Government: This segment primarily serves customers that are U.S. government and non-U.S. government agencies.
Segment profitability is evaluated based on contribution and contribution margin. Contribution is segment revenue less the related costs of revenue and sales and marketing expenses, excluding stock-based compensation expense. Contribution margin is contribution divided by revenue. To the extent costs of revenue or sales and marketing expenses are not directly attributable to a particular segment, they are allocated based upon headcount at each operating segment during the period. We use it, in part, to evaluate the performance of, and allocate resources to, each of our operating segments, which excludes certain operating expenses that are not allocated to operating segments because they are separately managed at the consolidated corporate level or are noncash costs. These noncash or unallocated costs include stock-based compensation expense, research and development costs, and general and administrative costs.
26
Results of Operations
The following table summarizes our condensed consolidated statements of operations data (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue | $ | 1,632,583 | $ | 883,855 | |||||||
| Cost of revenue | 215,798 | 172,970 | |||||||||
| Gross profit | 1,416,785 | 710,885 | |||||||||
| Operating expenses: | |||||||||||
| Sales and marketing | 319,220 | 236,309 | |||||||||
| Research and development | 160,981 | 134,889 | |||||||||
| General and administrative | 182,586 | 163,639 | |||||||||
| Total operating expenses | 662,787 | 534,837 | |||||||||
| Income from operations | 753,998 | 176,048 | |||||||||
| Interest income | 66,394 | 50,441 | |||||||||
| Other income (expense), net | 68,209 | (3,173) | |||||||||
| Income before provision for income taxes | 888,601 | 223,316 | |||||||||
| Provision for income taxes | 12,199 | 5,599 | |||||||||
| Net income | 876,402 | 217,717 | |||||||||
| Less: Net income attributable to noncontrolling interests | 5,875 | 3,686 | |||||||||
| Net income attributable to common stockholders | $ | 870,527 | $ | 214,031 | |||||||
The following table sets forth the components of our condensed consolidated statements of operations data as a percentage of revenue:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue | 100 | % | 100 | % | |||||||
| Cost of revenue | 13 | 20 | |||||||||
| Gross margin | 87 | 80 | |||||||||
| Operating expenses: | |||||||||||
| Sales and marketing | 20 | 27 | |||||||||
| Research and development | 10 | 15 | |||||||||
| General and administrative | 11 | 18 | |||||||||
| Total operating expenses | 41 | 60 | |||||||||
| Income from operations | 46 | 20 | |||||||||
| Interest income | 4 | 6 | |||||||||
| Other income (expense), net | 4 | — | |||||||||
| Income before provision for income taxes | 54 | 26 | |||||||||
| Provision for income taxes | 1 | 1 | |||||||||
| Net income | 53 | 25 | |||||||||
| Less: Net income attributable to noncontrolling interests | — | 1 | |||||||||
| Net income attributable to common stockholders | 53 | % | 24 | % | |||||||
27
Comparison of the Three Months Ended March 31, 2026 and 2025
Revenue
| Three Months Ended March 31, | Change | |||||||||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||||||||
| Revenue: | ||||||||||||||||||||||
| Government | $ | 858,410 | $ | 486,963 | $ | 371,447 | 76 | % | ||||||||||||||
| Commercial | 774,173 | 396,892 | 377,281 | 95 | % | |||||||||||||||||
| Total revenue | $ | 1,632,583 | $ | 883,855 | $ | 748,728 | 85 | % | ||||||||||||||
Revenue increased by $749 million, or 85%, for the three months ended March 31, 2026 compared to the same period in 2025. Revenue from government customers increased by $371 million, or 76%, for the three months ended March 31, 2026 compared to the same period in 2025. Of the increase, $367 million was from government customers existing as of December 31, 2025. Revenue from U.S. government customers was $687 million for the three months ended March 31, 2026 compared to $373 million for the same period in 2025. Revenue from commercial customers increased by $377 million, or 95%, for the three months ended March 31, 2026 compared to the same period in 2025. Of the increase, $352 million was from commercial customers existing as of December 31, 2025. Revenue from U.S. commercial customers was $595 million for the three months ended March 31, 2026 compared to $255 million for the same period in 2025, a 133% increase.
Generally, increases in revenue from our existing customers are related to increased adoption of our products and services within their organizations.
Cost of Revenue and Gross Profit
| Three Months Ended March 31, | Change | |||||||||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||||||||
| Cost of revenue | $ | 215,798 | $ | 172,970 | $ | 42,828 | 25 | % | ||||||||||||||
| Gross profit | $ | 1,416,785 | $ | 710,885 | $ | 705,900 | 99 | % | ||||||||||||||
| Gross margin | 87 | % | 80 | % | 7 | % | ||||||||||||||||
Cost of revenue for the three months ended March 31, 2026 increased by $43 million, or 25%, compared to the same period in 2025. The increase was primarily due to an increase of $39 million in third-party cloud hosting services.
Our gross margin for the three months ended March 31, 2026 increased from 80% for the same period in 2025 to 87%.
Operating Expenses
| Three Months Ended March 31, | Change | |||||||||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||||||||
| Sales and marketing | $ | 319,220 | $ | 236,309 | $ | 82,911 | 35 | % | ||||||||||||||
| Research and development | 160,981 | 134,889 | 26,092 | 19 | % | |||||||||||||||||
| General and administrative | 182,586 | 163,639 | 18,947 | 12 | % | |||||||||||||||||
| Total operating expenses | $ | 662,787 | $ | 534,837 | $ | 127,950 | 24 | % | ||||||||||||||
Sales and Marketing
Sales and marketing expenses increased by $83 million, or 35%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase was primarily due to increases of $27 million in marketing, $22 million in payroll and other payroll-related costs, and $15 million in stock-based compensation expense and related expenses.
Research and Development
Research and development expenses increased by $26 million, or 19%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase was primarily due to an increase of $25 million in third-party cloud hosting services.
28
General and Administrative
General and administrative expenses increased by $19 million, or 12%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase was primarily due to an increase of $6 million in stock-based compensation expense and related expenses and $3 million in payroll and other payroll-related costs.
Stock-Based Compensation
| Three Months Ended March 31, | Change | |||||||||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||||||||
| Cost of revenue | $ | 17,906 | $ | 15,016 | $ | 2,890 | 19 | % | ||||||||||||||
| Sales and marketing | 76,896 | 52,513 | 24,383 | 46 | % | |||||||||||||||||
| Research and development | 36,545 | 31,834 | 4,711 | 15 | % | |||||||||||||||||
| General and administrative | 70,245 | 55,976 | 14,269 | 25 | % | |||||||||||||||||
| Total stock-based compensation expense | $ | 201,592 | $ | 155,339 | $ | 46,253 | 30 | % | ||||||||||||||
Stock-based compensation expenses increased by $46 million, or 30%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase was driven by expense from new grants awarded since or within the three months ended March 31, 2025, including restricted stock units (“RSUs”), performance-based RSUs (“P-RSUs”), and stock appreciation rights (“SARs”), partially offset by reductions in expense from equity awards that became fully vested and forfeitures.
Interest Income
| Three Months Ended March 31, | Change | |||||||||||||||
| 2026 | 2025 | Amount | ||||||||||||||
| Interest income | $ | 66,394 | $ | 50,441 | $ | 15,953 | ||||||||||
Interest income increased by $16 million for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to an increase in our interest-bearing cash, cash equivalents, and investments in short-term U.S. Treasury securities.
Other Income (Expense), Net
| Three Months Ended March 31, | Change | |||||||||||||||
| 2026 | 2025 | Amount | ||||||||||||||
| Other income (expense), net | $ | 68,209 | $ | (3,173) | $ | 71,382 | ||||||||||
Other income (expense), net changed by $71 million for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to a realized gain on privately-held equity securities.
Provision for Income Taxes
| Three Months Ended March 31, | Change | |||||||||||||||
| 2026 | 2025 | Amount | ||||||||||||||
| Provision for income taxes | $ | 12,199 | $ | 5,599 | $ | 6,600 | ||||||||||
Provision for income taxes increased by an immaterial amount for the three months ended March 31, 2026 compared to the same period in 2025. For additional information see Note 10. Income Taxes in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Liquidity and Capital Resources
As of March 31, 2026, our principal sources of liquidity were cash, cash equivalents, and short-term U.S. Treasury securities totaling $8.0 billion. We generated positive cash flow from operations for the three months ended March 31, 2026. We believe that we have sufficient liquidity to meet our operating requirements for at least the next twelve months and thereafter for the foreseeable future. We continue to evaluate our liquidity and capital resources, including our access to external capital, to ensure we can finance future capital requirements.
29
The following table summarizes our cash flows for the periods indicated (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash provided by (used in): | |||||||||||
| Operating activities | $ | 899,165 | $ | 310,263 | |||||||
| Investing activities | (26,724) | (1,390,277) | |||||||||
| Financing activities | 3,397 | (28,897) | |||||||||
Effect of foreign exchange on cash, cash equivalents, and restricted cash | (2,404) | 3,980 | |||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | 873,434 | $ | (1,104,931) | |||||||
Operating Activities
Net cash provided by operating activities was $899 million and $310 million for the three months ended March 31, 2026 and 2025, respectively. The increase was primarily driven by revenue growth partially offset by timing of billings to and payments from customers.
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-06-01 | Stat Lauren Elaina Friedman | Director | Sell | -1,598 | $160.00 | -$255,680 |
| 2026-05-29 | Stat Lauren Elaina Friedman | Director | Sell | -1,667 | $150.00 | -$250,050 |
| 2026-05-20 | Taylor Ryan D. | See Remarks | Sell | -19,662 ×5 | $136.04 | -$2,674,859 |
| 2026-05-20 | Glazer David A. | See Remarks | Sell | -17,128 ×5 | $136.04 | -$2,330,130 |
| 2026-05-22 | Buckley Jeffrey | See Remarks | Sell | -830 | $137.41 | -$114,050 |
| 2026-05-20 | Buckley Jeffrey | See Remarks | Sell | -1,712 ×5 | $136.04 | -$232,903 |
| 2026-05-20 | Cohen Stephen Andrew | See Remarks | Sell | -319,934 ×5 | $136.04 | -$43,524,501 |
| 2026-05-20 | Sankar Shyam | See Remarks | Sell | -165,514 ×5 | $136.04 | -$22,516,876 |
| 2026-05-20 | Karp Alexander C. | See Remarks | Sell | -397,744 ×5 | $136.04 | -$54,109,936 |
| 2026-05-15 | Moore Alexander D. | Director | Sell | -16,000 ×4 | $134.04 | -$2,144,663 |
| 2026-04-15 | Moore Alexander D. | Director | Sell | -16,000 ×8 | $139.41 | -$2,230,580 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-08-04 10-Q expected by 2026-08-08 (in 50 days)
- ~2026-11-03 10-Q expected by 2026-11-07 (in 141 days)
- ~2027-02-16 10-K expected by 2027-02-25 (in 246 days)
- ~2027-05-04 10-Q expected by 2027-05-08 (in 323 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-05-05 10-Q Quarterly Report
- 2026-05-04 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-04-24 DEF 14A Proxy Statement
- 2026-02-17 10-K Annual Report
- 2026-02-02 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-04 10-Q Quarterly Report
- 2025-11-03 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-08-05 10-Q Quarterly Report
- 2025-08-04 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-05-06 10-Q Quarterly Report
- 2025-05-05 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-02-28 8-K Officer/Director Change
- 2025-02-18 10-K Annual Report
- 2025-02-03 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2024-11-14 8-K Delisting Notice; Regulation FD Disclosure; Financial Statements and Exhibits