Data analytics company Palantir (NYSE:PLTR) gave its shareholders something to cheer about today after delivering stronger-than-expected third-quarter financial results.
PLTR stock rose as much as 5% in premarket trading before reversing and declining by 3%. The movement in the share price comes after the Colorado-based company, which develops software and analytics tools for governments and private sector clients, reported third-quarter revenue of $392 million compared to $385 million expected by Wall Street. Earnings per share (EPS) came in at 4 cents, which met analyst forecasts. The latest earnings are welcomed by Palantir shareholders, as the stock has struggled for much of this year.
Three Key Takeaways
Here are three key takeaways that investors should know about Palantir’s latest financial results:
1. Palantir’s third-quarter revenue growth of 36% year-over-year was actually a slowdown from the two previous quarters of 49% year-over-year growth. However, the company provided a strong outlook for revenue generation in the current fourth quarter, saying it expects revenue to come in at $418 million, which is higher than the consensus forecast of analysts for Q4 revenue of $402 million. Palantir forecasts that its revenue for all of this year will come in $1.53 billion, which would represent 40% year-over-year growth.
2. Palantir is succeeding in diversifying its business. While the company continues to derive the lion’s share of its revenue from contracts with the U.S. federal government, most notably from the Department of Defense, Palantir has been focusing on securing more commercial, private sector clients and lessening its reliance on government work. During the recent third quarter, Palantir said that its U.S. commercial revenue grew 103% year-over-year and that its commercial customer count rose 46% from this year’s second quarter. In all, during Q3, Palantir added 34 net new customers. Furthermore, the company closed 33 deals worth $5 million or more, plus 18 deals valued at $10 million or greater.
3. Palantir continues to invest in special purpose acquisition companies (SPACs). Over the summer months and leading into the fall, Palantir invested in more than a dozen SPAC deals ranging from digital health to robotics and aviation. Palantir was one of several investors to put money into the upcoming market debut of Babylon Health via a SPAC deal or reverse merger. At one point, Palantir invested in six different SPACs in under three months. The investments are reported on the company’s financial statements.
What’s Next for PLTR Stock
After a difficult spring and summer, PLTR stock has caught fire in recent weeks. The company’s share price is now up 14% in the past month, bringing its year-to-date gains to 15%. The latest earnings report should support the bull case for Palantir. Additionally, it should keep the company’s stock rising in the near term.
At just under $27 a share, Palantir stock remains affordable. While the stock could pullback immediately after its Q3 earnings report, investors can reasonably expect the shares to continue trending higher through the end of this year as the broader stock market tests all-time highs. View today’s pullback as a buying opportunity.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.