Palantir Technologies falls despite 'blowout results' as total contract value growth slows

[Financial News]  

Shares of AI platform provider Palantir Technologies fell on the 3rd (local time). The company had reported quarterly revenue and net income above expectations after the market closed the previous day, but its shares fell.
Analysts pointed to a slowdown in total contract value (TCV) growth and in 'leading indicators.'
Palantir Technologies' third-quarter results, released the previous day, were solid. Revenue doubled and net income nearly doubled from a year earlier.
The company posted revenue of $2.31 billion and net income of $1.13 billion, or $0.44 per share. That far exceeded Wall Street analysts' estimates of $2.18 billion in revenue and earnings of $0.41 per share.
But in regular trading the following day, the blowout results failed to impress.
This was because TCV growth slowed sharply, even as revenue from the U.S. private sector surpassed government-sector revenue for the first time.
In the second quarter, Palantir Technologies' TCV in the U.S. private sector surged 153% year over year to a record $2.1 billion. But in the third quarter, TCV was $1.5 billion, up just 11% from a year earlier.
According to CNBC, Piper Sandler said in a research note the previous day that investors had grown skeptical, and noted that they were closely watching to see whether the 11% growth in third-quarter TCV in the U.S. private sector was a one-off event rather than a structural problem.
In a research note on the 3rd, Goldman Sachs attributed the slowdown in TCV growth to shorter contract durations, saying, “The key is whether short-term contracts can be converted into long-term contracts,” and expressing confidence that “Palantir Technologies has successfully done this before.”

[email protected] Song Kyung-jae Reporter