Palantir Technologies Inc., a leading data analytics company, has reported strong growth in its US commercial segment during the first quarter of 2024. The company’s Artificial Intelligence Platform (AIP) continues to drive customer growth and revenue acceleration. Despite some challenges in the sales cycle for AIP, Palantir’s US commercial business remains robust.
In Q1, Palantir’s US commercial revenue reached $150 million, representing a 40% year-over-year increase. The company added 41 net new customers in the segment, a 69% YoY growth. AIP’s popularity and demand remain high, with over 915 organizations participating in bootcamps to explore and build on the platform.
However, Palantir’s management acknowledged the difficulties in selling AIP, stating that they are still in the early stages of figuring out how to market and sell the product effectively. This poses a potential challenge as the market has high expectations for Palantir’s performance and is pricing the stock for perfection.
Internationally, Palantir faced headwinds in its European business, with a decline in revenue due to ongoing challenges in the region. The company expects Europe’s slow GDP growth to impact its business in the coming years.
The market has priced Palantir’s stock for strong performance, with expectations of beat and raise results in each quarter of 2024. However, the company’s extended valuation and international headwinds pose downside risks. Palantir’s stock trades at a premium compared to similar enterprise software stocks, despite slower revenue growth.
Analysts expect Palantir’s business momentum to accelerate throughout the year, with increased guidance and beat expectations. However, if the company fails to meet these elevated expectations, its premium multiple risks rerating lower.