Palantir Q4 Earnings Preview: High Stakes for a High Valuation
$Palantir Technologies Inc.(PLTR)$
Core Financial Indicators
– Palantir's revenue is expected to be $1.34B for 2025 Q4, up 62.09% YOY;
– Consensus diluted EPS is estimated to be 0.182, up 505.67% YOY.
– PLTR's free cash flow has consistently exceeded its reported net income, suggesting that its actual earning power may be underestimated. In Q3 2025, cash from operations totaled $507.66 million compared to a net income of $476.75 million. Additionally, the company's substantial cash balance is generating significant interest income.
– The higher operating cash flow compared to net profit is due to timing differences between product delivery and revenue recognition in certain projects. This reflects PLTR's business model, where client payments may be received before revenue can be fully recognized under accounting standards.
Palantir's net margin is another indicator to watch. Since relatively fixed costs are being diluted, Palantir's profit growth exceeds its revenue growth. The company's net margin turned positive for the first time in Q4 2022. In the previous quarter, its net margin reached 40.37%, the highest in its history.
Two Segments to Watch
1. Growth in Commercial Segment
Palantir's commercial business remains its key growth engine. In Q3 2025, U.S. commercial revenue surged 121.79% year over year, while international commercial revenue increased by only 9.42% versus Q3 2024. Palantir's recent collaborations with commercial companies have focused on cloud and data platforms, enterprise ERP, and other areas, including partnerships with Snowflake, Databricks, and SAP.
Q4 will be crucial: growth momentum will depend on acquiring new customers, increasing average revenue per customer, and wider adoption of AIP in enterprise deployments.
2. Government Contracts
Palantir has a significant presence in the government sector. The US government revenue grew by 51.88% YOY in Q3. Although there are suppliers in the market similar to Palantir, they are difficult to compare in terms of scale.
Palantir has established deep collaborations with traditional large weapons suppliers such as Northrop Grumman, L3Harris, RTX, Lockheed Martin, and BAE Systems. These partnerships primarily focus on embedding AI decision-making software into weapons platforms, jointly developing large-scale defense projects, upgrading digital manufacturing processes, and collectively undertaking government defense contracts.
Option Market Signals
The put/call ratio of Palantir options has reached 0.99, showing signs of bearish sentiment among some investors in the options market. IV data indicates a volatility of 66.32%. After the past 12 earnings announcements, Palantir's stock price has averaged a fluctuation of 16.82%.
Summary of Risks and Opportunities
– Potential Positive Catalysts: Government AI demand increases
– Risks to Monitor: Risk of fiscal spending cuts; Lower-than-expected corporate capital expenditure; Weak international demand
– Valuation:
Palantir's PE (Trailing Twelve Months) ratio currently exceeds 340 times, placing it at the 73rd percentile historically. Prior to its last earnings release, its valuation had exceeded 600 times. The earnings threshold will still be very high.
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