Palantir (Minutes): Welcome DOGE, government's focus on efficiency benefits us

Below is the transcript of the $Palantir Tech(PLTR.US) Q1 2025 earnings call. For financial report analysis, please refer to Palantir: "DOGE + Tariffs" Double-Edged Sword – Will AI Faith Fall from Grace?

1. Key Financial Metrics

2. Management Report

Q1 performance was strong with significant momentum. We continue to maintain excellence in the U.S., with our "Rule of 40" score improving from 81 in Q4 to 83 last quarter. Although some organizations may consider cutting costs to improve efficiency or respond to increased environmental volatility, they find this is precisely when they need Palantir the most. They turn to us, asking how we can help them adapt and address the latest challenges.

Every three days, you see headlines suggesting our commercial business might be at risk due to pressure—pressure that’s necessary to weed out fraud, waste, and abuse, and to stress-test systems to see if they create more, less, or no value for the U.S. government. We’re seeing rapid expansion and significant demand for Maven, both in the U.S. and abroad, as part of our core mission to provide noble Western warriors with an unfair advantage.

There’s growing recognition that large language models are just commodities, and their value is only realized within our Foundry-based ontological framework. As mentioned earlier, America’s reindustrialization is happening through our software, as is the ability to reimagine your business amid turbulence.

If you look at our business, 90% is outside Europe, where structural changes are still unfolding and AI isn’t fully understood yet. Perhaps in the near future, they’ll grasp AI. Outside Europe, we achieved 49% growth in Q1, and we’re doing this at a very significant scale. So we say we’re approaching $4 billion in revenue.

What Palantir is doing is something we want to share with our friends and allies on this journey to victory. These friends are mainly in the U.S. but also include allied nations. They’re both inside and outside Palantir. We’re using Ontology and AIP to drive these successes. I’d say that while profitability isn’t always popular, these numbers reflect the value we’re creating.

As AI evolves, we continue to help clients maximize these large models and leverage ontology to fully exploit internal operational scenarios. So even though Q1 is typically our slowest quarter due to seasonality, sustained demand for AIP drove outperformance.

The market generally agrees Palantir has value-creation capabilities. What does this mean? It means when you use our software, you get significantly more value than what you pay for, and you share some of that value with us. Culturally, we’re also seeing far less resistance to how we operate compared to the past.

Back then, we showed up like weirdos trying to make things work by visiting the wrong people at the wrong time. And this was intentional. At every level of enterprises, people were uncomfortable working with us. While I won’t name names—since these companies are often in the midst of self-transformation—I, like everyone here, was on the front lines. Two years ago, we might’ve reached out to a CEO, a CIO, a marketer, or someone willing to rebuild the business but lacking authority. Now, our full-stack teams collaborate with us, whether inside or outside government, tackling the most critical issues.

If you look at the math again, our business grew 49% outside continental Europe, with a Rule of 40 score of 83. We’ve spent 20 years preparing for this moment, focusing on mobilizing Palantir’s best talent to serve the best clients, ensuring our partners—especially in national security—are aligned with America’s victories. That’s why we’re seeing these results.

We’ll stay focused on execution, which is essentially our plan for the rest of this year and next. We’re very, very optimistic about what’s happening.

1. U.S. Commercial

Our U.S. commercial revenue grew 19% sequentially, exceeding a $1 billion annual run rate in Q1. U.S. commercial TCV reached $810 million, with a dollar-weighted duration growth rate of 239% YoY. The number of deals worth $1 million or more doubled compared to last year.

We’re seeing demand in client conversations, and in practice, things are accelerating—clients scale quickly after onboarding.

Examples include:

(1) In December, a major healthcare company attended our Bootcamp and signed a 5-year, $26 million ACV agreement five weeks later.

(2) A global bank piloted with us in Q4 2024, signed a $2 million deal a month later, and expanded it to a 3-year, $19 million ACV agreement four months after that.

(3) A Fortune 500 healthcare company started working with us in Q2 2024 and signed a 5-year, $10 million ACV conversion last quarter.

(4) We consistently hear clients highlight our software’s impact. A Walgreens exec recently noted that Foundry and AIP enabled AI-driven end-to-end workflow automation across 4,000 stores in 8 months—equivalent to automating 384 billion daily decisions, impossible manually.

(5) AIG recently emphasized that Palantir’s tech could double their 5-year CAGR through end-to-end adoption. They said: "This is an incredible outcome. You could give underwriters unlimited time—2, 3, 4 weeks—and they still wouldn’t get the data volume I access via Palantir in 2-3 hours." We’re working with R1 RCM on intelligent automation for faster, more precise medical reimbursements.

Their exec noted: "We see a multi-billion-dollar industry opportunity to return funds to providers so they can better invest in patient outcomes." Our name appears frequently in global earnings calls, with companies like Citi, BP, and L3Harris promoting their Palantir partnerships to investors.

You’ll hear more about these stories in our clients’ earnings calls than ours. As Ryan mentioned, AIG, Citi, BP, L3Harris, and Hertz recently cited AIP’s transformative impact. These proxies represent AI users—supply chain agents working with analysts, smart AI agents collaborating with humans. AI as a platform lets clients rapidly build and deploy agents to automate ever more processes.

AIG announced AI underwriting agents. AI agents process vast intelligence reports at the DoD, spotting what humans miss. AI agents monitor sepsis at Tampa General. As Ryan noted, our U.S. business is strong. I’ll reiterate the sustained strength, especially Warp Speed, our modern U.S.-made OS. Adoption and speed in product development exceeded expectations. These investments are driving reindustrialization, spanning new defense players, traditional contractors, and broader manufacturing.

2. U.S. Government

Our U.S. government business continues impressive growth as we support critical missions. With a focus on efficiency, our battle-tested products stand apart.

Last quarter, we expanded our DoD collaboration, including key impacts via Maven for joint commands and services.

In Q1, we delivered the first Titan vehicles to the Army on time and budget. The Army rated Titan a top performer—and it’s 颠覆 ing everything: a software company as prime contractor, a non-traditional defense team. Maven adoption keeps growing, doubling in the first 9 months of 2024 and doubling again in the next 5.

As Maven expands across commands, services, and use cases, adoption accelerates. You now often hear commanders mention Maven in Congressional hearings.

And Maven has entered Europe—NATO adopted its capabilities for its C2 OS. Leadership says:

"Maven isn’t just a common operational picture; it’s a decision-superiority environment rapidly transforming into...commanders. AI agents aren’t just changing U.S. commerce—they’re changing how we fight. They analyze intel, find targets, automate staff functions, and improve battlespace understanding.

Our defense users are among the most creative, self-sufficient developers. A soldier built a Hurricane Helen rescue COP in 5 days. Next time, they’ll have AI agents do it in 5 minutes."

3. International Government

Internationally, we agreed to provide NATO with Palantir Maven for AI mission command across 32 member states.

Historically, in turbulent times, public and private organizations turn to Palantir. As AI spreads, the gap between winners and losers grows starker. Winners aren’t determined by size but adaptability. Many have had to reimagine operations just to survive. We’re committed to helping firms embrace volatility. We expect more surprises, not fewer. Amid uncertainty, we’re more confident than ever that Palantir delivers tangible impact, helping organizations transform through real workflows and adapt to survive.

Even as LLMs improve—whether closed or open-source—they’re converging in performance while token costs plummet. The market focuses on AI models; we focus on meeting AI demand. After the first DeepSeek moment, this is now clear to all.

Our foundational investments in ontology and infrastructure uniquely position us to meet current and future AI needs. AIP has entered its next phase, focusing on enterprise automation. As I said last call, AI’s normative value is the "self-driving company." We’re not talking about a 50% productivity copilot but a 50x smart agent.

AIP is proving the best tool to build, test, evaluate, and deploy agents solving complex enterprise problems. Daily, users create agents to realize autonomy’s potential in public and private sectors.

AI agents operate as human-AI teams, blending workflow apps with code-first approaches, using ontology as a universal intermediary for enterprise state. They bring transformative impact—from targeting enemies to spotting supply chain opportunities.

3. Analyst Q&A

Q1: How will Palantir maintain its AI edge amid rising competition?

A: Our edge is ontology. This is the AI demand-side advantage. It makes AIP the platform capturing raw LLM capabilities and converting them into business value. AIP is the tool factory and control point coordinating these models.

You see this in the clear feedback from clients achieving value in days or weeks. Crucially, transforming enterprises requires hybrid AI teams—where AIP excels.

Q2: How will U.S. federal spending cuts and February’s DoD budget reduction affect existing and future contracts?

A: First, this is the right thing for the country. We’ve overspent on many ineffective programs. The government’s like wagyu—fat evenly spread, no weak spots.

Fake projects that can’t deliver squeeze out potentially great ones. We welcome these changes. To me, these folks are heroes—world-class technologists choosing this path. We’re confident our software creates real value, absolutely and versus traditional cost-plus models that failed Americans.

We often face questions about whether agency stress affects software sales. Palantir excels under stress. We love stressed systems—they force questions: Does the software work? How? How does it handle ethics, data protection, outputs?

Without stress, you might think spending more gets better systems—ethically or output-wise. But you get neither. We need stress. We need change. That’s why they accept us. Once they see results, they stick with us.

Q3: Given government trends, isn’t this another opportunity? Could Palantir capture more budget share as we shift toward elite (efficient) systems?

A: We’re very optimistic about U.S. prospects. Details matter. We run this for owners—there’ll be volatility, but we forecast huge success. Key elements under stress: AIP, AI, Foundry, Ontology, Apollo, and Palantir’s warrior culture. Our culture deploys the right teams and products to critical scenarios, especially under pressure. We value capability—achievable via buying and deploying the best products, which also bring the best ethics and execution.

Why is this key? No one’s entered these environments at this scale before—and if they did, it was via services. Now, we have a highly integrated, purpose-built software stack matched by a culture guiding its use. This appeals to some, not others. It’s compounding returns on the stack, aligning with Shyam’s view.

It lets you express tribal knowledge on your terms, at previously unattainable cost efficiency. This explains 90% of our market, the 49% growth, and Rule of 40 at 83. Externally, this might look like strong sales/marketing and how we engage—internally, externally, and with frontline clients. We don’t do shelf-ware. Government stress helps—we’ve never done shelf-ware. Our personality can’t handle it.

Q4: On European defense—given Warp Speed’s U.S. success, would you apply it there as Europe builds its underinvested industrial base?

A: Yes. On Europe’s rearmament challenges, we’d gladly help. Alex may have more. Warp Speed’s key was recognizing traditional manufacturing’s collapse. The U.S. leads due to Elon Musk-like talent spreading real manufacturing thinking—the foundation of reindustrialization.

So with emerging defense/industrial champs, sales cycles are short—they instantly grasp Warp Speed’s value. With traditional manufacturers, even in the U.S., it’s heterogenous. Some get it; others will. Europe shows glimmers—some manufacturers realize their ERPs don’t work and consider Warp Speed. Success depends on clients’ mindset, but we can help.

Europe doesn’t yet grasp AI—but will. It’s not monolithic. Some nations realize they need integrated systems. Our products are highly differentiated and renowned. Europe may take years to learn that investment alone isn’t enough—it must fund what works, like battle-tested solutions.

We aim to sustain ~90% ex-Europe growth, currently at 49% with Rule of 40 at 83. We expect U.S.-led growth, with Europe uncertain. Outside Europe, especially in government software, demand signals are strong, though early.

Q5: Investors know Palantir’s software model. Titan shows software’s hardware potential. Where else—like Golden Dome or space comms—could software add value?

A: Titan’s a great example—it’s about building hardware around software. We have classified projects where step one isn’t hardware but mission payloads and software, then reverse-engineering the hardware. This is a cultural clash.

Hardware companies see the world like builders—you need foundations first. But with software, you build the kitchen first. Otherwise, you’re totally wrong. More next-gen projects are thinking lethal software first, then hardware.

Shyam notes a key U.S.-Europe difference: people assume top hardware experts are also top software experts. They’re not—the skills and tastes differ. America’s edge is software-hardware integration. Any plan to outpace rivals must be software-first or hybrid—otherwise, you’re disadvantaged. Resource allocation and execution are critical, where some allies and rivals struggle. Taste, tribal knowledge, and execution are underrated.

Palantir exists to give supporters an edge, not help rivals. Thanks to all aiding Western values and meritocracy worldwide. Your support is why we’re here. We believe in capability—confidence built on ethics and results.

Risk Disclosures & Statements: Dolphin Research Disclaimer & General Disclosures