Palantir q4 good results, bad stock gon na talk about all that. I'm gon na explain what happened and what i think is coming next in just a second. Let's talk about what happened yesterday, because ever since my grandpa came back after new year's eve and fell down the stairs broke, some glasses got into his vladimir drove into the neighbor's backyard ran over this garden gnome. I haven't seen a cluster freak like this.

Until the palette q4 financials, our earnings call from denver it's my maiden voyage numbers are impressive, and yet the stock tank, and that's because palantir technologies is out with quarterly results. This morning, software platform company reported adjusted quarterly profit of two cents per share that compared to a consensus estimate of four cents, so you're going to be seeing that stock already off about two to three percent. This morning, revenue did beat wall street forecast, we're gon na keep our eye on it. We did see 1.5 billion in revenue give or take, which is basically what i expected, and i think most analysts expected so nothing to write home about.

You know it's only um. You know 100 growth in two years from 750 to 1.5 billion. You know since 2019, not that impressive. I mean every company grows 100 revenue in two years and of course, i'm being cynical here in case you didn't pick it up, but it is what it is now.

The other thing i was looking at here is free cash flow, because free cash flow is basically operational efficiency. I want to see how much money the company's making, because i hear a lot of people talk about well. Palantir - is not profitable, hardly har har. Well, 424 million in free cash flow from operations.

Not loans seems like 30 to me. So for those who are you know that are here saying that penalty is not profitable. I i find that kind of laughable, but that's not the reason why this stock tanked and there's plenty of other reasons which we're going to cover here in a second. So i think there is the multitude of reasons that cause this, because, first of all, as you may have noticed yesterday, the entire stock market took a beating.

I mean everything was so red, come on this parade. Every single stock was read a few exceptions here and there, but mainly everything, was red that still doesn't explain what happened with palantir, because, even though you know stocks like nvidia down seven and a half percent amd down three percent, even snowflake, the beloved snowflake, is down Six percent, so it's still not as bad as palantir, but it dropped 15. So there had to be something else. So obviously, the entire market took a beating because at this point, we're basically being managed by president putin every time putin says or doesn't say anything.

The entire stock market behaves like a manic depressive grandpa. In this ladder going backwards. You know without a visor i mean at this point. I think putin is secretly enjoying digging around the stock market every time he smirks something happens, so he either has puts on this market, or you know, he's just enjoying the eager trip of basically driving the stock market insane.

Oh, he was putting us on, but basically there's sounds of war intensifying again out of ukraine after actually mellowing down just a few days ago. So everything is going back to red. That is only a partial explanation of why palantiya actually took a beating. The other part of what happened yesterday, which is not financially or fundamentally driven, is something that you can't really change, which is alex carp's, personality and attitude.

I mean it is what it is. That's the guy he is, and i kind of like it to be honest, but i know a lot of people get triggered, he's arrogant and uh he's aloof and he thinks that he's better than you. It is what it is. I mean he basically gave the middle finger to the entire industry by moving out out of you, know san francisco all the way to denver and he's basically saying well, we know better, we are better and you're all you know not as good as us, and that's Fine, i kind of like it, but if you're going to say that you got to beat earnings, you can't miss on eps.

I know nobody cares about eps in the industry. I know actual analysts only care about revenue, growth and commercial growth, and you know free cash flow and operational margin stuff, like that. Nobody really cares about eps in the industry. However, the fact of the matter is that they missed, so you know it's irrelevant.

We can talk all day about how stock based comp drove it down and if, without stock based comp, there would have been much more gap. Profitable gap would be general accepted, accounting principles. So that's all true, but i mean if grandma had wheels, she would be a bicycle. Who cares? The bottom line is: there's a miss next to the name.

Eps miss with such a high participation of retail investors in palantir, there's literally like 70 cents on the dollar of retail investor money in volunteer versus institutional, which is almost a reverse from what you know. The other big companies are nvidia has 70 institutional investments similar to snowflake similar to amd. They all have 60 to 70 institutionals valentina. Has it the opposite, so only 35 institutionals and increasing quite rapidly uh.

You know companies like blackrock goldman sachs. Are you know pouring in, but still only 35, until we have more institutional investors in palantir which don't care about eps and empty metrics like this we're going to have this manic depressive volatile, behavior and you know alex's demeanor, i guess will be always a part of It but it will change, i guess when we'll have more institutionals taking over a retail money. Now, let's talk numbers, because there were some numbers that actually drove down the performance of the stock. Obviously the annual revenue beat was impressive.

They beat expectations quite significantly: 41 annual year-over-year growth in revenues instead of the guided 30 and 47 government growth, 34 commercial growth. Everything across the board you know is performing excellent, so why? Why is it tanking where's the problem, so the main thing that we saw that was kind of alarming, and we talked about this during our live stream when we were talking about the financials as they were coming out? Is that we're seeing quite a significant decrease deceleration in the pace of government business growth? So it is growing, but the pace in which is growing quarter of a quarter is slowing down, which is again something that we as long-term investors and volunteers, know about and understand that the company is pivoting away from government contractor to a commercial software provider and that's Part of the process, because there's only so much tam in the government side of things i mean, there's a glass ceiling there you have to pivot away from that into the commercial sector and that's exactly what they're doing, but that pivot comes with the cost. I mean uh, retail investors are looking at valentine's, saying, even maybe some analysts well right. Now, 60 of your revenue is coming from the government business and if that's not, you know as fast accelerating as we thought it would be.

Then we don't care about your pivot. I mean it is what it is and i get it, but for those of us who are there long term, we kind of expect to see that and not really alarm, but that's kind of the both sides of the story here. So i totally understand people who get freaked out by that, but i also totally understand why that's not a big deal to people like me who actually see this pivot is actually an important thing now, let's talk about the other part now, on the commercial side of Things where we see the massive growth, which is exactly what i wanted to see is there lies a little problem beneath the surface a little of a problem. The problem is that if you look at the u.s commercial growth - let's just say a hundred percent - just for you know - simplicity, a hundred percent commercial growth in the us.

It's amazing, however uh if the u.s grew by 100 percent, how we grew 34 in pretty much the entire commercial sector. That means that the rest of the world row is pretty much non-existent and that's kind of a self-imposed restriction that palantir is creating for themselves. I mean and they're not willing to take a lot of business because of their government affiliation and i'm assuming um that loosening up of their ability to take more and more commercial business. That's not as restricted is going to take time, the more they get away from the government and into the commercial sector, the more they're going to be able to loosen it up and get more business through the door.

Now. The next thing that actually is alarming to a lot of retail investors and a lot of the algorithms is the eps earnings per share. Now earnings per share was only two cents. Instead of the expected four cents which is half so it sounds dramatic.

The problem is that nobody gives a about eps in the industry. However, great investors do and the algorithms do and that's why you saw the big sell-off for me and for i think, most analysts and again you can comment below and share with us your opinion, especially if you have industry experience when you have a top-line growth, which Is revenue growth when you have high margins like they have when you have improvement in the margins when you have operational, free cash flow growth, so basically a company that grew 41 revenues and improved ebitda and generated 420 million in free cash flow for operations from 1.5 Billion in revenue, when you see that it actually is way more important than eps numbers, because it shows you that the business model is working, that is strong as the company is growing and it's heading in the right direction. However, you know i get it still at the end of the day. That's all excuses.

Eps is the metric that is there and they're going to have a miss next to the name. It's like playing in a basketball game and saying. Well, you know i had this easy layup and some guy just flagrantly fouled me and i missed the lap, but the referees navy, you know never gave me the call. They never blew the whistle.

So we lost the game, nobody cares. My guy, i mean you lost the game, so eps as far as you know, not being relevant i'll completely agree with that. However, it's a mess and that's why you know they're getting punished. It is what it is now.

The next thing is basically that i think they're sandbagging guidance and they've been known to do this for a while, as you notice, they're still guiding for 30 until 2025, and only 440 million for q1 of this year, which is exactly where expectations are nothing. As far as beating the expectations now, when you have that kind of guidance, usually it pushes the stock down now they've been known to send back these, and obviously you just saw this happen. They got it for 30 this year they did 41, but i think it loses the effectiveness of it when people are expecting you to do it. So at this point everybody knows that it's kind of the mo of volunteer.

So i don't know if that necessarily is the right decision, but i think this kind of low end conservative guidance is partially what's holding back the stock. Now, as far as things that i was looking at, which is, of course, the free cash flow, the revenue - i was also looking one more metric. I don't like the fact that they have two little clients. I want to see growth and client count so coming into this quarter.

They had 200 clients, they grew by 17, their client list in a single quarter, which is very nice but, more importantly, they actually grew their client list year over year on an annual basis by 71, again very impressed by that exactly what i've been looking for and The other thing i was focused on is the commercial growth. I wanted to see an acceleration in commercial growth versus the deceleration in the government, growth, which is exactly the pivot i was talking about, and we got that and some so you know nice, commercial growth, 34. On the year, but looking at the numbers quarter of a quarter, you see a massive incline: 19 first quarter, 28. Second quarter, 37, third quarter and 47 growth in the commercial sector in the final quarter of the year.

So the commercial sector growth is actually accelerating, which means it's exponential. Now i'm really excited about that part as well, not to mention the fact that if you look at the u.s numbers, the growth in the commercial sector is insane u.s. Commercial growth in this quarter was 130 percent annually 400. They went from 17 to 80 clients on the us commercial side.

I mean that's just something you can't ignore. However, as i mentioned before, they still fell short of the expectations, because, even though they did 432 million in revenue opposed to the 418, they were expected to make still the eps number, the eps miss of two cents versus four cents is basically what's pushing them down. That's part of the business: if you want to be on wall street, you got to be able to talk the talk and walk the walk. If you've been saying i'm better, you got ta beat eps, there's no excuses here, but i mean you got ta love the clients that they have.

They just signed 64 new deals in this quarter alone, which are worth one million or more out of those 20 deals worth 10 million, and more i mean they have some of the best clients in the industry that sort of commercial growth. Isn't these kind of small low-level little tickets? These are the big ticket clients and they're getting them in the bunch, but again, if you're not going to hit the gap, profitability, the generally accepted accounting principles, basically you're, not getting it done now. For me, when i see a company, that's not hitting gap profitability, i'm looking for two things. If you can't show me gap, profits show me two things.

I want to see improvements in margins and i want to see growth. Obviously, as far as growth we just talked about, it have plenty of, as far as the margins actually quite impressive, so their margins on an accounting basis on the gap basis with stock based comp, which is not a cash flow item. By the way, it's just kind of an accounting number they're actually improving. They went from negative 49 to negative 14 operating margin by these last four quarters.

Now, if you take out stock based comp, which again is not a cash flow item, it's an accounting line and it doesn't cost the company any money. Of course it dilutes the shareholders, but it doesn't cost the company any money without stock-based comp. This company is operating on 30 operating margin, that's quite impressive, and that's exactly why they had 424 million in free cash flow from operations, but again stock based comp is something we have to talk about it and there's no time like the present. So shall we the thing with stock base comp is wall street doesn't like it now it's true that stock based comp is the best way to attract top tier talent, especially if you know you're going up against a microsoft in a couple of years, which is quite Likely to happen, you want to attract the best people possible right now and lock them in with stock based comp.

I get it. The problem is that wall street hates it, even though they know it's important but to their defense. Planeteer have been actually improving in that. As well, stock based comp and dilution have been going down drastically so this quarter.

The share count of planetary only grew by two and a half percent from 1.96 to 2.01 billion, so it is slowing down. It is actually getting better, but until it completely halts, people are going to be complaining about it because they're getting deluded and they don't like it. It is what it is now the thing with valentiers, regardless of the stock based comp or what you're going to say about their gap: profitability they're five times cheaper than snowflake on a price to sale basis, so they're trading at you know: 14 15, 17 price to Sales depend which day you're going to check now. The bottom line here is quite simple: palantir had great q4 financials.

They beat expectations on revenue on cash flow, on margins on anything besides eps, but somehow they're still considered expensive. Even though they're trading at 1 4 one-fifth of price to sales compared to a company like snowflake, the bottom line here is quite simple: it's a company with great growth, amazing, moat, great margins and some of the best clients in the industry as long as they continue To growth at this space and they continue improving on their margins and they're, going to stop and keep slowing down dilution in stock based comp they're going to be killing it in just a few years. However, not all of us have the patience for that and that's fine. Some of you may say well, there's better alternatives out there for faster improvement on roi.

That's okay! For me, i think that's a generational company, but then again what do i know? It's just my opinion, i'm just a guy a hacksaw, you know. Do your research, i'm not a financial advisor. You know make your own decisions. I think that palantir is the next best thing since sliced bread, but hey it's just my opinion before i let you go.

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