Watch my full Q3 earnings breakdown (in under 10 minutes): https://www.youtube.com/watch?v=hX01QOY3rQQ
So, is Palantir a sell after the third quarter earnings we saw yesterday? Well, the numbers this quarter were good. Much better than I personally expected in this sort of macro environment. However, there were plenty of reasons for concern around the deceleration on the revenue growth rate, so let's talk about it.
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So is Pilot there finally a buy after the third quarter earnings we saw yesterday. That's a question in everybody's mind. Now look, let's dive deep into the Q3 results. and let's talk about it. First of all, we know one thing. Pilot Theory reported revenues of 478 million dollars, which slightly beat estimates by a couple million dollars. So I would say it was technically a beat, but realistically, this was on par with expectations I Don't think it's actually a beat. Nevertheless, it's still quite impressive given the fact that just two years ago in Q3 of 2020, Palantir did 290 million dollars. That's a 64 increase in just two years now. The issue that investors have with this number that it also has a flip side. This means that we only saw 21.6 growth rate in revenues from 2021 until now. But given what happened in the past year, with you know, the tail end of the pandemic, the worst inflation 40 years, the war in Ukraine, a recession around the corner kind of I'm kind of willing to give them the benefit of the doubt. here. you know, not the best economic conditions. So 21.6 although not something to write home above for a company like volunteer, it's good enough to keep the needle moving, at least in my book. Now moving on, we found out that the company reaffirmed its Revenue guidance for the full year of 2022 for 1.9 billion dollars. Which means that if they hold true to that, we're gonna have the first 500 million dollar quarter in Palantir's history, which is absolutely massive. I'm excited to see that happen. It's a nice big milestone, which is something I Spoke about yesterday my video. But beyond the historic Milestone the growth rate of revenues is concerning if you look at the previous years. If you look at the first half of 2022, I mean look. Palantir is aiming for an annual growth rate of about 23.3 percent for the rest of this year. Now, if you look at the first six months of this year, compared to the previous year, we have 28 Revenue growth. Now we just had a 22 quarter Right now. if you calculate 28 22 and at 23.3 rate for the rest of the year, it means that Q4 Revenue growth is going to be 16. So I Cannot lie. there's definitely a Slowdown in Revenue growth for the rest of this year. It's not something we're going to put under the rug and completely ignore. Now, looking at it a little bit deeper, we can see the root cause of this is coming from the commercial business of all places, not the government business. This category is primarily like us dominated. You all know this as a Palantir investor I'm assuming at this point, right? But we did see a deceleration growth from 120 in the previous quarter to just 53 Growth in Q3 Just 53 I mean everything is in context, but I mean if you went from 120 to 53, there's definitely a problem. We can't ignore it now. I'm assuming personally that this has something to do with the weak macroeconomic conditions I mean we saw similar results from Google from Amazon Other companies are suffering from the same kind of B to B you slender I Mean there's a lot of problems right now. People are basically slashing budgets, spending is reduced, Everybody is fearful. You know Enterprise software sector is actually in the shelter waiting for the decision to come. Everybody is afraid. nobody wants to spend any money. You know what they say. Right when the macroeconomic condition sneezes, everybody gets wet. Polyte is not excluded from that. I mean they're a regular company like everybody else and they also feel the macroeconomic pain. Now here's the problem. I'd Love to get more clarity on this from the management, which we haven't yet, but hold on a second. Maybe we will in the future. maybe we won't I Don't know. but here's the thing. I'd Like to take a look at this whole story from a kind of an annual basis. I Think looking at it on a quarter by quarter in an isolated fashion is like, you know, being an ant on the football pitch. Every piece of grass looks like a ginormous building. When you're up at the bleachers, it looks completely different. So let's go to the bleachers for a second, right? By the time 2022 is over and done right, Palantir will achieve a 23.3 revenue growth now, according to their guidance. Now that shows me that Palantir is learning how to play football in the rain and in the snow in the elements, they've improved their go-to-market strategy. We know that Foundry is selling better than ever. Look at the customer account growth, you can see that the idea is to get your foot through the door and to trust the sticky products and your net dollar retention to increase the actual spend over the years. And with that system, it takes time to actually see the revenues. Pile In that's just normal. it's kind of a lost leading strategy. Now for me, the test is actually down the road for multiple reasons. Number one: I Want to see that strategy actually pan out? Can we see these customers who actually just basically got through the door actually increased their net daughter spend? And also I Want to see what's going on with the acceleration of the growth? As long as Q1 of 2023 is not going to continue in this decelerated growth trend, I'll be fine, I'll take the 23.3 growth this year and I'll just move on, no problem. That, in my mind, is going to be the big test whether this decelerated trend continues to the next quarter. basically the first quarter of next year as well. Now about that, we know the FED is tightening the monetary policy. The monetary conditions are going Tighter and Tighter They're basically putting us in a collusion course with some bad times in 2023. We know that. However, operationally speaking, if you ignore the you know reaction of the market, this company can weather the storm pretty darn good. I mean zero debt 2.4 billion in cash, including an emergency 950 million dollars credit line. They secure just the score just in case. By the way, you can actually look it up, it says that in the report. given the fact it's not burning through any cash flow, it's actually cash flow positive. I Feel very relaxed going into this horrible year as a Palantir shareholder. Now, while the growth in earnings is trending down over the past two years, Palantir's customer count as I mentioned earlier is actually very impressive. It's actually trending upwards. Over the past year, the company grew its customer account by 66 percent in a year. In the bad year, while maintaining about 20 Revenue growth and a positive operating free cash flow I mean that's not bad. but Tom What about stock based compensation? What about Insider selling? Well, First of all, beyond the fact that Alex Carp did not sell a single parental share in over a year, I Have to admit that using stock based compensation, paying employees with stocks is one of the reasons Palantir is generating all that positive cash flow. True, However, look at the number guys. Even those of you who don't like volunteer, go and check me on this. From 2020 to 2021, the share count of Planetary more than doubled as it went from 900 million shares to 1.9 billion shares. But things have changed and things are changing. Over the past year, Palantir share count only increased by 5.5 percent from 1.95 billion to 2 billion shares. That's it. Now it's a high growth rate for the share count, but for a high growth company which is giving you 20 a year Revenue growth. five percent dilution is on par with the industry standards, and it's not unusual. So here's my bottom line here. The numbers this quarter were good. much better than I personally expected given how bad Q2 was. So maybe I'm a victim of my own low expectations perhaps. but I think it's partially because of the macroeconomic environment. I Think there's a lot going on around Palantir, which is not strictly about the company itself. You know there are plenty of reasons to be concerned about deceleration of the revenue mainly, but I'm optimistic since I see some impressive customer growth which I know combined with 120 net door retention, volunteer has is going to convert to increased revenues over the years, especially in the US. And speaking about the US, the U.S momentum is pretty darn amazing. I Mean government contracts have provided an anchor for the company even in bad times. 130 growth in commercial customers in the US Very impressive therefore. Bottom line: my long-term thesis as a parenting investor is unchanged and given the lower share price and my unchanged thesis, I will be increasing my position in the next few days. So I Thought you should know this as always, thank you for watching if you want to see the recap of the actual numbers. I've done it yesterday. I'm going to put the video right here sorry right here. Go check it out right now. Full Numbers Recap: I'll see you there in just a minute.

By Stock Chat

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23 thoughts on “Is it time to sell palantir after q3 earnings?”
  1. Avataaar/Circle Created with python_avatars David Best says:

    Palantir CEO slams metaverse as 'idiosyncratic pursuit' of the elite

    Why do you think we have $2.4 billion in the bank and no debt? We weren't living in the meta-sphere," Karp said.

  2. Avataaar/Circle Created with python_avatars RPG007 says:

    FU Tom

  3. Avataaar/Circle Created with python_avatars ET Music says:

    As soon as it hits my buy in price again (hopefully soon), Im out and selling. Karp is WEF and that means stake holder socialism, not share holder capitalism. Until management changes, this stock won't do squat.

  4. Avataaar/Circle Created with python_avatars Rafael Nacpil says:

    SHUT UP TALK ABOUT FTX

  5. Avataaar/Circle Created with python_avatars Andrew Sandstrom says:

    I’m buying weekly til I hit 2000 shares, almost half way

  6. Avataaar/Circle Created with python_avatars KRA says:

    AMCG431 spam has overrun the comments.

  7. Avataaar/Circle Created with python_avatars Web Surfer says:

    Purchased more…i'm stayin'.

  8. Avataaar/Circle Created with python_avatars Rob Builder says:

    Tom where do you get your data on the share count? I thought palantir DPOd at 1.7 billion shares and now sits above 2 billion shares?

  9. Avataaar/Circle Created with python_avatars ze teiro says:

    how many stocks to retire in palantir?

  10. Avataaar/Circle Created with python_avatars Felicia Wichrowski says:

    Sell? I'm still waiting to buy mother lover! 21 cents away….

  11. Avataaar/Circle Created with python_avatars Larry Hill says:

    Tom I currently own PLTR 2021 Q1 yoy 49% Q2 yoy 49% Q3 yoy 36% Q4 yoy 34% 2022 Q1 yoy 31% Q2 yoy 26% Q3 yoy 22% what do you make of this. Once this turns around so will the stock.

  12. Avataaar/Circle Created with python_avatars Fernando Nunes says:

    I also think there is a more than expected lag between the increase of new clients and the respective increase of revenues. The deployment of Foundry is not immediate. For example the revenues of most of the new clients acquired on Q2 2022 will be only reflected in the accounts in Q1/Q2 of 2023.

  13. Avataaar/Circle Created with python_avatars Edmond Price says:

    Sold Puts at $6 to start a position. Sounds good

  14. Avataaar/Circle Created with python_avatars FrancescoB says:

    I agree great company long term winner

  15. Avataaar/Circle Created with python_avatars jacob drachmann says:

    Hej Tom
    I think you along with a lot of others youtubers are over looking the fact or atleast haven't addressed that the commerical revenue Quarter over Quarter is actually declining. I believe with around 6 million $. This is primiarly because of decline in the US commerical revenue with as declining from 120% to 53% growth over one quarter, typically, means mathematically that there has been a decrease, except in situations where the growth from Q2-Q3 2021 has been extreme, which is lost in the newest q over q calculation. This is true to some extend, as i believe they received a lot of their SPAC revenue in Q3 2021. Furthermore, I might suspect that after selling out of some of these SPAC deals that they might have lost some of that revenue which artificial have boosted their commerical revenue a bit the past year.

    What is your take on this?
    I suggest you try to play a bit with the percentages given of the US commercial revenue to make the mathemathical point more clear.

    Love all your videos and analysis.
    Btw bought some leaps myself yesterday and still have very high conviction in the company especially after seing all of the government action comeback to save us now when commercial is a bit lacking.

  16. Avataaar/Circle Created with python_avatars Indiana Jones says:

    Tom, enjoy your program, but with all due respect, it was not time to buy PLTR until today.

  17. Avataaar/Circle Created with python_avatars Marco Nierop says:

    I had to make a choice this morning, and my cash went into Tesla, maybe end of the month I can invest in Palantir, we will see.

  18. Avataaar/Circle Created with python_avatars Russell Copeland says:

    I think PLTR stock is way too beat up and should bounce by Jan. Bought some Jan calls.

  19. Avataaar/Circle Created with python_avatars JLizard says:

    Untimely meditations, par usual.

  20. Avataaar/Circle Created with python_avatars Happy Camper says:

    Client growth seems to be speeding up on the commercial side but those $$ take time to positively impact the bottom line. I’m buying when ever I get a opportunity to add below my current lows. Yes its undervalued at these prices but since I plan to hold for years I need to get my best price. I’m even ok with a bigger pullback into the $5 to attract the long term value investors.

  21. Avataaar/Circle Created with python_avatars Oshry Fitosi says:

    Great job

  22. Avataaar/Circle Created with python_avatars Boxer Bond says:

    Tom would never recommend to sell Palantir. him and Amit are too buried in the fanboyisme of this company no mather how far down it goes. Alex Karp keeps talking crap about Europe that's why it will never be big outside the US. When the US government market is saturated with Palantir the growth history will be game over. Tom is a good guy but he got too caught up hyping Palantir right after they IPO'ed with insane predictions on the stock price.

  23. Avataaar/Circle Created with python_avatars Renaissance Man says:

    I dont need to read any ERs or calculate crap… PLTRs stock price action over the last year and a half clearly states they are about to go underwater in a high inflationary environment where Fed rates are only going higher.

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