Hey guys, it's asham palantir has just published their results, and the share price immediately got smashed to pieces. Palantir is 10 down, as i'm recording this video trading at roughly around that 24 mark, but high level numbers didn't actually look very bad for palantir. So what caused palancia share price to crash so hard? Well, i'm going to walk you through the results not going to go into the depths of the boring stuff, but i'll show you some really important numbers. That may be part of the reason why this is happening and i'll also show you a few other numbers that are really positive for palance's stock on the counter, and then i'm going to share my thoughts on what all this means for me personally and maybe you'll Find some of this useful for your own determinations all right, so the results came in and, to be honest, they looked very much like any other recent quarterly reported by palin's here very, very similar q3 revenue was 392 million dollars up 36 from q3 last year and Ahead of alex carp's internal guideline of her 30 year on year, growth now gross margin continues to slowly improve.

So that's good and last quarter it was 77.9, but operating expenses continued to be higher than revenue and so on. On the surface, palantir has another last making quarter a net loss of 102 million dollars, and here we have the first issue, because i think this is beginning to weigh down on palantir more than it should, and that is when you look deeper at what is actually Underpinning all of these costs now i do know that valencia is an early stage company and i am aware of how they work and as any early stage company a large part of their compensation structure, especially for those at the top of the organization is through stock And on page 22 of the sec submission you can see that valencia spent 184.8 million dollars on stock-based compensation. This figure continues to be very high and it is ongoing. It doesn't fluctuate really that much last quarter's sec filing shows that they spent 232 million dollars and the quarter before that it was 193 million dollars, and i do understand why they're doing it, they want the management and senior staff members to be personally vested in the Business and this is a much more cash efficient way of paying people who are very expensive in an early stage company.

I get that, but we take we're talking a total of 611 million dollars so far this year, just in stock-based compensation payments on a total revenue of 1.1 billion dollars, that's over 50 percent, so the majority of their expenses at the moment are paying out shares to Their employees - and yes, this number is lower in the last quarter than it has been in the few before that. But it's still very high and that's going to be concerning people as to how long this is going to continue going for and what the taper. That might look like the next thing in this report. That is really not helping.

The share price is just below that. On page 22. - and this bit shows the distribution of revenue for palantir by region and as the company is growing and beginning to spread its wings, you wouldn't actually expect this to begin spreading around the world because they were very heavily us focused at the beginning of Their journey and you would expect more companies and governments and everyone around the world to buy into planet earth solutions, but this number is doing the exact opposite. 58 percent of pontius q3 revenue came from the united states.

This number is growing rather than shrinking, and it is much higher than it was just last year and that shows a lack of ability to penetrate outside the us. I mean it could in some ways i guess show that they are growing so much in the us, but they're not really growing outside, but in relative terms it makes them much more dependent on just the us market and it is going to be an ongoing concern. As to whether palantir can actually convince large corporates and governments abroad in other countries to work with them, you know seeing as they work and provide the systems for companies in the us for the cia, for the us government and the us army that may actually genuinely Play against them in quite a few other markets in other countries, and that leads me on to the next big reason why the share price tanked. In my opinion - and that is this - this outstanding deal value, which i think is the most important figure in any of the stuff that they publish.

This is the sum of all the contracts that parents here have already signed, but not yet delivered on. So this is the number that is going to be driving future revenues that we can see today. This number at the moment is 3.6 billion dollars, which is amazing. It is over three times what palantir made in the whole of 2020, but the problem is that this number was 3.4 billion last quarter, so it's only grown by 200 million dollars, and this is the number that is an indicator of what future growth looks like, especially In the sort of three to four year range and the fact that it did not grow very much at all could be a sign that valencia's growth could stagnate if they don't begin finding new contracts somewhere, and it is important to remember that this number is not The be-all and end-all, first off each quarter, a chunk of those contracts that are in that pipeline are actually delivered as part of that quarter's revenue.

So, for example, if this quarter, they earned 400 million dollars roughly in revenue. That means that they had to sell another 600 million dollars in new contracts for the outstanding deal value to go up by 200 million, which is the difference, but palantir's typical contracts are quite long. The average is around four years, so the fact that they are only selling 600 million dollars in new deals for an average term of four years when they're earning 400 million dollars in revenue right now in the last quarter is actually not a great sign. In terms of the relative growth, that's the amount they're selling, for you know three to four years time compared to today, and that's only a 50 markup.

I went back over their old presentations and this number does tend to jump quite a bit. You can see that it jumped in q2 this year from 2.8 to 3.4 billion, and the overall direction is up, which is good, but it does seem very dependent on those one-off, big contracts coming in. That's why these jumps are happening. So, although it does look good, it also indicates a lot more volatility and a higher risk around it continuing to go up in the future.

And imagine if we have another couple of quarters where this growth figure is low, because no big contracts are struck. That would potentially indicate that growth in three to four years time will not be as big as it is today, and that is going to affect valuations of pounds here, a lot because they are very forward-looking. Now, in october, palencia announced a huge 823 million dollar contract with the us army. That's almost as much as they earned in the whole of last year.

That's big, but we won't see that coming through in this outstanding deal value this quarter or next quarter, and that's because in the last few, quarterly updates palantir have specifically not disclosed what the idiq deal totals are id iq. Are these sort of army and defense contracts, which are somewhat separate to the rest of what palantir is doing with governments and with corporates they published that number in one quarterly update? I think it was two or three quarterly updates before, but they didn't publish it before and i haven't published it since and i'm suspecting. Maybe there are reasons why that you know maybe they were told not to publish that data that could in some ways be sensitive. Um, so that's sort of good and sort of bad at the same time, it's good because there is extra money that is already booked.

The palantir will collect in the future above that outstanding contract figure, but it's also a number we don't have any sight of and we can't really project as a result. Now i went through the 98 pages of this report that they published today and i couldn't see any numbers or references to these specific numbers anywhere in it. Maybe i missed it. Maybe these numbers are just not published for national security reasons or whatever, but anyway then palantir had a long earnings call which, if i'm completely honest, was a giant bore fest and was just one super long effectively.

Sales pitch with actually very little useful in content or things that we didn't already know, and the only interesting bits came later on when live questions came on now. The first few were pretty straightforward and not particularly exciting, but then there were these two questions towards the end. That were much more pointed talking on the question of contract delivery and new contracts being signed very similar to the points that i was just discussing and palantir completely skirted and basically avoided those questions and did not answer them and that didn't come across well at all. In fact, the share price started tanking the moment that happened the moment they avoided answering those questions it began.

Dropping i mean it was a small drop already, but it began dropping hard. It indicates that perhaps there is an issue there, but it is very hard to judge how much of an issue it may be because they are not answering the question. There were two numbers, though, in this report that were actually really good, despite what's happening with the share price. The first one was on page 38 of this powerpoint, and this is the remaining performance obligations number this number at the end of q3 is 874 million dollars, and this is a really big number.

Roughly speaking, this is the money the palantir will make in the future. For from work that they sort of have already done, if you like money, that is either based on some sort of performance metrics for money, that is only due to be invoiced in the future. For whatever reasons - and this is a huge number - and it is growing crazy fast - i was actually really surprised when i saw it because i didn't remember seeing it before and then i went back to all the old powerpoint presentations and yeah. It wasn't there.

So this is a really cool thing, because remember that revenue was only up 36 in the last quarter. Only i mean 36 is good, but what this is showing is that a lot of the revenue the palantir is actually making is essentially being sort of backdated. They will only invoice it for whatever different commercial reason at a future date, so they're always building this guaranteed future cash flow of revenue that doesn't require direct operating cost for work that they have already delivered or already completed, and the size of that future cash flow Is very significant, it is large and it is growing much much faster than revenue, and so it kind of suggests that there is an element of sandbagging going on here and the official figures. The pounds here is publishing because they're publishing today's earnings, but all of these earnings that they have sort of already earned are not going through the p l, they're sort of being delayed until a point in the future.

So that'll be quite an interesting one. To keep an eye on will they continue publishing this number and what is it going to do, and also u.s commercial revenue? Is the other big number that i wanted to talk about? Palantir earnings from u.s companies have grown by 103 percent year on year, which is huge, and that is a great sign because commercial revenue has to catch up and overtake these large government contracts to sustain palencia's growth in the long term. But look at the chart on the right. The total commercial revenue only grew 37 percent year on year.

This is a vast difference, so that means that commercial revenue outside of the united states has either not grown much at all or even declined. If the u.s revenue is exploding at 103 percent - and that's one part of this big total, but the average of u.s revenue and this other revenue, which is everyone else - is only 37 - that must mean that the average is much less than the 37. For these other countries that are not the united states, if that makes sense, so the big question is: what does all this mean for valuations? Well, i've been looking at mine personally and i'm just a random guy on youtube. So please please, do not listen and take this as any kind of meaningful.

This is my opinion. I've actually scaled down some of my own projections and palantius revenue and growth to be more conservative, given the risks that are beginning to appear and to sort of be a bit more prominent and tapering, the growth rate is pretty much. The only thing that i have done in my model, but it also means that i've dropped my personal target price for palantir down to 60, and i suspect that a lot of analysts are probably looking at this. I don't know mixed bag of a quarterly report and probably doing the same thing.

Hence why the share price has tanked so hard. If you found this video useful, please don't forget to smash the like button for the youtube algorithm. Thank you so much for watching. I really really appreciate it and, as always i'll see you guys later, you.