Hey guys, it's sasha palantir, just published their q4 results, and the stock immediately took a nose dive losing over 13 going back to 12, and given that the stock is already 55 down from its highs in november. That makes the 10 percent even more significant. In this video, i will give you a summary of what the results showed and tell you why the stock is tanking, i'm going to cover the good and the bad things that came through in their csc filings and the presentations and all the rest of the paperwork. That they published - and i will also share some comments about the live earnings - call that just finished.

If you are an investor - and you only want the good stuff, you don't want to hear any of the negatives, because you want some confirmation bias. I'm sorry! This is the wrong channel for you, because i am an investor, not a member of a fan club and if you're here, to dish out some hate on palantir. I'm also sorry, but i'm going to mention some good bits about the stock as well, because there are some pretty good things in this report now in case you're wondering i am a palantir shareholder, so i may be biased to some degree and palantir is one of My biggest positions, one of the bigger positions in my portfolio and if you decide that you want to buy palantir shares for yourself at these incredibly low prices compared to recent times the cheapest platform out there for buying us stocks from the uk is lightyear. Who are the sponsors of today's video light? Here? Is a new investing app in the uk.

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Just for opening you like your account, which is not too shabby all right. First up, let's look at the headlines with the palancia earnings. Palantir posted a quarterly revenue of 433 million dollars, which is 34 up year on year, and this was roughly in line with expectations and actually a slight beat on some of the analyst forecasts. The government side of the business only grew 26 year on year, and this is the first hurdle that i think is causing the stock to tank and people to panic.

The majority of valentia's business is currently through government and military work and that part of the business is growing considerably slower than the commercial side and the rest of the business. So the bigger part of the business is slowing down. They even have a sliding presentation where you can see how sharp this decline in government revenue growth has been. It is quite staggering it is still growing, but it's growing at a much slower rate than it used to now.

There are a few problems here. First, the us government is such an important part of palantir's business today that a slowdown in growth potentially affects the outlook for the business over the next few quarters, but also the fact that the us government is such a big customer means that palantir is somewhat restricted. In their ability to work outside the us, because foreign governments and many other large foreign organizations are far more reluctant to work with a company that supplies tools and data to us, intelligence right and as valentine's business pushes for growth in the commercial sector. In particular.

This could become a somewhat partially limiting factor in the future. Now the biggest problem with the us government revenue is that it is naturally by itself limited right. There are only so many government bodies who want to buy very expensive software, and there is only so much money that those bodies are prepared to throw at it. So the long-term growth of palantir is in other areas and the government part will naturally decline as a proportion of the business anyway.

Now the total commercial revenue grew by 47 year-on-year, which is great, but it's the u.s commercial revenue that is really stealing the show here. Growing by 132 over the last 12 months, that is phenomenal and in their presentation, patentee have published a chart of this u.s commercial growth year on year, and you can see that this segment of the business is growing fast and becoming very important. It's growing by over a hundred percent for two years running and alex carr said in the earnings school that this is just the beginning. This is where they are placing a lot of their focus and all of their bets.

The problem with this chart is that it is very fragmented if you look at the individual cohorts in here, the bars within each of the years. The 2019 cohort, for example, is huge, but then the 2020 cohort is really really small. Then the 2021 cohort is again really quite big, because usually customers don't earn that much revenue right at the start in the first year of when they're booked, so without even adding new customers, the prospect for 2022 looked really great. 22, revenue from existing cohorts should grow significantly before you even add new customers.

Just look at how the 2019 and 2020 cohorts grew proportionately from the first year to the next year. Now, having said that, one of palance's problems is that it is a tech solutions, business and, if you look at the older cohorts, the really old ones 2017 and before these cohorts are declining. Alex carter mentioned. There's a lot of customers from a long time ago, like 15 plus years ago, and they are declining, and this is because the software that was sold to those customers that many years ago is now becoming obsolete, outdated, completely defunct.

And this is a risk that the business model for palantir has some kind of limitation in terms of the customer life cycle and like a small lifecycle, is not quite as ever green, as perhaps it could be, or perhaps the company wants it to be. Now one big point in the earnings and on the call was the fact that parents have been doing a massive lot of hiring they hired 63 additional sales staff in 2021, which added to 17 that they already had in the us commercial team. That is a massive massive increase in terms of their marketing and sales, and the majority of these sales staff came later on in the year, and you can see that the us commercial revenue growth has also been accelerating very fast during 2021. And given this huge increase in sales personnel, there is a very good chance that that trend is going to continue through 2022.

So this is really great, because this is where the future of panel tiers business is. Parenting actually announced that they are hiring a lot more sales staff in 2022 as well and specifically they're going to focus outside the us this year. After focusing on the us last year - and there was one question in the q - a on the earnings score that asked how many sales staff they were hiring, it was by far the shortest answer, because alex skype just said is going to be 200.. They are planning to apparently hire 1 000 people in total, and 200 of them are going to be sales staff, and this is going to be another massive increase to drive sales for the business, and there is a very good reason why they are doing this.

If you zoom out panties growth has really slowed down in the last few quarters. You can see that, while the annual figures still look great, we have all the indications that the quarterly numbers are flatlining and the q1 outlook by palantir themselves is for that revenue to be 443 million dollars so again, very very flat from q4 and palancia used to Report the remaining deal value in their presentation, but this quarter they have stopped doing it. They've taken that slide out, and the number is now only mentioned in the remarks paper, and there is a reason why they've done that. The outstanding deal value in q4 was 3.8 billion dollars.

Now it was 3.6 billion in q3 and has generally been stagnating over the last few quarters. This is the total amount of deals the palantir have already signed, but not yet collected the money on so they've sold. The work or the software, but they haven't built for that software yet so the issue here is that the growth is slowing down as we've just seen, but the future growth, which is what this number indicates, is also looking very very flat, but at the same time Panel interior is also saying that they continue to expect annual growth to be in excess of 30 percent through to the 2025 year so over the next four years. The problem is that the current data just doesn't support that 30.

Their own q1 forecast is only 30 up from q1 2020, so the growth is already slowing down and hitting that 30 benchmark on the way down with this quarter and if patented want to change that trend, they have to act very quickly and very decisively to open Up new markets - and the good thing is, i guess that this is exactly what they say they are doing with all of these hires. With all these new people coming on they're hiring an absolutely insane number of sales staff, literally orders of magnitude more than they ever had before, and these sales people will take some time to come through in terms of revenue numbers, because this is all about relationship building. The sales process is not an overnight job, but also palantir is putting a lot of effort into expanding their foundry product to bring in more small to medium-sized businesses into the fold. This is going to be where the big money in the long term is probably going to be made.

Unfortunately, alex garb did say on the call, perhaps ill-advised, that there is absolutely in existence currently a minimum barrier to entry in terms of the competency required from the company buying their tools on software development. So if you're a regular running male business without a very strong or particularly good developer culture, perhaps palencia may still be a relatively difficult product to buy and integrate and use now. One really interesting chart in the presentation was this: one: about operating margins palancy presents two versions of this data usgap and their adjusted version. Usgap is the official version that aligns with proper accounting standards, so you have to account for everything properly and naturally, that number is lower.

The adjusted version takes out things that balance, it believes, are not genuine factors in terms of assessing the operational profitability of the business because they see them as one of costs, and these are stock-based compensation and the associated taxes. Basically, palantir is saying that they are hiring a bunch of super smart people and they're, giving them shares in the business so that they come in so that they come in and be part of their grey story. But in the long term, in 10 or 15 years time, those one-off initial stock-based compensation incentives are not going to be there as part of the ongoing operational cost. So when you assess their real operational performance in the eyes of palantir, their view is that the operational margin is sitting at around 30, which is really pretty good because remember they made over one and a half billion dollars in revenue in 2021.

So, using that 30 the operating margin is somewhere around 500 million dollars and the market cap is 24 billion at the moment. So that's only a 48 times, multiple which i know it sounds really high. When you look at some numbers, but for a relatively early stage, growth company - that is growing at a pretty high rate at the moment - that's actually not bad they're still pre-profit, and i think that they added this chart here to show that the official us gap version Of the operating margin is consistently trending towards that figure that they keep showing as the adjusted margin and in a few years it looks like it's going to get there and that's when the business will begin really raking in the cash now. One thing i really did not like in the presentation and in the q a was the amount of arrogance coming from alex carp.

A bit of arrogance is great, you know every ceo has it, but i really - and i really appreciate that he's built a really phenomenal company that is doing seriously amazing stuff, but there were continuous references to how palantir is completely leagues and streets ahead of any other Company every other company is pretty much irrelevant. How no other company is really building any new software patented is the only one. He literally said that, and generally there was far too much self-congratulating and patting himself on the back. I am sure the palantir is doing great things, but saying that absolutely nobody else knows what they're doing everyone else sucks and you are the only smart guy in the room - is not the best indicator of palantir appreciating risks to their business and the long road ahead.

For the company, especially when the company's growth has been slowing down as a shareholder, i think it's likely to be a somewhat rocky few quarters, while palantir upgrades the sales process and before that new sales process shows up in the revenue numbers. But the indicators are there that perhaps they are working on turning the type and this is beginning to head in the right direction. So i'm going to see what happens through the next year or two. If you found this video useful, please do not 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.