Palantir Technologies (PLTR -0.59%), which provides artificial intelligence (AI)-powered data analytics software platforms, is slated to release its fourth-quarter 2024 report after the market closes on Monday, Feb. 3.
Among tech investors, Palantir's upcoming earnings release will be one of the most anticipated of this quarterly earnings season. That's largely because last year the company's stock was the best-performing stock on the S&P 500 index. It gained 341%, versus the index's 25% return. That stunning gain was driven by the company's revving-up performance, thanks in part to the robust adoption of its Artificial Intelligence Platform (AIP).
Moreover, there's market buzz that Palantir's business could get an added boost from the incoming Trump administration. Some of this chatter involves the possibility that Palantir could get work from the president's newly created Department of Government Efficiency (DOGE), headed by Elon Musk, Tesla's CEO.
This speculation makes sense, since Palantir's platforms are aimed at increasing efficiency and effectiveness, and the company already does much work for various agencies within the U.S. government. Indeed, in the third quarter, its government business, which also does work for the governments of our allies, accounted for 56% of its total revenue. Investors, however, should not expect management to comment on the earnings call about this topic unless and until there are official contracts.
Palantir's Q4 2024 guidance and Wall Street's estimates
| Metric | Q4 Fiscal 2023 Result | Palantir's Q4 2024 Guidance | Palantir's Projected Growth | Wall Street's Q4 2024 Consensus Estimate | Wall Street's Projected Growth |
|---|---|---|---|---|---|
| Revenue | $608.4 million | $767 million to $771 million | 26% to 27% | $776.8 million | 28% |
| Adjusted earnings per share (EPS) | $0.08 | N/A | N/A | $0.11 | 38% |
Data sources: Palantir and Yahoo! Finance. Palantir does not provide earnings guidance. Data as of Jan. 27, 2025.
Palantir does not provide earnings guidance, but it does issue guidance for adjusted income from operations. In Q4, it expects this metric to be $298 million to $302 million. That equates to growth of 42% to 44% year over year.
Guidance will be crucial
The market looks forward. So Palantir's guidance, relative to Wall Street's estimates, will probably be a bigger catalyst for its post-earnings release stock price movement than the company's fourth-quarter results relative to analysts' expectations.
Here are Wall Street's consensus estimates for first-quarter 2025 and full-year 2025.
| Metric | Q1 Fiscal 2024 Result | Wall Street's Q1 2025 Consensus Estimate | Wall Street's Projected Growth | Full-Year 2024 Result | Wall Street's 2025 Consensus Estimate | Wall Street's Projected Growth |
|---|---|---|---|---|---|---|
| Revenue | $634.3 million |
$798.9 million |
26% | TBD | $3.5 billion | N/A |
| Adjusted earnings per share (EPS) | $0.08 | $0.11 | 38% | TBD | $0.48 | N/A |
Data sources: Palantir and Yahoo! Finance.TBD = to be determined; full-year 2024 results will be released on Feb. 3. Data as of Jan. 27, 2025.
As the chart shows, in Q1 2025, Wall Street expects Palantir's earnings to grow faster than its revenue. That means analysts expect the company's profit margin to keep expanding.
Palantir's track record of beating Wall Street's expectations in 2024
Palantir has exceeded Wall Street's revenue consensus estimate in each quarter of 2024 that it's reported so far. So, it's 3-for-3 for revenue "beats." On the earnings side, it exceeded Wall Street's expectation in Q2 and Q3 and met the expectation in Q1.
- Revenue grew 30% year over year, beating the 26% Wall Street expected.
- Adjusted EPS increased 43%, beating the 29% analyst consensus estimate.
- Revenue guidance for Q4 came in higher than the Street was expecting.
- Stock surged 23.5% the day after the earnings release.
- Revenue grew 27% year over year, beating the 22% Wall Street expected.
- Adjusted EPS increased 80%, beating the 60% analyst consensus estimate.
- Revenue guidance for Q3 came in higher than the Street was expecting.
- Stock jumped 10.4% the day after the earnings release.
Q1 2024:
- Revenue grew 21% year over year, beating the 17% Wall Street expected.
- Adjusted EPS increased 60%, in line with the analyst consensus estimate.
- Revenue guidance for Q2 came in higher than the Street was expecting.
- Stock dropped 15.1% the day after the earnings release. This sell-off largely stemmed from investors' overreaction to Palantir's U.S. commercial business' year-over-year revenue growth decelerating to 40% from the prior quarter, when it was 70%. Quarterly revenue will be somewhat "lumpy" because of variability in the timing of the close of large deals. Palantir's U.S. commercial business' year-over-year revenue growth reaccelerated from Q1's 40%. This metric was 55% and 54%, respectively, in Q2 and Q3.
Prediction: Palantir will beat Wall Street's earnings and revenue expectations on Feb. 3
Palantir has a good recent track record of surpassing Wall Street's revenue and earnings estimates, and issuing revenue guidance that also exceeds expectations. Given this record, it seems likely the company's Q4 report will, once again, be stronger than Wall Street is expecting.
I'm not going to predict what Palantir stock will do on Feb. 4, the day after the earnings release. That's because much depends on overall market sentiment -- and particularly tech stock sentiment -- on Feb. 3 and Feb. 4.
Long-term investors should focus on a company's business performance, not get hung up on daily stock moves. If a company performs well over time, its stock should do well over the long term.
