Palantir’s Record Q3 Results, 63% Revenue Growth as Commercial AI Growth Accelerates

Palantir’s AI Expansion Powers 65% Stock Rally and Record Operating Margins

Palantir (NYSE: PLTR) delivered an impressive third quarter, marking another major step in its transformation from a niche government contractor to a data-driven enterprise powerhouse. Palantir beat EPS expectations by $0.04 and revenue by US$90M. Over the past six months, the stock has climbed roughly 65%, reflecting growing investor confidence in the company’s ability to commercialise its AI software platform beyond government clients.

Total revenue reached A$1.1 billion, up 63% year-over-year and 18% quarter-over-quarter. The standout performer was US commercial revenue, which surged to US$397M as more businesses adopted Palantir’s AI and data-integration tools to improve operational decision-making. Meanwhile, US government revenue remained the largest contributor, rising to US$486M this quarter, underscoring the strength of Palantir’s long-standing federal partnerships.

Profitability is where Palantir is able to leverage value creation. Operating income hit a record US$601M, representing a 51% operating margin. Free cash flow came in at US$540M, translating to an impressive 46% margin. These figures demonstrate a highly efficient business model capable of converting top-line growth directly into sustainable profitability.

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Inside PLTR AI Advantage: Turning Complex Data into Real-Time Decisions

For those still getting familiar with Palantir, the company has quickly become one of the most talked-about names in tech. Its software helps both governments and enterprises make better decisions by transforming vast, unstructured datasets into actionable insights.

PLTR business model is built around long-term contracts that generate recurring revenue across two main segments: government and commercial. The government segment provides intelligence, defense, and decision-support platforms to US agencies and allies such as NATO. Meanwhile, the commercial segment has been expanding rapidly across industries, including finance, manufacturing, and healthcare. What makes Palantir’s platform particularly valuable is its ability to integrate seamlessly across different verticals, allowing organisations to connect fragmented data systems into one unified operational layer.

At the core of this system is PLTR Ontology architecture, a framework that structures enterprise data for AI use. Unlike traditional software that simply visualises or processes data, Ontology transforms it into a living model of an organisation’s operations. It standardises unstructured data, embeds business logic and workflows, and connects these insights directly to decision-making processes. This allows customers to run any generative AI model, such as OpenAI or Anthropic, securely within their own data environments. The result is that companies can harness the power of AI on sensitive datasets without risking leaks or compliance breaches.

Palantir’s True Moat Lies in Its Stickiness

The real competitive advantage here is stickiness. Because Palantir’s Ontology requires deep mapping of a client’s systems, processes, and decision logic, it becomes tightly woven into their operations. Once an organisation has modelled its assets and workflows within the Ontology, migrating away becomes complex and costly. In our view, that’s where Palantir’s moat lies; it’s not just selling analytics software; it’s embedding itself as the backbone of how clients make decisions, creating a level of integration that few competitors can match.

The Investors’ Takeaway For Palantir

Palantir continues to deliver record-breaking performance this quarter, closing 204 deals worth at least US$1M, 91 deals above $5M, and 53 exceeding $10M. Altogether, these agreements represented a record total contract value of roughly US$2.76B, highlighting not only strong demand but also the stickiness of Palantir’s customer base. Many of these deals are likely to translate into long-term recurring revenue as clients deepen their reliance on the company’s platforms over time.

Management expects fourth-quarter revenue to reach around US$1.3B, with operating income between US$695M and US$699M, reinforcing confidence in the company’s momentum heading into year-end. From an investment standpoint, though, the challenge lies in valuation. Palantir is already priced for near-perfect execution, which leaves little margin for error. With a price-to-earnings ratio of roughly 378, an enterprise value-to-sales multiple of 136, and a forward EBITDA multiple of 243, investors are clearly paying a significant premium for this growth story.