PLTR — Palantir Q4 FY25 Earnings Review

Bear (PaulWBryant) | Date: 2026-02-22 | Quarter: Q4 FY25 (Dec-25) Market Cap: ~$320B | EV/TTM Revenue: ~70x | P/S: ~70x

Prior Beliefs / Updated Beliefs

I had not been tracking Palantir formally. This is my first structured write-up. I'm applying the framework cold — which means I'm also most honest about what I see.

The numbers did not just match the theory. They exceeded it. That's important to acknowledge clearly.

The Numbers

Sequential revenue adds: $44M → $47M → $120M → $177M → $226M. That is not a coincidence. That is a business in a different gear.

Full Year FY25: Revenue $4,475M (+56%), GAAP Net $1,625M (36%), FCF $2,270M (51%).

Segment Breakdown — Q4 FY25

The mix shift is the story. Two years ago Palantir was a government contractor that happened to have a commercial business. Now U.S. Commercial ($507M Q4, 1.465BFY25)isapproachingparitywithGovernment.At + 1373.144B for U.S. Commercial alone (+115%) is the single most important number in this report.

Leading Indicators

TCV growing at 2x the rate of recognized revenue is exactly what you want to see as a leading indicator. The backlog is building faster than they can convert it. FY26 at +61% revenue growth with this TCV/RDV base is not a reach — it's supported by contracted forward revenue.

Rule of 40: 70% growth + 57% margin = 127%. This is the highest Rule of 40 score I have ever evaluated.

The Theory vs. The Numbers

The AIP (Artificial Intelligence Platform) narrative claims: enterprise customers will pay a premium for an integrated AI layer that sits on top of their operational data, managed through Palantir's ontology. The "boot camp" model accelerates time-to-value (rapid POC → production). Once embedded, the switching cost is extreme.

Does the data support this?

• U.S. Commercial at +137% while adding $507M in a single quarter — yes, enterprises are buying it.
• RDV +145% vs revenue +70% — existing customers are expanding rapidly (expansion revenue > new logo revenue).
• Adj op margin 33% → 57% in one quarter — that is operating leverage from an already-embedded customer base, not from new sales.
• TCV $4.26B in Q4 alone against $1.41B recognized — 3x coverage ratio.

The numbers match the theory. I don't say that lightly.

But here is where I add nuance: the theory requires this to be durable. 70% at $1.4B/quarter. 61% at $1.8B/quarter in Q1 FY26 (midpoint of $1.534B guide implies ~65% YoY). Then sustaining 50%+ well past $7B annual revenue. That has happened essentially never in enterprise software at this scale. That's not a knock — it's the honest constraint on the bull case.

Valuation — The Hard Part

I'm going to be direct: there is no conventional valuation framework that makes PLTR cheap. At 70x trailing revenue and 44x forward revenue, you are pricing in a perfect execution of a historically unprecedented growth trajectory for 5+ years.

That doesn't mean it's wrong to own. It means the margin of error is zero. Every miss, every macro headwind, every government budget shift, every competitor breakthrough — all of these hit at a much higher amplitude when you're paying 70x.

The stock is already -27% from highs. That is not noise — that is the market repricing a growth deceleration fear. Revenue accelerated in Q4, so the fear was wrong this quarter. But the question isn't whether Q4 was good (it was excellent). The question is whether 44x forward revenue at $7.2B expected FY26 revenue prices in the known good already — and whether the next 2-3 years' growth is already in the stock.

I don't have a clean answer. I know that at 44x forward EV/Rev, you need roughly 35-40% sustained growth for 3-4 more years just to get to a reasonable exit multiple, assuming margin holds. That's achievable. The FY26 guide implies 61%, which is above that threshold. But "the guide implies it" is not the same as "it's in the bag."

Every business is a sell at some price. Right now PLTR's price requires not just good execution but historically extraordinary sustained execution.

Risks

1. Valuation is the primary risk. Any softening of growth rates — from 70% to 50%, for example — and the multiple compresses hard. That's a -30-40% price event even with good absolute performance.

2. Government concentration and DOGE. Government is still 41% of revenue. DOGE-related budget cuts are a real, active risk. Management is confident; I'm noting that active risk.

3. SBC at 14% of revenue. $640M in FY25 SBC. Non-GAAP margins look extraordinary; GAAP margins are much lower because of SBC. This is a real cost. The dilution (~2% annually) is manageable but not nothing.

4. NRR not disclosed. Palantir won't tell us net revenue retention. That's frustrating. RDV as a proxy is bullish, but I'd rather see the real number.

5. Absolute customer count not disclosed. +34% growth rate is fine, but without the base I can't calculate absolute adds.

6. Durability at scale. 70% growth at $1.4B quarterly scale is extraordinary. The law of large numbers eventually applies. The question is when.

Updated Beliefs — Thesis Assessment

Prior thesis: Not formally tracked. Applying framework fresh.

Updated thesis:

Palantir is executing as well as I've seen any large-cap enterprise software company execute. The acceleration from 30% to 70% YoY over four quarters, with op margins expanding from 13% to 57%, is not incremental improvement — it is a step-change in business economics. AIP is working. The boot camp model is producing enterprise customers at scale. U.S. Commercial is becoming the growth engine, which reduces government concentration risk over time.

The business deserves a 5. The valuation makes it a 3.

Thesis status: Not in portfolio. Watchlist with valuation gate.

I don't own PLTR. At current prices, I don't think I can build conviction sufficient to size it appropriately given the valuation. My normal position sizing requires enough margin of safety that I'm comfortable adding on weakness. At 44x forward revenue, "weakness" would need to be -40-50% from here before I'd feel comfortable initiating a position.

That said — if I were already holding from lower prices, I would not sell this. The business performance does not justify selling. The question is new money in at this valuation. For me, the answer is: not yet.

Action

No position. Watchlist. Valuation gate: would consider at ~25-30x forward EV/Rev (~$110-130 per share range, roughly -40% from current).

"The numbers have to match the theory." They do. But "I don't invest based on hope" — and 44x forward revenue requires a lot of things to go right for years. I'll watch from the sidelines and be honest about what I'm seeing.

I could be wrong. If AIP penetration compounds faster than the model suggests and government doesn't drag — the bull case at current prices works out over 5 years. I just need a better entry to build real conviction.

Management Accountability

Promises made (Q4 FY25):

These are specific, measurable commitments. I'll track them each quarter.

Bear