Date: 2026-02-22 Quarter: Q4 FY25 (Dec-25) Revenue: $1,407M | YoY: +70% | Adj Op Margin: 57% | FCF: 791M(56Marketcap: 320B | EV/TTM Rev: ~70x | Position: None (watchlist)
Holy smokes!! — the numbers are extraordinary. Revenue accelerating to 70% YoY, adj op margins exploding to 57% from 33% the prior quarter, FCF at 56%, Rule of 40 at 127%. By every growth metric I care about, this is an elite quarter from an elite company. The business is operating at a level I've rarely seen.
But I don't own PLTR. And after looking at this quarter carefully, I still don't see a way in at current prices. At 70x EV/TTM Revenue, this stock is pricing in years of near-flawless execution. The numbers deserve a standing ovation. The valuation demands extreme caution.
We will see what happens...
| Factor | Rating | Detail |
|---|---|---|
| 1. Revenue Growth >40% | ✅ PASS | 70% YoY — accelerating, not decelerating |
| 2. Trajectory | ✅ ACCELERATING | 39% → 48% → 63% → 70% YoY. Sequential adds: $120M → $177M → $226M. Each quarter bigger than the last. |
| 3. Gross Margins | ✅ HIGH | ~81% GAAP — consistently high. Enables everything else. |
| 4. Competitive Dominance | ✅ STRONG | "n of 1" in ontology-based enterprise AI at scale. AIP bootcamp model creates switching costs. No direct competitor at this level. |
| 5. Relative Valuation | ❌ EXTREME | 70x EV/TTM Rev, 138x EV/TTM FCF. Far beyond anything in my CRM Case Study history. Even the most richly valued periods for CRM were ~15-20x EV/Sales. |
| 6. Special Circumstances | ✅ PRESENT | AI secular tailwind. AIP driving step-change in commercial adoption. Government + commercial both accelerating simultaneously. |
Summary: 5 of 6 factors pass. The one that doesn't — valuation — is the one that keeps me out.
| Q1 FY24 | Q2 FY24 | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | |
|---|---|---|---|---|---|---|---|---|
| Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 | |
| Revenue ($M) | 634 | 678 | 726 | — | 884 | 1,004 | 1,181 | 1,407 |
| YoY % | 20.8% | 27.2% | 30.0% | — | 39.4% | 48.0% | 62.8% | 70.0% |
| QoQ % | — | 6.9% | 7.0% | — | — | 13.5% | 17.7% | 19.1% |
| Sequential Add ($M) | — | 44 | 47 | — | — | 120 | 177 | 226 |
| Adj Op Margin [Non-GAAP] | 12.8% | 15.5% | 15.6% | — | 19.9% | 26.8% | 33.3% | 57.0% |
| GAAP Net Margin | 16.6% | 19.8% | 19.8% | — | 24.2% | 32.5% | 40.3% | 43.0% |
| EPS [Non-GAAP] | $0.04 | $0.06 | $0.06 | — | $0.08 | $0.13 | $0.18 | $0.25 |
Note: Q4 FY24 (Dec-24) data not available — earnings released Feb 2026 but prior Q4 FY24 not pulled.
| Segment | Q4 FY25 Rev | % Total | YoY | QoQ |
|---|---|---|---|---|
| U.S. Commercial | $507M | 36% | +137% | +28% |
| U.S. Government | $570M | 41% | +66% | +17% |
| International | $331M | 23% | — | — |
| Total | $1,407M | 100% | +70% | +19% |
The story here is U.S. Commercial at +137% YoY. This segment is doubling multiple times over and is now nearly equal to U.S. Government revenue. The historical knock on PLTR was government dependency — that concern is rapidly becoming obsolete.
This is where it gets really interesting. TCV and RDV are running well ahead of revenue — which is exactly the bullish divergence I want to see.
| Metric | Q4 FY25 | YoY | Signal |
|---|---|---|---|
| Total TCV | $4.26B | +138% | Revenue +70% — leading by 2x |
| U.S. Commercial TCV | $1.34B | +67% | — |
| U.S. Commercial RDV | $4.38B | +145% | +21% QoQ — pipeline 3.3x quarterly revenue |
| Deals ≥$1M | 180 | — | Breadth |
| Deals ≥$10M | 61 | — | Enterprise depth |
| Customer growth | +34% YoY | — | Volume expanding |
TCV growing at 138% vs revenue at 70% means the pipeline is building faster than it's being recognized. This is the classic setup I look for. Revenue is a lagging indicator — what's happening in the contract books is what matters for the next 4-8 quarters. These numbers say the next several quarters should continue to be strong. That FY26 revenue guide of +61% is conservative relative to what TCV implies.
The move from 33.3% adj op margin in Q3 to 57.0% in Q4 is the most striking number in this report. That's a 23.7pp sequential expansion in one quarter. What happened?
Three likely factors:
The key question is durability. Management answers it directly — FY26 guidance implies 57% adj op margin sustained ($4.134B adj op income / $7.190B revenue). If they hit those numbers, Q4's margin was not a one-quarter aberration.
FCF quality is outstanding: $791M FCF on $777M OCF, with minimal CapEx. FCF even slightly exceeds net income, which is unusual and suggests government prepayments boosting cash conversion. High-quality earnings.
I've built the CRM Case Study over 60 quarters precisely to benchmark valuations against what elite companies actually deserve. Let me apply that lens here.
| Metric | Current | FY26 Implied | Assessment |
|---|---|---|---|
| EV/TTM Revenue | 70x | 44x (forward) | Extreme |
| EV/TTM FCF | ~138x | ~78x (forward) | Extreme |
| GAAP P/E | ~200x | — | Extreme |
| Rule of 40 | 127% | — | Extraordinary |
| Revenue growth | 70% YoY | 61% guided | Elite |
Even if I give PLTR the benefit of every doubt — hitting $7.2B revenue in FY26, sustaining 57% margins, generating $4B+ FCF — at a $320B market cap, you're paying 78x forward FCF. For context, at the peak of CRM's growth (40%+ growth, 20%+ FCF margins), it never touched these multiples.
For the math to work at current prices, you need to believe PLTR is worth 500B−1T in 3-5 years. That would imply ~$20B+ revenue at 50%+ margins by 2030. Is that possible? Given the trajectory, surprisingly, maybe. But it requires every optimistic scenario to play out.
The Karp factor: I respect what Alex Karp has built. The "commodity cognition" framing — the idea that AI model capability is becoming commoditized and the value is in the platform that makes it operational — is correct and important. If AIP truly becomes the OS for enterprise AI operations, PLTR is a $1T+ company. But I've learned the hard way that paying for perfection leaves no margin of safety.
Prior beliefs (no prior position or analysis): PLTR was on my radar as a high-quality business but felt untouchable on valuation.
Updated after Q4 FY25: The business is executing better than I expected. The acceleration to 70% YoY at $5B+ annual revenue run rate is genuinely rare — maybe unprecedented for a company this size. The U.S. Commercial inflection is real; this is no longer a government-dependent business. TCV and RDV divergence gives high confidence in forward quarters.
But the valuation has moved with the business and then some. I'm more impressed by the company. I'm not closer to owning the stock.
What would change my mind: A meaningful correction — I'd want to see EV/TTM Rev below 40x before I'd seriously consider a position. At current prices, even a perfect execution scenario offers limited upside and enormous downside if growth even slightly disappoints.
Karp's "n of 1" language is characteristic — bold, combative, designed to establish Palantir as category-defining rather than competing. The phrase "commodity cognition" is a sharp positioning move: positioning AI models as the commodity and Palantir's operational layer as the value. If the market accepts this framing, PLTR commands a premium multiple for years.
What I'm tracking going forward: Does the language stay this confident through potentially slower quarters? Karp's rhetoric is highest when results support it. A deceleration quarter would test whether the framing holds.
| Metric | FY26 Guidance | Implied Growth |
|---|---|---|
| Revenue | $7.182-7.198B | +61% YoY |
| U.S. Commercial | >$3.144B | +115% |
| Adj Op Income | $4.126-4.142B | ~57% margin |
| Adj FCF | $3.925-4.125B | ~54-57% margin |
The U.S. Commercial guide at +115% is the one to watch. That implies commercial revenue nearly tripling to $3.1B+ in a single year. Given Q4 run rate of 507Mquarterly(2B annualized) and TCV/RDV building rapidly, it's credible but requires continued AIP bootcamp momentum and deal velocity.
The FY26 FCF guide of 3.925 − 4.125Bmidpoint( 4B) on 7.2Brevenueisa551B to $4B+ FCF for any software company.
No position. Watchlist.
The business quality is undeniable — I'd put PLTR in the top tier of growth companies I've ever analyzed. The trajectory is exactly what I screen for. But my discipline on valuation exists precisely for moments like this. Paying 70x TTM sales for any company, no matter how good, means there's essentially no margin of safety.
My entry trigger: EV/TTM Revenue below 40x, which at current revenue levels implies a stock price ~40% below current. That could happen on any deceleration quarter, a market correction, or simply multiple compression as the hype cycle normalizes.
Until then: I'm watching, admiring from a distance, and resisting. We will see what happens...
GR
Q4 FY25 | Feb 22, 2026 | No position