Date: 2026-02-22 Quarter: Q4 FY25 (Dec-25) Market cap: ~$320B | EV/TTM Rev: ~70x | Revenue growth: +70% YoY
Let me start by just laying out the revenue trajectory, because the trajectory is what I follow first:
| Q124 | Q224 | Q324 | Q125 | Q225 | Q325 | Q425 | |
|---|---|---|---|---|---|---|---|
| Mar-24 | Jun-24 | Sep-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 | |
| Revenue ($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 |
Do you see that? Revenue growth was 20.8% → 27.2% → 30.0% → 39.4% → 48.0% → 62.8% → 70.0%. That is 7 consecutive quarters of acceleration! At $1.4 billion of quarterly revenue! I'm sorry, but that is preposterous! I have followed growth companies for decades and almost nothing behaves like this at this scale.
Sequential adds: $44M → $47M → then JUMP to $120M → $177M → $226M. The business is gaining velocity, not losing it. That is so, so rare.
And the operating margins! From 12.8% [Non-GAAP] when I first look at them to 57.0% [Non-GAAP] in Q4. A single quarter jump from 33.3% to 57.0%! That is not normal. That is a business where operating leverage has truly inflected.
Full year 2025: $4,475M revenue (+56% YoY), $2,270M adjusted FCF (51% FCF margin), $1,625M GAAP net income. GAAP profitable. FCF positive. Growing at 56%. That is just extraordinary!
The key story is U.S. Commercial. Let me show you:
| Segment | Q4 Revenue | YoY Growth |
|---|---|---|
| U.S. Commercial | $507M | +137% |
| U.S. Government | $570M | +66% |
| International | $331M | Slower |
| Total | $1,407M | +70% |
U.S. Commercial is growing at 137% year-over-year! And FY26 guidance for U.S. Commercial is >$3.144 billion — which would be +115% growth on an already enormous base. They're guiding for another double!
The TCV (Total Contract Value) closed in Q4 was $4.26 billion — growing at 138% while revenue grew 70%. That is the leading indicator I want to see. When contracts are being signed faster than revenue is being recognized, you have strong forward visibility. The Remaining Deal Value of $4.38 billion in U.S. Commercial alone (+145% YoY) represents about 3 quarters of forward U.S. Commercial revenue already under contract.
The AIP (Artificial Intelligence Platform) product is doing something genuinely novel — Palantir runs "bootcamps" where they bring customers in, get them using AIP in days, and convert pilots to production contracts. The boot camp GTM model is driving rapid deal velocity. This is real, measurable, in the numbers.
I usually don't obsess about valuation in the SaaS era. I've said many times that I stopped looking at PE ratios for high-growth companies. But even I have to acknowledge: 70x trailing revenue is an extraordinary price.
At ~$320 billion market cap:
Even on FY27 estimates assuming ~40% growth ($10B revenue), you'd still be at 30x+ revenue. For context, the best SaaS companies during peak SaaS mania in 2021 rarely exceeded 40-50x revenue, and those companies were growing 50-80% on much smaller bases.
Now, Palantir is also generating real GAAP profits (43% net margin!) and real FCF ($791M in Q4 alone). So this is not a "loss-making hypergrowth" story where you ignore valuation. This is a profitable, accelerating, FCF-generating monster. But the valuation still embeds years — maybe a decade — of continued outperformance.
I want to be clear about my position: I am not in PLTR. This is not a stock I currently own. And looking at these results, the question I'm wrestling with is: should that change?
Here's the thing about Palantir. The results are genuinely extraordinary. The business has inflected. Revenue is accelerating at scale, margins are expanding dramatically, FCF conversion is exceptional, and the leading indicators (TCV, RDV) are screaming forward growth. This is not a mediocre business with a high multiple — it is an exceptional business with an extreme multiple.
CEO Karp's comment: "Palantir's Rule of 40 score is now an incredible 127%." Rule of 40 = growth rate + profit margin. 70% + 57% = 127. That is not a typo. The best companies I've tracked in the SaaS era occasionally hit 60-80 on this metric. 127% is "n of 1" — I actually agree with Karp on this one!
But here's my discipline: I will not buy a stock at any price. Even the best business in the world can be a terrible investment if you pay too much for it. At 70x revenue, the market is already pricing in years of perfection. If growth decelerates from 70% to, say, 50% next quarter — still extraordinary — the stock could drop 30-40%.
My conclusion: This is a Watch position for me. The business deserves to be in my portfolio if the entry point ever becomes sane. What would sane look like? A pullback to 40-50x revenue would get my attention. At the current trajectory, if they hit $7.19B FY26 revenue (guided), and the stock stays flat for 12 months while revenue grows 61%, you'd be at ~44x forward revenue — still expensive, but closer to the zone where I'd consider initiating.
| Quarter | Rev ($m) | YoY % | Adj Op M [NG] | GAAP Net M |
|---|---|---|---|---|
| Q1 FY25 / Mar-25 | 884 | 39.4% | 19.9% | 24.2% |
| Q2 FY25 / Jun-25 | 1,004 | 48.0% | 26.8% | 32.5% |
| Q3 FY25 / Sep-25 | 1,181 | 62.8% | 33.3% | 40.3% |
| Q4 FY25 / Dec-25 | 1,407 | 70.0% | 57.0% | 43.0% |
| Q1 FY26 Guidance | ~1,534 | ~68% | ~57% | — |
| FY26 Guidance | ~7,190 | ~61% | ~57% | — |
Acceleration on all dimensions. FY26 guidance holds the growth rate near current levels while maintaining 57% adjusted operating margins. That is exceptional guidance.
Karp is a polarizing figure. His letters are grandiose. But the results are backing up the rhetoric quarter after quarter. Management has guided conservatively and beaten consistently. The FY25 full-year result of 4, 475Msignificantlyexceededtheconsensusof 4.1B. The FY26 guide of 7.19Bwaswellaboveanalystconsensusof 6.9B. This management team under-promises and over-delivers.
The thing I always say: I follow the money, the results. And the results here are undeniably outstanding.
Adjusted [Non-GAAP] metrics exclude SBC. Full-year FY25 SBC was ~$640M — about 14% of revenue. This is real dilution. The GAAP vs Non-GAAP gap is meaningful here. However: (1) total share dilution is only ~2% annually given the $320B market cap, (2) GAAP net income was still $1,625M (36% margin) after SBC, (3) FCF was $2,270M. So even on a fully-loaded GAAP basis, this company is enormously profitable. I do pay attention to this — the GAAP numbers still look great here.
PLTR: Watch — Not Currently Buying
The business is extraordinary. The numbers are genuinely among the best I have ever seen for a company this size. Revenue acceleration at $1.4B quarterly revenue is historically rare. Margin expansion from 12.8% to 57.0% [Non-GAAP] over 4 quarters is exceptional. GAAP profitability at 43% net margin is real. FCF at 56% margin is real. The leading indicators — TCV +138%, RDV +145% — confirm this growth is durable.
But at 70x trailing revenue and ~320Bmarketcap, Iamnotbuyingtoday.Thispriceembedsperfectionforyears.Thestockhasalreadycorrected2785-100/share (roughly 40-45x FY26 revenue), or if the growth rate sustains at 70%+ for two more quarters at current valuations.
This is the right business. I just want a better price. Sometimes patience is the discipline.
Best, Saul