Palantir shares lost 1.65% on Tuesday following the release of the software company’s third-quarter earnings report, as analysts highlighted indicators of a slowdown in total contract value. Although the stock faced steeper losses during early trading, it managed to recover as the day progressed.
Commercial Revenue Growth and Contract Values
During the quarter, U.S. commercial revenue surpassed government revenue for the very first time. The company secured $1.5 billion in total contract value (TCV) within the commercial segment, marking an 11% increase compared to the previous year. This followed a record-breaking second quarter where Palantir closed $2.1 billion in TCV for the segment, representing a 153% jump from the prior year.
According to a Monday note from Piper Sandler, investors will undoubtedly search for evidence in upcoming quarters to confirm that the 11% growth in U.S. commercial TCV bookings is merely a duration anomaly rather than a structural issue. The firm added that it believes demand for Palantir’s solutions continues to significantly outstrip supply.
Analyst Reactions and Revenue Milestone
Goldman Sachs analysts explained in a Tuesday note that Palantir attributed part of the metric’s change to shorter contract durations. The analysts emphasized that successfully converting these shorter-duration contracts into longer-term commitments will be the key factor moving forward, noting that the company has accomplished this successfully in the past.
In its official earnings report, Palantir announced that its revenue nearly doubled compared to the same period a year ago, surpassing the $2 billion threshold for the first time.
