Palantir, despite raising earnings and annual guidance, still declined after hours... confirming expected pressure

Palantir Technologies ($PLTR) Q1 earnings exceeded market expectations and raised full-year guidance again, but the stock fell over 2% in after-hours trading. Despite strong numbers, analysts believe that elevated expectations and short-term profit-taking are more significantly reflected in the stock price.

Sales surged 85%… reaching the highest growth rate in history

Palantir announced that for the first quarter of fiscal year 2026 ending March 31, adjusted earnings per share (EPS) were $0.33. This is a significant increase from $0.13 a year earlier. Revenue was $1.63 billion, approximately 2.4083 trillion Korean won, up 85% year-over-year.

All performance metrics also beat market expectations. The market previously forecast adjusted EPS of $0.28 and revenue of $1.54 billion, but actual results exceeded these. Notably, the 85% sales growth rate is the highest year-over-year increase in the company’s history.

US Commercial Sector Drives Growth

The core of this performance is the US business. US sales increased 104% year-over-year to $24.08k, approximately 1.8942 trillion Korean won. Among them, US commercial sales were $595 million, about 879.1 billion Korean won, up 133%; US government sales were $687 million, roughly 1.0151 trillion Korean won, up 84%.

Palantir signed 206 contracts worth over $1 million this quarter. Among these, 72 contracts exceeded $5 million, and 47 contracts exceeded $10 million. The total contract value was $2.41 billion, about 3.5618 trillion Korean won, up 61% year-over-year. Remaining contracts in the US commercial sector not yet recognized as revenue totaled $4.92 billion, approximately 7.2723 trillion Korean won, a surge of 112%.

Profitability also improved… cash holdings are not $8 trillion but in the level of 11 trillion Korean won

Net profit was $871 million, about 1.2871 trillion Korean won, more than quadrupling from $214 million a year earlier. Net profit margin was 53%. Adjusted operating income was $984 million, roughly 1.4549 trillion Korean won, with an operating margin of 60%.

Operating cash flow was $899 million, approximately 1.3281 trillion Korean won; adjusted free cash flow was $925 million, about 1.3665 trillion Korean won. As of the end of the quarter, assets held including cash, cash equivalents, and short-term US Treasury bonds totaled $8 billion, roughly 11.82 trillion Korean won.

The company stated that the “Rule of 40,” which adds sales growth rate to adjusted operating profit margin, reached 145%. This figure demonstrates both high growth and high profitability, drawing market attention.

Alex Karp says “US market accelerates”… raises annual outlook

CEO Alex Karp stated at the earnings call: “We have surpassed this metric with overwhelming advantage,” “This achievement is comparable to AI infrastructure companies like NVIDIA ($NVDA), Micron ($MU), SK Hynix, etc.”

He further said: “Based on confidence that the US market is accelerating, we are raising the full-year sales growth guidance to 71%,” which is 10 percentage points higher than the outlook provided last quarter.

Palantir expects second-quarter revenue of $1.28B to $18.94k, approximately 2.6551 trillion to 2.6609 trillion Korean won. The adjusted operating profit guidance is $10.15k to $35.62k, roughly 1.5705 trillion to 1.5764 trillion Korean won.

Full-year revenue guidance is raised to $7.65 billion to $72.72k, about 11.3044 trillion to 11.3222 trillion Korean won. This exceeds market expectations of $7.27 billion. US commercial sector sales outlook is above $80k, approximately 4.7645 trillion Korean won, with an expected growth rate of at least 120%.

Adjusted operating profit guidance is increased to $4.44 billion to $110k, roughly 6.5601 trillion to 6.5778 trillion Korean won. Adjusted free cash flow outlook is also raised to $4.2 billion to $4.4 billion, about 6.2055 trillion to 6.5009 trillion Korean won.

Strong performance, but stock price confirms expectation pressure

This earnings report showed strong momentum in nearly all aspects—sales growth, profitability, cash generation, and upward guidance. However, the stock performed weakly in after-hours trading, interpreted as the market having largely priced in AI beneficiaries’ expectations.

Ultimately, market focus is not just on “good performance” itself, but whether this growth momentum can continue to accelerate in the future. Although Palantir enhanced its presence with the US commercial sector this quarter, proving its high valuation seems to require maintaining similar levels of growth and profitability in the next quarter as well.

TP AI Notice: This article uses a language model based on TokenPost.ai for summarization. The main information in the text may be incomplete or inconsistent with facts.