Revenue growth in the core government business of Palantir Technologies (PLTR) slowed unexpectedly in the third-quarter, said an analyst who downgraded the stock. PLTR stock fell again on Wednesday after a big sell-off following the Q3 earnings report.
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RBC Capital analyst Rishi Jaluria downgraded Palantir stock to under-perform. “Government, to us, is the strongest part of Palantir’s business and while we expected a deceleration, the growth rate was nearly cut in half from Q2 to Q3,” he said in a report.
He added: “We’d also note government deal value was up only 7% year-over-year. We believe Palantir got direct benefits from Covid-related spending and those benefits have already faded.”
Palantir released the Q3 earnings report early Tuesday. Palantir stock on Wednesday fell 9.4% to 24.25. PLTR stock slipped 2.4% to 23.66 before the market open on the stock market today.
Palantir Q3 earnings were 4 cents per share on an adjusted basis. Revenue jumped 36% to $392 million, the maker of data analytics software said.
Analysts estimated Palantir earnings of 4 cents a share on revenue of $385 million for the quarter that ended Sept. 30.
PLTR Stock: Government Revenue Growth Light
Palantir’s government revenue rose 34% to $218 million from the year-earlier period, missing estimates of $235.9 million. Commercial revenue rose 37% to $174 million, topping estimates of $148.6 million.
Palantir said it added 34 net new customers during the period, up from 20 in the second quarter. It ended the September quarter with 203 customers, topping estimates of 180.
Also, Denver-based Palantir said it expects adjusted operating margin of 22% in the current December quarter, down from 30% in the third quarter.
For the current quarter ending in December, Palantir forecast revenue of $$418 million. Analysts polled by FactSet had projected fourth-quarter revenue of $402 million.
Heading into the earnings report, Palantir stock had an entry point of 29.39. PLTR stock had gained 12% in 2021.
The Palantir earnings report comes amid the enterprise software maker’s growing investments in special purpose acquisition companies. SPACs raise money in an initial public offering with the purpose of making acquisitions.
Expanding Into Other Sectors
Government agencies use Palantir software for intelligence gathering, counterterrorism and military purposes. In addition, the software maker aims to expand into the health care, energy and manufacturing sectors.
In addition, Palantir recently released new software for the digital cryptocurrency market. “We are super excited about Foundry (software) for crypto,” said Chief Operating Officer Shyam Sankar on the earnings call with analysts. “We think we’re going to be a massive accelerant for crypto companies.”
He added: “We’re going to give them credible AML (anti-money laundering) platforms to enable them to go toe-to-toe and beyond with the legacy players. We’re going to deliver (regulatory) compliance so they can focus on disruption. And of course, they are welcome to pay us in crypto.”
PLTR stock holds a Relative Strength Rating of 83 out of a best possible 99, according to IBD Stock Check-up.
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Read More:Palantir Stock Falls As PLTR Stock Customer Growth Tops Views But Government Sales Miss
2021-11-10 12:15:00
