Palantir secures quiet contract win with big implications
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Palantir’s (PLTR) eye-catching stock performance (up 146% year-to-date) often makes us forget that much of its real progress happens far from Mr. Market’s spotlight. Although the stock market punditry continues to debate valuations and AI outlooks, Palantir remains laser-focused on what has defined its business over the years: convincing governments to trust its robust software with the most sensitive problems.That’s why the contract renewal with France’s domestic intelligence agency (DGSI) matters a lot more than the headline suggests. Over the past few years, Palantir’s local team has worked diligently alongside the DGSI during high-stakes moments.These include marquee sporting events, such as the 2024 Paris Olympic Games, and supporting counter-terrorism operations. The support Palantir offers becomes mission-critical for an agency that has tasks such as tracking terror threats, foreign espionage, and domestic security risks on its plate 24/7.Europe hasn’t been the easiest nut to crack for Palantir, and France isn’t an easy customer. Also, it’s a region where Palantir CEO Alex Karp has often been panned for being sluggish on AI and national security technology.Strict data and privacy norms have often taken center stage in the relationship. Heck, France was reportedly looking for ways to replace Palantir.It failed.Instead, France chose to double down on its deal with Palantir, which has been in place since 2016. For Palantir and its fans, France’s nod of approval underscores the importance of reliability over ideology, even in markets that once resisted it most. Palantir lands rare European win as its AI push spreads.Photo by STEFANI REYNOLDS on Getty Images France looked for a Palantir alternative and came back empty-handedPalantir’s renewed contract with the DGSI is far bigger than its undisclosed dollar value. The biggest takeaway for the AI bellwether is that it strengthens its government business outside the U.S.Palantir has relied heavily on American defense and intelligence clients over the years.
Palatir Operating Revenue ChartsGuruFocus/TheStreet In 2024, about 66% of the company’s operating revenue came from the U.S., coming up to nearly $1.9 billion. In comparison, just 10.6% came from the UK and 23% from the rest of the world. Europe has been a tough market, to say the least, for Palantir, making this new deal unusually meaningful.That’s perhaps doubly true, given France’s skepticism. The country has spent years looking for alternative defense AI specialists, on the back of concerns around data sovereignty and privacy. In the end, France renewed its decade-long Palantir contract anyway, in essence admitting to the platform’s stickiness.Related: Cathie Woods buys $13.4 million of tumbling tech stockKarp has been blunt about Europe’s hesitation, Entrepreneur reported. He has sounded the alarm over the region being “left behind” in AI advancement and the need to be flexible or “risk ruin.” In his scathing takedown, he went further, arguing European institutions have been “whining and crying” while the U.S. charges ahead in the AI arms race.Government contracts still power Palantir’s growth engineGovernment customers essentially form the backbone of Palantir’s growth story. Per the latest disclosures, public-sector clients generate roughly 50% of total sales, a balance Karp expects to remain at 50/50 between government and commercial business for the foreseeable future.
More Palantir Palantir CEO Karp just settled major debateStagwell’s Palantir pact boosts shares, slashes labor needsAnalysts share advice on shorting Palantir stockPalantir CEO makes another controversial statementIn Q3, U.S. government sales skyrocketed over 50% year over year, reaching nearly $486 million, while international government revenue also jumped 66%, spearheaded by the UK and allied nations. That demand effectively pushed total contract value bookings to an eye-popping record of $2.8 billion, up 151% from the prior year.The momentum could be seen throughout its financials, where it generated nearly $476 million in quarterly net income (a 40% margin), alongside over $2 billion in trailing free cash flow and $6.4 billion in its cash till.Palantir’s biggest government wins show its strategic reachPerhaps the best way to gauge Palantir’s massive influence is by the scale and scope of its multi-year government contracts:U.S. Army (up to $10 billion): A 10-year enterprise agreement consolidating dozens of programs, underscoring the Army’s intent to spend “billions” on Palantir’s AI platforms.Pentagon – Project Maven ($795 million): A major Defense Department program in which Palantir offers a range of defense AI services.U.S. Navy – ShipOS ($448 million): A major logistics modernization effort with Palantir’s robust AI software to overhaul the Navy’s shipbuilding supply chain.UK Ministry of Defence ($950 million): A five-year deal expanding Palantir’s role in British defense.NHS England ($420 million): A controversial yet high-profile contract to develop a nationwide health data platform.Related: Morgan Stanley drops eye-popping Broadcom price target after event