What's going on?
Palantir saw this coming from a mile off: the surveillance software maker announced better-than-expected quarterly results in its first earnings report since hitting the stock market.
What does this mean?
Palantir’s revenue rose by 50% in the first nine months of the year – double 2019’s entire growth. Even better, it recently got another kick thanks to a deal it’s just struck with the US army. But that also neatly sums up investors’ biggest worry about the company: it depends on a small number of very big contracts. Lose one, and it’ll make a massive dent in Palantir’s profitability. At least the software-maker seems to be taking the feedback to heart: it pointed out that the proportion of its revenue coming from its 20 biggest customers has dropped from 69% to 61%.
Why should I care?
For markets: I got this.
Palantir listed on the stock market in September, but it didn’t go down the traditional route of an initial public offering. Instead, it plumped for a “direct listing”, which cuts out investment banks, their related costs, and their knack for stabilizing share prices. That usually means the company’s stock is more volatile in the early days, but not in Palantir’s case: its share price has been pretty steady, even as it’s climbed almost 50%. That might have something to do with the US election outcome, mind you: analysts are expecting the new administration to slash military spending, which could spur demand for Palantir’s (relatively) cheap surveillance technology.
The bigger picture: Où est la Ciscotheque?
Palantir was joined by Cisco on the list of tech companies with better-than-expected earnings last quarter. Still, it was the fourth quarter in a row that the conglomerate’s revenue had fallen, which is probably because so much of its revenue comes from the sale of equipment for pandemic-stalled data centers and offices.