Palantir Technologies Inc. (PLTR) reported impressive results for Q1 2025, with revenue increasing 39% year-over-year to reach $884 million. The company’s U.S. segment played a key role, accounting for much of the growth. With a 55% rise in U.S. revenue, Palantir is well-positioned for continued success in 2025.
Strong U.S. Revenue Growth
Palantir’s Q1 2025 revenue growth was driven by a 55% increase in U.S. revenue, reaching $628 million. This now represents 71% of the company’s total business. The commercial sector in the U.S. was particularly strong, growing by 71% year-over-year. The U.S. commercial business also surpassed a $1 billion annual run rate for the first time. In addition, U.S. government revenue grew by 45%, totaling $373 million.
Healthy Financial Position and Cash Flow
The company posted an adjusted free cash flow of $370 million for the quarter, which translates to a margin of 42%. Palantir’s adjusted operating margin stood at 44%, an 800 basis point increase from the previous year. The company’s GAAP net income was $214 million, reflecting a 24% margin. GAAP earnings per share (EPS) were $0.08, while adjusted EPS came in at $0.13.
International Challenges
Despite the strong overall performance, Palantir faced challenges internationally. Revenue from international commercial contracts declined by 5% year-over-year and 11% sequentially. This drop was largely due to slow AI adoption in European markets. The company also anticipates a decline in revenue from strategic commercial contracts in Q2 2025 compared to the same period last year.
Raised Full-Year Guidance
Palantir raised its revenue guidance for the full year of 2025. The company now expects revenue to range between $3.89 billion and $3.902 billion. This represents a 36% year-over-year growth rate. Palantir remains confident in its strong cash flow and ability to meet its updated financial targets.
Focus on AI and Competitive Advantage
Palantir continues to focus on advancing its AI technology. The company’s Ontology-based platform is seen as a key differentiator in the market. Shyam Sankar, Palantir’s Chief Technology Officer, explained that their AI-powered software is uniquely positioned to create business value. The company is also investing in mixed human-AI teams to transform enterprises.
Impact of U.S. Budget Cuts
While there are concerns about U.S. Department of Defense budget cuts, Palantir’s leadership remains optimistic. CEO Alexander Karp noted that Palantir thrives in environments where pressure forces systems to be tested and improved. This allows the company to demonstrate the value of its software in critical sectors, including defense and intelligence.
Europe and Future Prospects
In Europe, Palantir faces challenges but also sees opportunities. The company could help address manufacturing issues, particularly within defense. However, Palantir believes European nations need to acknowledge the limitations of their current manufacturing systems before they can fully adopt its solutions.
