ROIC Dive: Is Palantir a Long-Term Buy?

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Palantir (PLTR) stock is only up ~5% YTD, but it has been a popular name among investors since going public via a direct listing in October of last year. As many ROIC members know, our first glance at PLTR around $23 per share resulted in a [Meh 😐] quick rating on the Mini Board. As the performance of the company catches up to the valuation, we updated it to an [Interesting 🧐] rating in August 2021.


  • Palantir Technologies (PLTR) builds software platforms for institutions.
  • Palantir is trying to position itself to be the next industry default software in data analysis.
  • The company started in 2003 and started by building software for United States intelligence organizations to assist in counterterrorism investigations and operations.
  • Palantir offers two main software platforms, Palantir Gotham and Palantir Foundry.
    • The first software platform, Gotham, was built for analysts at defense and intelligence agencies.
    • Foundry is the commercial version of Gotham.
    • Both platforms aggregate data from disparate sources and allows analysis to be run on the entire data set.
  • The platforms are specifically built to protect individual privacy and prevent the misuse of information. Palantir is not in the business of collecting, mining, or selling data.
  • Palantir also launched and continues to develop Apollo – a continously delivery and product infrastructure platform, which is used to deliver software updates to Palantir customers.
  • PLTR now operates in over 40 industries and over 150 countries.

Q2 Highlights

  • Revenue grew 49% YoY in the second quarter (guided to 43% in Q1).
    • Commercial revenue grew at 28% YoY and is accelerating.
    • Government revenue grew at 66% YoY due to new deals with the U.S. Army, Air Force, Coast Guard, HHS, and CDC.
  • Total contract value booked grew 175% YoY to $925 million.
  • Average revenue from Palantir’s top 20 customers grew from $36 million in Q1 to $39 million in Q2.
  • Commercial customer count grew 32% QoQ to 169 in the TTM.

Growth + Outlook

  • Palantir expects revenue growth of 30%+ this year and over the next four years, ultimately reaching $4B in revenue by fiscal year 2025.
  • Palantir also expects adjusted free cash flow of $300 million for this fiscal year.
  • The company continues to drive growth in Gotham, Foundry, and Apollo.
  • Apollo makes it possible to run Foundry and Gotham on drones, submarines, satellites, classified networks and on-prem networks without losing the efficiencies and scalability of a centrally managed SaaS solution.
    • Palantir has used Apollo to meet its customers where they are. Now the company is commercializing Apollo itself.
  • Palantir hired more than 100 salespeople in the first half of the year and marketing spend nearly doubled QoQ.
  • Palantir recently launched the Double Click demo series. It shows the platforms used across industries and customers.

Valuation + Analysis

  • At $24.52 per share, Palantir carries a high valuation on the surface trading at a $47.9B market cap and $45.6B enterprise value.
  • This represents a 31x forward gross profit and 89x forward EBITDA.
  • An investment in PLTR involves a lot of faith that they growh much larger and very quickly.

Justin Oh: Most ROIC members know by now that I’ve been “coming around” to Palantir ($PLTR), increasingly convinced that it can become a huge business-to-business (B2B) company, and that powerful data analytics will increasingly be used throughout governments and corporations. But should we buy the stock now?

  • For ROIC members, Justin put together a DCF valuation here where he talks about his assumptions and his ultimate conclusion of whether or not we’ll be adding PLTR to the Big Board.
  • For non-ROIC members, sign-up for our FREE daily newsletter to get daily macro, crypto, and business news. We’ll also make one of our 4 weekly dives available for free.
  • For FULL access to our 4 weekly dives, a full-look at a former hedge fund analyst’s porfolio and trades, private live streams, an active Discord, and more, consider joining ROIC at!

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