What Palantir reported for Q3 2026
Palantir reported third-quarter 2026 results on 2 November, covering the three months to 30 September. Revenue reached $2.313 billion, up 96% from about $1.2 billion a year earlier. It was the first quarter in company history above $2 billion.
The result beat the $2.18 billion revenue and $0.41 adjusted earnings per share that analysts expected, based on LSEG consensus cited by CNBC. Palantir reported $0.44 per share on both a GAAP and adjusted basis.
Growth also accelerated. In the second quarter, Palantir reported $1.935 billion of revenue, up 93%. The third quarter's 96% rate was faster, despite a larger base.
Profitability was unusually high for a software company growing this quickly. GAAP operating income was $1.085 billion, a 47% margin. Adjusted operating income was $1.427 billion, a 62% margin. Adjusted operating income excludes stock-based compensation and related payroll taxes, so it sits above the GAAP result.
GAAP net income reached $1.128 billion, a 49% margin. Adjusted free cash flow was $1.216 billion, a 53% margin. Palantir ended the quarter with $10.4 billion in cash, equivalents and US Treasury securities.
The company reported a Rule of 40 score of 158%, which adds revenue growth to adjusted operating margin. Chief financial officer David Glazer called 96% the highest year-over-year growth rate in Palantir's history, Fortune reported. He also called the 20% sequential growth a record.
Contract activity was broad. Palantir closed 212 deals worth at least $1 million, 107 worth at least $5 million and 64 worth at least $10 million.
Guidance moved up. Palantir now expects full-year 2026 revenue of $8.530 billion to $8.534 billion, about 91% growth. Three months earlier it guided $8.150 billion to $8.158 billion. For the fourth quarter it projects $2.649 billion to $2.653 billion, against analyst expectations of about $2.46 billion.
Karp's shareholder letter opened with a characteristic flourish. "It would be an understatement to say that our results this past quarter were extraordinary," he wrote.
Why did US commercial revenue pass government?
The milestone is a US-only comparison, and the distinction matters. US commercial revenue was $984 million, up 148% year over year and 29% sequentially. US government revenue was $953 million, up 96% and 18%.
That made US commercial the larger of the two for the first time. A year earlier, US commercial revenue was $397 million and US government revenue was $486 million, according to Fortune.
Aggregate US revenue grew 119% to $1.937 billion. The remaining roughly $376 million came from outside the United States. Palantir did not claim that global commercial revenue had passed global government revenue.
Palantir attributes the shift to demand for what it calls sovereign AI. The pitch is that companies can run frontier models, or fine-tune open-weight models, without sending data and business processes to outside labs.
TechCrunch described that offer as the reason enterprises are signing up. Palantir also sells forward-deployed engineers who customise the software, a model it has used with governments for years.
Karp described a split between haves and have-nots in the results release. "Every institution—government and commercial—is rapidly being forced, voluntarily or not, into one of these two categories," he said.
Future revenue tied to US commercial customers also rose. US commercial remaining deal value, which measures the value left in signed contracts, reached $6.517 billion. That was up 79% year over year and 4% from the second quarter. At the end of June, the same measure stood at $6.238 billion, up 124% year over year at the time.
Remaining deal value differs from contract value. It counts what is left on existing agreements, rather than the full potential value of new ones signed in the period.
The deal count supports the idea that adoption is broadening rather than concentrated. Palantir closed 64 contracts of at least $10 million in the quarter. Its government work, which the company says spans five US administrations, still supplies the revenue base for the commercial push.
Why did Palantir stock fall after 96% growth?
Investors were less impressed than the income statement suggested. Palantir shares fell as much as 7% to $165.25 on Tuesday, 3 November, before recovering. They closed at $175.40, down 1.65% on the day, according to StockAnalysis data.
The after-hours reaction on Monday had already been choppy. Fortune reported that shares rose about 1.5% immediately after the release, then fell 3.6%. CNBC put the extended-trading decline at about 3%.
The trigger was bookings, not revenue. US commercial total contract value was $1.463 billion, up 11% year over year. In the second quarter, the same measure had hit a record $2.132 billion, up 153%.
That is a steep sequential drop. Business Insider reported that analysts focused on the deceleration, with commercial bookings growth falling from 153% to 11%.
Backlog added to the concern. UBS analyst Karl Keirstead said the only real flaw in the quarter was sequentially flat remaining performance obligations. He noted it was the first time since the first quarter of 2023. Keirstead wrote that Palantir pinned the flat backlog mostly on shorter contract durations.
Karp addressed the point on the earnings call. He said commercial customers now move from first meeting to deployment faster, but sign shorter contracts. "Much quicker interaction, much quicker to deployment, shorter duration of the contract," he said, according to TechCrunch.
His explanation is that short initial deals can expand later. "Once you go Palantir, you don't go back," he told analysts. The results do not yet prove that pattern at scale.
Valuation and market mood amplified the move. Fortune described Palantir as a $430 billion company. The stock came into earnings after a rough week for AI-linked shares. Alphabet posted its worst one-day drop as a public company, and the Nasdaq fell 4% over five sessions.
Fortune noted that disappointing results from Amazon and Intel the previous week had deepened concerns about AI spending. Palantir, a software beneficiary of that spending, became an easy target for investors trimming exposure.
Business Insider called the session the latest example of a small flaw derailing a high-flying tech stock. Palantir beat estimates, raised guidance and still sold off.
David Morrison of Trade Nation told Business Insider the selling reflected "some fragility spreading across the AI-adjacent trade". Palantir, priced for rapid compounding, had little room for a bookings miss.
Is Palantir's growth slowing?
The honest answer is that the data points in two directions. Revenue growth accelerated, from 93% in the second quarter to 96% in the third. Rule of 40 rose from 155% to 158%.
The second quarter set a high bar. Revenue was $1.935 billion, US commercial revenue was $764 million, and total contract value was $3.373 billion, up 49%. The record $2.132 billion of US commercial contract value made the third quarter's comparison harder.
New business tells a weaker story. Total contract value was $2.918 billion, up 6% year over year and about 13% below the second quarter's $3.373 billion.
US commercial contract value grew 11%, against 153% three months earlier. Bloomberg Intelligence analyst William Tong said the sequential growth in commercial customer additions was the slowest since the third quarter of 2024. He linked that to competition from frontier model providers.
Tong also noted that gross margin fell roughly 100 basis points, which he tied to higher compute requirements as inference-heavy workloads scale.
Contract value is a leading indicator, so a slowdown can precede a revenue slowdown by several quarters. It is also a soft measure. Palantir's own definition assumes customers exercise all contract options and that no contract is terminated. The company notes that most contracts can be terminated for convenience.
Contract rules matter when customers start with short trials. A trial can inflate bookings when signed and disappear from future periods if it is not renewed. It can also expand, which is Karp's bet.
Revenue is a lagging measure by comparison. Palantir can post record sales from agreements signed months earlier while new bookings fall. That is why analysts watch contract value and backlog even when the income statement looks strong.
Analysts remain split. InvestorPlace's Luke Lango wrote that the rearview looks spectacular while the view through the windshield got foggier. "For most stocks, that's a footnote," he wrote. "For a stock priced for perfection, it's the headline bears have been waiting for."
Keirstead at UBS kept a Buy rating, arguing that 96% revenue growth outweighs the flaws in the report. The disagreement is less about the quarter than about what short contracts signify.
What does sovereign AI mean for Palantir?
Palantir's sales pitch rests on a claim about where value sits in AI. Karp argues that models alone generate limited value inside a large organisation. The hard part is connecting them to data, workflows, permissions and decisions.
In his letter he wrote that an agent without that grounding is "a virtually unlimited liability". That argument underpins Palantir's Foundry and AIP products, which the company says connect models to an organisation's workflows and data.
It also supports Karp's political rhetoric. He told CNBC that nationalising AI labs is the "only realistic way" to manage liability, repeating earlier calls. He has criticised leading labs for pushing customers to give up data sovereignty.
"Beware of thinking you can delay the future in AI," he told CNBC. The line fits Palantir's marketing: adoption is urgent, and the deployment layer is where control is won.
The letter goes further, arguing that the real alignment problem is between AI companies and their customers. That is a competitive claim as much as a philosophical one. Palantir positions itself as the layer between enterprises and model providers.
In the letter, Karp warns that agents without enterprise grounding have "a blast radius that tends towards infinity". The phrase is dramatic, but it states the commercial case plainly: control over data and permissions is the product.
The claim has limits. Nationalisation is Karp's opinion, not government policy. Frontier model providers are emerging as competitors, and Bloomberg Intelligence sees that pressure in Palantir's slower customer additions.
Palantir also depends on government revenue. US government sales were $953 million in the quarter, roughly half of US revenue despite growing 96%. Commercial growth reduces that dependence but does not remove it.
What should investors watch in Q4 2026?
The fourth quarter is now the test. Palantir guides revenue of $2.649 billion to $2.653 billion, roughly 88% growth at the midpoint, according to Fortune. Analysts had expected about $2.46 billion.
Full-year guidance implies no slowdown in the final months. Palantir expects US commercial revenue above $3.559 billion, at least 143% growth. It also guides adjusted operating income of $5.245 billion to $5.249 billion and adjusted free cash flow of $4.8 billion to $5.0 billion. In August, the free cash flow range was $4.5 billion to $4.7 billion.
Seasonality could help. TechCrunch noted that many enterprises sign their largest technology purchases in the fourth quarter, one reason Karp's team remains confident.
Four numbers will show whether the bookings scare was noise. First, US commercial contract value, which needs to recover from $1.463 billion. Second, remaining performance obligations, flat last quarter. Third, customer additions, which slowed. Fourth, gross margin, which Bloomberg Intelligence says is under pressure from compute costs.
The wider AI trade matters too. Palantir has become a bellwether for whether enterprise AI spending turns into software revenue. Fortune treated its results as a temperature read on that trade. In the prior week, Alphabet lost $505 billion in market value and Intel fell about 29%.
A 96% quarter with a falling share price is a reminder about expectations. Palantir's revenue milestone is real. The debate is whether short, expandable contracts are a new sales model or an early warning.
The fourth quarter will not settle that fully, but it will show whether commercial bookings rebound. A rebound would make the slowdown look like lumpy deal timing. Another weak quarter would give the bears more evidence.
For now, Palantir has proven demand at scale. It has not yet proven that the demand is durable.