PLTR Q1 2021 Earnings Call Q&A

Come and see what happened in $Palantir(PLTR.US)$‘s Q1 2021 earnings call!
This article is a script from the Q&A session of PLTR's earnings call on May 11. To facilitate reading, we have made appropriate cuts. If you want to know more details, you can click here to re-watch the earnings call.

Q1:
I wanted to ask about the commercial business. It looks like growth improved from last quarter, still below 20%, but I know there's a lot that you've been working on there, including the modularization of foundry, and wanted to hear how that was resonating with customers.
A1:
The commercial business is gaining more and more momentum. As we mentioned, it grew 72% in the U.S.So what we're seeing is where economies are opening, there's just incredible traction there.
We've hired 50 sales folks in the last quarter. You're starting to see that translate through in terms of activity two and a half times the number of qualified opportunities in the U.S. and the U.K., double the number of commercial pilots, the product investments that we've made around modularization and archetypes, those are what are translating also into increased activity.

Q2:
I had a question on kind of the margin side of the equation. And how we should be thinking about expense growth throughout the remainder of the year. How should we think about that on a go-forward basis? What's the investment philosophy if you will behind Palantir over the next couple of years as you look to sustain that 30% plus growth?
A2:
We had a very strong quarter, 49% revenue growth, 44% adjusted free cash flow margin, and 34% adjusted operating margin. There's nothing noteworthy to call out on the expense side. Overall, super pleased with the results. It shows the underlying unit economics.
We're going to be investing into the business, investing in sales hires, investments around the sales team, continued investment in the product and R&D, a lot of what Shyam talked about. And we're going to be focused on reopening. We think it's really important to get the company back in the offices to get people together and focus on culture.

Q3:
Can you talk about the divergence in pilots in the commercial sector versus the stated revenue growth? And when will those pilots convert to revenues? How visible is that conversion timeline, etc.?
A3:
The pilots themselves are compressing in terms of how long they're taking because of the investments made in product modularization, archetypes, these allow us to structure the products in a way that something that would have taken three months to four is now a week or less.
This is giving us a lot more capacity to cost-efficiently distribute the product, accomplish these pilots and turn the revenue crank here. And so we're seeing very high returns to the sales force we're building. We want to keep doing more here. Look for that to accelerate even further in the back half of the year.
And the conversion, we're really happy with it. I think when I just think about the two and a half x qualified pipeline that's been created since February 1, and then I think about the doubling of the pilot we're seeing about a third of those have already turned into something. And so as we build a bigger and bigger pipeline here, we're feeling good about how that funnel is flowing through.