Palantir Earnings:SBC Slowdown But Still Expensive
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Palantir Technologies Inc. (NYSE:PLTR) just released its fiscal first quarter earnings. The release beat analyst estimates on revenue as well as on earnings per share ("EPS"). Overall, Palantir's earnings beat expectations. It rallied 21% after-hours.
Earnings Re-Cap
Palantir's first quarter release beat estimates on every single metric worth noting, boasting metrics like:
$17 million in net income, up from a loss (a beat);
$0.01 in EPS, up from a loss (a beat).
$0.05 in adjusted EPS (a beat).
$525 million in revenue, up 18% (a beat).
$236 million in commercial revenue, up 15%.
$289 million in government revenue, up 20%.
$114 million in SBC, down $15 million from Q4
Q1 was Palantir's most GAAP profitable quarter ever, beating Q4 by $6 million. The growth also did not slow down from Q4, staying unchanged at 18%. There was a lot to like in this release-though PLTR stock remains expensive.The growth rate of this quarter is the same as that of the previous quarter, which is 18%, which initially released a signal that the revenue growth rate has stabilized.
Business revenue from U.S. companies rose 26% year-on-year to $107 million, and U.S. government business rose 22% year-on-year to $230 million. One of the company's problems before was that it relied too much on government orders. Now the company's business and government business are basically half and half.
Palantir's SBC Trend
Particularly noteworthy in the release was stock-based compensation ("SBC"), which declined compared to the fourth quarter amount ($129 million).The amount of SBC was just $114 million, which was down considerably from previous years. In fiscal 2022, PLTR had over $778 million in SBC costs; at the current pace, it would have only $456 million in such costs in this fiscal year, so the SBC picture has gotten much better.
The picture has certainly improved, but for a company doing around $500 million in quarterly revenue, $100M or more in SBC is going to put a lot of pressure on margins. So, investors will want to see these SBC figures decline further; the amount of SBC is enough to significantly eat into whatever "free cash flow" Palantir generates on paper.
Valuation
I'm not personally going to buy the stock even though I found the first quarter results impressive:
Palantir's valuation remains outrageously high. the stock trades at 36 times forward adjusted earnings, 419 times 2023 GAAP earnings, seven times sales, six times book value, and 70 times operating cash flow. That certainly isn't cheap.
We still need to see Palantir Technologies Inc.'s stock-based compensation to come down even further for the stock to have an upside.
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星空_4396 : What do your friends think of this week's US stocks?
Carter West OP 星空_4396 : The CPI released tomorrow may give the market some confidence, but now the market’s reaction to the CPI has become smaller and smaller, and the prospects for technology stocks are still not optimistic. In the short term, I hold a cautious attitude.
星空_4396 Carter West OP : Right, the gains of big tech stocks last week were so good that there is a high probability that they will fall back this week
Achiver :