Palantir Technologies Inc Stock

Good afternoon. I'm Ana Soro from Palantir's finance team, and I'd like to welcome you to our second quarter 2026 earnings call. We'll be discussing the results announced in our press release issued after the market close and posted on our Investor Relations website.

During the call, we will make statements regarding our business that may be considered forward-looking within applicable securities laws, including statements regarding our third quarter and fiscal 2026 results management's expectations for our future financial and operational performance and other statements regarding our plans, prospects and expectations. These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially from actual results.

Information concerning those risks is available in our earnings press release distributed after the market closed today and in our SEC filings. We undertake no obligation to update forward-looking statements, except as required by law.

Further, during the course today's call, we will refer to certain adjusted financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from GAAP measures. Additional information about these non-GAAP measures, including reconciliation of non-GAAP to comparable GAAP measures is included in our press release and investor presentation provided today.

Our press release, investor presentation and other earnings materials are available on our Investor Relations website at investors.palantir.com. Over the course of the call, we will refer to various growth rates when discussing our business. These rates reflect year-over-year comparisons unless otherwise stated.

Joining me on today's call are Alex Karp, Chief Executive Officer; Shyam Sankar, Chief Technology Officer; Dave Glazer, Chief Financial Officer; and Ryan Taylor, Chief Revenue Officer and Chief Legal Officer.

I'll now turn it over to Ryan to start the call.

Our Q2 results are unprecedented, but entirely unsurprising as the abrupt market shift in LLMs that we've been warning you about for years is now here. We delivered 93% year-over-year revenue growth, our highest ever. The story of this quarter is once again our U.S. business. It now comprises over 81% of total revenue and grew 115% year-over-year and 23% sequentially. Our U.S. commercial revenue growth accelerated to 149% year-over-year and 28% sequentially. And our U.S. government revenue grew remarkable 90% year-over-year and 18% sequentially.

These top line results are accompanied by a Rule of 40 score of 155% and $1.22 billion of adjusted free cash flow. We closed 220 deals worth $1 million or more. of which 98 deals were worth $5 million or more, and 70 deals were worth $10 million or more, record highs across the Board. These results are a clear indication of the profound value, we've unlocked both for and with our customers who dared to cross the chasm with us.

In contrast, enterprises that are not using Palantir are seeing their token meters spinning endlessly just to get slope without any correlation to value. This token model may be working for the labs, but it is not working for anyone else. It's breaking corporate budgets without results to justify the expense and worse companies are paying to give away their most important secrets, the very basis for their competitive advantage ultimately contributing to the commoditization of their own businesses as their Secrets become the training data embedded in the foundations of all future models.

On our side of the chasm, what enterprises demand is AI sovereignty owning the operational definition of the data, logic, actions and security of their enterprise. An organization's data is its treasure. In its richness is the alpha. We are fully aligned with our customers, building the stack that enables the compounding of their alpha. Our deep alignment allows our customers' ambitions and to become one. As Kirkland and Ellis highlighted, "through our work with Palantir, we have built a new operating model for legal services, one that setilizes and compounds the expertise of our most senior lawyers what used to take days for a lawyer to analyze, discuss and draft now happens in minutes. This will be impossible without the ontology.

We do not see this as a vendor relationship or a one-off endeavor. We think this is a revolutionary change in how our work gets done. This is what we do with our customers across industries and the deals we are closing are a testament to the monumental shift in the AI market that's underway as we speak.

In our U.S. commercial business, we closed $2.1 billion in TCV with a 271% year-over-year growth rate on a dollar-weighted duration basis. A multinational technology company began working with us in the fourth quarter of last year at one operating company and expanded on their success with our platform to deliver revolutionary impact across their full portfolio converting to a 3-year nearly $370 million deal last quarter.

Customers are decisive and bold about taking the next step with Palantir. A global asset management firm started working with us in Q1, then converted last quarter to a year $35 million TCV deal spanning asset management automation and investment life cycle intelligence across 4 verticals. After an agent camp in May, a global software and services company signed an initial $15 million 5-month deal last quarter, and a leading nonprofit health system signed a pilot at the end of 2025 and then last quarter converted to a 3-year partnership at $37 million TCV.

Our U.S. government business remains a source of extraordinary strength with momentum across both defense and civil. We continue to take great pride in our U.S. government work, equipping our nation with the most advanced battle-tested AI capabilities. For Palantir, this is our calling.

Our customers are making the decision to go deep with us with greater urgency and conviction than I've ever seen before, choosing AI sovereignty over dependency and compounding their alpha in a way that their competitors and adversaries will forever envy. I'll now turn it over to Shyam.

Thanks, Ryan. Ryan just talked about the incredible customer momentum behind sovereign AI. I want to spend some time on the underlying product investments that positioned us for this moment. AIP succeeded because it's the best most ergonomic environment for AI in the enterprise. It integrates mixed mammal AI teams across heterogeneous interdependent workflows and delivers the fastest implementations that turn tokens into real economic value for our customers in complex high stakes environments. What makes it work is exquisite and layered, data integration and transformation, ontology and actions, security and audit, workflows, aging SDKs, agent orchestration with telemetry and observability, evals and customer-specific benchmarks, AIP Evolve and our latest investments in post-training, both supervised fine tuning and reinforcement learning.

Every layer builds on our foundational primitives and every layer flows together. This infrastructure captures the rich operational telemetry to feed the compounding loop, an automated model factory that runs inside the customer security boundary and accumulates intelligence in weights they control. Last quarter, I said tokens are the new call and AIP is the train. Now our customers can build their own locomotives. AIP is where your sovereign AI is built, deployed and compounded.

We're excited for a new era not want a bench maxing but a bench making. The assumption that the frontier is actually the best performing is just not borne out in practice. Within 24 hours of bringing NemoTron/Ultra into our stacks, we found 5 production tasks were a standard nemotron/Ultra model without post-training beat frontier models. This underscores that a handful of common benchmarks can be gained. That era benchmaxing has ended.

The new era is benchmaking. A customer-specific benchmark is not just a scorecard. It's a hill to climb. It's a normative orientation that directs your entire operational workflows and post training pipeline. It defines what better means on your terms for your business, with your strategy, and then everything optimizes against it continuously. And because the benchmark is yours, the trade-offs become yours too. AIP gives you the control plane to trade cost, performance and latency against each other and to decide where you run your weights versus theirs, workflow by workflow, continuously.

Now you can have a continuous improvement cycle that compounds your alpha into your weights. AIP was built for this. We continue to see that our product is winning head-to-head. The others are focused on productivity. We are laser-focused on turning tokens into real economic value for our customers. The reality is that the market has created far more intelligence than it has converted into value. A more powerful model does not solve this problem.

The limiting factor is the rate of AIP deployment. A major Silicon Valley tech company recently ran a bake-off, a frontier lab and its deployment team against AIP and our forward deployed engineers. Remember, only Palantir has FDs. Everyone else has sparkling sales engineers. The lab picked a ticketing automation problem and failed to deliver anything of value against it. We built agent swarms for each of our customers' customers, proactively recommending marketing, packaging and pricing changes to drive revenue and utilization. This work converted into a $10 million ACV contract. The lab was shown the door.

Same customer, same time line, same models. The only difference was AIP in Palantir's unique FD tradecraft, and it was determinative. It was an incredible quarter in U.S. government, measured not just by 90% year-over-year revenue growth, but by mission impact. Maven continues to deliver for the joint force from the factory Florida the Foxhole.We had our first program in the Maven platform launched this past quarter, where a government program of record chose Maven as the platform that they will operate their program in taking advantage of our open data standards, ontology, developer tooling, peering, security and other platform primitives to go faster and deliver seamless experiences and capabilities to the department's chosen command and control platform.

Maven has also continued to win as the developer and builder platform for the joint force with over 25,000 builders, uniform service members, civilians, contractors and companies are developing agents and applications in and on the platform at the speed of war. And for all that growth, our Department of our trailing 12-month revenue is still less than 25 basis points of the Pentagon's budget.

Finally, last week, we held our first American Builder Summit in D.C. to celebrate the Americans who step forward to join the American tech fellowship and to let them make the case that AI is creating jobs and prosperity by sharing their stories and showing what they built. We created ATF because the most transformative applications of AI that we saw were being driven by people without traditional tech backgrounds on literal front lines and factory floors. We now have over 1,000 ATF grads. One of our speakers, who joined Tabet as a submarine parts manufacturer 13 years ago, straight on to the factory floor. He's a proud blue-collar worker who still turns wrenches for a living and he built an AI application that took production planning from 30 to 40 days down to less than 1.

AI alone cannot do that. It takes AI in the hands of the American worker. The tribal knowledge earned through success and failure on the line, the insights only they have. The models are commodities, but the American worker is not.

I'll turn it over to Dave to take us through the numbers.

Thanks, Shyam. We had a phenomenal second quarter delivering our highest ever reported year-over-year revenue growth rate of 93% and our highest ever adjusted free cash flow of $1.22 billion, representing a 63% margin and 115% growth year-over-year. We surpassed $1 billion milestones in GAAP net income, adjusted free cash flow and adjusted operating income.

Revenue in our U.S. business grew 115% year-over-year and 23% sequentially in the second quarter. Our U.S. commercial business accelerated to 149% year-over-year and 28% sequentially, and our U.S. government business grew 90% year-over-year and 18% sequentially. We closed $2.132 billion of U.S. commercial TCV bookings representing growth of 153% year-over-year and 81% sequentially, nearly $800 million above our prior highest U.S. commercial bookings quarter.

We are seeing the immense demand of enterprises recognizing the need for sovereign AI to retain full control of their alpha. On the back of this exceptional continued strength in the U.S. and accelerating demand for sovereign AI capabilities.We are raising our full year U.S. commercial revenue guidance to an excess of $3.424 billion, representing a growth rate of at least 134%. We are also raising our full year 2026 revenue guidance midpoint to $8.154 billion, representing 80% growth year-over-year and 11-point increase over our full year 2026 revenue guidance from last quarter and our largest ever full year revenue guidance raise.

Turning to our global top line results. Second quarter revenue grew 93% year-over-year and 19% sequentially to $1.935 billion. Second quarter U.S. revenue grew 115% year-over-year and 23% sequentially to $1.573 billion. Revenue from our largest customers continues to expand. Second quarter trailing 12-month revenue from our top 20 customers increased 67% year-over-year to $124 million per customer.

Now moving to our commercial segment. Second quarter commercial revenue grew 110% year-over-year and 22% sequentially to $945 million. We closed $2.337 billion in commercial TCV bookings in the second quarter representing 118% growth year-over-year. Our AI platform continues to dominate the U.S. market as the only real choice for operationalizing LLMs, particularly as more customers demand full ownership over the data, logic, actions and security of their enterprise.

Second quarter U.S. commercial revenue grew 149% year-over-year and 28% sequentially to $764 million. We closed a record-setting $2.132 billion of U.S. commercial TCV bookings representing growth of 153% year-over-year. Over the past 12 months, we closed $5.964 billion of U.S. commercial TCV bookings a 117% increase from the prior 12 months, highlighting the accelerating demand for AI that creates real operational value.

Total remaining deal value in our U.S. commercial business grew 124% year-over-year and 27% sequentially. Our U.S. commercial customer count grew to 653 customers, refuting growth of 35% year-over-year and 6% sequentially. Second quarter international and commercial revenue grew 26% year-over-year and 2% sequentially to $182 million.

Revenue on strategic commercial contracts was approximately $400,000 for the quarter representing 0.02% of overall revenue. We continue to expect revenue from these contracts to be less than $500,000 in each remaining quarter of this year.

Shifting to our Government segment. Second quarter government revenue grew 79% year-over-year and 15% sequentially to $990 million. Second quarter U.S. government revenue grew 90% year-over-year and 18% sequentially to $809 million. This growth was driven by continued execution in existing programs and new awards reflecting growing demand for our AI platform and government. Second quarter international government revenue grew 42% year-over-year and 5% sequentially to $181 million. We closed $3.4 billion of TCV bookings, up 49% year-over-year on a dollar-weighted duration basis, TCV bookings grew 129% year-over-year.

Net dollar retention was 157%, an increase of 700 basis points from last quarter. We ended the second quarter with $13.1 billion in total remaining deal value, an increase of 83% year-over-year and 11% sequentially and $4.9 billion in remaining performance obligations, an increase of 103% year-over-year and 10% sequentially.

As a reminder, RPO is primarily comprised of our commercial business as it does not take into account contracts with initial term of less than 12 months and contractual obligations that fall beyond termination for convenience clauses, both of which are common in most of our government business.

Turning to margin and expense. Adjusted gross margin, which excludes stock-based compensation expense, was 86% for the quarter and reflects an increase in costs associated with taking on cloud hosting for one of our government customers. While this change led to a higher cost of revenue in Q2 -- going forward, we believe it will power faster time to value, drive greater efficiency, provide greater cost certainty to the customer and enable us to expand their future workflows.

Adjusted income from operations which excludes stock-based compensation expense and related employer payroll taxes was $1.194 billion in the second quarter, representing an adjusted operating margin of 62%. Q2 adjusted expense was $741 million, up 14% sequentially and 37% year-over-year, primarily driven by the continued investment in our AI platform and technical hiring.

As in prior years, we expect a significant ramp in expense in the third quarter due to the seasonality of new hire starts and other product and marketing initiatives. We remain committed to investing in the most technical talent as well as R&D for product pipeline and sovereign AI efforts, all diluting on our goals of sustained GAAP profitability. Second quarter GAAP operating income was $912 million, representing a 47% margin. Second quarter GAAP net income was $1.062 billion, representing a 55% margin. Second quarter stock-based comp expense was $265 million and equity related employer payroll tax expense was $17 million.

Second quarter GAAP earnings per share was $0.41, second quarter adjusted earnings per share was $0.41. Unrealized gains from our holdings and SpaceX resulted in a $0.03 tailwind to GAAP EPS and a $0.02 tailwind to adjusted EPS in the quarter. Additionally, our combined revenue growth and adjusted operating margin accelerated to 155% in the second quarter, a 10-point increase to our Rule of 40 score from the prior quarter and our 12th consecutive quarter of an expanding rule of 40 score.

Turning to our cash flow. In the second quarter, we generated $1.216 billion in cash from operations and $1.22 billion in adjusted free cash flow, representing margins of 63%. We ended the quarter with $9.2 billion in cash, cash equivalents and short-term U.S. Treasury securities.

Now turning to our outlook. For Q3 2026, we expect revenue of between $2.16 billion and $2.164 billion and adjusted income from operations of between $1.292 billion and $1.296 billion. For full year 2026, we are raising our revenue guidance to between $8.15 billion and $8.158 billion. We're raising our U.S. commercial revenue guidance to an excess of $3.424 billion, representing a growth rate of at least 134%. We're raising our adjusted income from operations guidance to between $4.889 billion and $4.897 billion. We are raising our adjusted free cash flow guidance to between $4.5 billion and $4.7 billion, and we continue to expect GAAP operating income and net income in each quarter of this year.

With that, I'll turn it over to Alex for a few remarks, and then Ana will kick off the Q&A.

Obviously, we are loving these results and loving what they mean for our customers and broadly speaking, the West. So reflections on how we got to 93% aggregate growth just under 150% growth in U.S. commercial and an aggregate growth of 115% in America, which is astonishing even surpassing the already anomalous results we've posted in the past and at a very significant scale. And the story really does begin at the beginning when we dedicated ourselves to our most important partners in the U.S. government, and we built products to deliver value for them.

We delivered those value for them by looking at the world in its naked state. We did not have soft -- we did not have AI available. We had to work with NLP. So we had to develop for deployed engineer model to extend the technology and deliver value, the nascent version of Ontology was developed, Shyam, Aki, others, strapped Blackberries around their head and made the code work in sensitive environments.

And what we learned and what was built into this company is that there are things, values, structures that are more important than purely extracting value from a client, and we rejected the way in which we were being taught in Silicon Valley to build a software company at the time Palantir, of course, is now both infrastructure software, FTEs, orchestration and business know-how. It's a completely different hybrid but at the time, we were being told our job was to trick the clients into giving us money for something that made them attached to us, but really added no value. So essentially a parasitic model.

And in the rejection of that, we fully aligned with our partners. Now we -- to do that, as we move through the years, we built -- we built PJ, Foundry, Gaya, Maven, Ontology, AIP. Now we're taking the AIP stack and extending it for sovereign AI, which requires us to be able to orchestrate and fine-tune models to provide a completely sovereign stack to our partners. But what is the philosophical importance of that, we are offering a present that augurs to a future that we want to live in. what does that future look like? We have more rights in the PG frame. There's -- it's safer in the sovereign AI frame, which is arguably by far, the most important because -- all these other things are downstream from GDP growth and GDP Health and what if we transform America into the only democracy that actually grows where production is more efficient and manufacturing actually happens.

What is that frame? That frame is not -- you are going to buy into a future where you have new job where adversaries win. And everybody who does win is a small, tiny group of people living in a tiny place, that someone believes because they eat vegetables and they don't support war fighters that they deserve to have the total means of production of this country. And the rest of us should just sit back and absorb the cost of that revolution, which we're paying for. How are we paying for it?

In the enterprise context, people sign up for token self pleasurings -- and those -- and that -- a real cost, like other forms of self-pleasuring where you are paying for the right for them to migrate your IP, your know-how, your expertise to their model so that they can build a competitive business that doesn't require your business for people. And why are they doing it? It's actually being done for what they believe are moral reasons. They are superior to you. They deserve to colonize your enterprise, you deserve to be colonized. And then Palantir and a, it's interesting, it doesn't work as well or as efficient purely on the alpha side as having an application layer owning your compute witness.

We built a partnership with NVIDIA. We're expanding our application layer. We are going to enter the market and already entering it in the classified space, as Shyam alluded to, of fine-tuning models. So the model is actually fine-tuned by us in our enterprise on a Nvidia stack outperform frontier models. And you own the weights, you own the alpha, you own everything. Every single enterprise in this country is going to either look at doing this, find ways of doing it or at least avoid the alternative of unprotected interaction with Frontier models. This is very dangerous. You're worried about this in high school.

And now you're learning about it in your enterprise. And talent here, we are in the front of driving this revolution I am driving the business to grow at a rate equal or above to what we have in U.S. commercial for the next 18 months. which is a very high goal, but it is 1 we can actually get to because we are fully aligned with what's right and what's good and what actually works well in an enterprise. And for the first time, people believe us -- and if you didn't believe us, you can believe 149% growth in the U.S., a Rule of 40 that's 155%, 93% aggregate growth and 90% growth in U.S. com with 62%, 63% of free cash flow margins.

People thought we wouldn't be profitable. So this is one of the more exciting times to be at Palantir. It's 1 of the more exciting times to participate in Palantir. And for everyone on the sidelines, you got to get off the sidelines. This is a revolution that will affect the sovereign revolution, where you stand in it will affect your livelihood, the livelihood of the people you care and whether America and the West win.

We cannot regress to a thin philosophical model where only a small group of people who think very differently than most of us actually absorb all of the revenue and value in our business and transfer all the dangers to us. And that's what this revolution is about, and it's extremely motivating for those of us at Palantir. Thank you.

Thanks, Alex. Our first question is from Dan with Yorkville Ives. Dan, please turn on your camera and then you receive a prompt to unmute your line.

Well, while we're waiting, you can be interchanged. Maybe we can circle back to Dan.

Our next question is from Mariana with Bank of America. Mariana, please turn on your camera, and then you'll receive a prompt to unmute your line.

I think I'm good. Can you walk through at the sovereignty boot camp, what did you learn with talking to customers that may be you weren't expecting? I mean, obviously, just an overwhelming sort of group of executives. Can you just talk about that, Alex?

Well, first of all, for those of you not in the know, we did a sovereign boot camp after this kind of revolution exploded -- and just to give the backdrop here, 2 years ago, we were -- we spent 4 or 5 months, Sasha, who runs this organizing AIPCon. This was much more like, hey, let's provide our buddies over to lunch.

And then all of a sudden, we started getting bombarded by people. People we invited, people we didn't invite all levels of the business. So like when you're working in enterprise, it's really important that operational people are interested. So it was like CEOs, operational leads and there's a huge educational component and Shyam talks about this a lot, like we -- people understand that they need a way of controlling their alpha -- they understand broadly that token maxing is at their own cost. And they certainly understand that token Maxine is leading to them, transferring their data, their prompts, the way they run their business, their expertise to third party. But they don't they need education on what they can do about that with us preferably, but also without us, how do you do contracts?

How do you work with open way models? How do you work with closed wave models? How does this work in otology is ontology the protective layer that they've been told, -- does it create value the way they -- how we just look in their own business and how would they work with the compute stack? And so there's just this massive demand and we're in the business of educating people with our customers and others. But it was a super group of people, both in terms of the kind of people showed up, the demand for it and also people we've not worked for.

By the way, one of the reasons the NDR number is so strong, ridiculously strong. I mean people always write these things about customer adoption and maybe -- but the NDR number is enormously strong that is also going to shift as hard as to believe become even more positive because some of our older partners we haven't really interacted with, they also showed up -- they're like, "Oh, okay, now we get why we would need you and not just foundry, they're migrating across our stack.

So customers that are only using foundry now in oncology, now want to be part of the cavern AI stack. I would say, last not least, you're asking the internal version -- external version internally, recruiting, retention, excitement at Palantir. It's -- I mean, I'm very excited. I think the people around this table are very excited.

The legal department is exciting. I mean that hasn't happened. It's like that doesn't happen. Like they're out like Rob on. So it's just -- it's more fun -- so yes, there's just -- that's the way this went down. And I think this is going to -- this is the way beginning. So the way at least we think about this internally is what portion of the market is available to people who want to create value, you mean create value and keep it -- that portion of the market has gone from a small portion of the market where we were doing were to like a large part of the U.S. GDP. And that's why we need partners.

Behind the scenes now we're trying to find partners -- now partners, we need technically, exceedingly competent partners. Partners doesn't mean a vessel. We don't have to grant every issue. We don't even have to agree in every client. They can occasionally compete against us. We've seen this in the defense tech stuff. Shyam like the approach to Defense Tech where we partner with people. Partner doesn't mean we agree, sometimes we compete, but it means in in a similar direction allows us to scale.

So those things are going to be a very big important part of like essentially the guide. Why am I pushing the company to grow not to just at the end of the year, but next year, it's because that also forces us to find ways to scale to meet the demand that's out there.

Thanks, Alex. Our next question is from Mariana with Bank of America..

So a follow-up to Dan's question. When all the AI revolution started, it was really clear for enterprises that data and proprietary data and how you train your models what's going to be the key but then we're like 3 years into that revolution, and now everyone started to realize owning my data and wherever our data is important.

What happened there? Why you think that you position yourself then in a different approach to AI that enterprises were unable to see and why these numbers that reflect that you're the winner of AI today. It wasn't that clear for any other software application back then.

Well, you can kind of divide it up into 2 parts. There's the first part is efficacy. And then the second part is efficiency. That's not quite the right word, but it's like how do you scale it in the 0 to 1 phase, it's much more important to focus on the application layer. Like, okay, this new thing has happened, how do we turn that into economic value.

And then as people started to experience the economic value and as time started happening, you started to see that some of the people who were partners out there were building things that were competitive to you. And I think that took some time to kind of seep into the psyche and mindset of wait a second. This is maybe not -- now I know this thing is valuable in the right hands on the right platform, but I also am going to need to control the weight that the alpha that is being generated isn't simply the data that's resident in my enterprise. It's also the media, the reasoning traces, the exhaust, the usage of this, which I don't yet have mechanisms to control and now I understand that it's actually probably more valuable than just the data in my enterprise. And that's been a clarion call I think, for the market over the last quarter, 2 quarters.

There's also the question implicit in your question is why did we get this right. And again, I think it's -- we are actually fully aligned with our partners. Sometimes we make decisions like that are against our economic interest, like we're supporting lots of institutions in Europe, the growth sucks. I mean cleaned ascent institutions. But without our products, they would have rampant terrorism and their migration problems and the results would be 10 times worse -- it's not actually in our economic interest anymore to do this, but we still do it. And it's because we actually are believers for better or worse I would say also, this is a company that, from beginning from inception, has valued artistic insights, meaning you can't model something purely on science. You have to have an aesthetic or artistic appreciation for it.

And we've made huge bets. Everyone sitting at this table and many, many hundreds of people at Palantir have essentially artistic insights. We've always viewed ourselves -- we've always said we're in a colony of artists and people assume that means we're just difficult, and that's also true.

But it's also we value insights that are way before anyone else would see them and we build major parts of our business. That's very hard for normal business to do because, I mean, one of the jokes running around Panther is we can definitely meet our guide next year if we get paid for all the people copying us. So we got a small portion of people copy of the funds for the copiers, we do very well.

Normal businesses, again, no critique here are built around -- there was a playbook. We executed on that playbook. And we're in the non playbook world. So executing on a playbook that works 5, 10 years ago, essentially build parasetic software and monetize it, that doesn't work now. And there's hundreds of variants of that, but that is a central advantage we have. We are a colony, believers and artists that are very motivated to drive value. And that sets us aside much more than I would have imagined 10 years ago, if you'd asked the same question.

And then luckily for us, this is capitalism. I mean DSA wants to get rid of it. But until they do, you got to look at the results because of our results -- and the other thing I'll tell you that's very special for us, we are outsiders. Outsiders like you're an outsider. You come to this country, you better have really good results. And like the same thing for Palantir, we know we need the best results because people aren't buying our product because we're swinging the golf cube correctly or paying for the steak dinner. They don't even invite us to stay tuners. So that's -- and that outsider status has caused huge problems, but in the first 18 years, but a lot of benefits in the next 18 years.

And other people don't like being outsiders -- in fact, I'm struggling with our current popularity.

Our next question is from Gil with D.A. Davidson. Gil, please turn on your camera, and then you'll receive a prompt to unmute your line.

The topic of sovereignty, you focused a lot on how dangerous it is to give the keys to the labs because they could choose to compete with you. Is there another aspect of this as well, though, that -- if you choose a lab and you buy the orchestration and the consulting and the harnesses from them, you're beholden to their models. And if something happens, if it's not the best anymore if the model gets pulled, then you as a customer are stuck and you may have a mission-critical system fail. And this isn't hypothetical. This happened a couple of times this year where one of the frontier models got pulled by either the government or the company well if you work with Palantir, I would assume that when that happens, you can go to your customer and say, "Hey, if that model doesn't work, I can plug in another model for you?

No. I mean I'll let Ryan and Shyam comment here, but we're already doing that across the USG U.S. government. We have a product that allows you to switch out models. Look, at the end of the day, if you are locked into a product, you're going to -- I mean that's the nature of monopoly capitalism. That's why people want to lock in because then they can raise the prices and reduce the quality. We're against that because we're on the side of the American work with the American people and its great institutions and other institutions across the west.

But yes, they're and people are running big enterprises in this country are very sophisticated. They're aware of these risks. And they don't like people who are kind of flaunting like setting this up so that they feel they're being made fun of or they're being basically. So there's a lot -- honestly, there's a lot of anger here.

I spent interestingly, a fair bit of my time trying to explain to people that some of the people involved in these things are not the caricature as they think they are. But because the business setup looks like heads I win, tails I win and American business people don't like that. But then I don't know there's a lot of things on the contractual front that would support that.

Yes, I would say like that's our whole focus is converting tokens to value. The example Shyam gave, that's happening across the board and the conversations with customers, that's why they're looking to expand to convert how they position themselves in the industry with us in their industry. And so we're seeing like extreme alignment. It's not about being beholden to one model. It's about bringing the right models to bear for the right purposes and our contracts, our structures are set up to do that to support and compound their alpha in the organization.

I think I mentioned it earlier, but you're going to see this, like we've been beholding to a small number of benchmarks that people have been designing models to and then releasing model saying, like, look, how well it does on this benchmark. But the benchmark is actually almost nothing to do with your business.

So how do you figure out how to make the benchmark that represents your reality, what you're trying to succeed at, what are you trying to get better at and then see what model makes sense. And the natural consequence of doing that even leaving aside all of your other arguments for sovereignty, it's like, "Oh, how do I climb that hill? How do I figure out what it is that I do as a business that I feed back into weights that I can control, which presupposes an open model and sovereignty. And then you're not just going to do that where you're waiting, hey, maybe I'll switch it out when this model gets pulled and the rug gets pulled out from underneath me. You're actually going to be leveraging the automation to do that constantly to figure out when you have a next act on forward maybe there's a new model.

I mentioned the example. I literally almost felt gas lit when within 24 hours of getting Nemotron up with no post training. This is via Nemotron/Ultra, it did better than Frontier. If you just looked at the numbers, you would say, well, it's nowhere near the frontier. That shouldn't even be possible. But of course, the benchmarks are wrong. I mean the benchmarks are right for what the benchmark is measuring, but that's not my business. Those are not the task my customers had that they were trying to solve. And so then moving this to an empirical basis is, I think, is how we're going to accelerate the realization of tokens to real economic value.

You Alex, as always, we have a lot of individual investors on the line. Is there anything you'd like to say before we?

Well, your support has -- was crucial to getting us this far. -- and crucial to getting us to where we're going to go, which is a much, much, much, much larger company. This is one of the most exciting times to be involved in the Palantir mission. We are going to help transform especially this country, but allied countries, both in commercial and government. And the sovereign frame that is -- we're using as our organizational principle is 1 that is inclusive of everybody who wants to have a better world today and tomorrow. And we invite everyone to engage with it in some form. And thank you.

Thank you. That concludes Q&A for today's call.

Good afternoon. I'm Ana Soro from Palantir's finance team, and I'd like to welcome you to our First Quarter 2026 Earnings Call. We'll be discussing the results announced in our press release issued after the market closed and posted on our Investor Relations website.

During the call, we will make statements regarding our business that may be considered forward-looking within applicable securities laws, including statements regarding our second quarter and fiscal 2026 results, management's expectations for our future financial and operational performance, and other statements regarding our plans, prospects and expectations. These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially from actual results. Information concerning those risks is available in our earnings press release distributed after the market closed today and in our SEC filings. We undertake no obligation to update forward-looking statements, except as required by law.

Further, during the course of today's call, we will refer to certain adjusted financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from GAAP measures. Additional information about these non-GAAP measures, including reconciliation of non-GAAP to comparable GAAP measures is included in our press release and investor presentation provided today. Our press release, investor presentation and other earnings materials are available on our Investor Relations website at investors.palantir.com.

Over the course of the call, we will refer to various growth rates when discussing our business. These rates reflect year-over-year comparisons unless otherwise stated. Joining me on today's call are Alex Karp, Chief Executive Officer; Shyam Sankar, Chief Technology Officer; Dave Glazer, Chief Financial Officer; and Ryan Taylor, Chief Revenue Officer and Chief Legal Officer.

I'll now turn it over to Ryan to start the call.

The last 3 months have been some of the most exciting in the history of Palantir as we watched the whole world begin to see the incredible promise of operational AI as well as the risks and perils of being beholden to model the loan. We achieved 85% year-over-year revenue growth, our highest overall revenue growth rate as a public company and 16% sequential growth. Our U.S. business now 79% of total revenue surpassed 100% year-over-year growth for the first time since our DPO, growing 104% year-over-year and 19% sequentially. Our Rule of 40 score climbed at 145, up from 127 last quarter on absolute AIP dominance. AIP is the only platform that establishes a true AI no-stop zone, a necessary requisite to converting potential AI leverage into compounding real-world value without risking enterprise disaster.

As the AIG CEO noted in their recent earnings call, they are deploying AIP to implement a multi-agentic underwriting and claims solution comprised of purpose-built agents ingesting submissions, evaluating risk, benchmarking pricing and detecting fraud, all coordinated through the Ontology. When you want AI to work in production in a real enterprise at real scale, where there is no room for slap, there is only one platform, AIP. It is not just the playbook of cutting costs and streamlining processes. AIP is the battle-tested platform that allows the wholesale redefinition of how companies compete within their industries. The depth of our customer commitments reflects that ambition, referencing our work with [ Motor and Freedom Mortgage ], where we are revamping the end-to-end mortgage process with AIP, the Motor Chairman stated, "This strategic partnership will reshape the future of our industry. Together, we're building technology that can help improve affordability, lower borrowing costs and expand access to homeownership for millions of Americans."

Our U.S. commercial business grew [indiscernible] to the compounding real value created for our customers. For example, on the back of a 26% increase in engine production with AIP, GE Aerospace deepened their partnership with Palantir last quarter to deploy agentic AI-powered solutions across their production system and military aviation supply chain with a shared mission of ensuring that more aircraft remain available to train America's next generation of U.S. Air Force pilots. [ Ondis ] and [ WorldView ] expanded their work with Palantir to bring AIP to the Stratosphere and the operational backbone required to scale their missions. They noted, "Palantir powered workflows don't just make 1 launch faster. They make dozens or 100 simultaneous launches possible with the same operational efficiency. Load-bearing institutions upon which the west depends now or will soon know that our AI platforms are the indispensable means of delivering their must win operational [indiscernible] an upshot of our transformational work across every domain."

The foundation remains our deployment of Maven Smart System to empower our troops. As the Chief Digital and AI Officer at the Department of War noted. "I care about one thing and one thing only, that the 18, 19 20-year-old kid who had no choice in where he went or what threat he was facing. I want him to win and come home. That's why we do it. Palantir is very helpful in delivering this."

Beyond Maven, ShipOS in partnership with the Department of the Navy has produced remarkable impact at several manufacturing industrial-based suppliers already including dropping manufacturing bill of materials approval time from 200 hours to 15 seconds, increasing speed of contract review cycles by 57% to 73%, and reducing monthly material planning time by 94%. Just as commercial organizations are reshaping their industries, ShipOS is the reinvention of America's maritime industrial base. This is just the art of how our support of manufacturing processes will transform existential programs for the U.S. government. In fact, we've already seen the government step in to transition and scale a successful private sector manufacturing program we're supporting.

On the Civil side, the USDA awarded Palantir a contract of up to $300 million last month to provide USDA with capabilities to support American farmers, secure farmland, enhance supply chain resilience and shield agricultural programs from fraud, abuse and foreign adversary influence. In government and commercial, Palantir is transforming how load-bearing institutions operate and how they win.

I'll now turn it over to Shyam.

Thanks, Ryan. For over 2 years now, we've been saying that while LLM are improving, models are converging and the cost per token continues to drop precipitously. [ GPT4 ] equivalent performance that cost $20 per million tokens in early 2023 is now approximately 1,000x cheaper 3 years later. Because of this increased efficiency, use case demand for tokens is exploding. Our AIP workflows today utilize vastly more tokens, agents orchestrating across the ontology, chaining reasoning, pool use, retrievable and execution, and it's growing. This is Jevons paradox. It's the single most important dynamic in enterprise software right now.

When the Victorians built more efficient steam engines, everyone assumed coal consumption would fall. Instead, it's skyrocketed. Cheaper transport meant more demand for transport. Tokens are the new coal. AIP is the train. As inference gets cheaper, the number of tasks that you can economically assign to AI grows exponentially. Precisely because tokens are so much cheaper [indiscernible] self-correct. But in practice, the number of tasks that you can trust a model without the right harness exponentially declines. More tokens means more slop. In the more commodity cognition you consume, the more you need a system that can prevent the economic harm so you can harness the economic value. That system is AIP. That intermediary representation is the ontology. This is also why we are seeing the depth of legacy software. AIP replaces static workflows, not by replicating the playbook, but by eliminating the need for one.

[ Thomas Cabana Construction ] 97% of their employees use foundry every day. And every other piece of software must now justifies existence. And so far, they haven't been able to. We're seeing this internally, too. This quarter, we replaced our old expensive CRM with an AI-first solution built on AIP in a few months that users absolutely love. Our customers are seeing the real value is not automating what you already do. It's doing what was previously impossible. A major telco set out to automate 10 million customer calls a year. The real insight was that the most dissatisfied customers never call. They churn silently. The reframe was counterintuitive. Don't use AI to reduce coals use it to generate that, an AI advocate that proactively calls on every customer's behalf. The point is simple, use AI to do more work, work that was never economically feasible before AIP.

For every agent action, our customers need to answer 3 questions: who authorize this? What did it cost? Can I trust what it did? These questions need exact answers with precision. There's no tolerance for slop. We're building a platform native agent engine SDK, a single set of perimeters were building, persisting, governing and operating ontology native agents, a common layer that lets you visualize every agent in your enterprise and control it regardless of how it was built, a true agent operating system. On top of that, unified cost attribution per agent, per session, per workflow, with administrative caps full provenance. So every oncology mutation traces back to the agent and reasoning chain that produced it. Security marketing, propagation from input data through agent sessions on to all output with approval gates for any workflow that could reclassify information. That's how you get a [ CISO ], a CFO and a [ bacommander ] to say yes. AIP is the no slop zone, the platform where every agent action is governed, attributed and auditable.

Turning to U.S. government. On the [ Foxhole ] side, Maven met its moment across real-world events in Q1. Usage has doubled in the past 4 months through the end of March and is now 4x over the past 12 months. Across the services, the [ combatant ] commands, the joint staff and the intelligence community. When the stakes are highest, when failure is measured in lives and readiness. This is where we are uniquely positioned. On the factory floor side, the demand on the defense industrial base to ramp production and sustainment has been so acute that we have surge resources from our commercial business. This is exactly what Warp Speed was built for, modernized American manufacturing. And we're doing just that where it counts the most. AIP is the default builder platform in the Department of War with thousands of developers using AIFD, migrating legacy systems, standing up new capabilities, solving problems that used to require contractor teams and months of lead time. Our software is becoming the most valuable and responsive weapon system for the joint force.

Finally, what's now clear is that meet those and spud and even other current generation models with AIP are capable of finding novel vulnerabilities in complex cyber kill chains. They have discovered thousands of 0 days in major operating systems in browsers. This is the spud [ Nick ] moment in the AI arms race. The rate of vulnerability identification is about to skyrocket, finding the bugs is no longer the limiting factor. Rapid fire remediation with exact precision immediacy and absolute certainty is the new hard problem, knowing exactly what versions of what software are running where and closing the remediation chain autonomously. Apollo was built for exactly this. We're shipping the next generation of Apollo as we help our customers re-posture for this world. And note, the Jevons paradox dynamic here too. More AI means more code. More code means more slop. More slot means more attack surface. More attacks surface means more vulnerabilities and more vulnerabilities means more Apollo.

I'll turn it over to Dave.

Thanks, Shyam. We had an outstanding first quarter, delivering our strongest ever Q1 sequential growth rate of 16% and our highest ever reported year-over-year growth rate of 85%. Our revenue growth rate accelerated for the 11th consecutive quarter highlighting the durability of the growth of our business at scale. We expanded our Rule of 40 score by 18 points quarter-over-quarter from 127 in Q4 to 145 in Q1.

Our U.S. business achieved triple-digit growth for the first time, driven by accelerating demand for our AI platform. Revenue in our U.S. business grew 104% year-over-year and 19% sequentially in the first quarter. Our U.S. commercial business grew 133% year-over-year and 18% sequentially, and our U.S. government business grew 84% year-over-year and 21% sequentially. On the back of this continued strength in the U.S., we are raising our full year 2026 revenue guidance midpoint to [ 7.656 ] billion, representing 71% growth year-over-year a 10-point increase over our full year 2026 revenue guidance from last quarter and our largest ever full year revenue guidance raise.

Turning to our global top line results. First quarter revenue grew 85% year-over-year and 16% sequentially to $1.633 billion. First quarter U.S. revenue grew 104% year-over-year and 19% sequentially to $1.282 billion. Customer count grew 31% year-over-year and 6% sequentially to 1,007 customers. Revenue from our largest customers continues to expand. First quarter trailing 12-month revenue from our top 20 customers increased 55% year-over-year to $108 million per customer.

Now moving to our commercial segment. First quarter commercial revenue grew 95% year-over-year and 14% sequentially to $774 million. We closed $1.3 billion in commercial TCV bookings in the first quarter, representing 42% growth year-over-year. Our AI platform dominates U.S. markets as the only real choice for deploying AI models operationally in a way that actually works. First quarter U.S. commercial revenue grew 133% year-over-year and 18% sequentially to $595 million. This exceptional growth even understates our [ GS ] commercial momentum. As Ryan noted, we had a successful U.S. commercial customer program turns us into a U.S. government customer. Absent this transition, U.S. commercial growth would have been 143% year-over-year and 22% sequentially.

In Q1, we closed our third consecutive quarter of over $1 billion in U.S. commercial TCV bookings at $1.2 billion, representing growth of 45% year-over-year. Over the past 12 months, we closed $4.7 billion of U.S. commercial TCV bookings, a 115% increase from the prior 12 months, highlighting the accelerating demand for AI that creates real operational value. Total remaining deal value in our U.S. commercial business grew 112% year-over-year and 12% sequentially. Our U.S. commercial customer count grew to 615 customers electing growth of 42% year-over-year and 8% sequentially.

First quarter international commercial revenue grew 26% year-over-year and 5% sequentially to $179 million. Revenue from strategic commercial contracts was $3 million for the quarter, representing 0.2% of overall revenue. We expect revenue from these contracts to be less than $0.5 million in each remaining quarter of this year.

Shifting to our Government segment. First quarter government revenue grew 76% year-over-year and 18% sequentially to $858 million. First quarter U.S. government revenue grew 84% year-over-year and 21% sequentially to $687 million. This growth was driven by continued execution in existing programs and new awards reflecting the growing demand for our AI platform in government. First quarter international government revenue grew 51% year-over-year and 7% sequentially to $172 million. We closed $2.4 billion of TCV bookings, up 61% year-over-year. On a dollar-weighted duration basis, TCV bookings grew 135% year-over-year. Net dollar retention was 150%, an increase of 1,100 basis points from last quarter. The increase was driven both by expansions at existing customers and new customers acquired in Q1 of last year as load-bearing institutions continue to turn to Palantir's battle-tested AI platform. As net dollar retention does not include revenue from new customers or acquired in the past 12 months, it has not yet fully captured the acceleration and velocity in our U.S. business over the past year.

We ended the first quarter with $11.8 billion in total remaining deal value, an increase of 98% year-over-year and 6% sequentially and $4.5 billion in remaining performance obligations an increase of 134% year-over-year and 9% sequentially. As a reminder, RPU is primarily comprised of our commercial business as it does not take into account contracts with an initial term of less than 12 months and contractual obligations that fall beyond termination for convenience clauses, both of which are common in most of our government business.

Turning to margin and expense. Adjusted gross margin, which excludes stock-based compensation expense, was 88% for the quarter. adjusted income from operations, which excludes stock-based compensation expense and related employer payroll taxes was $984 million in the quarter, representing adjusted operating margin of 60%. Q1 adjusted expense was $649 million, up 7% sequentially and 32% year-over-year, primarily driven by the continued investment in our AI platform and technical hiring. We continue to expect expenses to ramp in 2026 as we remain committed to investing in the product pipeline and the most elite technical talent, all while delivering on our goals of sustained GAAP profitability [indiscernible] GAAP net income was $871 million, representing a 53% margin.

First quarter stock-based compensation expense was $202 million and equity related employer payroll tax expense was $28 million. First quarter GAAP earnings per share was $0.34. First quarter adjusted earnings per share was $0.33. Additionally, our combined revenue growth and adjusted operating margin accelerated to 145% in the first quarter and [ 18 ] increase to our Rule of 40 score from the prior quarter and our 11th consecutive quarter of an expanding Rule of 40 score. With our 2026 revenue and adjusted operating income guidance, we are guiding to a Rule of 40 score of 129% for the full year.

Turning to our cash flow. In the first quarter, we generated $899 million in cash from operations and $925 million in adjusted free cash flow, representing margins of 55% and 57%, respectively. We ended the quarter with $8 billion in cash, cash equivalents and short-term U.S. Treasury securities.

Now turning to our outlook. For Q2 2026, we expect revenue of between $1.797 billion and $1.801 billion and adjusted income from operations of between $1.063 billion and $1.067 billion. For full year 2026, we are raising our revenue guidance to between $7.650 billion and $7.662 billion. We're raising our U.S. commercial revenue guidance to an excess of $3.224 billion, representing a growth rate of at least 120%. We are raising our adjusted income from operations guidance to between $4.440 billion and $4.452 billion. We are raising our adjusted free cash flow guidance to between $4.2 billion and $4.4 billion. And we continue to expect GAAP operating income and net income in each quarter of this year.

With that, I'll turn it over to Alex for a few remarks, and then Ana will kick off the Q&A.

Well, welcome to yet another exciting earnings call. With these numbers, the ones that leap out to everyone are the over 100% growth in the U.S., the Rule of 145, the 85% growth in the U.S. and guiding to 71%. And just the underlying dynamics of that, we -- you would think that the most interesting thing is just the truly end-of-one nature of these numbers. And in fact, it is pretty fascinating, especially people who've doubted that we get this far. But I think the most important thing about our earnings is it establishes beyond a doubt that while over the history of Palantir, we focused on things that actually, actually transform the world. And the current environment is actually being transformed by the Palantir platform.

And although there's a wide view out there in the world that AI swap is going to take over the world, our clients, especially [indiscernible] Infrastructure Industries know, this is not the case. They buy our product despite the fact we have 70 salespeople, a normal company of our size would have 7,000. Only 7 of our salespeople actually even really sell we're doing what a normal company would do with 7,000 sales with 7 people. We're doubling the U.S. We are dominating on the battlefield. Shyam will talk about this later. But the way [indiscernible] posed in a contradiction to both allies and friends and enemies is being done in our platform from beginning to end across the U.S. The reality that we will be able to drive a 100% growth in the U.S. is being driven by the fact that our customers either know or will know that you need actual results.

Those results require granularity, specificity, actual relationship to facts, the appearance of software working is not software working. And the slop that is getting a lot of attention is not only dangerous in terms of the hyperbolic [ retic ] that also like there will be no jobs because of the slop. Nothing will work we will have a god-like figure in the name of AI. When in fact, what actually does work is a platform built like by a [ motley ] crew of highly technical people, who over 20 years have been aligned for being right about the nature of having to build foundry, the nature of having to build Apollo, the nature of an FDA and [indiscernible].

The demand for this is once in a lifetime and that demand is actually driving these financials, meaning growing 100% goal for the year. What did we miss? Okay. In any case, I hope you guys got that. Wow, this is like being on stage.

Yes. So with that, maybe we'll go to questions. But the unique way in which this company is being run, the unique way in which is the way we built the products, the unique way in which we're willing to be [ non-met ] when the whole world said software had to be worthless, we build platforms that work. When the whole world said you could not extend it with FTEs, we went and build FTEs. When the whole world is saying AI swap without an ontology that allows you to put true statements and truth into the ontology and therefore, produce actual results we stuck to our guns. And what did we get? We got these results. And I think if you just look at the results, how can a company grow 100% in the U.S. with functionally a nonexisting sales force with the same number of people.

Our free cash flow this quarter is larger than our revenue a year ago in the same quarter. Think about that. same company, same people, extenuated products, it's all being extended and then look at the impact on the battlefield in the Middle East on every government institution on demand of our product and in U.S. commercial. This is all the result of being right about product, right about execution and standing in the headwinds of people who are certain there, right? Now the new version is AI swap and proving that they are wrong with our results. This is an incredible quarter, and I'm very proud of this.

Now I'll turn to questions from our shareholders [indiscernible] call. We received a question from [indiscernible] commentary expect to navigate an environment where AI is pressuring software [indiscernible].

Well, thanks, [ Adam ], for the question. Well, it's a massive tailwind for us because we've always been counter positioned against this sort of legacy thin software that kind of was built by and execute a playbook that's built around rent extraction and no outcome delivery. We, on the other hand, have been focused entirely on building software that's focused on alpha and not beta. We're not trying to make you the same as every other person. I'm trying to figure out what makes you different? How do we express your business strategy through the software platforms and products we build.

So that part is probably obvious, that counter positioning. But the other counter positioning is against AI slop. We are focused on enterprise autonomy, not on dazzling demos, have in the oncology, the no slop zone. The ontology is the body to the AI brains. You can't actually interact with the enterprise or affect the world, your agents can go nowhere without oncology. And you're seeing that with our customers in government, we are the platform that you build applications and agents on. In the commercial world, people are replacing legacy software at a light and fast pace, as I mentioned in my remarks. And we see that even internally at Palantir we're gotten rid of legacy software like CRM, built it very quickly on top of our platform to a user experience that our users love.

I just -- almost every single highlighted example of AI that actually is producing results in the U.S. is actually parented by Palantir. And if you -- one of the ways to pen test what we're saying is just dig into the examples of AI actually transforming an enterprise call the client, talk to them. I'm not saying every single one is but almost every single one is. And it is because the theory of what -- how you do AI and the practice in the enterprise are just radically different, and they look the same to nontechnical people. but they do not look the same to practitioners, whether you're on the battlefield or whether you're an insurance company or whether you're a hospital or whether you're a manufacturer what they discover is the reality of doing this requires a platform like ontology and currently executing on top of foundry with FTEs. And currently, that combination is available from one company and that is us.

Thank you. Our next question is from Dan with Wedbush. Dan, please turn on your camera and then you receive prompt to unmute your line.

Yes. Thank you. Well, great quarter yet again. But my question is, how do you balance between going after government deals and then commercial vehicles. Obviously, you're in a unique position, just like we saw with that deal this quarter. Can you just talk about that balance? Because obviously, there's more demand and supply in terms of relative -- in terms of Palantir.

Yes, just and then I'll get to [indiscernible] talk to Ryan. So the reality of how Palantir works is we always -- we position and prioritize the U.S. war fighters over everything else. And when we believe or no because of our proximity that the U.S. war fighter is it in danger, we put the whole company against it. And it is not always the way in which 1 should do this, but it is how we do it. And we've done this from the beginning, and we're doing it now. And so in the current context, we take opportunities that look the same from a business perspective. And we 100% prioritize this nation security over any other variable.

Now if that also interestingly gives us leverage because we go to the government. And we'll -- and one thing people don't believe is we're like, look, this doesn't work the way you think or this kind of execution will not lead to success. And you are actually asking us to take money out of our pocket to do it, which we will do. but we cannot sign up to do something that won't work that will not advance the war fighter that will not advance munitions that will not help this country have better unit economics while just hurting or deprioritizing other -- by the way, we tell commercial clients is, I tell commercial clients is all the time. We are highly monogamous in our in the way we work. We are not trying to make you into a commodity.

The only thing we will put above you is U.S. national security. And by the way, we're more than willing to do this when it is unpopular or when it's popular. And that's -- if you look at the retention and the full alignment inside Palantir, the benefit of this is we just attract and retain people that understand there is a higher value than just running the business as a business. That said, our biggest problem currently is demand in the U.S. I believe we will have 100% growth in the U.S. is that we just cannot meet demand. And again, the advantage here is we can go to commercial and government clients and say, "Look, this doesn't make sense. If you want swap, you can go here. If you want old school software that actually doesn't work and probably will disappear, there are a lot of names. If you wants us, we need to do it in a way that will make sense." And that gives us a lot of leverage. But we're very upfront with people. We're just like with our customers and just like we are internally.

And we're also doing this abroad. One of the reasons why we're intolerant of software and AI or some kind of which witch crafts that you have in some parts of Continental Europe is we have no time for it we literally have no time or no energy for the waste of time machine. Probably, I should be on TV explaining to people why the models are actually only useful on the platform, why the use cases peak platform companies are talking about are actually in Palantir. Why the to cost and token reduction in token price is exactly what we predicted. Why our clients actually are asking, "Can I have a cheaper model since they seem pretty similar, but we also don't have a lot of time for that." Would you like to add to this? Now that we're on the mic.

I'll just say what we're seeing across our customers, and this is what's driving the U.S. generally is those that understand the load-bearing context in order to apply AI in that context, you need to be able to deploy it with precision without swap. And you see like the AIG CEO talking about the agentic underwriting and claims process that's being coordinated through the oncology. These are all really massive undertakings. We're going deep with our customers, and we're having that level of impact, and that's what really is driving us.

Our next question is from Mariana with Bank of America.

Afternoon everyone, everyone. I hope you guys hear me. And I don't know if you are going to be able to see me. But I'm going to start as a follow-up. I'm going to do 3 questions today. Number one, when AI started, you guys -- you have some customers that wanted to do it their way. And what's happening right now with the AI labs getting into enterprises? Like how many customers understand that value or how many are the niche customers that like understand it and are actually advancing faster, but we also have some that are still like just, I don't know, trying with just [indiscernible], Gemini like OpenAI, they all have enterprise solutions now. Alex, you mentioned Thailand, how easy or hard is actually to get the right engineers to keep being able to incorporate all that to the outcomes that you are looking for.

And the second one on defense because it's where my heart is always, you got a good call out on Maven in the presidential budget request, Maven is 1 of the 2 pillars for [indiscernible]. TITAN is moving to production, and that is amazing news. But this is an election year. How much of that growth depends on that budget being appropriated and how much you can actually keep growing if we were to see an extended [indiscernible] resolution?

Well, the talent question is the Palantir's famous for having the best talent over a very long period of time. Look, it's a super competitive environment. The -- I think most -- the whole world wants to either work at Palantir or a lab. The advantage that we have at Palantir is if you come to Palantir, you learn how to build something that is truly unique. And quite frankly, if you want a leap bounty, you can have any job in the world. And so I think that talent race is going to continue.

The thing about being a Palantir is it's a very high pressure, very unique environment where we need people who are willing to do things that are different than anyone else and where although we're 9/10 of the world loves us, 1/10 of the world professionally hits us someone on your social graph is definitely going to call you up and say, "How can you how can you do us important work in Israel or the Department of War or other places even though we've powered every administration basically since in existence, not at the scale, obviously." So that's an ongoing thing. I am pretty confident that we will continue to attract and retain some of the best talent in the world, and we're seeing a ramp-up in that.

I am now personally sitting across recruiting. I'm particularly interested in neuro divergent people of all kind, people who are neurodivergent enough that they get up and come to this country and do important valuable work. And we see a lot of -- yes, and so like we're really we find a lot of our allies have chosen to come to America and chosen to come to Palantir. We like that. but it is an ongoing battle. There really are a couple of options in the world that makes sense. Palantir is obviously one of them, and we're very, very unique.

I would also say the more we produce these numbers and the more we have actual experience on the battlefield and enterprise. One of the things we're going to do an increasingly a frontal job of doing this, you can join the startup that probably is not going anywhere. Everyone kind of on the inside knows venture is kind of not doing well or you could come to Palantir [indiscernible] but it is an ongoing everyday battle. Everybody wants a Palantirian.

When we started this, I think a couple of years ago, I was saying Palantir is the most important degree in the world. The problem for us is it is the most important decree in the world. And everyone knows it now. Thanks also because we got fair coverage. And because I mean, we probably are -- because of our domination here somewhat undervalued. But People know that we actually are changing the world, and we're probably somewhat undervalued, so it's a great place to go.

On the defense side, I'll leave it to Shyam to talk now that we're doing our...

Yes. On the defense side, it's been a very active period. It's not just Maven and TITAN. There's also the work that we're doing on production across major weapon systems for the department work around the [ Spudnik ] movement right now. So there's a lot going on that one should be pretty excited about. The department is pulling as much of that into '26 as possible. History would suggest, of course, we're going to be in a CR because we -- like most time since Palantir exist, there's always been a CR.

So there are certain things that are outside of our control, but I feel very good that the role we're playing, the stakes are very high. What we're providing is existential to actually moving the department forward, and we'll realize that value.

On the AI lab side, the enterprise side here, I think 1 of the privileged positions we live in is that the limits of what the models can do. I think one of the challenges for the labs is that they -- all they see are the limitless potential as opposed to living at the edge of where does it translate into economic value. And you see that with when -- I wish everyone the best was building out the [indiscernible], but it's essentially how do I take Palantir and try to replicate that. What we do is very unique based on how we've organized ourselves and the tension between [ FD ] and product development. And we have these out-of-body experiences. There's at least 2 labs we can think about where they were talking about 2 different customers that they're working with and how it's transformed X or Y. Yes, it did in AIP. We did that [indiscernible].

So I just add. To that point. The best thing that can happen to this company and maybe this country is, of course, they should go out and flirt with all this slop. Mostly, they come home to Palantir. They don't have to all come on to Palantir, we have limits. But go test it out, go see how easy. I mean, they're creating the market for us. We saw the same [indiscernible] as it is to make these things work, great. And then compare what you're delivering to what we've delivered. And you know what, we don't -- my version is we don't have to have all the market. We can only -- we are at our limit doing 100% this year, which I am going to drive the company and maybe we can do 100% next year in the U.S. That's all we can do. And they can just expose the market to their beautiful shiny appearances. And we'll just expose the market to how we will transform your enterprise. That's how it's going to go down.

And by the way, I'm always telling people inside the company. Everybody wants to be you. You just may not know it. They're all trying [ to Pleco, Stoyko, Disco ] it's because in the end of the day, they need to have growth with profit. But you can't have profit if you're not changing your -- the dynamics of the partner you work with meaning your customer. it is downstream from the value you create, and that's how Palantir -- we're very comfortable in that zone.

Now I do think this is going to be -- we're going to end up with a different term for software. You can't lump what we're doing. We're really providing infrastructure and installation of AI infrastructure. Look, if your company is largely running around and offering steak dinners with something that someone can hack and rebuild in a week, yes, you're going to have a huge problem [indiscernible] that don't make sense. They're under huge pressure. And that's one of the reasons we're at the forefront. I mean, can you believe we're that at the forefront of almost every discussion in the world. And it's simply because we're powering almost everything that works, not everything. There are some other great companies out there. Many of them are not well known, and we should help publicize them, but we're -- and that's where we're at, and that's what these numbers show. You don't have to believe us, believe you're non-lying eyes.

Alex, as always, we have a lot of individual investors on the line. Is there anything you'd like to say before we end the call?

Well, to individual investors and [ Palantirians ] who are also individual investors. Being on the front line of important things is painful. You get yelled at occasionally. Many of the people yelling at you have no clue what they're saying. Some of the people do have a clue what they're saying and just disagree with the West being strong and more efficient and more moral and having better unit economics or quite frankly, are value your support and we value your defense of us, we are defending you every day, every day, and that's in great part, what drives these results and we are having some fun doing it too, just so you know. And hopefully, you'll have some fun. Thank you for your support, and we will see you next quarter.

Thank you. That concludes Q&A for today's call.

Good afternoon. I'm Ana Soro from Palantir's finance team, and I'd like to welcome you to our fourth quarter 2025 earnings call. We'll be discussing the results announced in our press release issued after the market close and posted on our Investor Relations website. During the call, we will make statements regarding our business that may be considered forward-looking within applicable securities laws, including statements regarding our first quarter and fiscal 2026 results management's expectations for our future financial and operational performance and other statements regarding our plans, prospects and expectations. These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially from actual results.

Information concerning those risks is available in our earnings press release distributed after the market closed today and in our SEC filings. We undertake no obligation to update forward-looking statements, except as required by law. Further, during the course of today's call, we will refer to certain adjusted financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from GAAP measures. Additional information about these non-GAAP measures, including a reconciliation of non-GAAP to comparable GAAP measures is included in our press release and investor presentation provided today.

Our press release, investor presentation and other earnings materials are available on our Investor Relations website at investors.palantir.com. Over the course of the call, we will refer to various growth rates when discussing our business. These rates reflect year-over-year comparisons unless otherwise stated. Joining me on today's call are Alex Karp, Chief Executive Officer; Shyam Sankar, Chief Technology Officer; Dave Glazer, Chief Financial Officer; and Ryan Taylor, Chief Revenue Officer and Chief Legal Officer. I'll now turn it over to Ryan to start the call.

Our fourth quarter results are nothing short of historic, capping off a monumental year for our business. In Q4, we overall revenue surged 70% year-over-year, our highest growth rate as a public company, propelled by the relentless momentum of our U.S. business. which now commands 77% of our total revenue, up 93% year-over-year and 22% sequentially. Our Rule of 40 score reached new heights at 127 and up 4 points year-over-year and 13 points quarter-over-quarter, proving that hyper growth and exceptional profitability aren't mutually exclusive, but rather the inevitable outcome of Palantir delivering transformational impact at scale. We closed our highest TCV quarter ever at $4.3 billion, and fourth quarter trailing 12-month revenue from our top 20 customers increased 45% year-over-year to $94 million per customer, a testament to our customers' conviction.

Our customers aren't tentatively trying AI. They're committing to it at scale with Palantir as the driving force. The rapid advancement of AI models is continuing to drive the commoditization of cognition. The next step is for the market to differentiate between those who are supplying the commoditization of cognition and those who are scaling the leverage made possible by it. We are the only enterprise software company that made a conscious choice to focus exclusively on the latter, delivering real-world value for our customers by maximally leveraging these models in production. Palantir is an end of one. This is what makes a rule of 127 possible. This is why customers who have crossed the chasm with Palantir, the AI haves are defining the future of their industries. While those still on the other side, the AI have not are fighting for survival in the present.

As Johnson Controls noted about our work together, it is really incredible to see that you can transform a 140-year-old company with the power of AI. I'm seeing this play out across our customer base. We are moving customers from AI adopters to AI-native enterprises, transforming execution into exponential advantage. This is summed up best by an executive at Thomas Cavanagh Construction, who noted, we've gone all in so much so that every other software must justify its existence. And so far, they haven't been able to. 7% of our employees use foundry every day. Foundry is our operating system. And he continued quote oncology is the secret weapon. Nothing else comes close. And not only are we getting rid of third-party software, we've replaced their functionality and then beaten them to new features all within the year because of the ontology.

Our U.S. commercial business grew 137% year-over-year and 28% sequentially, building on the blistering pace of 121% year-over-year in Q3 and 93% year-over-year growth in Q2. define conventional enterprise software dynamics. This isn't just growth. It's compounding acceleration. AIP continues to fundamentally transform how quickly our customers realize value. collapsing the time from initial engagement to transformational impact. Lear noted at our recent DevCon conference their experience starting with 100 users and 4 use cases and growing to 16,000 users and 280 use cases. We're seeing the effects across our entire customer base. Existing customers are expanding faster and larger. For example, a utility company expanded from $7 million ACV in Q1 2025 and to $31 million ACV by year-end, while an energy company expanded from $4 million ACV in Q1 2025 to over $20 million ACV by year-end, driven by value generated from new use cases.

In addition, new customers are starting with substantial initial deals. A health care company completed 2 boot camps with us last summer and signed a $96 million deal with us before the end of the year. an engineering services company saw a series of demos in the fall, then signed an $80 million deal before year-end. Speed to production and transformational scale is no longer optional, it's existential. Palantir remains the only platform delivering that speed at enterprise scale. This revolution isn't limited to just companies. It extends to countries with the U.S. leading the way. Our U.S. government business grew 66% year-over-year and 17% sequentially, driven by our mission impact across the Department of Defense as well as accelerating momentum in civil agencies. The U.S. Navy awarded Palantir contract worth up to $448 million to modernize the shipbuilding supply chain and accelerate delivery of naval vessels.

This engagement exemplifies how Palantir's supply chain expertise owned across commercial and defense customers is now being deployed to solve some of the most strategically important challenges facing our nation including rebuilding its maritime industrial base. The strength of our U.S. government results reflects a fundamental reality in an era of intensifying global threats and budgetary pressure, the government is turning to software that actually works as speed, precision and decision advantage are paramount. We're entering 2026 with extremely strong footing. Everything we've built over 2 decades, is converging into this moment, and we're charging into the year with unmatched conviction as the defining enterprise software company of this generation. I'll now turn it over to Shyam.

Thanks, Ryan. Our focus with AIP continues to be enterprise autonomy, our normative view of the value of AI in the enterprise. Hivemind now lets the AI develop novel solutions to immersion challenges and to identify hidden opportunities. And the rest of AIP enables you to turn those ideas into an implemented reality, closed-loop evolution of the business with AI possible because of AIP and oncology. The Hivemind framework is being applied to broader problem sets. We used Hive Mine to generate a bespoke AIP demo for a specific customer based only on their website and other public information. The company's CTO was blown away by how good the demo fit their internal challenges, even though it was only based on information in the public domain. Hivemind is just that good.

We're going to continue to invest in closing the loop between Hivemind's output and the autonomous execution of these ideas at our customers. AI FD continues to delight AI is now capable of powering complex SAP ERP migrations from ECC to S/4, years of work now done in as little as 2 weeks. And we are generalizing AI FDE's capabilities to do this for a broader and broader set of problems at our customers. AI FDE, and OSDK has unleashed Pro code builders in our platforms. We serve over 1 billion API gateway requests a week from applications built by our customers on top of AIP with OSDK. Maven usage is at all-time highs, supporting simultaneous real-world events across combatant commands in the joint force. Maven will continue to be rolled out to all combatant commands and many more networks over the rest of this government fiscal year. But Maven is also pushing to the edge.

We completed a live-fire exercise with Maven coordinating with UAV assets through our new Maven Edge agent called MACE, enabling the declarative statement of mission Intent and fully onboard planning reaction to emerging battlefield realities and execution. AIP is becoming the default builder platform in the Department of War. -- uniform service members, primes, federally funded research and development centers all in Maven, Vantage, Envision, Warp Core and more, all building, not just consuming AI applications. We're seeing green suiters and blue servers building their own agent swarms to transform how they fight. As with any good revolution, the innovation is coming from the edge, not the program offices. It's the E4 in Hawaii, the E8 in South Carolina. These are the folks pathfinding how AI is transforming the joint force with every code commit they make.

Scotland's new suite of integrated capabilities, platform run foundry met their moment. Kairos for integrated planning and Sync Matrices Nexus for dynamic command relationships and unit task hierarchies and workbench to automate collections, fires and battle damage assessment. These aren't 3 stand-alone capabilities. There are 3 new dimensions of the Prism that turn battlefield complexity into lethality. They all work together, building on each other. Orbis MES continued to build momentum across the American industry. ShipOS was the most significant development in Q4, rolling out Warp Speed to accelerate submarine production and sustainment across shipbuilders, shipyards and critical suppliers. At one shipbuilder, we took planning from 160 hours of effort to 10 minutes.

At a shipyard, we took material review from weeks to less than an hour. But most exciting to me is proving what we always believe to be true that AI will create jobs. This is Jevons paradox in action. By reducing the deadweight loss of time spent planning and ensuring the availability of materials, one of our customers was able to add a third shift because now there is more work waiting to be done, that was shovel-ready and executable. We've been so impressed with the latent talent in the submarine industrial base that we're launching an American tech fellowship exclusively for them later this month.

This will be an 8-week or to upskill users at suppliers and shipyards so they can build their own AI applications, unleashing the profound domain expertise to accelerate the delivery of one of our military's most important capabilities. Other worst speed wins, one customer making a mature weapon system at full rate production was able to improve root cause analysis coverage from less than 20% to over 99% in less than a week. On the other end, a different customer making a brand-new weapon system that is still constantly changing designs was able to see a 40x improvement in throughput with a production system that scales with the design velocity rather than breaking under it. With that, I'll turn it over to Dave to talk us through the numbers.

Thanks, Shyam. We had an exceptional fourth quarter with a Rule of 40 score increasing 13 points quarter-over-quarter to 127 in the fourth quarter, we generated our highest ever reported revenue growth rate of 70% year-over-year, exceeding the high end of our prior guidance by over 900 basis points and representing a 3,400 basis point increase compared to the growth rate in Q4 of last year. Full year 2025 revenue grew 56% year-over-year on the strength of our 2025 results, we are guiding the full year 2026 revenue of $7.190 billion at the midpoint, representing 61% growth year-over-year. We reached another $1 billion milestone in the quarter with revenue from our U.S. business surpassing $1 billion for the first time. Accelerating demand for AIP continues to drive the outperformance in our U.S. business overall, which grew 93% year-over-year and 22% sequentially in the fourth quarter.

Our U.S. commercial business grew 137% year-over-year and 28% sequentially, and our U.S. government business grew 66% year-over-year and 17% sequentially. We delivered these outstanding top line results with expanding profitability. In the fourth quarter, we generated $798 million in adjusted operating income, representing a 57% margin and exceeding our prior guidance by 500 basis points. Full year 2025 adjusted operating income was $2.3 billion, representing a margin of 50%, an expansion of 1,100 basis points compared to 2024. We generated $2.3 billion in adjusted free cash flow for the full year representing a 51% margin and 82% growth year-over-year. Turning to our global top line results. Fourth quarter revenue grew 70% year-over-year and 19% sequentially to $1.07 billion.

Full year revenue grew 56% year-over-year to $4.475 billion. Fourth quarter U.S. revenue grew 93% year-over-year and 22% sequentially to $1.076 billion. Full year U.S. revenue grew 75% year-over-year to $3.32 billion. Excluding the impact of revenue from strategic commercial contracts, fourth quarter revenue grew 72% year-over-year and 19% sequentially and full year revenue grew 59% year-over-year. We closed our highest ever quarter of TCV bookings at $4.3 billion, up 138% year-over-year. This eclipses our prior highest quarter of TCV bookings just last quarter by over $1.5 billion. Customer count grew 34% year-over-year and 5% sequentially to 954 customers. Revenue from our largest customers continues to expand. Fourth quarter trailing 12-month revenue from our top 20 customers increased 45% year-over-year to $94 million per customer.

Now moving to our commercial segment. Fourth quarter commercial revenue grew 82% year-over-year and 23% sequentially to $677 million. Full year commercial revenue grew 60% year-over-year to $2.073 billion. Excluding the impact from strategic commercial contracts, fourth quarter commercial revenue grew 86% year-over-year and 24% sequentially, and full year commercial revenue grew 65% year-over-year. We closed $2.6 billion in commercial TCV bookings in the fourth quarter, representing 161% growth year-over-year and 83% sequentially. AI continues to drive existing customer expansions and new customer conversions in the U.S. Fourth quarter U.S. commercial revenue grew 137% year-over-year and 28% sequentially to $507 million. Full year U.S. commercial revenue grew 109% year-over-year to $1.465 billion.

Excluding revenue from strategic commercial contracts, fourth quarter U.S. commercial revenue grew 142% year-over-year and 28% sequentially, and full year U.S. commercial revenue grew 113% year-over-year. In the fourth quarter, we closed $1.3 billion of U.S. commercial TCV bookings represent growth of 67% year-over-year. In 2025, we closed $4.3 billion of U.S. commercial TCV bookings a 161% increase from last year, highing the accelerating demand for AI production use cases. Total remaining deal value in our U.S. commercial business grew 145% year-over-year and 21% sequentially. Our U.S. commercial customer count grew to 571 customers, reflecting growth of 49% year-over-year and 8% sequentially. We Fourth quarter international commercial revenue grew 8% year-over-year and 12% sequentially to $171 million. Full year international commercial revenue grew 2% year-over-year to $608 million.

In the fourth quarter, we closed $1.3 billion of international commercial TCV bookings driven by long-term renewals that we signed with several long-standing international commercial customers. Revenue from strategic commercial contracts was $2.1 million for the quarter, representing 0.1% of overall revenue. We anticipate first quarter 2026 revenue from these contracts to between $1 million and $3 million compared to $5.1 million in the first quarter of 2025. We anticipate 2026 revenue from these contracts to be less than $7 million or less than 0.1% of full year revenue. Shifting to our Government segment. Fourth quarter government revenue grew 60% year-over-year and 15% sequentially to $730 million. Full year government revenue grew 53% year-over-year to $2.42 billion.

Fourth quarter U.S. government revenue grew 66% year-over-year and 17% sequentially to $570 million. Full year U.S. government revenue grew 55% year-over-year to $1.855 billion. This growth was driven by continued execution in existing programs and new awards reflecting the growing demand for AI in our government software offerings. Fourth quarter international government revenue grew 43% year-over-year and 9% sequentially to $160 million, bolstered primarily by our continued work in the U.K. Full year international government revenue grew 47% year-over-year to $547 million. We closed our highest ever quarter of TCV bookings of $4.3 billion, up 138% year-over-year and 54% sequentially. On a dollar-weighted duration basis, TCV bookings grew 166% year-over-year.

Net dollar retention was 139%, an increase of 500 basis points from last quarter. The increase was driven both by expansions at existing customers and new customers acquired in Q4 of last year as we see the effect of the AI revolution. As net dollar retention does not include revenue from new customers that were acquired in the past 12 months, it does not yet fully capture the acceleration of velocity in our U.S. business over the past year. We ended the fourth quarter with $11.2 billion in total remaining deal value, an increase of 105% year-over-year and 29% sequentially and and $4.2 billion of remaining performance obligations, an increase of 144% year-over-year and 62% sequentially. In the fourth quarter, we signed a few significant long-term renewals with long-standing international customers, which provide a tailwind to RPO growth.

As a reminder, RPO is primarily comprised of our commercial business as it does not take into account contracts with an initial term of less than 12 months and contractual obligations that fall beyond termination for convenience clauses, both of which are common in most of our government business. Turning to margin and expense. Adjusted gross margin, which excludes stock-based compensation expense, was 86% for the quarter and 84% for the full year. Adjusted income from operations, which excludes stock-based compensation expense, and related employer payroll taxes was $798 million in the fourth quarter, representing an adjusted operating margin of 57%. Full year adjusted income from operations was $2.254 billion, representing a 50% margin. Adjusted expense was $608 million, up 5% sequentially and 34% year-over-year, primarily driven by our continued investment in AIP and elite technical hiring.

Full year adjusted expenses were $2.221 billion, up 28% year-over-year. We continue to expect expenses to increase in 2026 as we remain committed to investing in the product pipeline and the most elite technical talent all while delivering on our goals of sustained GAAP profitability. Fourth quarter GAAP operating income was $575 million, representing a 41% margin. Full year GAAP operating income was $1.44 billion, representing a 32% margin. Fourth quarter GAAP net income was $609 million, representing a 43% margin. Full year GAAP net income was $1.625 billion, representing a 36% margin. Fourth quarter stock-based compensation expense was $196 million and equity related employer payroll tax expense was $27 million. Full year stock-based compensation expense was $684 million and equity-related employer payroll tax expense was $156 million.

Fourth quarter GAAP earnings per share was $0.24, and full year GAAP earnings per share was $0.63. Fourth quarter adjusted earnings per share was $0.25, and full year adjusted earnings per share was $0.75. Additionally, our combined revenue growth and adjusted operating margin accelerated to 127% in the fourth quarter, a 13-point increase to our Rule of 40 score from the prior quarter and our tenth consecutive quarter of an expanding Rule of 40 score, our full year rule of 40 score was 106%. With our 2026 revenue and adjusted operating income guidance, we were guiding to a Rule of 40 score of 118% for the full year. Turning to our cash flow. In the fourth quarter, we generated $777 million in cash from operations and $791 million in adjusted free cash flow, representing margins of 55% and 56%, respectively.

For the full year, we generated $2.13 billion in cash from operations and $2.27 billion in adjusted free cash flow, representing margins of 48% and 51%, respectively. We ended the quarter with $7.2 billion in cash, cash equivalents and short-term U.S. Treasury securities. Now turning to our outlook. For Q1 2026, we expect revenue of between $1.532 and $1.536 billion and adjusted income from operations of between $870 million and $874 million. For full year 2026, we expect revenue of between $7.8 billion and $7.98 billion, U.S. commercial revenue in excess of $3.14 billion, representing a growth rate of at least 115%. And adjusted income from operations of between $4.26 billion and $142 billion, adjusted free cash flow of between $3.925 billion and $4.125 billion. and GAAP operating income and net income in each quarter of this year. With that, I'll turn it over to Alex for a few remarks, and then Ana will kick off the Q&A.

Well, welcome to our earnings call, celebrating one of the truly iconic performances in the history of corporate performance or technology just to underscore some of the numbers that laser read in a kind of dry form, which is very hard to do. This company grew 93% in the U.S. We had an aggregate growth of 70%. Yes, that's a 70% handle. We have a rule of $127 million and we are guiding to 61% growth this year. Now those results would be stellar unusual and supplying for a company that was in a much earlier stage of its development. but we have been doing this for quite a while, and you just cannot expect a company like ours to perform at anything like this level. At the beginning of last year, we were guiding to roughly in the which is -- which would be a stellar performance for a company.

At the end of the year, we grew our company almost 20% in one quarter. If you were a company sitting in Continental Europe or in Canada, or in any other similarly situated country, and you grew your whole company 20% and you had a Rule of 50, you would be one of the premier companies in your nation, if not in your continent. And we also did this while supporting in critical manner some of the most interesting intricate unusual operations that the U.S. government has been involved in, many of which we can't comment on. But were the highlight of last year and we're highly motivating to all of us at Palantir. And so this really just raises the question, what do bombastic numbers like this mean? Because if you're growing a company like ours you would then say somehow this is tethered to a broader category, which is doing well. But with a rule of 127 and 70% aggregate growth, 93% growth in the U.S.

You really have to look at this and the numbers speak volumes that we are an N-of-1 category of our own, and we are doing things unlike any other company has done, which has, of course, been confounding to people over the years because they said we were a services company when we're doing FTEs. They said that our products were somehow merely software. In fact, their implementation and orchestration machines -- and no 1 thought we'd be able to generate this kind of revenue while having an anemic and declining sales force. And this obviously has import for the world. And what does it mean for the world? Well, it means that -- first of all, that the way in which we view value is obviously no longer relevant.

At the bottom of the snack somehow is where the value is lessened in the top of the stack where we impregnate the world with AI with ontology and FDA and tribal now, which is represented at this table is actually where the value is created. And that value is so large and so disproportionate that you can create a company that seemingly is exploding in terms of growth and quality of growth. It also means the risk we've been saying for years that it's chips and ontology, meaning investing purely in commodity products at LMs that are not orchestrated of course, it not only ruins the unit economics of your business, but it also provides the market with a very distorted view of what value creation would mean because, obviously, if you're making revenue with no way of making profit because the cost of it is so high, that's not valuable.

And obviously, if you're producing something that is the same thing everyone else is producing, it's obviously a de minimis or no value. So we've inverted the stack we've proven that the investment in what we've done is with small numbers can have disproportionate impact both on top and bottom line. And we've also seen, unfortunately, that there's a real hesitance to adopt these kind of products in the west outside of America, and the 2 places leading here are China and America. And what we're seeing in America is so widely divergent and so the non-adopters that have not are hoping for a catch-up function. But these numbers are a breakout function. With these numbers, you've broken through to a new category. It is not the category.

The basket of category of AI is actually meaningless. It's the basket of category of performance value creation with the tools we have at hand, of which AI is crucial. And to believe you can go and build companies without this is supremely dangerous. And we're going to see over the next year, companies that adopt things that actually work we know ontology FDA orchestration is explosive and revolutionary. And obviously, companies cannot be expected to perform at this level because this is truly historic. But how do you even perform at half this level is going to be a real question for tech companies and a real question for countries, can we produce companies that are producing what we produced in the quarter in a year? And one of the things we've got to figure out in the West is how do we do this?

And this is putting enormous political pressure on our institutions because because obviously, political leaders struggle with how do I provide value when there is a disproportion to have and have not. Now in the Palantir version, the haves or the workers and the people that know how to actually use these products. And even the ground truth of this is so far away from what people intuitively believe, it's actually not the capitalist against the workers, just the capitalist and the workers but that's very compounding to political leaders. And it's confounding to structures that don't know how to adopt this and cultures that are not producing these kind of products. Last not least, these numbers are extraordinary because they're fully organic. They're not just organic because we don't do acquisitions.

We don't do acquisitions because we are a thick dense culture, which means you would have to fit in and we have the perfect excuse now of not being able to do them because no 1 has numbers like this, and they would reduce our numbers to do acquisitions. But there are also fully organic in the sense that we have no intertwined economics. Palantir has direct relationships with our clients in defense, intel and commercial clients. we are not co-investing. We are not investing in commodity products. The numbers are pure the purity of the Palantir enterprise. -- and the courage of the enterprise, and we have lots of debates internally about what we should do, how we should do it. And -- but from the beginning, we have stuck to our very strong values of expanding what we believe is the Noble side of the West, which means being let on the front end, meaning outside against adversaries, if necessary, hopefully, adversaries do not want to mess with us.

And on the inside, meaning domestic institutions, intelligence institutions essentially taking an incantation of the fourth amendment, which is completely represented by our pipelining foundry and impregnating institutions with it that every institution that uses our product is doing it with the conformity of the law and the ethics of America and hopefully, a logical extension of those around the world. Thank you.

Thanks, Alex. We'll now turn to questions from our shareholders before opening up the call. We received a question from [ Jeff Jay ], who asks, how are you thinking about your international business? Do you anticipate reacceleration in the near future, for instance, due to European rearmament.

Well, Shyam and Ryan should comment on this. But one of the big difficulties outside of America. And again, as these numbers show, it's not how much you spend is with whom and so we're currently -- first of all, Palantir is in a unique position where we really don't have the bandwidth to do anything that's difficult outside of America. So -- and as this learning curve goes on, it's more and more difficult to help people understand how to implement these things, and the demand in the U.S. is so great. But the core issue for our allies is going to be, can we get to a point where there's a clear recognition that you're going to have to buy products that are much, much more advanced than what is being built domestically. And that's complicated for them because they tend to want to buy products for themselves.

But if you just go back to a wider frame, is this institution load bearing. Is the purchasing structure of a European country actually allowed to bear the load of buying the best product. can they understand the delta in a way that allows them to make a decision that might go against the narrow economics of their own country. And I think, unfortunately, what you see is you see in the Arab and non-Arab area of Middle East, so Arab countries in Israel, you see adoption, you see wide-scale adoption in China and you see a lack of adoption in Canada, Northern Europe, and in Europe in general. And then -- but the real difficulty for the world is if Palantir is going to bear a lot of the weight of this work we are scaling -- I mean like the demands on our product in the U.S. government in defense and civil are extraordinary.

So how do you, in fact, even justify moving into something that's more complicated is a real issue. And again, but the issue ends up being there is more than ours. I think one of the things you're going to see in Northern Europe, can and other places is a real pressure to move to the left and right politically very far because the way you deal with this -- when you don't have an answer to a question, you come up with ideologies that make no sense, and you try to implement them. And then that's the pressure they're going to have. The pressure we're going to have as a company, as a country is how do we actually service the demand at the unyielding level of quality that we demand from ourselves.

And the bar at Palantir is not where the best. It's got to be magical. We're not in the business of delivering the best products. We're in the business of delivering magically projects that are magical in the front line. And we, unfortunately, going talk about some of that, but we've seen that in the last year. Magical implementations that have actually changed how people view U.S. deterrents. Obviously, the primary heroes here are the war fighters. But the implementation orchestration, which Sham and many, many people at Palantir have spent tireless nights working on has actually changed what people are able to do.

If you have any questions about this, you can actually go -- if you speak or read French, go into the French newspapers, the one of the countries that has the clearest idea of the problem is France. But they don't really know how to solve it because solution involves buying American products, particularly. Nothing to add to that. That's great.

Thanks, Alex. Our next question is from Mariana with Bank of America. Mariana, please turn on your camera, and then you'll receive a prompt to unmute your line.

Can you hear me?

Yes.

So 2 questions, as usual. One in the commercial side, the other 1 on defense. On the commercial side, the markets have already decided that 2026 is the show me story for AI. Have you seen that in the customers or software partners? Like you talk about this, I think you call it hesitancy, but like over time, you have talked about like this resistance from some corporates to implement AI the way you thought it was the right way. Have you seen a change in that dynamic? The other one is related to ship OS Shipbuilding has not been the only thing that the Pentagon has struggled to ramp up. There is a major effort to reindustrialize the U.S. and especially the military-related stuff. But like is there an opportunity to have like, I don't know, an ammo or a missile OS and like where else we could see that applied?

So I would say our whole commercial go-to-market strategy is showing and actually delivering value impact to our customers directly as quickly as possible. And that's why we're seeing the stories of customers that are starting at larger sizes and expanding more quickly. We closed -- in our overall business, we closed 61 deals over $10 million. That's because of the impact that we're delivering to customers. And the customers are -- I'm having a lot of those conversations with those customers, and they're all it's all because we're showing them what we can do with the software, and we're showing the impact and we're the only 1 that's delivering that leverage impact from the models with the oncology, with the FDE, with our products in those organizations.

In the -- again, here, you'd have to disambiguate America from all other markets. But in the American market, we have inbounds where people have already seen proof points at other companies and not on 1 use case. It will be like migration of this kind of product, underwriting a myriad of use cases. And the conversation -- 2 years ago, it was much more I kind of this weird thing that might be able to make it work. In general, the conversation now is I've heard you made this work. I don't understand where you fit into a slot. The reality of Palantir is we're not a one slot company. So it's like if you want to view us what people know us for is it will work and it will work really well and it will be very quick. And then -- but a lot of our customers come now with, I know it will work what do I need to do to make this accelerate?

And then on the end where it's like not as positive, it might be, I don't quite understand how this would work or why this would work. but there's a lot less of that. And quite frankly, we're in a much better position to shape who we work with than we've ever been. And part of what we're doing, quite frankly, is shaping who we work with because like Ryan is sitting on one of the more interesting deployments, both technically and commercially. And the person running that deployment in their end, is the CEO. And they're very far in the wheats. And it's like and they're like they've reshaped their org to absorb our product. And like we've never had anything like and it's the same thing, Shyam talk about this in the DoD, but it's not -- one of the unusual things that unfortunately, we can't talk about is also just how much we can shape what's going on under the hood including like how do you orchestrate something in a defense or civilian context.

Now it's not that we're to the ciders, but it is the first time that we can help shape the footprint against which we execute. Not in all cases, but in the first -- for the first time in many. And what we need to get done this year is to expand that. It's much more density of client base than volume. We're into transforming large institutions and then making a lot of money with them. very counterintuitive. But because of that, they see very deep alignment and they're willing to listen to us and we say, yes, we know that won't work. Like in the past, we had to show them it won't work. Now a lot of our conversations, look, we know this won't work. Everyone thinks this work. This is some BS that companies tell you it's never going to work. If you want the event planning and the state dinner you can have that. And quite frankly, some companies are like, yes, we can have some part of our company that's not real. We'll use some other company that does event planning and state dinners for that. And then we're part of the real part of the business.

And on defense and reindustrialization, obviously, is something we've been talking about for the better part of 2 or 3 years now. It's something we're very focused on. It starts in defense, but I think it goes to pharmaceuticals. It goes to a chain reaction where we're helping build data centers, so like there's so much activity there that we're uniquely positioned to go after being overly modest.

Shyam's phone rings off the hook all day. And what they went from him is -- how do I do the same thing across government? That's literally what's happening.

And that's sort of ShipOS, of course, we're starting with the sub fleet, but people are asking us to help with all sorts of different weapon systems, fighters, surface vessels, drones, weapons themselves, munitions. And it's a big area for us that spans not only the production of the weapon, but also sustainment of them. And if you think about lethality, the ability to deliver combat power, you need an integrated ability to do this from the factory floor to the Fox hole. And Maven is a huge investment that has changed how we fight across the joint force on the Fox oil side. And what we're doing that ShipOS is really the kernel of and is powered by warp speed is how we're going to reinvigorate the factory floor and provide an integrated view to the Pentagon through this.

Thank you. Our next question is from Dan with Wedbush meant your line.

Yes. So great to see you again. And I might look obviously a phenomenal quarter. My question is, does it feel like you're getting more and more of the budgets on the commercial as well as even on the government defense side, where you go in to do X and all of a sudden, instead you're doing why -- is that starting to happen now? You're just getting a bigger, bigger piece of these budgets when Palantir comes in?

Well, if you look at our numbers very closely. What you will see is inexplicable growth in revenue, but not inexplicable growth in customers. And it's inexplicable growth in revenue because customers that are serious are putting a lot of their most important problems in our hands. And then the value creation we're downstream from that, but the value creation is so large. So it's both -- it's not just that you get more problems. It's that you solve them in a way that is determined for the business and then they they pay you a lot more. And then there's also just this consensus right or wrong that the alternatives to us are not great. It's like constantly before these calls, I get 50 techs, could you please be more modest?

And it's an issue. But we struggle. We all struggle with something. But the thing is, I think the true answer to this, it's not like -- I don't understand this false modesty, like the customers we work with know that we know things other people don't. And we've been sticking to the way we do things for a long time. And now AI is just put gasoline on all these tribal knowledge we have in our products. And I would say -- and then we're much better at actually, I wouldn't say being modest, but saying, you may be a customer or a country that's not getting this right now. like Western Europe. I'm very pro Western Europe. I've been at modest Germany in German to like wake up because I care, not for commercial reasons. But the reality is most people there they're not ready.

So it's like we're very -- we're in a position to say, yes, you understand what we can do. and this is how it works. The best examples aren't all the stuff Sham is doing and other people are doing in government, which cannot be talked about. But the initial discussions are like, well, how would you shape the problem? Number one is like, that's what people want from us. Because like our weapon software is in every combat situation I'm aware of. Now maybe the more people with higher clearances are where some things were not involved in. So -- and people say, well, this should not have worked and it did. And then on the commercial side, which is I think, have a great interest to investors. I mean that's why we have these that's why we have a rule of 127 that's why we're growing 93% in the U.S.

That's why our guidance is at 6% was at 31% last year at the beginning of the year or something like that. So it's like it's because we have a very tethered and deep and dense proximate relationship with the leaders in almost every field of industry. And last, adjacent to your question, but it's like -- and these relationships are not circular pay relationships in any way. It's like we are -- we provide value. I tell -- I mean, not that it comes up very much, but I used to tell people all the time, just imagine we're a Swiss company, but we have to pay us a little way like we deliver a high-value product. We don't want any BS about getting paid. We're not going to give you any BS about why our product didn't work and offer you a steak dinner or event planning event we're going to deliver and then we get paid. And like -- and we got paid last year, a lot, 127, 70, 93%. Those are my favorite numbers.

Thank you. Alex, as always, we have a lot of individual investors on the line. Is there anything you'd like to say before we end the call?

When we are thinking about what we're building, we are building these things with our internal culture, our defense clients partners and with a great thought to people have put their own money into Palantir. And it's just a very important part of why we continue to perform and what motivates a lot of us here and definitely may and I hope that you are having a great time when you run into professional analysts who thought we would never be free cash positive, we'd never be profitable. we'd never have a 2 handle, a 3 handle, a 4 handle, a 5 handle and now a 7 handle on our aggregate growth and the rule of 40 with some unattainable category, although 127 is ununderstandable by everyone besides us. So I hope you're enjoying the ride. There's always ups and downs and there are ups and downs for all of us. We've been doing this for a long time. And -- but we're having fun tonight. I hope you are too. And yes, congratulations.

Thank you. That concludes Q&A for today's call.

Good afternoon. I'm Ana Soro from Palantir's finance team, and I'd like to welcome you to our third quarter 2025 earnings call. We'll be discussing the results announced in our press release issued after the market closed and posted on our Investor Relations website.

During the call, we will make statements regarding our business that may be considered forward-looking within applicable securities laws, including statements regarding our fourth quarter and fiscal 2025 results, manage expectations for our future financial and operational performance, and other statements regarding our plans, prospects and expectations. These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially from actual results. Information concerning those risks, it's available in our earnings press release distributed after the market closed today and in our SEC filing. We undertake no obligation to update forward-looking statements, except as required by law.

Further, during the course of today's call, we will refer to certain adjusted financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from GAAP measures. Additional information about these non-GAAP measures, including reconciliation of non-GAAP to comparable GAAP measures is included in our press release and investor presentation provided today. Our press release, investor presentation and other earnings materials are available on our Investor Relations website at investors.palantir.com. Over the course of the call, we will refer to various growth rates when discussing our business. These rates reflect year-over-year comparisons unless otherwise stated.

Joining me on today's call are Alex Karp, Chief Executive Officer; Shyam Sankar, Chief Technology Officer; Dave Glazer, Chief Financial Officer; and Ryan Taylor, Chief Revenue Officer and Chief Legal Officer. I'll now turn it over to Ryan to start the call.

We had a monumental third quarter shattering expectations yet again. Our overall revenue grew 63% year-over-year and 18% sequentially. We outperformed across the board, driven by strong execution in the U.S. which accounted for 3/4 of our business in Q3, growing 77% year-over-year and 20% sequentially. Our Rule of 40 score soared to an unprecedented 114, up 4 points year-over-year and a full 20 points since last quarter alone, reinforcing our position as the defining enterprise software company of our generation.

Our U.S. commercial business grew an incredible 121% year-over-year and 29% sequentially, driven both by insatiable demand and the quantified exceptionalism compelling customers to scale AIP across their operations. Organizations are embracing an undeniable truth. -- real enterprise AI at scale requires Palantir. We're seeing that AIP again and again, is the only platform delivering transformational impact in this market. And critically, AIP is the only AI platform that has an actual plan for compounding your enterprises AI leverage, not just the model makers leverage over you. Sharing this leverage with our customers is our highest priority. Our whole company is singularly focused around value creation for our customers, and I'm proud to share with you all the fruits of our labor.

We closed our highest TCV quarter ever at $2.8 billion. Underlying this performance, we closed a staggering 204 deals worth $1 million or more of which 91 deals were worth $5 million or more and 53 deals were worth $10 million or more. In our U.S. commercial business, which now accounts for 34% of our overall revenue. We closed $1.3 billion in TCV, a milestone achievement for the fastest-growing area of our business with a more than 6x year-over-year growth rate on a dollar-weighted duration basis. The trajectory is clear. customers are converting to larger enterprise agreements in short time frames, reflecting both the expanding scope of their AI ambitions and the immediate impact our software delivers.

A leading medical device manufacturer signed a multiyear expansion just 5 months after their initial contract, increasing ACV more than eightfold. 2 weeks into their initial contract, the conversation evolved from a single use case to pursuing the opportunity of becoming an AI-first enterprise. Their CEO approached me to embrace a shared vision for an enterprise-wide AIP deployment to transform their entire organization. This transformation reflects a broader pattern we're seeing across our customer base. AI is a strategic imperative owned at the C-suite level with executive leaders recognizing the enterprise-wide AI adoption is the defining factor separating the AI haves and the AI have-nots.

We're seeing C-suite-driven AI transformations across our customers. At a leading insurance company, the CEO has taken personal ownership of their AI transformation, meeting with our team regularly to orchestrate a company-wide transformation around AIP, reimagining every function from underwriting to claims processing, leading to a significant expansion of our work together. Our partnership with TWG Global named virgin.ai continues to gain momentum as TWG's Thomas Toll noted "what was once a competitive advantage is now a competitive necessity." Companies that fail to incorporate AI into their core operations will be outpaced by those that do. These examples underscore what we are seeing. We are the only platform bringing true transformational impact to the enterprise AI market.

Turning to our U.S. government business. Revenue grew 52% year-over-year and 14% sequentially as we continue to deliver mission-critical capabilities. We remain deeply admitted to our founding mission of supporting the U.S. government honored by the privilege of equipping our nation with transformative software that actually works. We remain focused on delivering the most advanced defense capabilities in the world to the U.S. government and internationally to our allied partners around the world. The momentum we're carrying into Q4 is extraordinary. As we look towards the end of the year, our mission is clear: deliver the production capabilities that turn AI from promise into performance for the enterprises defining the future of their industries through AIP's compounding AI leverage.

I'll now turn it over to Shyam.

Thanks Ryan. 20 years of grinding has built a unique moat and a growing lead. Our products were built for this moment, and the numbers continue to show it. Realizing value from AI in the enterprise requires the elegant integration of LLM workflow and software. And this is only possible with ontology. Our foundational investments in oncology and infrastructure have positioned us to uniquely deliver on AI demand now and in the world ahead. The most significant product developments are the accelerating progress in our AI applications inside of AIP our AIP native development agent that understands how to connect to data sources, how to integrate and transform data, how to create ontologies and functions and build applications it's unleashing incredible speed and productivity for our FTEs and customer developers alike. At 1 customer, 2 human FTEs spond an army of AI FDs to migrate a customer off their legacy data warehouse in 5 days, something that would have taken an army of SIs up to 2 years. This is not a prototype. This is production across our customers, the results are shocking.

AI Hivemind is a new AIP capability that orchestrates a form of a dynamically generated agents to tackle hard problem solving, idea generation refinement and executable proposal generation that is integrated with ontology and therefore, aware of the context of your enterprise. AI Hivemind was originally developed to solve extremely complex problems in the classified space. But it's already been used to help our commercial customers identify bottlenecks in their supply chain, proactively developing possible solutions and then leveraging AI FD to code that up into an actual solution. In the government space, AI Hivemind is able to take its proposals and generate intricate mission plans right in GAIA and MAVERICK. Our focus with AIP continues to be enterprise autonomy, our normative view of where the value is for AI in the enterprise. Hivemind now lets the AI develop novel solutions to emergent challenges and to identify hidden opportunities. And the rest of AIP enables you to turn those ideas into an implemented reality. Closed-loop evolution of the business with AI possible because of AIP in oncology. We continue to make investments that allow enterprises to extend AIP to the far edge. Edge Ontology is a new lightweight implementation of ontology that runs on mobile devices. It enables customers to build mobile applications or embedded software for hardware, things like drones and robots and is fully integrated with your enterprises AIP instance.

Turning to field-facing updates. The U.S. Army issued an official public memo directing all Army organizations to consolidate and centralize on Vantage, the Army data platform built on foundry and AI. The Army views this, not merely as a technical decision, but a cultural decision, enabling the data-driven decision-making that continues to make our army the most lethal in the world. This directive will enable the Army to rapidly sunset legacy systems and enable more investment in the Army's Future Force concept and systems. Warp Speed and the American Tech Fellowship, our early investments to support manufacturing and reindustrialization in America are bearing fruit. While works bed launched by helping new defense entrants meet their surging production goals, it's now being rapidly adopted across the traditional defense industrial base and the maritime industrial base. The second cohort of the American Tech Fellowship will be wrapping up in the next few weeks. We started the American tech fellowship because we noticed that many of our best builders were frontline workers. They don't come from conventional consulting background. You don't have formal computer science backgrounds. To highlight a few of these folks, Mason, a Louisiana-based civil engineers building AI applications for more accurate estimates for heavy construction projects, something that is only going to grow with our reindustrialization. Michael, who works for a potato farm in North Dakota is streamlining its operations and Cody from Georgia, who is a utilities expert is building in foundry to deliver safe, reliable energy across the South. These Americans are the true face of innovation, underscoring that it will be the American worker with AI that drives reindustrialization and American prosperity. Our customers have taken notice and asked us to create American tech fellowship programs for their employees, specifically to include Lear who highlighted their fellowship in their recent earnings call.

With that, I'll turn it over to Dave to take us through the numbers.

Thanks, Sean. We had an outstanding third quarter achieving a Rule of 40 score of 114, our highest ever by 20 points. We also generated our highest ever reported revenue growth rate of 63% year-over-year exceeding the high end of our prior guidance, a 1,300 basis points and representing a 3,300 basis point increase compared to the growth rate in Q3 of last year.

On the back of this extraordinary strength, we are guiding to revenue of $1.329 billion in the fourth quarter, representing 13% growth quarter-over-quarter, our highest-ever sequential revenue growth guide and 61% growth year-over-year. We're also raising our full year 2025 revenue guidance midpoint to $4.398 billion, representing a 53% year-over-year growth rate and 8-point or $252 million increase over our full year 2025 revenue guidance last quarter. In addition, we're raising our full year U.S. commercial revenue guidance to an excess of $1.433 billion, representing a growth rate of at least 104% year-over-year, a 19-point increase over the guidance we gave just last quarter. Accelerating demand for AIP continues to drive the outperformance in our U.S. business overall, which grew 77% year-over-year and 20% sequentially in the third quarter. Our U.S. commercial business grew 121% year-over-year and 29% sequentially and our U.S. government business grew 52% year-over-year and 14% sequentially. We delivered these exceptional top line results while also achieving our highest ever reported adjusted operating margin of 51%, exceeding the high end of our prior guidance by 500 basis points and highlighting the unit economics of our business at scale. Our revenue and profitability drove a 20-point sequential increase to our Rule of 40 score from 94 in the second quarter to 114 in the third quarter. On a trailing 12-month basis, we generated $2 billion in adjusted free cash flow for the first time in the company's history.

Turning to our global top line results. Third quarter revenue grew 63% year-over-year and 18% sequentially to $1.181 billion. Third quarter U.S. revenue grew 77% year-over-year and 20% sequentially to $883 million. Excluding the impact of revenue from strategic commercial contracts, third quarter revenue grew 65% year-over-year and 18% sequentially, and third quarter U.S. revenue grew 78% year-over-year and 20% sequentially. We closed our highest ever quarter of TCV bookings at $2.8 billion, up 151% year-over-year. This eclipses our prior highest quarter of TCV bookings just last quarter by nearly $0.5 billion. Customer count grew 45% year-over-year and 7% sequentially to 911 customers. Revenue from our largest customers continues to expand. Third quarter trailing 12 months revenue from our top 20 customers increased 38% year-over-year to $83 million per customer.

Now moving to our commercial segment. Third quarter commercial revenue grew 73% year-over-year and 22% sequentially to $548 million. This is the fourth consecutive quarter that revenue from our commercial business has been larger than our U.S. government business. Excluding the impact from strategic commercial contracts, third quarter commercial revenue grew 77% year-over-year and 22% sequentially. We closed $1.4 billion in commercial TCV bookings representing 132% growth year-over-year and 32% sequentially. AIP continues to drive existing customer expansions and new customer conversions in the U.S. Third quarter U.S. commercial revenue 121% year-over-year and 29% sequentially to $397 million. Excluding revenue from strategic commercial contracts, third quarter U.S. commercial revenue grew 126% year-over-year and 29% sequentially. In the third quarter, we closed $1.3 billion of U.S. commercial TCV bookings representing growth of 342% year-over-year and surpassing the $1 billion mark for the first time. Over the past 12 months, we closed $3.8 billion of U.S. commercial TCV bookings a 217% increase from the prior 12 months, highlighting the demand for AI production use cases. Total remaining deal value in our U.S. commercial business grew 199% year-over-year and 30% sequentially. Our U.S. commercial customer count grew to 530 customers, relucting growth of 65% year-over-year and 9% sequentially.

Third quarter international commercial revenue grew 10% year-over-year and 5% sequentially to $152 million. For international commercial business, we continue to capitalize on targeted growth opportunities in Asia, the Middle East and beyond but remain focused on accelerating the growth in our U.S. business. Revenue from strategic commercial contracts was $2.9 million for the quarter. We anticipate fourth quarter 2025 revenue from these contracts to be between $2 million to $4 million compared to $9.6 million in the fourth quarter of 2024. We anticipate 2025 revenue from these contracts to be less than half of 1% of full year revenue.

Shifting to our Government segment. Third quarter government revenue grew 55% year-over-year and 14% sequentially to $633 million. Third quarter U.S. government revenue grew 52% year-over-year and 14% sequentially to $486 million. This growth was driven by continued execution in existing programs and new awards reflecting the growing demand for AI and our government software offerings. Third quarter international government revenue grew 66% year-over-year and 16% sequentially to $147 million, bolstered primarily by our continued work in the U.K. As previously mentioned, we closed our highest ever quarter of TCV bookings at $2.8 billion, up 151% year-over-year. Net dollar retention was 134%, an increase of 600 basis points from last quarter. The increase was driven both by expansions of existing customers and new customers acquired in Q3 of last year as we see the effect of the AI revolution. As net dollar tension does not include revenue from new customers that were acquired in the past 12 months, it does not yet fully capture the acceleration and velocity in our U.S. business over the past year. We ended the third quarter with $8.6 billion in total remaining deal value, an increase of 91% year-over-year and 21% sequentially and $2.6 billion in the remaining performance obligations, an increase of 66% year-over-year and 8% sequentially. as a reminder, RPO is primarily comprised of our commercial success. As it is not taken into otoacontracts with an initial term of less than 12 months and contractual obligations that fall beyond termination for convenience clauses, both of which are common in most of our government business.

Turning to margin and expense. Adjusted gross margin, which excludes stock-based compensation expense, was 84% for the quarter. adjusted income from operations, which excludes stock-based compensation expense and related employer payroll taxes was $601 million, representing adjusted operating margin of 51%. Q3 adjusted expense was $581 million, up [ 8% ] sequentially and 29% year-over-year, primarily driven by our continued investment in AIP and technical hiring. We continue to expect expenses to increase in the fourth quarter as we remain committed to investing in the product pipeline and the most elite technical talent, all while delivering on our goals of sustained GAAP profitability. Third quarter GAAP operating income was $393 million, representing a 33% margin. Third quarter GAAP net income was $476 million, representing a 40% margin. Third quarter stock-based compensation expense was $172 million and equity-related employer pay tax expense was $35 million. Third quarter GAAP earnings per share was $0.18. Third quarter adjusted earnings per share was $0.21. Additionally, our combined revenue growth and adjusted operating margin accelerated to 114% in the third quarter a 20-point increase to our Rule of 40 score from the prior quarter and our ninth consecutive quarter of an expanding Rule of 40 score. With the increase in our 2025 revenue and adjusted operating income guidance, we are now guiding to a Rule of 40 score of 102% for the full year.

Turning to our cash flow. In the third quarter, we generated $508 million in cash from operations and $540 million in adjusted free cash flow, representing margins of 43% and 46%, respectively. Additionally, we achieved $2 billion in trailing 12-month adjusted free cash flow for the first time. Through the end of the third quarter, we repurchased approximately 2.6 million shares as part of our share repurchase program. As of the end of the quarter, we have $880 million remaining of the original authorization. We ended the quarter with $6.4 billion in cash, cash equivalents and short-term U.S. Treasury securities.

Now turning to our outlook. For Q4 2025, we expect revenue of between $1.327 billion and $1.331 billion and adjusted income from operations of between $695 million and $699 million. For full year 2020, we are raising our revenue guidance to between $4.396 billion and $4.400 billion. We are raising our U.S. commercial revenue guidance to an excess of $1.433 billion, representing a growth rate of at least 104%. We are raising our adjusted income from operations guidance to between $2.151 billion and $2.155 billion, we are raising our adjusted free cash flow guidance to between $1.9 billion and $2.1 billion, and we continue to expect GAAP operating income and net income in each quarter of this year.

With that, I'll turn it over to Alex for a few remarks, and then Ana will kick off the Q&A.

Greetings. By any normal or even reasonable standard, these are not normal results. These are not even strong results. These aren't extraordinary results. These are arguably the best results that any software company has ever delivered. And it's dasaybolic. Despite what your analyst friends may want you to believe because they've been wrong at every price, they're wrong in every -- at every single round. But of course, they're perspective and they're not investing our own money. But a normal enterprise company should not have a Rule of 40 above 100. A normal enterprise company at our base should not have over 100% U.S. commercial growth should not have 77% growth in the U.S.

And by the way, that growth is being held down by a stagnant Europe, which is still a significant part of our business. So the pure unvarnished numbers are 77% growth off of a massive significant base, very significant cash flow with a company that throws off a Rule of 40 of 114. And then if this world was at all seen, every single person in the financial world would stop and say, how did this happen? How did a company, which stood by the American Warfighter marine special operators, people in client stand services, who stood up for a rate of free speech and was really the first company to be completely anti with how did the company stick up for the American Warfighter actually give normal Americans venture quality results.

So one of the issues we have with the arbiters of truth is, it was the American worker that we supported and the American worker that we helped make rich. And the arbiters are true some did not participate in that because they were such experts. And of course -- but -- what these numbers show is doing that and taking the American worker along with it and doing it in a way that foreshadow the future, FDA ontology foundry, making each specific institution, making the American Warfighter fight the way the American Warfighter is born to fight.

Empowering the tenants of being free and having the ability to do creative things in the battlefield context and then an enterprises instead of selling them commodity parasitic software with a massive sales force with a kind of lumbering jargon bearing leaders, offering you stakes and dinners and other things we shall not mention in order that you turn the value -- the high-value revenue of your enterprise over to them in return for these accolades, we created direct alignment with our customers. And what does that mean? It means when our customers have a unique and triable way of doing something, whether it's underwriting or fighting or making workers even more valuable.

We put in FDA, we orchestrated an ontology. We take tribal understanding of their business, the specific nature of their business that makes them particular valuable and lethal and we empower that. And how do we participate in that, unlike seemingly in the most obvious way, we are downstream from the value creation. So when you see [ 141 ] or you see 77% or [ 63 ] and you ask -- and by the way, with really a workforce that is not a any way, linearly proportional to that growth and also with a sales force which is declining, which seems improbable. The reason why that's working is because we are making our clients more money or we're making them more dominant on the battlefield, and they're paying us a subset of that. And -- and this is why these numbers are so extraordinary. The sociological political version of this should be, wait a minute, how can we learn from this? How can we implement institutions? By the way, we have all these people talking about AI bottle. I'll tell you what 114 proves. There is a massive part of the AI market that actually cares about value creation, and that's the part we own. And we own that part because to do this, you have to have FD orchestration, you have to have ontology and you have to have foundry and you have to have access to the game, and you have to have a deep understanding of how to do that, and you have to have done this for a very, very long time with products, by the way, and then the products are getting better and better and better and better.

And I'll let Shyam talk about what we're doing on the battlefield to the extent that he can. But you see the very similar trajectory where we're giving America, both in industry and in government, a massive, unfair advantage. And again, you see it like if you look at our numbers, look at how poorly Europe is doing. Look how well America is doing. Look how we're doing this. And again, it's not just top line. The Rule of 114 that we have shows top line and bottom line growth that is distinctive, massive and unique. And on top of everything else, there is this issue in the U.S. that we're all focused on [indiscernible]. What access -- what portion of the GDP growth that we're blessed to have in this country, meaning GDP growth defined or helped out and bolstered by AI. What percentage of that is available to the American worker. And so when we're -- we're AI GDP availability for the American worker meaning, do they participate in this or is it just a people around this table who are getting richer and richer. And then you see our platform on the battlefield as Shyam was mentioning, the people doing the coding in AIP are vocationally trained smart Americans with specific knowledge. They don't have -- and actually, and people on the factory floor, very same thing. People across the nation, truck drivers. Anybody with specific domain expertise is more powerful, more valuable in our product than they were yesterday. In fact, the real misalignment of AI is with people with commodity like high trained elite institution, general specialists that's just not as valuable as it was. And yes, the destructive -- positive destruction of capitalism is going to put that class of people.

Typically, the class of people that also is skeptical of Palantir under enormous pressure. But it is our -- what I see in these numbers and what I think we see in these numbers is to be -- put it slightly over the top. Yes, we were right, you were wrong, and we are going to go very, very deep on our rightness because it is exceedingly good for America. It's exceedingly good for the American economy. It's as good for American workers and know what I really enjoy turning on TV and seeing some analysts explain why some other company is better than ours simply because they didn't make any in our company and probably aren't. And we're just going to keep going and going and going. And then we're obviously not going to forecast for next year. But I would say, if you're thinking about how this company is going to go, look at our ability to look at our ability to create revenue on the top and look at it -- look at the unit economics of our business. If you're a technical expert in how do you evaluate business, evaluate those numbers against any other business you've ever seen and then make your decision. But yes, I'm wildly enthusiastic. I think we're wildly enthusiastic. And thank you for those of you who stayed with us to enjoy these numbers, especially Palantirians who work day and night to deliver these kind of numbers.

Thank you, Alex. We'll now turn to questions from our shareholders before opening up the call. We received a few questions asking what do you see as Palantir's unique differentiator that others may not understand?

Well, Alex mentioned a bit of this here. It's become fashionable actually for lots of companies to start hiring FTEs. The Financial Times had an article by how it's the most popular new job title. But what you see is that they don't really understand it. It's just mimetic. And if you -- everything Alex, you said, like we build software not software that ought to work. We build software for the world as it exists, not a world that never was. And this ability to find what's true -- that comes from the FDA. Our measure of success is not that we sell to a it did we solve the problem, and we have built an entire software stack over 2 decades, downstream of creating value for our customers. That led to the oncology a decade ago, more than a decade ago, which is a fundamental prerequisite to getting value out of 11 the enterprise. In this past year, it led to AI Hivemind in AIFD.

The other thing, which like is implicit in that is the way we work puts us -- forces us to go up the chain of complexity every day. So we're taking on the most painful, most integral, most valuable parts of the stack in every enterprise and it's precisely because like that's the way we actually lever our ability to deploy and orchestrate FTEs. That's the way we make our products stronger. And quite frankly, that's the way we produce these numbers because the closer you are to the front line of the very complex problem a black box was not meant to solve cannot solve. And at this point, everyone has a joke to believe it could solve, that's where you -- and by the way, it's the safest position for us because this company, we will always believe that we are outsiders. We need to be a in the place where the most valuable problem is being solved because that's the way we end up staying solving the problem tomorrow and the way we get paid. .

Thank you both. Our next question is from Dan with Wedbush. Dan.

Yes. Great. Look out another month or quarter for you guys, congrats. So my question for you is for Alex and team. What -- can you just walk through just the accelerated sales cycles that you're seeing from so many companies that have gone to the boot camps? Like what surprised you from -- they come to you at that first sort of contact to now actually launching deals. I mean maybe you could talk about that just in terms of everything you're seeing anecdotally.

Thanks, Dan. So I think we look at U.S. commercial. We closed $1.3 billion in TCV at 6x on a dollar-weighted duration basis from what it was a year ago. And of those deals worth 83 were worth of $1 million or more 40 were $5 million or the 21 deals were $10 million or more. I've been involved in a lot of those directly. I'm feeling exactly what you're asking on the ground from customers. And what's happening now is from the C-suite across the company. Customers are coming to us, you can just not just say, let's do a use case. The customers are having the most impact are coming to us saying, how do we deploy this across our entire organization, how do we reorganize our entire organization around Palantir and AIP. And that's what's happening on the ground. And we're singularly is on delivering the value to the customers, and that's our go-to-market. How do we get the product to them and deliver...

Where Ryan is like really very much on the front line here is there's both how many customers approach you. I think where we're seeing the biggest shift is the customers who've approached us very quickly want to move to how would I change my enterprise to express it in a way that's most valuable according to my terms in your product? And then one -- and literally want a reorg, a short-hand version that we often use is you used to have to take a company private to change the net economics of it. Basically, just like we're providing venture results, high in ventral results to normal investors in the last couple of years. What we're doing actually in enterprises is providing a private equity like transformation in the public markets in the public space under the current leadership. And that's essentially what the our best and by the way, the other thing I would tell you about is our newer clients have much higher expectations of us. Like they're like, essentially, I want to transform my business. I want to do it in months. I want to do it in the public eye, while being in the public market, mostly not exclusively. And I want you to not only do the product side but also tell us how would you actually implement AI, foundry, ontology, FTE model and our tribal knowledge to do that. And it's a completely different game. We used to have to beg and plead to be like when we first started talking, we were begging and pleading to be at the margin of a problem that could affect a subset of the business. By the way, it's like, unfortunately, you can only tell you 1% what he's involved in. But this is like exactly the same in the U.S. government around the world. It's like the things that we're sitting on and working on are like crazy, crazy and important and are not downstream of the problem. They are the problem, and we're reshaping them.

Thank you both. Our next question from Mariana with Bank of America.

I'm going ahead as usual, a couple of questions. One on commericial, one on defense or government. On commercial, I'd like to follow up to Dan's question. And let's say, if you can discuss what changed from a behavioral perspective from a customer perspective to see this accelerated appetite to incorporate Palantir to not only accelerating how many customers you have, but also existing customers go to go up the value chain. And what changed internally as well. We recently saw in a bit is like AI agents or AI FDA, how are you incorporating tech internally to be able to accelerate and catch up with that demand. And on the government side, U.S. government up 50% plus is really impressive. And how do you think about opportunities like Golden Don going forward, piling up to this?

Well, you guys want to answer these questions. I think that there's an external one, which is like what does it feel like? That's clearly you. The internal one is a really subtle question. And I don't know if you want to jump in there? And then obviously, we have Shyam opine on. Yes.

Yes. Well, do you want to start with commercial or...

Sure. Yes. I think on the external, I think it's like going deeper and deeper and more and more like tangible results with customers where they're there's a network effect in coming, like customer sharing impact that we're having and direct impact revenue with customers are seeing as we -- it's a continuation of what we've been doing, but going deeper and deeper with the customers on that impact. And I think that what we're seeing is more and more are now coming to a and the ones that are most impact are coming to us and let's do more.

Ryan is our -- is ours being a wonderful -- I'll just give a vulgar version here. Our clients realize the choice suck basically. And they've tried a lot of stuff. It hasn't worked. And then we're in so many verticals where sales just say, we're in vertical 252 and we dominate for one customer. People see that. And then they're like, "Oh, well, I'll try this with some, I don't know, knock off half fake thing. It's just like -- and then a lot of people really still don't understand that are still trying to do this long migration where LLMs are going to perform as if they're LLM and ontology. And as if the LMs were not a commodity. And then -- but then in the marketplace, they see the final result of someone else using ontology, foundry, FDA. And now it's like, wait a minute, I'm paying hundreds of millions of dollars in getting nothing. And the person down the road, I kind of looked down on his way ahead of me and their unit economics are transforming overnight. And that just shifts the whole conversation because the we're like, okay, well, if you want it to work, you can have to do these 5 things. And these things are like you're going to have to talk to Ryan and they're going to have to -- I don't know, occasionally meet with me, and you're going to have to actually allow us to come in with engineers. And you're going to -- we're going to have to actually work on the problems that are valuable for your business and also look at the costs that are dragging you down.

By the way, the cost for most businesses is not just the actual money they're wasting. That wasted money creates an ecosystem of waste. They're talking to all these vendors all the time about all these things will never work instead of solving the problem. And so like -- and so getting the pathogens out of their business is a real issue, and now they're really, really interested in this. And so -- and then on the internal front, I would say it's just we have to double down. The most important thing for us internally is with all this success, we do not want to give up the unique attributes of talent here and somehow purchase fake ways for us that are artificial for us. And so making sure we are very, very close to the problem and making sure everyone here -- like if you heard our internal dialogue, it's much more like who's on the factory floor here. What are we doing internally? How do we make sure our products are better and better? How do we make sure, say, Shyam is a savant at going around and figuring out what the underlying tech issue is, how are we making sure we have the best route and the very, very exact right fit for every single deployment across our deployments that we care about, especially mission deployments, which we highly, highly overvalue in terms of our time and energy.

And like how do you make sure Palantir stays as tribal and cultus and unique as it was 20 years ago, how do we double and triple down on that? And how do we recruit the right people. And then internally, we have, look, we power ICE, we power efforts to defend American Ukraine and with allies. We're on the front line of all adversaries, including vis-a-vis China, and we support -- we're at ICE and we're -- we've supported Israel.

Okay. These are very controversies. I don't know why this is all controversial, but many people find that controversial. Okay? So how do you align people to focus on these things in a way that is actually beneficial for us and our clients. These are really hard tricky issues that we spend a lot of time and say, as an overarching thing because what we found is the more we focus on our internal dynamics the better our numbers are. That's why we have less salespeople, and we have 77% growth in 75% of our market. 121% growth in U.S. comp. Please tell that to some of your friends I don't even understand how they can look at these numbers and not drop the key out of their [indiscernible] like say they're like they're bombastic numbers. But it's like internal focus.

I'll make a mistake if I go to follow Alex there and he just say on the internal side with AI FD. That's why we actually originally built it. has grown roughly 10%, but revenue grew 63%. How are we doing that? We've made us wildly more productive. And I mean, so much so that we decided to give it to our comers and we've started to make our customers more productive. When you have a note like the Army Vantage note or the consolidating into the Army Data platform, you now have an army, literal army of green suiters who need to become proficient developers in the software and you have a generation of green suiters whose first interaction with the offer is going to be with AI FD. They're going to be superheroes on day 1. I think that it's accelerating adoption, it's accelerating, understanding like the depth of adoption, not just are you using it, but how much of it are you really using? How much of it can you understand? And then quickly on your comment on the U.S. government business, like, yes, the number of opportunities out there are great. I can't comment on all the opportunities you mentioned there, but whether it's NGC 2, the continued growth of Maven, I mean, we have -- of course, America is involved with 3 conflicts right now in the world from Europe, the east and in our own Hemisphere right now. And things are getting a little spicy.

By the way, let me say something slightly political, and I'm not saying other people agree with this. But when people are attacking our soldiers for stopping fentanyl from a company in this country, I want able to remember if Fentanyl was killing 60,000 Yale grads instead of 60,000 working class people, we'd be dropping a nuclear bomb on whoever was sending it from South America. So slightly like we -- in this balance here, we are on side of the American average American, who sometimes gets screwed because all the empathy goes to elite people, and none of it goes to the people who are actually dying on our streets and that's why it's like when you had an open border it means that the average poor American earns less.

I know my fellow progressives believe having an open border is going to make things, but that's because we're actually wrapping elite people instead of the working class. And the same thing in South America, we just like to believe our constitution does not give us the right to stop 60,000 deaths a year of working class men and women is insane and this company -- this country is right to stop that, and I am very proud. I don't know all the efforts we're involved in, but the sent we're involved in these efforts. I -- and most Palantirians are very proud of this. You're here.

Thank you. Alex, as always, we have a lot of individual investors on the line. Is there anything you'd like to say before we end the call?

We're rocking along. Please turn on to conventional television and see how unhappy those that didn't invest in us are. Get some popcorn, they're crying. We are every day making this company better. And we're doing it for this nation for Allied countries and also for -- and I never really like the term retail investors, how about seeing people who put up their own money and fight for us. Another way, you are fighting for the right side of what should work in this country, meritocracy, lethal technology vis-a-vis adversaries, products that spread GDP to working-class men and women by making their value creation higher. And by the way, your bank account and thank you for that.

Thank you. That concludes Q&A for today's call.