Palantir Technologies Inc. delivered a standout first quarter for 2025, reporting robust revenue growth, record U.S. commercial performance, and an upgraded full-year outlook.
The company’s results underscore accelerating demand for its artificial intelligence and data analytics platforms, particularly in the U.S. market, even as international headwinds persist.
Revenue Surges on U.S. Momentum
Palantir’s Q1 2025 revenue climbed 39% year-over-year to $884 million, outpacing Wall Street expectations. The U.S. business was the clear engine of growth, with U.S. revenue soaring 55% to $628 million and now accounting for 71% of total revenue.
U.S. commercial revenue was a particular highlight, jumping 71% year-over-year and surpassing a $1 billion annual run rate for the first time. U.S. government revenue also impressed, rising 45% to $373 million.
The company’s customer base expanded 39% year-over-year to 769, reflecting both new client wins and deepening relationships with existing customers. Net dollar retention improved to 124%, up 400 basis points from the previous quarter, signaling strong customer satisfaction and upsell momentum.
Profitability and Cash Flow Strengthen
Palantir’s profitability metrics advanced significantly. Adjusted operating margin reached 44%, up 800 basis points from a year ago, while adjusted free cash flow soared to $370 million, representing a 42% margin. GAAP net income doubled to $214 million, for a 24% margin, and GAAP earnings per share were $0.08. On an adjusted basis, EPS came in at $0.13, in line with analyst estimates.
The company’s balance sheet remains healthy, ending the quarter with $5.4 billion in cash and equivalents. Total remaining deal value increased 45% year-over-year to $5.97 billion, providing strong future revenue visibility.
Guidance Raised Amid AI Adoption Wave
Citing “tectonic shifts” in enterprise AI adoption, Palantir raised its full-year 2025 revenue guidance to a range of $3.89 billion to $3.902 billion, representing 36% year-over-year growth. Second quarter revenue is expected between $934 million and $938 million.
U.S. commercial revenue is forecast to grow at least 68% for the year, with the company’s AI Platform (AIP) cited as a key driver of new customer conversions and deal expansions.
Challenges Abroad and Investor Reaction
Despite the stellar U.S. results, Palantir faced continued challenges in international markets, particularly Europe, where commercial revenue declined 5% year-over-year and 11% sequentially.
The company also anticipates increased expenses in 2025 as it invests in technical talent and expands its AI product pipeline. Additionally, concerns linger regarding potential impacts from U.S. Department of Defense budget cuts on future government contracts.
Investor reaction was muted, with Palantir shares falling over 8% in after-hours trading. The pullback reflects high expectations and some caution about the sustainability of the current growth trajectory, especially given the international softness and anticipated rise in expenses.