Shares in Palantir Technologies fell sharply Tuesday after the software maker reported its first quarter earnings, despite results that met or exceeded analyst expectations for the period. Wall Street analysts highlighted concerns about the company's high valuation and the pace of future growth.
Palantir reported adjusted earnings of 13 cents per share for the quarter ending March 31, 2025, matching analyst forecasts. Revenue rose 39% year-over-year to $884 million, topping expectations of $863 million polled by LSEG. Net income reached about $214 million, or 8 cents per share.
For the second quarter, Palantir predicted revenue of $936 million, ahead of consensus estimates. The company also raised its full-year 2025 revenue outlook to a range of $3.89 billion to $3.90 billion. This new range, with a midpoint of $3.895 billion, is up from earlier guidance of $3.74 billion to $3.75 billion.
Despite the upward revision, some analysts described the full-year guidance raise as modest relative to the first quarter beat, adding pressure on the company's stock multiple. The price for PLTR Stock retreated approximately 12% in early trading following the report.
Analysts from firms including Mizuho, Raymond James, and Morgan Stanley noted the difficulty in justifying Palantir's valuation multiple, even acknowledging its strong execution and position in the artificial intelligence market. Jefferies also pointed to the valuation as a hurdle.
Strength in the quarter came from the company's domestic segments. U.S. government revenue increased 45% year-over-year to $373 million, exceeding projections. U.S. commercial revenue saw robust growth, jumping 71% to $255 million, also surpassing expectations.
However, international commercial revenue declined 5% year-over-year and 11% quarter-over-quarter. This decrease was attributed primarily to ongoing headwinds in Europe. Management commented on an earnings call that the region is undergoing structural change and lags in AI adoption.
Palantir Stock had seen significant gains prior to the earnings release, continuing performance from the previous year. The stock's run has contributed to an elevated multiple, requiring the company to consistently deliver strong results to meet market expectations. The share price has also experienced volatility amid broader market turbulence.Palantir co-founder and CEO Alex Karp stated during the earnings call, “Palantir is on fire” and expressed optimism about the current situation.
