We first examined Palantir in April 2021, outlining the company’s history, products, and core U.S. government customers.
Included below are updates on their financials, work with top customers, and several noteworthy company developments.
Developments over 2020 and 2021
According to their 2021 annual report, Palantir’s government business continued to constitute the majority of their business, accounting for 58% of their revenue. To offset risk associated with having a limited number of customers account for a substantial portion of their revenue, the company stated a desire in 2020 to grow their commercial business, thereby more greatly diversifying their business. The company has started to fulfill this objective, increasing their commercial business 34% year over year from 2020 to 2021.
Overall, Palantir revenue increased from $1.1B in FY2020 to $1.5B in FY2021. Though not unusual for the company, Palantir did not, however, generate an actual profit. Their net loss was $520 million in 2021 compared to $1.2 billion in 2020.
Top Federal Customers
The majority of their top customers (USSOCOM, ICE, the military services, SEC, IRS, and DoJ) have remained the same over the past 10 fiscal years. While the Federal Bureau of Investigation (FBI) and Centers for Disease Control and Prevention (CDC) are no longer top customers, their overall revenues from both agencies increased from FY15-FY19 to FY17-FY21. Meanwhile, they have increased their footprint at the National Institute of Health (NIH), in part due to the 2020 award of the National Center for Advancing Translational Sciences (NCATS) Software Support IDIQ.
Included below are recent highlights from select top customers.
Immigrations and Customs Enforcement (ICE)
In September, Palantir won a $96 million ceiling value follow on contract to continue to support Homeland Security Investigations (HSI) with Investigative Case Management (ICM) software.
The company may, however, lose one of their other key ICE contracts. Palantir has held at least two contract iterations centered on providing their FALCON solution to the ICE customer, the latest of which expires in June 2023. FALCON is a customized version of Palantir’s Gotham platform that provides federated search, analytics, geospatial referencing, reporting and situational awareness capabilities across structured and unstructured law enforcement data.
ICE has indicated a desire to replace FALCON with RAVEn, a new platform that was custom built for the agency by multiple contractors (including Booz Allen Hamilton). If this occurs, Palantir’s footprint could shrink in ICE in future years.
The Army, on the other hand, continues to be a strong customer for Palantir, as demonstrated through several recent wins:
- In September 2022, the company won a $229 million ceiling value contract from the U.S. Army Research Laboratory to deliver AI/ML capabilities across U.S. Department of Defense. Through this work, Palantir’s software will continue to support warfighters, the data science community, and commercial AI companies across all facets of AI/ML research and development within the DoD.
- In October 2022, Palantir won an $85 million ceiling value contract from the U.S. Army Materiel Command (AMC) to provide its software to support logistics in contested environments, improve equipment reliability, and advance supply chain optimization.
- In June 2022, Palantir moved from the design phase of the Tactical Intelligence Targeting Access Node (TITAN) program. Palantir and Raytheon both won $36 million ceiling value contracts to build their own prototypes for this AIML-enabled Intelligence ground station.
U.S. Space Force
Palantir has seen an increased footprint in the U.S. Space Force in the past year through an expanding contract to provide a Data-as-a-Service (DaaS) Platform to aid coronavirus analysis and joint all domain command and control decision-making efforts.
Palantir provides Warp Core, an enterprise data management and operations software solution. It enables the integration and management of data from various disparate data sources and supports application delivery, in-depth analysis, and data-driven decision-making across echelons and functional communities.
Supply chain work
In their latest Q3 earnings call, Palantir highlighted their success in using their Foundry product’s data integration capabilities for supply chain work. The company noted to have started 25 supply chain projects in the past year. In October 2022, for instance, Palantir won a $22 million ceiling value contract to help the Food and Drug Administration (FDA) modernize the agency’s approach to food supply chain and resilience.
In March 2022, Palantir and Jacobs announced a partnership to collaborate on solutions for the infrastructure and national security markets. The partnership has initially focused on a joint data analytics offering supporting public and private sector clients in solving complex water infrastructure problems. As of November 2022, Jacobs and Palantir entered into an agreement to expand and commercialize their solution with its deployment to more than 30 water and wastewater treatment plants.
Impact Level 6 Accreditation
In October, Palantir’s Federal Cloud Service (PFCS) received a DoD Impact Level 6 accreditation, a strict security and compliance standard required to process classified data for cloud-based workloads. Palantir joins Microsoft and Amazon Web Services (AWS) as one of only three companies with this accreditation.
FedSavvy Strategies Takeaway
- Palantir continues to be unprofitable despite market growth.
- As part of their strategy to grow, the company is working towards further diversifying their business by expanding their commercial work.
- Several federal wins this year demonstrate that Palantir is growing competitor in the federal enterprise data platform market.
- The company maintains a strong footprint in the U.S. Army, demonstrated through several wins focused on delivering AI/ML, maintenance, and logistics solutions.
- If Palantir’s FALCON solution for ICE is replaced by RAVEn in coming years, Palantir will likely face a decrease in revenue from one of their top federal customers.
- Palantir’s partnership with Jacobs could lead to increased commercial or federal business focused on infrastructure O&M.
- The company’s IL6 accreditation opens the door for Palantir to gain more cloud work centered on managing classified data for defense and Intelligence Community customers.
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