Palantir Revenue Nearly Doubles as New Contract Growth Slows

Palantir Technologies ($PLTR) reported a 96% year-over-year increase in third-quarter revenue to $2.31 billion, beating analysts’ expectations of $2.18 billion. However, the value of new contracts signed grew just 6% to $2.92 billion, down sharply from 49% growth in the previous quarter.
U.S. commercial contract value increased 11% to $1.46 billion, while revenue from the segment surged 148%. Palantir said the slowdown partly reflects shorter contract terms as customers move more quickly to deploy its AI products.
CFO Dave Glazer said the company signed several eight-figure deals with shorter-than-usual durations. CEO Alex Karp argued that customers are deploying faster and may expand those contracts significantly over time. Net dollar retention reached 165%, while one customer reportedly expanded a $1.6 million pilot into an approximately $21 million annual deal.
However, shorter contracts could leave Palantir with less predictable future revenue. Its remaining U.S. commercial deal value stood at $6.52 billion at the end of September, covering roughly six and a half quarters of sales at the current pace, compared with more than nine quarters a year earlier. The backlog grew just 4% last quarter, while U.S. commercial revenue increased 29%.
Valuation remains another concern. Palantir traded at roughly 100 times its expected 2026 adjusted earnings of $1.61 per share, even after its shares fell 7.8% in premarket trading on November 3.
Analysts raised their 2027 revenue growth forecasts following the results. UBS increased its estimate to 70% from 60%, while Morgan Stanley raised its forecast to 65% from 45%. Both estimates are above the roughly 51% growth analysts had expected before the report.
Wall Street remains divided on the stock’s valuation. Baird maintained an Outperform rating with a $250 price target, Morgan Stanley raised its target to $233 while keeping an Equalweight rating, and RBC Capital raised its target to $130 while maintaining an Underperform rating.
The key question is whether Palantir’s shorter initial contracts will expand into larger, longer-term agreements. Upcoming booking results and customer expansion trends could help determine whether its growth prospects justify its premium valuation.