The company expanded its customer base to 849 as of June 30, 2025, up from 593 customers year-over-year. Average revenue from the top twenty customers grew 30% to $74.7 million (trailing twelve months), indicating success in expanding relationships and increasing adoption of products and services within existing accounts.

Revenue from U.S. commercial customers showed exceptional growth, increasing by 92.5% to $306.5 million for the three months ended June 30, 2025, compared to $159.2 million in the prior year. This highlights a successful strategy in penetrating the domestic commercial market.

Palantir continues to deploy its Artificial Intelligence Platform (AIP) across commercial and government sectors, leveraging existing machine learning and generative AI models. This initiative is central to its strategy to operationalize AI on enterprise data and is expected to be a key driver of future growth.

The company's adjusted operating margin improved to 46% for the three months ended June 30, 2025, from 37% in the prior year, demonstrating management's ability to scale operations more efficiently. Total operating expenses as a percentage of revenue decreased from 65% to 54% in the same period.

Sales and marketing expenses increased by 24% and research and development costs increased by 24% for the three months ended June 30, 2025, compared to the prior year. This indicates management's commitment to investing in customer acquisition, market expansion, and product innovation to sustain growth.

Management successfully resolved key legal proceedings, with securities class action complaints and stockholder derivative actions being dismissed with prejudice in April 2025. This indicates effective legal strategy and reduces potential distractions and liabilities.

The company acknowledges ongoing risks from macroeconomic conditions, including heightened interest rates and geopolitical tensions (e.g., Russia-Ukraine, Israel/Middle East conflicts). While not materially impacting current results, these factors could adversely affect customer demand, acquisition, and renewals in the future.

The increasing integration of AI, including LLMs, into platforms introduces risks such as flawed algorithms, biased datasets, ethical issues, and heightened cybersecurity threats. The company notes that these could lead to reputational harm, legal liability, and require additional resources for development and testing of responsible AI capabilities.

Palantir's dependence on third-party computing infrastructure (AWS, Microsoft Azure) creates exposure to disruptions and performance issues. Additionally, the inherently long and unpredictable sales cycle, particularly for large enterprise and government customers, continues to pose a risk to quarterly revenue predictability and efficient resource allocation.

The markets for Palantir's platforms are highly competitive, with larger competitors possessing greater resources, brand recognition, and broader product portfolios. The company anticipates needing to make substantial additional investments in R&D, sales, and marketing to maintain or improve its competitive position.

The company's pricing structures are subject to change due to competition, global economic conditions, and customer spending levels. This dynamic could make it challenging to attract new customers at historical price points or maintain existing pricing, potentially impacting revenue and margins.

The U.S. government's preference for non-commercial developmental services over commercial products, along with budget uncertainties and bid protests, creates a distinct competitive hurdle. This requires Palantir to continuously adapt its sales strategy and potentially engage in costly challenges to secure contracts.

Despite a 50% increase in cost of revenue for the three months ended June 30, 2025, to $192.9 million, gross margin remained stable at 81%. This indicates effective management of direct costs relative to revenue growth, even with higher subcontractor expenses and cloud hosting services.

Total operating expenses increased by 22% for the three months ended June 30, 2025, to $541.4 million, but decreased as a percentage of revenue from 65% to 54%. This demonstrates improved operational leverage, as revenue growth outpaced the growth in sales & marketing, R&D, and G&A expenses.

Stock-based compensation expense increased by 13% for the three months ended June 30, 2025, to $159.9 million. While a non-cash expense, its continued growth affects GAAP profitability and requires careful management to ensure it aligns with long-term shareholder value creation.

Research and development costs increased by 24% for the three months ended June 30, 2025, to $135.0 million. This sustained investment indicates the company's commitment to developing new features, modules, and enhancing existing platforms, including the Artificial Intelligence Platform (AIP).

The company's newest offering, AIP, deployed in 2023, leverages existing machine learning and generative AI models to operationalize AI on enterprise data. This strategic focus on AI aims to enable customers to derive value from recent breakthroughs and is a key differentiator.

Palantir's platforms rely on third-party products and services (e.g., AWS, Microsoft Azure) and incorporate open-source software. This creates risks related to compatibility issues, service disruptions, security vulnerabilities, and potential legal obligations if open-source license terms are not met.

Cash and cash equivalents decreased from $2.1 billion on December 31, 2024, to $0.9 billion on June 30, 2025. Concurrently, marketable securities significantly increased from $3.1 billion to $5.1 billion, indicating a strategic decision to invest excess cash in short-term U.S. Treasury securities for yield and capital preservation.

The company repurchased $36.6 million of Class A common stock during the six months ended June 30, 2025, under its $1.0 billion authorized program, with $899.2 million remaining. This ongoing repurchase activity reflects management's belief in the company's intrinsic value and commitment to returning capital to shareholders.

Palantir maintains a robust liquidity position with $6.0 billion in cash, cash equivalents, and short-term U.S. Treasury securities as of June 30, 2025, and no outstanding debt. The company also has an undrawn $500.0 million revolving credit facility available, providing ample financial flexibility for future operations and strategic initiatives.

Palantir explicitly states it may not enter into relationships with potential customers if their activities are inconsistent with its organizational mission or values, particularly concerning supporting Western liberal democracy. This indicates a commitment to ethical considerations in its business development, which could impact growth prospects.

The company acknowledges ethical issues and biases associated with AI and states its platforms include data governance, machine learning modeling, and model testing/evaluation tools to develop and manage more effective and responsible AI capabilities. This commitment aims to mitigate risks and promote ethical AI use.

The 10-Q highlights climate change impacts, including extreme weather events and resource scarcity, as potential disruptors to business operations, supply chains, and customer activities. This signals an awareness of environmental risks, though specific mitigation initiatives are not detailed in this section.

Palantir acknowledges ongoing macroeconomic conditions, including geopolitical tensions, heightened interest rates, and foreign currency fluctuations. While these factors have disrupted customer operations, the company states that their impact on its business and results of operations for the six months ended June 30, 2025, was not material.

New and evolving laws, such as the EU AI Act, Colorado's Consumer Protections for AI bill, and various state-level data privacy regulations (e.g., CCPA, CPRA), are creating complex compliance requirements. These regulations could increase operational costs and necessitate changes to data handling practices, potentially impacting business operations.

A significant portion of Palantir's revenue comes from government contracts, making it susceptible to changes in government budgets, spending priorities, and procurement processes. The company notes that increased government spending on technology for national defense and cybersecurity could drive demand, but budget uncertainties remain.