Two recent videos to audiences of industry and investors
Sniippets from the Annual letter. We need to look past the current core value proposition which aligns with the defence industry in US and Europe. The bold comment is my emphasis and is telling when we look at Silicon Valley.
The broader moral and philosophical questions raised by the role our software is playing in the defense and intelligence sectors are significant.
We acknowledge that the participation of private corporations, whose leadership is unelected and therefore not directly beholden to the public, raises important questions regarding the appropriate means of holding private actors performing government functions accountable.
A generation of entrepreneurs in Silicon Valley were perhaps disenchanted with the work of government for any number of reasons. They turned their back on the country that made their rise possible in favor of the consumer internet and other less than consequential pursuits.
But we believe that the fates of the technology industry and the republic are very much intertwined. More collaboration, not less, may be required for both to succeed and survive over the long term.
When we look at Artificial Intelligence as a generator of the next Industrial Revolution it requires a step change beyond the communication/ marketing applications that we have seen since the dot com crash.
Palantir have a software vision that has altered the defence industry through AI.
Here follows the CEO annual letter in full FYI.
Annual Letter from the Chief Executive Officer
February 13, 2023
I.
We were profitable for the first time in our company’s history last quarter.
Q4 22 | Earnings Letter Chart 1
In Q4 2022, we earned a profit of $31 million.
Our commitment to and relentless focus on the long term at times has required patience. At other times, as our profitability demonstrates, we will deliver results at a rate that surpasses even the expectations of those who believed that we would prevail.
A threshold has been crossed, and this is the start of our next chapter.
We expect to generate a profit for the current fiscal year, our first profitable year in the history of our company.
This moment is significant and demonstrates to a broader audience the magnitude of the potential of our business, which is only now being revealed.
II.
We have repeatedly built something from nothing.
A substantial U.S. commercial business, in particular, has emerged in essentially two years, with a fledgling sales force that is still in its infancy and only now taking shape.
Q4 22 | Earnings Letter Chart 4
In 2018, for example, we generated a total of $38 million of revenue from our U.S. commercial business. Four years later, in 2022, we generated $335 million of revenue, representing a 72% compound annual growth rate.
The significant expansion of our commercial business in the United States reflects the unrelenting demand from customers for enterprise software systems that work.
The need for commercial enterprises to reimagine the way in which they relate to data, and to invest in the software platforms that will make their continued survival possible, has never been greater.
When we were just starting out, many doubted our ability to evolve beyond anything more than a specialty provider of software to a handful of government customers, let alone generate meaningful revenue from the government sector as a whole. They were wrong.
Others later doubted that we could construct a thriving commercial business on top of that government work. They were wrong again.
Our commercial offering, for years made available to a select group of initial partners and collaborators, is now becoming the default choice for an increasingly broad swath of customers that require both immediate and durable results from their investment in enterprise software.
III.
Our collective focus on artificial intelligence, including the natural language processing capabilities that have recently been made more widely available to the public, is not misplaced.
The transformative potential of software, which we have been building for two decades, is only in the earliest stages of revealing itself.
The demand from customers for our platforms has in recent months gained additional momentum, in significant part because of the accelerating embrace of artificial intelligence by companies across sectors and industries. We anticipate that this new source of demand will contribute to our growth moving forward, above and beyond what we would have anticipated even late last year.
The widespread adoption of artificial intelligence in civilian applications will come soon. In the military context, it has already arrived.
Our technology is on the front lines around the world, including in eastern Europe, where software has become a significant and often decisive lever on the battlefield.
The traditional military calculus that involves comparative assessments of the capabilities of physical assets, including tanks and missiles, for example, in isolation from their accompanying software systems, which are now essential to the efficacy of an asset in the field, is now essentially obsolete.
IV.
The broader moral and philosophical questions raised by the role our software is playing in the defense and intelligence sectors are significant.
We acknowledge that the participation of private corporations, whose leadership is unelected and therefore not directly beholden to the public, raises important questions regarding the appropriate means of holding private actors performing government functions accountable.
A generation of entrepreneurs in Silicon Valley were perhaps disenchanted with the work of government for any number of reasons. They turned their back on the country that made their rise possible in favor of the consumer internet and other less than consequential pursuits.
But we believe that the fates of the technology industry and the republic are very much intertwined. More collaboration, not less, may be required for both to succeed and survive over the long term.
And we remain committed to the defense of the state whose existence is a precondition for our own.
Sincerely,
Alexander C. Karp
Chief Executive Officer & Co-Founder
Palantir Technologies Inc.
Forward-Looking Statements
This letter contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook, product development, distribution, and pricing, expected benefits of and applications for our software platforms, business strategy, and plans (including strategy and plans relating to our sales and marketing efforts, sales force, partnerships, and customers), investments in our business, market trends and market size, opportunities (including growth opportunities), our expectations regarding our existing and potential investments in, and commercial contracts with, various entities, our expectations regarding macroeconomic events and foreign currency fluctuations, and positioning. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. Words such as “guidance,” “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “plan,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” “shall,” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to risks detailed in our filings with the Securities and Exchange Commission (the “SEC”), including in our quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2022, and other filings and reports that we may file from time to time with the SEC, including our current report on Form 8-K furnishing our earnings press release for the fourth quarter and fiscal year ended December 31, 2022 and our annual report on Form 10-K for the fiscal year ended December 31, 2022. In particular, the following factors, among others, could cause our results to differ materially from those expressed or implied by such forward-looking statements: our ability to successfully execute our business and growth strategy; the sufficiency of our cash and cash equivalents to meet our liquidity needs; the demand for our platforms in general; our ability to increase our number of new customers and revenue generated from customers; our ability to realize some or all of the total contract value of customer contracts as revenue, including any contractual options available to customers or contractual periods that are subject to termination for convenience provisions; our long and unpredictable sales cycle; our ability to successfully execute our channel sales and other strategic initiatives with third parties; our ability to retain and expand our customer base; the fluctuation of our results of operations and our key business measures on a quarterly basis in future periods; the seasonality of our business; the implementation process for our platforms, which may be complex and lengthy; our ability to successfully develop and deploy new technologies to address the needs of our existing or prospective customers; our ability to make our platforms easier to install and consume; our ability to maintain and enhance our brand and reputation; our ability to maintain and enhance our culture as our business grows; news or social media coverage about us, including but not limited to coverage that presents, or relies on, inaccurate, misleading, incomplete, or otherwise damaging information; the impact of recent or future global macroeconomic and geopolitical events, such as the Russia-Ukraine conflict, foreign currency fluctuations, or rising inflation or interest rates in the U.S. and in other countries, on the business and operations of our company or of our existing or prospective customers and partners; and any breach or access to customer or third-party data.
The forward-looking statements included in this letter represent our views as of the date of this letter. We anticipate that subsequent events and developments will cause our views to change. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this letter. Past performance is not necessarily indicative of future results.
Other Notes
This letter may contain statistical data, estimates, forecasts and statements that are based on independent industry publications or other publicly available information, as well as other information based on our internal sources. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of that data nor do we undertake to update such data after the date of this letter.
This letter may refer to various growth rates when discussing our business. These rates reflect year-over-year comparisons unless otherwise stated.
By receiving this letter, you acknowledge that you will be solely responsible for your own assessment of the market and our market position and that you will conduct your own analysis and be solely responsible for forming your own view of the information provided, including regarding the potential future performance of our business.
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