Monetising the rot is a tough business

The war in Ukraine. Tensions in the South China Sea. Covid-19. Monkeypox. Global famine. Crisis should be big business for US data analytics group Palantir, named after a fictional surveillance tool from a fantasy novel. The company cheerily stressed in its second-quarter earnings call on Monday that a more dangerous world presents an “enormous” opportunity for growth.

Alas, despite revenue and adjusted operating margins for the three months to June 30 coming in above expectations, some of Palantir’s other headline figures were lower than hoped. From the FT’s write-up earlier today:

The Denver-based software company on Monday said it expected full year revenue to rise 23 per cent to $1.9bn, below analysts’ forecasts of $1.96bn and less than the 30 per cent growth it had previously outlined.

The company, led by Alex Karp and co-founded by Peter Thiel, also forecast third-quarter revenue of about $475mn, below analysts’ expectations of $506.9mn.

Palantir said the revisions reflected “uncertainty towards the end of the year” and the US government — a key partner — having “pushed out” some of its largest contracts. Its US commercial customer count may have increased 250 per cent year on year, to 119 customers, but that wasn’t enough to prevent a quarterly net loss of $179mn, compared to $101mn in the first three months of the year.

Palantir said the results didn’t “come close to representing our ambition” and that it hopes to become profitable by 2025. Investors in the here-and-now seem less sure, with shares down 9 per cent at pixel time. They are down 65 per cent from their September peak.

Chief executive Alex Karp was nevertheless in a bullish mood on Monday’s call, boasting that the company had five of the “most interesting, important and crazy-baller [Ed note: ??], impactful products in the world,” while predicting that the “next 10 years, the next two years, are clearly more dangerous” for the West than the decade just gone. That’s supposed to be good news for Palantir, which Karp said progressed expressly “in the service of the West, which we will fight to help win”.

Karp’s drumbeating for his half of the globe went on. The West, he said, has “the most interesting, knowable [sic] and virtuous societies” anywhere on the planet. His most lavish praise was saved for the US, however, which Karp said remains far more willing than boring old Europe to adopt new and aggressive surveillance technologies.

Indeed, the proportion of the company’s revenue generated in the US relative to the rest of the world rose to 61 per cent of Q2 2022’s $473mn from 38 per cent of the $146mn earned in Q1 2019. That may change if the NHS awards the company a contract later this year, of course.

And Karp remains optimistic even as overall growth slows. “Both our micro-positioning and obviously the macro-position . . . is so sublime it’s hard to talk about without sounding like we’re kind of war mongering,” he said. Heaven forbid.