Palantir's sales nearly doubled, but its new business customers may not stay

Palantir just posted its biggest quarter ever, with revenue up 96% from a year ago to $2.31 billion. Even so, its stock slipped slightly the next day. The reason: many of its new business customers are signing short trials, and the value of new U.S. business deals fell from the quarter before.

What changed

Palantir sells data and AI software. Its third-quarter revenue was the first above $2 billion. It beat analyst expectations of $2.18 billion, and it raised its revenue forecast for the full year.

The bigger milestone was in the U.S. Business sales reached $984 million, up 148% from a year earlier. That passed U.S. government sales of $953 million for the first time.

• Revenue: $2.31 billion, up 96% from a year ago and 20% from the prior quarter
• Adjusted earnings per share: $0.44, versus $0.41 expected
• U.S. business sales: $984 million, versus $953 million from U.S. government

Why businesses are signing up

Companies want to use advanced AI models without handing their data and business methods to outside AI labs. Palantir says its software lets them run those models securely. It also sends its own engineers to help customers tailor the product, a practice often called forward-deployed engineering.

The warning sign

CEO Alex Karp told analysts that deals now move faster and the contracts run shorter, with the chance to expand them a lot later. The report notes that companies will try AI quickly, skipping their usual red tape, but are also more willing to cancel.

The numbers hint at a slowdown. New U.S. business deals totaled $1.46 billion in total contract value, meaning the full worth of the deals signed. That is down from a record $2.13 billion the quarter before.

What it means for your business

The same pattern applies to any company buying AI tools. Trials are easy to start and easy to drop. Starting small, checking whether the tool delivers real results, and only then committing to a long contract keeps the risk low.

What happens next

The next earnings report should show whether the slowdown was a blip. The report says many companies sign their biggest tech purchases in the last quarter of the year. Palantir is confident. It now expects U.S. business revenue of more than $3.559 billion for the year, growth of at least 143%.