Updated Version 2 - Driven by strong demand for artificial intelligence, Palantir expects quarterly revenue to exceed expectations

Additional charts, background, details, and analyst commentary included

Reuters, November 2 - Palantir Technologies, after posting third-quarter results that beat expectations, forecasted that revenue for the final three months of the year would exceed market estimates, driven by continued demand for its data analytics software from U.S. government and commercial clients.

The company PLTR.O said on Monday it expects fourth-quarter revenue to range between $2.649 billion and $2.653 billion, above the analyst average forecast of $2.46 billion.

Boosted by companies rapidly adopting artificial intelligence software to improve operational efficiency and protect sensitive data, revenue from U.S. commercial clients surpassed government business revenue for the first time in the third quarter.

"Maven Smart System" developed by Palantir (link) has been adopted by NATO military headquarters and several European armed forces, with government and defense contracts remaining a core part of its business.

Total revenue for the third quarter soared about 96% to $2.31 billion, the second consecutive quarter of 90% growth. According to data compiled by London Stock Exchange Group (LSEG), analysts previously expected $2.18 billion.

"Compared with the same quarter last year, the overall scale of our business has now nearly doubled," CEO Alex Karp said in a letter to shareholders.

During the same period, Palantir's U.S. commercial revenue increased 148% to $984 million, while U.S. government revenue grew 96% to $953 million.

In highly volatile after-hours trading, the company's stock recently rose nearly 1%.

"Like all AI concept stocks, Palantir's share price was perfectly priced by the market prior to the earnings release, so a pullback instead occurred after beating expectations. Excessively high expectations appear to be the main factor constraining the development of this recently strong-performing company," said Ryan Lee, Senior Vice President of Product and Strategy at Direxion.

Palantir's 12-month forward price-earnings ratio is 83.38, compared to 109.05 for Snowflake (SNOW.N) and 80.16 for Datadog (DDOG.O).

The company reported that, as of the last 12 months ending September 30, the total number of customers was 1,090, with 904 classified as commercial clients.

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Palantir also raised its full-year revenue forecast to a range of $8.53 billion to $8.534 billion, above the previous estimate of $8.15 billion to $8.158 billion.

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