Palantir’s sales nearly double, but contract growth lags

Sales surge; the next contracts matter

Palantir delivered a striking third quarter after the November 2 market close: revenue rose 96% year over year to US$2.313 billion, while both GAAP and adjusted diluted earnings reached US$0.44 per share. Yet its November 3 Nasdaq snapshot at 06:49 ET displayed US$163.64, down US$14.70, or 8.24%, from Monday’s close. That timestamped premarket display is not a live executable quote or a completed-session return. 1 2

The tension is between revenue already earned and potential future business. U.S. commercial sales climbed 148% to US$984 million, overtaking U.S. government sales of US$953 million for the first time. But U.S. commercial total contract value, or TCV, grew just 11% to US$1.463 billion; company-wide TCV increased 6% to US$2.918 billion. That contrast helps explain caution despite strong sales, without proving a single cause for the share-price decline. 1

The business is growing, not just telling an AI story

The reported driver was expansion in both U.S. businesses: commercial revenue rose 29% from the previous quarter, while government revenue increased 18%. U.S. commercial remaining deal value reached US$6.517 billion, up 79% year over year but only 4% sequentially. These figures show demand reaching reported sales, while leaving a separate question about replenishing the pipeline. 1

TCV is not booked revenue or guaranteed backlog. Palantir defines it as potential lifetime contract value, assuming customer options are exercised and contracts are not terminated; many contracts allow termination, including for convenience. One quarter’s signings therefore cannot be read as either a guaranteed future revenue stream or proof that growth is ending. 1

Profit quality deserves the same care. GAAP operating income was US$1.085 billion, versus US$1.427 billion adjusted; the rounded margins were 47% and 62%. The adjustment excludes stock-based compensation and related employer payroll taxes. Management’s fourth-quarter revenue range has a US$2.651 billion midpoint, about 14.6% above the exact third-quarter revenue of US$2.313411 billion—an implied sequential increase, not an analyst forecast. 1

Separate the earnings reaction from the wider tape

Monday’s US$178.34 close was already down US$5.77, or 3.13%, from Friday’s US$184.11, before the results arrived. Yahoo’s completed November 2 daily bar recorded 36,476,600 shares, versus 23,056,775 on average over the preceding 20 sessions: 1.58 times normal. This is Monday’s historical daily-bar volume, not Tuesday’s premarket turnover. 2 3

Enterprise-software peers did not move together on Monday: Salesforce fell 1.30%, while ServiceNow rose 0.85%; the technology-heavy QQQ ETF lost 1.36%. That mixed comparison argues against treating every move as a uniform software selloff. Separately, October’s ISM manufacturing index rose to 55.5 from 54.5, while its prices index eased to 75.2 from 77.9—strong activity with continued cost pressure, not a direct explanation of Palantir bookings. 4 5 6 7

What it means for option sellers

The wheel starts with a cash-secured put and may continue with covered calls after assignment. A put seller must still buy shares at the strike if assigned, even after a large fall; a covered call retains stock downside and limits upside. The earnings announcement has passed, but that does not turn the shares into a low-risk income asset. 9 10

Post-earnings implied volatility and IV rank were not independently established for this article before regular options trading. An overnight feed is not evidence of the option premium available after the open. Lower IV can reduce a short option’s value, all else equal, but an adverse stock move can overwhelm that benefit; fresh quotes, spreads and contract terms would be necessary before any decision. 9 10

• Business risk: potential contract value may not become revenue on the timing investors expect. 1
• Option risk: premium is limited, while a cash-secured put can sustain a substantial loss. 9
• Reassessment framework: compare fresh prices and option liquidity with the updated business outlook; an old strike is not automatically a new opportunity.

What to watch next

• November 3, 10:00 ET: September JOLTS job-openings data, scheduled by the BLS. 8
• November 6, 08:30 ET: October Employment Situation, before that Friday’s market close. 8
• November 10, 08:30 ET: October CPI; another dated market-risk checkpoint, not a forecast of the release. 8

Educational information, not personal financial advice. Options can cause substantial losses; hypothetical examples omit fees and do not promise returns.

Photo: NOIRLab/NSF/AURA/T. Slovinský, CC BY 4.0; March 21, 2022, cropped/resized. Archival NOIRLab server racks in Tucson—not Palantir equipment or a current deployment.