Palantir Technologies Inc. 10-Q

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risks in the ordinary course of our business, which primarily relate to fluctuations in the value of our investments, interest rates, foreign exchange, and inflation. Market Risk As of September 30, 2021, we had investments valued at $148.1 million in marketable securities. We may continue to make additional investments or sell the existing investments. These investments are often in early or growth stage companies that have minimal public trading history; as such the fair value of these investments may fluctuate depending on the financial outcome and prospects of the investees, as well as global market conditions including recent and ongoing volatility related to the impacts of COVID-19. We record gains or losses as the fair value of these investments changes and as we sell them. We anticipate additional volatility to our condensed consolidated statements of operations due to changes in market prices, and as such gains and losses are realized. 42 Table of Contents During the three and nine months ended September 30, 2021, net unrealized losses of $7.2 million related to marketable securities were recorded in other income (expense), net on the condensed consolidated statements of operations. Interest Rate Risk Our cash, cash equivalents, and restricted cash consist of cash, certificates of deposit, and money market funds. Our primary investment policy and strategies are focused on the preservation of capital and supporting our liquidity requirements. Other than the investments disclosed in Note 4. Investments and Fair Value Measurements and investment commitments disclosed in Note 8. Commitments and Contingencies and Note 14. Subsequent Events in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, we have not entered into investments for trading or speculative purposes. Due to the short-term nature of the financial instruments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our condensed consolidated financial statements. As of September 30, 2021, we had no debt outstanding. Foreign Currency Exchange Risk Our contracts with customers are primarily denominated in U.S. dollars, with a small amount denominated in foreign currencies. Our expenses are generally denominated in the currencies of the jurisdictions in which we conduct our operations, which are primarily in the United States, United Kingdom, and other European countries. Our results of current and future operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro and GBP. Additionally, fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our statement of operations. To date, foreign currency transaction gains and losses have not been material to our condensed consolidated financial statements, and we have not engaged in any foreign currency hedging transactions. Inflation Risk We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. 43 Table of Contents