What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-21 compared with 2022-02-24 · 431 added, 420 removed, 682 unchanged (56% of the section changed)

4 unchanged sentences

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders' Equity

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of Palantir Technologies Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, redeemable convertible and convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, redeemable convertible and convertible preferred stock and stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

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Revenue Recognition

Description of the Matter

As discussed in Note 2 to the consolidated financial statements, the Company derives its revenue primarily from the sale of subscriptions to access its software in the Company’s hosted environment with ongoing operations and maintenance (“O&M”) services (“Palantir Cloud”), software licenses, primarily term licenses in the customers’ environments, with ongoing O&M services (“On-Premises Software”), and professional services.

Description of the Matter As discussed in Note 2 to the consolidated financial statements, the Company generates its revenue primarily from the sale of subscriptions to access its software in the Company’s hosted environment, along with ongoing operations and maintenance (“O&M”) services (“Palantir Cloud”);

software licenses, primarily term licenses in the customers’ environments, with ongoing O&M services (“On-Premises Software”);

and professional services.

Management applies significant judgment in identifying and evaluating any non-standard terms and conditions in customer arrangements which may impact the determination of performance obligations or the timing of revenue recognition.

In addition, the determination as to whether the Company’s On-Premises Software licenses and O&M services are considered distinct performance obligations that should be accounted for separately or combined as a single performance obligation requires significant judgment.

The Company has concluded that the On-Premises Software licenses and O&M services are highly interdependent and interrelated and represent a single distinct performance obligation within the context of the contract that is generally recognized ratably over the contract term.

Auditing revenue recognition was complex and required a significant level of auditor judgment to identify and evaluate non-standard terms and conditions that impact revenue recognition and to assess whether the On-Premises software licenses and O&M services should be accounted for as distinct performance obligations or combined as a single performance obligation.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls to identify and evaluate terms and conditions and performance obligations in customer arrangements that would impact revenue recognition.

In addition, the determining whether promises are distinct performance obligations that should be accounted for separately – or not distinct within the context of the contract and, thus, accounted for together – requires significant judgment.

The Company concluded that the promise to provide a software license is highly interdependent and interrelated with the promise to provide O&M services and such promises are not distinct within the context of its contracts and are accounted for as a single performance obligation for the Company’s On-Premises Software.

Auditing revenue recognition was complex and required a significant level of auditor judgment to identify and evaluate non-standard terms and conditions that impact revenue recognition and to assess whether the software licenses and O&M services should be accounted for as distinct performance obligations or combined as a single performance obligation.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls to identify and evaluate terms and conditions and performance obligations in customer arrangements that would impact revenue recognition.

Our substantive procedures included, among others, testing the completeness and accuracy of management’s identification and evaluation of non-standard terms and conditions, reading executed contracts for a sample of revenue transactions and evaluating whether the Company appropriately applied its revenue recognition policy to the arrangements based on the terms and conditions therein and consistent with U.S.

In addition, we evaluated management’s key assumptions and analysis of its performance obligations, including their assessment of the nature, interdependency, and level of integration between the On-Premises software license and O&M services.

We also evaluated the appropriateness of the related disclosures in the consolidated financial statements.

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, redeemable convertible and convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated February 24, 2022 expressed an unqualified opinion thereon.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Palantir Technologies Japan K.K, which is included in the 2022 consolidated financial statements of the Company and constituted 0.3% and 0.1% of total and net assets, respectively, as of December 31, 2022 and 0.4% and 0.5% of revenues and net loss, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Palantir Technologies Japan K.K.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, redeemable convertible and convertible preferred stock and stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 21, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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Restricted cash 16,244 36,628

Accounts receivable

Accounts receivable, net 258,346 190,923

Marketable securities 35,135 234,153

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Restricted cash, noncurrent 12,551 39,612

Operating lease right-of-use

Operating lease right-of-use assets 200,240 216,898

Other assets 137,701 96,386

Total assets $ 3,461,239 $ 3,247,450

Liabilities and Stockholders' Equity

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Customer deposits, noncurrent 3,936 33,699

Debt, noncurrent, net

Operating lease liabilities, noncurrent 204,305 220,146

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Stockholders’ equity:

Preferred stock, $ 0.001 par value:

2,000,000 shares authorized and 0 shares issued and outstanding as of December 31, 2021 and 2020

Common stock, $ 0.001

20,000,000 Class A shares authorized as of December 31, 2021 and 2020;

1,926,589 shares issued and outstanding as of December 31, 2021, and 1,542,058 shares issued and outstanding as of December 31, 2020, respectively;

2,700,000 Class B shares authorized as of December 31, 2021 and 2020;

99,880 and 249,077 shares issued and outstanding as of December 31, 2021 and 2020, respectively;

and 1,005 Class F shares authorized, issued, and outstanding as of December 31, 2021 and 2020

Additional paid-in

Common stock, $ 0.001 par value:

20,000,000 Class A shares authorized as of December 31, 2022 and December 31, 2021;

1,995,414 and 1,926,589 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively;

2,700,000 Class B shares authorized as of December 31, 2022 and December 31, 2021;

102,656 and 99,880 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively;

and 1,005 Class F shares authorized, issued, and outstanding as of December 31, 2022 and December 31, 2021

Additional paid-in capital 8,427,998 7,777,085

Accumulated other comprehensive loss ( 5,333 ) ( 2,349 )

Accumulated deficit ( 5,859,438 ) ( 5,485,733 )

( 5,485,733 )

( 4,965,354 )

Total stockholders’ equity 2,565,326 2,291,030

Total liabilities and stockholders’ equity

Noncontrolling interests 77,111 —

Total equity 2,642,437 2,291,030

Total liabilities and equity $ 3,461,239 $ 3,247,450

The accompanying notes are an integral part of these consolidated financial statements.

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Years Ended December 31,

2022 2021 2020

Revenue $ 1,905,871 $ 1,541,889 $ 1,092,673

Cost of revenue 408,549 339,404 352,547

Gross profit 1,497,322 1,202,485 740,126

Operating expenses:

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Provision for (benefit from) income taxes 10,067 31,885 ( 12,636 )

Net loss ( 371,094 ) ( 520,379 ) ( 1,166,391 )

Net income attributable to noncontrolling interests 2,611 — —

Net loss attributable to common stockholders $ ( 373,705 ) $ ( 520,379 ) $ ( 1,166,391 )

Net loss per share attributable to common stockholders, basic $ ( 0.18 ) $ ( 0.27 ) $ ( 1.19 )

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Years Ended December 31,

Other comprehensive loss

2022 2021 2020

Net loss $ ( 371,094 ) $ ( 520,379 ) $ ( 1,166,391 )

Other comprehensive income (loss)

Foreign currency translation adjustments ( 2,984 ) 396 ( 2,042 )

Comprehensive loss ( 374,078 ) ( 519,983 ) ( 1,168,433 )

$ ( 1,168,433

The accompanying notes are an integral part of these consolidated financial statements.

Palantir Technologies Inc.

Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands)

Redeemable Convertible

Preferred Stock

Treasury Stock

Comprehensive

Income (Loss)

Stockholders’

Balance as of December 31, 2018

( 3,231,876 )

( 1,751,428 )

Cumulative effect of accounting changes

Issuance of Series H redeemable convertible preferred stock upon exercise of warrants

Redemption of Series H redeemable

preferred stock

Sale of Series H redeemable convertible

preferred stock

Reclassification of Series H redeemable convertible preferred stock into convertible preferred stock upon expiration of redemption option

Repurchase of Series A convertible preferred

Repurchase of Series D convertible preferred

Repurchase of Series F convertible preferred

Distributed earnings attributable to participating securities

Conversion of Series F convertible stock to common stock

Issuance of Series D convertible preferred stock upon exercise of warrants

Conversion of Series D convertible stock to common stock

Sale of common stock, held in treasury

Repurchase of common stock, held in treasury

Issuance of common stock from the exercise of stock options

Stock-based compensation

Other comprehensive loss

Balance as of December 31, 2019

( 3,798,963 )

( 1,980,642 )

Comprehensive income attributable to noncontrolling interests 2,611 — —

Comprehensive loss attributable to common stockholders $ ( 376,689 ) $ ( 519,983 ) $ ( 1,168,433 )

The accompanying notes are an integral part of these consolidated financial statements.

Palantir Technologies Inc.

Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity

(in thousands)

Redeemable Convertible

Preferred Stock

Treasury Stock

Comprehensive

Stockholders’

Redeemable Convertible Preferred Stock Convertible Preferred Stock Common Stock Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ (Deficit) Equity

Shares Amount Shares Amount Shares Amount Shares Amount

Balance as of December 31, 2019 4,017 $ 33,569 742,840 $ 2,093,662 581,497 $ 588 $ 1,857,331 6,393 $ ( 38,895 ) $ ( 703 ) $ ( 3,798,963 ) $ ( 1,980,642 )

( 3,798,963 )

( 1,980,642 )

Conversion of Series H-1

convertible preferred stock to common stock

Conversion of Series H-1 convertible preferred stock to common stock — — ( 28 ) ( 100 ) 28 — 100 — — — — 100

Issuance of Series K convertible preferred stock — — 121 947 — — — — — — — —

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Conversion of convertible preferred stock to common stock — — ( 745,313 ) ( 2,105,319 ) 793,726 794 2,104,525 — — — — 2,105,319

( 2,105,319 )

Conversion of preferred stock warrants to common stock warrants — — — — — — 31,007 — — — — 31,007

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Other comprehensive loss — — — — — — — — — ( 2,042 ) — ( 2,042 )

( 1,166,391 )

Net loss — — — — — — — — — — ( 1,166,391 ) ( 1,166,391 )

Balance as of December 31, 2020 — $ — — $ — 1,792,140 $ 1,792 $ 6,488,857 — $ — $ ( 2,745 ) $ ( 4,965,354 ) $ 1,522,550

( 4,965,354 )

The accompanying notes are an integral part of these consolidated financial statements.

Palantir Technologies Inc.

Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity

(in thousands)

Comprehensive

Stockholders’

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

Shares Amount

Balance as of December 31, 2020 1,792,140 $ 1,792 $ 6,488,857 $ ( 2,745 ) $ ( 4,965,354 ) $ 1,522,550

( 4,965,354 )

Issuance of common stock from the exercise of stock options 178,849 178 507,277 — — 507,455

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Other comprehensive income — — — 396 — 396

Net loss — — — — ( 520,379 ) ( 520,379 )

Balance as of December 31, 2021 2,027,474 $ 2,027 $ 7,777,085 $ ( 2,349 ) $ ( 5,485,733 ) $ 2,291,030

( 5,485,733 )

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interests Total Equity

Shares Amount

Balance as of December 31, 2021 2,027,474 $ 2,027 $ 7,777,085 $ ( 2,349 ) $ ( 5,485,733 ) $ 2,291,030 $ — $ 2,291,030

Issuance of common stock from the exercise of stock options 19,660 20 86,068 — — 86,088 — 86,088

Issuance of common stock upon vesting of RSUs 51,941 52 ( 52 ) — — — — —

Stock-based compensation — — 564,897 — — 564,897 — 564,897

Other comprehensive loss — — — ( 2,984 ) — ( 2,984 ) — ( 2,984 )

Noncontrolling interests — — — — — — 74,500 74,500

Net loss — — — — ( 373,705 ) ( 373,705 ) 2,611 ( 371,094 )

Balance as of December 31, 2022 2,099,075 $ 2,099 $ 8,427,998 $ ( 5,333 ) $ ( 5,859,438 ) $ 2,565,326 $ 77,111 $ 2,642,437

The accompanying notes are an integral part of these consolidated financial statements.

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Years Ended December 31,

2022 2021 2020

Operating activities

Net loss $ ( 371,094 ) $ ( 520,379 ) $ ( 1,166,391 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

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Deferred income taxes ( 174 ) 43,316 ( 20,385 )

Impairment of assets held for sale

operating lease expense

Unrealized and realized loss (gain) from marketable securities, net

Non-cash operating lease expense 40,309 33,821 35,049

Unrealized and realized (gain) loss from marketable securities, net 272,108 73,311 —

Gain from step acquisition ( 44,306 ) — —

Other operating activities 6,677 2,722 4,280

Changes in operating assets and liabilities:

Accounts receivable

Changes in operating assets and liabilities, net of effect of acquisitions:

Accounts receivable, net ( 77,519 ) ( 35,237 ) ( 108,476 )

Prepaid expenses and other current assets ( 25,997 ) ( 10,929 ) ( 18,565 )

Other assets 6,033 ( 3,345 ) ( 8,605 )

Accounts payable ( 29,859 ) 57,767 ( 34,681 )

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Purchases of marketable securities ( 124,500 ) ( 308,315 ) —

Purchases of equity method investments

Return of capital from equity method investment

Proceeds from sales and redemption of marketable securities 52,319 851 —

Business combinations, net of cash acquired 66,708 — —

Purchases of alternative investments — ( 50,941 ) —

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Proceeds from the issuance of common stock, net of issuance costs — — 942,529

Proceeds from issuance of debt, net of issuance costs

Proceeds from issuance of debt, net of borrowing costs — — 199,369

Principal payments on borrowings — ( 200,000 ) ( 400,000 )

Proceeds from the exercise of common stock options 86,089 507,455 298,829

Repurchase of common stock

Proceeds from the sale of redeemable convertible preferred stock

Redemption of redeemable convertible preferred stock

Repurchase of convertible preferred stock

Other financing activities ( 93 ) ( 708 ) ( 4,274 )

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Years Ended December 31,

2022 2021 2020

Supplemental disclosures of cash flow information

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Cash paid for interest 5 2,774 11,432

Supplemental disclosures of non-cash

investing and financing information:

Supplemental disclosures of non-cash investing and financing information:

Conversion of redeemable convertible and convertible preferred stock to common stock $ — $ — $ 2,138,988

Conversion of convertible preferred stock warrants to common stock warrants — — 31,007

Cashless net exercise of warrants for redeemable convertible preferred stock

Cashless net exercise of warrants for convertible preferred stock — — 10,810

Reclassification of redeemable convertible preferred stock into convertible preferred stock upon expiration of redemption option

The accompanying notes are an integral part of these consolidated financial statements.

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The accompanying consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding annual financial reporting.

generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission regarding annual financial reporting.

The accompanying consolidated financial statements include the accounts of Palantir Technologies Inc.

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All significant intercompany balances and transactions have been eliminated in consolidation.

Investments in entities where the Company holds at least a 20% ownership interest and has the ability to exercise significant influence over the investee, but not control, are accounted for using the equity method of accounting.

Investments in entities where the Company holds at least a 20% ownership interest and has the ability to exercise significant influence over, but does not control, the investee are accounted for using the equity method of accounting.

For such investments, the share of the investee’s results of operations is included as a component of other income (expense), net in the consolidated statements of operations and the investment balance is included in other assets and classified as noncurrent in the consolidated balance sheets.

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On September 30, 2020, the Company completed a direct listing of its Class A common stock on the New York Stock Exchange (“NYSE”) (the “Direct Listing”).

Immediately prior to the Direct Listing, all outstanding shares of redeemable convertible preferred stock and convertible preferred stock were converted into Class B common stock, and all of the Company’s outstanding preferred stock warrants were converted into common stock warrants, which resulted in the reclassification of the warrants liability to additional paid-in

Use of Estimates

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the useful lives of tangible assets;

the valuation of assets acquired and liabilities assumed from business combinations, including intangible assets and goodwill;

and the incremental borrowing rate for operating leases.

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Actual results could differ from those estimates, and such differences could affect the Company’s financial position and results of operations.

The Company has two operating segments, commercial and government, which were determined based on the manner in which the chief operating decision maker (“CODM”), who is the chief executive officer, manages the

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

operations of the Company for purposes of allocating resources and evaluating performance.

Various factors, including the Company’s organizational and management reporting structure and customer type, were considered in determining these operating segments.

The Company’s operating segments are described below:

This segment primarily serves customers working in non-government

• Commercial:

This segment primarily serves customers working in non-government industries.

• Government:

This segment primarily serves customers that are United States (“U.S.”) government and non-U.S.

government agencies.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Cash, Cash Equivalents, and Restricted Cash

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As of December 31,

2022 2021 2020

Cash and cash equivalents $ 2,598,540 $ 2,290,674 $ 2,011,323

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Accounts Receivable and Allowance for Credit Losses

Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses, if any.

The Company generally grants non-collateralized

credit terms to its customers.

Allowance for credit losses is based on the Company’s best estimate of probable losses inherent in its accounts receivable portfolio and is determined based on expectations of the customer’s ability to pay by considering factors such as customer type (commercial or government), historical experience, financial position of the customer, age of the accounts receivable, current economic conditions, including the ongoing COVID-19

pandemic, and reasonable and supportable forward-looking factors about its portfolio and future economic conditions.

Accounts receivable are written-off

and charged against an allowance for credit losses when the Company has exhausted collection efforts without success.

Based upon the Company’s assessment as of December 31, 2021 and 2020, it did no t record an allowance for credit losses as probable losses are not expected to be material.

Concentrations of Risk

Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses.

The Company generally grants non-collateralized credit terms to its customers.

Accounts receivable are written-off and charged against an allowance for credit losses when the Company has exhausted collection efforts without success.

Based upon the Company’s assessment as of December 31, 2022 the Company recorded an allowance for credit losses of $ 10.1 million.

Based upon the Company’s assessment as of December 31, 2021, the allowances for credit losses were not material.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, accounts receivable, and marketable securities.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

equivalents primarily consist of money market funds with original maturities of three months or less, which are invested primarily with U.S.

Cash equivalents primarily consist of money market funds with original maturities of three months or less, which are invested primarily with U.S.

financial institutions.

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The Company’s accounts receivable balances as of December 31, 2022 and 2021 were $ 258.3 million and $ 190.9 million, respectively.

No customer represented more than 10 % of total accounts receivable as of December 31, 2021.

Customer G represented 13 % of total accounts receivable as of December 31, 2020.

No other customer represented more than 10 % of total accounts receivable as of December 31, 2020.

For the year ended December 31, 2021, no customer represented 10 % or more of total revenue.

No customer represented more than 10% of total accounts receivable as of December 31, 2022 and 2021.

For the years ended December 31, 2022 and 2021, no customer represented 10% or more of total revenue.

For the year ended December 31, 2020, Customer F, which is in the government operating segment, represented 10 % of total revenue.

For the year ended December 31, 2019, Customer D, which is in the commercial operating segment, represented 12 % of total revenue.

No other customers represented more than 10 % of total revenue for the years ended December 31, 2020 and 2019.

No other customers represented more than 10% of total revenue for the year ended December 31, 2020.

Alternative Investments

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Realized gains and losses are recorded in other income (expense), net upon realization.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Property and Equipment, Net

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Upon sale or retirement of assets, the cost and related accumulated depreciation and amortization are derecognized from the consolidated balance sheet and any resulting gain or loss is recorded in the consolidated statements of operations in the period realized.

Equity Method Investments

In general, nonconsolidated investments in which the Company owns 20 % to 50 % of the affiliate’s equity and has the ability to exercise significant influence but does not control are accounted for under the equity method.

In making this determination, the Company first considers whether it has a direct or indirect controlling financial interest based on either the variable interest entity (“VIE”) model or the voting interest entity (“VOE”) model.

The Company adjusts the carrying value of its investment by its proportionate share of the net earnings or losses of the investee, adjustments for unrealized profits or losses on intra-entity transactions, impairment charges, dividends received, additional capital investments, and the amortization of basis differences during the respective reporting period.

The Company’s proportionate share of the net earnings or loss of its equity method investments

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

are based on the most recently available financial statements of the investee and is reflected as a component of other income (expense), net in the consolidated statements of operations.

The income tax benefit or expense related to the Company’s interest in the net earnings or loss of the equity method investee is reported in the consolidated provision (benefit) for income taxes.

The Company reviews the investments for impairment whenever factors indicate that the carrying amount of the investment might not be recoverable.

In such a case, the decrease in value is recognized in the period the impairment occurs in the consolidated statements of operations

Privately-held Securities

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Changes in the basis of the equity securities are recognized in other income (expense), net in the consolidated statements of operations.

Business Combinations

Business combinations are accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, and are included in our consolidated financial statements from their respective acquisition dates.

Assets acquired and liabilities assumed, if any, are measured at fair value on the acquisition date using the appropriate valuation method.

Goodwill generated from acquisitions is recognized if the fair value of the purchase consideration transferred, or the fair value of the acquirer’s interest in the acquiree if no consideration is transferred, and any noncontrolling interests is in excess of the net fair value of the identifiable assets acquired and the liabilities assumed.

In determining the fair value of identifiable assets, we use various valuation techniques which require us to make estimates and assumptions surrounding projected revenues and costs, future growth, and discount rates.

Goodwill represents the excess of the fair value of the purchase consideration transferred, or the fair value of the acquirer’s interest in the acquiree if no consideration is transferred, and any noncontrolling interests over the net fair value of the identifiable assets acquired and the liabilities assumed in business combinations.

Goodwill is not amortized but is subject to an annual impairment test.

We perform our annual goodwill impairment assessment on the first day of the fourth quarter.

Tests are performed more frequently if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount.

Goodwill is recorded in other assets in the consolidated balance sheet.

Other Intangible Assets

Other intangible assets include finite-lived intangible assets, which mainly consist of customer relationships, reacquired rights, and backlog.

These assets are amortized over their estimated useful lives and are tested for impairment using a similar methodology to our property and equipment, as described below.

Other intangible assets are recorded in other assets in the consolidated balance sheet.

Impairment of Long-Lived Assets

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If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.

The Company adopted the Accounting Standard Update (“ASU”) 2016-02,

and additional ASUs issued to clarify and update the guidance in ASU 2016-02

(collectively “ASC 842”), as of January 1, 2020.

Impairments of long-lived assets during the years ended December 31, 2022, 2021, and 2020 were not material.

The Company adopted the Accounting Standard Update (“ASU”) 2016-02, Leases, and additional ASUs issued to clarify and update the guidance in ASU 2016-02 (collectively “ASC 842”), as of January 1, 2020.

The Company determines if an arrangement is a lease at inception.

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The Company’s leases do not provide an implicit interest rate and therefore the Company estimates its incremental borrowing rate to discount lease payments.

The incremental borrowing rate reflects the interest rate that the Company would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term.

Operating lease right-of-use

(“ROU”) assets are based on the corresponding lease liability adjusted for any lease payments made at or before commencement, initial direct costs, and lease incentives.

The incremental borrowing rate reflects the

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

interest rate that the Company would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term.

Operating lease right-of-use (“ROU”) assets are based on the corresponding lease liability adjusted for any lease payments made at or before commencement, initial direct costs, and lease incentives.

Renewals or early terminations are not accounted for unless the Company is reasonably certain to exercise these options.

Operating lease expense is recognized and the ROU asset is amortized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease

components, which are accounted for as a single lease component.

The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease component.

The Company elected to use the transition relief package of practical expedients but did not elect to use the hindsight practical expedient in determining a lease term and impairment of ROU assets at the adoption date.

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Lease payments for short-term leases are expensed on a straight-line basis over the lease term.

Operating leases are included in operating lease right-of-use

assets, operating lease liabilities, and operating lease liabilities, non-current

on the Company’s consolidated balance sheets.

Operating leases are included in operating lease right-of-use assets, operating lease liabilities, and operating lease liabilities, non-current on the Company’s consolidated balance sheets.

Finance leases are not material.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Fair Value Measurement

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The Company generates revenue from the sale of subscriptions to access its software in the Company’s hosted environment, along with ongoing operations and maintenance (“O&M”) services (“Palantir Cloud”);

software licenses, primarily term licenses in the customers’ environments, with ongoing O&M services (“On-Premises

software licenses, primarily term licenses in the customers’ environments, with ongoing O&M services (“On-Premises Software”);

and professional services.

In accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers

, the Company recognizes revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services.

In accordance with ASC 606, Revenue from Contracts with Customers , the Company recognizes revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services.

The Company applies the following five-step revenue recognition model in accounting for its revenue arrangements:

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• Recognition of revenue when, or as, the Company satisfies a performance obligation.

Each of the Company’s significant performance obligations and the Company’s application of ASC 606 to its revenue arrangements is discussed in further detail below.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (continued)

Each of the Company’s significant performance obligations and the Company’s application of ASC 606 to its revenue arrangements is discussed in further detail below.

Palantir Cloud

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Revenue associated with Palantir Cloud subscriptions is generally recognized over the contract term on a ratable basis, which is consistent with the transfer of control of the Palantir Cloud subscription to the customer.

On-Premises Software

Sales of the Company’s software licenses, primarily term licenses, grant customers the right to use functional intellectual property, either on their internal hardware infrastructure or on their own cloud instance, over the contractual term and are also sold together with stand-ready O&M services.

The O&M services include critical updates, support, and maintenance services required to operate the software and, as such, are necessary for the software to maintain its intended utility over the contractual term.

Because of this requirement, the Company has concluded that the software licenses and O&M services, which together the Company refers to as On-Premises

Software, are highly interdependent and interrelated and represent a single distinct performance obligation within the context of the contract.

Because of this requirement, the Company has concluded that the software licenses and O&M services, which together the Company refers to as On-Premises Software, are highly interdependent and interrelated and represent a single distinct performance obligation within the context of the contract.

Revenue is generally recognized over the contract term on a ratable basis.

Professional Services

The Company’s professional services support the customers’ use of the software and include, as needed, on-demand

user support, user-interface configuration, training, and ongoing ontology and data modeling support.

Professional services contracts typically include the provision of on-demand

professional services for the duration of the contractual term.

These services are typically coterminous with a Palantir Cloud subscription or the On-Premises

Professional services are on-demand,

whereby the Company performs services throughout the contract period;

The Company’s professional services support the customers’ use of the software and include, as needed, on-demand user support, user-interface configuration, training, and ongoing ontology and data modeling support.

Professional services contracts typically include the provision of on-demand professional services for the duration of the contractual term.

These services are typically coterminous with a Palantir Cloud subscription or the On-Premises Software.

Professional services are on-demand, whereby the Company performs services throughout the contract period;

therefore, the revenue is recognized over the contractual term.

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Deferred revenue represents billings under noncancelable contracts before the related product or service is transferred to the customer.

Customer deposits consist of refundable payments received in advance of the start of the contractual term or for anticipated revenue generating activities for the portion of a contract term that is subject to cancellation.

Many of the Company’s arrangements include terms that allow the customer to terminate the contract for convenience and receive a pro-rata

refund of the amount of the customer deposit for the period of time remaining in the contract term after the applicable termination notice period expires.

Customer deposits consist of amounts billed and/or paid in advance of the start of the contractual term or for anticipated revenue generating activities for the portion of a contract term that is subject to cancellation by our customers.

Many of the Company’s arrangements include terms that allow the customer to terminate the contract for convenience and receive a pro-rata refund of the amount of the customer deposit for the period of time remaining in the contract term after the applicable termination notice period expires.

In these arrangements, the Company concluded there are no enforceable rights and obligations after such notice period and therefore the consideration received or due from the customer that is subject to termination for convenience is recorded as customer deposits.

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As such, the Company determined its contracts do not generally contain a significant financing component.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Areas of Judgment and Estimation

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Determining whether promises are distinct performance obligations that should be accounted for separately – or not distinct within the context of the contract and, thus, accounted for together – requires significant judgment.

Additionally, the pricing of the Company’s contracts is generally fixed;

however, it is possible for contracts to include variable consideration in the form of performance bonuses, which can be based on subjective or objective criteria.

The Company includes the estimated amount of variable consideration that it expects to receive to the extent it is probable that a significant revenue reversal will not occur.

Any amounts received in the form of performance bonuses were not material in the periods presented.

however, it is possible for contracts to include variable consideration, which can be based on subjective or objective criteria.

The Company includes the estimated amount of variable

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

consideration that it expects to receive to the extent it is probable that a significant revenue reversal will not occur.

Variable consideration received was not material in the periods presented.

Costs to Obtain and Fulfill Contracts

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Cost of Revenue

Cost of revenue primarily includes salaries, stock-based compensation expense, and benefits for personnel involved in performing O&M and professional services, as well as third-party cloud hosting services, allocated overhead, and other direct costs.

Sales and Marketing Costs

Sales and marketing costs primarily include salaries, stock-based compensation expense, and benefits for personnel involved in sales functions, executing on pilots, and performing other brand building activities, as well as third-party cloud hosting services for our pilots, marketing and sales event-related costs, and allocated overhead.

The Company generally charges all such costs to sales and marketing expense in the period incurred.

Advertising costs are expensed as incurred and included in sales and marketing expense in the consolidated statements of operations.

Advertising expense totaled $ 26.3

million for the year ended December 31, 2021 and was immaterial for the years ended December 31, 2020 and 2019.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Advertising costs are expensed as incurred and included in sales and marketing expense within the consolidated statements of operations.

Advertising expense totaled $ 38.6 million and $ 26.3 million for the years ended December 31, 2022 and 2021, respectively, and was immaterial for the year ended December 31, 2020.

Research and Development Costs

Research and development costs primarily include salaries, stock-based compensation expense, and benefits for personnel involved in performing the activities to develop and improve the Company’s platforms, as well as third-party cloud hosting services, and allocated overhead.

Research and development costs primarily include salaries, stock-based compensation expense, and benefits for personnel involved in performing the activities to develop and improve the Company’s platforms and products, as well as third-party cloud hosting services, travel costs, and allocated overhead.

Research and development costs are expensed as incurred.

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For RSUs, the Company determines the grant-date fair value of the RSUs as the fair value of the Company’s common stock on the grant date.

The Company records stock-based compensation expense for stock options and RSUs that vest only based upon the satisfaction of a service condition on a straight-line basis over the requisite service period, which is generally four years.

The Company records stock-based compensation expense for stock options and RSUs that vest only based upon the

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

satisfaction of a service condition on a straight-line basis over the requisite service period, which is generally four years .

For stock option awards, the Company uses the Black-Scholes option pricing model to determine the fair value of the stock options granted.

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Employee Benefit Plan

The Company sponsors a 401(k) tax-deferred

savings plan for all employees who meet certain eligibility requirements.

Participants may contribute, on a pretax and post-tax

basis, a percentage of their qualifying annual compensation, but not to exceed a maximum contribution amount pursuant to Section 401(k) of the Internal Revenue Code.

The Company sponsors a 401(k) tax-deferred savings plan for all employees who meet certain eligibility requirements.

Participants may contribute, on a pretax and post-tax basis, a percentage of their qualifying annual compensation, but not to exceed a maximum contribution amount pursuant to Section 401(k) of the Internal Revenue Code.

The Company may make additional matching contributions on behalf of the participants.

The Company did no t make matching contributions for the years ended December 31, 2021, 2020, and 2019.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

The Company did not make matching contributions for the years ended December 31, 2022, 2021, and 2020.

The Company estimates its current tax expense together with assessing temporary differences resulting from differing treatment of items not currently deductible for tax purposes.

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In general, deferred tax assets represent future tax benefits to be received when certain expenses previously recognized in the Company’s consolidated statements of operations become deductible expenses under applicable income tax laws or loss or credit carryforwards are utilized.

Accordingly, the realization of the Company’s deferred tax assets are dependent on future taxable income against which these deductions, losses, and credits can be utilized.

Accordingly, the realization of the Company’s deferred tax assets is dependent on future taxable income against which these deductions, losses, and credits can be utilized.

The Company evaluates the realizability of its deferred tax assets and recognizes a valuation allowance when it is more likely than not that a future benefit on such deferred tax assets will not be realized.

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The tax benefits recognized in the consolidated financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.

The Company recognizes interest and penalties related to uncertain tax positions in its provision (benefit) for income taxes.

The Company is subject to the Global Intangible Low Taxed Income (“GILTI”) tax in the U.S.

The Company has elected to treat taxes on future GILTI inclusions as a current period expense if and when incurred.

and has elected to treat taxes on future GILTI inclusions as current period expense if and when incurred.

Net Loss Per Share Attributable to Common Stockholders

The Company computes net loss per share attributable to its common stockholders using the two-class

method required for participating securities, which determines net loss per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in distributed and undistributed earnings.

The two-class

method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

The Company computes net loss per share attributable to its common stockholders using the two-class method required for participating securities, which determines net loss per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in distributed and undistributed earnings.

The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

The rights, including the liquidation and dividend rights, of the holders of Class A, Class B, and Class F common stock (collectively, the “common stock”) are identical, except with respect to voting and conversion.

As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis and the resulting net loss per share will, therefore, be the same for all classes of common stock on an individual or combined basis.

As such, the Company has presented the net loss attributed to its common stock on a combined basis.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Noncontrolling Interests

A noncontrolling interest represents the proportionate equity interest in a subsidiary that is not attributable, either directly or indirectly, to the Company and is reported as equity of the Company, separate from the Company’s controlling interest.

Revenues, expenses, gains, losses, net income (loss), and other comprehensive income (loss) are reported in the consolidated financial statements at the consolidated amounts, which include the amounts attributable to both the controlling and noncontrolling interest.

Foreign Currency

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Gains and losses from these translations are recognized as a cumulative translation adjustment and included in accumulated other comprehensive income (loss).

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

For transactions that are not denominated in the local functional currency, the Company remeasures monetary assets and liabilities at exchange rates in effect at the end of each reporting period.

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Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12,

Simplifying the Accounting for Income Taxes (Topic 740)

as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes.

removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

also amends other aspects of the guidance to help simplify and promote consistent application of GAAP.

The Company adopted ASU 2019-12

as of January 1, 2021 using transition methods allowed under each aspect of the guidance.

The adoption of the standard did not have a material impact on the Company’s consolidated financial statements.

In October 2021, the Financial Accounting Standards Board issued ASU 2021-08, Business Combinations—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805) .

The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with ASC 606 as if the acquirer had originated the contracts.

The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted, including an adoption in an interim period.

The Company adopted this standard effective October 1, 2022.

The adoption of this standard did not have a material effect on the Company’s consolidated financial statements.

Contract Liabilities and Remaining Performance Obligations

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Cancelable contracted revenue, which includes customer deposits, is not considered a remaining performance obligation.

The Company’s remaining performance obligations were $ 1.1 billion as of December 31, 2021, of which the Company expects to recognize approximately 42 % as revenue over the next twelve months.

The Company’s remaining performance obligations were $ 972.7 million as of December 31, 2022, of which the Company expects to recognize approximately 53 % as revenue over the next 12 months, 38 % as revenue over the subsequent 13 to 36 months, and the remainder thereafter.

Disaggregation of Revenue

Segment and Geographic Information

for disaggregated revenue by customer segment and geographic region.

Segment and Geographic Information for disaggregated revenue by customer segment and geographic region.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (continued)

Investments and Fair Value Measurements

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation (in thousands):

The following tables present the Company’s assets that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation (in thousands):

As of December 31, 2022

Total Level 1 Level 2 Level 3

Cash and cash equivalents:

Money market funds $ 1,149,302 $ 1,149,302 $ — $ —

Certificates of deposit 6,791 — 6,791 —

Restricted cash, current and noncurrent

Certificates of deposit 18,707 — 18,707 —

Marketable securities:

Marketable securities 35,135 35,135 — —

Total $ 1,209,935 $ 1,184,437 $ 25,498 $ —

As of December 31, 2021

Total Level 1 Level 2 Level 3

Cash and cash equivalents:

Money market funds $ 507,317 $ 507,317 $ — $ —

Certificates of deposit 6,844 — 6,844 —

Restricted cash, current and noncurrent

Certificates of deposit 45,048 — 45,048 —

Marketable securities:

Marketable securities 234,153 234,153 — —

Total $ 793,362 $ 741,470 $ 51,892 $ —

Certificates of Deposit

The Company’s Level 2 instruments consist of restricted cash invested in certificates of deposit.

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Realized and unrealized gains and losses are recorded in other income (expense), net on the consolidated statements of operations.

During the year ended December 31, 2021, the Company recorded net unrealized losses of

within other income (expense), net on the consolidated statements of operations.

During 2021, the Company approved and entered into certain agreements (“Investment Agreements”) to purchase, or commit to purchase, as further discussed in Note 9.

Commitments and Contingencies — Investment

shares of various entities, including special purpose acquisition companies and/or other privately-held or publicly-traded entities (each, an “Investee,” and such purchases, and commitments to purchase, the

“Investments”).

In connection with signing the Investment Agreements, each Investee or an associated entity and the Company entered into a commercial contract for access to the Company’s products and services.

The total value of such commercial contracts was

$ 767.9 million

as of December 31, 2021, which is inclusive of

$ 116.2 million

of contractual options.

The terms of such contracts, including contractual options, range from three to ten years.

The majority of these commercial contracts are subject to various termination provisions, including for convenience in the event a proposed business combination is not completed.

During the years ended December 31, 2022 and 2021, the Company recorded net unrealized losses of $ 159.0 million and $ 72.8 million, respectively, and realized losses of $ 113.1 million during the year ended December 31, 2022.

An immaterial amount of realized gains and losses were recorded during the year ended December 31, 2021.

Net realized and unrealized gains and losses are recorded within other income (expense), net on the consolidated statements of operations.

Since 2021, the Company has approved and entered into certain agreements (“Investment Agreements”) to purchase shares of various entities, including special purpose acquisition companies and/or other privately-held or publicly-traded entities (each, an “Investee,” and such purchases, the “Investments”).

During the year ended December 31, 2021, the Company purchased shares for a total investment of $ 326.0 million.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

During 2021, the Company assessed the concurrent agreements under the non-monetary

guidance within ASC 606 — Revenue from Contracts

with Customers

as well as the commercial substance of each arrangement considering the customer’s ability and intention to pay as well as the Company’s obligation to perform under each

The total revenue recognized from these commercial contracts during the year ended December 31, 2021 was $ 48.3

Notes to Consolidated Financial Statements (continued)

The following table presents the details of the investments purchased under such Investment Agreements during the year ended December 31, 2022 (in thousands):

Investment Amount

Faraday Future

Sarcos Robotics

Roivant Sciences

Babylon Health

Embark Trucks

Pear Therapeutics

Hyundai Oilbank

Investments are in publicly-traded marketable securities, unless otherwise noted.

Investment in privately-held company.

Share Amount Investment Amount

Fast Radius 2,000 $ 20,000

Energy Vault 850 8,500

Tritium 2,500 15,000

Rigetti 1,000 10,000

Allego 2,000 20,000

Starry Group Holdings 2,133 16,000

Rubicon Technologies 3,500 35,000

Total 13,983 $ 124,500

(1) Investments are in publicly-traded marketable securities at the time of investment.

In connection with signing the Investment Agreements, each Investee or an associated entity and the Company entered into a commercial contract for access to the Company’s products and services (collectively, the “Strategic Commercial Contracts”).

As of December 31, 2022, the terms of such contracts, including contractual options, range from three years to eight years and are subject to termination for cause provisions.

The Company assesses the concurrent agreements under the noncash and consideration paid or payable to a customer guidance within ASC 606, Revenue from Contracts with Customers, as well as the commercial substance of each arrangement considering the customer’s ability and intention to pay as well as the Company’s obligation to perform under each contract.

As currently assessed, the total value of such Strategic Commercial Contracts with Investees or associated entities was $ 492.7 million as of December 31, 2022, which is inclusive of $ 63.7 million of contractual options.

The Company performs ongoing assessments of customers’ financial condition, including the consideration of customers’ ability and intention to pay, and whether all or some portion of the value of such contracts continue to meet the criteria for revenue recognition, among other factors.

As of December 31, 2022, the cumulative amount of revenue recognized from Strategic Commercial Contracts was $ 166.6 million, of which $ 118.4 million of revenue was recognized during the year ended December 31, 2022.

Alternative Investments

year ended December 31, 2021, the Company purchased $ 50.9 million in 100 -ounce

The gold bars will initially be kept in a secure third-party facility located in the northeastern United States.

During the year ended December 31, 2021, the Company purchased $ 50.9 million in 100 -ounce gold bars.

The gold bars are kept in a secure third-party facility located in the northeastern United States.

The Company is able to take physical possession of the gold bars stored at the facility at any time with reasonable notice.

During the year ended December 31, 2021, unrealized losses on the Company’s alternative investments were not material.

Net unrealized losses related to alternative investments, which are recorded within other income (expense), net on the consolidated statements of operations, were not material for the years ended December 31, 2022 and 2021.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (continued)

Balance Sheet Components

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Accrued payroll and related expenses $ 43,495 $ 60,732

Accrued taxes 41,326 22,550

Accrued other liabilities 87,894 72,524

Total accrued liabilities $ 172,715 $ 155,806

Equity Method Investments

Palantir Technologies Japan, K.K.

During November 2019, the Company and SOMPO Holdings, Inc.

(“SOMPO”) created a Japanese Kabushiki Kaisha (“K.K.”), Palantir Technologies Japan, K.K.

(“Palantir Japan”) to distribute Palantir platforms to the Japanese market.

Upon closing of the transaction with SOMPO, the Company purchased a total of 100,000 shares of Palantir Japan common stock for $ 25.0 million.

The shares the Company received in exchange represent a 50 % voting interest in Palantir Japan.

The remaining 50 % of the voting interest is held by SOMPO.

The Company’s investment in Palantir Japan is accounted for as an equity method investment as the Company is able to exercise significant influence over, but does not control, the investee.

2014 Credit Facility

In October 2014, the Company entered into an unsecured revolving credit facility which has been subsequently amended (the “2014 Credit Facility”).

The revolving credit facility allows for the drawdown of up to

In October 2014, the Company entered into an unsecured revolving credit facility, which has been subsequently secured by substantially all of the Company’s assets and amended from time to time (as amended, the “2014 Credit Facility”), including on March 31, 2022 (the “March 2022 Amendment”) and on July 1, 2022 (the “July 2022 Amendment”).

The March 2022 Amendment provided for, among other things, an extension of the revolving loan facility maturity date to March 31, 2027 and an increase of $ 100.0 million to the lenders’ revolving commitments for total revolving commitments of $ 500.0 million.

The July 2022 Amendment provided for, among other things, a new incremental delayed draw term loan (“DDTL”) commitment in an aggregate principal amount of up to $ 450.0 million, upon the terms and conditions set forth in the 2014 Credit Facility, as amended, with new and existing lenders.

The DDTL commitment is available to draw upon through July 1, 2023 and any drawn amounts will mature on March 31, 2027.

As of December 31, 2022, the 2014 Credit Facility allows for the drawdown of up to $ 950.0 million to fund working capital and general corporate expenditures.

Outstanding balances under the 2014 Credit Facility would incur interest at the Secured Overnight Financing Rate (“SOFR”) as administered by the Federal Reserve Bank of New York, or a successor administrator of the SOFR (or the applicable benchmark replacement), plus 2.00 % or a base rate plus 1.00 %, subject to certain adjustments.

The Company incurs a commitment fee of 0.30 % assessed on the daily average undrawn portion of revolving and DDTL commitments.

Applicable interest and commitment fees are payable quarterly or more or less frequently in certain circumstances.

The 2014 Credit Facility also allows for an incremental loan facility of additional term loans or revolving loans in an aggregate principal amount up to the amount and upon the terms and conditions set forth therein with one or more existing or new lenders upon mutual agreement between the Company and such lenders.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

$ 400.0 million to fund working capital and general corporate expenditures.

Outstanding balances under the 2014 Credit Facility incur interest at the London Interbank Offered Rate (“LIBOR”), or the applicable benchmark replacement rate, plus a margin of 2.75 % per annum, subject to certain adjustments, and the Company incurs a commitment fee of 0.375 % assessed on the daily average undrawn portion of revolving commitments.

Interest and commitment fees are payable at the end of an interest period or at each three-month interval if the interest period is longer than three months.

The 2014 Credit Facility, as amended, matures on June 4, 2023 .

As of December 31, 2021, the Company had no amounts outstanding and a $ 400.0 million undrawn revolving credit facility.

As of December 31, 2020, the Company had $ 200.0 million in outstanding debt.

Notes to Consolidated Financial Statements (continued)

As of December 31, 2022, the Company had no outstanding debt balances and an aggregate of $ 950.0 million undrawn of revolving and DDTL commitments under the 2014 Credit Facility.

The 2014 Credit Facility contains customary representations and warranties, and certain financial and nonfinancial covenants, including but not limited to maintaining minimum liquidity of $ 50.0 million, and certain limitations on liens and indebtedness.

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Certain lease agreements contain renewal options, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate.

The Company’s leases have remaining terms up to March 2032 with renewal terms up to June 2033 or options to terminate leases within the next six years.

The Company's leases have remaining terms up to December 2033, some of which include one or more options to extend the leases up to June 2033.

Additionally, some lease contracts include termination options within the next five years .

Supplemental balance sheet information related to lease liabilities at December 31, 2022 and 2021 was as follows (in thousands):

As of December 31,

Lease-Related Assets and Liabilities

Financial Statement Line Items

Operating leases

Operating lease right-of-use assets

Total right-of-use

Lease-Related Assets and Liabilities Financial Statement Line Items 2022 2021

Right-of-use assets:

Operating leases Operating lease right-of-use assets $ 200,240 $ 216,898

Total right-of-use assets $ 200,240 $ 216,898

Lease liabilities:

Operating leases

Operating lease liabilities

Operating leases Operating lease liabilities $ 45,099 $ 39,927

Operating lease liabilities, noncurrent 204,305 220,146

7 unchanged sentences

Total lease expense, net $ 52,737 $ 43,056

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Variable lease costs are primarily related to payments made to lessors for common area maintenance, property taxes, insurance, and other operating expenses.

1 unchanged sentence

Finance lease costs were not material for the years ended December 31, 2022 and 2021.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Maturities of operating lease liabilities as of December 31, 2022 were as follows (in thousands):

As of December 31, 2022

Operating Lease

Operating Lease Commitments Less:

Sublease Income Net Lease Commitments

Year ended December 31,

2023 $ 58,843 $ 18,458 $ 40,385

2024 54,672 16,593 38,079

2025 50,910 14,356 36,554

2026 39,173 13,748 25,425

2027 27,548 14,423 13,125

Thereafter 82,738 43,231 39,507

Total undiscounted liabilities 313,884 120,809 193,075

Leases not yet commenced ( 8,446 ) — ( 8,446 )

Imputed interest ( 56,034 ) — ( 56,034 )

Total operating lease liabilities $ 249,404 $ 120,809 $ 128,595

The weighted-average remaining lease term related to the Company’s operating lease liabilities as of December 31, 2021 and 2020 was 6.9 years and 8.1 years, respectively.

The weighted-average remaining lease term related to the Company’s operating lease liabilities as of December 31, 2022 and 2021 was 6.5 and 6.9 years, respectively.

The weighted-average discount rate related to the Company’s operating lease liabilities as of December 31, 2022 and 2021 was 6.25 % and 6.03 %, respectively.

The following table sets forth the supplemental information related to the Company’s operating leases for the year ended December 31, 2021 (in thousands):

The following table sets forth the supplemental information related to the Company's operating leases for the years ended December 31, 2022 and 2021 (in thousands):

Years Ended December 31,

Cash paid for operating lease liabilities $ 53,772 $ 49,228

Lease liabilities arising from obtaining right-of-use

Under ASC 840, during the year ended December 31, 2019, net rent expense was $ 38.5 million, which included sublease income of $ 14.8 million.

Lease liabilities arising from obtaining right-of-use assets

$ 28,169 $ 34,606

As of December 31, 2022, the Company has additional operating leases for office space that have not yet commenced with future lease obligations of $ 8.4 million.

These operating leases will commence in 2023 with lease terms of up to ten years .

Commitments and Contingencies

Letters of Credit and Guarantees

The Company had irrevocable standby letters of credit and guarantees, including bank guarantees, outstanding in the amounts of $ 76.2 million and $ 116.8 million as of December 31, 2021 and 2020, respectively, which were fully collateralized.

The Company is required to maintain these letters of credit and guarantees primarily in connection with operating lease agreements, certain customer contracts, and other guarantees and financing arrangements.

As of December 31, 2021, these letters of credit and guarantees had expiration dates through August 2028.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Purchase Commitments

In December 2019, the Company entered into, and subsequently amended, a minimum annual commitment to purchase cloud hosting services of at least $ 1.49 billion over six contract years, with an optional carryover period through June 30, 2029, in exchange for various discounts on such services.

In May 2022, the agreement was amended to extend the second contract year from June 30, 2022 to September 30, 2022 and the optional carryover period from June 30, 2029 to September 30, 2029.

If the spend does not meet the minimum annual commitment each year or at the end of the term, the Company is obligated to make a return payment.

If the difference is greater than $ 30.0 million for each of the first three contract years or $ 50.0 million for each of the contract years thereafter (“relief amounts”), the Company has the option to pay the respective relief amount for that year for services to be utilized in the future and the excess amount of the difference above the relief amount would be added to the minimum annual commitment of the following year through the end of the contract.

As of December 31, 2021, the Company had satisfied $ 72.8 million of its $ 167.0 million commitment for the contract year ending June 30, 2022.

In June 2020, the Company entered into an additional commitment to purchase at least $ 45.0 million of cloud hosting services over a period of five years commencing on June 1, 2020 and ending on May 31, 2025.

If the spend commitment is not met at the end of the term, the Company is obligated to pay the full amount of the outstanding balance (“shortfall payment”).

The shortfall payment may be applied as a prepayment against consumption during an additional twelve-month coverage period expiring on May 31, 2026, at which time any unused amount would be forfeited.

As of December 31, 2021, the Company had satisfied $ 10.4 million of its commitment.

Investment Commitments

The Company approved and entered into certain Investment Agreements with Investees, as further discussed in Note 4.

Investments and Fair Value

Measurements—Investments.

of December 31, 2021, the Company had outstanding investment commitments, subject to the applicable terms and conditions, to purchase a total

of 13.5 million shares for an aggregate purchase price of $ 134.5 million.

The closings of certain of such Investments are contingent upon the completion of a proposed business combination between the applicable Investee and other applicable parties.

The following table presents details related to the Company’s investment commitments outstanding as of December 31, 2021 (in thousands):

Agreement Date

July 18, 2021

July 27, 2021

August 2, 2021

September 8, 2021

Electric vehicle charging company

September 10, 2021

Rigetti & Co, Inc.

October 6, 2021

Telecommunications company

October 6, 2021

Rubicon Technologies

December 15, 2021

Commercial contract contains termination for convenience clauses in the event the proposed business combination and/or the Company’s proposed investment is not completed.

The Company’s investment closed after December 31, 2021.

See further discussion in Note 15.

Subsequent Events.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

As of December 31, 2022, the Company had satisfied $ 40.9 million of its $ 199.0 million commitment for the contract year ending September 30, 2023.

Litigation and Legal Proceedings

10 unchanged sentences

breach of contract;

breach, leak, or misuse of personal data or confidential information;

breach, leak, or misuse of

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

personal data or confidential information;

government procurement;

5 unchanged sentences

The complaint alleges tortious interference with prospective economic advantage and civil conspiracy in connection with a potential sale of stock by the KT4 Plaintiffs to a third party.

The KT4 Plaintiffs seek compensatory and punitive damages, interest, fees, and costs.

The Company believes the lawsuit brought by the KT4 Plaintiffs is without merit and is vigorously defending itself against it.

Given the uncertainty of litigation it may be reasonably possible that the Company will incur a loss with regards to the matter;

however, it cannot currently estimate a range of possible losses.

Accordingly, the Company is unable at this time to estimate the overall effects that may result from the remaining case on its financial condition, results of operations, or cash flows.

The KT4 Plaintiffs sought compensatory and punitive damages, interest, fees, and costs.

On June 27, 2022, the Company and the KT4 Plaintiffs entered into an agreement to settle the litigation and certain other matters.

The Company has paid the amount of the settlement in full and has received the insurance reimbursement as of December 31, 2022.

This matter is now concluded.

On September 15, 2022, October 25, 2022, and November 4, 2022, putative securities class action complaints were filed in the United States District Court for the District of Colorado, captioned Cupat v.

Palantir Technologies Inc., et al.

1:22-cv-02384, Allegheny County Employees’ Retirement System v.

Palantir Technologies, Inc., et al., Case No.

1:22-cv-02805, and Shijun Liu, Individually and as Trustee of the Liu Family Trust 2019 v.

Palantir Technologies Inc., et al., Case No.

1:22-cv-02893, respectively, naming the Company and certain current and former officers and directors as defendants.

The suits allege false and misleading statements about our business and prospects, and purport to allege claims under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Securities Act of 1933, as amended (the “Securities Act”), and seek unspecified damages and remedies under Sections 10(b), 20(a), and 20(A) of the Exchange Act and Sections 11 and 15 of the Securities Act.

These three actions subsequently were consolidated as Cupat v.

Palantir Technologies Inc., et al.

, Lead Civil Action No.

1:22-cv-02834-CNS-SKC, consolidated with civil actions 1:22-cv-02805-CNS-SKC and 1:22-cv-02893-CNS-SKC.

On November 21, 2022 and January 13, 2023, stockholder derivative actions were filed in the United States District Court for the District of Colorado, captioned Li v.

22-cv-3028 and Parmenter v.

23-cv-118, and on January 27, 2023, a stockholder derivative action was filed in the United States District Court for the District of Delaware captioned Miao v.

1:23-cv-00103-MN, each against certain current and former officers and directors asserting breach of fiduciary duty and related claims relating to the allegations of the securities class action complaints and seek unspecified damages and injunctive remedies under Section 14(a) of the Exchange Act and Delaware law.

Because the litigation is in early stages, the Company is unable to estimate the reasonably possible loss or range of loss, if any, that may result from these matters.

As of December 31, 2022 and 2021, the Company was not aware of any currently pending legal matters or claims, individually or in the aggregate, that are expected to have a material adverse impact on its consolidated financial statements.

Letters of Credit and Guarantees

The Company had irrevocable standby letters of credit and guarantees, including bank guarantees, outstanding in the amounts of $ 28.8 million and $ 76.2 million as of December 31, 2022 and 2021, respectively, which were fully collateralized.

As of December 31, 2022, these letters of credit and guarantees had expiration dates through August 2031.

Warranties and Indemnification

The Company generally provides a warranty for its software products and services and a service level agreement (“SLA”) for the Company’s performance of software operations via its O&M services to its customers.

and the Company includes O&M services as part of its subscription and license agreements to support this warranty and maintain the operability of the software.

The Company’s products are generally warranted to perform substantially as described in the associated product documentation during the subscription term or for a period of up to 90 days where the software is hosted by the customer, and the Company includes O&M services as part of its subscription and license agreements to support this warranty and maintain the operability of the software.

The Company’s services are generally warranted to be performed in a professional manner and by an adequate staff with knowledge about the products.

2 unchanged sentences

The Company has not recorded warranty expense or related accruals as of December 31, 2022 and 2021.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

The Company generally agrees to indemnify its customers against legal claims that the Company’s software products infringe certain third-party intellectual property rights and accounts for its indemnification obligations.

In the event of such a claim, the Company is generally obligated to defend its customer against the claim and to either settle the claim at the Company’s expense or pay damages that the customer is legally required to pay to the third-party claimant.

In the event of such a claim, the Company is generally obligated to defend its customer against the claim and to either settle the claim at the Company’s expense

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

or pay damages that the customer is legally required to pay to the third-party claimant.

In addition, in the event of an infringement, the Company generally agrees to secure the right for the customer to continue using the infringing product;

4 unchanged sentences

The Company has obligations under certain circumstances to indemnify each of the defendant directors and certain officers against judgments, fines, settlements, and expenses related to claims against such directors and certain officers and otherwise to the fullest extent permitted under the law and the Company’s bylaws and Amended and Restated Certificate of Incorporation.

Stockholders’ Equity (Deficit)

During September 2020, the Company filed an amended and restated certificate of incorporation, which became effective on the date of its filing.

The amended and restated certificate of incorporation authorized the issuance of a total of 20,000,000,000 shares of Class A common stock, 2,700,000,000 shares of Class B common stock, and 1,005,000 shares of Class F common stock.

Additionally, each of the Founders exchanged 335,000 shares of their Class B common stock for an equivalent number of shares of Class F common stock.

The Company’s Class A, Class B, and Class F common stock all have the same rights, except with respect to voting and conversion rights.

Stockholders’ Equity

The Company’s amended and restated certificate of incorporation authorizes the issuance of a total of 20,000,000,000 shares of Class A common stock, 2,700,000,000 shares of Class B common stock, and 1,005,000 shares of Class F common stock.

In September 2020, each of the Founders exchanged 335,000 shares of their Class B common stock for an equivalent number of shares of Class F common stock.

The Company’s Class A, Class B, and Class F common stock (collectively, the “common stock”) all have the same rights, except with respect to voting and conversion rights.

Class A and Class B common stock have voting rights of 1 and 10 votes per share, respectively.

The Class F common stock has the voting rights generally described herein and each share of Class F common stock is convertible at any time, at the option of the holder thereof, into one share of Class B common stock.

All shares of Class F common stock are held in a voting trust established by the Founders.

The Class F common stock generally give the Founders the ability to control up to

49.999999 % of the total voting power of the Company’s capital stock, so long as the Founders and certain of their affiliates collectively meet a minimum ownership threshold, which was

100.0 million of the Company’s equity securities as of December 31, 2021.

All shares of Class F common stock are held in a voting trust established by Stephen Cohen, Alexander Karp, and Peter Thiel (the “Founders”).

The Class F common stock generally gives the Founders the ability to control up to 49.999999 % of the total voting power of the Company’s capital stock, so long as the Founders and certain of their affiliates collectively meet a minimum ownership threshold, which was 100.0 million of the Company's equity securities as of December 31, 2022.

Holders of the common stock are entitled to dividends when, as, and if declared by the Company’s Board of Directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends.

No dividends have been declared as of December 31, 2022.

During the year ended December 31, 2020, the Company sold a total of 206,500,523 shares of its Class A common stock at a price of $ 4.65 per share, for aggregate proceeds of $ 942.5 million, net of issuance costs of $ 17.7 million.

Included in these sales were 107,526,881 shares of Class A common stock sold to SOMPO, a partner investor in the Company’s equity method investee, Palantir Japan.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

The following represented the total authorized, issued, and outstanding shares for each class of common stock (in thousands):

As of December 31, 2021

As of December 31, 2020

As of December 31, 2022 As of December 31, 2021

Authorized Issued and Outstanding Authorized Issued and Outstanding

Class A Common Stock 20,000,000 1,995,414 20,000,000 1,926,589

1 unchanged sentence

Class F Common Stock 1,005 1,005 1,005 1,005

Total 22,701,005 2,099,075 22,701,005 2,027,474

Stock-Based Compensation

1 unchanged sentence

In August 2020, the Company’s Board of Directors approved the 2020 Executive Equity Incentive Plan (the “Executive Equity Plan”).

The Executive Equity Plan permitted the granting of NSOs and RSUs to the Company’s employees, consultants, and directors.

The Executive Equity Plan permitted the granting of nonstatutory stock options (“NSOs”) and RSUs to the Company’s employees, consultants, and directors.

A total of 165,900,000 shares of the Company’s Class B common stock were reserved for issuance under the Executive Equity Plan.

2 unchanged sentences

However, the Executive Equity Plan will continue to govern the terms and conditions of the outstanding awards previously granted under the Executive Equity Plan.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

2020 Equity Incentive Plan

In September 2020, prior to the Direct Listing, the Company’s Board of Directors approved the 2020 Equity Incentive Plan (“2020 Plan”).

The 2020 Plan provides for the grant of ISOs, NSOs, restricted stock, RSUs, SARs,

and performance awards to the Company’s employees, directors, and consultants.

The 2020 Plan provides for the grant of incentive stock options (“ISOs”), NSOs, restricted stock, RSUs, stock appreciation rights (“SARs”), and performance awards to the Company’s employees, directors, and consultants.

A total of 150,000,000 shares of the Company’s Class A common stock were initially reserved for issuance pursuant to the 2020 Plan.

In addition, the number of shares of Class A common stock reserved for issuance under the 2020 Plan includes certain shares of common stock subject to awards under the 2010 Plan and Executive Equity Plan in the case of certain occurrences such as expirations, terminations, exercise and tax-related

withholding, or failures to vest.

In addition, the number of shares of Class A common stock reserved for issuance under the 2020 Plan includes certain shares of common stock subject to awards under the 2010 Plan and Executive Equity Plan in the case of certain occurrences, such as expirations, terminations, exercise and tax-related withholding, or failures to vest.

Shares of Class B common stock added to the 2020 Plan from the 2010 Plan or Executive Equity Plan are reserved for issuance under the Company’s 2020 Plan as Class A common stock.

4 unchanged sentences

Under the 2020 Plan, the exercise price of options granted is generally at least equal to the fair market value of the Company’s Class A common stock on the date of grant.

The term of an ISO generally may not exceed

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

The term of an ISO generally may not exceed ten years .

Additionally, the exercise price of any ISO granted to a 10 % stockholder shall not be less than 110 % of the fair market value of the common stock on the date of grant, and the term of such option grant shall not exceed five years .

2 unchanged sentences

The following table summarizes stock option activity for the year ended December 31, 2022 (in thousands, except per share amounts):

Intrinsic Value

Options Outstanding Weighted-Average Exercise Price Per Share

Weighted-Average

Remaining Contractual Life (years) Aggregate Intrinsic Value

Balance as of December 31, 2021 349,952 $ 7.81 9.06 $ 3,638,685

4 unchanged sentences

The aggregate intrinsic value of options outstanding, and vested and exercisable is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock as of December 31, 2022.

The aggregate intrinsic value of options exercised during the years ended December 31, 2021, 2020, and 2019 was $ 3.8 billion, $ 974.2 million, and $ 90.7 million, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock on the exercise date.

There were no

options granted during the year ended December 31, 2021.

The weighted average grant-date fair value of options granted during the years ended December 31, 2020 and 2019 was $ 2.57 and $ 3.67 per share, respectively.

The aggregate intrinsic value of options exercised during the years ended December 31, 2022, 2021, and 2020 was $ 112.3 million, $ 3.8 billion, and $ 974.2 million, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock on the exercise date.

There were no options granted during the year ended December 31, 2022 and 2021.

The weighted average grant-date fair value of options granted during the year ended December 31 2020 was $ 2.57 per share.

The total grant-date fair value of options that vested during the years ended December 31, 2022, 2021, and 2020 was $ 170.8 million, $ 189.5 million, and $ 214.7 million, respectively .

As of December 31, 2021, the unrecognized expense related to options outstanding was $ 888.6 million, which is expected to be recognized over a weighted-average service period of eight years .

As of December 31, 2022, the total unrecognized stock-based compensation expense related to options outstanding was $ 721.9 million, which is expected to be recognized over a weighted-average service period of eight years .

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (continued)

Determination of Stock Option Fair Value

The estimated grant-date fair value of all the Company’s stock-based option awards was calculated using the Black-Scholes option-pricing model, based on the below assumptions.

There were no options granted during the year ended December 31, 2021.

Years Ended December 31,

There were no options granted during the years ended December 31, 2022 and 2021.

Year Ended December 31, 2020

Fair value of common stock $ 7.60

4 unchanged sentences

The following table summarizes the RSU activity for the year ended December 31, 2022 (in thousands, except per share amounts):

Weighted Average

Fair Value per

RSUs Outstanding Weighted Average Grant Date Fair Value per Share

RSUs unvested and outstanding as of December 31, 2021 153,749 $ 9.56

RSUs granted 33,673 10.24

RSUs vested and converted to shares ( 51,941 ) 8.73

RSUs canceled ( 9,055 ) 9.78

7 unchanged sentences

During the year ended December 31, 2020, the Company recognized $ 940.0 million in stock-based compensation expense related to RSUs, of which $ 769.5 million was recognized upon the Company's Direct Listing which satisfied the performance-based vesting condition.

No compensation expense related to RSUs was recognized for the year ended December 31, 2019 as the performance-based vesting condition was not achieved.

The total grant-date fair value of RSUs vested during the years ended December 31, 2021 and 2020 was $ 421.0 million and $ 531.9 million.

The total grant-date fair value of RSUs vested during the years ended December 31, 2022, 2021, and 2020 was $ 453.2 million, $ 421.0 million, and $ 531.9 million.

As of December 31, 2022, the total unrecognized stock-based compensation expense related to the RSUs outstanding was $ 770.3 million, which is expected to be recognized over a weighted-average service period of three years .

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (continued)

Stock-based Compensation Expense

1 unchanged sentence

Years Ended December 31,

2022 2021 2020

Cost of revenue $ 44,061 $ 68,546 $ 139,627

3 unchanged sentences

Total stock-based compensation expense $ 564,798 $ 778,215 $ 1,270,702

The Company did no t recognize any tax benefits related to stock-based compensation expense during the year ended December 31, 2021 ,

and it recognized tax benefits of $ 18.2 million and $ 6.4 million during the years ended December 31, 2020 and 2019, respectively.

The Company did not recognize any tax benefits related to stock-based compensation expense during the years ended December 31, 2022 or 2021, and it recognized tax benefits of $ 18.2 million during the year ended December 31, 2020.

Loss before provision for (benefit from) income taxes consisted of the following (in thousands):

Years Ended December 31,

2022 2021 2020

United States $ ( 402,834 ) $ ( 514,200 ) $ ( 1,203,682 )

Foreign 41,807 25,706 24,655

Loss before provision for (benefit from) income taxes $ ( 361,027 ) $ ( 488,494 ) $ ( 1,179,027 )

1 unchanged sentence

Years Ended December 31,

2022 2021 2020

Federal $ — $ — $ —

State 765 ( 88 ) 500

Foreign 9,476 ( 11,343 ) 7,249

Total current provision 10,241 ( 11,431 ) 7,749

Federal — ( 111 ) —

Foreign ( 174 ) 43,427 ( 20,385 )

Total deferred provision ( 174 ) 43,316 ( 20,385 )

1 unchanged sentence

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (continued)

A reconciliation of the expected tax provision (benefit) at the statutory federal income tax rate to the Company’s recorded tax provision (benefit) consisted of the following (in thousands):

Years Ended December 31,

2022 2021 2020

Expected tax (benefit) at U.S.

4 unchanged sentences

Stock-based compensation 1,374 ( 817,839 ) ( 194,730 )

Non-deductible

officers’ compensation

Non-deductible officers’ compensation

40,629 428,682 76,093

Change in valuation allowance 49,833 616,572 373,632

Base Erosion Anti-Abuse Tax and related elections 25,200 — —

Other 1,571 863 9,890

Total provision for (benefit from) income taxes $ 10,067 $ 31,885 $ ( 12,636 )

For the year ended December 31, 2022, the Company recorded a provision for income taxes of $ 10.1 million compared to $ 31.9 million for the year ended December 31, 2021, primarily due to the prior year establishment of a full valuation allowance against its U.K.

deferred tax assets during the fourth quarter of 2021 partially offset by permanent differences associated with U.S.

Base Erosion and Anti Abuse Tax elections.

The Company maintains a full valuation allowance against its U.S.

federal and state and U.K.

deferred tax assets.

For the year ended December 31, 2021, the Company recorded a provision for income taxes compared to a benefit from income taxes for the year ended December 31, 2020, primarily due to the establishment of a full valuation allowance against its U.K.

deferred tax assets during the fourth quarter of 2021, partially offset by a one-time

benefit related to the refund of the Company’s U.K.

deferred tax assets during the fourth quarter of 2021, partially offset by a one-time benefit related to the refund of the Company’s U.K.

2019 taxes paid based on the tax election to carry back the 2020 U.K.

net tax operating losses.

For the year ended December 31, 2020, the Company recorded a benefit from income taxes compared to a provision for income taxes for the year ended December 31, 2019, primarily due to decreases in profits from our international operations and foreign benefits from stock-based compensation.

Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis using enacted tax rates in effect for the year in which the differences are expected to reverse.

2 unchanged sentences

Net operating loss carryforwards $ 1,436,957 $ 1,497,774

Capitalized research and experimental expenses 70,839 —

Reserves and accruals 76,905 43,348

4 unchanged sentences

Gross deferred tax assets 2,102,722 2,025,650

Outside basis difference ( 6,512 ) —

Acquisition related intangibles ( 10,225 ) —

Right-of-use assets ( 46,295 ) ( 49,665 )

Total net deferred tax assets before valuation allowance 2,039,690 1,975,985

1 unchanged sentence

Net deferred tax assets $ ( 11,965 ) $ ( 1,580 )

The Company performs an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable.

Such assessment is required on a jurisdiction by

The Company performs an assessment of both positive and negative evidence, including its earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies when determining whether it is more likely than not that deferred tax assets are recoverable.

Such assessment is required on a jurisdiction by jurisdiction basis.

The Company reviews the recognition of deferred tax assets on a regular basis to determine if

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

jurisdiction basis.

The Company reviews the recognition of deferred tax assets on a regular basis to determine if realization of such assets is more likely than not.

Notes to Consolidated Financial Statements (continued)

realization of such assets is more likely than not.

A valuation allowance is provided when it is more likely than not that such assets will not be realized.

For the year ended December 31, 2021, the provision for income taxes increased compared to the year ended December 31, 2020, due to the Company’s valuation allowance against its U.K.

deferred tax assets.

The Company maintains a full valuation allowance against its U.S.

federal and state deferred tax assets.

Additionally, due to the Company’s current and projected U.K.

tax losses, the Company has determined its U.K.

deferred tax assets are currently not more likely than not to be realized, and accordingly, the Company established a full valuation allowance against its total net U.K.

deferred tax assets.

Provisions enacted by the 2017 Tax Cuts and Jobs Act related to the capitalization for tax purposes of research and experimental (“R&E”) expenditures became effective on January 1, 2022.

Beginning January 1, 2022, all U.S.

based R&E expenditures must be capitalized and amortized over five years and 15 years, respectively.

Beginning January 1, 2022, the Company began capitalizing and amortizing R&E expenditures over five years for domestic research and 15 for international research rather than expensing these costs as incurred.

As a result, the Company has recorded a deferred tax asset of $ 70.8 million related to the capitalization requirement.

The valuation allowance totaled $ 2.1 billion and $ 2.0 billion for the years ended December 31, 2022 and 2021, respectively.

The valuation allowance on our net deferred tax assets increased by $ 74.1 million and $ 757.5 million during the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, the Company had U.S.

4 unchanged sentences

The state net operating loss carryforwards will expire at various dates beginning in 2023 through 2041 if not utilized.

As of December 31, 2021, the Company has net operating losses in the U.K.

of approximately $ 333.0 million.

net operating

losses can be carried forward indefinitely.

Additionally, as of December 31, 2022, the Company had federal and California research and development credits of approximately $ 230.2 million and $ 91.4 million, respectively.

As of December 31, 2020, the Company

had federal and California research and development credits of approximately $

85.1 million and $

66.0 million, respectively.

As of December 31, 2021, the Company had federal and California research and development credits of approximately $ 184.1 million and $ 68.7 million, respectively.

The federal research and development credits will begin to expire in the years 2027 through 2041 if not utilized and the California research and development credits have no expiration date.

Utilization of the net operating losses and research and development credit carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code (“IRC”) of 1986 and similar state provisions.

The annual limitation may result in the expiration of the net operating loss and research and development credit carryforwards before utilization.

As of December 31, 2021, the Company had an immaterial amount of earnings indefinitely reinvested outside the U.S.

As of December 31, 2022, the Company had net operating losses in the United Kingdom of approximately $ 303.4 million.

net operating losses can be carried forward indefinitely.

As of December 31, 2022, the Company had an immaterial amount of earnings from its wholly-owned non-U.S.

subsidiaries indefinitely reinvested outside the U.S.

The Company does not intend to repatriate these earnings and, accordingly, the Company does not provide for U.S.

income taxes and foreign withholding tax on these earnings.

The Company recorded $ 6.5 million of deferred tax liability on the outside basis differences in its investment in Palantir Technologies Japan, Kabushiki Kaisha (“Palantir Japan”) that is unrelated to unremitted earnings.

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy.

Based on the Company’s current analysis of the provisions, the Company does not believe this legislation will have a material impact on its consolidated financial statements.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Uncertain Tax Positions

1 unchanged sentence

Years Ended December 31,

2022 2021 2020

Unrecognized tax benefit beginning of year $ 65,070 $ 75,557 $ 31,702

5 unchanged sentences

Unrecognized tax benefit end of year $ 81,904 $ 65,070 $ 75,557

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2022, 2021, and 2020, the Company recorded gross unrecognized tax benefits of $ 81.9 million, $ 65.1 million, and $ 75.6 million, respectively, that, if recognized, would not benefit the Company’s effective tax rate due to the valuation allowance that currently offsets deferred tax assets.

1 unchanged sentence

It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense.

The Company has accrued immaterial interest and penalties related to uncertain tax positions as of December 31, 2021 and has not accrued interest and

penalties related to uncertain tax positions as of December 31, 2020.

The Company has recorded immaterial interest and penalties related to uncertain tax positions as of December 31, 2022 and 2021.

The Company files U.S.

3 unchanged sentences

Net Loss Per Share Attributable to Common Stockholders

The following table presents the calculation of basic and diluted net loss per share attributable to

common stockholders (in thousands, except share and per share amounts):

The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share amounts):

As of December 31,

Distributed earnings attributable to participating securities

2022 2021 2020

Net loss attributable to common stockholders $ ( 373,705 ) $ ( 520,379 ) $ ( 1,166,391 )

7 unchanged sentences

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

The following outstanding potentially dilutive common stock equivalents have been excluded from the computation of

diluted net loss per share attributable to common stockholders for the periods presented due to their anti-dilutive effect (in thousands):

Notes to Consolidated Financial Statements (continued)

The following outstanding potentially dilutive common stock equivalents have been excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented due to their anti-dilutive effect (in thousands):

As of December 31,

2022 2021 2020

Options and SARs issued and outstanding 326,913 349,977 535,792

2 unchanged sentences

Growth units outstanding — — 3,583

Redeemable convertible preferred stock

Convertible preferred stock

Warrants to purchase redeemable convertible and convertible preferred stock

Total 466,381 516,768 743,313

Segment and Geographic Information

7 unchanged sentences

Years Ended December 31,

2022 2021 2020

Government $ 1,071,776 $ 897,356 $ 610,198

Commercial 834,095 644,533 482,475

Total revenue $ 1,905,871 $ 1,541,889 $ 1,092,673

Years Ended December 31,

2022 2021 2020

Amount % Amount % Amount %

Contribution:

Government $ 620,677 58 % $ 541,883 60 % $ 346,937 57 %

Commercial 414,496 50 % 357,546 55 % 247,320 51 %

Total contribution $ 1,035,173 54 % $ 899,429 58 % $ 594,257 54 %

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (continued)

The reconciliation of contribution to loss from operations is as follows (in thousands):

Years Ended December 31,

2022 2021 2020

Loss from operations $ ( 161,201 ) $ ( 411,046 ) $ ( 1,173,679 )

Research and development expenses (1)

265,808 237,189 203,597

General and administrative expenses (1)

365,768 295,071 293,637

Total stock-based compensation expense 564,798 778,215 1,270,702

5 unchanged sentences

Years Ended December 31,

2022 2021 2020

Amount % Amount % Amount %

United States $ 1,161,416 61 % $ 879,156 57 % $ 573,549 52 %

1 unchanged sentence

Rest of world (1)

523,513 27 % 489,371 32 % 386,697 36 %

Total revenue $ 1,905,871 100 % $ 1,541,889 100 % $ 1,092,673 100 %

No other country represents 10 % or more of total revenue for the years ended December 31, 2021, 2020, or 2019.

(1) No other country represented 10 % or more of total revenue for the years ended December 31, 2022 , 2021, or 2020 .

Property and equipment, net is attributed to the Company’s office locations as follows (in thousands, except percentages):

As of December 31,

Amount % Amount %

Property and equipment, net:

United States $ 46,599 67 % $ 18,728 60 %

Japan 13,318 19 % 1,340 4 %

United Kingdom 6,746 10 % 8,375 27 %

1 unchanged sentence

Total property and equipment, net $ 69,170 100 % $ 31,304 100 %

Business Combinations

On November 8, 2022, the Company gained the right to majority representation on the board of directors of Palantir Japan, thereby obtaining a controlling interest.

Prior to obtaining a controlling interest, the Company accounted for its 50 % ownership in Palantir Japan as an equity method investment, which was created to distribute Palantir platforms to the Japanese market.

This transaction was accounted for as a “step acquisition” (as defined by U.S.

GAAP), as such, the Company remeasured its pre-existing equity interest in Palantir Japan immediately prior to the completion of the acquisition to its estimated fair value.

The results of Palantir Japan have been included in the Company’s consolidated financial statements since the acquisition date, with the portion outside of its control forming a noncontrolling interest.

The fair value of Palantir Japan on the acquisition date totaled $ 149.0 million, which included the Company’s equity interest immediately prior to the acquisition of $ 74.5 million and the noncontrolling interest of $ 74.5 million.

The amounts recognized

Palantir Technologies Inc.

Notes to Consolidated Financial Statements

Subsequent Events

From January 1, 2022 to the date of this filing, the Company purchased

million shares for an aggregate purchase price of

which were reflected as commitments in Note 9.

Commitments and Contingencies- Investment Commitments

as of December 31, 2021,

as set forth in the following table (in thousands):

Investment Amount

Total investments

Notes to Consolidated Financial Statements (continued)

of assets acquired and liabilities assumed as of the acquisition date included:

cash of $ 66.7 million;

goodwill of $ 36.1 million;

intangible assets of $ 34.7 million related to customer relationships, reacquired rights, and backlog;

$ 32.5 million of other identifiable assets;

and $ 21.0 million of net liabilities.

The intangible assets are reported in other assets and are being amortized over a period of two to seven years in accordance with the underlying pattern of economic benefit reflected by the future net cash flows.

Goodwill is reported in other assets and is primarily attributed to the value expected from synergies resulting from the Palantir Japan acquisition.

None of the goodwill recognized is expected to be deductible for income tax purposes.

The acquisition-date fair value of the noncontrolling and controlling equity interest was determined using a combination of the income and market approaches.

With respect to intangible assets, the estimated fair values were determined based on the excess earnings method of the income approach.

These models used primarily Level 3 inputs, including estimates of projected revenue growth rates, projected EBITDA margins, and an estimated discount rate.

In accordance with accounting for a step acquisition, the Company recognized a gain of $ 44.3 million as a result of remeasuring its pre-existing interest in Palantir Japan held immediately before the business combination, which is included in other income (expense), net in the consolidated statements of operations.

The amounts of Palantir Japan’s revenue and net income included in the Company’s consolidated statement of operations for the year ended December 31, 2022 were immaterial.

This acquisition did not have a material impact on the Company’s reported revenue or net loss amounts for any period presented;

therefore, historical and pro forma disclosures have not been presented.

Intangible Assets and Goodwill

Intangible assets subject to amortization that are not fully amortized are as follows (in thousands):

Weighted average useful life As of December 31, 2022 As of December 31, 2021

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

Customer relationships 4.85 $ 10,400 $ ( 347 ) $ 10,053 $ — $ — $ —

Reacquired rights 6.85 17,618 ( 419 ) 17,199 — — —

Backlog 1.85 6,700 ( 558 ) 6,142 — — —

Other 1.27 5,717 ( 3,572 ) 2,145 5,717 ( 1,881 ) 3,836

Total intangible assets $ 40,436 $ ( 4,897 ) $ 35,539 $ 5,717 $ ( 1,881 ) $ 3,836

Amortization expense of intangible assets was not material for the years ended December 31, 2022 and 2021.

As of December 31, 2022, expected amortization expense for the unamortized finite-lived intangible assets for the next five years and thereafter is as follows (in thousands):

Year ended December 31, Amount

Thereafter 4,614

Total $ 35,539

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Changes in the carrying amount of goodwill, which is reported in the commercial segment, for the year ended December 31, 2022 are as follows (in thousands):

Goodwill at December 31, 2021

Acquisitions 36,069

Goodwill at December 31, 2022

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data