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Item 8. Financial Statements and Supplementary Data

2024-02-20 compared with 2023-02-21 · 335 added, 362 removed, 751 unchanged (48% of the section changed)

3 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

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

Consolidated Statements of Comprehensive Income ( Loss )

Consolidated Statements of 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, 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”).

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

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Revenue Recognition

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”);

Description of the Matter As discussed in Note 2 to the consolidated financial statements, the Company generates revenue from the sale of subscriptions to access its software platforms 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”);

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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 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.

In addition, 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.

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

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.

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, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 20, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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Cash and cash equivalents $ 831,047 $ 2,598,540

Restricted cash 16,244 36,628

Accounts receivable, net 258,346 190,923

Marketable securities 2,843,132 35,135

Accounts receivable, net 364,784 258,346

Prepaid expenses and other current assets 99,655 149,556

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Property and equipment, net 47,758 69,170

Restricted cash, noncurrent 12,551 39,612

Operating lease right-of-use assets 182,863 200,240

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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

20,000,000 Class A shares authorized as of December 31, 2023 and 2022;

2,096,982 and 1,995,414 shares issued and outstanding as of December 31, 2023 and 2022, respectively;

2,700,000 Class B shares authorized as of December 31, 2023 and 2022;

102,141 and 102,656 shares issued and outstanding as of December 31, 2023 and 2022, respectively;

and 1,005 Class F shares authorized, issued, and outstanding as of December 31, 2023 and 2022

Additional paid-in capital 9,122,173 8,427,998

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

Accumulated other comprehensive income (loss), net 801 ( 5,333 )

Accumulated deficit ( 5,649,613 ) ( 5,859,438 )

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Total operating expenses 1,673,941 1,658,523 1,613,531

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

Income (loss) from operations 119,966 ( 161,201 ) ( 411,046 )

Interest income 132,572 20,309 1,607

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Other income (expense), net ( 11,977 ) ( 216,077 ) ( 75,415 )

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

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

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

Income (loss) before provision for income taxes 237,091 ( 361,027 ) ( 488,494 )

Provision for income taxes 19,716 10,067 31,885

Net income (loss) 217,375 ( 371,094 ) ( 520,379 )

Net income attributable to noncontrolling interests 7,550 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 )

Net loss per share attributable to common stockholders, diluted $ ( 0.18 ) $ ( 0.27 ) $ ( 1.20 )

Weighted-average shares of common stock outstanding used in computing net loss per share attributable to common stockholders, basic 2,063,793 1,923,617 977,722

Weighted-average shares of common stock outstanding used in computing net loss per share attributable to common stockholders, diluted 2,063,793 1,923,617 979,330

Net income (loss) attributable to common stockholders $ 209,825 $ ( 373,705 ) $ ( 520,379 )

Net earnings (loss) per share attributable to common stockholders, basic $ 0.10 $ ( 0.18 ) $ ( 0.27 )

Net earnings (loss) per share attributable to common stockholders, diluted $ 0.09 $ ( 0.18 ) $ ( 0.27 )

Weighted-average shares of common stock outstanding used in computing net earnings (loss) per share attributable to common stockholders, basic

2,147,446 2,063,793 1,923,617

Weighted-average shares of common stock outstanding used in computing net earnings (loss) per share attributable to common stockholders, diluted

2,297,927 2,063,793 1,923,617

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

Palantir Technologies Inc.

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

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2023 2022 2021

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

Net income (loss) $ 217,375 $ ( 371,094 ) $ ( 520,379 )

Other comprehensive income (loss)

Foreign currency translation adjustments 2,699 ( 2,984 ) 396

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

Net unrealized gain (loss) on available-for-sale securities 3,435 — —

Comprehensive income (loss) 223,509 ( 374,078 ) ( 519,983 )

Comprehensive income attributable to noncontrolling interests 7,550 2,611 —

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

Comprehensive income (loss) attributable to common stockholders $ 215,959 $ ( 376,689 ) $ ( 519,983 )

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

Consolidated Statements of Stockholders’ Equity

(in thousands)

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

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss, Net 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

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 — — — — — — — —

Issuance of Series D preferred stock upon net exercise of Series D preferred stock warrants — — 2,380 10,810 — — — — — — — —

Repurchase of common stock, held in treasury — — — — ( 808 ) — — 808 ( 3,777 ) — — ( 3,777 )

Retirement of treasury stock — — — — — ( 7 ) ( 42,665 ) ( 7,201 ) 42,672 — — —

Issuance of common stock upon net exercise of common stock warrants — — — — 7,631 8 ( 8 ) — — — — —

Issuance of common stock, net of issuance costs — — — — 206,501 207 942,322 — — — — 942,529

Conversion of redeemable convertible preferred stock to common stock ( 4,017 ) ( 33,569 ) — — 4,017 4 33,565 — — — — 33,569

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

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

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

Issuance of common stock upon vesting of restricted stock units (“RSUs”) 50,350 50 ( 50 ) — — —

Issuance of common stock upon vesting of growth units 1,471 1 ( 1 ) — — —

Issuance of common stock upon net exercise of common stock warrants and other 4,664 6 1,706 — — 1,712

Stock-based compensation — — 779,296 — — 779,296

Settlement of employee loan accounted for as a modification to stock option — — — — ( 3,500 ) ( 4 ) ( 201 ) — — — — ( 205 )

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

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

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

(in thousands)

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

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

Shares Amount

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

Issuance of common stock upon vesting of growth units 1,471 1 ( 1 ) — — —

Issuance of common stock upon net exercise of common stock warrants and other 4,664 6 1,706 — — 1,712

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

Other comprehensive income — — — 396 — 396

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

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

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

Net income (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

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

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss), Net Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interests Total Equity

Shares Amount

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Other comprehensive loss — — — 6,134 — 6,134 — 6,134

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

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

Other, net — — — — — — 743 743

Net income — — — — 209,825 209,825 7,550 217,375

Balance as of December 31, 2023 2,200,128 $ 2,200 $ 9,122,173 $ 801 $ ( 5,649,613 ) $ 3,475,561 $ 85,404 $ 3,560,965

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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:

Net income (loss) $ 217,375 $ ( 371,094 ) $ ( 520,379 )

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

Depreciation and amortization 33,354 22,522 14,897

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Deferred income taxes ( 4,806 ) ( 174 ) 43,316

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

Noncash operating lease expense 47,019 40,309 33,821

Unrealized and realized (gain) loss from marketable securities, net 13,160 272,108 73,311

Noncash consideration ( 46,609 ) ( 15,537 ) —

Gain from step acquisition — ( 44,306 ) —

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Other noncurrent liabilities 58 ( 73 ) ( 3,185 )

Net cash provided by (used in) operating activities 223,737 333,851 ( 296,608 )

Net cash provided by operating activities

712,183 223,737 333,851

Investing activities

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Purchases of alternative investments — — ( 50,941 )

Proceeds from sales of alternative investments 51,072 — —

Purchases of privately-held securities — — ( 23,009 )

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Financing activities

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

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

Principal payments on borrowings — — ( 200,000 )

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Effect of foreign exchange on cash, cash equivalents, and restricted cash 2,930 ( 3,885 ) ( 3,918 )

Net increase in cash, cash equivalents, and restricted cash 260,421 238,768 726,184

Net increase (decrease) in cash, cash equivalents, and restricted cash

( 1,777,228 ) 260,421 238,768

Cash, cash equivalents, and restricted cash - beginning of period 2,627,335 2,366,914 2,128,146

Cash, cash equivalents, and restricted cash - end of period $ 850,107 $ 2,627,335 $ 2,366,914

Palantir Technologies Inc.

Consolidated Statements of Cash Flows

(in thousands)

Years Ended December 31,

2022 2021 2020

Supplemental disclosures of cash flow information

Cash paid for income taxes $ 13,515 $ 2,904 $ 4,131

Cash paid for interest 5 2,774 11,432

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 convertible preferred stock — — 10,810

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

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Basis of Presentation and Consolidation

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 regarding annual financial reporting.

The accompanying consolidated financial statements have been prepared in accordance with United States (“U.S.”) 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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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.

Certain prior year balances have been reclassified to conform to the current year presentation.

Such reclassifications did not affect total revenues, loss from operations, net loss, or cash flows.

Such reclassifications did not affect total revenues, income (loss) from operations, net income (loss), or cash flows.

The Company’s fiscal year ends on December 31.

Direct Listing

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 capital.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.

Significant estimates and assumptions made in the accompanying consolidated financial statements include, but are not limited to, the identification of performance obligations in customer contracts;

the valuation of deferred tax assets and uncertain tax positions;

the collectability of contract consideration, including accounts receivable;

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.

Significant estimates and assumptions made in the accompanying consolidated financial statements include, but are not limited to, the identification of performance obligations in customer contracts, the valuation of deferred tax assets and uncertain tax positions, and the collectability of contract consideration, including accounts receivable.

Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that management believes to be reasonable under the circumstances.

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government agencies.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents.

Cash equivalents primarily consist of amounts invested in money market funds.

Cash equivalents primarily consist of amounts invested in money market funds and available-for-sale debt securities.

Restricted cash primarily consists of cash and certificates of deposit that are held as collateral against letters of credit and guarantees that the Company is required to maintain for operating lease agreements, certain customer contracts, and other guarantees and financing arrangements.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the amounts shown in the consolidated statements of cash flows (in thousands):

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

As of December 31,

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Cash and cash equivalents $ 831,047 $ 2,598,540 $ 2,290,674

Restricted cash 16,244 36,628 37,285

Restricted cash, noncurrent 12,551 39,612 79,538

Restricted cash included in prepaid expenses and other current assets 370 16,244 36,628

Restricted cash included in other assets 18,690 12,551 39,612

Total cash, cash equivalents, and restricted cash $ 850,107 $ 2,627,335 $ 2,366,914

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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.

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, 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, 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.

Based upon the Company’s assessment as of December 31, 2023 and 2022, the Company recorded an allowance for credit losses of $ 10.5 million and $ 10.1 million, respectively.

Debt Securities

Debt securities are primarily comprised of U.S.

treasury securities.

The debt securities are classified as available-for-sale at the time of purchase and are reevaluated as of each balance sheet date.

The Company considers the majority of its available-for-sale debt securities as available for use in current operations and may sell these securities at any time, and therefore classifies these securities as current assets in its consolidated balance sheets.

Debt securities included in marketable securities on the consolidated balance sheets consist of U.S.

treasury securities with original maturities of greater than three months at the time of purchase, and the remaining U.S.

treasury securities are included in cash and cash equivalents.

Interest income on debt securities is included in other income (expense), net on the consolidated statements of operations.

The majority of the Company’s available-for-sale securities are recorded at fair value each reporting period using quoted prices of similar instruments and are classified within Level 2 of the fair value hierarchy.

The Company evaluates investments with unrealized loss positions for other than temporary impairment by assessing if they are related to deterioration in credit risk and whether it expects to recover the entire amortized cost basis of the security, the Company’s intent to sell, and whether it is more likely than not that the Company will be required to sell the securities before the recovery of their cost basis.

Credit-related impairment losses, not to exceed the amount that fair value is less than the amortized cost basis, are recognized in other income (expense), net in the consolidated statements of operations.

Unrealized gains and non-credit related losses are reported as a separate component of accumulated other comprehensive loss, net in the consolidated balance sheets until realized.

Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in other income (expense), net in the consolidated statements of operations.

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.

Cash 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 and U.S.

treasury securities with original maturities of three months or less, which are invested primarily with U.S.

financial institutions.

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Management believes minimal credit risk exists with respect to these financial institutions and the Company has not experienced any losses on such amounts.

The Company is exposed to concentrations of credit risk with respect to accounts receivable presented on the consolidated balance sheets.

The Company is exposed to concentrations of credit risk with respect to accounts receivable presented in the consolidated balance sheets.

The Company’s accounts receivable balances as of December 31, 2023 and 2022 were $ 364.8 million and $ 258.3 million, respectively.

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

Customer I represented 15 % of total accounts receivable as of December 31, 2023, and no other customer represented more than 10% of total accounts receivable as of December 31, 2023.

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

For the years ended December 31, 2023, 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.

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

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

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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Maintenance and repairs that do not improve or extend the useful lives of the assets are expensed when incurred.

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.

Privately-held Securities

Equity securities in private-held companies without readily determinable fair values are recorded using the measurement alternative.

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

Privately-held Equity Securities

Equity securities in privately-held companies without readily determinable fair values are recorded using the measurement alternative.

Such investments are carried at cost, less any impairments, and are adjusted for subsequent observable price changes in orderly transactions for identical or similar investments of the same issuer.

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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.

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

Impairment of Long-Lived Assets

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Impairments of long-lived assets during the years ended December 31, 2023, 2022, and 2021 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.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

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

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.

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.

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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.

For short-term leases, defined as leases with a term of twelve months or less, the Company elected the practical expedient to not recognize an associated lease liability and ROU asset.

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Revenue Recognition

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”);

The Company generates revenue from the sale of subscriptions to access its software platforms 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”);

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

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

• Identification of the contract(s) with the customer, including whether collectability of the consideration is probable by considering the customers’ ability and intention to pay;

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

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

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

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

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.

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The Company’s Palantir Cloud subscriptions grant customers the right to access the software functionality in a hosted environment controlled by Palantir and are sold together with stand-ready O&M services, as further described below.

The Company promises to provide continuous access to the hosted software throughout the contract term.

The Company agrees to provide continuous access to its hosted software platforms throughout the contract term.

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.

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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.

The Company’s professional services support the customers’ use of the software platforms 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.

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Contract Liabilities

The timing of customer billing and payment relative to the start of the service period varies from contract to contract;

The timing of customer billings and payments relative to the start of the service period varies from contract to contract;

however, the Company bills many of its customers in advance of the provision of services under its contracts, resulting in contract liabilities consisting of either deferred revenue or customer deposits (“contract liabilities”).

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

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.

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however, the Company’s terms generally require payment within 30 to 60 days from the invoice date.

In instances where the timing of revenue recognition differs from the timing of payment, the Company elected to apply the practical expedient in accordance with ASC 606 to not adjust contract consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when promised goods and services are transferred to the customer and when the customer pays for those goods and services will be one year or less.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

effects of a significant financing component as the Company expects, at contract inception, that the period between when promised goods and services are transferred to the customer and when the customer pays for those goods and services will be one year or less.

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

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

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.

Significant estimates and assumptions are used in the identification of performance obligations in customer contracts and collectability of contract consideration, including accounts receivable.

Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that management believes to be reasonable under the circumstances.

Actual results could differ from those estimates and such differences could affect our financial position and results of operations.

Costs to Obtain and Fulfill Contracts

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The Company evaluates capitalization of certain software development costs subsequent to the establishment of technological feasibility.

Based on the Company’s product development process and substantial development risks, technological feasibility is established for the Company’s products when they are made available for general release.

Accordingly, the Company has charged all such costs to research and development expense in the period incurred.

Based on the Company’s product development process and substantial development risks, technological feasibility is generally established for the Company’s products when they are made available for general release.

Accordingly, most costs are charged to research and development expense in the period incurred.

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, travel costs, allocated overhead, and other direct costs.

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 field service representatives, third-party cloud hosting services, travel costs, 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, travel costs, and allocated overhead.

Sales and marketing costs primarily include salaries, stock-based compensation expense, commissions, and benefits for the sales force and personnel involved in sales functions, executing on pilots, including bootcamps, and performing other brand building and customer growth activities, as well as third-party cloud hosting services for pilots, marketing and sales event-related costs, travel 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 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.

Advertising expense totaled $ 21.4 million, $ 38.6 million, and $ 26.3 million for the years ended December 31, 2023, 2022, and 2021, respectively.

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 and products, as well as third-party cloud hosting services, travel costs, 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 refine the Company’s platforms and products, as well as third-party cloud hosting services and other IT related costs, travel costs, and allocated overhead.

Research and development costs are expensed as incurred.

Commitments and Contingencies

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Liabilities for loss contingencies arising from claims, disputes, legal proceedings, fines and penalties, and other sources are recorded when it is probable that a liability has been or will be incurred and the amount of the liability can be reasonably estimated.

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The Company determines the fair value of stock-based awards granted or modified on the grant date or modification date using appropriate valuation techniques.

The Company recognizes forfeitures as they occur.

Service-Based Vesting

The Company grants RSUs and stock option awards that vest only based upon the satisfaction of a service condition.

The Company grants RSUs and stock option awards that vest based upon the satisfaction of only a service condition.

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

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 .

The Company records stock-based compensation expense for stock options and RSUs that vest based upon the satisfaction of only a service condition on a straight-line basis over the requisite service period, which is generally one to 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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These estimates involve inherent uncertainties and the application of management’s judgment.

The Company recognizes forfeitures as they occur.

Performance-Based Vesting

The Company grants awards, including RSUs, that vest upon the satisfaction of both a service condition and a performance condition.

The performance-based vesting condition for the RSUs granted prior to the Company’s Direct Listing was satisfied upon the occurrence of the Direct Listing and are expensed using the accelerated attribution method over the remaining service period.

The Company also grants awards, including RSUs, that vest upon the satisfaction of both a service condition and a performance condition.

The Company determines the grant-date fair value of RSUs with both a service-based vesting condition and a performance-based vesting condition as the fair value of the Company’s common stock on the grant date and records stock-based compensation expense using the accelerated attribution method over the service period.

The performance-based vesting condition for the RSUs granted prior to September 30, 2020, the date the Company completed a direct listing of its Class A common stock on the New York Stock Exchange (the “Direct Listing”) was satisfied upon the occurrence of the Company’s Direct Listing.

For performance-based RSUs granted after the Direct Listing (“P-RSUs”), the Company recognizes expense from the number of P-RSUs expected to vest, determined based on the level of achievement against certain performance conditions, over the requisite service period when it is probable that the performance condition will be achieved.

The probability of achievement is assessed periodically to determine whether the performance metric continues to be probable.

When there is a change in the assessment of the probability of achievement, any cumulative effect of the change is recognized in the period of the change and any remaining expense of the related awards is amortized over the remaining service period.

Employee Benefit Plan

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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.

The Company considers all evidence, both positive and negative, in determining any required valuation allowance and evaluates the need for a valuation allowance on a regular basis.

The Company performs an assessment of both positive and negative evidence when determining whether it is more likely

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

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 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.

If certain factors change and the Company determines that the deferred tax assets are realizable at a more-likely-than not level, it will adjust the valuation allowance in the period the determination is made.

Changes in the valuation allowance, when recorded, would be included in the Company’s consolidated statements of operations.

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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 for income taxes.

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

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.

Net Earnings (Loss) Per Share Attributable to Common Stockholders

The Company computes net earnings (loss) per share attributable to its common stockholders using the two-class method required for participating securities, which determines net earnings (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 comb ined 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)

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

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

Noncontrolling Interests

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Transaction gains and losses from the remeasurement are recognized in other income (expense), net within the consolidated statements of operations.

Recently Adopted Accounting Pronouncements

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.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires disclosure of incremental segment information on an annual and interim basis.

This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements.

The Company is currently evaluating the impacts of the new standard.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

In December 2023, the FASB issued ASU 2023-09, Income Taxes – Improvements to Income Tax Disclosures , requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid.

This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted.

The Company is currently evaluating the impacts of the new standard.

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 $ 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.

The Company’s remaining performance obligations were $ 1.2 billion as of December 31, 2023, of which the Company expects to recognize approximately 52 % as revenue over the next 12 months, 37 % 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.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Investments and Fair Value Measurements

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Money market funds $ 576,565 $ 576,565 $ — $ —

treasury securities 10,079 — 10,079 —

Certificates of deposit 938 — 938 —

Restricted cash, current and noncurrent

Prepaid expenses and other current assets and other assets:

Certificates of deposit 4,777 — 4,777 —

Marketable securities:

Marketable securities 35,135 35,135 — —

treasury securities 2,824,861 — 2,824,861 —

Publicly-traded equity securities 18,271 18,271 — —

Total $ 3,435,491 $ 594,836 $ 2,840,655 $ —

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

As of December 31, 2022

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Certificates of deposit 6,791 — 6,791 —

Restricted cash, current and noncurrent

Prepaid expenses and other current assets and other assets:

Certificates of deposit 18,707 — 18,707 —

Marketable securities:

Marketable securities 234,153 234,153 — —

Publicly-traded equity securities 35,135 35,135 — —

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

Certificates of Deposit

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

The Company’s certificates of deposit are Level 2 instruments.

The fair value of such instruments is estimated based on valuations obtained from third-party pricing services that utilize industry standard valuation models, including both income-based and market-based approaches, for which all significant inputs are observable either directly or indirectly.

These inputs include interest rate curves, foreign exchange rates, and credit ratings.

Marketable Securities

Marketable securities consist of equity securities in publicly-traded companies and are recorded at fair market value each reporting period.

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

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.

Debt Securities

As of December 31, 2023, available-for-sale debt securities consisted of the following (in thousands):

As of December 31, 2023

Amortized Cost Unrealized Gains Unrealized Losses Fair Value

treasury securities $ 2,831,505 $ 4,520 $ ( 1,085 ) $ 2,834,940

Total debt securities $ 2,831,505 $ 4,520 $ ( 1,085 ) $ 2,834,940

Included in cash and cash equivalents $ 10,078 $ 1 $ — $ 10,079

Included in marketable securities $ 2,821,427 $ 4,519 $ ( 1,085 ) $ 2,824,861

The Company sold $ 694.6 million of available-for-sale debt securities during the fiscal year ended December 31, 2023 and immediately reinvested such proceeds into additional available-for-sale debt securities.

The realized gains and losses from those sales were immaterial.

No credit or non-credit losses related to available-for sale debt securities were recorded as of December 31, 2023.

As of December 31, 2023, available-for-sale debt securities of $ 236.0 million were in an unrealized loss position primarily due to unfavorable changes in interest rates subsequent to initial purchase.

None of the available-for-sale debt securities held as of December 31, 2023 were in a continuous unrealized loss position for greater than 12 months.

The decline in fair value below amortized cost basis was not considered other than temporary as it is more likely than not that the Company will hold the securities until maturity or a recovery of the cost basis, and no credit-related impairment losses were recorded as of December 31, 2023.

All of the Company’s U.S.

treasury securities had contractual maturities due within one year as of December 31, 2023.

As of December 31, 2022, the Company held an immaterial amount of debt securities.

Equity Securities

The Company has equity securities consisting of shares held in publicly-traded companies, which are recorded at fair market value each reporting period within marketable securities in the consolidated balance sheets.

Additionally, we have accepted, and may continue to accept, securities as noncash consideration.

Total equity securities received as noncash consideration was $ 41.7 million, $ 6.8 million, and an immaterial amount during the years ended December 31, 2023, 2022, and 2021, respectively.

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

For the years ended December 31, 2023,

Palantir Technologies Inc.

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):

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.

2022, and 2021 net unrealized losses from publicly-traded equity securities held at the end of each period were $ 4.5 million, $ 197.3 million, and $ 72.8 million respectively.

The Company also has equity securities in privately-held companies without readily determinable fair values that are recorded using the measurement alternative.

As of December 31, 2023 and December 31, 2022, the total amount of privately-held equity securities included in other assets on the consolidated balance sheets was $ 32.6 million and $ 24.4 million, respectively.

The Company classifies these fair value measurements as Level 3 within the fair value hierarchy.

The Company did not record any material adjustments or impairments for the privately-held equity securities held as of December 31, 2023 and December 31, 2022.

From 2021 through 2022, the Company 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, 2022, the Company purchased shares for a total investment of $ 124.5 million.

No Investments were purchased under such Investment Agreements during the fiscal year ended December 31, 2023.

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.

As currently assessed, the total value of Strategic Commercial Contracts was $ 376.5 million as of December 31, 2023, which is inclusive of $ 40.4 million of contractual options.

The original terms of the Strategic Commercial Contracts with remaining deal value as of December 31, 2023, including contractual options, range from two years to seven years and are subject to termination for cause provisions.

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.

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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.

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 (continued)

During the year ended December 31, 2023, the Company sold all of its gold bars for total proceeds of $ 51.1 million and recorded an immaterial realized gain within other income (expense), net in the consolidated statements of operations.

Balance Sheet Components

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Depreciation and amortization expense related to property and equipment, net was $ 23.7 million, $ 19.5 million, and $ 12.8 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Accrued Liabilities

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2014 Credit Facility

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 (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.

As of December 31, 2023, the Company had no outstanding debt balances and had undrawn revolving commitments of $ 500.0 million available to fund working capital and general corporate expenditures under the 2014 Credit Facility, which has a maturity date of March 31, 2027.

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 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 .

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

Additionally, some lease contracts include termination options.

Supplemental balance sheet information related to lease liabilities at December 31, 2023 and 2022 was as follows (in thousands):

8 unchanged sentences

Total lease liabilities $ 229,392 $ 249,404

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

The components of lease expense included in the Company's consolidated statements of operations include (in thousands):

7 unchanged sentences

Short-term lease costs primarily represent temporary employee housing.

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, 2023 were as follows (in thousands):

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Total undiscounted liabilities 276,751 102,352 174,399

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

Imputed interest ( 47,359 ) — ( 47,359 )

Total operating lease liabilities $ 229,392 $ 102,352 $ 127,040

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 weighted-average remaining lease term related to the Company’s operating lease liabilities as of December 31, 2023 and 2022 was six years and seven years , respectively.

The weighted-average discount rate related to the Company’s operating lease liabilities as of December 31, 2023 and 2022 was 6 %.

The following table sets forth the supplemental information related to the Company's operating leases for the years ended December 31, 2023 and 2022 (in thousands):

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$ 28,112 $ 28,169

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 .

As of December 31, 2023, the Company has no additional operating leases for office space that have not yet commenced.

Commitments and Contingencies

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

In September 2023, the Company amended one of its third-party cloud hosting services agreements.

Under this amendment, the Company has a commitment to spend at least $ 1.95 billion over ten contract years through September 30, 2033, as well as certain additional minimum usage commitments, among other things.

Any and all previous payment obligations related to such third-party cloud hosting services agreement were terminated concurrently with the signing of this amendment.

As of December 31, 2023, the Company had satisfied $ 40.7 million of the $ 154.0 million commitment amount for the contract year beginning October 1, 2023 and ending September 30, 2024.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Litigation and Legal Proceedings

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breach of contract;

breach, leak, or misuse of

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

personal data or confidential information;

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

government procurement;

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The Company establishes an accrual for loss contingencies when the loss is both probable and reasonably estimable.

On December 14, 2017, members of KT4 Partners LLC (Managing Member Marc Abramowitz) and Sandra Martin Clark, as trustee for the Marc Abramowitz Irrevocable Trust Number 7 (together, “KT4 Plaintiffs”), filed an action in the Delaware Superior Court against the Company and Disruptive Technology Advisers LLC.

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 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.

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

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.

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

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

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These three actions subsequently were consolidated as Cupat v.

Palantir Technologies Inc., et al.

, Lead Civil Action No.

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.

Karp, et al., Case No.

22-cv-3028 and Parmenter v.

Karp, et al., Case No.

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.

Karp, et al., Case No.

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.

On August 22, 2023, a stockholder derivative action was filed in the Court of Chancery of the State of Delaware captioned Central Laborers’ Pension Fund v.

2023-0864 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 seeks unspecified damages and injunctive relief under 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.

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

On November 20, 2023, the plaintiff in Parmenter v.

Karp, et al ., Case No.

23-cv-118, filed a Notice of Voluntary Dismissal.

On November 28, 2023, the court terminated the Parmenter action accordingly.

As of December 31, 2023, 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.

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.

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.

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.

In the event there is a failure of such warranties, the Company generally is obligated to correct the product or service to conform to the warranty provision, as set forth in the applicable SLA, or, if the Company is unable to do so, the customer is entitled to seek a refund of the purchase price of the product and service (generally prorated over the contract term).

In the event there is a failure of such warranties, the Company generally is obligated to correct the product or service to conform to the warranty provision or, if the Company is unable to do so, the customer is entitled to seek a refund of the purchase price of the product and service (generally prorated over the contract term).

Due to the absence of historical warranty claims, the Company’s expectations of future claims related to products under warranty continue to be insignificant.

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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

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

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or, if those options are not commercially practicable, to refund the cost of the software, as prorated over the period.

To date, the Company has not been required to make any payment resulting from infringement claims asserted against its customers and does not believe that the Company will be liable for such claims in the foreseeable future.

To date, the Company has not been required to make any payment resulting from

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

infringement claims asserted against its customers and does not believe that the Company will be liable for such claims in the foreseeable future.

As such, the Company has not recorded a liability for infringement costs as of December 31, 2023 and 2022.

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.

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 Amended and Restated Bylaws and Amended and Restated Certificate of Incorporation.

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.

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Total 22,701,005 2,200,128 22,701,005 2,099,075

Share Repurchase Program

In August 2023, the Company’s Board of Directors authorized a stock repurchase program of up to $ 1.0 billion of the Company’s outstanding shares of Class A common stock (the “Share Repurchase Program”).

The Company may repurchase shares of its Class A common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act in accordance with applicable securities laws and other restrictions.

The timing and the amount of stock repurchases under the Share Repurchase Program will be determined by the Company’s management, based on its evaluation of factors including business and market conditions, corporate and regulatory requirements, and other considerations.

The Share Repurchase Program does not obligate the Company to repurchase any specific number of shares and may be discontinued at any time.

During the year ended December 31, 2023, the Company did not repurchase any shares of its Class A common stock under the Share Repurchase Program.

Stock-Based Compensation

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

During August 2020, options to purchase 162,000,000 shares of Class B common stock and restricted stock units covering 3,900,000 shares of the Company’s Class B common stock were granted to certain officers.

The Executive Equity Plan was terminated prior to the Company’s Direct Listing, and no additional awards will be granted under the Executive Equity Plan.

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

During August 2020, options to purchase 162,000,000 shares of Class B common

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

stock and restricted stock units covering 3,900,000 shares of the Company’s Class B common stock were granted to certain officers.

The Executive Equity Plan was terminated prior to the Company’s Direct Listing, and no additional awards will be granted under the Executive Equity Plan.

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

2020 Equity Incentive Plan

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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 Equity Incentive Plan (“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.

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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, 2023.

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, 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 (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.

The aggregate intrinsic value of options exercised during the years ended December 31, 2023, 2022, and 2021 was $ 476.8 million, $ 112.3 million, and $ 3.8 billion, 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 years ended December 31, 2023, 2022, and 2021.

Year Ended December 31, 2020

Fair value of common stock $ 7.60

Expected volatility 71.00 %

Expected term (in years) 12.04

Expected dividend yield — %

Risk-free interest rate 0.64 %

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

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

RSUs unvested and outstanding as of December 31, 2022 126,426 $ 10.07

Prior to September 30, 2020, the Company granted RSUs with both a service-based vesting condition and a liquidity event-related performance condition which was considered a performance-based vesting condition.

The stock-based compensation expense related to such RSUs is recognized using the accelerated attribution method from the grant date.

The service-based vesting period for these awards varies across service providers and is up to five years .

The performance-based vesting condition for the RSUs was satisfied upon the Company’s Direct Listing, which occurred on September 30, 2020.

Additionally, subsequent to September 30, 2020, the Company granted RSUs with only a service based-based vesting condition.

The stock-based compensation expense related to such RSUs is recognized ratably over the service period.

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.

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 .

The total grant-date fair value of options that vested during the years ended December 31, 2023, 2022, and 2021 was $ 131.0 million, $ 170.8 million, and $ 189.5

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

million, respectively .

As of December 31, 2023, the total unrecognized stock-based compensation expense related to options outstanding was $ 599.1 million, which is expected to be recognized over a weighted-average service period of seven years .

RSUs and P-RSUs

The following table summarizes the RSU and P-RSU activity for the year ended December 31, 2023 (in thousands, except per share amounts):

Units Outstanding Weighted Average Grant Date Fair Value per Share Units Outstanding Weighted Average Grant Date Fair Value per Share

Unvested and outstanding as of December 31, 2022 126,426 $ 10.07 — $ —

Granted 19,484 11.77 1,976 15.39

Vested ( 54,974 ) 9.57 — —

Canceled ( 8,674 ) 11.08 — —

Unvested and outstanding as of December 31, 2023 82,262 $ 10.71 1,976 $ 15.39

During the fiscal year ended December 31, 2023, the Company granted RSUs that have only a service-based vesting condition, as well as those that have both service-based and performance-based vesting conditions (“P-RSUs”).

The service-based vesting condition for each is generally satisfied upon continued service through a specified date.

Vesting periods for the RSUs and P-RSUs are generally up to 4 years and three months , respectively.

The performance-based vesting condition is satisfied upon the achievement of certain Company performance goals set by the Compensation Committee of the Board of Directors.

The ultimate number of P-RSUs earned and eligible to vest ranges between 0 % to 100 % of the target number of P-RSUs granted depending on the level of achievement of such Company performance goals.

The total grant-date fair value of RSUs vested during the years ended December 31, 2023, 2022, and 2021 was $ 526.1 million, $ 453.2 million, and $ 421.0 million, respectively.

As of December 31, 2023, the total unrecognized stock-based compensation expense related to the RSUs outstanding was $ 566.4 million, which is expected to be recognized over a weighted-average service period of three years .

As of December 31, 2023, there was no unrecognized stock-based compensation expense related to the P-RSUs outstanding.

Stock-based Compensation Expense

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Total stock-based compensation expense $ 475,903 $ 564,798 $ 778,215

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):

The Company did not recognize any tax benefits related to stock-based compensation expense during the years ended December 31, 2023, 2022, or 2021.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Income (loss) before provision for income taxes consisted of the following (in thousands):

Years Ended December 31,

2 unchanged sentences

Foreign 62,454 41,807 25,706

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

Provision for (benefit from) income taxes consisted of the following (in thousands):

Income (loss) before provision for income taxes $ 237,091 $ ( 361,027 ) $ ( 488,494 )

Provision for income taxes consisted of the following (in thousands):

Years Ended December 31,

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Total deferred provision ( 4,806 ) ( 174 ) 43,316

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

Palantir Technologies Inc.

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):

Total provision for income taxes $ 19,716 $ 10,067 $ 31,885

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

Years Ended December 31,

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Base Erosion Anti-Abuse Tax and related elections 14,700 25,200 —

Taxes withheld at source 4,378 — —

Non-deductible expenses 3,610 — —

Other ( 683 ) 1,571 863

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.

Total provision for income taxes $ 19,716 $ 10,067 $ 31,885

For the year ended December 31, 2023, the Company recorded a provision for income taxes of $ 19.7 million compared to $ 10.1 million for the year ended December 31, 2022, primarily due to the increase in foreign income taxes as the result of higher foreign taxable income and higher foreign withholding taxes in the current year.

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

federal and state, and certain foreign deferred tax assets.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

against its U.K.

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

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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.

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

net tax operating losses.

federal and state and certain foreign deferred tax assets.

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.

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Depreciation and amortization 14,413 29,665

Capitalized facilitative expenses 28,906 —

Gross deferred tax assets 2,145,337 2,102,722

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Valuation allowance ( 2,102,251 ) ( 2,051,655 )

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

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 (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.

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

federal and state 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.

Net deferred tax assets (liabilities) $ ( 8,063 ) $ ( 11,965 )

Because of the Company’s history of U.S.

and certain foreign net operating tax losses, primarily in the U.K., the Company has maintained a full valuation allowance against potential future benefits for U.S, federal, state, and certain foreign deferred tax assets as of December 31, 2023.

The valuation allowance totaled $ 2.1 billion for the years ended December 31, 2023 and 2022.

The valuation allowance on our net deferred tax assets increased by $ 50.6 million and $ 74.1 million during the years ended December 31, 2023 and 2022, respectively.

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.

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

As a result of this enactment, the Company began capitalizing and amortizing R&E expenditures over five years for domestic research and 15 for foreign research rather than expensing these costs as incurred during fiscal year ended December 31, 2022.

The Company has recorded a deferred tax asset of $ 214.8 million as of December 31, 2023 related to the capitalization requirement.

As of December 31, 2023, the Company had U.S.

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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, 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.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

As of December 31, 2023, the Company had U.S.

federal capital loss carryforwards of $ 324.0 million.

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

federal capital loss carryforwards of $ 113.1 million.

The capital loss carryforwards will expire beginning in 2027 if not utilized.

As of December 31, 2023, the Company had foreign net operating losses, primarily in the U.K., of approximately $ 464.7 million.

These net operating losses can be carried forward indefinitely.

As of December 31, 2023, the Company had an immaterial amount of earnings from its wholly-owned foreign 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.

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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

9 unchanged sentences

Unrecognized tax benefit end of year $ 112,016 $ 81,904 $ 65,070

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.

As of December 31, 2023, 2022, and 2021, the Company recorded gross unrecognized tax benefits of $ 112.0 million, $ 81.9 million, and $ 65.1 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.

As of December 31, 2023, no significant increases or decreases are expected to the Company’s uncertain tax positions within the next twelve months.

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

It is the Company’s policy to recognize interest and penalties related to income tax matters in provision for income taxes on the consolidated statements of operations.

The Company has recorded immaterial interest and penalties related to uncertain tax positions as of December 31, 2023, 2022, and 2021.

2 unchanged sentences

The material jurisdictions where the Company is subject to potential examination by tax authorities are the U.S.

(federal and state) for tax years 2004 through 2022 and the UK for tax years 2013 through 2022.

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):

As of December 31,

2022 2021 2020

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

Change in fair value attributable to participating securities — — ( 5,483 )

Net loss attributable to common stockholders for diluted net loss per share $ ( 373,705 ) $ ( 520,379 ) $ ( 1,171,874 )

Weighted-average shares used in computing net loss per share, basic 2,063,793 1,923,617 977,722

Weighted-average shares used in computing net loss per share, diluted 2,063,793 1,923,617 979,330

Net loss per share

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

Net loss per share attributable to common stockholders, diluted $ ( 0.18 ) $ ( 0.27 ) $ ( 1.20 )

(federal and state) for tax years 2004 through 2023 and the U.K.

for tax years 2017 through 2023.

Palantir Technologies Inc.

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):

Net Earnings (Loss) Per Share Attributable to Common Stockholders

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

As of December 31,

2023 2022 2021

Net income (loss) attributable to common stockholders for diluted net earnings (loss) per share $ 209,825 $ ( 373,705 ) $ ( 520,379 )

Weighted-average shares used in computing net earnings (loss) per share:

Basic 2,147,446 2,063,793 1,923,617

Effect of dilutive shares 150,481 — —

Diluted 2,297,927 2,063,793 1,923,617

Net earnings (loss) per share

Net earnings (loss) per share attributable to common stockholders:

Basic $ 0.10 $ ( 0.18 ) $ ( 0.27 )

Diluted $ 0.09 $ ( 0.18 ) $ ( 0.27 )

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

As of December 31,

2023 2022 2021

Options and SARs issued and outstanding 162,000 326,913 349,977

RSUs outstanding 126,426 153,749 184,870

RSUs and P-RSUs outstanding 13,245 126,426 153,749

Warrants to purchase common stock — 13,042 13,042

Growth units outstanding — — 3,583

Total 175,245 466,381 516,768

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A segment’s contribution is calculated as segment revenue less the related costs of revenue and sales and marketing expenses.

It excludes certain operating expenses that are not allocated to segments because they are separately managed at the consolidated corporate level.

These unallocated costs include stock-based compensation expense, research and development expenses, and general and administrative expenses.

It excludes certain operating expenses that are not allocated to segments because they are separately managed at the consolidated corporate level, or are noncash costs.

These unallocated and noncash costs include stock-based compensation expense, research and development expenses, and general and administrative expenses.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

Financial information for each reportable segment was as follows (in thousands):

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Total contribution $ 1,245,555 56 % $ 1,035,173 54 % $ 899,429 58 %

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

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

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

Years Ended December 31,

2023 2022 2021

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

Income (loss) from operations

$ 119,966 $ ( 161,201 ) $ ( 411,046 )

Research and development expenses (1)

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(1) No other country represented 10 % or more of total revenue for the years ended December 31, 2023 , 2022, or 2021 .

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

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

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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 (continued)

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

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

cash of $ 66.7 million;

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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

In accordance with accounting for a step acquisition, the Company recognized a gain of $ 44.3 million during the year ended December 31, 2022 as a result of remeasuring its pre-existing interest in Palantir Japan held immediately before the business combination, which was included in other income (expense), net in the consolidated statements of operations.

Intangible Assets

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

6 unchanged sentences

Total intangible assets $ 38,943 $ ( 13,041 ) $ 25,902 $ 40,436 $ ( 4,897 ) $ 35,539

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

Amortization expense of intangible assets was $ 9.6 million and not material for the years ended December 31, 2023 and 2022, respectively.

Palantir Technologies Inc.

Notes to Consolidated Financial Statements (continued)

As of December 31, 2023, expected amortization expense for the unamortized finite-lived intangible assets for the next five years and thereafter is as follows (in thousands):

2 unchanged sentences

Total $ 25,902

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