What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-18 compared with 2024-02-20 · 81 added, 119 removed, 379 unchanged (35% of the section changed)

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We have built four principal software platforms, Gotham, Foundry, Apollo, and our Artificial Intelligence Platform (“AIP”).

Gotham and Foundry enable institutions to transform massive amounts of information into an integrated data asset that reflects their operations, and AIP leverages the power of our existing machine learning technologies alongside large language models (“LLMs”) directly within Gotham and/or Foundry to help connect AI to enterprise data.

Gotham and Foundry enable institutions to transform massive amounts of information into an integrated data asset that reflects their operations, and AIP leverages the power of our existing machine learning technologies alongside generative AI models, including large language models (“LLMs”), directly within Gotham and/or Foundry to help operationalize AI on enterprise data.

For over a decade, Gotham has surfaced insights for global defense agencies, the intelligence community, disaster relief organizations and beyond.

becoming a central operating system not only for individual institutions but also for entire industries.

Foundry is becoming a central operating system not only for individual institutions but also for entire industries.

Apollo, which we began offering as a commercial solution in 2021, is a cloud-agnostic, single control layer that coordinates ongoing delivery of new features, security updates, and platform configurations, helping to ensure the continuous operation of critical systems.

Apollo allows our customers to run their software in virtually any environment.

In 2023, we began deploying our newest offering, AIP, which is designed for customers across the commercial and government sectors, enabling them to derive value from recent breakthroughs in artificial intelligence via the combination of our existing software platforms with LLMs.

We believe AIP uniquely allows users to connect LLMs and other AI with their data and operations to facilitate decision-making within the legal, ethical, and security constraints that they require.

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For the year ended December 31, 2024, we generated $2.9 billion in revenue, reflecting a 29% growth rate from the year ended December 31, 2023, when we generated $2.2 billion in revenue.

In the year ended December 31, 2024, we generated income from operations of $310.4 million, or adjusted income from operations of $1.1 billion when excluding stock-based compensation and related employer payroll taxes.

In the year ended December 31, 2023, we generated income from operations of $120.0 million, or adjusted income from operations of $632.8 million when excluding stock-based compensation and related employer payroll taxes.

In the year ended December 31, 2022, our losses from operations were $161.2 million, or adjusted income from operations of $420.8 million when excluding stock-based compensation and related employer payroll taxes.

In the year ended December 31, 2024, our gross profit was $2.3 billion, reflecting a gross margin of 80%, or 83% when excluding stock-based compensation.

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We have built lasting and significant customer relationships and partnerships with some of the world’s leading government institutions and companies.

As of December 31, 2023, we expect to generate revenue from contracts closed during the year ended December 31, 2023 for an additional 3.4 years on a dollar-weighted average contract duration basis.

although the majority of our contracts are subject to termination provisions, including for convenience, and there can be no guarantee that contracts are not terminated or that contract options will be exercised.

As of December 31, 2024, we expect to generate revenue from contracts closed during the three months and year ended December 31, 2024 for an additional 4.7 and 3.6 years, respectively, on a dollar-weighted average contract duration basis.

Dollar-weighted average contract duration represents the length of time we expect to generate revenue on average, based on the total potential lifetime length and value of contracts entered into with, or awarded by, our customers at the time of contract execution, presuming that our customers will exercise all of the contractual options available to them and no termination of contracts, although many of our contracts are subject to termination provisions, including for convenience, and there can be no guarantee that contracts are not terminated or that contract options will be exercised.

We calculate this duration on a dollar-weighted basis to adjust for smaller deals.

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customers will continue to be a source of significant revenue growth for us.

We continue to believe that our government customers remain a meaningful and resilient source of revenue for our business, particularly during periods of economic uncertainty.

We continue to believe that our government customers remain a meaningful source of revenue for our business, particularly during periods of economic uncertainty.

However, large government customers in particular are generally subject to a number of uncertainties regarding budgets and spending levels, changes in timing and spending priorities, and regulatory and policy changes, which can make it difficult to predict when, or if, we will make sales to such customers or the size and scope of any contract awards.

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Our contracts with our customers reflect that long-term orientation, often lasting for multiple years at a time.

Total remaining deal value is the total remaining value of contracts that have been entered into with, or awarded by, our customers as of the end of the reporting period.

Total remaining deal value is the total remaining value, as of the end of the reporting period, of contracts that have been entered into with, or awarded by, our customers.

Total remaining deal value presumes the exercise of all contract options available to our customers and no termination of contracts.

However, the majority of our contracts are subject to termination provisions, including for convenience, and there can be no guarantee that contracts are not terminated or that contract options will be exercised.

However, many of our contracts are subject to termination provisions, including

for convenience, and there can be no guarantee that contracts are not terminated or that contract options will be exercised.

Further, total remaining deal value may exclude all or some portion of the value of certain commercial contracts as a result of our ongoing assessments of customers’ financial condition, including the consideration of such customers’ ability and intention to pay, and whether such contracts continue to meet the criteria for revenue recognition, among other factors.

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As of December 31, 2024, the total remaining deal value of the contracts that we had been awarded by government agencies in the United States and allied countries around the world, including existing contractual obligations and contractual options available to those government agencies, was $2.3 billion, up 30% from December 31, 2023, when the total value of such contracts was $1.8 billion.

When calculating the total remaining deal value of government contracts, we do not include government contracts known as IDIQ contracts, totaling $4.1 billion, as of December 31, 2023, that we have been awarded, but where the funding of such contracts has not yet been determined.

The funding of these contracts is not guaranteed.

When calculating the total remaining deal value of government contracts, we do not include government contracts known as IDIQ contracts, totaling $3.7 billion, as of December 31, 2024, that we have also been awarded, but where the funding of such contracts has not yet been determined or guaranteed.

Many of our government and commercial contracts are subject to termination for convenience provisions.

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We continue to closely monitor the impact of various geopolitical tensions and their global impacts on our business.

While the ongoing Russia-Ukraine and Israel conflicts are still evolving and the outcomes remain highly uncertain, we do not expect that resulting challenging macroeconomic conditions will have a material impact on our business or results of operations.

While the ongoing Russia-Ukraine and Israel conflicts are still evolving and the outcomes remain highly uncertain, we do not expect that the resulting challenging macroeconomic conditions will have a material impact on our business or results of operations.

We do not currently have office locations in Russia or Palestinian territories and none of our revenues came from sales to entities headquartered in those countries or territories.

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Our contracts with customers and vendors are primarily denominated in U.S.

However, the general strengthening of the U.S.

dollar relative to other major foreign currencies (primarily the Euro and GBP) has had, and could in the future have, an unfavorable impact on our revenues and expenses from certain non-U.S.

customers or vendors whose contracts are denominated in currencies other than U.S.

However, when the U.S.

dollar strengthens compared to other currencies (primarily the Euro and GBP), it has had, and could in the future have, an unfavorable impact on our revenues and expenses from certain non-U.S.

customers or vendors whose contracts are denominated in currencies other than the U.S.

Additionally, certain of our U.S.

subsidiaries may hold monetary assets and liabilities in currencies other than their functional currency (primarily the JPY, Euro, and GBP), which could subject our results of operations and cash flows to adverse fluctuations due to changes in such foreign currency exchange rates as compared to the U.S.

subsidiaries may hold monetary assets and

liabilities in currencies other than their functional currency (primarily the JPY, Euro, and GBP), which could subject our results of operations and cash flows to adverse fluctuations due to changes in such foreign currency exchange rates as compared to the U.S.

For the year ended December 31, 2024, such impacts were not material to our financial position or results of operations.

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Relationships with early- or growth-stage customers carry inherent risks because, among other things, such customers may be unable to generate sufficient revenues or profitability or to access any necessary financing or funding in a timely manner or on favorable terms to them in the current macroeconomic environment, which has impacted, and may continue to impact, our expected revenue and collections.

As a result, current macroeconomic conditions have impacted, and may continue to impact, our ability to realize the full value of our commercial contracts with

such early- or growth-stage customers.

For additional information, see Note 4.

Investments and Fair Value Measurements in the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

As a result, current macroeconomic conditions have impacted, and may continue to impact, our ability to realize the full value of our commercial contracts with such early- or growth-stage customers.

Key Business Measure

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Allocated revenues and expenses are then aggregated into a segment based upon the customer account to which they relate.

Contribution margin, both across our business and segments, is intended to capture how much we have earned from customers after accounting for the costs associated with deploying and operating our software, as well as any sales and marketing expenses involved in acquiring and expanding our partnerships with those customers, including allocated overhead.

We exclude stock-based compensation as it is a noncash expense.

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Contribution margin should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

For more information about contribution margin, including the limitations of this measure, and a reconciliation to loss from operations, see the section titled “Non-GAAP Reconciliations” below.

For more information about contribution margin, including the limitations of this measure, and a reconciliation to income from operations, see the section titled “Non-GAAP Reconciliations” below.

Non-GAAP Reconciliations

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and adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes, to help us evaluate our business, identify trends affecting our business, formulate business plans and financial projections, and make strategic decisions.

We exclude stock-based compensation, which is a noncash expense, from these non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance and provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team.

the same manner as our management team.

Additionally, we exclude employer payroll taxes related to stock-based compensation as it is difficult to predict and outside of our control.

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We compensate for these limitations by providing reconciliations of these non-GAAP measures to the most comparable GAAP measures.

We encourage investors and others to review our business, results of operations, and financial information in their

entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measures.

We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measures.

Contribution Margin

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Years Ended December 31,

Income (loss) from operations $ 119,966 $ (161,201)

Income from operations $ 310,403 $ 119,966

Research and development expenses (1)

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Years Ended December 31,

Income (loss) from operations $ 119,966 $ (161,201)

Income from operations $ 310,403 $ 119,966

stock-based compensation 691,638 475,903

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Adjusted income from operations $ 1,128,062 $ 632,776

Adjusted operating margin 39 % 28 %

Components of Results of Operations

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Our 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.

We agree to provide

continuous access to our hosted software throughout the contract term.

We agree to provide continuous access to our hosted software 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 services to the customer.

On-Premises Software

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

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

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

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

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

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

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

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

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

Professional services are on-demand, whereby we perform services throughout the contract period;

therefore, the revenue is recognized over the contractual term.

Professional services contracts typically include the provision of on-demand professional services for the duration of the contractual term, which may be coterminous or non-coterminous with a Palantir Cloud subscription or the On-Premises Software.

Professional services are on-demand, whereby we perform services throughout the service period;

therefore, the revenue is recognized over the related term.

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 field-service representatives, third-party cloud hosting services, hardware costs, 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 subcontractor expenses, field-service representatives, third-party cloud hosting services, hardware costs, travel costs, allocated overhead, and other direct costs.

We expect that cost of revenue will increase in absolute dollars as our revenue grows and will vary from period to period as a percentage of revenue.

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Our sales and marketing efforts span all stages of our sales cycle, including personnel involved with sales functions, and executing pilots at new or existing customers.

Sales and marketing costs primarily include salaries, stock-based compensation expense, commissions, and benefits for our sales force and personnel involved in sales functions, executing on pilots, including bootcamps, and customer growth activities;

Sales and marketing costs primarily include salaries, stock-based compensation expense, variable compensation, including commissions, and benefits for our sales force and personnel involved in sales functions, executing on pilots, including bootcamps, and customer growth activities;

as well as third-party cloud hosting services for our pilots, marketing and sales event-related costs, travel costs, and allocated overhead.

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Treasury securities, and restricted cash balances.

Interest Expense

Interest expense consists primarily of interest expense and commitment fees incurred under our credit facility.

Other Income (Expense), Net

Other income (expense), net consists primarily of foreign currency exchange gains and losses and realized and unrealized losses from equity securities.

Other income (expense), net consists primarily of realized and unrealized losses from equity securities and foreign currency exchange gains and losses.

The year ended December 31, 2022 also included a gain from a step acquisition.

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Provision for income taxes consists of income taxes related to foreign and state jurisdictions in which we conduct business and withholding taxes.

Net Income (Loss) Attributable to Noncontrolling Interests

Net income (loss) attributable to noncontrolling interests represents the share of income (loss) that is not attributable to the Company.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests represents the share of income (loss) that is not attributable to the Company.

We have two operating segments, commercial and government, which were determined based on the manner in which the chief operating decision maker, who is our Chief Executive Officer, manages our operations for purposes of allocating resources and evaluating performance.

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We use it, in part, to evaluate the performance of, and allocate resources to, each of our operating segments, which excludes certain operating expenses that are not allocated to operating segments because they are separately managed at the consolidated corporate level, or are noncash costs.

These unallocated or noncash costs include stock-based compensation expense, research and development costs, and general and administrative costs, such as legal and accounting costs.

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

Results of Operations

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Cost of revenue 565,990 431,105 408,549

431,105 408,549 339,404

Gross profit 2,299,517 1,793,907 1,497,322

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Sales and marketing 887,755 744,992 702,511

744,992 702,511 614,512

Research and development 507,878 404,624 359,679

404,624 359,679 387,487

General and administrative 593,481 524,325 596,333

524,325 596,333 611,532

Total operating expenses 1,989,114 1,673,941 1,658,523

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Interest income 196,792 132,572 20,309

Interest expense (3,470) (4,058) (3,640)

Other income (expense), net (18,022) (15,447) (220,135)

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Interest income 7 6 1

Interest expense — — —

Other income (expense), net (1) — (12)

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Revenue from government customers increased by $347.4 million, or 28%, for the year ended December 31, 2024 compared to 2023.

Of the increase, $129.4 million was from existing government customers as of December 31, 2022.

Generally, increases in revenue from our existing customers are a result of expanded use of our products and services within their organizations.

Of the increase, $280.7 million was from government customers existing as of December 31, 2023.

Revenue from U.S.

government customers was $921.2 million for the year ended December 31, 2023 compared to $826.3 million for the same period in 2022.

government customers was $1.2 billion for the year ended December 31, 2024 compared to $921.2 million for the same period in 2023.

Revenue from commercial customers increased by $293.1 million, or 29%, for the year ended December 31, 2024 compared to 2023.

Of the increase, $79.6 million was from existing customers as of December 31, 2022, which included an offsetting decrease of $31.1 million of revenue from Strategic Commercial Contracts.

Investments and Fair Value Measurements in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.

Of the increase, $190.7 million was from commercial customers existing as of December 31, 2023, including a decrease of $35.0 million of revenue from Strategic Commercial Contracts.

Revenue from U.S.

commercial customers was $457.1 million for the year ended December 31, 2023 compared to $335.1 million for the same period in 2022.

commercial customers was $702.3 million for the year ended December 31, 2024 compared to $457.1 million for the same period in 2023, a 54% increase.

Generally, increases in revenue from our existing customers are related to the increased adoption of our products and services within their organizations.

For additional information on Strategic Commercial Contracts, see Note 4.

Investments and Fair Value Measurements in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Cost of Revenue and Gross Profit

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Cost of revenue for the year ended December 31, 2024 increased by $134.9 million, or 31%, compared to 2023.

The increase was primarily due to increases of $12.2 million in third-party cloud hosting services and other IT costs driven by usage from customer growth and expansion, $9.4 million in payroll and other payroll-related costs as a result of higher average headcount during the year, and $7.5 million in field service representatives, hardware, and other direct costs generally related to new or expanded projects.

The increases were partially offset by a decrease of $5.9 million in stock-based compensation expense and related expenses, net.

For additional information, see the section titled “Stock-Based Compensation” below.

Our gross margin for the year ended December 31, 2023 increased by 2% compared to 2022, as revenue growth outpaced costs of revenue.

The primary cause of this growth rate variation was the decrease in stock-based compensation expense and related expenses, net in cost of revenue and smaller growth in field service representatives and other direct costs relative to revenue growth as compared to the prior year.

The increase was primarily due to increases of $56.6 million in subcontractor expenses, $42.3 million in stock-based compensation expense and related expenses, and $37.4 million in third-party cloud hosting services.

Our gross margin for the year ended December 31, 2024 decreased from 81% for the same period in 2023 to 80% as a result of the growth of cost of revenue slightly outpacing revenue growth.

For additional information related to stock-based compensation expense, see the section titled “Stock-Based Compensation” below.

Operating Expenses

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Sales and marketing expenses increased by $142.8 million, or 19%, for the year ended December 31, 2024 compared to 2023.

The increase was primarily due to increases of $53.6 million in payroll and other payroll-related costs driven by higher average headcount, $20.2 million in travel and office-related costs, and $10.2 million in professional services.

The increases were

partially offset by a decrease of $26.2 million in stock-based compensation expense and related expenses, net.

For additional information, see the section titled “Stock-Based Compensation” below.

The increase was primarily due to increases of $111.4 million in stock-based compensation expense and related expenses, $13.9 million in third-party cloud hosting services, and $12.9 million in payroll and other payroll-related costs.

For additional information related to stock-based compensation expense, see the section titled “Stock-Based Compensation” below.

Research and Development

Research and development expenses increased by $103.3 million, or 26%, for the year ended December 31, 2024 compared to 2023.

The increase was primarily due to increases of $17.2 million in payroll and other payroll-related costs driven by higher average headcount, $9.6 million in third-party cloud hosting services and other IT costs, and $9.2 million in stock-based compensation expense and related expenses.

For additional information, see the section titled “Stock-Based Compensation” below.

The increase was primarily due to increases of $87.4 million in stock-based compensation expense and related expenses and $17.5 million in third-party cloud hosting services.

For additional information related to stock-based compensation expense, see the section titled “Stock-Based Compensation” below.

General and Administrative

General and administrative expenses decreased by $72.0 million, or 12%, for the year ended December 31, 2023 compared to 2022.

The decrease was primarily due to decreases of $46.2 million in stock-based compensation expense and related expenses, net, $17.9 million in professional services, and $11.3 million in travel costs.

This decrease was partially offset by an increase of $15.0 million in payroll and other payroll-related costs driven by higher average headcount.

For additional information see the section titled “Stock-Based Compensation” below.

General and administrative expenses increased by $69.2 million, or 13%, for the year ended December 31, 2024 compared to 2023.

The increase was primarily due to increases of $63.7 million in stock-based compensation expense and related expenses and $11.6 million in travel costs.

For additional information related to stock-based compensation expense, see the section titled “Stock-Based Compensation” below.

Stock-Based Compensation

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Total stock-based compensation expense $ 691,638 $ 475,903 $ 215,735 45 %

Stock-based compensation expenses decreased by $88.9 million, or 16%, for the year ended December 31, 2023 compared to 2022.

The decrease was primarily driven by lower expense under the accelerated attribution method for RSUs granted prior to our Direct Listing, during the year ended December 31, 2023 compared to the same period in 2022.

Additionally, stock-based compensation expenses decreased due to the cancellation and vesting of options and RSUs during the year.

Stock-based compensation expenses increased by $215.7 million, or 45%, for the year ended December 31, 2024 compared to 2023.

The increase was primarily driven by the acceleration of $115.8 million of expense for Market-Vesting SARs upon achieving the applicable market condition, as well as expense from new equity grants awarded since December 31, 2023, including grants for RSUs, P-RSUs, and SARs.

These were partially offset by a reduction in expense from equity awards that became fully vested, forfeitures, and lower expense under the accelerated attribution method for RSUs granted prior to September 30, 2020, the date we completed the direct listing of our Class A common stock on the NYSE.

Interest Income

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Interest income $ 196,792 $ 132,572 $ 64,220

Interest income increased by $112.3 million for the year ended December 31, 2023 compared to 2022 primarily due to higher U.S.

interest rates and increases in our interest-bearing cash and cash equivalents, and our investments in short-term U.S.

Interest income increased by $64.2 million for the year ended December 31, 2024 compared to 2023 primarily due to an increase in our interest-bearing cash, cash equivalents, and investments in short-term U.S.

Treasury securities.

Interest Expense

Years Ended December 31, Change

2023 2022 Amount

Interest expense $ (3,470) $ (4,058) $ 588

There was no material change in interest expense for the year ended December 31, 2023 compared to 2022.

Other Income (Expense), Net

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Other income (expense), net $ (18,022) $ (15,447) $ (2,575)

Other income (expense), net changed by $204.1 million for the year ended December 31, 2023 compared to 2022 primarily due to the net decrease in unrealized losses from our shares held in equity securities, partially offset by an increase in net realized losses from sales of publicly-traded equity securities, and $44.3 million gain from a “step acquisition” (as defined by U.S.

GAAP) that was reported in 2022.

For additional information see Note 4.

Investments and Fair Value Measurements and Note 14.

Business Combinations in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Other income (expense), net changed by $2.6 million for the year ended December 31, 2024 compared to 2023 primarily due to an increase in net realized and unrealized losses from our shares held in equity securities.

Provision for Income Taxes

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Provision for income taxes $ 21,255 $ 19,716 $ 1,539

Provision for income taxes increased by $9.6 million for the year ended December 31, 2023 compared to 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.

Provision for income taxes increased by $1.5 million for the year ended December 31, 2024 compared to 2023 primarily due to the increased foreign tax expense as the result of higher foreign taxable income and withholding taxes.

For additional information see Note 11.

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Treasury securities totaling $5.2 billion available as of December 31, 2024.

We believe that cash flows generated from operations, cash, cash equivalents, marketable securities, available funds, and access to financing sources, including our credit facility, will be sufficient to meet our anticipated operating cash needs for at least the next twelve months.

We believe that cash flows generated from operations, available funds, and access to financing sources, including our undrawn credit facility, will be sufficient to meet our anticipated operating cash needs for at least the next twelve months.

However, any projections of future cash needs and cash flows are subject to substantial uncertainty.

We have historically generated significant losses from our operations as reflected in our consolidated balance sheets and while we have generated income from operations and positive cash flows from operations in the year ended December 31, 2023, the amounts may fluctuate for the foreseeable future.

While we have generated income from operations and positive cash flows from operations in the year ended December 31, 2024, the amounts may fluctuate for the foreseeable future.

As of December 31, 2024, our accumulated deficit balance was $5.2 billion, and our principal sources of liquidity were cash, cash equivalents, and short-term U.S.

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Debt in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

During the year ended December 31, 2024, the Company repurchased and subsequently retired 2.1 million shares of its Class A common stock for an aggregate amount, including commissions, of $64.2 million under our Share Repurchase Program.

As of December 31, 2024, approximately $935.8 million of the originally authorized amount under our Share Repurchase Program remained available for future repurchases.

Our future capital requirements will depend on many factors, including, but not limited to, the rate of our growth, our ability to attract and retain customers and their willingness and ability to pay for our products and services, and the timing and extent of spending to support our efforts to market and develop our products.

Further, we may enter into future arrangements to acquire or invest in businesses, products, services, strategic partnerships, and technologies;

additionally, we may repurchase shares of our Class A common stock from time to time under our Share Repurchase Program.

As such, we may be required to seek additional equity or debt financing.

additionally, we have, and may in the future, repurchase shares of our Class A common stock from time to time under our Share Repurchase Program.

As such, we may seek additional equity or debt financing on an as needed or opportunistic basis.

In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

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(6,745) 2,930 (3,885)

Net increase in cash, cash equivalents, and restricted cash

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

$ 1,269,829 $ (1,777,228) $ 260,421

Operating Activities

Net cash provided by operating activities was $712.2 million and $223.7 million for the year ended December 31, 2023 and 2022, respectively.

The increase was primarily driven by timing of payments to vendors and timing of the receipt of payments from our customers, as well as an increase in interest income.

Net cash provided by operating activities was $1.2 billion and $712.2 million for the year ended December 31, 2024 and 2023, respectively.

The increase was primarily driven by the growth of our business and timing of payments to vendors.

Investing Activities

Net cash used in investing activities was $2.7 billion and $45.4 million for the year ended December 31, 2023 and 2022, respectively.

The increase in cash used in investing activities was primarily due to purchases of marketable securities, primarily comprised of short-term U.S.

treasury securities, offset by proceeds from sales and redemptions of marketable securities.

Net cash used in investing activities was $340.7 million and $2.7 billion for the year ended December 31, 2024 and 2023, respectively.

The decrease in cash used in investing activities was primarily due to increased proceeds from maturities of short-term U.S.

Treasury securities compared to the prior year.

Financing Activities

Net cash provided by financing activities was $463.4 million and $218.8 million for the year ended December 31, 2024 and 2023, respectively, each of which primarily consisted of proceeds from the exercise of common stock options.

During the year ended December 31, 2024, these were partially offset by taxes paid related to the net settlement of SARs and repurchases of Class A common stock.

Contractual Obligations and Commitments

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(2) The contractual commitment amounts under operating leases in the table above are primarily related to facility and equipment leases.

Operating lease commitments are reflected net of $102.4 million of sublease income from tenants in certain of our leased facilities.

Operating lease commitments are reflected net of $86.2 million of sublease income from tenants in certain of our leased facilities and $68.8 million of imputed interest.

Refer to Note 7.

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On-Premises Software

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

Because of this requirement, we

have concluded that the software subscriptions and O&M services, which together we refer to as our On-Premises Software, are highly interdependent and interrelated and represent a single distinct performance obligation within the context of the contract.

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

1 unchanged sentence

Our 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.

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

Professional services are on-demand, whereby we perform services throughout the contract period;

therefore, the revenue is recognized over the contractual term.

Contract Liabilities

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

however, we bill many of our customers in advance of the provision of services under our contracts, resulting in contract liabilities consisting of either deferred revenue or customer deposits.

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

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

The payment terms and conditions vary by contract;

however, our 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, we 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 we expect, 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, we determined our contracts do not generally contain a significant financing component.

Professional services are on-demand, whereby we perform services throughout the service period;

therefore, the revenue is recognized over the related term.

Areas of Judgment and Estimation

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

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

We 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 our contracts and are accounted for as a single performance obligation for our On-Premises Software.

Recent Accounting Pronouncements

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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 7. Management’s Discussion and Analysis