Palantir Technologies Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX Page Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 82 Consolidated Balance Sheets 85 Consolidated Statements of Operations 86 Consolidated Statements of Comprehensive Income 87 Consolidated Statements of Equity 88 Consolidated Statements of Cash Flows 89 Notes to Consolidated Financial Statements 90 81 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Palantir Technologies Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Palantir Technologies Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 17, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 82 Table of Contents Revenue Recognition 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”); and professional services. Management applies significant judgment in identifying and evaluating any non-standard terms and conditions in customer arrangements which may impact the determination of performance obligations or the timing of revenue recognition. Auditing revenue recognition was complex and required a significant level of auditor judgment to identify and evaluate non-standard terms and conditions that impact revenue recognition. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls to identify and evaluate terms and conditions and performance obligations in customer arrangements that would impact revenue recognition. Our substantive procedures included, among others, testing the completeness and accuracy of management’s identification and evaluation of non-standard terms and conditions, reading executed contracts for a sample of revenue transactions, and evaluating whether the Company appropriately applied its revenue recognition policy to the arrangements based on the terms and conditions therein and consistent with U.S. GAAP. We also evaluated the appropriateness of the related disclosures in the consolidated financial statements. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2008. San Jose, California February 17, 2026 83 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Palantir Technologies Inc. Opinion on Internal Control Over Financial Reporting We have audited Palantir Technologies Inc.’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Palantir Technologies Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 17, 2026 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP San Jose, California February 17, 2026 84 Table of Contents Palantir Technologies Inc. Consolidated Balance Sheets (in thousands, except per share amounts) As of December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 1,423,796 $ 2,098,524 Marketable securities 5,753,247 3,131,463 Accounts receivable, net 1,042,065 575,048 Prepaid expenses and other current assets 139,066 129,254 Total current assets 8,358,174 5,934,289 Property and equipment, net 51,960 39,638 Operating lease right-of-use assets 200,105 200,740 Other assets 290,153 166,217 Total assets $ 8,900,392 $ 6,340,884 Liabilities and Equity Current liabilities: Accounts payable $ 8,064 $ 103 Accrued liabilities 355,624 427,046 Deferred revenue 408,963 259,624 Customer deposits 357,066 265,252 Operating lease liabilities 45,864 43,993 Total current liabilities 1,175,581 996,018 Deferred revenue, noncurrent 46,216 39,885 Customer deposits, noncurrent 18 1,663 Operating lease liabilities, noncurrent 183,474 195,226 Other noncurrent liabilities 7,092 13,685 Total liabilities 1,412,381 1,246,477 Commitments and Contingencies (Note 8) Palantir's stockholders’ equity: Common stock, $ 0.001 par value: 20,000,000 Class A shares authorized as of December 31, 2025 and 2024; 2,290,987 and 2,242,389 shares issued and outstanding as of December 31, 2025 and 2024, respectively; 2,700,000 Class B shares authorized as of December 31, 2025 and 2024; 99,200 and 95,401 shares issued and outstanding as of December 31, 2025 and 2024, respectively; and 1,005 Class F shares authorized, issued, and outstanding as of December 31, 2025 and 2024 2,391 2,339 Additional paid-in capital 10,933,325 10,193,970 Accumulated other comprehensive income (loss), net 13,942 ( 5,611 ) Accumulated deficit ( 3,562,390 ) ( 5,187,423 ) Total Palantir's stockholders’ equity 7,387,268 5,003,275 Noncontrolling interests 100,743 91,132 Total equity 7,488,011 5,094,407 Total liabilities and equity $ 8,900,392 $ 6,340,884 The accompanying notes are an integral part of these consolidated financial statements. 85 Table of Contents Palantir Technologies Inc. Consolidated Statements of Operations (in thousands, except per share amounts) Years Ended December 31, 2025 2024 2023 Revenue $ 4,475,446 $ 2,865,507 $ 2,225,012 Cost of revenue 789,177 565,990 431,105 Gross profit 3,686,269 2,299,517 1,793,907 Operating expenses: Sales and marketing 1,056,859 887,755 744,992 Research and development 557,677 507,878 404,624 General and administrative 657,718 593,481 524,325 Total operating expenses 2,272,254 1,989,114 1,673,941 Income from operations 1,414,015 310,403 119,966 Interest income 229,181 196,792 132,572 Other income (expense), net 14,172 ( 18,022 ) ( 15,447 ) Income before provision for income taxes 1,657,368 489,173 237,091 Provision for income taxes 22,724 21,255 19,716 Net income 1,634,644 467,918 217,375 Less: Net income attributable to noncontrolling interests 9,611 5,728 7,550 Net income attributable to common stockholders $ 1,625,033 $ 462,190 $ 209,825 Earnings per share attributable to common stockholders, basic $ 0.69 $ 0.21 $ 0.10 Earnings per share attributable to common stockholders, diluted $ 0.63 $ 0.19 $ 0.09 Weighted-average shares of common stock outstanding used in computing earnings per share attributable to common stockholders, basic 2,369,612 2,250,163 2,147,446 Weighted-average shares of common stock outstanding used in computing earnings per share attributable to common stockholders, diluted 2,565,197 2,450,818 2,297,927 The accompanying notes are an integral part of these consolidated financial statements. 86 Table of Contents Palantir Technologies Inc. Consolidated Statements of Comprehensive Income (in thousands) Years Ended December 31, 2025 2024 2023 Net income $ 1,634,644 $ 467,918 $ 217,375 Other comprehensive income (loss), net of tax Foreign currency translation adjustments 10,938 ( 3,386 ) 2,699 Net unrealized gain (loss) on available-for-sale securities 8,615 ( 3,026 ) 3,435 Comprehensive income 1,654,197 461,506 223,509 Less: Comprehensive income attributable to noncontrolling interests 9,611 5,728 7,550 Comprehensive income attributable to common stockholders $ 1,644,586 $ 455,778 $ 215,959 The accompanying notes are an integral part of these consolidated financial statements. 87 Table of Contents Palantir Technologies Inc. Consolidated Statements of Equity (in thousands) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss), Net Accumulated Deficit Total Palantir’s Stockholders’ Equity Noncontrolling Interests Total Equity Shares Amount 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 Issuance of common stock from the exercise of stock options 46,079 46 218,192 — — 218,238 — 218,238 Issuance of common stock upon vesting of restricted stock units (“RSUs”) 54,974 55 ( 55 ) — — — — — Stock-based compensation — — 476,038 — — 476,038 — 476,038 Other comprehensive income — — — 6,134 — 6,134 — 6,134 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 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss), Net Accumulated Deficit Total Palantir’s Stockholders’ Equity Noncontrolling Interests Total Equity Shares Amount 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 Issuance of common stock from the exercise of stock options 99,297 100 745,296 — — 745,396 — 745,396 Issuance of common stock from the exercise of stock appreciation rights (“SARs”), net of shares withheld for employee taxes 5,943 6 ( 302,493 ) — — ( 302,487 ) — ( 302,487 ) Issuance of common stock upon release of RSUs and performance-based RSUs (“P-RSUs”) 35,550 35 ( 35 ) — — — — — Repurchases of common stock ( 2,123 ) ( 2 ) ( 64,194 ) — — ( 64,196 ) — ( 64,196 ) Stock-based compensation — — 693,223 — — 693,223 — 693,223 Other comprehensive loss — — — ( 6,412 ) — ( 6,412 ) — ( 6,412 ) Net income — — — — 462,190 462,190 5,728 467,918 Balance as of December 31, 2024 2,338,795 $ 2,339 $ 10,193,970 $ ( 5,611 ) $ ( 5,187,423 ) $ 5,003,275 $ 91,132 $ 5,094,407 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss), Net Accumulated Deficit Total Palantir’s Stockholders’ Equity Noncontrolling Interests Total Equity Shares Amount Balance as of December 31, 2024 2,338,795 $ 2,339 $ 10,193,970 $ ( 5,611 ) $ ( 5,187,423 ) $ 5,003,275 $ 91,132 $ 5,094,407 Issuance of common stock from the exercise of stock options 25,739 25 129,082 — — 129,107 — 129,107 Issuance of common stock upon release of RSUs and P-RSUs 27,259 27 ( 27 ) — — — — — Repurchases of common stock ( 601 ) — ( 74,985 ) — — ( 74,985 ) — ( 74,985 ) Stock-based compensation — — 685,285 — — 685,285 — 685,285 Other comprehensive income — — — 19,553 — 19,553 — 19,553 Net income — — — — 1,625,033 1,625,033 9,611 1,634,644 Balance as of December 31, 2025 2,391,192 $ 2,391 $ 10,933,325 $ 13,942 $ ( 3,562,390 ) $ 7,387,268 $ 100,743 $ 7,488,011 The accompanying notes are an integral part of these consolidated financial statements. 88 Table of Contents Palantir Technologies Inc. Consolidated Statements of Cash Flows (in thousands) Years Ended December 31, 2025 2024 2023 Operating activities Net income $ 1,634,644 $ 467,918 $ 217,375 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 26,145 31,587 33,354 Stock-based compensation 684,033 691,638 475,903 Unrealized and realized (gain) loss from marketable securities, net 21,228 19,306 13,160 Noncash consideration ( 37,244 ) ( 52,521 ) ( 46,609 ) Other operating activities 15,630 66,034 12,764 Changes in operating assets and liabilities: Accounts receivable, net ( 450,429 ) ( 211,157 ) ( 106,159 ) Prepaid expenses and other assets 51,979 11,883 ( 2,955 ) Accounts payable and accrued liabilities 4,659 96,793 21,063 Contract liabilities 238,688 76,796 143,859 Other liabilities ( 54,860 ) ( 44,412 ) ( 49,572 ) Net cash provided by operating activities 2,134,473 1,153,865 712,183 Investing activities Purchases of property and equipment ( 33,882 ) ( 12,634 ) ( 15,114 ) Purchases of marketable securities ( 7,702,060 ) ( 5,395,913 ) ( 5,636,406 ) Proceeds from sales and redemption of marketable securities 5,026,315 5,073,507 2,889,268 Purchases of privately-held securities ( 72,924 ) ( 5,615 ) — Other investing activities ( 1,000 ) — 51,072 Net cash used in investing activities ( 2,783,551 ) ( 340,655 ) ( 2,711,180 ) Financing activities Proceeds from the exercise of common stock options 129,107 745,396 218,238 Repurchases of common stock ( 74,985 ) ( 64,196 ) — Taxes paid related to net share settlement of equity awards ( 81,117 ) ( 218,280 ) — Other financing activities 85 444 601 Net cash provided by (used in) financing activities ( 26,910 ) 463,364 218,839 Effect of foreign exchange on cash, cash equivalents, and restricted cash 7,477 ( 6,745 ) 2,930 Net increase (decrease) in cash, cash equivalents, and restricted cash ( 668,511 ) 1,269,829 ( 1,777,228 ) Cash, cash equivalents, and restricted cash - beginning of period 2,119,936 850,107 2,627,335 Cash, cash equivalents, and restricted cash - end of period $ 1,451,425 $ 2,119,936 $ 850,107 Supplemental disclosures of cash flow information Noncash investing and financing activities Accrued taxes related to net share settlement of equity awards $ — $ 84,207 $ — The accompanying notes are an integral part of these consolidated financial statements. 89 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements 1. Organization Palantir Technologies Inc. (including its subsidiaries, “Palantir” or the “Company”) was incorporated in Delaware on May 6, 2003. The Company builds and deploys software platforms that serve as the central operating systems for its customers. 2. Significant Accounting Policies Basis of Presentation and Consolidation 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. and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in entities where the Company holds at least a 20% ownership interest and has the ability to exercise significant influence over, but does not control, the investee are accounted for using the equity method of accounting. Certain prior year balances have been reclassified to conform to the current year presentation. Such reclassifications did not affect total revenues, income from operations, net income, or cash flows. The Company’s fiscal year ends on December 31. 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 valuation and recognition of stock-based compensation awards, 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. Actual results could differ from those estimates and such differences could affect the Company’s financial position and results of operations. Segments The Company has two operating segments, commercial and government, which were determined based on the manner in which the chief operating decision maker (“CODM”), who is the Chief Executive Officer, manages the operations of the Company for purposes of allocating resources and evaluating performance. Various factors, including the Company’s organizational and management reporting structure and customer type, were considered in determining these operating segments. The Company’s operating segments are described below: • Commercial: This segment primarily serves customers working in non-government industries. • Government: This segment primarily serves customers that are U.S government and non-U.S. government agencies. 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 and U.S. Treasury securities with original maturities of three months or less. 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. 90 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) 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): As of December 31, 2025 2024 2023 Cash and cash equivalents $ 1,423,796 $ 2,098,524 $ 831,047 Restricted cash included in prepaid expenses and other current assets 2,518 7,704 370 Restricted cash included in other assets 25,111 13,708 18,690 Total cash, cash equivalents, and restricted cash $ 1,451,425 $ 2,119,936 $ 850,107 Accounts Receivable, Net Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses. The Company generally grants non-collateralized credit terms to its customers. 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, the allowance for credit losses was immaterial as of December 31, 2025 and 2024. 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 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 income (loss), net in the consolidated balance sheets until realized. Realized gains and losses and declines in value 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, marketable securities, and privately-held equity securities. 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. Cash deposits with financial institutions, including restricted cash, generally exceed federally insured limits. 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 in the consolidated balance sheets. The Company’s accounts receivable balances as of December 31, 2025 and 2024 were $ 1.0 billion and $ 0.6 billion, respectively. Customer I represented 25 % and 26 % of total accounts receivable as of December 31, 2025 and 2024, respectively, and no other customer represented more than 10% of total accounts receivable as of December 31, 2025 or 2024. For the years ended December 31, 2025, 2024, and 2023, no customer represented 10% or more of total revenue. 91 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) Property and Equipment, Net Property and equipment, net are stated at cost less accumulated depreciation and amortization. Depreciation is recognized using the straight-line method over the estimated useful lives of the respective assets, which are generally three years . Leasehold improvements are capitalized and amortized using the straight-line method over the shorter of the remaining lease term or the estimated useful life, which is generally five years . 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 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. Changes in the basis of the equity securities are recognized in other income (expense), net in the consolidated statements of operations. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset to the future undiscounted cash flows that the asset is expected to generate. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Impairments of long-lived assets during the years ended December 31, 2025, 2024, and 2023 were not material. Leases The Company determines if an arrangement is a lease at inception. An arrangement is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. If a lease is identified, classification is determined at lease commencement. Operating lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The Company’s leases do not provide an implicit interest rate and therefore the Company estimates its incremental borrowing rate to discount lease payments. The incremental borrowing rate reflects the interest rate that the Company would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term. Operating lease right-of-use (“ROU”) assets are based on the corresponding lease liability adjusted for any lease payments made at or before commencement, initial direct costs, and lease incentives. Renewals or early terminations are not accounted for unless the Company is reasonably certain to exercise these options. Operating lease expense is recognized and the ROU asset is amortized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease component. 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. Lease payments for short-term leases are expensed on a straight-line basis over the lease term. Operating leases are included in operating lease right-of-use assets, operating lease liabilities, and operating lease liabilities, non-current on the Company’s consolidated balance sheets. Finance leases are not material. Fair Value Measurement Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date. The Company measures fair value based on a three-level hierarchy of inputs, maximizing the use of observable inputs, where available, and minimizing the use of unobservable inputs when measuring fair value. A financial instrument’s level within the three-level hierarchy is based on the lowest level of input that is significant to the fair value measurement. The three-level hierarchy of inputs is as follows: Level 1: Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; 92 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on the Company’s own assumptions about current market conditions and require significant management judgment or estimation. Financial instruments consist of money market funds and certificates of deposit included in cash equivalents and restricted cash, accounts receivable, marketable securities, other assets accounted for at fair value, accounts payable, and accrued liabilities. Money market funds, certificates of deposit, and marketable securities are stated at fair value on a recurring basis. Accounts receivable, accounts payable, and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. Revenue Recognition 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”); and professional services. In accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers , the Company recognizes revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company applies the following five-step revenue recognition model in accounting for its revenue arrangements: • 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; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, the Company satisfies a performance obligation. 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. Palantir Cloud 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 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. On-Premises Software Sales of the Company’s software licenses, primarily term licenses, grant customers the right to use functional intellectual property, either on their internal hardware infrastructure or on their own cloud instance, over the contractual term and are also sold together with stand-ready O&M services. The O&M services include critical updates, support, and maintenance services required to operate the software and, as such, are necessary for the software to maintain its intended utility over the contractual term. Because of this requirement, the Company has concluded that the software licenses and O&M services, which together the Company refers to as On-Premises Software, are highly interdependent and interrelated and represent a single distinct performance obligation within the context of the contract. Revenue is generally recognized over the contract term on a ratable basis. 93 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) Professional Services 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, which may be coterminous or non-coterminous with a Palantir Cloud subscription or the On-Premises Software. Professional services are on-demand, whereby the Company performs services throughout the service period; therefore, the revenue is recognized over the related term. Contract Liabilities 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 its customers. Many of the Company’s arrangements include terms that allow the customer to terminate the contract for convenience and receive a pro-rata refund of the amount of the customer deposit for the period of time remaining in the contract term after the applicable termination notice period expires. In these arrangements, the Company concluded there are no enforceable rights and obligations after such notice period and therefore the consideration received or due from the customer that is subject to termination for convenience is recorded as customer deposits. The payment terms and conditions vary by contract; 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. As such, the Company determined its contracts do not generally contain a significant financing component. Areas of Judgment and Estimation The Company’s contracts with customers can include multiple promises to transfer goods or services to the customer. 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 as the Company’s On-Premises Software. 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 Incremental costs of obtaining a contract include only those costs that are directly related to the acquisition of contracts, including sales commissions, and that would not have been incurred if the contract had not been obtained. The Company recognizes a contract cost asset for the incremental costs of obtaining a contract with a customer if it is expected that the economic benefit and amortization period will be longer than one year. Costs to obtain contracts were not material in the periods presented. The Company recognizes an asset for the costs to fulfill a contract with a customer if the costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered. Costs to fulfill contracts were not material in the periods presented. Software Development Costs 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 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. 94 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) 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 subcontractor expenses, field-service representatives, third-party cloud hosting services, hardware costs, and other direct costs. Sales and Marketing Costs Sales and marketing costs primarily include salaries, stock-based compensation expense, variable compensation, including commissions, and benefits for the sales force and personnel involved in sales functions, executing on pilots, and customer growth activities, as well as third-party cloud hosting services for pilots, and marketing and sales event-related costs. 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 $ 16.0 million, $ 18.2 million, and $ 21.4 million for the years ended December 31, 2025, 2024, and 2023, 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 refine the Company’s platforms and products, as well as third-party cloud hosting services and other IT-related costs. Research and development costs are expensed as incurred. Contingencies 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. Legal costs incurred in connection with loss contingencies are expensed as incurred. Recoveries of such legal costs from insurance policies are recorded as an offset to legal expenses in the period they are received. Stock-Based Compensation The Company accounts for stock-based compensation expense in accordance with the fair value recognition and measurement provisions of GAAP, which require compensation cost for the grant-date fair value of stock-based awards to be recognized over the requisite service period. 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 assumptions used to determine the grant-date fair value of the awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. The Company recognizes forfeitures as they occur. Service-Based Awards The Company grants awards, including RSUs, stock option awards, and SARs, which vest based upon the satisfaction of a service condition. For such awards, the Company records stock-based compensation expense on a straight-line basis over the requisite service periods. The Company determines the grant-date fair value of the RSUs based on the fair value of the Company’s common stock on the grant date. For stock option awards and SARs that vest over an explicit service period and are exercisable at expiration, during a limited window (“Time-Vesting SARs”), the Company uses the Black-Scholes-Merton (“Black-Scholes”) option pricing model to determine the grant-date fair value of the awards. The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the expected term of the award, the expected volatility rate, risk-free interest rate, and the expected dividend yield of the common stock. Performance-Based Awards 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 P-RSUs based on 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 Company recognizes expense for 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. Income Taxes The Company estimates its current tax expense together with assessing temporary differences resulting from differing treatment of items not currently deductible for tax purposes. These differences result in deferred tax assets and liabilities on the Company’s consolidated balance sheets, which are estimated based upon the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates that will be in effect when these differences reverse. In general, 95 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) deferred tax assets represent future tax benefits to be received when certain expenses previously recognized in the Company’s consolidated statements of operations become deductible expenses under applicable income tax laws or loss or credit carryforwards are utilized. Accordingly, the realization of the Company’s deferred tax assets is dependent on future taxable income against which these deductions, losses, and credits can be utilized. The Company evaluates the realizability of its deferred tax assets on a regular basis 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. During such evaluation, the Company weighs all available positive and negative evidence, including temporary and permanent differences by jurisdiction, especially those related to excess tax benefits from stock-based compensation, scheduled reversals of deferred tax liabilities, its earning history and results of operations, and tax planning strategies. Additionally, the Company evaluates its projected future results of business operations, considering any uncertainty in future operating results relative to historical results, volatility in the market price and performance of the Company’s Class A common stock over time, variable macroeconomic conditions impacting the Company’s ability to forecast future taxable income, and changes in business that may affect the existence and magnitude of future taxable income. 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. Management’s judgment is required in determining the Company’s valuation allowance recorded against its net deferred tax assets. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. 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. Earnings Per Share Attributable to Common Stockholders The Company computes earnings per share attributable to its common stockholders using the two-class method required for participating securities, which determines earnings 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 earnings 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 attributed to its common stock on a combined basis. Noncontrolling Interests A noncontrolling interest represents the proportionate equity interest in a subsidiary that is not attributable, either directly or indirectly, to the Company and is reported as equity of the Company, separate from the Company’s controlling interest. Revenues, expenses, gains, losses, net income, and other comprehensive income are reported in the consolidated financial statements at the consolidated amounts, which include the amounts attributable to both the controlling and noncontrolling interests. Foreign Currency Generally, the functional currency of the Company’s international subsidiaries is the local currency of the country in which they operate. The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each reporting period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized as a cumulative translation adjustment and included in accumulated other comprehensive income. For transactions that are not denominated in the local functional currency, the Company remeasures monetary assets and liabilities at exchange rates in effect at the end of each reporting period. Transaction gains and losses from the remeasurement are recognized in other income (expense), net within the consolidated statements of operations. 96 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) Recently Adopted Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“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 adopted this standard update effective December 31, 2025 using a prospective approach and included the required disclosures in Note 11. Taxes . This standard update did not affect the Company’s operating results. Recent Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures, which requires the disclosure of additional information about specific expense categories in the notes to the consolidated financial statements on an annual and interim basis. The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027 on either a prospective or retrospective basis, with early adoption permitted. The Company is currently evaluating the impacts of the new standard on its consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software , which simplifies the capitalization guidance related to internal-use software by removing all references to software development project stages so the guidance is neutral to different software development methods. This ASU is effective for fiscal years beginning after December 15, 2027, including interim periods within those annual reporting periods, with early adoption permitted and can be applied using a prospective, retrospective, or modified transition approach. The Company is currently evaluating the impacts of the new standard on its consolidated financial statements. In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging and Revenue from Contracts with Customers , which refines the scope of the guidance on derivatives in ASC 815 and clarifies the guidance on share-based payments from a customer in ASC 606. This ASU is effective for fiscal years beginning after December 15, 2026, including interim periods within those annual reporting periods, with early adoption permitted. The guidance can be applied prospectively to new contracts entered into on or after the date of adoption or on a modified retrospective basis for contracts existing as of the beginning of the annual reporting period of adoption. The Company is currently evaluating the impacts of the new standard on its consolidated financial statements. 3. Contract Liabilities and Remaining Performance Obligations Contract Liabilities The Company’s contract liabilities consist of deferred revenue and customer deposits. As of December 31, 2025 and 2024, the Company’s contract liabilities were $ 812.3 million and $ 566.4 million, respectively. Revenue of $ 526.6 million and $ 457.6 million was recognized during the years ended December 31, 2025 and 2024, respectively, that was included in contract liabilities as of December 31, 2024 and 2023, respectively. Remaining Performance Obligations The Company’s arrangements with its customers often have terms that span over multiple years. However, the Company allows many of its customers to terminate contracts for convenience prior to the end of the stated term with less than twelve months’ notice. Revenue allocated to remaining performance obligations represents noncancelable contracted revenue that has not yet been recognized, which includes deferred revenue and, in certain instances, amounts that will be invoiced. The Company has elected the practical expedient allowing the Company to not disclose remaining performance obligations for contracts with original terms of twelve months or less. Cancelable contracted revenue, which includes customer deposits, is not considered a remaining performance obligation. The Company’s remaining performance obligations were $ 4.1 billion as of December 31, 2025, of which the Company expects to recognize approximately 38 % as revenue over the next 12 months, 36 % as revenue over the subsequent 13 to 36 months, and the remainder thereafter. Disaggregation of Revenue See Note 13. Segment and Geographic Information for disaggregated revenue by customer segment and geographic region. 97 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) 4. Investments and Fair Value Measurements The following tables present the Company’s assets that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation (in thousands): As of December 31, 2025 Total Level 1 Level 2 Level 3 Assets: Cash and cash equivalents: Money market funds $ 945,330 $ 945,330 $ — $ — Prepaid expenses and other current assets and other assets: Certificates of deposit 4,846 — 4,846 — Marketable securities: U.S. Treasury securities 5,729,892 — 5,729,892 — Publicly-traded equity securities 23,355 23,355 — — Total $ 6,703,423 $ 968,685 $ 5,734,738 $ — As of December 31, 2024 Total Level 1 Level 2 Level 3 Assets: Cash and cash equivalents: Money market funds $ 1,823,046 $ 1,823,046 $ — $ — Prepaid expenses and other current assets and other assets: Certificates of deposit 4,826 — 4,826 — Marketable securities: U.S. Treasury securities 3,110,687 — 3,110,687 — Publicly-traded equity securities 20,776 20,776 — — Total $ 4,959,335 $ 1,843,822 $ 3,115,513 $ — Debt Securities As of December 31, 2025 and 2024, available-for-sale debt securities, all of which are included in marketable securities on the consolidated balance sheet, consisted of the following (in thousands): As of December 31, 2025 Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. Treasury securities $ 5,720,869 $ 9,158 $ ( 135 ) $ 5,729,892 Total debt securities $ 5,720,869 $ 9,158 $ ( 135 ) $ 5,729,892 As of December 31, 2024 Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. Treasury securities $ 3,110,278 $ 1,022 $ ( 613 ) $ 3,110,687 Total debt securities $ 3,110,278 $ 1,022 $ ( 613 ) $ 3,110,687 The Company sold $ 279.7 million and $ 694.6 million of available-for-sale debt securities during the fiscal years ended December 31, 2025 and 2023. The realized gains and losses from those sales were immaterial. The Company did not sell any 98 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) available-for-sale debt securities during the fiscal year ended December 31, 2024. As of December 31, 2025 and 2024, available-for-sale debt securities of $ 724.9 million and $ 716.3 million, respectively, 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, 2025 or 2024 were in a continuous unrealized loss position for greater than 12 months and it is more likely than not that the Company will hold the securities until maturity or a recovery of the cost basis. We did not recognize any credit losses related to our available-for sale debt securities during the years end December 31, 2025 and 2024. All of the Company’s U.S. Treasury securities had contractual maturities due within one year as of December 31, 2025 and 2024. Equity Securities The Company holds equity securities in publicly-traded companies, which are recorded at fair market value each reporting period in marketable securities on the consolidated balance sheets. Realized and unrealized gains and losses are recorded in other income (expense), net on the consolidated statements of operations. For the years ended December 31, 2025, 2024, and 2023, net unrealized gains and losses from publicly-traded equity securities held at the end of each period were immaterial. The Company also holds equity securities in privately-held companies without readily determinable fair values that are recorded using the measurement alternative. As of December 31, 2025 and December 31, 2024, the total amount of privately-held equity securities included in other assets on the consolidated balance sheets was $ 170.0 million and $ 64.9 million, respectively. The Company classifies these fair value measurements as Level 3 within the fair value hierarchy. There were upward adjustments on privately-held equity securities based on observable transactions of $ 30.7 million during the year ended December 31, 2025, and no upward adjustments on privately-held equity securities during the year ended December 31, 2024. There were no material downward adjustments or impairments for the privately-held equity securities held as of December 31, 2025 or 2024. Cumulative upward adjustments were $ 30.7 million and cumulative downward adjustments and impairments were not material on privately-held equity securities held by the Company as of December 31, 2025. Additionally, we have accepted, and may continue to accept, securities as noncash consideration. Total equity securities received as noncash consideration was $ 38.9 million, $ 58.7 million, and $ 41.7 million during the years ended December 31, 2025, 2024, and 2023, respectively. Strategic Commercial Contracts 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”). No Investments were purchased under such Investment Agreements during the fiscal years ended December 31, 2025 or 2024. 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”). The Company assessed the concurrent agreements under the noncash consideration and consideration 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. 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. During the years ended December 31, 2025, 2024, and 2023, revenue recognized from Strategic Commercial Contracts was $ 15.3 million, $ 52.3 million, and $ 87.3 million, respectively. 99 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) 5. Balance Sheet Components Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): As of December 31, 2025 2024 Leasehold improvements $ 98,302 $ 85,284 Computer equipment, software, and other 77,315 55,815 Furniture and fixtures 15,435 13,906 Construction in progress 9,999 7,632 Total property and equipment, gross 201,051 162,637 Less: accumulated depreciation and amortization ( 149,091 ) ( 122,999 ) Total property and equipment, net $ 51,960 $ 39,638 Depreciation and amortization expense related to property and equipment, net was not material for the years ended December 31, 2025, 2024, and 2023. Accrued Liabilities Accrued liabilities consisted of the following (in thousands): As of December 31, 2025 2024 Accrued payroll and related expenses $ 178,659 $ 306,939 Accrued other liabilities 176,965 120,107 Total accrued liabilities $ 355,624 $ 427,046 6. Debt 2014 Credit Facility The Company has a secured revolving credit facility, which provides for aggregate revolving commitments of $ 500.0 million and has a maturity date of March 31, 2027 (as amended, the “2014 Credit Facility”). As of December 31, 2025, the Company had no outstanding debt balances under the 2014 Credit Facility. The 2014 Credit Facility contains customary representations and warranties, and certain financial and nonfinancial covenants, including but not limited to maintaining minimum liquidity of $ 50.0 million, and certain limitations on liens and indebtedness. The Company was in compliance with all covenants associated with the 2014 Credit Facility as of December 31, 2025. 7. Leases The Company has operating leases primarily for corporate office space. Certain lease agreements contain renewal options, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate. The Company's leases have remaining terms up to March 2035, some of which include one or more options to extend. Additionally, some lease contracts include termination options. 100 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) Supplemental balance sheet information related to lease liabilities at December 31, 2025 and 2024 was as follows (in thousands): As of December 31, Lease-Related Assets and Liabilities Financial Statement Line Items 2025 2024 Right-of-use assets: Operating leases Operating lease right-of-use assets $ 200,105 $ 200,740 Total right-of-use assets $ 200,105 $ 200,740 Lease liabilities: Operating leases Operating lease liabilities $ 45,864 $ 43,993 Operating lease liabilities, noncurrent 183,474 195,226 Total lease liabilities $ 229,338 $ 239,219 The components of lease expense included in the Company's consolidated statements of operations include (in thousands): Years Ended December 31, 2025 2024 2023 Operating lease expense $ 57,164 $ 57,655 $ 61,972 Short-term lease expense 4,461 3,445 4,949 Variable lease expense 5,636 5,585 4,772 Sublease income ( 15,966 ) ( 17,205 ) ( 18,905 ) Total lease expense, net $ 51,295 $ 49,480 $ 52,788 Variable lease costs are primarily related to payments made to lessors for common area maintenance, property taxes, insurance, and other operating expenses. Short-term lease costs primarily represent temporary employee housing. Maturities of operating lease liabilities as of December 31, 2025 were as follows (in thousands): As of December 31, 2025 Operating Lease Commitments Less: Sublease Income Net Lease Commitments Year ended December 31, 2026 $ 62,079 $ 13,786 $ 48,293 2027 50,428 14,423 36,005 2028 29,555 12,470 17,085 2029 24,943 10,254 14,689 2030 33,319 10,254 23,065 Thereafter 92,215 10,254 81,961 Total undiscounted liabilities 292,539 71,441 221,098 Less: Imputed interest ( 63,201 ) — ( 63,201 ) Total operating lease liabilities $ 229,338 $ 71,441 $ 157,897 The weighted-average remaining lease term related to the Company’s operating lease liabilities as of December 31, 2025 and 2024 was six and seven years , respectively. The weighted-average discount rate related to the Company’s operating lease liabilities as of December 31, 2025 and 2024 was 7 %. 101 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) The following table sets forth the supplemental information related to the Company's operating leases for the years ended December 31, 2025 and 2024 (in thousands): Years Ended December 31, 2025 2024 Cash paid for operating lease liabilities $ 63,818 $ 65,402 Lease liabilities arising from obtaining right-of-use assets $ 37,784 $ 58,320 8. Commitments and Contingencies Purchase Commitments The Company has commitments with various third parties to purchase cloud hosting services. Under one of its third-party cloud services agreements, as amended, the Company has committed to spend at least $ 1.95 billion over ten contract years through September 30, 2033, among other things. As of December 31, 2025, the Company satisfied $ 79.2 million of its $ 170.2 million commitment for the contract year beginning October 1, 2025 and ending September 30, 2026. Litigation and Legal Proceedings The Company has been, is currently party to, and may, from time to time, be subject to various legal proceedings, claims, disputes, government investigations, or similar matters arising in the normal course of business. These may include proceedings, claims, disputes, allegations, or investigations related to, but not limited to, intellectual property; employment; securities; investors; taxes; class actions; contract or breach of contract; tort; warranty; refund; breach, leak, or misuse of personal data or confidential information; government procurement; government regulation or compliance; or other matters. The Company evaluates associated developments on a regular basis and establishes an accrual for loss contingencies when the loss is both probable and reasonably estimable. 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., 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. Palantir Technologies Inc., et al., Case No. 1:22-cv-02893, respectively, naming the Company and certain current and former officers and directors as defendants. The suits allege false and misleading statements about our business and prospects, and purport to allege claims under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Securities Act of 1933, as amended (the “Securities Act”), and seek unspecified damages and remedies under Sections 10(b), 20(a), and 20(A) of the Exchange Act and Sections 11 and 15 of the Securities Act. These three actions subsequently were consolidated as Cupat v. Palantir Technologies Inc., et al., Lead Civil Action No. 1:22-cv-02834-CNS-SKC, consolidated with civil actions 1:22-cv-02805-CNS-SKC and 1:22-cv-02893-CNS-SKC. On March 31, 2024, the Court dismissed the Cupat matter without prejudice. On May 24, 2024, plaintiffs filed a second amended complaint. On April 4, 2025, the Court dismissed the Cupat matter with prejudice and entered judgment for the defendants on the same day. On May 2, 2025, plaintiffs filed a Notice of Appeal from the final judgment with the United States Court of Appeals for the Tenth Circuit. As of December 31, 2025, the Company was not aware of any currently pending legal matters or claims, individually or in the aggregate, that were 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. 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 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. The Company has not recorded warranty expense or related accruals as of December 31, 2025 and 2024. 102 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) The Company generally agrees to indemnify its customers against legal claims that the Company’s software products infringe certain third-party intellectual property rights and accounts for its indemnification obligations. In the event of such a claim, the Company is generally obligated to defend its customer against the claim and to either settle the claim at the Company’s expense or pay damages that the customer is legally required to pay to the third-party claimant. In addition, in the event of an infringement, the Company generally agrees to secure the right for the customer to continue using the infringing product; to modify or replace the infringing product; 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. As such, the Company has not recorded a liability for infringement costs as of December 31, 2025 and 2024. 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. 9. Stockholders’ Equity The Company’s Class A, Class B, and Class F common stock (collectively, the “common stock”) all have the same rights, except with respect to voting and conversion rights. Class A and Class B common stock have voting rights of 1 and 10 votes per share, respectively. The Class F common stock has the voting rights generally described herein and each share of Class F common stock is convertible at any time, at the option of the holder thereof, into one share of Class B common stock. All shares of Class F common stock are held in a voting trust established by Stephen Cohen, Alexander Karp, and Peter Thiel (the “Founders”). The Class F common stock generally gives the Founders the ability to control up to 49.999999 % of the total voting power of the Company’s capital stock, so long as the Founders and certain of their affiliates collectively meet a minimum ownership threshold, which was 100.0 million of the Company's equity securities as of December 31, 2025. Holders of the common stock are entitled to dividends when, as, and if declared by the Company’s Board of Directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. No dividends have been declared as of December 31, 2025. The following represented the total authorized, issued, and outstanding shares for each class of common stock (in thousands): As of December 31, 2025 As of December 31, 2024 Authorized Issued and Outstanding Authorized Issued and Outstanding Class A Common Stock 20,000,000 2,290,987 20,000,000 2,242,389 Class B Common Stock 2,700,000 99,200 2,700,000 95,401 Class F Common Stock 1,005 1,005 1,005 1,005 Total 22,701,005 2,391,192 22,701,005 2,338,795 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”). Share repurchases were recorded on the trade date and the repurchase price is inclusive of any related fees and commissions. Shares of Class A common stock repurchased by the Company were immediately retired, and upon retirement the par value of the Class A common stock repurchased was deducted from common stock with the excess of repurchase price recorded to additional paid-in capital on the Company’s consolidated balance sheets. During the year ended December 31, 2025, the Company repurchased and subsequently retired 0.6 million shares of its Class A common stock for an aggregate amount, including commissions, of $ 75.0 million under the Share Repurchase Program. In January 2026, the Company terminated the Share Repurchase Program. 103 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) 10. Stock-Based Compensation 2020 Executive Equity Incentive Plan In August 2020, the Company’s Board of Directors approved the 2020 Executive Equity Incentive Plan (the “Executive Equity Plan”). The Executive Equity Plan permitted the granting of nonstatutory stock options (“NSOs”) and RSUs to the Company’s employees, consultants, and directors. A total of 165,900,000 shares of the Company’s Class B common stock were reserved for issuance under the Executive Equity Plan. 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. 2020 Equity Incentive Plan In September 2020, prior to the Direct Listing, the Company’s Board of Directors approved the 2020 Equity Incentive Plan (“2020 Plan”). The 2020 Plan provides for the grant of incentive stock options (“ISOs”), NSOs, restricted stock, RSUs, SARs, and performance awards to the Company’s employees, directors, and consultants. A total of 150,000,000 shares of the Company’s Class A common stock were initially reserved for issuance pursuant to the 2020 Plan. In addition, the number of shares of Class A common stock reserved for issuance under the 2020 Plan includes certain shares of common stock subject to awards under the 2010 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. The number of shares of Class A common stock available for issuance under the 2020 Plan will also include an annual increase on the first day of each fiscal year beginning on January 1, 2022, equal to the least of: • 250,000,000 shares of the Company’s Class A common stock; • Five percent of the outstanding shares of the Company’s common stock as of the last day of the immediately preceding fiscal year; or • such other amount as the administrator of the 2020 Plan determines. Under the 2020 Plan, the exercise price of options granted is generally at least equal to the fair market value of the Company’s Class A common stock on the date of grant. The term of an ISO generally may not exceed ten years . Additionally, the exercise price of any ISO granted to a 10 % stockholder shall not be less than 110 % of the fair market value of the common stock on the date of grant, and the term of such option grant shall not exceed five years . Options and other equity awards become vested and, if applicable, exercisable based on terms determined by the Board of Directors or another plan administrator on the date of grant, which is typically four years for new employees and varies for subsequent grants. Stock Options and SARs The following table summarizes stock option and SAR activity for the year ended December 31, 2025 (in thousands, except per share amounts, years, and aggregate intrinsic value): Options Outstanding SARs Outstanding Number of Awards Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life (years) Aggregate Intrinsic Value (millions) Number of Awards Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life (years) Aggregate Intrinsic Value (millions) Balance as of December 31, 2024 178,109 $ 9.26 6.9 $ 11,822 6,437 $ 55.75 6.7 $ 128 Granted — — 5,167 219.44 Exercised ( 25,739 ) 5.02 — — Canceled and forfeited ( 168 ) 6.45 ( 333 ) 82.54 Balance as of December 31, 2025 152,202 $ 9.98 6.1 $ 25,536 11,271 $ 130.00 7.1 $ 794 Vested and exercisable as of December 31, 2025 72,552 $ 8.44 5.6 $ 12,284 — $ — 0.0 $ — The aggregate intrinsic value of options and SARs outstanding, as well as those which are 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 104 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) the respective periods presented, accounting for the maximum appreciation of an award, as applicable. The aggregate intrinsic value of options exercised during the years ended December 31, 2025, 2024, and 2023 was $ 3.0 billion, $ 3.8 billion, and $ 0.5 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 SARs exercised during the years ended December 31, 2025 and 2023. The aggregate intrinsic value of SARs exercised during the year ended December 31, 2024 was $ 0.7 billion. There were no options granted during the years ended December 31, 2025, 2024, and 2023. The total grant-date fair value of options that vested during the years ended December 31, 2025, 2024, and 2023 was $ 103.6 million, $ 107.7 million, and $ 131.0 million, respectively . The weighted-average grant-date fair value of SARs granted during the year ended December 31, 2025 and 2024 was $ 22.43 and $ 4.08 per share, respectively. The total grant-date fair value of SARs that vested during the years ended December 31, 2025 and 2024 was $ 18.5 million and $ 138.8 million, respectively. There were no SARs granted or vested in the year ended December 31, 2023. As of December 31, 2025, the total unrecognized stock-based compensation expense related to options and SARs outstanding was $ 406.0 million and $ 144.6 million, respectively, which is expected to be recognized over a weighted-average service period of five and eight years , respectively. Time-Vesting SARs The Company grants Time-Vesting SARs that vest over explicit service periods of up to nine years and are exercisable at expiration, during a limited window, if the Company’s stock price reaches a certain threshold. Time-Vesting SARs have exercise prices of between $ 39 –$ 250 and maximum appreciation values of between $ 60 –$ 300 . The Company determined the grant-date fair value of Time-Vesting SARs using a Black-Scholes option-pricing model, calculated as the difference in fair value between a SAR with a strike price at the exercise price and a SAR with the strike price at its maximum appreciation, using the following assumptions: Years Ended December 31, 2025 2024 Expected volatility rate 56.7 % – 66.1 % 54.9 % – 59.2 % Expected term (in years) 3.4 – 9.3 3.7 – 9.2 Risk-free interest rate 3.9 % – 4.6 % 3.4 % – 3.9 % Expected dividend yield — % — % The expected volatility rate is based on a combination of the Company’s implied and historical volatility, and the historical volatility of comparable publicly-traded companies. The expected term represents the period of time the SARs are expected to be outstanding. The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the SAR. The Company has never paid and has no plans to pay dividends on its common stock, therefore the expected dividend yield is zero. 105 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) Market-Vesting SARs During the year ended December 31, 2024, the Company granted SARs that vested upon the satisfaction of a market-based vesting condition and were subject to continued service (“Market-Vesting SARs”). All Market-Vesting SARs were vested during the year ended December 31, 2024. RSUs and P-RSUs The following table summarizes the RSU and P-RSU activity for the year ended December 31, 2025 (in thousands, except per share amounts): RSUs Outstanding Weighted Average Grant Date Fair Value per Share P-RSUs Outstanding Weighted Average Grant Date Fair Value per Share Unvested and outstanding as of December 31, 2024 65,236 $ 14.89 577 $ 41.93 Granted 5,751 136.28 815 106.56 Vested ( 26,080 ) 19.31 ( 1,180 ) 70.04 Canceled and forfeited ( 3,263 ) 29.34 ( 20 ) 103.49 Adjustment for performance achievement (1) ( 74 ) $ 68.14 Unvested and outstanding as of December 31, 2025 41,644 $ 27.74 118 $ 180.79 ————— (1) This amount represents the difference between the maximum number of shares that could have been issued under the grant and the actual number of shares earned based on final performance. The Company grants RSUs that have only a service-based vesting condition, as well as P-RSUs that have both service-based and performance-based vesting conditions. 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 four 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, 2025, 2024, and 2023 was $ 503.7 million, $ 436.6 million, and $ 526.1 million, respectively. The total grant-date fair value of P-RSUs vested during the year ended December 31, 2025 and 2024 was $ 82.6 million and $ 75.0 million, respectively. There were no P-RSUs vested in the year ended December 31, 2023. As of December 31, 2025, the total unrecognized stock-based compensation expense related to the RSUs outstanding was $ 914.9 million, which is expected to be recognized over a weighted-average service period of three years . As of December 31, 2025, there was no unrecognized stock-based compensation expense related to the P-RSUs outstanding. Stock-based Compensation Expense Total stock-based compensation expense was as follows (in thousands): Years Ended December 31, 2025 2024 2023 Cost of revenue $ 64,555 $ 69,065 $ 35,995 Sales and marketing 248,732 239,121 160,645 Research and development 136,839 165,065 98,064 General and administrative 233,907 218,387 181,199 Total stock-based compensation expense $ 684,033 $ 691,638 $ 475,903 The Company did not recognize any tax benefits related to stock-based compensation expense during the years ended December 31, 2025, 2024, or 2023. 106 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) 11. Taxes The Company adopted ASU 2023-09, Income Taxes – Improvements to Income Tax Disclosures , for the annual disclosures for the year ended December 31, 2025 on a prospective basis. Comparative financial information for prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. Income before provision for income taxes consisted of the following (in thousands): Years Ended December 31, 2025 2024 2023 United States $ 1,584,577 $ 426,944 $ 174,637 Foreign 72,791 62,229 62,454 Income before provision for income taxes $ 1,657,368 $ 489,173 $ 237,091 Provision for income taxes consisted of the following (in thousands): Years Ended December 31, 2025 2024 2023 Current: Federal $ — $ — $ — State 1,537 1,556 2,333 Foreign 25,101 20,265 22,189 Total current provision 26,638 21,821 24,522 Deferred: Federal — — — State — — — Foreign ( 3,914 ) ( 566 ) ( 4,806 ) Total deferred provision ( 3,914 ) ( 566 ) ( 4,806 ) Total provision for income taxes $ 22,724 $ 21,255 $ 19,716 107 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) 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, subsequent to the adoption of ASU 2023-09 (in thousands, except percentages): Year Ended December 31, 2025 Amount Percent U.S. federal tax at statutory rate $ 348,047 21.0 % State and local income taxes, net of federal income tax effect (1) 1,537 0.1 Foreign tax effects: United Kingdom (“U.K.”): Statutory tax rate difference between the U.K. and U.S. ( 29,130 ) ( 1.8 ) Stock-based compensation expense ( 159,108 ) ( 9.6 ) Changes in valuation allowance 184,024 11.1 Other ( 3,279 ) ( 0.2 ) Other foreign jurisdictions 8,637 0.5 Effects of changes in tax laws or rates enacted in the current period — — Effects of cross-border tax laws — — Tax credits ( 151,602 ) ( 9.1 ) Changes in valuation allowances 467,493 28.1 Nontaxable or nondeductible items: Stock-based compensation expense ( 720,691 ) ( 43.4 ) Nondeductible officers' compensation 34,453 2.1 Other 4,442 0.3 Changes in unrecognized tax benefits 37,901 2.3 Total provision for income taxes and effective tax rate $ 22,724 1.4 % ———— (1) State taxes in Maryland made up the majority of the tax effect in this category. 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, prior to the adoption of ASU 2023-09 (in thousands): Years Ended December 31, 2024 2023 Expected tax provision at U.S. federal statutory rate $ 102,726 $ 49,789 State income taxes - net of federal benefit 1,365 2,309 Foreign tax rate differential ( 15,767 ) 859 Research and development tax credits ( 103,858 ) ( 45,667 ) Stock-based compensation ( 513,841 ) ( 79,128 ) Non-deductible officers’ compensation 33,404 34,479 Change in valuation allowance 507,149 35,070 Base Erosion Anti-Abuse Tax and related elections — 14,700 Taxes withheld at source 5,599 4,378 Non-deductible expenses 5,545 3,610 Other ( 1,067 ) ( 683 ) Total provision for income taxes $ 21,255 $ 19,716 For the year ended December 31, 2025, the Company recorded a provision for income taxes of $ 22.7 million compared to $ 21.3 million for the year ended December 31, 2024. 108 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) For the year ended December 31, 2024, the Company recorded a provision for income taxes of $ 21.3 million compared to $ 19.7 million for the year ended December 31, 2023. The amounts of cash taxes for the year ended December 31, 2025 included the following, subsequent to the adoption of ASU 2023-09 (in thousands): Year Ended December 31, 2025 Federal $ — State 2,500 Foreign Korea 5,771 Japan 4,796 France 2,843 Germany 1,724 All other foreign 4,052 Income taxes, net of amounts refunded $ 21,686 Employment taxes $ 364,675 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. Significant deferred tax assets and liabilities consisted of the following (in thousands): As of December 31, 2025 2024 Net operating loss carryforwards $ 2,617,820 $ 1,583,076 Capitalized research and experimental expenses 85,377 504,156 Reserves and accruals 113,289 87,111 Tax credit carryforwards 528,449 394,579 Stock-based compensation 62,453 76,604 Lease liabilities 54,842 60,103 Depreciation and amortization 16,679 15,839 Capitalized facilitative expenses 22,573 38,436 Gross deferred tax assets 3,501,482 2,759,904 Acquisition related intangibles ( 4,925 ) ( 6,827 ) Right-of-use assets ( 47,941 ) ( 50,208 ) Total net deferred tax assets before valuation allowance 3,448,616 2,702,869 Valuation allowance ( 3,452,323 ) ( 2,710,393 ) Net deferred tax assets (liabilities) $ ( 3,707 ) $ ( 7,524 ) 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. Due to the weight of objectively verifiable negative evidence, including the Company’s history of U.S. and certain foreign net operating tax losses, primarily in the U.K., the Company has continued to maintain a full valuation allowance against potential future benefits for U.S, federal, state, and certain foreign deferred tax assets as of December 31, 2025. The Company will release the valuation allowance when there is sufficient positive evidence to support a conclusion that it is more likely than not the future benefit on such deferred tax assets will be realized. Although the Company has achieved positive cumulative income before provision for income taxes in the U.S. over the past three years, when adjusting for permanent differences, primarily related to excess tax benefits from stock-based compensation, the outcome resulted in a cumulative tax loss position for that period. The future timing and amount of such valuation allowance being released is uncertain based on the 109 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) Company’s future assessment of all available evidence, including its recent earnings and anticipated future earnings, expected temporary and permanent differences, especially those related to excess tax benefits from stock-based compensation, scheduled reversals of deferred tax liabilities, and tax planning strategies. As such, there is a reasonable possibility that the Company may have sufficient positive evidence in the future to release all or a portion of the valuation allowance it recorded against its deferred tax assets. The release of all, or a portion, of the valuation allowance would result in the recognition of certain deferred tax assets and may result in a material decrease to income tax expense for the period the release is recorded. The valuation allowance totaled $ 3.5 billion and $ 2.7 billion for the years ended December 31, 2025 and 2024, respectively. The valuation allowance on our net deferred tax assets increased by $ 741.9 million and $ 608.1 million during the years ended December 31, 2025 and 2024, respectively. Such increase was primarily a result of an increase in excess tax benefits from permanent differences related to excess tax benefits from stock-based compensation, partially offset by an increase in income before provision for income taxes in the U.S. Provisions enacted in 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. All U.S. and non-U.S. based R&E expenditures had to be capitalized and amortized over five and fifteen years, respectively. As a result of this enactment, the Company began capitalizing and amortizing R&E expenditures over five years for domestic research and fifteen for international research rather than expensing these costs as incurred during the fiscal year ended December 31, 2022. As of December 31, 2024, the Company has recorded a deferred tax asset of $ 504.2 million related to the capitalization requirement. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing several significant U.S. income tax provisions relevant to the Company. The provisions include immediate expensing of domestic R&E expenditures beginning in 2025. As a result, the Company expensed the domestic R&E expenditures paid or incurred in the current year and also the unamortized domestic R&E expenditures capitalized in the prior years. As of December 31, 2025, the Company has recorded a deferred tax asset of $ 85.4 million related to the capitalization requirement. As of December 31, 2025, the Company had U.S. federal and state net operating losses of approximately $ 9.0 billion and $ 4.8 billion, respectively. As of December 31, 2024, the Company had U.S. federal and state net operating losses of approximately $ 5.5 billion and $ 3.2 billion, respectively. The U.S. federal net operating loss carryforwards will expire at various dates beginning in 2035 through 2037 if not utilized, with the exception of $ 8.3 billion which can be carried forward indefinitely. The state net operating loss carryforwards will expire at various dates beginning in 2026 through 2045 if not utilized. Additionally, as of December 31, 2025, the Company had federal and California research and development credits of approximately $ 577.9 million and $ 152.1 million, respectively. As of December 31, 2024, the Company had federal and California research and development credits of approximately $ 426.3 million and $ 122.6 million, respectively. The federal research and development credits will begin to expire in the years 2027 through 2045 if not utilized and the California research and development credits have no expiration date. Utilization of the net operating losses and research and development credit carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of the net operating loss and research and development credit carryforwards before utilization. As of December 31, 2025, the Company had U.S. federal capital loss carryforwards of $ 355.3 million. As of December 31, 2024, the Company had U.S. federal capital loss carryforwards of $ 351.5 million. The capital loss carryforwards will expire beginning in 2027 if not utilized. As of December 31, 2025, the Company had foreign net operating losses, primarily in the U.K., of approximately $ 1.8 billion. As of December 31, 2024, the Company had foreign net operating losses, primarily in the U.K., of approximately $ 0.9 billion. These net operating losses can be carried forward indefinitely. As of December 31, 2025, 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. 110 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) The Organisation for Economic Co-operation and Development (“OECD”) Base Erosion and Profit Shifting (“BEPS”) global minimum tax provision (“Pillar Two”) rules are at varying stages of adoption across jurisdictions where the Company operates. While the United States has not yet adopted Pillar Two, several countries have enacted Pillar Two and these rules were applicable to the Company starting January 1, 2024 in some jurisdictions, and it did not have a material impact on our financial condition or results of operations for the periods presented. Furthermore, in response to trade negotiations with the United States, the Group of 7 countries (the “G7”) announced a joint understanding to exempt U.S.-parented multinational corporations from Pillar Two by adopting a “side-by-side” system between Pillar Two and the existing U.S. global minimum tax provisions, and the OECD released “Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two), Side-by-Side Package: Inclusive Framework on BEPS” on January 5, 2026, to this effect, which reduces the impact of Pillar Two rules on the Company. Uncertain Tax Positions A reconciliation of the gross unrecognized tax benefits consists of the following (in thousands): Years Ended December 31, 2025 2024 2023 Unrecognized tax benefit beginning of year $ 151,183 $ 112,016 $ 81,904 Increases in current year tax positions 45,426 39,494 14,346 Increases in prior year tax positions 43 2,926 15,766 Decreases in prior year tax positions — — — Decreases in prior year tax positions due to settlements ( 12,445 ) ( 3,253 ) — Decreases in prior year tax positions due to lapse of statute of limitations — — — Unrecognized tax benefit end of year $ 184,207 $ 151,183 $ 112,016 As of December 31, 2025, 2024, and 2023, the Company recorded gross unrecognized tax benefits of $ 184.2 million, $ 151.2 million, and $ 112.0 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. 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, 2025, 2024, and 2023. The Company files U.S. federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitation. 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 2025 and the U.K. for tax years 2024 through 2025. 111 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) 12. Earnings Per Share Attributable to Common Stockholders The following table presents the calculation of basic and diluted earnings per share attributable to common stockholders (in thousands, except per share amounts): As of December 31, 2025 2024 2023 Numerator Net income attributable to common stockholders for diluted earnings per share $ 1,625,033 $ 462,190 $ 209,825 Denominator Weighted-average shares used in computing earnings per share: Basic 2,369,612 2,250,163 2,147,446 Effect of dilutive shares 195,585 200,655 150,481 Diluted 2,565,197 2,450,818 2,297,927 Earnings per share Earnings per share attributable to common stockholders: Basic $ 0.69 $ 0.21 $ 0.10 Diluted $ 0.63 $ 0.19 $ 0.09 Diluted earnings per share is calculated using our weighted-average shares of outstanding common stock including the dilutive effect of stock awards as determined under the treasury stock method. There were outstanding potentially dilutive common stock equivalents for stock options and RSUs combined of 1.1 million and 175.2 million for the years ended December 31, 2025 and 2023, respectively, which were excluded from the computation of diluted earnings per share attributable to common stockholders due to their antidilutive effect. There were no outstanding potentially dilutive common stock equivalents for stock options or RSUs for the year ended December 31, 2024. As of December 31, 2025 and 2024, the Company had 11.3 million and 6.4 million Time-Vesting SARs outstanding, respectively, of which the maximum number of potentially dilutive shares of Class A common stock upon vesting would be the fraction that equals the maximum appreciation divided by the Company’s Class A common stock price at that time. No Time-Vesting SARs were outstanding as of December 31, 2023. 13. Segment and Geographic Information The following reporting segment tables reflect the results of the Company’s reportable operating segments consistent with the manner in which the CODM evaluates the performance of each segment and allocates the Company’s resources. The CODM does not evaluate the performance of the Company’s assets on a segment basis for internal management reporting and, therefore, such information is not presented. Contribution is used, in part, to evaluate the performance of, and allocate resources to, each of the segments, primarily by monitoring actual results versus historical periods. 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, or are noncash costs. These unallocated and noncash costs include stock-based compensation expense, research and development expenses, and general and administrative expenses. 112 Table of Contents Palantir Technologies Inc. Notes to Consolidated Financial Statements (continued) Financial information for each reportable segment was as follows (in thousands, except percentages): Years Ended December 31, 2025 2024 2023 Amount % Amount % Amount % Contribution: Government revenue $ 2,402,287 $ 1,569,605 $ 1,222,215 Expenses attributable to government segment ( 826,217 ) ( 621,165 ) ( 497,245 ) Government contribution 1,576,070 66 % 948,440 60 % 724,970 59 % Commercial revenue 2,073,159 1,295,902 1,002,797 Expenses attributable to commercial segment ( 706,532 ) ( 524,394 ) ( 482,212 ) Commercial contribution 1,366,627 66 % 771,508 60 % 520,585 52 % Total contribution $ 2,942,697 66 % $ 1,719,948 60 % $ 1,245,555 56 % The reconciliation of total contribution to income from operations is as follows (in thousands): Years Ended December 31, 2025 2024 2023 Income from operations $ 1,414,015 $ 310,403 $ 119,966 Research and development expenses (1) 420,838 342,813 306,560 General and administrative expenses (1) 423,811 375,094 343,126 Total stock-based compensation expense 684,033 691,638 475,903 Total contribution $ 2,942,697 $ 1,719,948 $ 1,245,555 ————— (1) Excludes stock-based compensation expense. Geographic Information Revenue by geography is based on the customer’s headquarters or agency location at the time of sale. Revenue is as follows (in thousands, except percentages): Years Ended December 31, 2025 2024 2023 Amount % Amount % Amount % Revenue: United States $ 3,320,043 74 % $ 1,900,247 66 % $ 1,378,247 62 % United Kingdom 427,398 10 % 304,575 11 % 235,257 11 % Rest of world (1) 728,005 16 % 660,685 23 % 611,508 27 % Total revenue $ 4,475,446 100 % $ 2,865,507 100 % $ 2,225,012 100 % ————— (1) No other country represented 10 % or more of total revenue for the years ended December 31, 2025 , 2024, or 2023 . 113 Table of Contents 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): As of December 31, 2025 2024 Amount % Amount % Property and equipment, net: United States $ 38,102 73 % $ 22,968 58 % Japan 7,063 14 % 9,183 23 % United Kingdom 5,027 10 % 5,634 14 % Rest of world 1,768 3 % 1,853 5 % Total property and equipment, net $ 51,960 100 % $ 39,638 100 % 14. Related Party Transactions Alexander Karp, the Company’s Chief Executive Officer, flies on non-commercial aircraft beneficially owned by him (the “Executive Aircraft”) for business and personal travel. During the years ended December 31, 2025 and 2024, the Company incurred expenses related to the use of the Executive Aircraft of $ 17.2 million and $ 7.7 million, respectively. 114 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.