What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-04 compared with 2026-05-05 · 109 added, 69 removed, 298 unchanged (37% of the section changed)

31 unchanged sentences

Many of our customer contracts contain termination for convenience provisions.

For the three months ended March 31, 2026, we generated $1.6 billion in revenue, reflecting a 85% growth rate from the three months ended March 31, 2025, when we generated $0.9 billion in revenue.

In the three months ended March 31, 2026 and 2025, we generated income from operations of $754 million and $176 million, respectively, or adjusted income from operations of $984 million and $391 million, respectively, when excluding stock-based compensation and related employer payroll taxes.

In the three months ended March 31, 2026 and 2025, our gross profit was $1.4 billion and $0.7 billion, respectively, reflecting a gross margin of 87% and 80%, respectively, or 88% and 82%, respectively, when excluding stock-based compensation.

For the three months ended June 30, 2026, we generated $1.9 billion in revenue, reflecting a 93% growth rate from the three months ended June 30, 2025 when we generated $1.0 billion in revenue.

For the six months ended June 30, 2026, we generated $3.6 billion in revenue, reflecting a 89% growth rate from the six months ended June 30, 2025 when we generated $1.9 billion in revenue.

In the three months ended June 30, 2026 and 2025, we generated income from operations of $912 million and $269 million, respectively, or adjusted income from operations of $1.2 billion and $0.5 billion, respectively, when excluding stock-based compensation and related employer payroll taxes.

In the six months ended June 30, 2026 and 2025, we generated income from operations of $1.7 billion and $0.4 billion, respectively, or adjusted income from operations of $2.2 billion and $0.9 billion, respectively, when excluding stock-based compensation and related employer payroll taxes.

In the three months ended June 30, 2026 and 2025, our gross profit was $1.6 billion and $0.8 billion, respectively, reflecting a gross margin of 85% and 81%, respectively, or 86% and 82%, respectively, when excluding stock-based compensation.

In the six months ended June 30, 2026 and 2025, our gross profit was $3.1 billion and $1.5 billion, respectively, reflecting a gross margin of 86% and 81%, respectively, or 87% and 82%, respectively, when excluding stock-based compensation.

For more information about our adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes;

3 unchanged sentences

We define a customer as an organization from which we have recognized revenue during the trailing twelve-month period.

During the period ended March 31, 2026 and 2025, we had 1,007 and 769 customers, respectively, including companies in various commercial sectors and government agencies around the world.

During the period ended June 30, 2026 and 2025, we had 1,049 and 849 customers, respectively, including companies in various commercial sectors and government agencies around the world.

For large government agencies, where a single institution has multiple divisions, units, or subsidiary agencies, each such division, unit, or subsidiary agency that enters into a separate contract with us and is invoiced as a separate entity is treated as a separate customer.

3 unchanged sentences

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

Our average revenue for the top twenty customers during the trailing twelve months ended March 31, 2026 was $108 million, which grew 55% from an average of $70 million in revenue from the top twenty customers during the trailing twelve months ended March 31, 2025, demonstrating our expanding relationships with existing customers.

Our average revenue for the top twenty customers during the trailing twelve months ended June 30, 2026 was $124 million, which grew 67% from an average of $75 million in revenue from the top twenty customers during the trailing twelve months ended June 30, 2025, demonstrating our expanding relationships with existing customers.

Organizations in the commercial and government sectors face similar challenges when it comes to managing data, and we intend to expand our reach in both markets moving forward.

2 unchanged sentences

We manage customers at the account level, not by industry or sector, so that we can optimize on the specific growth opportunities for each customer.

In the three months ended March 31, 2026, 53% of our revenue came from government customers and 47% came from commercial customers.

customers have been a meaningful source of revenue growth for our business.

In the three months ended March 31, 2026, we generated 79% of our revenue from customers in the United States and the remaining 21% from non-U.S.

In the six months ended June 30, 2026, 52% of our revenue came from government customers and 48% came from commercial customers.

customers have been a meaningful source of revenue growth for our business and, in recent periods, has represented an increasing portion of our total revenue.

In the six months ended June 30, 2026, we generated 80% of our revenue from customers in the United States and the remaining 20% from non-U.S.

Revenue from our U.S.

customers during the trailing twelve months ended March 31, 2026 was $4.0 billion, which grew 87% from the prior twelve-month period.

customers during the trailing twelve months ended June 30, 2026 was $4.8 billion, which grew 99% from the prior twelve-month period.

We expect that U.S.

1 unchanged sentence

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

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

However, large government customers, in particular, are generally subject to a number

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

See also the discussion of “Risks Related to Relationships and Business with the Public Sector” within “ Item 1A.

6 unchanged sentences

Macroeconomic Trends

As a corporation with an international presence, we are subject to risks and uncertainties caused by significant events with macroeconomic impacts, including, but not limited to, geopolitical tensions, fluctuating interest rates, monetary policy changes, foreign currency fluctuations, and the potential or actual imposition of tariffs or other impacts on trade relations.

As a corporation with an international presence, we are subject to risks and uncertainties caused by significant events with macroeconomic impacts, including, but not limited to, geopolitical tensions, fluctuating interest rates, monetary policy changes, supply chain disruptions, geopolitical or economic uncertainty, foreign currency fluctuations, and the potential or actual imposition of tariffs or other impacts on trade relations.

Additionally, these macroeconomic impacts have disrupted, and may continue to disrupt, the operations of our customers and prospective customers.

In particular, if the portion of total revenue attributable to the United States remains at current levels or continues to increase, our business and financial condition could be more exposed to any future adverse conditions such as these in the United States.

We continuously monitor the direct and indirect impacts of these circumstances on our business and financial results, as well as the overall global economy and geopolitical landscape.

15 unchanged sentences

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

For the three months ended March 31, 2026 such impacts were not material to our financial position or results of operations.

For the six months ended June 30, 2026 such impacts were not material to our financial position or results of operations.

Customer Impacts

36 unchanged sentences

Contribution Margin

The following table provides a reconciliation of contribution margin for the three months ended March 31, 2026 and 2025 (in thousands, except percentages):

Three Months Ended March 31,

The following table provides a reconciliation of contribution margin for the three and six months ended June 30, 2026 and 2025 (in thousands, except percentages):

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Income from operations $ 912,004 $ 269,317 $ 1,666,002 $ 445,365

8 unchanged sentences

Gross Profit and Gross Margin, Excluding Stock-Based Compensation

The following table provides a reconciliation of gross profit and gross margin, excluding stock-based compensation for the three months ended March 31, 2026 and 2025 (in thousands, except percentages):

Three Months Ended March 31,

The following table provides a reconciliation of gross profit and gross margin, excluding stock-based compensation for the three and six months ended June 30, 2026 and 2025 (in thousands, except percentages):

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Gross profit $ 1,638,594 $ 810,763 $ 3,055,379 $ 1,521,648

3 unchanged sentences

Adjusted Income from Operations and Adjusted Operating Margin

The following table provides a reconciliation of adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes for the three months ended March 31, 2026 and 2025 (in thousands, except percentages):

Three Months Ended March 31,

The following table provides a reconciliation of adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes for the three and six months ended June 30, 2026 and 2025 (in thousands, except percentages):

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Income from operations $ 912,004 $ 269,317 $ 1,666,002 $ 445,365

8 unchanged sentences

We agree to provide continuous access to our hosted software throughout the contract term.

Revenue associated with Palantir Cloud subscriptions is

generally recognized over the contract term on a ratable basis, which is consistent with the transfer of control of the Palantir services to the customer.

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

On-Premises Software

52 unchanged sentences

The following table summarizes our condensed consolidated statements of operations data (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Revenue $ 1,935,464 $ 1,003,697 $ 3,568,047 $ 1,887,552

15 unchanged sentences

The following table sets forth the components of our condensed consolidated statements of operations data as a percentage of revenue:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Revenue 100 % 100 % 100 % 100 %

14 unchanged sentences

Net income attributable to common stockholders 55 % 33 % 54 % 29 %

Comparison of the Three Months Ended March 31, 2026 and 2025

Three Months Ended March 31, Change

2026 2025 Amount %

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2026 2025 Amount % 2026 2025 Amount %

Government $ 990,032 $ 552,983 $ 437,049 79 % $ 1,848,442 $ 1,039,946 $ 808,496 78 %

1 unchanged sentence

Total revenue $ 1,935,464 $ 1,003,697 $ 931,767 93 % $ 3,568,047 $ 1,887,552 $ 1,680,495 89 %

Revenue increased by $749 million, or 85%, for the three months ended March 31, 2026 compared to the same period in 2025.

Revenue from government customers increased by $371 million, or 76%, for the three months ended March 31, 2026 compared to the same period in 2025.

Revenue increased by $932 million, or 93%, for the three months ended June 30, 2026 compared to the same period in 2025.

Revenue from government customers increased by $437 million, or 79%, for the three months ended June 30, 2026 compared to the same period in 2025.

Of the increase, $428 million was from government customers existing as of December 31, 2025.

Revenue from U.S.

government customers was $687 million for the three months ended March 31, 2026 compared to $373 million for the same period in 2025.

Revenue from commercial customers increased by $377 million, or 95%, for the three months ended March 31, 2026 compared to the same period in 2025.

government customers was $809 million for the three months ended June 30, 2026 compared to $426 million for the same period in 2025.

Revenue from commercial customers increased by $495 million, or 110%, for the three months ended June 30, 2026 compared to the same period in 2025.

Of the increase, $407 million was from commercial customers existing as of December 31, 2025.

Revenue from U.S.

commercial customers was $595 million for the three months ended March 31, 2026 compared to $255 million for the same period in 2025, a 133% increase.

commercial customers was $764 million for the three months ended June 30, 2026 compared to $306 million for the same period in 2025, a 149% increase.

Revenue increased by $1.7 billion, or 89%, for the six months ended June 30, 2026 compared to the same period in 2025.

Revenue from government customers increased by $808 million, or 78%, for the six months ended June 30, 2026 compared to the same period in 2025.

Of the increase, $795 million was from government customers existing as of December 31, 2025.

Revenue from U.S.

government customers was $1.5 billion for the six months ended June 30, 2026 compared to $0.8 billion for the same period in 2025.

Revenue from commercial customers increased by $872 million, or 103%, for the six months ended June 30, 2026 compared to the same period in 2025.

Revenue from U.S.

commercial customers was $1.4 billion for the six months ended June 30, 2026 compared to $0.6 billion for the same period in 2025, a 142% increase.

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

Cost of Revenue and Gross Profit

Three Months Ended March 31, Change

2026 2025 Amount %

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2026 2025 Amount % 2026 2025 Amount %

Cost of revenue $ 296,870 $ 192,934 $ 103,936 54 % $ 512,668 $ 365,904 $ 146,764 40 %

1 unchanged sentence

Gross margin 85 % 81 % 4 % 86 % 81 % 5 %

Cost of revenue for the three months ended March 31, 2026 increased by $43 million, or 25%, compared to the same period in 2025.

The increase was primarily due to an increase of $39 million in third-party cloud hosting services.

Our gross margin for the three months ended March 31, 2026 increased from 80% for the same period in 2025 to 87%.

Cost of revenue for the three months ended June 30, 2026 increased by $104 million, or 54%, compared to the same period in 2025.

The increase was primarily due to increases of $89 million in third-party cloud hosting services and $13 million in stock-based compensation and related expenses, partially offset by a decrease of $13 million in subcontractor expenses.

Our gross margin for the three months ended June 30, 2026 and 2025 was 85% and 81%, respectively.

Cost of revenue for the six months ended June 30, 2026 increased by $147 million, or 40%, compared to the same period in 2025.

The increase was primarily due to increases of $128 million in third-party cloud hosting services and $16 million in payroll and other payroll-related costs, partially offset by a decrease of $19 million in subcontractor expenses.

Our gross margin for the six months ended June 30, 2026 and 2025 was 86% and 81%, respectively.

Operating Expenses

Three Months Ended March 31, Change

2026 2025 Amount %

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2026 2025 Amount % 2026 2025 Amount %

Sales and marketing $ 339,500 $ 243,788 $ 95,712 39 % $ 658,720 $ 480,097 $ 178,623 37 %

3 unchanged sentences

Sales and Marketing

Sales and marketing expenses increased by $83 million, or 35%, for the three months ended March 31, 2026 compared to the same period in 2025.

The increase was primarily due to increases of $27 million in marketing, $22 million in payroll and other payroll-related costs, and $15 million in stock-based compensation expense and related expenses.

Sales and marketing expenses increased by $96 million, or 39%, for the three months ended June 30, 2026 compared to the same period in 2025.

The increase was primarily due to increases of $43 million in stock-based compensation and related expenses and $22 million in payroll and other payroll-related costs.

Sales and marketing expenses increased by $179 million, or 37%, for the six months ended June 30, 2026 compared to the same period in 2025.

The increase was primarily due to increases of $58 million in stock-based compensation and related expenses, $43 million in payroll and other payroll-related costs, and $36 million in marketing expenses,

Research and Development

Research and development expenses increased by $26 million, or 19%, for the three months ended March 31, 2026 compared to the same period in 2025.

The increase was primarily due to an increase of $25 million in third-party cloud hosting services.

Research and development expenses increased by $57 million, or 43%, for the three months ended June 30, 2026 compared to the same period in 2025.

The increase was primarily due to increases of $25 million third-party cloud hosting services and $20 million in stock-based compensation and related expenses.

Research and development expenses increased by $84 million, or 31%, for the six months ended June 30, 2026 compared to the same period in 2025.

The increase was primarily due to increases of $50 million in third-party cloud hosting services and $18 million in stock-based compensation and related expenses.

General and Administrative

General and administrative expenses increased by $19 million, or 12%, for the three months ended March 31, 2026 compared to the same period in 2025.

The increase was primarily due to an increase of $6 million in stock-based compensation expense and related expenses and $3 million in payroll and other payroll-related costs.

General and administrative expenses increased by $32 million, or 20%, for the three months ended June 30, 2026 compared to the same period in 2025.

The increase was primarily due to an $11 million in stock-based compensation and related expenses and $8 million in payroll and other payroll-related costs.

General and administrative expenses increased by $51 million, or 16%, for the six months ended June 30, 2026 compared to the same period in 2025.

The increase was primarily due to an increase of $17 million in stock-based compensation and related expenses and $12 million in payroll and other payroll-related costs.

Stock-Based Compensation

Three Months Ended March 31, Change

2026 2025 Amount %

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2026 2025 Amount % 2026 2025 Amount %

Cost of revenue $ 30,889 $ 14,973 $ 15,916 106 % $ 48,795 $ 29,989 $ 18,806 63 %

3 unchanged sentences

Total stock-based compensation expense $ 265,209 $ 159,971 $ 105,238 66 % $ 466,801 $ 315,310 $ 151,491 48 %

Stock-based compensation expenses increased by $46 million, or 30%, for the three months ended March 31, 2026 compared to the same period in 2025.

The increase was driven by expense from new grants awarded since or within the three months ended March 31, 2025, including restricted stock units (“RSUs”), performance-based RSUs (“P-RSUs”), and stock appreciation rights (“SARs”), partially offset by reductions in expense from equity awards that became fully vested and forfeitures.

Stock-based compensation expenses increased by $105 million, or 66%, and $151 million, or 48%, for the three and six months ended June 30, 2026 compared to the same periods in 2025, respectively.

The increase was driven by expense from new grants awarded since June 30, 2025, including restricted stock units (“RSUs”), performance-based RSUs (“P-RSUs”), and stock appreciation rights (“SARs”), partially offset by reductions in expense from equity awards that became fully vested and forfeitures.

Interest Income

Three Months Ended March 31, Change

2026 2025 Amount

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2026 2025 Amount 2026 2025 Amount

Interest income $ 77,505 $ 56,255 $ 21,250 $ 143,899 $ 106,696 $ 37,203

Interest income increased by $16 million for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to an increase in our interest-bearing cash, cash equivalents, and investments in short-term U.S.

Interest income increased by $21 million and $37 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025 primarily due to an increase in our interest-bearing cash, cash equivalents, and investments in short-term U.S.

Treasury securities.

Other Income (Expense), Net

Three Months Ended March 31, Change

2026 2025 Amount

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2026 2025 Amount 2026 2025 Amount

Other income (expense), net $ 91,836 $ 6,596 $ 85,240 $ 160,045 $ 3,423 $ 156,622

Other income (expense), net changed by $71 million for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to a realized gain on privately-held equity securities.

Other income (expense), net changed by $85 million and $157 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025 primarily due to a realized gain and upward adjustments on privately-held equity securities and net unrealized gains on publicly-traded equity securities.

Provision for Income Taxes

Three Months Ended March 31, Change

2026 2025 Amount

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2026 2025 Amount 2026 2025 Amount

Provision for income taxes $ 15,383 $ 3,596 $ 11,787 $ 27,582 $ 9,195 $ 18,387

Provision for income taxes increased by an immaterial amount for the three months ended March 31, 2026 compared to the same period in 2025.

Provision for income taxes increased by $12 million and $18 million, respectively, for the three and six months ended June 30, 2026 compared to the same periods in 2025.

The increases were primarily related to higher U.S.

and foreign profits.

For additional information see Note 10.

1 unchanged sentence

Liquidity and Capital Resources

As of March 31, 2026, our principal sources of liquidity were cash, cash equivalents, and short-term U.S.

As of June 30, 2026, our principal sources of liquidity were cash, cash equivalents, and short-term U.S.

Treasury securities totaling $9.2 billion.

We generated positive cash flow from operations for the three months ended March 31, 2026.

We generated positive cash flow from operations for the six months ended June 30, 2026.

We believe that we have sufficient liquidity to meet our operating requirements for at least the next twelve months and thereafter for the foreseeable future.

1 unchanged sentence

The following table summarizes our cash flows for the periods indicated (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Net cash provided by (used in):

3 unchanged sentences

Effect of foreign exchange on cash, cash equivalents, and restricted cash (2,112) 11,518

(2,404) 3,980

Net increase (decrease) in cash, cash equivalents, and restricted cash $ 611,933 $ (1,168,702)

Operating Activities

Net cash provided by operating activities was $899 million and $310 million for the three months ended March 31, 2026 and 2025, respectively.

Net cash provided by operating activities was $2.1 billion and $0.8 billion for the six months ended June 30, 2026 and 2025, respectively.

The increase was primarily driven by revenue growth, partially offset by timing of billings to and payments from customers.

Investing Activities

Net cash used in investing activities was $27 million and $1.4 billion for the three months ended March 31, 2026 and 2025, respectively.

The decrease in cash used in investing activities was primarily due to decreased purchases of short-term U.S.

Treasury securities compared to the prior year, partially offset by sales and redemptions of marketable securities.

Net cash used in investing activities was $1.5 billion and $2.0 billion for the six months ended June 30, 2026 and 2025, respectively.

The decrease in cash used in investing activities was primarily due to a higher amount of proceeds from sales and redemptions of marketable securities offsetting increased purchases of short-term U.S.

Treasury securities compared to prior year.

Financing Activities

Net cash provided by financing activities was $3 million for the three months ended March 31, 2026 and net cash used in financing activities was $29 million for the three months ended March 31, 2025.

Net cash provided by financing activities was $8 million for the six months ended June 30, 2026 and net cash used by financing activities was $22 million for the six months ended June 30, 2025.

Financing cash inflows consisted primarily of proceeds from the exercise of common stock options.

For the three months ended March 31, 2025, financing cash outflows were driven by taxes paid related to the net share settlement of SARs and repurchases of our Class A common stock.

For the six months ended June 30, 2025, financing cash outflows were driven by taxes paid related to the net share settlement of SARs and repurchases of our Class A common stock.

Material Cash Requirements

2 unchanged sentences

Commitments and Contingencies in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there have been no additional material changes in our contractual obligations and commitments other than in the ordinary course of business since our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission (“SEC”) on February 17, 2026.

As of March 31, 2026, we had no outstanding debt balances and additional available and undrawn revolving commitments of $500 million under our credit facility.

As of June 30, 2026, we had no outstanding debt balances and additional available and undrawn revolving commitments of $500 million under our credit facility.

For more information, see Note 6.

10 unchanged sentences

Actual results could differ significantly from our estimates.

To the extent that

there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.

To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates discussed in the Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on February 17, 2026, except as described in Note 2.

4 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis