Palantir recently achieved one of the most remarkable enterprise software quarters in years:
– 48% Year-over-Year revenue growth
– 94% Rule of 40 score
– 93% Year-over-Year growth in US commercial revenue
– Remarkable recovery from slow growth just 24 months ago.
This is unprecedented. We are in the Age of AI.
For Palantir, it represents the Great AI Re-Acceleration.
#1. 157 Deals Over $1M Shows AI Can Transform Your Customer Acquisition Engine
**The Learning:** Palantir’s Artificial Intelligence Platform (AIP) has evolved into its main customer acquisition engine.
**Key Metrics:** US commercial customer count grew 64% Year-over-Year to 485, with significant deal velocity: 157 deals over $1M, 66 deals over $5M, and 42 deals over $10M in a quarter. This scale of enterprise deals typically takes years to develop.
AIP has redefined their sales strategy. At AIPCon 7, customers like Land O’Frost reported reducing production planning from 40 hours to 30 minutes. The State Department cut candidate clearance time from 60 days to 12. These transformations yield substantial ROI.
The insight: When AI delivers 10x+ workflow improvements, sales shift to discussions about business outcomes, accelerating deal velocity.
#2. Why 1,100%+ Efficiency Gains Create the Ultimate Competitive Moat
**The Learning:** Palantir has integrated the concept of delivering value swiftly—termed “a Palantir unit of time.”
**Key Metrics:** Nebraska Medicine achieved a 2,000%+ increase in discharge lounge utilization, 99% approval rate on AI-generated packets, and 1,100%+ efficiency gains, reducing processes from 80 to 7 minutes. These metrics drive customer lock-in and expansion.
Their speed-to-value is mirrored in Q2 TCV results: $2.3B total contract value (+140% YoY), US commercial TCV at $843M (+222% YoY). Fast realization of value leads to long-term contracts.
In the SaaS realm: Time-to-first-value is a key differentiator. Failure to demonstrate meaningful initial results may lead customers elsewhere.
#3. The Journey from 46% to 94% Rule of 40: How Elite Companies Scale Both Growth and Profitability
**The Learning:** Palantir’s jump in the Rule of 40 from 46% to 94% in two years shows leading companies can grow and expand margins simultaneously.
**Metrics Analysis:**
– Q3 2023: 46% Rule of 40 (17% growth + 29% adj. operating margin)
– Q2 2025: 94% Rule of 40 (48% growth + 46% adj. operating margin)
They are accelerating both growth and profitability. Adjusted operating income rose from $254M to $464M (+83% YoY) while sustaining 48% revenue growth. This signifies a platform reaching true scale.
The key: Their land-and-expand model, with 128% net dollar retention and 145% YoY growth in US commercial remaining deal value to $2.8B.
#4. How 53% Government + 93% Commercial Growth Creates Unique Business Model Durability
**The Learning:** Palantir’s dual-engine model (government + commercial) offers resilience and synergy, rare among pure-play SaaS firms.
**Metrics Story:**
– Government revenue: $553M (+49% YoY)
– Commercial revenue: $451M (+47% YoY)
– US Government: $426M (+53% YoY)
– US Commercial: $306M (+93% YoY)
The concurrent US commercial and strong government growth shows they aren’t sacrificing one for the other. Government work provides R&D and credibility that speeds commercial growth.
Success stories like techniques developed for national security in healthcare (TeleTracking), financial services (Fannie Mae), and manufacturing (Land O’Frost) show the power of government-funded innovation in their commercial products.
#5. $6.0B Cash + 57% Free Cash Flow Margin: Building the Ultimate Self-Funding Growth Engine
**The Learning:** Palantir has built an efficient cash generation machine in enterprise software, with adjusted free cash flow margins reaching 57%.
**Key Metrics:** Q2 adjusted free cash flow of $569M (57% margin) vs $144M (22% margin) in Q2 2024. Ending the quarter with $6.0B in cash and no debt signifies strategic freedom.
With $2.42B total RPO (+76% YoY) and strong cash flow, they can invest in R&D and market strategies without external capital pressure, enabling long-term AI development while competitors focus on funding.
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