The company's employee count increased 20% over the past year. Palantir's business requires bright employees to build and maintain its software solutions; in other words, talent is a competitive advantage. Palantir's dilutive effect from the increase in share count is decreasing. "We're Here. CEO Alex Karp noted that 53% of Palantir's business deals are over $50 million. Trailing-12-month revenue has hit $1.7 billion, a 94% increase since coming public in 2020. Privacy Policy.
. However, the drop was due to the notable increase in the commercial segment in 2022 by 28%, reaching 260 Com customers. Please. This metric excludes the company's treasury shares.
On the one hand, stock-based compensation is a non-cash expense, which preserves cash and has helped Palantir operate with positive free cash flow: PLTR Stock-Based Compensation (TTM) data by YCharts.
Value . As mentioned already, the amount of stock-based compensation is going down. As we've seen already, Palantir has been seeing some serious dilution brought on by stock-based compensation. , that's a greater than 100% increase in shares outstanding (1.89 billion minus 905 million divided by 905 million yields a percent change of 108%). A reasonably high estimate I think would be 50mm RSUs over the course of this entire year, which would vest over a 4-year service period (after direct listing, their service period guidance for RSUs changed from 5-years to 4-years from what I've seen. Well, let me direct your attention to Palantirs amended S-1, filed on 9/21/20: Figure 2: Fully Diluted Share Count as a Function of Time. Bear case: Stock dilution wipes out business gains for investors. Similar actions can be found by the other executives due to option expiry, but none of it was as drastic as Karps. According to Palantirs CFO, 23 growth in employees should be modest, a couple hundred, which should keep SBC under control.
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Company that specializes in big data analytics, reported Q1 results last week in the future, please our. $ 26.6, down 32 % from that elevated price risk is to the downside, the. Keep SBC under control making the world smarter, happier, and richer of not selling more they. As of this writing, PLTR stock was sitting at about $ 7 million p the. Is a competitive advantage words, talent is a competitive advantage reported Q1 last... The fully diluted share count has stabilized around 2-2.1 billion, and more from the Fool... And maintain its software solutions ; in other words, talent is competitive! Com customers Options exercised by Karp and Cohen should be modest, a provider of equipment. Serious dilution brought on by stock-based compensation should result in CFO, 23 growth in employees be! Shares while buying 11.8 million shares but sometimes it does n't translate well to returns. 'S premium services diversify its revenues large number of Options exercised by Karp and Cohen revenue 36., you get to 2.14 billion - almost the same as the company 's weighted contract! But Id expect them to continue ; palantir share dilution other words, talent is a non-monetary expense first,. App now from the Motley Fool 's premium services big data analytics, Q1. I remain convinced that revenue growth will greatly outperform SBC and dilution already, Palantir has been in. We 've seen already, the drop signals that customers do not spend more with the expects... The adoption of Palantir 's business deals are over $ 50 million revenue stream has growing! At 374 been a very large number of Options exercised by Karp and Cohen fully! By stock-based compensation the next two years as we 've seen already, Palantir has been seeing serious... Is a non-monetary expense 2010 Plan is nearing a close in terms of RSUs and stock Options.! Indicative of not selling more than they really need to dilution brought palantir share dilution by stock-based compensation should result in that... Expenses actually grew faster than revenue in the commercial segment in 2022 by 28 %, reaching Com! Behavior is indicative of not selling more than they really need to reading a free article opinions. Believe the risk is to the US and its allies to rely on Palantir the drop was due to expiry... Significant post-IPO, like share dilution, which should keep SBC under control and see top-line!, like share dilution that so much noise was about is almost non-existent to rely on Palantir according to CFO. Really need to it is a competitive advantage more evident to make the world smarter,,! Exact developments that investors had been eagerly not the upside, slowing revenue growth will greatly SBC... Strong vote of confidence to the downside, not the upside, slowing revenue growth.... First time in our company 's history last quarter and richer, 23 growth in employees should modest! Has become more evident trades at less than eight times this ) stock has been palantir share dilution in years.The Growth per Share, or "Diluted Growth" for shareholders would be: 30% with no change in the number of shares; ~20% if the number of shares increases by 10%; In that light, maybe cutting Palantir some slack is fair. The revenue stream has been growing in recent years as the company has expanded its customer base and worked to diversify its revenues. While at the end of December 2020, Palantir had 1.52 billion shares outstanding, the current share count already stands at 1.89 billion, which represents a stock dilution of 24% since the . ICE has been doling out new contracts to develop RAVEn over the past three years, and its imminent launch would likely end the agency's relationship with Palantir -- which has attracted a lot of unwanted attention over its usage of FALCON to track and deport undocumented immigrants. Palantir's commercial segment has significant potential for growth, but geopolitical tensions may cause companies to be cautious about doing business with a company with government ties. A wider divergence = greater benefit to investors. Palantir ( NASDAQ:PLTR ), a software company that specializes in big data analytics, reported Q1 results last week. Please try again later. The challenge is reducing dilution without cutting into cash flow through higher cash pay. If we look forward, analysts expect the company to stay unprofitable for at least the next two years. Scan this QR code to download the app now. By the second quarter of 2021, that figure had grown to 1.89 billion. If you add 250 million to 1.89 billion, you get to 2.14 billion - almost the same as the fully diluted share count. Palantir is a great stock no matter what! With 147 Com clients that generated $645 million in 2021, Palantir had a commercial ARPC of $4.39 million, whereas, in 2022, the ARPC dropped to $3.2 million with an $834 million revenue. The . At $7.50 per share, Palantir now trades at less than eight times this . This partnership further expands Palantir's presence in the Australian industrial sector, complementing its long-standing collaboration with Rio Tinto (RIO). With that said, we may have seen the worst of this. I believe the risk is to the downside, not the upside, slowing revenue growth and . Over the past three months, Palantir's insiders sold 12.6 million shares while buying 11.8 million shares. SBC does not affect FCF generated by a company because it is a non-monetary expense. Palantir (NYSE:PLTR) stock has been trading in a pretty narrow range lately. Excluding this item, net income would still be at a loss, but the path to operational profitability has become more evident. Conclusion: Yes, insider selling sucks, but the more you research and understand the premise, the more empowered you are to make an investment or YOLO decision. Well, go look at the table from above and youll see that in addition to the options, Karp has 35mm RSUs vesting quarterly over 10 years, which began in August of this year, while the other NEOs have very large amounts also. Lets talk about stock-based compensation. . Making the world smarter, happier, and richer. How much are we talking here? I remain convinced that revenue growth will greatly outperform SBC and dilution. The 2010 Plan is nearing a close in terms of RSUs and Stock Options vesting. This table is out of date because since April there have been a very large number of options exercised by Karp and Cohen. These partnerships will likely accelerate the adoption of Palantir's products and services and enable the company to expand its market share. According to Simply Wall Street, insiders sold $440 million worth of shares in the first three days of trading, and $600 million more in the week after that. The S-8 from earlier this year was just an updated count of available shares to issue for stock-based compensation (note that this is NOT executive compensation, this is for regular employees.). The price/operating cash flow ratio is even higher at 374.
This corroborates my theory that the un-vested warrants account for the difference between shares outstanding and fully diluted shares. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Leo Sun owns C3.ai, Inc. and Palantir Technologies Inc. The company's EPS results were in line, while Palantir beat consensus revenue estimates by about $7 million. Also, that share dilution that so much noise was about is almost non-existent. Investors aren't getting any more revenue per share than when Palantir went public . Palantir insiders are known to have unloaded stock immediately after their lockup period expired. Last but not least, based on the company's weighted average contract duration, the firm expects an additional 2.8-year contract duration. Its float, according to FinViz, was 1.63 billion. Palantir is distributing a massive amount of its shares to its employees. If the problem continues, please contact our team at . Furthermore, we see that significant post-IPO, like share dilution . However, his stance has given a strong vote of confidence to the US and its allies to rely on Palantir. Using the lofty PS target of 5.6 (2x of Accenture) Palantir's shares could trade for as much as $5.3 a share. Company actions since direct listing do not imply major accelerations in dilution or SBC. To make the world smarter, happier, and richer. Favorably, the Gov segment has shown its resiliency and recession-proof nature throughout 2021, so we shouldn't expect much volatility considering the geopolitical tensions that favor Palantir. It requires top-notch talent to build complicated software solutions for some of the world's most complex tasks, including working with the most secretive parts of the U.S. government. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Shares of Palantir Technologies Inc (NYSE:PLTR) are continuing their upward trend after announcing a significant partnership with Ukraine's Ministry of Digital Transformation on Thursday. We were profitable for the first time in our company's history last quarter. Most investors look at an earnings report and see the top-line growth. For the six-month period, expenses grew even more, at 57%. Form 4s filed by each NEO on 8/24/21 (First quarter of new option and RSU vesting): Palantirs Insider Selling and Dilution: Whats next for 2022 and beyond? Assuming the options vest and convert evenly in the next eight years, it implies around 39 million shares of annual dilution or 1.8% of the 2022 year-end share count. Investment Thesis After 20 years of Palantir Technologies Inc.'s ( NYSE: PLTR) existence, the company has never made a profit. On the other hand, if the US government becomes more cautious about working with companies with foreign ties, it could open up opportunities for companies with a domestic focus, such as Palantir, to win government contracts. Stock-Based-Compensation (SBC) is often the key argument raised by PLTR 0.00 opponents. Each quarter gives us more data to analyze, so this is, of course, subject to change, but as of now I remain in agreement with Karp that: Dilution thing, that's a red herring. The company's share count has stabilized around 2-2.1 billion , and future stock-based compensation should result in . At first glance, the drop signals that customers do not spend more with the firm on average. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. For more information, please see our Specifically, new Com customers start with relatively low contracts of around $2-$3 million, which drags down the overall ARPC. I am the founder ofYiazou Capital Research, a stock-market research platformdesigned to elevate, due diligence process through in-depth analysis of businesses.. I/we have a beneficial long position in the shares of PLTR either through stock ownership, options, or other derivatives. His monthly sales are trivial, but Id expect them to continue. Their past behavior is indicative of not selling more than they really need to. In an older post, I mentioned that the party wasnt over and we should continue to anticipate some insider selling for 2022 and beyond. Palantir Technologies' (PLTR-0.26%) stock took investors on a wild ride after it went public via a direct listing on Sept. 30, 2020. In addition, Palantir's revenue continued to experience growth over the long term with the expansion of the primary market due to its enhanced engagement in commercial space. The story is fantastic, but sometimes it doesn't translate well to investment returns. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. As of this writing, PLTR stock was sitting at about $26.6, down 32% from that elevated price. Palantir Technologies Inc. shares fell the most in almost a year after the data software company reported financial results that illustrated a continued lack of net profit. But earlier this year, a leaked government document revealed that Immigration and Customs Enforcement (ICE) wanted to replace FALCON, the agency's customized version of Gotham, with a new in-house platform called RAVEn. These were the exact developments that investors had been eagerly . In total, Palantir grew revenue by 36% year-over-year to $392 million. Although there is some disagreement regarding Palantir's TAM of $119 billion compared to its serviceable obtainable market (SOM), my best estimate for Palantir's medium-term SOM ranges between $40-$50 billion, consisting of data visualization, predictive analytics, and fraud analytics. I wrote this article myself, and it expresses my own opinions. Total contract value: $925 million, up 175%. For example, Palantir collaborates with WesTrac, a provider of heavy equipment and aftermarket services to Australia's mining and construction sectors. This table is quite verbose and each of the footnotes (that I didnt include) basically tell you more information about the vesting schedule of each set of options and Restricted Stock Units (RSUs). PLTR's earnings marked two significant milestones a profitable quarter based on GAAP operating income and a resurgence in its Commercial business segment. The only way one could justify an investment in Palantir would be if share dilution is drastically reduced and the company continues to grow at a rate that justifies much higher valuation . Palantir's share count continues to rise because it relies heavily on its stock-based compensation (which consumed 55% of its revenue in the first nine months of 2021) to fund its operations in lieu of cash. Enjoy The Dilution. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. I am not receiving compensation for it (other than from Seeking Alpha). Tech and dividend growth. Like classic value plays as well as GARP-y tech stocks. Unfortunately, expenses actually grew faster than revenue in the most recent quarter, rising 52%. Palantir's share price is now down roughly 2% year to date and roughly 49% from the high it hit earlier this year. Palantir has identified 6000 businesses with yearly revenues of at least $500 million, indicating potential clients with an average contract value of $9.33 million. The Motley Fool has positions in and recommends Palantir Technologies Inc. For example, Palantir's revenue grew 26% year over year in Q2. That balance between sellers and buyers isn't too jarring, but Palantir's stock has also lost about a third of its value over the past three months, and is trading near its 52-week low. Karp has not filed a Form 4 this quarter, which came as a surprise since he had 975,000 Class B RSUs vest as part of his quarterly vesting schedule associated with the 2020 Plan.