Palantir reported the most profitable quarter in its history on Monday, and the market's reaction ran past what the options market had priced. Shares closed the regular session at $125.65. By the 8 p.m. close of extended trading they were $144.42, a gain of 14.9%. Options had implied a move of about 12%, with an expected range of roughly $108 to $138. The stock finished the evening above that range.
That is the surface story. The harder question is what the quarter says about the shape of Palantir's growth. Revenue rose 93% to $1.935 billion. Nearly all of the incremental dollars came from one place. U.S. commercial revenue grew 149%. The business outside the United States appears to have grown by roughly a third. New contract value across the whole company grew 49%, well behind revenue. Investors now have to decide whether they are watching an AI franchise broaden, or one narrow engine pulling a company priced as though demand is everywhere.
The beat is cleaner than Palantir's usual beat
Start with what is not in dispute. GAAP diluted earnings were $0.41 a share, against $0.13 a year earlier. Adjusted diluted earnings were also $0.41. For a company that has spent years asking investors to look past stock compensation, that identity is new information.
Adjusted net income of $1.047 billion actually came in below GAAP net income of $1.062 billion. A $297.4 million income tax adjustment inside the non-GAAP calculation more than offset the add-back of stock compensation. The reconciliation is in the release, so the mechanism is verified rather than assumed.
The operating lines still carry a gap, and it is worth sizing. GAAP income from operations was $912 million, a 47% margin. Adjusted income from operations was $1.194 billion, a 62% margin. The difference is $282 million of stock compensation and related payroll taxes, or about 14.6% of revenue. A year ago the same gap was 19.4% of revenue. The non-cash charge is shrinking relative to the business rather than growing with it. GAAP operating margin expanded about 20 points year over year. The adjusted margin expanded about 15. On the measure that includes the cost of dilution, Palantir improved faster than its own preferred metric implies.
One caveat travels with the Rule of 40 figure. Palantir defines it as revenue growth plus adjusted operating margin, which produces the 155% in the release. Substitute the GAAP margin and the arithmetic gives about 140%. Both are defensible. Only one is the company's, and the definition needs to accompany the number.
One more earnings-quality note. GAAP net income exceeded GAAP operating income by about $150 million. Interest and other income on a cash and securities balance above $9 billion more than covered the tax charge. A year earlier that contribution was about $57 million. The cash pile is now a real earnings contributor, and a rate-sensitive one.
One engine did almost all of the work
U.S. commercial revenue reached $764 million, up 149% and accelerating from 133% growth in the first quarter. U.S. government revenue was $809 million, up 90%. Together the domestic business was $1.573 billion, about 81% of the total.
That leaves roughly $362 million from outside the United States. Working back from the disclosed U.S. growth rate, international revenue appears to have grown about a third year over year. Palantir published no international figure or growth rate, so this is derived and approximate. It still matters. Chief Executive Alex Karp's framing for the quarter was that demand for AI sovereignty has been unleashed. Sovereignty is, for most of the world, a non-U.S. proposition. The disclosed segments describe an American quarter.
A related correction is needed. A widely shared claim after the print held that commercial revenue has passed government revenue. The disclosed U.S. figures say otherwise, at $764 million against $809 million. Palantir gave no international commercial split, so the claim cannot be tested on a total basis, and as stated about the United States it is wrong.
The contracting numbers do not move with revenue
Total contract value closed in the quarter was $3.373 billion, up 49%. Revenue grew 93%. In the first quarter, contract value grew 61%. The measure of new business signed decelerated while reported revenue accelerated.
Inside that total, U.S. commercial contract value was $2.132 billion, up 153%. Subtract it and the remainder, which is government plus international, works out to roughly $1.24 billion against roughly $1.42 billion a year earlier. That implies a decline of about 13%. Contract signings are lumpy and one quarter settles little. But the arithmetic sits directly beneath the claim that demand is broad, and it should be reconciled rather than ignored.
The forward book is healthiest where the revenue already is. U.S. commercial remaining deal value was $6.238 billion, up 124% and accelerating from 112% growth in the prior quarter. Neither total contract value nor remaining deal value is revenue, and neither is backlog in the accounting sense. Neither should be converted into a forecast.
The move says more about the guide than the quarter
The reaction is easier to read once expectations are in view. Palantir entered the print down about 29% for the year and nearly 40% below its 52-week high of $207.52. It closed the regular session beneath both its 50-day and 200-day averages. Sell-side consensus for the quarter was $1.812 billion of revenue and about $0.34 of adjusted earnings on a seventeen-analyst tally, with other tallies at $0.35. Palantir's own guidance three months earlier had been $1.797 billion to $1.801 billion. Consensus sat within one percent of the top of that range.
The company then beat its own guidance by 7.6%, the second straight quarter it has cleared its guide by more than six percent. It guided third-quarter revenue to $2.162 billion at the midpoint, against consensus of $2.002 billion. Full-year guidance of $8.154 billion at the midpoint sits about 6.7% above what analysts had been carrying for 2026 in total. The evening's move appeared to reflect that gap between the guide and the models, not the earnings line itself.
Even after the move, $144.42 leaves the shares about 30% below their high and about 5% below the 200-day average. Extended-hours volume of 77 million shares exceeded the regular session's 67 million, which argues for treating the level as provisional until Tuesday's close. No post-print analyst revisions were on the record at the time of writing.
What has to show up in the next two quarters
Palantir's own guidance embeds deceleration. The third-quarter midpoint implies about 83% annual growth and 11.7% sequential growth, against 18.5% just delivered. The implied fourth quarter runs closer to 72%. Adjusted operating margin implied in the third-quarter guide is about 59.9%, below the 61.7% delivered. The company has cleared its guide by six to eight percent twice running, so the deceleration may be conservatism rather than forecast. The next print is what tests that.
Three developments would strengthen the bull case. A disclosed international revenue line growing faster than a third. Total contract value growth that reconverges with revenue growth. A government book that resumes signing at the pace the sovereignty framing implies.
Three would validate the bear case. Another quarter in which contract value grows at half the rate of revenue. U.S. commercial growth that fades without international stepping up. Any sign that the tax adjustment flattering the adjusted line does not repeat.
The burden of proof moved this quarter without getting lighter. Going in, Palantir had to show it could convert AI demand into profit. It did, on a GAAP basis, with no help from non-GAAP framing. What it now has to show is that the demand is wider than one segment of one country. At about 41 times its own revenue guidance for this year, the price already assumes it is.