In its third quarter of fiscal 2025, Palantir delivered revenue of $566 million, up 63% year-over-year, marking its ninth consecutive quarter of accelerating top-line growth. Non-GAAP net income more than doubled to $0.21 per diluted share, representing a 110% increase versus the prior year. The company’s gross margin expanded to a record 81%, driven by scale efficiencies in its Gotham and Foundry platforms, reinforcing its path to sustained profitability.

Palantir’s U.S. commercial segment posted revenue of $230 million, up 121% year-over-year, fueled by enterprise AI adoption across banking, energy and manufacturing verticals. Total contract value in the commercial channel surged 342% year-over-year, as the company’s Bootcamp sales model accelerated deal closure cycles. Management highlighted that over 80 new customers went live on its AI Platform in the quarter, underscoring rapidly expanding market penetration.

The firm continued to invest heavily in its AI Platform (AIP), allocating 28% of revenue to R&D for modular pricing features and enhanced large-language model integration. Despite elevated investment, operating leverage translated into positive free cash flow of $75 million for the quarter. Palantir reiterated a full-year non-GAAP operating margin target above 20%, projecting further margin expansion as fixed costs are absorbed by accelerating enterprise subscriptions.

Trading at over 100 times forward sales, Palantir stands as the highest revenue multiple among large-cap software peers. Historical analysis shows that other software firms peaking above 100x sales experienced average drawdowns exceeding 75% in subsequent years. Investors should weigh near-term momentum and platform differentiation against this elevated valuation and governance risks, including reliance on long-cycle government contracts and concentration of top customers.