Palantir Q1 2021 Earnings Fail To Impress Investors Amid a Plateauing of Financial Performance

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Palantir (NYSE:PLTR), a Software-as-a-Service (SaaS) provider that specializes in big data integration and analytics, has seen its share price enter a tailspin ever since peaking back in January 2021. At the heart of this share price swoon is a general belief that the stock is overvalued relative to the company’s financial prospects. Against this backdrop, Palantir’s earnings for the first quarter of 2021 have taken on an added significance.

Palantir (NYSE: PLTR) Q1 2021 Financial Scorecard

For the three months that ended on the 31st of March 2021, Palantir earned $341 million in revenue, exceeding consensus expectations by 2.6 percent and corresponding to annual growth of around 49 percent.

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(All figures are in millions of dollars)

Moreover, Palantir reported $116.58 million in adjusted income from operations.

(All figures are in millions of dollars)

Readers should note that Palantir relies heavily on stock-based compensation. Consequently, the adjusted metrics – where this effect is neutralized – remain much more important to analysts.

Finally, Palantir reported a non-GAAP EPS of $0.04, thereby matching the consensus estimate.

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(All figures are in dollars)

As far as Q2 2021 is concerned, Palantir expects to achieve annual growth in revenue of 43 percent, corresponding to a top-line figure of $360 million. It also expects its adjusted operating margin to compute at 23 percent. Moreover, the company expects annual revenue growth of 30 percent or greater for 2021 through 2025.

As is evident, Palantir's financial performance during Q1 2021 was largely in line with that of the previous quarter. This lack of material growth is not sitting well with investors. As an illustration, the stock is currently down over 8 percent in early pre-market trading.

As a refresher, Palantir currently has three main products which offer enterprises the ability to integrate, store, and analyze data. Its Gotham service integrates and transforms data, regardless of type or volume, into a single, coherent data asset. Moreover, the company’s Foundry service removes the barriers between back-end data management and front-end data analysis, thereby offering an integrated approach to interpreting vast data sets. Finally, the Apollo software solution powers Palantir’s Gotham and Foundry SaaS services in the cloud.

A major factor that strengthened Palantir’s bullish case over the past couple of months was the stock’s growing profile within Cathie Wood’s ARK Invest ETFs. Cumulatively, ARK Invest now owns over 20 million Palantir shares. However, Cathie Wood is fast losing clout on Wall Street due to the subpar performance of her ETFs lately. This adds an element of risk to Palantir’s outlook as Cathie Wood’s endorsement no longer entails the guarantee of outperformance.

The author has no position in any of the stocks mentioned. NewAgeAds LLC has a disclosure and ethics policy.
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