Palantir Technologies Inc (PLTR)

[eastunder]

Annual Letter from the Chief Executive Officer
February 13, 2023

https://www.palantir.com/newsroom/letters/2023-annual-letter/en/

We were profitable for the first time in our company’s history last quarter.



In Q4 2022, we earned a profit of $31 million.

Our commitment to and relentless focus on the long term at times has required patience. At other times, as our profitability demonstrates, we will deliver results at a rate that surpasses even the expectations of those who believed that we would prevail.

A threshold has been crossed, and this is the start of our next chapter.

We expect to generate a profit for the current fiscal year, our first profitable year in the history of our company.

This moment is significant and demonstrates to a broader audience the magnitude of the potential of our business, which is only now being revealed.

We have repeatedly built something from nothing.

A substantial U.S. commercial business, in particular, has emerged in essentially two years, with a fledgling sales force that is still in its infancy and only now taking shape.




In 2018, for example, we generated a total of $38 million of revenue from our U.S. commercial business. Four years later, in 2022, we generated $335 million of revenue, representing a 72% compound annual growth rate.

The significant expansion of our commercial business in the United States reflects the unrelenting demand from customers for enterprise software systems that work.

The need for commercial enterprises to reimagine the way in which they relate to data, and to invest in the software platforms that will make their continued survival possible, has never been greater.

When we were just starting out, many doubted our ability to evolve beyond anything more than a specialty provider of software to a handful of government customers, let alone generate meaningful revenue from the government sector as a whole. They were wrong.

Others later doubted that we could construct a thriving commercial business on top of that government work. They were wrong again.

Our commercial offering, for years made available to a select group of initial partners and collaborators, is now becoming the default choice for an increasingly broad swath of customers that require both immediate and durable results from their investment in enterprise software.

Our collective focus on artificial intelligence, including the natural language processing capabilities that have recently been made more widely available to the public, is not misplaced.

The transformative potential of software, which we have been building for two decades, is only in the earliest stages of revealing itself.

The demand from customers for our platforms has in recent months gained additional momentum, in significant part because of the accelerating embrace of artificial intelligence by companies across sectors and industries. We anticipate that this new source of demand will contribute to our growth moving forward, above and beyond what we would have anticipated even late last year.

The widespread adoption of artificial intelligence in civilian applications will come soon. In the military context, it has already arrived.

Our technology is on the front lines around the world, including in eastern Europe, where software has become a significant and often decisive lever on the battlefield.

The traditional military calculus that involves comparative assessments of the capabilities of physical assets, including tanks and missiles, for example, in isolation from their accompanying software systems, which are now essential to the efficacy of an asset in the field, is now essentially obsolete.

The broader moral and philosophical questions raised by the role our software is playing in the defense and intelligence sectors are significant.

We acknowledge that the participation of private corporations, whose leadership is unelected and therefore not directly beholden to the public, raises important questions regarding the appropriate means of holding private actors performing government functions accountable.

A generation of entrepreneurs in Silicon Valley were perhaps disenchanted with the work of government for any number of reasons. They turned their back on the country that made their rise possible in favor of the consumer internet and other less than consequential pursuits.

But we believe that the fates of the technology industry and the republic are very much intertwined. More collaboration, not less, may be required for both to succeed and survive over the long term.

And we remain committed to the defense of the state whose existence is a precondition for our own.

Sincerely,



Alexander C. Karp
Chief Executive Officer & Co-Founder
Palantir Technologies Inc.