Palantir Posts Record $2.31 Billion Quarter but Enterprise Contract Values Slip
U.S. commercial revenue surpassed government revenue for the first time, reaching $984 million, up 148% year over year. But enterprise contract value fell to $1.46 billion from $2.13 billion, with shorter deals tempering investor enthusiasm despite record results.
Palantir reported third-quarter 2026 revenue of $2.31 billion — a 96% year-over-year increase and the first time the company has surpassed the $2 billion mark — but signs of slowing enterprise sales tempered investor enthusiasm, leaving the stock trading slightly down on Tuesday.
The results beat analyst expectations of $2.18 billion, and adjusted earnings per share came in at $0.44, above the $0.41 consensus estimate. Revenue also grew 20% from the prior quarter. Palantir raised its full-year revenue guidance and increased its U.S. commercial revenue forecast to “in excess of $3.559 billion, representing a growth rate of at least 143%.”
A notable milestone: U.S. commercial revenue exceeded U.S. government revenue for the first time. Palantir reported $984 million in commercial contracts — up 148% year over year — compared to $953 million from U.S. government work. The company attributed enterprise demand to its AI software, which allows businesses to run frontier models and custom-train open-weight models without sharing data or processes with outside AI labs, alongside its “forward-deployed” software engineering services.
However, a concern emerged within the strong headline numbers. Total contract value from U.S. enterprises reached $1.46 billion in the quarter — a decline from the record $2.13 billion recorded the previous quarter. CEO Alex Karp acknowledged on the earnings call that enterprises are signing shorter-duration contracts, though he said those agreements often expand significantly over time.
“What Ryan and I are seeing on the front line and commercial is this much quicker interaction, much quicker to deployment, shorter duration of the contract but then an ability to expand that contract dramatically,” Karp told analysts.
The pattern reflects a broader dynamic: corporations are moving quickly to trial AI software but are also more willing to cancel contracts. Whether Palantir can convert short-term trials into long-term commitments may become clearer in its next earnings report, covering a quarter when enterprises historically make their largest technology purchases.