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(Bloomberg) -- Palantir Technologies Inc., the data analysis company co-founded by Peter Thiel, said it was profitable for the first time in the fourth quarter, and expects 2023 to be its first-ever profitable year.
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Shares were up by 19% in premarket trading at 10:28 a.m. London time on Tuesday.
The company said on Monday it earned 1 cent per share during the fourth quarter using generally accepted accounting principles, exceeding analyst expectations for a 3-cent loss. Profitability was helped along by higher-than-anticipated revenue, fueled by growth in sales to governments, and lower costs related to stock compensation.
“A threshold has been crossed, and this is the start of our next chapter,” Palantir Chief Executive Officer Alex Karp wrote in a letter to shareholders. “We expect to generate a profit for the current fiscal year, our first profitable year in the history of our company.”
RBC Capital Markets analyst Rishi Jaluria said Palantir is delivering annual profit two years earlier than expected, but some concerns remain over growth. “The numbers aren’t particularly strong,” he said, adding that Palantir’s commercial business is especially vulnerable given the broader trend toward declining IT budgets. “The thing that surprised people is the profit” for 2023, he said.
Palantir reported $508.6 million in sales in the fourth quarter. Analysts were expecting revenue of $505.1 million, according to data compiled by Bloomberg.
For two decades, the Denver-based company has been providing data analysis software to the US government and its allies, famously eschewing doing business with China and other countries considered American rivals. In recent years, it’s also made a concerted effort to push into commercial business, working with companies like Airbus SE, Merck & Co. and Ferrari.
Palantir’s revenue from its commercial clients, a closely watched metric, increased 11% to $215 million, in line with analyst estimates. In a conference call on Monday, Karp said that companies outside the US were a weak spot. “You just have a lack of receptivity to new technology in parts of Europe,” he said.
In his letter to shareholders Karp described the two-year-old commercial sales team as “fledgling,” and said that the surge in companies seeking to use artificial intelligence will help drive growth at Palantir over the long term.