Palantir Q3 2026 Earnings: U.S. Commercial Revenue Overtakes Government Revenue

Palantir Technologies (NASDAQ: PLTR) reported Q3 2026 revenue of $2.313 billion, up 96% year over year, while GAAP diluted EPS increased to $0.44 from $0.18. For the quarter ended September 30, 2026, U.S. commercial revenue surpassed U.S. government revenue for the first time, while GAAP operating margin reached 47% and adjusted free cash flow totaled $1.216 billion.

Core Financial Results

Revenue nearly doubled, but profitability grew even faster as operating expenses increased much more slowly than sales. GAAP operating income rose approximately 176%, and the operating margin expanded by about 13.7 percentage points.

Cash generation also accelerated, with both operating cash flow and adjusted free cash flow exceeding $1.2 billion. The following table separates GAAP results from the company’s adjusted measures.

Business and Segment Performance

U.S. revenue reached $1.937 billion, representing about 84% of total quarterly revenue. U.S. commercial revenue exceeded U.S. government revenue by $31 million, marking the first quarter in which the commercial business became Palantir’s larger U.S. revenue stream.

Contract activity remained substantial but grew more slowly than recognized revenue. Palantir closed 212 deals worth at least $1 million, including 107 worth at least $5 million and 64 worth at least $10 million. Total contract value was $2.918 billion, up 6%, while U.S. commercial TCV increased 11% to $1.463 billion.

U.S. commercial remaining deal value rose 79% year over year and 4% sequentially to $6.517 billion. RDV is not guaranteed future revenue: Palantir’s definition assumes customer contract options are exercised and that contracts are not terminated, while many agreements include termination provisions.

Profitability, Cash Flow, and the Balance Sheet

Revenue growth outpaced both cost of revenue and operating expenses. Cost of revenue increased approximately 85%, allowing gross margin to improve by about one percentage point. Operating expenses rose approximately 46%, compared with the 96% increase in revenue, producing significant operating leverage.

The difference between GAAP and adjusted operating income was approximately $342 million. Adjusted operating income excludes $318.9 million of stock-based compensation and $23.1 million of related employer payroll taxes. Stock-based compensation increased from $172.3 million a year earlier, so the adjusted margin provides a more favorable view of profitability than the GAAP result even though both margins expanded substantially.

Adjusted free cash flow slightly exceeded operating cash flow because Palantir’s calculation adds back $19.5 million of cash payroll taxes associated with stock-based compensation before deducting $8.0 million of capital expenditures. Investors comparing free cash flow across companies should account for this company-specific definition.

For the first nine months of 2026, rather than the quarter alone, operating cash flow was $3.320 billion, up from $1.357 billion. Accounts receivable used $843.4 million of cash during that nine-month period and increased to $1.883 billion at September 30 from $1.042 billion at the end of 2025. Despite that working-capital use, Palantir ended the quarter with $10.4 billion of cash, cash equivalents, and U.S. Treasury securities.

Earnings Guidance

Palantir raised its full-year revenue, U.S. commercial revenue, adjusted operating income, and adjusted free cash flow guidance. The prior ranges were not included in the release, so the size of each increase cannot be quantified from the provided information.

At the midpoint of its Q4 ranges, Palantir is guiding to approximately $2.651 billion in revenue and an adjusted operating margin of about 62%, broadly consistent with the Q3 adjusted margin.

The company also continued to expect positive GAAP operating income and net income in every quarter of 2026.

Management’s View

CEO Alex Karp attributed Palantir’s momentum to growing institutional demand for sovereign AI capabilities across government and commercial customers. Management emphasized the combination of Foundry, Ontology, and AIP, arguing that integrating models directly with customer workflows is supporting broader deployment and increased customer value.

Recent Insider Transactions

The supplied insider data show that, over the last six months, insiders purchased 1,989,828 shares across 13 transactions and sold 1,751,532 shares across 23 transactions. That produced a net purchase of 238,296 shares, equal to 0.30% of the 83.07 million shares reported as held by insiders.

The latest 10 reported entries were more heavily weighted toward sales, comprising eight sale entries with an aggregate value of approximately $11.83 million and two zero-cost stock awards. These transactions are presented without inferring insider views about the company’s prospects.

The October 15 entry for Moore aggregates multiple sales reported for the same filing date. All 10 entries were reported as transactions involving directly held shares.

Risks Investors Should Monitor

• Contract value is growing more slowly than revenue: Quarterly TCV rose 6% while revenue increased 96%. These metrics cover different economic periods and TCV can be uneven, but the gap makes future contract activity and revenue conversion important to monitor.
• Contract metrics do not equal guaranteed revenue: TCV and RDV may include customer options, and many contracts can be terminated. The full reported amount may therefore not be recognized as revenue.
• Growth is increasingly concentrated in the U.S.: U.S. revenue accounted for about 84% of the quarter’s total, making continued U.S. commercial and government demand particularly important.
• Stock-based compensation remains significant: Quarterly stock-based compensation rose approximately 85% to $318.9 million and explains most of the gap between GAAP and adjusted operating income.
• Receivables are absorbing working capital: Accounts receivable increased approximately 81% from the end of 2025 and used $843.4 million of cash during the first nine months, even as total cash generation remained strong.

Summary

Palantir’s Q3 2026 results combined 96% revenue growth with substantial operating leverage and cash generation. U.S. commercial revenue became the company’s largest U.S. business for the first time, while both GAAP and adjusted margins expanded. The raised full-year outlook points to continued growth through Q4, with contract conversion, stock-based compensation, receivables, and the durability of U.S. demand remaining the main areas to watch.