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Palantir Anticipates Its First Profitable Year In 2023 As Its Shares Soar

Palantir Anticipates Its First Profitable Year In 2023 As Its Shares Soar
Palantir Technologies forecasted its first profitable year on Monday, saying it had slowed hiring, cut stock-based payouts, and reduced cloud computing investments in response to lower spending from recession-wary businesses.
The forecast, which came on the heels of better-than-expected fourth-quarter results, sent the data analytics software maker's shares up 16% after hours, adding nearly $3 billion to the company's market capitalization of $15.6 billion.
"As we look ahead to 2023, we will continue to exercise spend discipline ... pace hiring while continuing to invest in high priority areas, including in our product offerings, building out our go-to-market strategy and technical roles," said finance chief David Glazer.
The comments on cost control echo those of tech behemoths like Meta Platforms and Alphabet Inc, which have shed thousands of jobs in recent months.
In an interview, Palantir executives also gushed about AI, saying that the rise of ChatGPT was a bright spot for the sector and would help its business in 2023.
"There are many different ways we can integrate with technologies like ChatGPT and apply those technologies to our customers data," Chief Revenue Officer Ryan Taylor told Reuters. He did not elaborate on how Palantir would do that.
However, even though the fourth quarter's profitability was boosted by "below the line" adjustments like interest income and the quarter as a whole met expectations, Palantir's stock was still up too much, according to RBC analyst Rishi Jaluria.
According to Refinitiv, the company predicted 2023 revenue between $2.18 billion and $2.23 billion, less than the $2.29 billion analysts predicted.
Palantir's revenue from newly public companies that make use of its services has suffered as the market for U.S. stock listings has been severely affected by economic uncertainty. In comparison to a year ago, that revenue is anticipated to drop by almost half in the first quarter, to $16 million.
However, an increase in defense contracts following Russia's invasion of Ukraine enabled fourth-quarter revenue to surpass estimates with an increase of 18% to $509 million.
During that time, Palantir entered into agreements with the UK military and defense contractor Lockheed Martin.
In contrast to estimates of 3 cents per share, Palantir earned 4 cents per share after items.

Christopher J. Mitchell

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