(Bloomberg) — Palantir Technologies Inc. shares fell the most in almost a year after the data software company reported financial results that illustrated a continued lack of net profit.
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The stock declined as much as 14% in intraday trading Thursday. Palantir shares have lost about half their value over the past 12 months.
The net loss was 8 cents a share in the fourth quarter. Adjusted earnings were 2 cents a share, short of analysts’ expectations. Net income is “within eyesight,” Chief Executive Officer Alex Karp assured analysts in a conference call, but he didn’t provide a date.
Pandemic-related restrictions are hampering the business, particularly in Europe. The region needs “to reopen,” Palantir Chief Operating Officer Shyam Sankar said in an interview with Bloomberg. “We need to work on Europe,” he said.
The number of business customers tripled last year to 147, but most of that came from the U.S. Sankar said he expects to add at least 175 salespeople this year, with many focusing on European businesses.
Karp started Palantir with the tech mogul Peter Thiel almost two decades ago to sell software to U.S. government agencies and their allies. The company has worked furiously in recent years, especially during the past year, to bring on more corporate customers. It has added hundreds of salespeople, simplified its software products and even spun up a program to take equity stakes in small startups that agree to be customers.
Palantir grew revenue 41% to $1.5 billion in 2021, beating the 40% rate it pledged late last year. Still, Palantir’s government business is larger and growing faster than its commercial segment, a dynamic that has concerned investors since Palantir went public in 2020. Revenue last year from government customers increased 47% to $897 million while commercial increased 34% to $645 million.
Deals with biotech startup Dewpoint Therapeutics Inc. and pipeline operator Kinder Morgan Inc. contributed to total fourth-quarter revenue of $433 million.
Palantir said it will deliver a 23% adjusted operating margin on $443 million in revenue during the quarter ending in March, falling short of an average of analysts’ estimates compiled by Bloomberg. The company said it expects its operating margin to increase to 27% in the fiscal 2022.
The company’s sometimes-controversial government work remains core to its future operations. Along with assisting more than a dozen governments in battling the Covid-19 pandemic, the software is used to power military operations.
“We are not ambivalent about the side we have chosen when it comes to supporting the defense of the United States,” wrote Karp, in his annual letter to shareholders. “Everything we have accomplished, and everything we have built, has been made possible by the country in which our company was founded.”
Continuing to expand its commercial segment is critical to sustaining the 30% annual revenue growth Palantir promised investors when it went public, according to Mandeep Singh, an analyst at Bloomberg Intelligence.
(Updates with reporting starting in first paragraph.)
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