# Alex Karp Leaves Audience Speechless on Palantir's Q3 Earnings Call

*David Carbutt * · https://www.youtube.com/watch?v=hLg45qG1Lr0

## Summary

This is a recording of Palantir's Q3 earnings call, featuring CEO Alex Karp's opening remarks followed by analyst and shareholder questions. Karp presents the quarter's results—77% US growth, 121% US commercial growth, and a rule of 40 score of 114—as arguably the best results any software company has ever delivered. He and other executives attribute the performance to Palantir's ontology, Foundry, AIP, and forward-deployed engineer model, and discuss accelerating customer demand, internal AI adoption, and defense work.

## Key points

- Karp claims Palantir's Q3 results are arguably the best any software company has ever delivered, citing a rule of 40 of 114 and 77% US growth.
- US commercial closed $1.3 billion in TCV, 6x on a dollar-weighted duration basis from a year ago, with 21 deals of $10 million or more.
- Karp says growth is held down by a stagnant Europe, which remains a significant part of the business.
- Palantir positions itself as downstream of value creation: clients make more money or become more dominant on the battlefield and pay Palantir a subset of that.
- Executives say headcount grew roughly 10% while revenue grew 63%, driven by making forward-deployed engineers more productive with AI.
- Karp argues the real AI misalignment is with elite generalist specialists, while vocationally trained workers with domain expertise become more valuable.
- Customers are increasingly asking to reorganize their entire organizations around Palantir and AIP rather than pursuing single use cases.
- Karp defends Palantir's work with ICE, defense of America, Ukraine, Israel, and border enforcement as proud and controversial.

## Notes

### Q3 Results Framing
- Alex Karp calls the results arguably the best any software company has ever delivered, saying it is not hyperbole.
- Key figures cited: 77% US growth, 121% US commercial growth, 63% revenue growth, rule of 40 of 114, and $1.3 billion in US commercial TCV.
- Karp notes growth is held down by a stagnant Europe, which remains a significant part of the business.
- He criticizes analysts who have been wrong at every price and who are not investing their own money.

### Business Model and Value Creation
- Palantir describes itself as downstream of value creation: it makes clients more money or more dominant on the battlefield, and clients pay a subset of that value.
- The company embeds customers' tribal, specific knowledge into ontology and Foundry rather than selling commodity software with a large salesforce.
- Karp says the salesforce is declining while growth accelerates, and headcount grew roughly 10% against 63% revenue growth.

### AI Positioning
- Karp argues a large part of the AI market cares about value creation, and Palantir owns that part because of ontology, Foundry, AIP, and forward-deployed engineers (FDEs).
- He claims the real AI misalignment hits elite generalist specialists, while vocationally trained workers with domain expertise become more valuable.
- Internally, AI has made forward-deployed engineers wildly more productive, which is why Palantir started giving the tooling to customers.

### Customer Momentum
- US commercial TCV was 6x a year ago on a dollar-weighted duration basis; 83 deals were worth $1 million or more, 40 were $5 million or more, and 21 were $10 million or more.
- Customers increasingly want to reorganize their entire organizations around Palantir and AIP, not just run a single use case.
- Karp compares the effect to a private-equity-like transformation in public markets.
- Competing approaches fail because LLMs are a commodity; ontology and Foundry are prerequisites for enterprise value.

### Government and Defense
- US government business grew 50% plus; executives cite NGC2, continued Maven growth, and the Army consolidating into the Army data platform with Army Vantage.
- Karp defends Palantir's work with ICE, Ukraine, Israel, and border enforcement, framing the company as on the side of the average American worker.

### Closing
- Karp declines to forecast next year but points to unit economics and value creation as the basis for judgment.
- He thanks individual investors, calling them sane people who put up their own money.

## Transcript

[00:00] By any normal or even reasonable standard, these are not normal uh results. These are not even strong results. These aren't extraordinary results. These are arguably the best results that any software company has ever delivered. And it's that's not hyperbolic. Despite what your analyst friends may want you to believe because they've been wrong at every price, they're wrong on every at every single round. But of course, they're persuasive and it's they're not investing their own money. But um I a a normal enterprise company should not have a rule of 40 above 100. A normal enterprise company at our base should not have over 100% US commercial growth. Should not have 77% growth in the US. That growth is being

[00:44] held down by a stagnant Europe which is still a significant part of our business. So the pure uh unvarnished numbers are 77% growth off of a massive significant base with very significant cash flow with a company that throws off a rule of 40 of 114. And then I if this world was at all sane every single mo every single person in the financial world would stop and say how did this happen? How did a company which stand stood by the American war fighter uh marine special operators uh people in clandestine services who stood up for our right of free speech and was really the first company to be completely anti-woke? How did this company stick up for the American war fighter uh actually give normal Americans venture quality

[01:39] results? So one of the issues we have with the arbiters of truth is it was the American worker that we supported and the American worker that we helped make rich and the arbiters of truth somehow did not participate in that because they were such experts and of course you know but what these numbers show is uh doing that and taking the American worker along with it it and uh doing it in a way that foreshadowed the future FDA ontology foundry, making each specific institution, making the American war fighter fight the way the American war fighter is born to fight, empowering the tenants of being, you know, free and having the ability to do creative things uh in the battlefield context. Um and then uh taking uh enterprises instead of

[02:31] selling them commodity parasitic software with a massive salesforce with a kind of lumbering uh jargonbearing leaders offering you stakes and dinners and other things we will shall not mention. In order that you turn the value the high value revenue of your enterprise over to them in return for for these accolades. We created direct alignment with our customers. And what does that mean? It means when our customers have a unique and tribal way of doing something, whether it's underwriting or fighting or making workers even more valuable, we put an FDA, we orchestrate it in ontology. We take the tribal understanding of their business, the specific nature of their business that makes them particular and valuable and

[03:19] lethal, and we empower that. And how do we participate in that? Unlike seemingly in the most obvious way we are downstream from the value creation. So when you see 141 or you see 77% or 63 and you ask and by the way with really a a workforce that is uh not growing in any way linearly proportional to that growth and also with a sales force which is declining which seems improbable. The reason why that's working uh is because we are making our clients more money or we're making them more dominant on the battlefield and they're paying us a subset of that. And this is why these numbers are so extraordinary. The psych the sociological and political version of this should be wait a minute how can we learn from this? How can we implement

[04:06] institutions? By the way to you know we have all these people talking about an AI battle. I'll tell you what 114 proves. There is a massive part of the AI market that actually cares about value creation and that's the part we own and we own that part because to do this you have to have FD orchestration you have to have ontology and you have to have foundry and you have to have access to the game and you have to have deep understanding of how to do that and you have to have done this for a very very long time with products by the way and then the products are getting better and better and better and better and I'll let Sham talk about what we're doing on the battlefield to the extent that he can but you see the very similar

[04:44] trajectory where we're giving America both in industry and in government a massive unfair advantage and and again you see it like if you look at our numbers look at how poorly Europe is doing look how well America is doing look how we're doing this and again it's not just topline the rule of 114 that we have shows topline and bottom line growth that is distinctive massive and unique and on top of everything else there is this issue in the US that we're all focused just on a pound here which is what access what portion of the GDP growth that we're blessed to have in this country meaning uh GDP growth uh defined or helped out and bolstered by a by AI what percentage of that is available to the American worker and so

[05:30] when we're we're you know AI uh GDP availability for the American worker meaning do they participate in this uh growth or is it just people around this table who are getting richer and richer and then you see our platform form on the battlefield as Sean was mentioning the people doing the coding in AIP are vocationally trained smart Americans with specific knowledge they don't have and actually and you people on the factory floor very same thing people across the nation truck drivers uh anybody with specific domain expertise is more powerful more valuable in our product than they were yesterday in fact the real misalignment of AI is with people with commodity like high trained elite institution general specialist

[06:16] that's just not as valuable as it was and yes the you know the destructive positive destruction of capitalism is going to put that class of people typically the class of people that also kind of skeptical of under enormous pressure it is our what I see in these numbers and what I think we see in these numbers is you know to be put it slightly over the top yeah we were right you were wrong and we are going to go very very deep in our rightness because it is exceed ex exceedingly good for America. It's exceedingly good for the American economy. It's as good for American workers. And you know what? I really enjoy turning on TV and seeing some analysts explain why some other company is better than ours simply

[06:57] because they didn't make any money on our company and probably aren't. And we're just going to keep going and going and going. And then we're obviously not going to forecast for next year, but I would say if you're thinking about how this company is going to go, look at our ability to value create. Look at our ability to create revenue on the top end. Look at it. Let look at the unit economics of our business. If you're a technical expert in in how you evaluate business, evaluate those numbers against any other business you've ever seen and then make your decision. But yeah, I'm wildly enthusiastic. I think we're wildly enthusiastic and um and thank you for uh those of you who stay stayed with

[07:35] us to enjoy these numbers, especially Palunteerians uh who work day and night to deliver these kind of numbers. >> Thank you, Alex. We'll now turn to questions from our shareholders before opening up the call. We received a few questions asking, "What do you see as Palanteer's unique differentiator that others may not understand?" >> Well, Alex mentioned a bit of this here. You know, it's become fashionable actually for lots of companies to start hiring FDEEs. The Financial Times had an article about how it's the most popular new job title. But what you see is that they don't really understand it. It's just mimemetic. And if you everything Alex you said like we build software that works, not software that ought to

[08:10] work. We build software for the world as it exists, not a world that never was. And this ability to find what's true that comes from the FDE. Our measure of success is not did we sell the software, it's did we solve the problem. And we have built an entire software stack over two decades downstream of creating value for our customers. That led to the ontology a decade ago, more than a decade ago, which is a fundamental prerequisite to getting value out of LLMs in the enterprise. In this past year, it led to AI hive mind and AIFD. The the other thing uh which like is implicit in that is the way we work puts us up forces us to go up the chain of complexity every day. So we're taking on the most

[08:52] painful, most integral, most valuable parts of the stack in every enterprise. And it's it's precisely because like that's the way we actually lever our ability to deploy and orchestrate FTEEs. That's the way we make our product stronger. And quite frankly, that's the way we produce these numbers because the closer you are to the front line of the very complex problem that a black box was not meant to solve, cannot solve. And at this point, everyone knows a joke to believe it could solve, uh that's where you and and by the way, it's the safest position for us because this company, we will always believe we're we that we are outsiders. We need to be in the place where the most valuable problem is being solved because that's

[09:34] the way we end up staying solving the problem tomorrow and the way we get paid. >> Thank you both. Our next question is from Dan with Wedbush. >> Great. Look, obviously another monster quarter for you guys. Congrats. My question for you is, you know, for Alex and team. What can you just walk through just the accelerated sales cycles that you're seeing from so many companies that have gone to the boot camps? Like what surprised you from when they come to you at that first sort of you know contact to now actually launching deals? Maybe you could talk about that just in terms of everything you're seeing anecdotally. >> Great. Thanks Dan. So I think you know we look at US commercial. We closed 1.3

[10:20] billion in TCV. That's 6x on a dollar weighted duration basis from what it was a year ago. And of those deals, 83 were worth a million or more. 40 were 5 million or more. 21 deals were $10 million or more. I've been involved in a lot of those directly. I'm feeling exactly what you're asking on the ground from customers. And what's what's happening now is from the seuite across the company, customers are coming to us looking to not just say let's do a use case. the customers where we're having the most impact are coming to us saying how do we deploy this across our entire organization? How do we reorganize our entire organization around Palunteer and AIP and that's what's happening on the ground and we're singularly focused on

[10:58] delivering the value to the customers and that's our go to market. How do we get the product to them and deliver the >> where Ryan is like really very much on the front line here is you know there's both how many customers approach you. I think where we're seeing the biggest shift is the customers who've approached us very quickly want to move to how would I change my enterprise to express it in a way that's most valuable according to my terms in your product and then want to and literally want to reorg a shorthand version that we often use is you used to have to take your company private to change the the unit economics of it basically just like we're providing venture results high-end venture results to normal investors in

[11:42] the last couple years. What we're doing actually in enterprises is providing a private equity- like transformation in the public markets in the public space under the current leadership. And that's essentially what the the our best and and by the way, the other thing Ryan would tell you about is our newer clients have much higher expectations of us. Like they're like essentially I want to trans my transform my business. I want to do it in months. I want to do it in the public eye while being in the public market mostly not exclusively and I want you to not only do the product side but also tell us how would you actually implement AI foundry ontology FD model and our tribal knowledge to do that and you know it's a completely

[12:23] different game we used to have to beg and plead to be at on like you know when we first started talking we were begging and pleading to be at the margin of a problem that could affect a subset of the business. By the way, Sham, you know, I don't it's like unfortunately he can only tell you 1% of what he's involved in, but this is like exactly the same in the US government around the world. It's like the things that we're sitting on and working on are like crazy crazy important and they're not downstream of the problem. They are the problem and we're reshaping them. >> Thank you both. Our next question is from Mariana with Bank of America. >> So, I'm going to do as usual a couple of questions. one on commercial, one on on

[13:04] defense or or government on commercial. I'd like to follow up to Dan's question and let's see if you can discuss what changed from a behavioral perspective from a customers perspective to see this accelerated appetite to incorporate volunteer to not only accelerating how many customers you have but also the existing customers go to go up the value chain and what changed internally as well. We recently saw uh in a visit this like AI agents or AI FDAs like how are you incorporating tech internally to be able to accelerate and catch up with that demand and on the government side US government up 50% plus is really impressive and how do you think about opportunities like golden dome going forward piling up to this?

[13:55] >> Well, you guys want to answer these questions? I I think I think that there's the external one which is like what does it feel like that's clearly you the internal one is a really subtle question and I don't know anyone should jump in there and then obviously should we have Sham opine on yeah >> yeah well do you want to start with commercial or >> Sure yeah I think uh on the external I think it's like going deeper and deeper and more and more like tangible results with customers where they're both there's a network effect incoming like customer sharing impact that we're having a direct impact we're having with customers. customers are seeing as we you know it's a continuation of what we've been doing but going deeper and

[14:33] deeper with the customers on that impact and and I think that you know what we're seeing is more and more are now coming to us saying and the ones that are most impactful are coming to us saying let's do more >> you know Ryan is our is our best at being a wonderful I'll just give a vulgar version here you know uh our clients realize that choices suck basically and they've tried a lot of stuff it hasn't worked and then we're in so many vertical we, you know, we're per, say, let's just say we're in vertical 252 and we dominate for one customer. People see that and then they're like, "Oh, well, I'll try this with some, I don't know, knockoff half fake thing." And then a lot of people really still don't

[15:13] understand that are still trying to do this long migration where you know LLMs are going to perform as if they're LLM and ontology and as if the LLMs were not a commodity and and then but then in the marketplace they see the final result of someone else using ontology foundry FDA and now it's like wait a minute you know I'm paying hundreds of millions of dollars and getting nothing and the person down the road I kind of look down on is way ahead of me and and their unit economics are transforming overnight. And that just shifts the whole conversation because then we're like, okay, well, if you want it to work, you're going to have to do these five things. And these things are like, you're going to have to talk to Ryan and

[15:53] you're going to have to, I don't know, occasionally meet with me and you're going to have to actually allow us to come in with engineers and you're going to we're going to have to actually work on the problems that are valuable for your business and also look at the costs that are dragging you down. By the way, the cost for most businesses is not just the actual money they're wasting. That money, wasted money creates an ecosystem of waste. They're talking to all these vendors all the time about all these things will never work instead of solving the problem. It's like and so getting the pathogens out of their business is is a real issue and now they're really really interested in this. And so, and then on the internal

[16:28] front, I would say it's just we have to double down. The most important thing for us internally is with all this success, we do not want to give up the unique attributes of of Palinger and somehow purchase um fake ways for us that are artificial for us. And so making sure we are very very close to the problem and making sure everyone here like if you heard our internal dialogue, it's much more like who's on the factory floor here? What are we doing internally? How do we make sure our products are better and better? How do we make sure say Sham you know who's a savant at going around and figuring out what the underlying tech issue is. How do we making sure we have the best product team and the very very exact

[17:15] right fit for every single deployment across our deployments that we care about especially mission deployments which we highly highly overvalue in terms of our time and energy and like how do you make sure stays as tribal and cultist and unique as it was 20 years ago? How do we double and triple down on that? And how do we recruit the right people? And and then internally we have look, we power ICE. We power efforts to defend America and Ukraine and with allies. We're on the front line of all adversaries, including visav China, and we support we're on we're at ICE and we're uh we we've supported Israel. Okay, these are very controversial. I don't know why this is all controversial, but many people find that

[17:55] controversial. Okay. So, how do you align people to focus on these things in a way that is actually beneficial for us and our clients? These are really hard and tricky issues that we spend a lot of time I would say as an overarching thing because what we found is the more we focus on our internal dynamics, the better our numbers are. That's why we have less salespeople and we have 77% growth in 75% of our market. 121% growth in USCOM. Please tell that to some of your friends. I don't even understand how they can look at these numbers and not drop the the key out of their Motel 6 and just like say, you know, I mean, they're like they're bombastic numbers and but it's but it's like internal focus.

[18:41] >> I'll make the mistake of trying to follow Alex there and just say on the on the internal side with AFD, that's why we actually originally built it. You know, our headcount has grown roughly 10% but revenue grew 63%. How are we doing that? you know, we've made our FDES wildly more productive and I mean, so much so that we decided to give it to our customers and we've started to make our customers more productive. When you have a note like the the Army Vantage note where the the Army's consolidating into the Army data platform, you now have an army, literal army of green suitors who need to become proficient developers in the software. And you have a generation of green suitors whose first interaction with the software is

[19:16] going to be with AIFD. They're going to be superheroes on day one. Uh I think that's it's accelerating adoption is accelerating understanding like the depth of adoption not just are you using it but how much of it are you really using how much of it can you understand uh and then quickly on on your comment on the US government business like yeah the number of opportunities out there are great I can't comment on on all the opportunities you mentioned there but whether it's NGC2 the continued growth of Maven I mean we have of course America's involved with three conflicts right now in the world from from Europe the Middle East and and in our own hemisphere right now and things are getting a little spicy in Africa

[19:50] >> by the Let me say something slightly political and I'm not saying other people agree with this, but when people are attacking uh our soldiers for stopping fentinel from coming to this country, I want people to remember if fentanel was killing 60,000 Yale grads instead of 60,000 workingclass people, we'd be dropping a nuclear bomb on whoever was sending it from South America. So I, you know, it's slightly like we in this in this at Palunteer, we are on the side of the American average American who sometimes gets screwed because all the empathy goes to elite people and none of it goes to the people are actually dying on our streets. And that's why, you know, it's like when you have an open border, it means that the

[20:32] average poor American earns less. I know my fellow progressives believe having an open border is going to make things, but that's because they're actually repping elite people instead of the working class. And the same thing in South America. We It's like, you know, to believe our constitution does not give us the right to stop 60,000 deaths a year of workingclass men and women is insane. And this company, this country is right to stop that. And I am very proud. I don't know all the efforts were involved in, but the extent we're involved in these efforts, I and most Palunteerians are very proud of this. You're here. >> Thank you, Alex. As always, we have a lot of individual investors on the line.

[21:11] Is there anything you'd like to say before the before we end the call? >> We're rocking along. Um, please turn on the conventional television and see how unhappy uh those that didn't invest in us are. Um, uh, enjoy, get some popcorn. They're crying. We are every day making this company better. And we're doing it for this nation, for allied countries, and uh, also for what? And I I never really like the term retail investors. How about sane people who put up their own money and fight for us? And by the way, you know, you are fighting for the right side of what should work in this country. Meritocracy, lethal technology visav adversaries, uh products that spread GDP to workingclass women and men

[21:57] and women by making their value creation higher. And by the way, your bank account and thank you for that. >> Picture this. A potential client searches for what your business offers and your YouTube video appears. Before they've even booked a call, they've built trust with you, turning them into a warm lead. That's why our clients are hitting $100,000 months because YouTube turns attention into authority. If you run a business, book a call. and I'll show you exactly how to make this