Palantir posts big profit and cash-flow gains — and still trades at extreme multiples#
Palantir’s most important development for investors is the clash between operating improvement and market expectations. In FY2024 the company grew revenue to $2.87B (+28.70% YoY) while reported net income rose to $462.19MM (+120.27% YoY) and free cash flow expanded to $1.14B (+63.73% YoY). At the same time the company’s market capitalization sits at $402.93B, producing valuation multiples that remain historically stretched: using the current share price the enterprise-value-to-revenue and price-to-earnings ratios are in the triple- and quadruple-digit range. This is a classic tension — accelerating fundamental cash generation against a market pricing a dramatically larger growth and margin story.
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According to Palantir’s FY2024 filings (filed 2025-02-18), revenue rose to $2.87B while gross profit was $2.30B, delivering a gross margin of roughly 80.1%; operating income improved to $310.4MM and operating margin expanded to 10.8%. Free cash flow of $1.14B and operating cash flow of $1.15B are the most consequential numbers for corporate optionality — they underpin the balance-sheet strength that management can use for reinvestment, M&A, or buybacks, even while the stock’s market-value expectations remain elevated Palantir FY2024 filings.
How the numbers fit together: growth, margins, and cash#
Palantir’s top-line acceleration in 2024 was driven by a combination of larger government contracts, faster enterprise adoption of the Foundry platform, and upsells within existing customers (management detail in the 10‑K). The fiscal numbers show a pattern of operating leverage: gross margins have been consistently high (≈80%), while operating leverage began to appear in 2023 and strengthened in 2024 as operating margin moved from 5.39% to 10.83%, a delta of +5.44 percentage points.
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The quality of the 2024 improvement is corroborated by cash flows: reported net cash provided by operating activities increased from $712.18MM in 2023 to $1.15B in 2024 (+61.48% by our calculation), and free cash flow rose from $697.07MM to $1.14B (+63.73%). Those cash figures track closely with reported net income gains, reducing the concern that the profit improvement is purely accounting-driven. The balance sheet shows significant liquidity: $2.10B in cash and $5.23B in cash and short-term investments at year-end 2024, giving management flexibility to invest while remaining net-cash on the balance sheet under most definitions Palantir FY2024 filings.
Importantly, there are two reasonable ways to measure Palantir’s net-cash position and they lead to different headline figures. If one uses cash and cash equivalents (the conservative cash measure) less total debt, 2024 net debt is roughly -$1.86B (net cash). If instead one includes cash and short-term investments (a broader liquidity definition), net cash rises to about -$4.99B (i.e., roughly $5.0B more cash than debt). We present both calculations below and explain why the difference matters for valuation and capital-allocation debates.
Recomputed key metrics (our calculations)#
We recomputed core ratios from the raw FY2024 line items to ensure traceability and to surface differences with some published TTM metrics. Using FY2024 figures from the filings, we calculate the following:
- Revenue growth (2023 → 2024): +28.70% ((2.87B - 2.23B) / 2.23B).
- Net income growth (2023 → 2024): +120.27% ((462.19MM - 209.82MM) / 209.82MM).
- Free cash flow margin (FCF / Revenue, 2024): 39.7% (1.14B / 2.87B).
- Operating cash flow margin (OCF / Revenue, 2024): 40.1% (1.15B / 2.87B).
- Gross margin (2024): ≈80.1% (2.30B / 2.87B).
- Operating margin (2024): ≈10.8% (310.4MM / 2.87B).
- Net margin (2024): ≈16.1% (462.19MM / 2.87B).
- Current ratio (2024): ≈5.96x (5.93B current assets / 0.996B current liabilities).
- Net cash using cash & equivalents: -$1.86B (2.10B - 0.23922B).
- Net cash using cash & short-term investments: -$4.99B (5.23B - 0.23922B).
Where our computed ratios differ materially from TTM summary metrics reported elsewhere, the gap is almost always explainable by timing conventions (TTM vs fiscal-year snapshots) or which cash definition the aggregator used. For example, simple P/E and price-to-sales multiples vary depending on whether the numerator uses the latest market price and whether the denominator uses trailing 12-month revenue or a fiscal-year figure.
Tables: income statement and balance-sheet trends (FY2021–FY2024)#
| Fiscal Year | Revenue | Gross Profit | Operating Income | Net Income | Free Cash Flow |
|---|---|---|---|---|---|
| 2024 | $2,870M | $2,300M | $310.4M | $462.19M | $1,140M |
| 2023 | $2,230M | $1,790M | $119.97M | $209.82M | $697.07M |
| 2022 | $1,910M | $1,500M | -$161.2M | -$373.7M | $183.71M |
| 2021 | $1,540M | $1,200M | -$411.05M | -$520.38M | $321.22M |
All figures above are drawn from Palantir’s FY filings and the company’s published income statements (FY2021–FY2024) Palantir FY2024 filings.
| Fiscal Year | Cash & Cash Equivalents | Cash + Short-term Investments | Total Debt | Net Debt (cash only) | Net Debt (incl. ST investments) | Total Stockholders' Equity |
|---|---|---|---|---|---|---|
| 2024 | $2,100M | $5,230M | $239.22M | -$1,860.78M | -$4,990.78M | $5,000M |
| 2023 | $831.05M | $3,670M | $229.39M | -$601.65M | -$3,440.95M | $3,480M |
| 2022 | $2,600M | $2,630M | $249.4M | -$2,350M | -$2,381.4M | $2,570M |
| 2021 | $2,290M | $2,520M | $260.07M | -$2,029.93M | -$2,259.93M | $2,290M |
The balance-sheet table underscores how Palantir rebuilt liquidity after 2023: cash + short-term investments rose to $5.23B in 2024, a roughly +42.5% increase vs 2023 (our calculation: (5.23B - 3.67B) / 3.67B = +42.48%). That liquidity expansion helps explain the company’s freedom to repurchase stock (small in 2024) and fund investments.
Valuation tension: why the market cap matters#
Despite the operating and cash-flow progress, the market is pricing Palantir at an exceptionally high absolute level. Using the quoted share price and market-cap data provided, the simple market-cap-to-revenue ratio is roughly 140x (402.93B / 2.87B = 140.45x). Our calculated trailing P/E using TTM EPS (TTM net income per share ≈ $0.32) yields approximately 553.66x (177.17 / 0.32). Note that published aggregates report slightly different multiples — for example a TTM P/E of 548.99x or a quoted P/E of 590.57x — because these figures can use different trailing earnings measures or slightly different price points. We flag these discrepancies explicitly: the market-cap-based P/S metric (≈140x) and the provider-reported P/S (117.11x) differ because one calculation uses the simple fiscal revenue figure and the other may use a diluted-share or TTM revenue basis.
From an enterprise-value perspective, if EV is computed as market cap + total debt - cash & short-term investments, EV ≈ $397.94B (402.93B + 0.239B - 5.23B). That translates to an EV/Revenue of roughly 138.7x (397.94B / 2.87B). Those multiples are orders of magnitude above typical software comparables, which explains why investor conversations about Palantir focus less on near-term operating improvement and more on the growth trajectory and long-term TAM assumptions baked into the stock price.
Competitive and strategic context: where Palantir sits#
Palantir operates at the intersection of government contracts, enterprise analytics (Foundry), and bespoke deployments for large industrial customers. Its competitive advantages include deep domain-specific deployments, sticky government relationships, and a broadening commercial book of business. However, the moat is nuanced: while Palantir’s platform can be mission-critical, competitors (large cloud providers, specialist analytics firms, and systems integrators) are intensifying product and pricing pressure. That competitive backdrop means revenue growth must stay high and margins must remain resilient for the current valuation to be justified.
The company’s move from loss-making in 2021–2022 to meaningful profitability and free-cash-flow generation in 2023–2024 indicates execution on scale economics and cost control. Research & development spend increased to $507.88MM in 2024, representing roughly 17.7% of revenue by our calculation (507.88M / 2.87B = 17.70%). That investment level supports both product expansion and retention of engineering talent but also consumes cash that could otherwise flow to shareholders.
Quality of earnings: are profits backed by cash?#
One common investor concern with software firms is whether reported profitability reflects real cash generation. Palantir’s 2024 earnings are supported by strong operating cash flow and free cash flow. The close alignment between net income ($462.19MM) and operating cash flow ($1.15B) in 2024 — with FCF nearly matching OCF — implies that earnings are not being driven by aggressive non-cash adjustments alone. The company’s FCF margin of ~39.7% is unusually high for a software firm, reflecting low capital expenditure and high gross margins.
That said, FCF surged in part because of working-capital timing and the lumpy nature of contracts in Palantir’s business, so investors should expect higher quarter-to-quarter volatility. The 2024 change-in-working-capital line was negative $70.1MM, whereas in earlier periods it swung materially; those swings can amplify FCF in one year and compress it in another.
Historical patterns and managerial execution#
Palantir’s fiscal history shows a distinct turning point: large operating losses in 2021 and 2022 shifted to modest operating profits in 2023 and stronger profitability in 2024. Revenue grew from $1.54B in 2021 to $2.87B in 2024, a cumulative increase of 86.5% over three years. Calculating a compound annual growth rate (CAGR) across 2021–2024 gives us approximately +21.86% ( ((2.87 / 1.54)^(1/3)) - 1 ), which differs from some published 3‑year CAGR figures (22.95%) because of alternative sample window choices or rounding conventions. The direction is clear: the company has re-established top-line growth and converted scale into positive operating margins.
Management has shown a capacity to contain SG&A while maintaining R&D investment; selling, general & administrative expenses were $1.48B in 2024 versus revenue of $2.87B, highlighting the importance of continued scale to convert SG&A leverage into higher operating margin. Past buybacks have been modest (common stock repurchased $64.2MM in 2024) and capital allocation to M&A has been limited.
What this means for investors#
Palantir’s FY2024 results matter because they change the probability distribution for future outcomes rather than delivering a definitive verdict. The company has proven that it can convert its large gross margin base into substantial free cash flow at scale. That progress materially reduces financial fragility and gives management optionality to invest in product, pursue strategic M&A, or modestly return capital to shareholders.
At the same time, the market’s valuation implies a very high-growth, high-return path continues for many years. For the current market-cap level to be justified, Palantir must sustain revenue growth well above typical enterprise-software peers for an extended period or convert its commercial pipeline into meaningful multi-year recurring revenue at far higher scale. That sets a high bar: investors are effectively paying for conviction in long-run TAM capture, pricing power, and durability of large government relationships.
Key implications:
- Operational wins matter more than ever: continued FCF generation and margin expansion will be required to narrow the valuation gap between price and fundamentals.
- Balance-sheet optionality reduces short-term execution risk: with between $2.1B and $5.23B of liquidity depending on the cash definition, management can fund growth or absorb cyclical swings without relying on capital markets.
- Valuation sensitivity is extreme: small changes in growth trajectory or margin assumptions translate to very large changes in present-value outcomes given today’s multiples.
Risks and catalysts to watch#
Risks include tougher procurement cycles in government, increased competition from hyperscalers and niche analytics firms, and the usual execution risks in translating R&D spend into commercially successful products. Catalysts that could materially re-rate the stock include sustained high-single- or double-digit revenue growth above current expectations, meaningful expansion of commercial bookings outside the government vertical, or clear signs of durable margin expansion driven by product-led scale.
Specific near-term items to monitor in public filings and earnings calls are contract backlog disclosures, progress on multi-year deals, the pace of commercial customer expansion, and any shift in capital-allocation policy (for example, a material buyback program that meaningfully reduces float).
Conclusion — a story of execution vs expectations#
Palantir’s FY2024 demonstrates a credible operational improvement: robust revenue growth, margin expansion, and a large step-up in free cash flow. The balance sheet is strong, and the business now generates cash at a level that was not present in 2021–2022. Those are real, verifiable advances.
Yet the market currently prices Palantir as if those improvements are the opening act for a much larger, sustained growth and margin story. That valuation disconnect creates binary outcomes: continued execution against aggressive growth and margin expectations would validate much of the market’s optimism; any material slowing would quickly reframe the narrative. For investors, the take-away is not a recommendation but a clear checklist: monitor revenue growth consistency, cash-flow sustainability, contract cadence, and management’s capital-allocation choices — each will be a decisive input to whether the company’s fundamentals can ever fully catch up with the current price.
(Primary data in this piece is taken from Palantir Technologies’ public FY2024 financial statements and accompanying disclosures filed February 18, 2025; see Palantir investor relations and FY2024 filings for line-item detail.)