Palantir reported second-quarter results after Monday’s close: revenue of $1.935 billion, up 93% year over year and 19% from the first quarter, against a street estimate near $1.80 billion. Adjusted earnings came in at $0.41 a share versus $0.35 expected. U.S. commercial revenue rose 149% to $764 million; U.S. government revenue rose 90% to $809 million. Shares were up 7.7% at $135.32 within half an hour of the release and extended their gain later in the session.
The guidance was the louder number. Full-year 2026 revenue moves to $8.150–8.158 billion from a prior $7.65–7.66 billion — a half-billion-dollar raise in a single quarter, against a $7.69 billion consensus. Adjusted free cash flow guidance goes to $4.5–4.7 billion from $4.2–4.4 billion. U.S. commercial growth guidance goes to at least 134%, up from at least 120%. Third-quarter revenue is guided to $2.160–2.164 billion against a $1.997 billion street.
All of that is the part everyone will quote. It is also the part that describes work already delivered. The forward number sits further down the release: Palantir closed $3.373 billion of total contract value in the quarter, up 49%, including a record $2.132 billion in U.S. commercial — up 153% year over year. That is a single quarter of U.S. commercial signings equal to roughly 62% of what the company now expects to recognize as U.S. commercial revenue for the entire year. U.S. commercial remaining deal value finished at $6.238 billion, up 124% year over year and 27% in three months.
The pilot phase is over
For three years the honest critique of enterprise AI was that the spending was tourism — six-figure proofs of concept that impressed a steering committee and never converted into a line item. Palantir closed 220 deals of at least $1 million last quarter, 98 of at least $5 million, and 73 of at least $10 million. Seventy-three eight-figure contracts in ninety days is not an experiment budget. It is procurement.
The margins say the same thing. GAAP net income was $1.062 billion, a 55% margin, on GAAP operating income of $912 million. Adjusted free cash flow was $1.220 billion at a 63% margin. CEO Alex Karp put the Rule of 40 score — growth rate plus adjusted operating margin — at 155%. Adjusted operating margin went from 46% a year ago to 62% while revenue nearly doubled. Companies do not expand margin by sixteen points while doubling unless customers are signing longer, not just more.
Our take: This is the same lesson Amazon’s $496 billion backlog taught on Monday, arriving from the software side: the market is paying for contracted duration, not AI exposure. But read the fine print before you extrapolate. Palantir’s own definitions note that TCV and remaining deal value assume every customer option gets exercised and no contract gets terminated — and that most of its contracts carry termination-for-convenience clauses. A bookings number built on optional years is a forecast wearing a bookings costume. The practical read for anyone selling AI software: the buying pattern that just got validated is the multi-year committed contract, not the seat-based pilot. Price and structure accordingly, because your buyer’s procurement team has now seen it done.
The line that crosses next quarter
U.S. government revenue is still Palantir’s largest single bucket at $809 million, growing 90%. U.S. commercial is at $764 million, growing 149%. At anything close to those rates, commercial is the bigger business by the next report — which retires the oldest bear case on the stock, that this is a defense contractor trading at a software multiple. It also creates a new one: commercial customers renew on results, and they can leave. Agencies mostly cannot.
What to watch
- The Q3 bar Palantir set for itself. $2.160–2.164 billion against a $1.997 billion street. The company has now guided above consensus and will be judged against its own number, not the analysts’.
- The commercial/government crossover. $764 million versus $809 million, growing 149% versus 90%. One report from a headline that rewrites the Palantir story.
- RDV conversion. U.S. commercial remaining deal value grew 27% quarter over quarter. Whether that compounds again or flattens tells you if Q2 was a trend or a signing surge.
- Everyone else’s AI budget. Multi-year commitments to one vendor are money no longer available to the hyperscaler-adjacent tools and deployment startups chasing the same line item.