Palantir Q2 Revenue Surges 93%, Raises Full-Year Guidance to $8.154B

Palantir Technologies delivered its strongest quarter to date in Q2 2026, reporting total revenue of $1.935 billion, a 93% year-over-year increase, driven by accelerating demand for AI platforms in the U.S. market. The company's U.S. operations, which now represent 81% of total revenue, grew 115% year-over-year and 23% sequentially, signaling continued momentum. Within the U.S., commercial revenue reached $764 million (up 149% year-over-year) while government revenue grew to $809 million (up 90% year-over-year), demonstrating strength across both private enterprise and federal segments.

Chief Revenue Officer Ryan Taylor emphasized that the quarter's results reflected an "abrupt market shift in LLMs" that the company had been warning about. He contrasted Palantir's approach with competitors' token-metered models, arguing that enterprises using alternative approaches see "token meters spinning endlessly just to get slop without any correlation to value." Instead, Palantir's Artificial Intelligence Platform (AIP) is designed to integrate large language models with an organization's private data, operational logic, and security policies—what management calls "AI sovereignty." This positioning resonates with enterprises concerned about budget waste and intellectual property leakage. A multinational technology company, initially working with Palantir at a single operating company in Q4 2025, expanded to a three-year contract worth nearly $370 million, exemplifying this expansion dynamic.

Operationally, the quarter delivered record-setting deal activity. Palantir closed 220 deals worth at least $1 million, 98 deals of at least $5 million, and 73 deals of at least $10 million—all company records. U.S. Commercial TCV bookings hit $2.132 billion, representing 153% year-over-year growth and nearly $800 million above the prior quarterly record. U.S. Commercial customer count reached 653, up 35% year-over-year and 6% sequentially, indicating broad customer acquisition. Net Dollar Retention rose to 157%, up 700 basis points from the prior quarter, highlighting significant expansion within the existing customer base. Remaining Performance Obligations (RPO), which reflects noncancelable contracted revenue not yet recognized, reached $4.9 billion, up 103% year-over-year. Total Remaining Deal Value (RDV) stood at $13.1 billion, up 83% year-over-year.

Financially, Palantir achieved a Rule of 40 score of 155% (a 10-point sequential increase and the 12th consecutive quarter of expansion for this metric, which adds revenue growth to adjusted operating margin). Adjusted Free Cash Flow reached $1.22 billion, up 115% year-over-year with a 63% margin. Adjusted Gross Margin was 86%, with a slight impact from increased costs associated with taking on cloud hosting for a government customer. Adjusted Operating Income was $1.194 billion, representing a 62% adjusted operating margin. GAAP Net Income reached $1.062 billion, or a 55% margin—the company's second consecutive quarter of GAAP net income exceeding $1 billion. GAAP EPS was $0.41, which included a $0.03 tailwind from unrealized gains on SpaceX holdings. Adjusted Operating Expense rose to $741 million, up 37% year-over-year, primarily driven by technical hiring and product pipeline investments.

Management raised full-year 2026 revenue guidance to approximately $8.154 billion at the midpoint (between $8.15 billion and $8.158 billion), representing 82% year-over-year growth at the midpoint and marking the largest guidance raise to date. Q3 2026 revenue guidance was set between $2.16 billion and $2.164 billion. U.S. Commercial FY 2026 guidance was raised to in excess of $3.424 billion, representing at least 134% year-over-year growth. Adjusted Free Cash Flow guidance for the full fiscal year was raised to between $4.5 billion and $4.7 billion. Chief Executive Officer Alex Karp described the quarterly performance as "otherworldly" and stated that "demand for AI sovereignty has now been unleashed." He indicated his intent to drive company growth at a rate equal to or above current U.S. commercial levels for the next 18 months by focusing on sovereign AI stacks. Chief Technology Officer Shyam Sankar noted that within 24 hours of integration, the standard Nemotron Ultra model "beat frontier models" on five production tasks when used within Palantir's stack, underscoring the value of integrating models within proprietary data environments. Sankar also highlighted the growth of the Maven platform, which now supports over 25,000 builders, including service members and contractors developing agents "at the speed of war."