Palantir Technologies Inc. (NASDAQ: PLTR) released its Q4 2021 earnings report on Thursday, February 17, 2021, with revenue topping expectations, but earnings fell short of estimates.
What to look for: The company’s shares lost 15.8% after reporting mixed earnings results in Q4. Palantir closed 64 deals in the fourth quarter of more than $1 million, including 27 more than $5 million deals, of which 19 were worth more than $10 million. In 2021 the company expanded its commercial business growing its revenue by 34%. In the fourth quarter, the company added 34 new clients and expects to add more in fiscal Q1 2022.
Earnings: Stockearning’s Estimated EPS was expected to be $0.04, but the company produced an EPS loss of $0.02 per share. Net loss was $156.2 million or $0.08 per share compared to $148.3 million or $0.08 per share a year ago. On an adjusted basis, the company reported earnings of $0.02 per share, down from $0.03 per share a year ago, while analysts expected earnings of $0.04 per share. Historical EPS Performance shows that the company has topped estimates three times in the past 12 quarters (60%), matched twice (40%) and never missed estimates.
Revenue: The company reported revenue of $433 million, topping Wall Street estimates of $418 million. A year ago, the company had revenue of $322.1 million. Commercial business revenue in 2021 was up 34% to $645 million, while govern revenue increased 47% to $897 million. For the first quarter, the company expects revenue of $433 million short of analysts’ projection of $439 million.
Stock movement: Palantir shares have dropped 47.8% since its third-quarter earnings. Interestingly, the company's shares have been UP 3 times out of the last 4 quarters following the earnings release. So, the historical price reaction suggests a 75% probability of the share price going UP following the fiscal Q4 2021 earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-9%, while the predicted volatility on the seventh day is +/-16%.
What analysts are saying: RBC Capital analyst Rishi Jaluria lowered his price target on PLTR from $15 to $9 and maintained a Sell rating in the stock following mixed Q4 earnings report. Q4 results showed that the company is experiencing broad-based deceleration attributed to the slowdown in deal value and government revenue. Jaluria, who continues to "struggle to underwrite sustainable 30% growth," said that commercial growth minus investment agreements remain lacklustre, more so considering an easier comparison.
Jefferies analyst Brent Thill slashed his price target in the stock from $24 to $21 but maintained a Buy rating in the shares ahead of the Q4 earnings report. When looking to the future to Q1 of FY22, revenue guidance is up 30% YoY after Palantir generated an increase of 36% in Q3, according to Thill, who also emphasizes that sales growth comparison gets progressively difficult, and seasonality is probably going to have an influence. Palantir "has the lowest investor sentiment" of the Infrastructure Software companies he covers, but Thill believes it can deliver 30 percent-plus compound yearly growth with commercial expansion inching upward.
Deutsche Bank analyst Brad Zelnick slashed his price target on the stock from $25 to $18 but kept a Hold rating in the shares. The analyst sees the software industry fundamentals improving in 2022 "while maintaining a healthy regard for the market and economic environment." He believes the company "sets up well from here" but advises taking a more balanced strategy with more valuation awareness than in past years.
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