Data analytics company Palantir Technologies (NASDAQ:PLTR) announced better-than-expected revenue in Q4 CY2025, with sales up 70% year on year to $1.41 billion. On top of that, next quarter’s revenue guidance ($1.53 billion at the midpoint) was surprisingly good and 15.3% above what analysts were expecting. Its non-GAAP profit of $0.25 per share was 8.6% above analysts’ consensus estimates.

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Revenue: $1.41 billion vs analyst estimates of $1.34 billion (70% year-on-year growth, 4.9% beat)

Adjusted EPS: $0.25 vs analyst estimates of $0.23 (8.6% beat)

Adjusted Operating Income: $798.5 million vs analyst estimates of $701.1 million (56.8% margin, 13.9% beat)

Revenue Guidance for Q1 CY2026 is $1.53 billion at the midpoint, above analyst estimates of $1.33 billion

Operating Margin: 40.9%, up from 1.3% in the same quarter last year

Free Cash Flow Margin: 56.3%, up from 45.7% in the previous quarter

Market Capitalization: $349.4 billion

Named after the all-seeing stones in "Lord of the Rings," Palantir Technologies (NASDAQ:PLTR) develops software platforms that help government agencies and enterprises integrate, analyze, and operationalize their data for decision-making.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Palantir Technologies grew its sales at an excellent 32.6% compounded annual growth rate. Its growth surpassed the average software company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Palantir Technologies’s annualized revenue growth of 41.8% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Palantir Technologies reported magnificent year-on-year revenue growth of 70%, and its $1.41 billion of revenue beat Wall Street’s estimates by 4.9%. Company management is currently guiding for a 73.6% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 39.5% over the next 12 months, a slight deceleration versus the last two years. Despite the slowdown, this projection is admirable and indicates the market sees success for its products and services.

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The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

Palantir Technologies is extremely efficient at acquiring new customers, and its CAC payback period checked in at 8.9 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Palantir Technologies more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.

We were impressed by how significantly Palantir Technologies blew past analysts’ adjusted operating come expectations this quarter. We were also glad its revenue guidance for next quarter trumped Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 4.2% to $154.49 immediately after reporting.

Sure, Palantir Technologies had a solid quarter, but if we look at the bigger picture, is this stock a buy? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.