What Are Palantir's Key Financial Metrics?

Not affiliated with Palantir Technologies Inc. This page explains what specific financial metrics mean and how Palantir defines them — it does not recommend any investment decision based on them. Nothing here is financial advice. Figures below are historical snapshots and will not reflect results reported after this page was last updated.

Palantir's earnings releases lean heavily on a specific set of metrics beyond simple revenue and profit — understanding what each one actually measures matters more than memorizing any single quarter's number.

GAAP vs. adjusted ("non-GAAP") figures

Palantir reports both standard GAAP figures and a set of "adjusted" non-GAAP metrics that exclude stock-based compensation and related employer payroll taxes. The company's own reasoning, stated directly in its earnings releases, is that stock-based compensation is a non-cash expense and that excluding it provides supplemental insight into operating performance — a common practice across software companies, though one worth noting explicitly, since it means the "adjusted" profit figure will always look better than the strict GAAP number.

Adjusted free cash flow and margin

Free cash flow measures actual cash generated after accounting for operating expenses and capital spending — a stricter test than accounting profit, since it can't be inflated by non-cash items. Palantir reported adjusted free cash flow of $925 million (a 57% margin) in Q1 2026, rising to $1.220 billion (a 63% margin) in Q2 2026, alongside GAAP net income of $871 million and $1.062 billion respectively in those same quarters — both GAAP and cash-flow figures moving in the same strongly positive direction, which is itself notable given how many high-growth software companies post accounting profits without matching cash generation.

The "Rule of 40"

The Rule of 40 is a widely used software-industry benchmark: it adds a company's year-over-year revenue growth rate to its profit margin (Palantir defines this specifically as adjusted operating margin), with a combined score above 40% generally considered healthy — enough to indicate a company isn't sacrificing profitability just to post fast growth. Palantir reported a Rule of 40 score of 155% in Q2 2026, and has taken to comparing that score not just against peer software companies like Snowflake and ServiceNow, but against mega-cap technology companies including Nvidia, Microsoft, and Apple — a notably ambitious framing, since the metric isn't a formal accounting measure and companies calculate it differently, limiting exact comparability.

Total contract value (TCV) and deal size

Beyond revenue, Palantir reports total contract value closed each quarter — the full value of new and expanded customer agreements, including contractual options that haven't yet been exercised. This metric is meant to signal forward momentum beyond what's already been recognized as revenue in a given quarter, though because it includes unexercised options, it can overstate near-term cash impact if read as equivalent to guaranteed revenue.

Cash reserves

Palantir has built a substantial cash position: $8.0 billion in cash, cash equivalents, and short-term U.S. Treasury securities as of Q1 2026, rising to $9.2 billion by Q2 2026 — a balance sheet strong enough that the company faces little near-term liquidity risk regardless of how its stock price moves.

A caution on all of these

Palantir states directly in its own filings that its definitions of adjusted metrics "may differ from the definitions used by other companies," meaning comparability across companies using superficially similar metric names is limited — a caveat worth taking seriously rather than treating these figures as standardized across the whole software industry.