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palantir just reported their earnings they are down now five percent listen to this earnings per share expectation was they were gonna make five cents a share they came in making five cents a share Revenue 533.3 million versus an expectation of 532.4 million that is a beat and you would expect that now the stock price would be up but it's not it's actually bouncing around now it's down about three percent I've seen it down as much as 11 as somebody on Twitter reported so palantir is a very very interesting company it's been one that we have spoken about for multiple years when this thing was around 45 actually when it hit 45 on the nose January 27th of 2021 I remember standing in our old Studio when we were saying this thing's probably somewhere worth around five dollars a share and people said it wasn't going to get there it got done five dollars and 84 cents at the beginning of this year the thing here is they make a fantastic product but that doesn't mean that you just go and pay whatever you want to pay for it because you are going to get burned I mean look at this and you say let's say six dollars you had bought this at five dollars and eighty four cents six bucks and now it's at 17 and change and you are still significantly off of those all-time highs when this thing was supposed to be going to the Moon it was the greatest thing since sliced bread and if you look at the income statement cash flow statement which we're going to look at soon they're doing significantly better than they were from their all-time highs in the beginning of 2021 so I'm gonna pull up the press release here we're gonna go through a couple of things that just came out in their quarterly earnings net income of 28 million I'm just going through some of their Q2 highlights Revenue growth of 13 year over year now that's not I actually thought that would be a little bit higher I would expect a little bit higher for a company that's in this type of growth phase but 13 year over year commercial Revenue grew 10 year over year this is something that I like to see because the big thing and the big hold up for me with palantir has always been I do not want a company that is just going after government contracts that's why I'm pretty apprehensive of going after companies like Lockheed Martin Northrop Grumman because I'm worried about those government contracts I don't want to live and die by the government and I love that they're starting to go into this commercial space government revenue did grow fifteen percent year over year customer count grew 38 year over year and eight percent quarter over quarter that's fantastic cash from operations of 90 million dollars representing a 17 margin let's continue on let's get down here into this is the first time looking at this so margins looks like they increased two percent free cash flows increased let's see what they're got they're guiding because that's kind of what I'm let's see what the stock price is doing first it's down about four percent right now they're expecting for the third quarter 553 to 557 million which is more than their 533.3 million uh adjusted income from operations 135 to 100 135 to 139 million full year they're raising total revenue guidance in excess of 2.2 billion dollars I'm not sure if I mentioned this before but they are going to be doing a one billion dollar share repurchase program that was authorized the question is going to become is this a good thing that they're doing are they buying back their shares at the correct price we're going to look into that in a little bit let's see if the so they're going to be talking here at 5 PM eastern time that is going to be their press release call forward-looking statements okay so those are the highlights that we've seen anything that stands out here let's go to their let's go over to their financials and see what they have going on so we talked about how in 2021 when they were at their all-time highs you would think that from those all-time Highs coming down to about five dollars and 84 cents a share you would say oh revenues probably got worse well if you look at this revenues in 2020 were 650 million went to 1.2 billion 1.65 billion and about 2 billion so revenues are increasing absolutely profit they are still not making a net income they are however making cash flow they have continuously made cash flow I think Paul would remember this better than me because he's more involved in this than I am he doesn't own any shares but it's either 10 or 11 quarters consistently of positive cash flow that's a fantastic thing but they're still not there with the net income uh on a yearly basis so at some point that's going to have to change and I do think that that's going to probably change pretty quickly let's go to the cash flow statement and just look at the at the past look at this cash flow growth free cash flow growth losing 120.9 million in 2020 to about 97 and a half in 2021 225 million positive in 2022 346 and 23 and you can see that their cash flows they're expecting what was that number that they were talking about expecting uh let's see here and uh where was there cash flow number I know I just read it expectations Outlook um nope okay I didn't just read it I was reading something else well anyways they're going to be they better be expecting more cash flow than they did in 2020 uh fiscal year 2023 346 million I'm sure they're going to be doing more than that let's go to the next income statement because there's something I want to talk about here let's go on quarterly we need to be making sure with this share repurchase they have done a lot of dilution over the past couple of years that's there's no way anybody can argue that now they're going to start buying back those Shares are they doing it in appropriate prices you can see here they've continuously been diluting shareholders every single quarter whether it's a couple million shares or what they've continuously been doing that every single quarter when was the big I remember when we did videos in the past they did some massive massive jumps yeah you could see 905 million shares outstanding to 2 billion I mean basically went basically doubled their amount of shares over a year period and that's when all the hype was happening in the market people were very excited people wanted to go buy the stock that's I'm worried that they're going to be buying back these shares at the wrong prices and that is not the best use of capital especially for a company that is this small pulling up the eight pillars here let's look at some high level stuff this gross margin gets me every time gross profit margin of 78.75 that is an astonishing number and that is a software company that is what their this is a company that is in the defense space they are when you're looking at companies and saying hey these gross profit margins these are the companies that you should be comparing them to this is absolutely what you should be comparing them to and palantir does a fantastic job of that now their return on invested Capital remember guys it's skewed we don't want to be judging a company based on this and that's going to take me to the a pillars right here these pillars look very bad and you don't go and buy a stock just because all the pillars are green and you don't go and sell a stock because all of the pillars are red this company is so new they're so young they're still in a growth phase they're still in a kind of finding themselves space are we going to go the commercial route for our main customer base are we going to go the government route for our main customer base while they're still figuring that out while they're still trying to generate profit you don't want to penalize them and just totally omit this company from your purchase or saying Hey I want to be invested in this thing now let's see what the analysts have to say because the analysts are typically the cheerleaders here they are going to be going from 22 cents a share to 48 cents a share wow that's some big big earnings per share growth big earnings for share growth over the next four years on the revenue side well basically more than double Revenue 2.25 billion to 5.37 billion that is we're in the 20 range and if we go back to the press release Here that's why I was saying this Revenue growth number of 13 that's not what we're seeing here this would be more realistic to what I'm seeing I'm thinking is there going to be in this 20 to 25 range for Revenue growth not so much the 13 range with where they were at but let's see what happens in the next year all right guys we are going to run through stock analyzer but I need you to know that we are doing a web class tomorrow we are going on what to look for in a 10K a lot of people say hey we want to go deeper we want to understand a 10K it's going to be a very intimidating document that's what we are going to go through tomorrow at 2PM thank you 2 p.m we're going to go through that the link is in the description below click on that join us tomorrow 2PM you're gonna love it if this is your first time and you've never even heard of what a 10K is it's an SEC document that tells you everything that you need to know about the company all of those nitty gritties are going to be in there so please join us 2 P.M tomorrow click the link in below all right let's go to stock analyzer what I'm actually going to do is go to my history and I'm going to click on palantir here and this is from May and the reason I'm clicking on this from May is because I want to see I want to not put any bias in there let's see what this is spitting out because I'm looking at this saying my number is 15 Revenue growth analysts are thinking that it's going to be mid-20s but from what I just saw year over year of 13 percent I kind of then I don't know why that number is sticking with me and worrying me so much but I'm gonna give them you know what I'm gonna change this one to 10.
why don't we put in here 10 we'll do 18 and I'll leave 31 there it's not going to be symmetrical but let's do that profit margin I'm going to leave the same and here's the hard part about the profit margin guys and the free cash flow margin frankly easier with free cash flow because they've been generating it we don't know where the profit's going to be that's the hard part there is no profit right now and remember when I hit analyze here and I spit out numbers this is assuming profit today so make sure you take that into effect when you're going and running this through your stock analyzer tool PE I'm actually going to increase the PE here I'm going to go with 20 23 and 26.
this is a young mature I'm sorry young that was a uh that didn't make any sense this is a young company that has a lot of potential and a lot of room for growth so if they can grow at 31 with 35 profit margins and 40 cash flow margins I'll give them a PE of 26 and I'm going to adjust my return there it's going to be a 16 return so let's click this 12 14 and 16 desired annual return all right so my numbers are basically 3.35 cents to 450.
you can see it's on my watch list for 450. 10 to 12 and 32 to 37 on the high side and if you bought it these prices today these would be your returns down here so if you bought it today's price 17.23 if you paid that price today you would lose 4.38 over the next decade now if you bought today and everything in this category worked out here you would make a pretty good return 25.75 but remember that assumes profit today that assumes everything is perfect today and it's just not so this is a company where we're going to keep following it I think that they have something to offer for the future there is absolutely no doubt but the question is do you want to buy that future today or do you want to wait you guys have a great day thank you
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