It’s been a long road for Palantir as it has submitted amendment after amendment with the SEC related to its S-1 filing over the past two months. But after weeks of back and forth, it’s official: Palantir’s S-1 has been marked effective, which means that it has been accepted by the SEC and its target market the NYSE and should be ready to go as the company heads toward a public direct listing.
The company will begin trading on Wednesday, September 30th, under the ticker PLTR. Palantir originally had planned to start trading today, but moved the date back to the 29th a few filings ago, and finally ended up with the 30th. It is not floating new stock, although the company effectively raised “IPO money” back in July of about $1 billion from the private markets.
Palantir yesterday also offered revenue guidance to fill out the rest of its calendar year. The company estimated it would target roughly $1.05 billion in revenue for 2020, with non-GAAP operating income (excluding stock-based compensation and some other major line items) of $116-126 million. It expects its head count to remain roughly flat, growing just 4%.
Palantir had revenue of $595 million in 2018 and $743 million in 2019 according to its S-1 filing. If it hits its new target revenue, that would be a growth rate of 41% from last year, an acceleration from the roughly 25% growth rate in the previous year. The company’s Q3 revenue is estimated to reach $278-280 million with a growth rate of 46-47%, according to the company’s projections. So it seems to be accelerating every so slightly in the back half of this year as customers presumably start ramping up their IT purchases following the global pandemic.
While we have talked extensively about Palantir’s woes on governance, the reality behind the company is reasonably decent: it’s a quick if not rapid growth company, predominantly in software rather than services, with a growing customer base including both government and enterprise customers. The company has very recently started to talk more about its Apollo product, which has helped it cut sales times and make more of its product self-service, or at least, reduced-service.
For comparison though, check out Snowflake, which is also in the data infrastructure space although a bit lower in the stack and just went public last week. In most of 2018 (the company has a Feb 1 fiscal calendar), the company generated $97 million in revenue, and then grew to an astonishing $265 million for most of 2019. Snowflake had a net loss of 131% of revenue, compared to Palantir, which had a net loss of 78% of revenue last year.
Snowflake was considered one of the best IPOs of the year, given its high net dollar retention rate, extremely rapid growth, and huge market size waiting to be tapped. Palantir is a much larger company in terms of revenues, but growing significantly slower, but with a bit better cash flow position, particularly in the last two years as it has made its operations much more efficient.
We’ll have to wait a week to see how the markets react. For now though, it looks like Palantir has gotten out of its own way and can finally start trading.