Palantir Q3 2025: Record Growth, 114% Rule of 40, and a Defining Moment for Enterprise AI

In its strongest quarter ever, Palantir Technologies (NYSE: PLTR) delivered results that solidified its leadership in enterprise AI, combining record growth with historic profitability. For Q3 2025, revenue surged 63% year-over-year and 18% sequentially, driven by a 121% jump in U.S. commercial business, while the company achieved a Rule of 40 score of 114%—a level rarely seen in software. CEO Alex Karp described the results as “arguably the best any software company has ever delivered,” underscoring Palantir’s transformation into a cash-generating AI powerhouse.

Revenue and Profitability Milestones

Palantir reported $1.18 billion in quarterly revenue, with U.S. operations accounting for three-quarters of the total. The U.S. commercial segment—the engine of AIP adoption—grew 121% year-over-year and 29% sequentially, closing $1.3 billion in total contract value.

Adjusted operating margins reached 51%, and adjusted free cash flow hit $540 million for the quarter, bringing the trailing 12-month figure to a record $2 billion. CFO Dave Glazer raised full-year guidance to $4.4 billion in revenue and projected 61% year-over-year growth in Q4, emphasizing that Palantir’s U.S. commercial revenue is set to more than double in 2025.

AIP at the Core of Enterprise Transformation

Chief Revenue Officer Ryan Taylor highlighted that Palantir closed 204 deals worth over $1 million and 53 deals worth over $10 million, signaling the enterprise adoption of AIP as a full-scale platform, not just a pilot tool. “Organizations are embracing an undeniable truth: real enterprise AI at scale requires Palantir,” he said. Taylor described C-suite-led transformations—ranging from insurers to manufacturers—where CEOs are personally driving enterprise-wide AIP deployments, calling AI “a competitive necessity.”

Technology Advantage: Ontology, AI FDE, and Hivemind

CTO Shyam Sankar explained how Palantir’s decades-long investment in Ontology and workflow integration has created an enduring moat. “Realizing value from AI in the enterprise requires the elegant integration of LLMs, workflow, and software,” he said. AIP’s built-in tools—AI FDE (a development agent that automates coding and integration) and AI Hivemind (a swarm-based AI problem-solver)—are accelerating both internal and customer productivity. Sankar cited examples where AI FDE replaced multi-year projects with five-day implementations, calling it “not a prototype—this is production.”

Karp’s Vision: Alignment with the American Worker

Karp used the call to contrast Palantir’s culture with traditional enterprise software firms. “We created direct alignment with our customers,” he said, emphasizing that Palantir’s mission is to make its clients—and their employees—more valuable.

Chief Technology Officer Shyam Sankar emphasized that Palantir’s mission extends beyond corporate efficiency. He credited the company’s success to empowering “the American worker with AI,” from engineers and soldiers to factory operators. The company’s American Tech Fellowship exemplifies this vision, training frontline workers to build AI applications that drive U.S. reindustrialization.

Closing the call, Karp said Palantir’s continued momentum reflects a simple truth: “There is a massive part of the AI market that actually cares about value creation—and that’s the part we own.”

You can find the entire earnings call here:

Palantir Technologies Inc. (PLTR) Q3 FY2025 Earnings Call Transcript