Palantir just delivered one of the most impressive enterprise software quarters we’ve seen in years:
- 48% YoY revenue growth
- a 94% Rule of 40 score, and
- US commercial revenue exploding 93% YoY
- and an incredible rebound from slow growth just 24 months ago.
We’ve never seen anything like it. It’s The Age of AI.
And Palantir? It’s the Great AI Re-Acceleration.
#1. 157 Deals Over $1M Shows AI Can Transform Your Customer Acquisition Engine
The Learning: Palantir’s Artificial Intelligence Platform (AIP) isn’t just a product feature—it’s become their primary customer acquisition engine.
The Metrics That Matter: US commercial customer count grew 64% YoY to 485 customers, but more telling is the deal velocity. They closed 157 deals over $1M (up significantly), 66 deals over $5M, and 42 deals over $10M in a single quarter. That’s enterprise-scale deal flow that most companies take years to build.
AIP has changed their sales motion. At AIPCon 7, customers like Land O’Frost described reducing production planning from 40 hours to 30 minutes. The State Department cut candidate clearance time from 60 days to 12 days. These aren’t marginal improvements—they’re order-of-magnitude transformations that create undeniable ROI.
The key insight: When your AI actually delivers 10x+ improvements in customer workflows, you shift from selling software to selling business outcomes. This fundamentally changes the buyer conversation and deal velocity.
#2. Why 1,100%+ Efficiency Gains Create the Ultimate Competitive Moat
The Learning: Palantir has institutionalized the concept of delivering value in under an hour—they literally call it “a Palantir unit of time.”
The Metrics That Matter: Nebraska Medicine’s results are staggering: 2,000%+ increase in discharge lounge utilization, 99% approval rate on AI-driven packet generation, 1,100%+ efficiency gains reducing processes from 80 to 7 minutes. These are the kinds of metrics that create customer lock-in and expansion.
This speed-to-value approach is reflected in their Q2 TCV numbers: $2.3B in total contract value (+140% YoY) with US commercial TCV hitting a record $843M (+222% YoY). When customers see value within hours, not months, they commit to larger, longer-term contracts.
For SaaS leaders: Time-to-first-value is becoming the ultimate competitive differentiator. If you can’t show meaningful results in your first customer interaction, someone else will.
#3. The Journey from 46% to 94% Rule of 40: How Elite Companies Scale Both Growth and Profitability
The Learning: Palantir’s Rule of 40 progression from 46% to 94% in just two years demonstrates how best-in-class companies can simultaneously accelerate growth while expanding margins.
The Metrics Deep Dive:
- Q3 2023: 46% Rule of 40 (17% growth + 29% adj. operating margin)
- Q2 2025: 94% Rule of 40 (48% growth + 46% adj. operating margin)
What’s remarkable is they’re not trading growth for profitability—they’re accelerating both. Adjusted operating income jumped from $254M to $464M (+83% YoY) while maintaining 48% revenue growth. This is the hallmark of a platform business hitting true scale.
The secret sauce appears to be their land-and-expand model. With 128% net dollar retention and US commercial remaining deal value growing 145% YoY to $2.8B, they’re extracting more value from existing relationships while adding new ones.
#4. How 53% Government + 93% Commercial Growth Creates Unique Business Model Durability
The Learning: Palantir’s dual-engine model (government + commercial) creates unusual resilience and cross-pollination that pure-play SaaS companies can’t replicate.
The Metrics Story:
- Government revenue: $553M (+49% YoY)
- Commercial revenue: $451M (+47% YoY)
- US Government: $426M (+53% YoY)
- US Commercial: $306M (+93% YoY)
The US commercial acceleration (93% growth) while maintaining strong government growth (53%) shows they’re not cannibalizing one for the other. Instead, their government work provides R&D and credibility that accelerates commercial adoption.
This is evident in their customer success stories: Using techniques developed for national security in healthcare (TeleTracking), financial services (Fannie Mae), and manufacturing (Land O’Frost). The government contracts fund innovation that makes their commercial offerings uniquely powerful.
#5. $6.0B Cash + 57% Free Cash Flow Margin: Building the Ultimate Self-Funding Growth Engine
The Learning: Palantir has built one of the most efficient cash generation machines in enterprise software, with adjusted free cash flow margins hitting 57%.
The Metrics: Q2 adjusted free cash flow of $569M (57% margin) vs $144M (22% margin) in Q2 2024. They ended the quarter with $6.0B in cash and zero debt. This isn’t just financial strength—it’s strategic freedom.
With $2.42B in total RPO (+76% YoY) and strong cash generation, they can invest aggressively in R&D and go-to-market without external capital pressure. This self-funding capability lets them make long-term bets on AI development while competitors worry about runway.
The billings acceleration to $1.1B (+53% YoY) shows strong upfront customer commitments, indicating confidence in future value delivery.
5 Additional Quick Hits:
- Guidance Beats: Q3 revenue guidance of $1.083-1.087B implies ~50% YoY growth, crushing consensus expectations
- Deal Size Expansion: Average deal sizes are clearly expanding with 5x more $5M+ deals and record TCV numbers
- International Opportunity: US outperformance suggests massive untapped international expansion potential
- Platform Extensibility: DevCon 3 unveiled AI FDE, AI Workbench, and Ontology-as-Code—showing continuous platform evolution
- Customer Concentration Diversification: 485 US commercial customers (up 64% YoY) reducing dependence on any single large customer
The bottom line: Palantir has cracked the code on AI-driven enterprise software that delivers measurable, immediate business impact. For SaaS leaders, the playbook is clear—focus obsessively on time-to-value, build for 10x outcomes not 10% improvements, and create a platform that customers can’t imagine living without.
