Palantir Technologies Inc. (NASDAQ:PLTR)

The financial performance, as measured by economic value added, demonstrates a volatile period with a shift from substantial economic losses to a more moderate loss in the most recent year. Net operating profit after taxes (NOPAT) initially exhibited significant negative values, transitioning to positive territory before declining again. This trend is coupled with a relatively stable cost of capital and fluctuating invested capital, impacting the overall economic profit.

NOPAT Trend

NOPAT began at a substantial negative value in 2020, representing a significant loss. It improved considerably in 2021 and 2022, though remaining negative. A positive NOPAT was achieved in 2023, indicating improved operational profitability. However, NOPAT decreased in 2024, though remaining positive.

Cost of Capital

The cost of capital remained relatively consistent across the observed period, fluctuating within a narrow range between 40.41% and 40.88%. This suggests a stable risk profile and financing structure throughout the years. The slight increase in the most recent year may warrant further investigation.

Invested Capital

Invested capital increased from 2020 to 2022, indicating growing investment in the business. A substantial decrease occurred in 2023, followed by a significant increase in 2024. These fluctuations suggest potentially large capital allocation or divestment activities during those periods.

Economic Profit

Economic profit mirrored the trend in NOPAT, starting with large negative values and gradually decreasing in magnitude. While still negative, the economic loss was reduced in 2023. However, economic profit worsened in 2024, indicating a decline in value creation relative to the capital employed. The consistent negative economic profit across all years suggests that the company’s returns have not consistently exceeded its cost of capital.

The interplay between NOPAT, cost of capital, and invested capital significantly influences economic profit. The substantial fluctuations in invested capital, combined with the consistently high cost of capital, contribute to the ongoing economic losses. Further analysis is needed to understand the drivers behind the changes in invested capital and to assess the potential for improving NOPAT to achieve positive economic profit.

The financial data reveals a significant improvement in profitability over the analyzed period.

Net Income (Loss) Attributable to Common Stockholders

A substantial negative net income was reported in 2020, amounting to approximately -1.17 billion US dollars. This loss decreased markedly in 2021 and 2022 to approximately -520 million and -374 million US dollars, respectively. In 2023, the company reversed its financial position with a positive net income of around 210 million US dollars, followed by further growth to approximately 462 million US dollars in 2024. This trend indicates a successful transition from significant losses to sustained profitability.

Net Operating Profit After Taxes (NOPAT)

Consistent with net income trends, NOPAT was markedly negative in 2020 (-1.19 billion US dollars), improving progressively to roughly -378 million in 2021 and -221 million in 2022. From 2023 onward, NOPAT turned positive, reaching about 207 million US dollars and expanding further to approximately 339 million US dollars in 2024. This reflects enhanced operational efficiency and effective tax management contributing to profitability.

Overall, the data demonstrates a clear and robust upward trajectory in both net income and operating profitability. The shift from pronounced losses to solid gains signals improved operational performance and potential stabilization of the company's financial health.

The financial data reveals notable fluctuations in both the provision for income taxes and cash operating taxes over the five-year period examined.

Provision for (benefit from) income taxes

Initially, there was a tax benefit of -$12,636 thousand in 2020. This shifted to a tax provision of $31,885 thousand in 2021, indicating a significant increase in tax expenses. In the following years, the provision decreased to $10,067 thousand in 2022, then rose again to $19,716 thousand in 2023, and slightly increased to $21,255 thousand in 2024. Overall, the provision for income taxes shows variability, with the initial tax benefit transitioning to recurring tax expenses that fluctuate but generally trend at a moderate level after 2021.

Cash operating taxes

Cash operating taxes experienced substantial variation across the period. The value was $13,182 thousand in 2020 and decreased to $7,577 thousand in 2021, showing a reduction in actual cash tax payments. However, there was a dramatic surge to $67,243 thousand in 2022, representing a significant cash outflow for taxes. This was followed by a sharp decrease to $1,246 thousand in 2023 and a negative outflow of -$15,989 thousand in 2024, indicating tax refunds or credits exceeding taxes paid. This irregular pattern suggests variability in the company's taxable income, tax planning strategies, or changes in tax regulations impacting cash taxes paid over time.

In summary, the data indicates a transition from tax benefits to taxable obligations in terms of accounting provision, with visible volatility year-over-year. The cash operating taxes display extreme fluctuations with a peak in 2022 and subsequent negative cash taxes in 2024, signaling potentially significant tax recoveries or adjustments in that year. This combination reflects an unstable tax environment or operational variability affecting the company's tax position during this period.

Total Reported Debt & Leases

There is a clear downward trend in total reported debt and leases from 2020 through 2023, decreasing from approximately 457 million USD to about 229 million USD. This represents a nearly 50% reduction over four years. In 2024, however, the debt level shows a slight increase to approximately 239 million USD, indicating a potential shift in capital structure or financing strategy.

Total Palantir’s Stockholders’ Equity

Stockholders’ equity has exhibited consistent and strong growth over the five-year period. Starting at around 1.52 billion USD in 2020, it increased steadily each year, reaching 5.00 billion USD by 2024. This trend suggests substantial value creation and effective retention of earnings or capital infusion, reflecting robust financial health and increased shareholder wealth.

Invested Capital

Invested capital generally increased from 2020 to 2022, rising from approximately 2.18 billion USD to about 3.07 billion USD, indicating growing deployment of resources in the business. However, there is a notable and sharp decline in 2023 to approximately 1.24 billion USD, followed by a recovery to 2.51 billion USD in 2024. The 2023 dip could signify asset disposals, restructuring, or a strategic shift in investment focus, with a partial rebound in the following year.

The economic spread ratio demonstrates a consistent pattern of negative values over the five-year period, indicating that the company’s returns on invested capital are less than its cost of capital. However, the magnitude of the negative spread has decreased over time, suggesting an improving, though still suboptimal, capital allocation efficiency.

Economic Spread Ratio Trend

The economic spread ratio moved from -95.13% in 2020 to -55.12% in 2021, representing a substantial improvement. This positive change continued with ratios of -47.62% and -24.02% in 2022 and 2023, respectively. While the ratio increased to -27.35% in 2024, it remains negative, but is relatively close to the levels observed in 2022.

The trend in economic profit mirrors the economic spread ratio, showing negative values throughout the period. The magnitude of the economic profit loss decreased significantly from 2020 to 2023, before increasing again in 2024. This suggests that while the company’s profitability improved relative to its capital base for a period, recent performance has seen a reversal of that trend.

Invested Capital Fluctuations

Invested capital increased from 2020 to 2022, peaking at 3,071,913 US$ in thousands. A significant decrease was observed in 2023, falling to 1,237,836 US$ in thousands, before rising again to 2,507,175 US$ in thousands in 2024. These fluctuations in invested capital likely influence the economic spread ratio, and require further investigation to understand the underlying drivers of these changes.

The observed trends suggest that the company is gradually becoming more efficient in generating returns on its invested capital, but it still does not generate returns exceeding its cost of capital. The increase in economic profit loss in 2024, coupled with the slight worsening of the economic spread ratio, warrants further scrutiny to determine the sustainability of the improvements observed in prior years.

The economic profit margin demonstrates a consistent pattern of improvement, albeit remaining negative throughout the observed period. While substantial losses are evident, the magnitude of these losses has decreased over time. This suggests a developing trend toward improved profitability from an economic value perspective.

Economic Profit

Economic profit exhibits a decreasing negative value from 2020 to 2023, moving from a loss of over two billion US dollars to a loss of approximately 297 million US dollars. However, in 2024, economic profit shows a slight increase in the negative value, reaching a loss of 686 million US dollars. This indicates a potential pause or reversal in the previously observed improvement.

Adjusted Revenue

Adjusted revenue consistently increased year-over-year throughout the period. From 2020 to 2024, revenue grew from approximately 1.07 billion US dollars to 2.89 billion US dollars. This revenue growth is a positive indicator, potentially contributing to the observed improvements in the economic profit margin.

Economic Profit Margin

The economic profit margin, initially at -193.78% in 2020, improved significantly to -12.89% in 2023. This represents a substantial, though still negative, shift. The margin then worsened slightly in 2024, moving to -23.73%. The overall trend suggests that while the company is generating more revenue, the cost of capital relative to that revenue is still substantial, but decreasing, with a recent indication of potential regression.

The interplay between increasing revenue and fluctuating economic profit suggests that while top-line growth is occurring, managing the cost of capital remains a critical area for improvement. The slight deterioration in the economic profit margin in 2024 warrants further investigation to determine the underlying causes and potential impact on future performance.