Palantir Technologies Inc. (NASDAQ:PLTR)

The financial performance, as measured by economic profit, demonstrates a significant shift over the observed period. Initially, the entity experienced substantial economic losses, which gradually diminished before culminating in a substantial economic profit. This evolution is closely tied to changes in net operating profit after taxes (NOPAT) and invested capital, alongside a relatively stable cost of capital.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibited a negative trend through 2022, decreasing from -US$377.568 million in 2021 to -US$221.451 million in 2022. A substantial positive change occurred in 2023, with NOPAT reaching US$207.040 million. This positive momentum continued, accelerating to US$339.176 million in 2024 and reaching US$1,618.029 million in 2025. This indicates a marked improvement in the entity’s core operational profitability.

Cost of Capital

The cost of capital remained relatively consistent throughout the period, fluctuating modestly between 25.75% and 26.03%. This stability suggests that the entity’s risk profile, as perceived by investors, did not undergo significant changes during the observed timeframe.

Invested Capital

Invested capital increased from US$2,585.786 million in 2021 to US$3,071.913 million in 2022. A significant decrease was observed in 2023, falling to US$1,237.836 million. Subsequently, invested capital rose to US$2,507.175 million in 2024 and slightly decreased to US$2,399.047 million in 2025. These fluctuations may reflect strategic capital allocation decisions or changes in operational requirements.

Economic Profit

Economic profit mirrored the trend in NOPAT. Large losses were recorded in 2021 (-US$1,045.128 million) and 2022 (-US$1,012.556 million). The loss diminished in 2023 (-US$114.186 million) and 2024 (-US$313.385 million) before transitioning to a substantial profit of US$993.564 million in 2025. This indicates that the entity’s returns on invested capital began to exceed its cost of capital in the final year of the observation period.

The progression from consistent economic losses to substantial economic profit suggests a successful turnaround or a period of significant growth and value creation. The increase in NOPAT appears to be the primary driver of this improvement, although fluctuations in invested capital also play a role. The stable cost of capital provides a consistent benchmark against which to measure performance.

The financial performance, as reflected by Net Income and Net Operating Profit After Taxes (NOPAT), demonstrates a significant shift over the five-year period. Initially, both metrics indicate losses, followed by substantial improvements and growth in subsequent years.

NOPAT Trend

NOPAT exhibited a negative value in 2021 and 2022, registering -377,568 thousand and -221,451 thousand respectively. This indicates that, during these years, the company’s operating profits were insufficient to cover its tax obligations, resulting in an after-tax operating loss. A positive turning point occurred in 2023, with NOPAT reaching 207,040 thousand. This positive trend continued, with NOPAT increasing to 339,176 thousand in 2024 and reaching 1,618,029 thousand in 2025. This represents a substantial and accelerating improvement in the company’s core operating profitability after accounting for taxes.

Relationship between Net Income and NOPAT

The patterns in Net Income attributable to common stockholders closely mirror those observed in NOPAT. Both metrics were negative in 2021 and 2022, then turned positive in 2023. The magnitude of the increase from 2023 to 2025 is considerable for both metrics, with Net Income growing from 209,825 thousand to 1,625,033 thousand and NOPAT growing from 207,040 thousand to 1,618,029 thousand. The close correlation suggests that changes in core operating profitability are a primary driver of changes in overall net income.

The progression from negative NOPAT and Net Income to substantial positive values suggests a successful turnaround or significant growth phase for the company. The accelerating growth in both metrics from 2023 to 2025 indicates increasing efficiency and profitability in core operations.

The provision for income taxes exhibited volatility over the observed period. Beginning at US$31.885 thousand in 2021, it decreased significantly to US$10.067 thousand in 2022 before increasing to US$19.716 thousand in 2023. Further increases were noted in 2024 and 2025, reaching US$21.255 thousand and US$22.724 thousand respectively. This suggests a fluctuating tax burden, potentially influenced by changes in taxable income or applicable tax rates.

Cash Operating Taxes Trend

Cash operating taxes demonstrated a markedly different pattern. A substantial increase is apparent from US$7.577 thousand in 2021 to US$67.243 thousand in 2022. This was followed by a dramatic decline to US$1.246 thousand in 2023. Subsequently, cash operating taxes became negative, reaching US$-15.989 thousand in 2024 and further decreasing to US$-18.119 thousand in 2025. This indicates a shift from cash outflows for taxes to cash inflows, potentially due to tax refunds or the utilization of tax loss carryforwards.

The divergence between the provision for income taxes and cash operating taxes is significant. While the provision for income taxes generally trended upwards after 2022, cash operating taxes experienced a substantial reversal, becoming negative in the latter years of the period. This discrepancy warrants further investigation to understand the underlying reasons, such as timing differences between accounting income and taxable income, changes in deferred tax assets and liabilities, or the impact of specific tax incentives or credits.

The negative cash operating taxes in 2024 and 2025 suggest the company received more in tax benefits than it paid in taxes during those years. This could be a temporary phenomenon or indicative of a sustained shift in the company’s tax position. Continued monitoring of these trends is recommended to assess the long-term implications for the company’s financial performance and cash flow.

The reported figures reveal notable fluctuations in invested capital alongside changes in the company’s debt and equity structure over the five-year period. Total reported debt & leases generally decreased, while total stockholders’ equity exhibited a consistent upward trajectory. However, invested capital demonstrates a more complex pattern, initially increasing then experiencing a significant decline before a partial recovery.

Total Reported Debt & Leases

Total reported debt & leases decreased from US$260,073 thousand in 2021 to US$249,404 thousand in 2022, continuing to US$229,392 thousand in 2023. A slight increase to US$239,219 thousand was observed in 2024, followed by a further decrease to US$229,338 thousand in 2025. This indicates a general trend of decreasing reliance on debt financing, although the 2024 figure represents a temporary deviation from this pattern.

Total Stockholders’ Equity

Total stockholders’ equity increased substantially throughout the period. From US$2,291,030 thousand in 2021, it rose to US$2,565,326 thousand in 2022, then to US$3,475,561 thousand in 2023. This growth continued with figures of US$5,003,275 thousand in 2024 and US$7,387,268 thousand in 2025. This consistent increase suggests strengthening financial health and potentially increased investor confidence.

Invested Capital

Invested capital initially increased from US$2,585,786 thousand in 2021 to US$3,071,913 thousand in 2022. However, a substantial decrease was recorded in 2023, falling to US$1,237,836 thousand. A partial recovery occurred in 2024, with invested capital rising to US$2,507,175 thousand, but this level decreased again in 2025 to US$2,399,047 thousand. The significant drop in 2023 warrants further investigation to understand the underlying reasons, such as asset sales, changes in operational needs, or shifts in capital allocation strategy. The subsequent recovery in 2024, followed by a slight decline in 2025, suggests a period of capital restructuring.

The divergence between the increasing equity and the fluctuating invested capital suggests a changing relationship between funding sources and asset deployment. The decrease in invested capital, particularly in 2023, despite rising equity, could indicate a shift towards more efficient capital utilization or a reduction in capital-intensive projects.

The economic spread ratio demonstrates a significant shift over the five-year period. Initially negative, the ratio transitions to a positive value, indicating a change in the company’s ability to generate returns exceeding its cost of capital.

Economic Spread Ratio Trend

In 2021 and 2022, the economic spread ratio was negative, registering at -40.42% and -32.96% respectively. This suggests that the company’s returns on invested capital were below its cost of capital during these years. The magnitude of the negative spread decreased from 2021 to 2022, implying some improvement in performance, although returns still did not cover the cost of capital.

The ratio continued to be negative in 2023, at -9.22%, indicating a further, though smaller, reduction in the gap between returns and the cost of capital. In 2024, the ratio remained negative at -12.50%, showing a slight reversal of the improving trend.

A substantial change is observed in 2025, with the economic spread ratio becoming positive at 41.41%. This signifies that the company generated returns significantly exceeding its cost of capital in that year.

The movement in the economic spread ratio correlates with changes in economic profit. While economic profit remained negative through 2023, it became positive in 2025, coinciding with the positive shift in the economic spread ratio. The invested capital also experienced fluctuations, decreasing significantly in 2023 before increasing again in 2024 and decreasing slightly in 2025.

Relationship between Economic Spread Ratio and Economic Profit

The progression from negative economic profit and a negative economic spread ratio to positive values for both metrics in 2025 suggests improved capital allocation and profitability. The increasing ratio indicates a growing efficiency in utilizing invested capital to generate returns.

The substantial improvement in the economic spread ratio in 2025 warrants further investigation to understand the underlying drivers of this change, such as increased revenue, reduced costs, or more efficient capital management.

The economic profit margin demonstrates a clear progression from negative values to positive territory over the observed period. Initially, substantial economic losses are recorded, which progressively diminish before transitioning into a significant economic profit.

Economic Profit Margin Trend

In 2021, the economic profit margin stands at -66.57%. This represents a considerable economic loss relative to adjusted revenue. A notable improvement is seen in 2022, with the margin increasing to -55.30%, indicating a reduction in the magnitude of the economic loss. The trend continues in 2023, where the margin further improves to -4.95%, approaching breakeven. A slight decline is observed in 2024, with the margin at -10.84%, before a substantial positive shift occurs in 2025, reaching 21.45%.

The movement in economic profit margin closely mirrors the trend in economic profit. The initial negative economic profit values correspond to the negative margins, and the eventual positive economic profit in 2025 aligns with the positive margin achieved in that year. The adjusted revenue consistently increases throughout the period, contributing to the improved margin as the economic losses are reduced and ultimately converted into a profit.

Relationship to Adjusted Revenue

The economic profit margin’s improvement is concurrent with increasing adjusted revenue. While the economic losses are substantial in the earlier years, the growing revenue base provides a larger denominator for the margin calculation. The significant increase in adjusted revenue between 2024 and 2025 appears to be a key driver of the positive economic profit margin achieved in the latter year.

The progression from substantial economic losses to a significant economic profit margin suggests a positive shift in the company’s ability to generate returns exceeding its cost of capital. The trend warrants further investigation into the factors driving the improved profitability and revenue growth.