Palantir Technologies Inc. (NASDAQ:PLTR)

The financial performance reveals a dynamic shift in the company's profitability and capital efficiency over the five-year period under review. The net operating profit after taxes (NOPAT) exhibits a notable improvement from a substantial negative value in 2020 to positive figures by 2023 and 2024. Specifically, NOPAT progresses from -1,189,427 thousand US dollars in 2020 to 339,176 thousand US dollars in 2024, indicating a turnaround in operational effectiveness and profitability.

Despite this positive trend in net operating profit, the cost of capital remains consistently high, fluctuating slightly but remaining near 34% throughout the period. This persistently elevated cost of capital suggests either high risk or capital structure considerations that may affect investment decisions and valuation perspectives.

Invested capital shows an initial increase from approximately 2.18 billion US dollars in 2020 to a peak of around 3.07 billion US dollars in 2022, followed by a sharp decline to roughly 1.24 billion US dollars in 2023, before rising again to approximately 2.51 billion US dollars in 2024. These fluctuations may reflect significant changes in asset base, divestitures, or restructuring efforts impacting the capital employed in business operations.

Regarding economic profit, the company consistently reports negative values over the period, indicating that returns are not exceeding the cost of capital. Although the negative economic profit narrows significantly from a high of -1.93 billion US dollars in 2020 to -213,371 thousand US dollars in 2023, it deteriorates again to -515,005 thousand US dollars in 2024. This pattern suggests that while operational profitability improved, the company still fails to generate value above its capital costs, potentially signaling ongoing challenges in achieving sustainable economic profit despite operational gains.

In summary, the company demonstrates significant progress in operational profitability with turning points after 2022. However, consistent high cost of capital and fluctuating invested capital contribute to persistent negative economic profit, highlighting the importance of continued focus on capital efficiency and cost management to enhance overall value creation.

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.

Economic Profit

The economic profit demonstrates an overall improving trend from 2020 to 2023, starting at a substantial negative value of -1,925,680 thousand US dollars in 2020 and progressively decreasing in negative magnitude to -213,371 thousand US dollars by 2023. However, in 2024, there is a reversal as the negative economic profit increases again to -515,005 thousand US dollars, indicating a deterioration compared to the previous year but still significantly better than the earliest reported periods.

Invested Capital

The invested capital exhibited a steady increase over the first three years, rising from 2,178,851 thousand US dollars in 2020 to 3,071,913 thousand US dollars in 2022. Subsequently, there is a sharp decline in 2023 to 1,237,836 thousand US dollars, followed by a recovery in 2024 to 2,507,175 thousand US dollars. This pattern suggests fluctuations in capital deployment, perhaps due to strategic realignments or asset disposals and acquisitions.

Economic Spread Ratio

The economic spread ratio shows a consistent improvement trend, although it remains negative throughout the observed periods. Starting at -88.38% in 2020, it improves to -17.24% in 2023, indicating a narrowing loss or better return relative to capital invested. However, in 2024, the ratio slightly worsens to -20.54%, paralleling the increased negative economic profit in the same year.

Summary Insight

Overall, the financial indicators reflect a company struggling to generate positive economic profit, but displaying gradual improvement in both profitability metrics and efficient use of invested capital through 2023. The notable decline in invested capital during 2023 followed by a recovery in 2024 might imply strategic adjustments in capital allocation. Despite these efforts, the negative economic spread ratio and economic profit in 2024 border on a cautious outlook, indicating the company still faces challenges in achieving sustainable economic value creation.

The financial data reveals several key trends concerning the company's economic profit, adjusted revenue, and economic profit margin over the five-year period ending December 31, 2024.

Adjusted Revenue

There is a consistent and significant growth trajectory in adjusted revenue throughout the period. Starting at approximately $1.07 billion in 2020, revenue increased steadily each year to reach about $2.89 billion by the end of 2024. This represents a nearly threefold increase over five years, indicating successful top-line expansion.

Economic Profit

Economic profit remains negative throughout the analyzed years, though there is some fluctuation. In 2020, the economic loss was around $1.93 billion, improving somewhat to an economic loss of approximately $1.25 billion in 2021 and remaining close to that level in 2022. By 2023, the economic loss substantially decreased to about $213 million, suggesting improved operational efficiency or cost management relative to revenue. However, this improvement reversed somewhat in 2024, with the economic loss increasing again to roughly $515 million, indicating greater economic costs or reduced profitability relative to the previous year.

Economic Profit Margin

The economic profit margin, defined as economic profit relative to revenue, shows a marked improvement from very high negative margins in the initial years. Starting at -180% in 2020, it improves dramatically to -80% in 2021 and continues to lessen in negativity to -69% in 2022. In 2023, the margin approaches break-even territory at -9%, highlighting near profitability on an economic profit basis. However, in 2024, the margin deteriorates again to -18%, signaling a setback in profitability efficiency despite growing revenue.

In summary, while the company demonstrates strong and sustained revenue growth, economic profit and profit margins have remained negative throughout the period. Notably, there was substantial progress toward reducing economic losses and improving margins by 2023, but these gains were partially reversed in 2024. This pattern suggests ongoing challenges in translating revenue growth into positive economic profit, highlighting areas for potential operational improvement or cost optimization to achieve sustainable economic profitability.