Palantir Technologies Inc. (NASDAQ:PLTR)

The financial performance, as measured by economic value added (EVA) metrics, 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 negative values, transitioning to positive figures in 2023 before declining again in 2024. Invested capital fluctuated considerably throughout the period, while the cost of capital remained relatively stable. Consequently, economic profit, the central metric of EVA, consistently remained negative, though the magnitude of the loss decreased before increasing again in 2024.

NOPAT Trend

NOPAT began at a significant negative value in 2020, representing a substantial operating loss. It improved considerably in 2021 and 2022, though remaining negative. A marked positive shift occurred in 2023, with NOPAT reaching US$207,040 thousand. However, this positive trend reversed in 2024, with NOPAT increasing to US$339,176 thousand, but not enough to offset the cost of capital.

Cost of Capital

The cost of capital remained consistently high, fluctuating narrowly between 34.10% and 34.49% over the five-year period. This consistent cost of capital presents a significant hurdle for generating positive economic profit.

Invested Capital

Invested capital increased from US$2,178,851 thousand in 2020 to US$3,071,913 thousand in 2022. A substantial decrease was observed in 2023, falling to US$1,237,836 thousand, before rising again to US$2,507,175 thousand in 2024. This volatility in invested capital likely influences the economic profit calculation significantly.

Economic Profit

Economic profit consistently registered as a negative value throughout the period. The largest loss occurred in 2020, at US$-1,934,710 thousand. Losses decreased in subsequent years, reaching a minimum of US$-218,532 thousand in 2023. However, the economic loss widened again in 2024 to US$-525,496 thousand, indicating a deterioration in value creation relative to the cost of capital.

In summary, while NOPAT showed improvement at one point, the consistently high cost of capital and fluctuations in invested capital resulted in persistent negative economic profit. The increase in economic loss in 2024 suggests a need to evaluate strategies for improving profitability and/or optimizing capital allocation.

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, though moderating, negative trend over the observed period. Initially, the ratio is significantly negative, and while it improves year-over-year, it remains negative throughout the analyzed timeframe.

Economic Spread Ratio Trend

In 2020, the economic spread ratio is reported at -88.79%. This figure improves to -48.79% in 2021, and further to -41.31% in 2022. The rate of improvement slows in subsequent years, with the ratio reaching -17.65% in 2023 before slightly worsening to -20.96% in 2024.

The economic profit consistently registers as a negative value across all years. While the magnitude of the economic profit loss decreases from 2020 to 2023, it increases again in 2024. This suggests that, despite improvements in the economic spread ratio, the company is still destroying economic value.

Relationship between Economic Profit and Invested Capital

Invested capital increases from 2020 to 2022, then experiences a substantial decrease in 2023, followed by an increase in 2024. The fluctuations in invested capital do not fully explain the changes in economic profit. The negative economic profit suggests that returns on invested capital are consistently below the cost of capital.

The observed trend in the economic spread ratio indicates a gradual improvement in the efficiency with which capital is deployed, but the continued negative economic profit suggests that the company is not yet generating returns sufficient to cover its cost of capital. The slight deterioration in the economic spread ratio in 2024, coupled with the increased negative economic profit, warrants further investigation.

The financial performance, as measured by economic profit and its margin, demonstrates a clear, albeit uneven, improvement over the five-year period. Initially, substantial economic losses are recorded, but these losses diminish over time, although a return to economic profitability has not yet been achieved.

Economic Profit

Economic profit exhibits a consistent, though fluctuating, reduction in absolute value. Beginning with a loss of approximately US$1.93 billion in 2020, the loss decreases to US$1.26 billion in 2021 and remains near that level in 2022 at US$1.27 billion. A significant improvement is then observed in 2023, with the loss reduced to US$218.53 million. However, the loss increases again in 2024 to US$525.49 million, indicating a potential reversal of the positive trend.

Adjusted Revenue

Adjusted revenue consistently increases throughout the period. From US$1.07 billion in 2020, revenue grows to US$1.57 billion in 2021, US$1.83 billion in 2022, and further to US$2.31 billion in 2023. This growth continues into 2024, reaching US$2.89 billion. The consistent revenue growth suggests increasing market acceptance or expansion of the company’s offerings.

Economic Profit Margin

The economic profit margin reflects the relationship between economic profit and adjusted revenue. The margin begins at a substantial negative value of -180.88% in 2020, indicating significant losses relative to revenue. This margin improves considerably to -80.37% in 2021 and -69.30% in 2022. The improvement continues dramatically in 2023, reaching -9.47%, suggesting a narrowing gap between revenue and the cost of capital. However, the margin deteriorates in 2024 to -18.18%, mirroring the increase in economic loss observed for that year. The trend suggests that while the company is becoming more efficient at generating profit relative to revenue, it has not yet reached a point of economic profitability.

In summary, while revenue demonstrates consistent growth, the company continues to operate at an economic loss. The economic profit margin shows improvement over the initial years, but the recent increase in loss in 2024 warrants further investigation to determine the underlying causes and potential impact on future performance.