Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Palantir Technologies Inc. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2020
- Operating Profit Margin since 2020
- Debt to Equity since 2020
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Economic Profit
Palantir Technologies Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial trajectory reflects a significant transition from systemic value destruction to substantial economic value creation over the five-year period. This shift is primarily driven by a dramatic improvement in operating profitability, which eventually overcame a consistently high cost of capital associated with the invested base.
- Net Operating Profit After Taxes (NOPAT)
- A consistent upward trend is evident, transitioning from a loss of US$ 377.6 million in 2021 to a significant profit of US$ 1.62 billion by 2025. The most notable acceleration occurred between 2024 and 2025, where NOPAT increased nearly fivefold, indicating a sharp improvement in operational efficiency and scalability.
- Cost of Capital
- The cost of capital remained remarkably stable, fluctuating narrowly between 25.56% and 25.83% across the entire period. This high and consistent hurdle rate underscores the substantial operating returns required to generate positive economic profit.
- Invested Capital
- Invested capital exhibited volatility, peaking in 2022 at US$ 3.07 billion before experiencing a sharp decline to US$ 1.24 billion in 2023. A subsequent recovery returned the invested capital to approximately US$ 2.4 billion by 2025, suggesting significant shifts in asset allocation or capital restructuring during the mid-period.
- Economic Profit
- Negative economic profit was sustained from 2021 through 2024, signifying that operating returns were insufficient to cover the cost of the capital employed. Despite the shift to positive NOPAT in 2023 and 2024, the economic profit remained negative during those years. A pivotal inflection occurred in 2025, with economic profit reaching US$ 998.3 million, marking the transition to genuine economic value added where returns finally exceeded the weighted average cost of capital.
Net Operating Profit after Taxes (NOPAT)
Palantir Technologies Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to common stockholders.
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income (loss) attributable to common stockholders.
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
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.
Cash Operating Taxes
Palantir Technologies Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
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$-18.119 thousand in 2025. This indicates a shift from cash outflows for taxes to cash inflows, potentially due to tax refunds or the utilization of tax loss carryforwards.
The divergence between the provision for income taxes and cash operating taxes is significant. While the provision for income taxes generally trended upwards after 2022, cash operating taxes experienced a substantial reversal, becoming negative in the latter years of the period. This discrepancy warrants further investigation to understand the underlying reasons, such as timing differences between accounting income and taxable income, changes in deferred tax assets and liabilities, or the impact of specific tax incentives or credits.
The negative cash operating taxes in 2024 and 2025 suggest the company received more in tax benefits than it paid in taxes during those years. This could be a temporary phenomenon or indicative of a sustained shift in the company’s tax position. Continued monitoring of these trends is recommended to assess the long-term implications for the company’s financial performance and cash flow.
Invested Capital
Palantir Technologies Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of equity equivalents to total Palantir’s stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of marketable securities.
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.
Cost of Capital
Palantir Technologies Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
Economic Spread Ratio
Palantir Technologies Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| Datadog Inc. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial trajectory from 2021 through 2025 demonstrates a significant transition from substantial economic value destruction to a position of positive economic value creation. The period is characterized by a volatile recovery phase, culminating in a sharp reversal of economic performance in the final year of the analysis.
- Economic Profit Trends
- Economic profit remained deeply negative between 2021 and 2022, with losses exceeding 1 billion US dollars annually. A marked improvement occurred in 2023, where losses narrowed to 111.7 million US dollars, before a slight regression to a loss of 308.4 million US dollars in 2024. This trend reversed decisively in 2025, as the company achieved a positive economic profit of approximately 998.2 million US dollars, indicating that the company began generating returns in excess of its cost of capital.
- Invested Capital Fluctuations
- Invested capital exhibited instability throughout the period. After peaking at 3.07 billion US dollars in 2022, a sharp contraction was observed in 2023, with capital decreasing to 1.23 billion US dollars. This was followed by a rebound to 2.50 billion US dollars in 2024 and a slight stabilization at 2.39 billion US dollars in 2025. The volatility in invested capital suggests significant changes in the capital base or asset utilization strategies during the 2023-2024 window.
- Economic Spread Ratio Analysis
- The economic spread ratio closely mirrors the trend of economic profit, serving as a percentage-based indicator of value creation. The ratio began at -40.22% in 2021 and improved to -9.03% by 2023. A minor decline to -12.30% was recorded in 2024, followed by a substantial positive surge to 41.61% in 2025. This progression highlights a fundamental shift in operational efficiency and capital productivity, as the spread ratio moved from extreme negative territory to a high positive percentage, confirming the realization of economic value.
Economic Profit Margin
Palantir Technologies Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| Datadog Inc. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
An analysis of the financial performance from 2021 through 2025 reveals a significant transition from substantial economic value destruction to positive economic value creation. This trajectory is characterized by consistent growth in adjusted revenue and a progressive recovery in the economic profit margin.
- Adjusted Revenue Growth
- Adjusted revenue exhibited a continuous upward trend over the five-year period, increasing from US$ 1,569,877 thousand in 2021 to US$ 4,631,116 thousand in 2025. A notable acceleration in growth occurred in the final year, where revenue increased by approximately 60% compared to the previous period.
- Economic Profit Trajectory
- The company operated with negative economic profit from 2021 to 2024, indicating that returns were below the cost of capital. The magnitude of these losses decreased from US$ 1,040,103 thousand in 2021 to US$ 111,765 thousand in 2023. Despite a moderate increase in losses in 2024 to US$ 308,463 thousand, a pivotal shift occurred in 2025, resulting in a positive economic profit of US$ 998,273 thousand.
- Economic Profit Margin Analysis
- The economic profit margin improved significantly from -66.25% in 2021 to 21.56% in 2025. The margin narrowed sharply between 2022 and 2023, moving from -54.97% to -4.85%. While 2024 experienced a slight regression to -10.67%, the subsequent jump to a positive 21.56% margin in 2025 suggests an achievement of operational scale and efficiency sufficient to exceed the weighted average cost of capital.