Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Income Statement
- Common-Size Income Statement
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2020
- Net Profit Margin since 2020
- Price to Operating Profit (P/OP) since 2020
- Analysis of Revenues
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Profitability Ratios (Summary)
Palantir Technologies Inc., profitability ratios
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 profitability metrics demonstrate a significant improvement over the observed period. Initially, the company experienced negative margins and returns, but these have progressively shifted towards positive and increasingly favorable values. This suggests a successful transition towards improved operational efficiency and profitability.
- Gross Profit Margin
- The gross profit margin exhibits a consistent upward trend, increasing from 77.99% in 2021 to 82.37% in 2025. This indicates strengthening pricing power or improvements in cost of goods sold, or a combination of both. The rate of increase appears to be accelerating in the later years.
- Operating and Net Profit Margins
- Both operating and net profit margins show a dramatic turnaround. Beginning with substantial losses in 2021 and 2022, they become positive in 2023 and continue to expand substantially through 2025. The operating profit margin rises from -26.66% to 31.59%, while the net profit margin increases from -33.75% to 36.31%. This suggests effective management of operating expenses and a reduction in other costs impacting net income.
- Return on Equity (ROE)
- The return on equity mirrors the improvement in profitability, moving from negative values in 2021 and 2022 to a substantial 22.00% in 2025. This indicates a growing ability to generate profit from shareholder investments. The increase in ROE is particularly pronounced in the later years, suggesting increasing efficiency in equity utilization.
- Return on Assets (ROA)
- Similar to ROE, the return on assets transitions from negative figures to a positive 18.26% in 2025. This demonstrates an improved capacity to generate earnings from the company’s total assets. The trend suggests enhanced asset utilization and operational effectiveness.
Collectively, these ratios paint a picture of a company that has successfully addressed prior profitability challenges. The consistent positive trends across all measured metrics indicate a strengthening financial position and improved performance.
Return on Sales
Return on Investment
Gross Profit Margin
Palantir Technologies Inc., gross 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) | ||||||
| Gross profit | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings 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 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin demonstrates a generally positive trend over the observed period. Both gross profit and revenue increased consistently from 2021 to 2025, with the gross profit margin exhibiting corresponding fluctuations.
- Gross Profit Margin Trend
- The gross profit margin began at 77.99% in 2021 and increased to 78.56% in 2022. This upward trajectory continued through 2023, reaching a peak of 80.62%. A slight decrease to 80.25% was noted in 2024, but the margin recovered and further improved to 82.37% in 2025, representing the highest value within the analyzed timeframe.
The consistent growth in gross profit, from US$1,202,485 thousand in 2021 to US$3,686,269 thousand in 2025, suggests effective cost management relative to revenue generation. Similarly, revenue experienced substantial growth, increasing from US$1,541,889 thousand to US$4,475,446 thousand over the same period. The observed correlation between increasing gross profit and revenue supports the conclusion that the company maintains a strong ability to convert sales into profit.
- Year-over-Year Changes
- The largest year-over-year increase in gross profit margin occurred between 2022 and 2023, with a rise of 2.06 percentage points. The smallest change was observed between 2024 and 2025, with an increase of 2.12 percentage points. These changes indicate a sustained, though not consistently accelerating, improvement in profitability.
The overall trend suggests improving operational efficiency or pricing power, as the company is able to maintain or increase its gross profit margin while simultaneously growing revenue. The slight dip in 2024 warrants further investigation, but the subsequent recovery in 2025 indicates this was likely a temporary fluctuation.
Operating Profit Margin
Palantir Technologies Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Income (loss) from operations | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings 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. | ||||||
| Operating Profit Margin, Sector | ||||||
| Software & Services | ||||||
| Operating Profit Margin, Industry | ||||||
| Information Technology | ||||||
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 2025 Calculation
Operating profit margin = 100 × Income (loss) from operations ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin demonstrates a significant improvement over the observed period. Initially negative, the metric transitions to positive values and exhibits accelerating growth.
- Operating Profit Margin Trend
- In 2021, the operating profit margin was -26.66%, indicating substantial operational losses relative to revenue. This figure improved considerably to -8.46% in 2022, suggesting a reduction in the magnitude of operational losses. A positive turning point was reached in 2023, with an operating profit margin of 5.39%.
- The rate of improvement accelerated in subsequent years. The operating profit margin increased to 10.83% in 2024 and further expanded to 31.59% in 2025. This represents a substantial increase in profitability from operations as a percentage of revenue.
The progression from negative to positive and then rapidly increasing operating profit margins suggests successful implementation of cost control measures, increased operational efficiency, or a combination of both. The magnitude of the increase between 2024 and 2025 is particularly noteworthy, indicating a potentially significant shift in the company’s operational performance.
- Relationship to Revenue
- The improvement in the operating profit margin coincides with consistent revenue growth. Revenue increased from US$1,541,889 thousand in 2021 to US$4,475,446 thousand in 2025. While revenue growth contributes to overall financial health, the simultaneous improvement in the operating profit margin demonstrates that the company is becoming more effective at converting revenue into operational profits.
The substantial increase in operating profit margin from 2021 to 2025 warrants further investigation to understand the underlying drivers of this improvement. Analysis of the components of operating income and revenue would provide additional insights into the sustainability of this trend.
Net Profit Margin
Palantir Technologies Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) attributable to common stockholders | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings 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. | ||||||
| Net Profit Margin, Sector | ||||||
| Software & Services | ||||||
| Net Profit Margin, Industry | ||||||
| Information Technology | ||||||
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 2025 Calculation
Net profit margin = 100 × Net income (loss) attributable to common stockholders ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin demonstrates a significant improvement over the observed period. Initially negative, the metric transitions to positive values and exhibits increasing strength through the final year presented.
- Net Profit Margin Trend
- In 2021, the net profit margin was -33.75%, indicating substantial net losses relative to revenue. This figure improved to -19.61% in 2022, suggesting a reduction in the magnitude of net losses, though remaining negative. A pivotal shift occurred in 2023, with the net profit margin turning positive at 9.43%.
- The upward trend continued into 2024, as the net profit margin increased to 16.13%. This represents a considerable gain in profitability. The most substantial increase is observed between 2024 and 2025, with the net profit margin reaching 36.31%. This indicates a substantial improvement in the company’s ability to convert revenue into profit.
The progression from negative to positive, and then to increasingly positive net profit margins, suggests improving operational efficiency, effective cost management, or a combination of both. The magnitude of the increase in 2025 is particularly noteworthy and warrants further investigation into the underlying drivers of this performance.
- Relationship to Revenue
- The improvement in net profit margin coincides with consistent revenue growth. While revenue increased steadily throughout the period, the acceleration of profit margin improvement in later years suggests that profitability is not solely driven by revenue increases, but also by enhanced cost control or pricing strategies.
Overall, the net profit margin exhibits a strong positive trajectory, indicating a substantial enhancement in the company’s profitability over the analyzed timeframe.
Return on Equity (ROE)
Palantir Technologies Inc., ROE 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) | ||||||
| Net income (loss) attributable to common stockholders | ||||||
| Total Palantir’s stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings 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. | ||||||
| ROE, Sector | ||||||
| Software & Services | ||||||
| ROE, Industry | ||||||
| Information Technology | ||||||
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 2025 Calculation
ROE = 100 × Net income (loss) attributable to common stockholders ÷ Total Palantir’s stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Equity (ROE) exhibited a significant improvement over the observed period. Initially negative, ROE transitioned to positive values and demonstrated increasing strength through the end of the period.
- Net Income Trend
- Net income attributable to common stockholders experienced a substantial shift from losses in 2021 and 2022 to profitability in 2023. This positive trend continued, with net income increasing significantly in both 2024 and 2025. The magnitude of the increase from 2023 to 2025 is particularly noteworthy.
- Stockholders’ Equity Trend
- Total stockholders’ equity consistently increased throughout the period. The rate of growth in equity accelerated from 2022 onwards, mirroring the improvement in net income. The largest year-over-year increase in equity occurred between 2024 and 2025.
- ROE Analysis
- In 2021, ROE was -22.71%, reflecting a substantial net loss relative to stockholders’ equity. The ROE improved to -14.57% in 2022, indicating a reduced loss. A positive ROE of 6.04% was achieved in 2023, coinciding with the first year of net income. Further improvements were observed in 2024, with ROE reaching 9.24%. By 2025, ROE had risen substantially to 22.00%, demonstrating a strong return generated on stockholders’ equity.
- The increasing ROE is directly correlated with the shift from net losses to substantial net income, coupled with the consistent growth in stockholders’ equity. The accelerating growth in both net income and equity contributed to the amplified ROE observed in the later years of the period.
The progression from negative to significantly positive ROE suggests improving operational efficiency and/or effective capital allocation. The substantial increase in ROE between 2023 and 2025 warrants further investigation to understand the key drivers of this performance.
Return on Assets (ROA)
Palantir Technologies Inc., ROA 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) | ||||||
| Net income (loss) attributable to common stockholders | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings 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. | ||||||
| ROA, Sector | ||||||
| Software & Services | ||||||
| ROA, Industry | ||||||
| Information Technology | ||||||
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 2025 Calculation
ROA = 100 × Net income (loss) attributable to common stockholders ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibits a significant upward trend over the observed period. Initially, the company experienced negative ROA values, followed by substantial improvements culminating in a notably high ROA by the end of the period.
- ROA Trend
- In 2021, the ROA stood at -16.02%, indicating a loss relative to the company’s assets. This negative value persisted in 2022, although it improved to -10.80%. A positive shift occurred in 2023, with the ROA reaching 4.64%. The rate of improvement accelerated in 2024, increasing to 7.29%. By 2025, the ROA had risen dramatically to 18.26%, representing a substantial return on assets.
The improvement in ROA is directly correlated with the progression from net losses to substantial net income. While total assets increased consistently throughout the period, the growth in net income attributable to common stockholders was particularly pronounced in the later years, driving the ROA increase. The magnitude of the ROA increase from 2023 to 2025 suggests increasing efficiency in asset utilization or a significant improvement in profitability.
- Net Income and Asset Relationship
- The company transitioned from reporting net losses in 2021 and 2022 to generating positive net income in 2023. This positive trend continued, with net income increasing significantly in both 2024 and 2025. Simultaneously, total assets grew each year. However, the rate of net income growth outpaced the growth in total assets, resulting in the observed improvement in ROA.
The substantial increase in ROA from 2023 onwards warrants further investigation to understand the underlying drivers of profitability and asset efficiency. The 2025 ROA of 18.26% represents a considerable improvement and suggests a potentially significant shift in the company’s financial performance.