Palantir Technologies Inc. (NASDAQ:PLTR)

The financial data reveals varying trends across key turnover ratios and average periods for receivables and payables over the analyzed time frame.

Receivables Turnover

The receivables turnover ratio exhibits a fluctuating pattern, initially rising from 6.96 in 2020 to a peak of 8.08 in 2021. Subsequently, it declines to 7.38 in 2022, continues downward to 6.1 in 2023, and further drops to 4.98 in 2024. This suggests a gradual reduction in the efficiency of collecting receivables over the later periods.

Average Receivable Collection Period

Complementing the receivables turnover trend, the average receivable collection period shortens from 52 days in 2020 to 45 days in 2021, then lengthens to 49 days in 2022. The lengthening becomes more pronounced with an increase to 60 days in 2023 and further to 73 days in 2024. This indicates increasing time taken to collect receivables, aligning with the declining turnover ratio.

Payables Turnover

Payables turnover shows significant volatility across the years. Starting at a high 21.55 in 2020, it sharply declines to 4.53 in 2021, recovers to 9.12 in 2022, then dramatically rises to 35.56 in 2023. In 2024, it spikes extraordinarily to 5495.05, which likely indicates an anomaly or data inconsistency. Excluding this outlier, the pattern suggests fluctuating but generally improving payables management in the middle years.

Average Payables Payment Period

The average payables payment period varies inversely with payables turnover ratios. It increases from 17 days in 2020 to 81 days in 2021, then decreases to 40 days in 2022, and further shortens significantly to 10 days in 2023. No data is available for 2024. These changes reflect shifts in the company's payment practices and liquidity management.

Working Capital Turnover

Working capital turnover ratio displays a moderate upward trend initially, moving from 0.66 in 2020 to 0.78 in 2022, indicating improved utilization of working capital. However, it declines thereafter to 0.66 in 2023 and further to 0.58 in 2024, suggesting a reduction in operational efficiency related to working capital in the most recent periods.

Overall, the data highlights a decreasing efficiency in receivables management, particularly evident through declining turnover and increasing collection periods. Payables management exhibits substantial variability, with a notable distortion in the latest year that may warrant further investigation. Working capital turnover improved transiently but deteriorated in the later years, reflecting possible challenges in optimizing short-term asset and liability management.

Revenue

The revenue exhibits a consistent upward trend over the five-year period. It increased from approximately $1.09 billion in 2020 to about $2.87 billion in 2024, indicating strong growth in the company’s sales and business expansion. The growth rate appears to accelerate notably in the later years, especially between 2023 and 2024.

Accounts Receivable, Net

The net accounts receivable balance has also increased significantly from $156.9 million in 2020 to $575.0 million in 2024. This substantial increase, more than tripling over the five years, suggests that higher revenue is accompanied by an increasing amount of credit extended to customers or longer collection periods.

Receivables Turnover

The receivables turnover ratio shows a declining trend from 6.96 in 2020 to 4.98 in 2024. This downward movement implies that the company is collecting receivables more slowly over time. Despite growing revenue, the efficiency in converting accounts receivable into cash has decreased, which could raise concerns about liquidity and working capital management if not addressed.

The analysis of the financial data across the evaluated periods reveals notable trends and shifts in key financial metrics.

Cost of Revenue

The cost of revenue initially decreased slightly from 352,547 thousand USD in 2020 to 339,404 thousand USD in 2021. However, the figure then increased significantly in the following years, reaching 408,549 thousand USD in 2022, 431,105 thousand USD in 2023, and further rising sharply to 565,990 thousand USD in 2024. This upward trajectory in cost of revenue from 2021 onwards suggests increasing expenses associated with generating revenue, which might impact gross margins if not accompanied by sufficient revenue growth.

Accounts Payable

The accounts payable balance exhibited considerable volatility. It increased markedly from 16,358 thousand USD in 2020 to a peak of 74,907 thousand USD in 2021, before decreasing substantially to 44,788 thousand USD in 2022. This declining trend continued with a sharp drop to 12,122 thousand USD in 2023, and an almost negligible balance of 103 thousand USD in 2024. Such a decline could indicate faster payment cycles or changes in supplier relationships and credit terms.

Payables Turnover Ratio

The payables turnover ratio experienced dramatic fluctuations. Starting at a high ratio of 21.55 in 2020, it fell sharply to 4.53 in 2021, nearly rebounded to 9.12 in 2022, then jumped significantly to 35.56 in 2023 and an extraordinary value of 5,495.05 in 2024. This ratio reflects the frequency with which accounts payable are paid off during the year. The increasing trend in recent years suggests that the company has been accelerating its payments to suppliers, with the extremely high figure in 2024 potentially indicating almost instantaneous pay-off of payables or anomalies in reporting.

Working Capital

The working capital demonstrates a consistent upward trend over the five-year period. It increased from approximately US$1.65 billion in 2020 to nearly US$4.94 billion in 2024, reflecting substantial growth in the company's current assets relative to current liabilities. This improvement suggests enhanced liquidity and a stronger capacity to meet short-term obligations.

Revenue

Revenue also exhibits a steady increase year-over-year, rising from about US$1.09 billion in 2020 to roughly US$2.87 billion in 2024. This indicates that the company has been successful in growing its top-line income, potentially through expanded sales, services, or market penetration.

Working Capital Turnover

The working capital turnover ratio shows variability across the observed years. Initially, it increased from 0.66 in 2020 to 0.78 in 2022, suggesting improved efficiency in using working capital to generate revenue. However, after 2022, the ratio declined to 0.58 by 2024. This downward shift indicates that while the company's working capital base expanded significantly, the rate of revenue growth relative to working capital slowed, potentially implying diminishing efficiency in capital utilization over the latter years.

Overall Analysis

Overall, the data indicates strong growth in both working capital and revenue, highlighting the company’s expanding operations and liquidity. However, the declining working capital turnover ratio in the later years suggests that the company may need to focus on improving the productivity of its working capital to sustain efficient revenue generation. This may warrant further investigation into asset management and operational effectiveness to ensure continued profitability and liquidity balance.

Receivables Turnover

The receivables turnover ratio shows a fluctuating trend over the observed periods. Initially, there is an increase from 6.96 in 2020 to 8.08 in 2021, indicating improved efficiency in collecting receivables. However, this is followed by a decline to 7.38 in 2022, and a further decrease to 6.1 in 2023. The ratio continues to decline to 4.98 by the end of 2024, suggesting a downward trend in the ability to collect receivables efficiently in the more recent years.

Average Receivable Collection Period

The average receivable collection period conversely shows an overall increasing pattern during the same timeframe. It decreases from 52 days in 2020 to 45 days in 2021, aligning with the peak in receivables turnover and suggesting quicker collection. However, starting in 2022, the collection period lengthens to 49 days, then rises more markedly to 60 days in 2023, and reaches 73 days by the end of 2024. This increase reflects a slower conversion of receivables into cash over the later years.

Summary

Overall, these two metrics display an inverse relationship consistent with their financial interpretations. The company experienced improvements in receivables management efficiency through 2021, followed by a deterioration in subsequent years. By 2024, the receivables turnover ratio is at its lowest point in the series, while the average collection period is at its highest, indicating potential challenges in accelerating cash inflows from customers.

The payables turnover ratio demonstrates significant fluctuations over the observed periods, beginning with a high value of 21.55 in 2020, followed by a sharp decline to 4.53 in 2021. It then increases moderately to 9.12 in 2022, experiences a substantial rise to 35.56 in 2023, and culminates in an exceptionally high figure of 5495.05 in 2024. This pattern suggests variability in the company's efficiency in managing its payables, with an extraordinary acceleration in turnover occurring in the latest period.

The average payables payment period, expressed in number of days, mirrors these trends inversely, starting at 17 days in 2020 and increasing dramatically to 81 days in 2021. This is followed by a reduction to 40 days in 2022 and further decline to 10 days in 2023. Data for 2024 is unavailable. The inverse correlation between the payables turnover ratio and the average payment period aligns with expectations, where higher payables turnover corresponds to shorter payment periods.

Payables Turnover

Exhibited significant volatility with an initial decline in 2021, partial recovery in 2022, and extreme growth in 2023 and 2024, peaking dramatically in the final year analyzed.

Average Payables Payment Period

Demonstrated a marked increase in 2021 indicating slower payment, followed by acceleration in payments in 2022 and 2023, reaching the lowest observed days in 2023.

Relationship Between Metrics

The inverse movements between payables turnover and payment periods reflect consistent underlying shifts in payables management efficiency.

Observations

The extraordinarily high payables turnover ratio in 2024 may indicate an anomaly or a significant change in operational or accounting practices, as the corresponding average payment period data is unavailable for confirmation.