Palantir Technologies Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Planet Here Technologies third quarter 2020 earnings conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Rodney Nelson, Head of Investor Relations. Thank you. Please go ahead.

Thank you, Operator. Good afternoon, and welcome to Palantir's third quarter 2020 earnings call. We'll be discussing the results announced in our press release issued after the market closed and posted on our Investor Relations website. With me on the call today is Shyam Sankar, Chief Operating Officer, Dave Glazer, Chief Financial Officer, and Kevin Kawasaki, Global Head of Business Development. During the call, we will make statements regarding our business that may be considered forward-looking within applicable securities laws, including statements regarding our outlook for the fourth quarter and full year 2020, management's expectations for our future financial and operational performance, and other statements regarding our plans, prospects, and expectations. These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially from actual results. Information concerning those risks is available in our earnings press release distributed after market close today and in our SEC filings. We undertake no obligation to update forward-looking statements except as required by law. Further, during the course of today's call, we will refer to certain adjusted financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from GAAP measures. Additional information about these non-GAAP measures, including a reconciliation of non-GAAP to comparable GAAP measures, is included in our press release issued today. Our press release, investor presentation, and SEC filings are available on our investor relations website at investors.palantir.com. With that, I'll turn it over to Sean.

Thank you, Rodney, and thanks, everyone, for joining us today. At Palantir, we build software platforms for institutions whose work is essential to our way of life. Those institutions must be able to function in times of stability as well as crisis and uncertainty. And to do so, they need software that works. We were founded in 2003 and started building software originally for the intelligence community in the United States to assist in counterterrorism investigations and operations. We later began working with commercial enterprises. We have two principal software platforms, Gotham and Foundry. Gotham, which is our first software platform, was constructed for analysts at defense and intelligence agencies. They were hunting for needles, not in one, but in thousands of haystacks. And they did not have the software they needed to do their jobs. In Iraq and Afghanistan, soldiers were mapping networks of insurgents and makers of roadside bombs by hand. Gotham enables users to identify patterns hidden deep within data sets, ranging from signals intelligence sources to reports from confidential informants. and it helps U.S. and allied military personnel respond to those threats. We later found that the challenges faced by commercial institutions when it came to working with data were fundamentally similar. Companies routinely struggled to manage, let alone generate alpha from, data involved in large projects. Foundry was built for them. The platform transforms the way in which organizations interact with information by creating a central operating system for their data. Our software is on the front line. And sometimes literally, that means so are we. Gotham's use has now extended beyond intelligence analysis into defense operations and mission planning. And Foundry is becoming the central operating system, not only for individual institutions, but entire industries. Turning to the third quarter, revenue grew 52% year over year, driven by continued expansion within our install base and initial wins at net new 2020 customers. we are distributing our platforms more efficiently than ever, as we generated adjusted gross margins of 81% and contribution margins of 56% in the third quarter. And Palantir has evolved significantly in the last several years, from the development of our second flagship platform, Foundry, to the acceleration in our government business, to the operating leverage from Apollo, our powerful continuous delivery infrastructure, which has assessed operating efficiencies in very heterogeneous environments. In many ways, our business is just getting started, and this is largely a function of the technology that we've developed over these years. And you can really see that based on what's happening in the field. Let me highlight a few wins. An energy super major was able to leverage our ERP suite an hour, and in just a few weeks, generate $57 million of cash savings, a meaningful contribution to working capital for a sector that is challenged in the pandemic. The customer has already identified an incremental $315 million in potential savings on top of that. And this project has created lasting changes in the way procurement will operate with a projected annualized savings of $1 billion. We also closed a five-year, $300 million renewal mid-pandemic with a large aerospace customer, further reinforcing Foundry as core infrastructure in the operating system of their business. Aerospace has been significantly challenged in the pandemic, and we see this as a long-term commitment to each other. This is the largest deal we have done in the commercial space, and we anticipate strong contribution margins from a customer of this scale and maturity. Another commercial example I'd like to focus on is a Q3 net new Fortune 100 U.S. consumer goods company. This customer needed immediate help understanding the impact COVID may have on its employees and its operational facilities. This company was dealing with a surge in positive COVID tests across its employee base and was scrambling to monitor the health and safety of its employees, but also the durability of its operations. Over the course of an eight-week pilot we started in July, Foundry allowed this customer to monitor potential infections, alert individuals at facilities where potential outbreaks were occurring, and quickly triage to limit the virus's spread. This solution allowed the customer to annotate CAD-based models of their facility with data integrated in our platform to track whether specific areas were particularly conducive to outbreaks or whether the spread was being driven by internal or external factors. This enabled the customer to reach out to affected individuals and provide medical assistance. But also, the customer had a long-running project looking to extract more value out of its supply chain and ERP systems. The firm had invested hundreds of millions of dollars into these solutions, but was struggling to gain the promised economic and competitive advantage from that investment. The customer wanted to use our platform, which they came to appreciate in the context of COVID, to solve core and enduring challenges, specifically to build a real-time buying solution on top of existing investments to make optimized purchasing decisions, such as capitalizing on discounted raw materials when pricing anomalies occur. By leveraging various components and modules in Foundry, the customer is able to model a complete view of its supply chain, from upstream raw materials to downstream finished goods in a few weeks. This created hundreds of opportunities across the customer supply chain for optimization. We also signed a recent expansion with a top five pharmaceutical company. This firm, like many large pharma companies, is awash in data from thousands of clinical trials. But it's hard to draw conclusions across those trials as data is often siloed in disparate systems of record. Leveraging Foundry, this customer is able to link and interrogate data across more than 2,000 clinical trials, including symptoms, diagnoses, and treatments to unearth valuable findings. Again, across trials, not just in a single isolated study. Our software unlocks the ability to see patients' stories at a population level and answer key questions. such as how many patients suffer from a particular condition regardless of which trial they participated in. These insights will help the customer build hypotheses around biomarkers and progressions of certain diseases to optimize research and develop new therapies. Turning to our government segment, we continue to pursue our vision of powering U.S. and allied defense to fight current and future threats from space to mud, and in doing so, becoming the default operating system. We generated several new government wins in the third quarter, including a two-year, $91 million contract with the U.S. Army Research Lab. This customer will be employing both Foundry and Gotham to build out artificial intelligence and machine learning capabilities. Foundry was selected amongst 999 bids, and our platform will be used to integrate, manage, and prepare data for training AI models. Early related work here has shown promising results in delivering next-generation capabilities during a recent warfighter exercise. The Army has leveraged Vantage to great effect across various lines of efforts, from readiness to financial management. These wins illustrate our expanding partnership with the Army, and we're looking forward to pursuing future programs with both the Army and other branches of the military. In particular, I'd highlight the continued growth of opportunities that we see at U.S. Space Force and U.S. Air Force, which we are investing in. Our work serving healthcare agencies domestically and abroad continues to deliver results. We were selected by NIH's National Center for Advancing Translational Sciences, or NCATS, for a $36 million contract supporting secure scientific platforms environment. NCATS is using Foundry for integration, management, security, and analysis across various initiatives supported by the platform, which include cancer and COVID-19 research. Foundry is powering N3C Unite, which is the largest COVID-19 clinical data asset in the world, with over 1 million patients across more than 30 hospitals, all assembled in Foundry in a few weeks. Foundry is also the infrastructure supporting the complex supply chain and logistics for Operation Warp Speed. And this builds on our existing work at CDC, HHS, the NCI, and FDA. And it intersects with our commercial work, helping retail pharmacies and drug companies coordinate plans and logistics to successfully deliver vaccines to the population. In the UK, Foundry has been powering NHS England's response to the pandemic, including the allocation and distribution of more than 2.7 billion items of PPE and other critical equipment. I'd highlight that the President of Colombia recently released a video showing his country's response to the pandemic and the role both Palantir and Amazon Web Services played in rapidly deploying the infrastructure used to manage the situation. This engagement was sourced by Amazon, one of our channel partners. Importantly, we can already see how the pandemic is leading to lasting and systemic transformation of healthcare in various countries. We have a unique opportunity to power the holistic digital transformation of these organizations with significant improvement in the health and safety of their citizens. It may have started with COVID, but it's not going to end there as the pandemic has revealed a broad swath of challenges and opportunities these institutions are rising to meet. And taken together with our commercial healthcare work, we believe these developments will have far-reaching positive implications for the future of healthcare. And we have the opportunity to be at the center of it. Before turning it over to Dave, to take us through the numbers, I wanted to touch on our R&D roadmap. We believe the investments we are making will enable us to drive significant increases in the number of customers that we can acquire and continue to improve our time to value. Our latest R&D investments include enabling our solutions to be fully modular, a take what you want, build on what you have approach for the enterprise. We will be hosting product deep dive for investors in the next month or two. So be on the lookout for an announcement coming soon about these sessions. We're going to showcase how our customers use our platform across industries and across problem spaces, including defense, healthcare, supply chain, and more. We'll also discuss the latest technical development, our roadmap, and upcoming R&D investments. I'll pass it over to Dave.