Palantir Technologies Inc.

Good morning. Welcome to Palantir's third quarter 2021 earnings call. We'll be discussing the results announced in our press release issued prior to the market open and posted on our investor relations website. During the call, we will make statements regarding our business that may be considered forward-looking within applicable securities laws, including statements regarding our fourth quarter and fiscal 2021 results, 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 prior to market open today and in our SEC filings. We undertake no obligation to update these 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 reconciliation of non-GAAP to comparable GAAP measures, is included in our press release and investor presentation provided today. Our press release, investor presentation, and SEC filings are available on our investor relations website at investors.palantir.com. Joining me on today's call are Shyam Sankar, Chief Operating Officer, Dave Glazer, Chief Financial Officer, and Kevin Kawasaki, Global Head of Business Development. Over the course of the call, we will refer to various growth rates when discussing our business. These rates reflect year-over-year comparisons unless otherwise stated. I'll turn the call over to Shyam to get us started. Thank you, Rodney.

It was a fantastic quarter across the board. In Q3, total revenue grew 36%. Commercial revenue growth has accelerated in every quarter over the last year, from 4% in Q4 2020 to 19% in Q1 to 28% in Q2, now 37% in Q3. At this scale, acceleration like this, it's gravity defying. U.S. commercial revenue growth accelerated once again to 103% year over year. We added 34 net new customers in Q3. To put this in perspective, our commercial customer count grew by 46% sequentially. We have more than doubled our commercial customer count since the beginning of the year. We closed 54 deals of $1 million or more, 33 of which were $5 million or more, and 18 of which were $10 million or more. Adjusted free cash flow was $119 million, a margin of 30%. Total deal value grew 50% to $3.6 billion. Commercial deal value more than doubled to $2.2 billion. Remaining performance obligations increased by 172%. And year-to-date, we have grown revenue 44% to over $1.1 billion. We have generated an adjusted free cash flow margin of 29% and 32% adjusted operating margin. There are so many wins this quarter. Instead of going through them customer by customer, as I usually do, I wanted to highlight three themes. One, we are seeing more traction selling into the defense industrial base as a customer. Foundry has shown that it can help in the production of the A320, of Ram pickup trucks, auto parts, PPE, and tractors. It can do it better, faster, and cheaper. And the defense industrial base is seeing that it can have the same impact on the production of fighter jets, naval ships, and land vehicles. We are excited to do more here with L3 Harris, Huntington Ingalls, and other large primes. Secondly, our work in automotive and more generally mobility is growing. We are adding more customers across the mobility value chain from OEMs and their suppliers all the way to EV charging companies and insurers. And lastly, our work in healthcare is exploding. The NHS, MD Anderson, 70 academic medical centers through the NIH's N3C, the Department of Veteran Affairs, and even more regional U.S. providers means that Foundry is helping to manage over 300 million patient lives and growing. We have a very unique opportunity and a diverse footprint that we believe continues to uniquely position us to deliver on the necessary transformation in health care delivery, from operational excellence to complex clinical care. Cutting-edge product and continued innovation and distribution drove these exceptional results in Q3. And you can really see that in the consistently accelerating commercial business. We are seeing a profound pull on Foundry in the market. As organizations digest and synthesize lessons from the shocks of COVID and subsequent events, there is a canonical spot for Foundry in the enterprise architecture that the market has synthesized. Foundry is the nervous system and the cardiovascular system of the enterprise. It is the connective tissue that connects your analytics to your operational systems. Such an architecture marries a digital twin of the enterprise with action APIs that allow you to first model and simulate and second orchestrate and execute complex cross-functional transactions. As the COVID-19 crisis pulled the tide out, that's exactly what was revealed as missing. Companies needed to move beyond visibility, beyond analytical insights, to having the technical infrastructure to translate that into coordinated, orchestrated actions in the operations of their business. And one of the coolest places to see this working is with our Day Zero companies. These companies have enormous ambition and deeply value the step change in speed and the reduction of expenses Foundry delivers when consumed as infrastructure as a service. Wejo is able to develop market-ready applications in as little as six weeks on Foundry. Sarkos is integrating half a trillion data points per month to accelerate design, maintenance, and commercialization of their Ironman suits. Lilium is flying through ground and flight testing, wielding the vast data generated by every sensor streaming from the aircraft. I'd like to introduce some of our Day Zero founders to unpack this a little bit more.

These companies have a strong engineering culture and they've been able to very quickly take on the platform and make it a core part of their tech infrastructure.