10-Q 1 pltr-20220930.htm 10-Q pltr-20220930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 001-39540
________________________________________________

Palantir Technologies Inc.
(Exact Name of Registrant as Specified in its Charter)
________________________________________________
Delaware68-0551851
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1200 17th Street, Floor 15
Denver, Colorado
80202
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (720) 358-3679
1555 Blake Street, Suite 250
Denver, Colorado 80202
(Former name, former address and former fiscal year, if changed since last report)
________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)
Name of each exchange
on which registered
Class A Common Stock, par value $0.001 per share
PLTR
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of October 31, 2022, there were 1,979,273,947 shares of the registrant’s Class A common stock outstanding, 99,861,503 shares of the registrant’s Class B common stock outstanding, and 1,005,000 shares of the registrant’s Class F common stock outstanding.
1



TABLE OF CONTENTS
Page

2

PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Palantir Technologies Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
(unaudited)
As of September 30,As of December 31,
20222021
Assets
Current assets:
Cash and cash equivalents$2,411,290 $2,290,674 
Restricted cash20,557 36,628 
Accounts receivable, net343,264 190,923 
Marketable securities57,342 234,153 
Prepaid expenses and other current assets114,157 110,872 
Total current assets2,946,610 2,863,250 
Property and equipment, net57,822 31,304 
Restricted cash, noncurrent20,902 39,612 
Operating lease right-of-use assets199,359 216,898 
Other assets94,142 96,386 
Total assets$3,318,835 $3,247,450 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$59,507 $74,907 
Accrued liabilities164,697 155,806 
Deferred revenue189,771 227,816 
Customer deposits234,142 161,605 
Operating lease liabilities40,233 39,927 
Total current liabilities688,350 660,061 
Deferred revenue, noncurrent31,383 40,217 
Customer deposits, noncurrent5,533 33,699 
Operating lease liabilities, noncurrent204,903 220,146 
Other noncurrent liabilities2,051 2,297 
Total liabilities932,220 956,420 
Commitments and Contingencies (Note 7)
Stockholders’ equity:
Common stock, $0.001 par value: 20,000,000 Class A shares authorized as of September 30, 2022 and December 31, 2021; 1,978,797 and 1,926,589 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively; 2,700,000 Class B shares authorized as of September 30, 2022 and December 31, 2021; 99,862 and 99,880 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively; and 1,005 Class F shares authorized, issued, and outstanding as of September 30, 2022 and December 31, 2021
2,080 2,027 
Additional paid-in capital8,284,686 7,777,085 
Accumulated other comprehensive loss(9,835)(2,349)
Accumulated deficit(5,890,316)(5,485,733)
Total stockholders’ equity2,386,615 2,291,030 
Total liabilities and stockholders’ equity$3,318,835 $3,247,450 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Palantir Technologies Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
    
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenue$477,880 $392,146 $1,397,247 $1,109,022 
Cost of revenue107,611 86,804 304,238 251,841 
Gross profit370,269 305,342 1,093,009 857,181 
Operating expenses:
Sales and marketing182,918 153,443 512,278 451,919 
Research and development100,863 94,316 277,635 303,311 
General and administrative148,679 149,524 446,471 454,054 
Total operating expenses432,460 397,283 1,236,384 1,209,284 
Loss from operations(62,191)(91,941)(143,375)(352,103)
Interest income5,540 379 7,559 1,127 
Interest expense(1,082)(609)(2,346)(3,039)
Other income (expense), net(65,046)(8,528)(260,714)(11,297)
Loss before provision for (benefit from) income taxes(122,779)(100,699)(398,876)(365,312)
Provision for (benefit from) income taxes1,096 1,438 5,707 (1,121)
Net loss$(123,875)$(102,137)$(404,583)$(364,191)
Net loss per share attributable to common stockholders, basic$(0.06)$(0.05)$(0.20)$(0.19)
Net loss per share attributable to common stockholders, diluted$(0.06)$(0.05)$(0.20)$(0.19)
Weighted-average shares of common stock outstanding used in computing net loss per share attributable to common stockholders, basic2,073,265 1,964,395 2,054,926 1,893,911 
Weighted-average shares of common stock outstanding used in computing net loss per share attributable to common stockholders, diluted2,073,265 1,964,395 2,054,926 1,893,911 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Palantir Technologies Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net loss$(123,875)$(102,137)$(404,583)$(364,191)
Other comprehensive income (loss)
Foreign currency translation adjustments(3,161)(1,760)(7,486)1,050 
Comprehensive loss$(127,036)$(103,897)$(412,069)$(363,141)
The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Palantir Technologies Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)

Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance as of June 30, 20222,062,741 $2,063 $8,119,876 $(6,674)$(5,766,441)$2,348,824 
Issuance of common stock from the exercise of stock options4,907 5 24,562 — — 24,567 
Issuance of common stock upon vesting of restricted stock units ("RSUs")12,016 12 (12)— —  
Stock-based compensation— — 140,260 — — 140,260 
Other comprehensive loss— — — (3,161)— (3,161)
Net loss— — — — (123,875)(123,875)
Balance as of September 30, 20222,079,664 $2,080 $8,284,686 $(9,835)$(5,890,316)$2,386,615 
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance as of December 31, 20212,027,474 $2,027 $7,777,085 $(2,349)$(5,485,733)$2,291,030 
Issuance of common stock from the exercise of stock options16,341 17 72,091 — — 72,108 
Issuance of common stock upon vesting of RSUs35,849 36 (36)— —  
Stock-based compensation— — 435,546 — — 435,546 
Other comprehensive loss— — — (7,486)— (7,486)
Net loss— — — — (404,583)(404,583)
Balance as of September 30, 20222,079,664 $2,080 $8,284,686 $(9,835)$(5,890,316)$2,386,615 

6

Palantir Technologies Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance as of June 30, 20211,936,578 $1,937 $7,294,369 $65 $(5,227,408)$2,068,963 
Issuance of common stock from the exercise of stock options41,249 41 97,954 — — 97,995 
Issuance of common stock upon vesting of RSUs13,291 13 (13)— —  
Stock-based compensation— — 184,995 — — 184,995 
Other comprehensive loss— — — (1,760)— (1,760)
Net loss— — — — (102,137)(102,137)
Balance as of September 30, 20211,991,118 $1,991 $7,577,305 $(1,695)$(5,329,545)$2,248,056 
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance as of December 31, 20201,792,140 $1,792 $6,488,857 $(2,745)$(4,965,354)$1,522,550 
Issuance of common stock from the exercise of stock options155,720 155 474,528 — — 474,683 
Issuance of common stock upon vesting of RSUs37,123 37 (37)— —  
Issuance of common stock upon vesting of growth units1,471 1 (1)— —  
Issuance of common stock upon net exercise of common stock warrants and other4,664 6 1,706 — — 1,712 
Stock-based compensation— — 612,252 — — 612,252 
Other comprehensive income— — — 1,050 — 1,050 
Net loss— — — — (364,191)(364,191)
Balance as of September 30, 20211,991,118 $1,991 $7,577,305 $(1,695)$(5,329,545)$2,248,056 


The accompanying notes are an integral part of these condensed consolidated financial statements.
7

Palantir Technologies Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended September 30,
20222021
Operating activities
Net loss$(404,583)$(364,191)
 Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization15,149 11,057 
Stock-based compensation435,400 611,308 
Deferred income taxes(31)337 
Non-cash operating lease expense30,130 23,417 
Unrealized and realized (gain) loss from marketable securities, net260,720 7,238 
Other operating activities2,344 3,076 
Changes in operating assets and liabilities:
Accounts receivable(154,591)(15,412)
Prepaid expenses and other current assets(5,780)(7,872)
Other assets10,490 (7,032)
Accounts payable(15,165)1,158 
Accrued liabilities(828)20,360 
Deferred revenue, current and noncurrent(44,912)(3,781)
Customer deposits, current and noncurrent44,263 (16,227)
Operating lease liabilities, current and noncurrent(27,437)(22,786)
Other noncurrent liabilities(195)(226)
Net cash provided by operating activities144,974 240,424 
Investing activities
Purchases of property and equipment(35,109)(6,783)
Purchases of marketable securities(124,500)(155,315)
Proceeds from sales of marketable securities36,482  
Proceeds from redemption of marketable securities4,619  
Purchases of alternative investments (50,941)
Other investing activities (3,000)
Net cash used in investing activities(118,508)(216,039)
Financing activities
Principal payments on borrowings (200,000)
Proceeds from the exercise of common stock options72,108 474,683 
Other financing activities(269)(401)
Net cash provided by financing activities71,839 274,282 
Effect of foreign exchange on cash, cash equivalents, and restricted cash(12,470)(3,638)
Net increase in cash, cash equivalents, and restricted cash85,835 295,029 
Cash, cash equivalents, and restricted cash - beginning of period2,366,914 2,128,146 
Cash, cash equivalents, and restricted cash - end of period$2,452,749 $2,423,175 
Supplemental disclosures of cash flow information
Cash paid for income taxes$1,268 $3,588 
Cash paid for interest$5 $2,774 
The accompanying notes are an integral part of these condensed consolidated financial statements.
8

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization
Palantir Technologies Inc. (including its subsidiaries, “Palantir” or the “Company”) was incorporated in Delaware on May 6, 2003. The Company builds and deploys software platforms that serve as the central operating systems for its customers.
2. Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The accompanying condensed consolidated financial statements include the accounts of Palantir Technologies Inc. and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in entities where the Company holds at least a 20% ownership interest and has the ability to exercise significant influence over, but does not control, the investee are accounted for using the equity method of accounting. Certain prior year balances have been reclassified to conform to the current year presentation. Such reclassifications did not affect total revenues, loss from operations, net loss, or cash flows. The Company's fiscal year ends on December 31.
The unaudited condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including certain notes required by GAAP on an annual reporting basis. In management’s opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets and statements of operations, comprehensive loss, stockholders’ equity, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period.
These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes included in its Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 24, 2022.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.
Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to, the identification of performance obligations in customer contracts; the valuation of deferred tax assets and uncertain tax positions; the collectability of contract consideration, including accounts receivable; the useful lives of tangible assets; and the incremental borrowing rate for operating leases. Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could affect the Company’s financial position and results of operations.
Summary of Significant Accounting Policies
The Company’s significant accounting policies are discussed in Note 2. Significant Accounting Policies in the notes to consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 24, 2022. There have been no significant changes to these policies during the nine months ended September 30, 2022.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents primarily consist of amounts invested in money market funds.
Restricted cash primarily consists of cash and certificates of deposit that are held as collateral against letters of credit and guarantees that the Company is required to maintain for operating lease agreements, certain customer contracts, and other guarantees and financing arrangements.
9

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the amounts shown in the condensed consolidated statements of cash flows (in thousands):
As of September 30,
20222021
Cash and cash equivalents$2,411,290 $2,335,068 
Restricted cash20,557 41,316 
Restricted cash, noncurrent20,902 46,791 
Total cash, cash equivalents, and restricted cash$2,452,749 $2,423,175 
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses. The Company generally grants non-collateralized credit terms to its customers. Allowance for credit losses is based on the Company’s best estimate of probable losses inherent in its accounts receivable portfolio and is determined based on expectations of the customer’s ability to pay by considering factors such as customer type (commercial or government), historical experience, financial position of the customer, age of the accounts receivable, current economic conditions, including the ongoing COVID-19 pandemic, and reasonable and supportable forward-looking factors about its portfolio and future economic conditions. Accounts receivable are written-off and charged against an allowance for credit losses when the Company has exhausted collection efforts without success. Based upon the Company’s assessment as of September 30, 2022 and December 31, 2021, the allowances for credit losses were not material.
Concentrations of Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, accounts receivable, and marketable securities. Cash equivalents primarily consist of money market funds with original maturities of three months or less, which are invested primarily with U.S. financial institutions. Cash deposits with financial institutions, including restricted cash, generally exceed federally insured limits. Management believes minimal credit risk exists with respect to these financial institutions and the Company has not experienced any losses on such amounts.
The Company is exposed to concentrations of credit risk with respect to accounts receivable presented on the condensed consolidated balance sheets. The Company’s accounts receivable balances as of September 30, 2022 and December 31, 2021 were $343.3 million and $190.9 million, respectively. Customers J and I represented 17% and 13% of total accounts receivable as of September 30, 2022. No other single customer represented more than 10% of total accounts receivable as of September 30, 2022 or December 31, 2021.
For the three and nine months ended September 30, 2022 and 2021, no customer represented more than 10% of total revenue.
3. Contract Liabilities and Remaining Performance Obligations
Contract Liabilities
The Company’s contract liabilities consist of deferred revenue and customer deposits. As of September 30, 2022 and December 31, 2021, the Company's contract liability balances were $460.8 million and $463.3 million, respectively. Revenue of $353.8 million and $347.7 million was recognized during the nine months ended September 30, 2022 and 2021, respectively, that was included in the contract liability balances as of December 31, 2021 and 2020, respectively.
Remaining Performance Obligations
The Company’s arrangements with its customers often have terms that span over multiple years. However, the Company allows many of its customers to terminate contracts for convenience prior to the end of the stated term with less than twelve months’ notice. Revenue allocated to remaining performance obligations represents noncancelable contracted revenue that has not yet been recognized, which includes deferred revenue and, in certain instances, amounts that will be invoiced. The Company has elected the practical expedient allowing the Company to not disclose remaining performance obligations for contracts with original terms of twelve months or less. Cancelable contracted revenue, which includes customer deposits, is not considered a remaining performance obligation.
10

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
The Company’s remaining performance obligations were $1.3 billion as of September 30, 2022, of which the Company expects to recognize approximately 44% as revenue over the next 12 months, 42% as revenue over the subsequent 13 to 36 months, and the remainder thereafter.
Disaggregation of Revenue
See Note 12. Segment and Geographic Information for disaggregated revenue by customer segment and geographic region.
4. Investments and Fair Value Measurements
The following tables present the Company’s assets that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation (in thousands):
As of September 30, 2022
TotalLevel 1Level 2Level 3
Assets:
Cash and cash equivalents:
Money market funds$914,646 $914,646 $ $ 
Certificates of deposit7,379  7,379  
Restricted cash, current and noncurrent
Certificates of deposit24,477  24,477  
Marketable securities:
Marketable securities57,342 57,342   
Total$1,003,844 $971,988 $31,856 $ 
As of December 31, 2021
TotalLevel 1Level 2Level 3
Assets:
Cash and cash equivalents:
Money market funds$507,317 $507,317 $ $ 
Certificates of deposit6,844  6,844  
Restricted cash, current and noncurrent
Certificates of deposit45,048  45,048  
Marketable securities:
Marketable securities234,153 234,153   
Total$793,362 $741,470 $51,892 $ 
Certificates of Deposit
The Company’s Level 2 instruments consist of restricted cash invested in certificates of deposit. The fair value of such instruments is estimated based on valuations obtained from third-party pricing services that utilize industry standard valuation models, including both income-based and market-based approaches, for which all significant inputs are observable either directly or indirectly. These inputs include interest rate curves, foreign exchange rates, and credit ratings.
Marketable Securities
Marketable securities consist of equity securities in publicly-traded companies and are recorded at fair market value each reporting period. Realized and unrealized gains and losses are recorded in other income (expense), net on the condensed consolidated statements of operations. During the three and nine months ended September 30, 2022, the Company recorded net unrealized losses of $18.0 million and $192.8 million, respectively, and realized losses of $41.3 million and $67.9 million, respectively, within other income (expense), net on the condensed consolidated statements of operations. During the three and nine months ended September 30, 2021, the Company recorded net unrealized losses of $7.2 million and no realized losses within other income (expense), net on the condensed consolidated statements of operations.
11

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Investments
Since 2021, the Company has approved and entered into certain agreements (“Investment Agreements”) to purchase shares of various entities, including special purpose acquisition companies and/or other privately-held or publicly-traded entities (each, an “Investee,” and such purchases, the “Investments”). During the nine months ended September 30, 2022 and the year ended December 31, 2021, the Company purchased shares for a total investment of $124.5 million and $326.0 million, respectively. During the three months ended September 30, 2022, the Company purchased 3.5 million shares of Rubicon Technologies for $35.0 million pursuant to the applicable Investment Agreement.
In connection with signing the Investment Agreements, each Investee or an associated entity and the Company entered into a commercial contract for access to the Company’s products and services. The terms of such contracts, including contractual options, range from three to ten years. The majority of these commercial contracts are subject to various termination provisions.
The Company assesses the concurrent agreements under the noncash and consideration paid or payable to a customer guidance within ASC 606—Revenue from Contracts with Customers as well as the commercial substance of each arrangement considering the customer’s ability and intention to pay as well as the Company’s obligation to perform under each contract. As currently assessed, the total value of such commercial contracts with Investees or associated entities was $754.9 million as of September 30, 2022, which is inclusive of $116.2 million of contractual options. As of September 30, 2022, the cumulative amount of revenue recognized from commercial contracts with Investees was $147.0 million, of which $28.1 million and $98.7 million of revenue was recognized during the three and nine months ended September 30, 2022, respectively.
Alternative Investments
During the year ended December 31, 2021, the Company purchased $50.9 million in 100-ounce gold bars. The gold bars are kept in a secure third-party facility located in the northeastern United States. The Company is able to take physical possession of the gold bars stored at the facility at any time with reasonable notice. During the three and nine months ended September 30, 2022, the Company recorded net unrealized losses of $2.6 million related to alternative investments within other income (expense), net on the condensed consolidated statements of operations. During the three and nine months ended September 30, 2021, the Company recorded net unrealized losses of $1.8 million related to alternative investments within other income (expense), net on the condensed consolidated statements of operations.
5. Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
As of September 30, 2022As of December 31, 2021
Leasehold improvements$77,320 $72,834 
Computer equipment, software, and other36,685 16,916 
Furniture and fixtures12,116 8,358 
Construction in progress6,378 3,126 
Total property and equipment, gross132,499 101,234 
Less: accumulated depreciation and amortization(74,677)(69,930)
Total property and equipment, net$57,822 $31,304 
Depreciation and amortization expense related to property and equipment, net was $5.5 million and $3.1 million for the three months ended September 30, 2022 and 2021, respectively, and $13.9 million and $9.3 million for the nine months ended September 30, 2022 and 2021, respectively.
12

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
As of September 30, 2022As of December 31, 2021
Accrued payroll and related expenses$52,991 $60,732 
Accrued other liabilities111,706 95,074 
Total accrued liabilities$164,697 $155,806 
6. Debt
2014 Credit Facility
In October 2014, the Company entered into an unsecured revolving credit facility, which has been subsequently secured by substantially all of the Company’s assets and amended from time to time (as amended, the “2014 Credit Facility”), including on March 31, 2022 (the “March 2022 Amendment”) and on July 1, 2022 (the “July 2022 Amendment”). The March 2022 Amendment provided for, among other things, an extension of the revolving loan facility maturity date to March 31, 2027 and an increase of $100.0 million to the lenders’ revolving commitments for total revolving commitments of $500.0 million. The July 2022 Amendment provided for, among other things, a new incremental delayed draw term loan (“DDTL”) facility in an aggregate principal amount of up to $450.0 million, upon the terms and conditions set forth in the 2014 Credit Facility, as amended, with new and existing lenders. The DDTL facility is available to draw upon through July 1, 2023 and any drawn amounts will mature on March 31, 2027. As of September 30, 2022, the 2014 Credit Facility allows for the drawdown of up to $950.0 million to fund working capital and general corporate expenditures.
Outstanding balances under the 2014 Credit Facility would incur interest at the Secured Overnight Financing Rate (“SOFR”) as administered by the Federal Reserve Bank of New York, or a successor administrator of the SOFR (or the applicable benchmark replacement), plus 2.00% or a base rate plus 1.00%, subject to certain adjustments. The Company incurs a commitment fee of 0.30% assessed on the daily average undrawn portion of revolving commitments. Applicable interest and commitment fees are payable quarterly or more or less frequently in certain circumstances. The 2014 Credit Facility also allows for an incremental loan facility of additional term loans or revolving loans in an aggregate principal amount up to the amount and upon the terms and conditions set forth therein with one or more existing or new lenders upon mutual agreement between the Company and such lenders.
As of September 30, 2022, the Company had no outstanding debt balances and $950.0 million undrawn of revolving or DDTL commitments under the 2014 Credit Facility.
The 2014 Credit Facility contains customary representations and warranties, and certain financial and nonfinancial covenants, including but not limited to maintaining minimum liquidity of $50.0 million, and certain limitations on liens and indebtedness. The Company was in compliance with all covenants associated with the 2014 Credit Facility as of September 30, 2022.
7. Commitments and Contingencies
Purchase Commitments
In December 2019, the Company entered into, and subsequently amended, a minimum annual commitment to purchase cloud hosting services of at least $1.49 billion over six contract years, with an optional carryover period through June 30, 2029, in exchange for various discounts on such services. If the spend does not meet the minimum annual commitment each year or at the end of the term, the Company is obligated to make a return payment. If the difference is greater than $30.0 million for each of the first three contract years or $50.0 million for each of the contract years thereafter (“relief amounts”), the Company has the option to pay the respective relief amount for that year for services to be utilized in the future and the excess amount of the difference above the relief amount would be added to the minimum annual commitment of the following year through the end of the contract. In May 2022, the agreement was amended to extend the second contract year from June 30, 2022 to September 30, 2022 and the optional carryover period from June 30, 2029 to September 30, 2029. The Company satisfied its $167.0 million commitment for the contract year ended September 30, 2022. The commitment amount for the contract year ending September 30, 2023 is $199.0 million.
Litigation and Legal Proceedings
From time to time, third parties may assert patent infringement claims against the Company. In addition, from time to time, the Company may be subject to other legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, copyrights, and other intellectual property rights; employment claims; securities claims; investor
13

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
claims; corporate claims; class action claims; and general contract, tort, or other claims. The Company may from time to time also be subject to various legal or government claims, disputes, or investigations. Such matters may include, but not be limited to, claims, disputes, allegations, or investigations related to warranty; refund; breach of contract; breach, leak, or misuse of personal data or confidential information; employment; government procurement; intellectual property; government regulation or compliance (including but not limited to anti-corruption requirements, export or other trade controls, data privacy or data protection, cybersecurity requirements, or antitrust/competition law requirements); securities; investor; corporate; or other matters. The Company establishes an accrual for loss contingencies when the loss is both probable and reasonably estimable.
On December 14, 2017, members of KT4 Partners LLC (Managing Member Marc Abramowitz) and Sandra Martin Clark, as trustee for the Marc Abramowitz Irrevocable Trust Number 7 (together, “KT4 Plaintiffs”), filed an action in the Delaware Superior Court against the Company and Disruptive Technology Advisers LLC. The complaint alleges tortious interference with prospective economic advantage and civil conspiracy in connection with a potential sale of stock by the KT4 Plaintiffs to a third party. The KT4 Plaintiffs sought compensatory and punitive damages, interest, fees, and costs. On June 27, 2022, the Company and the KT4 Plaintiffs entered into an agreement to settle the litigation and certain other matters. The Company has paid the amount of the settlement in full and has received the insurance reimbursement as of September 30, 2022.

On September 15, 2022, October 25, 2022, and November 4, 2022, putative securities class action complaints were filed in the United States District Court for the District of Colorado, captioned Cupat v. Palantir Technologies Inc., et al., Case No. 1:22-cv-02384, Allegheny County Employees’ Retirement System v. Palantir Technologies, Inc., et al., Case No. 1:22-cv-02805, and Shijun Liu, Individually and as Trustee of the Liu Family Trust 2019 v. Palantir Technologies Inc., et al., Case No. 1:22-cv-02893, respectively, naming the Company and certain current and former officers and directors as defendants. The suits allege false and misleading statements about our business and prospects, and purport to allege claims under the Securities Exchange Act of 1934 and the Securities Act of 1933. The Company disputes these claims and intends to defend these matters vigorously. Because the litigation is in early stages, the Company is unable to estimate the reasonably possible loss or range of loss, if any, that may result from these matters.

As of September 30, 2022, the Company was not aware of any currently pending legal matters or claims, individually or in the aggregate, that were expected to have a material adverse impact on its condensed consolidated financial statements.
Letters of Credit and Guarantees
The Company had irrevocable standby letters of credit and guarantees, including bank guarantees, outstanding in the amounts of $41.5 million and $76.2 million as of September 30, 2022 and December 31, 2021, respectively, which were fully collateralized. The Company is required to maintain these letters of credit and guarantees primarily in connection with operating lease agreements, certain customer contracts, and other guarantees and financing arrangements. As of September 30, 2022, these letters of credit and guarantees had expiration dates through August 31, 2031.
Warranties and Indemnification
The Company generally provides a warranty for its software products and services and a service level agreement (“SLA”) for the Company’s performance of software operations via its operations and maintenance (“O&M”) services to its customers. The Company’s products are generally warranted to perform substantially as described in the associated product documentation during the subscription term or for a period of up to 90 days where the software is hosted by the customer, and the Company includes O&M services as part of its subscription and license agreements to support this warranty and maintain the operability of the software. The Company’s services are generally warranted to be performed in a professional manner and by an adequate staff with knowledge about the products. In the event there is a failure of such warranties, the Company generally is obligated to correct the product or service to conform to the warranty provision, as set forth in the applicable SLA, or, if the Company is unable to do so, the customer is entitled to seek a refund of the purchase price of the product and service (generally prorated over the contract term). Due to the absence of historical warranty claims, the Company’s expectations of future claims related to products under warranty continue to be insignificant. The Company has not recorded warranty expense or related accruals as of September 30, 2022 and December 31, 2021.
The Company generally agrees to indemnify its customers against legal claims that the Company’s software products infringe certain third-party intellectual property rights and accounts for its indemnification obligations. In the event of such a claim, the Company is generally obligated to defend its customer against the claim and to either settle the claim at the Company’s expense or pay damages that the customer is legally required to pay to the third-party claimant. In addition, in the event of an infringement, the Company generally agrees to secure the right for the customer to continue using the infringing product; to modify or replace the infringing product; or, if those options are not commercially practicable, to refund the cost of the software, as prorated over the period. To date, the Company has not been required to make any payment resulting from infringement claims asserted against its customers and does not believe that the Company will be liable for such claims in the
14

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
foreseeable future. As such, the Company has not recorded a liability for infringement costs as of September 30, 2022 and December 31, 2021.
The Company has obligations under certain circumstances to indemnify each of the defendant directors and certain officers against judgments, fines, settlements, and expenses related to claims against such directors and certain officers and otherwise to the fullest extent permitted under the law and the Company’s bylaws and Amended and Restated Certificate of Incorporation.
8. Stockholders' Equity
The Company’s Class A, Class B, and Class F common stock (collectively, the “common stock”) all have the same rights, except with respect to voting and conversion rights. Class A and Class B common stock have voting rights of 1 and 10 votes per share, respectively. The Class F common stock has the voting rights generally described herein and each share of Class F common stock is convertible at any time, at the option of the holder thereof, into one share of Class B common stock. All shares of Class F common stock are held in a voting trust established by Stephen Cohen, Alexander Karp, and Peter Thiel (the “Founders”). The Class F common stock generally gives the Founders the ability to control up to 49.999999% of the total voting power of the Company's capital stock, so long as the Founders and certain of their affiliates collectively meet a minimum ownership threshold, which was 100.0 million of the Company's equity securities as of September 30, 2022.
Holders of the common stock are entitled to dividends when, as, and if declared by the Company’s Board of Directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. No dividends have been declared as of September 30, 2022.
The following represented the total authorized, issued, and outstanding shares for each class of common stock (in thousands):
As of September 30, 2022As of December 31, 2021
AuthorizedIssued and OutstandingAuthorizedIssued and Outstanding
Class A Common Stock20,000,000 1,978,797 20,000,000 1,926,589 
Class B Common Stock2,700,000 99,862 2,700,000 99,880 
Class F Common Stock1,005 1,005 1,005 1,005 
Total22,701,005 2,079,664 22,701,005 2,027,474 
9. Stock-Based Compensation
Stock Options
The following table summarizes stock option activity for the nine months ended September 30, 2022 (in thousands, except per share amounts):
Options Outstanding
Weighted-Average Exercise Price Per Share
Weighted-Average
Remaining Contractual Life (years)
Aggregate Intrinsic Value
Balance as of December 31, 2021349,952 $7.81 9.06$3,638,685 
Options exercised(16,341)4.41 
Options canceled and forfeited(2,490)4.91 
Balance as of September 30, 2022331,121 $8.00 8.54$568,915 
Options vested and exercisable as of September 30, 2022179,077 $5.61 7.55$525,193 
As of September 30, 2022, the total unrecognized stock-based compensation expense related to options outstanding was $759.7 million, which is expected to be recognized over a weighted-average service period of eight years.
15

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
RSUs
The following table summarizes the RSU activity for the nine months ended September 30, 2022 (in thousands, except per share amounts):
RSUs OutstandingWeighted Average Grant Date Fair Value per Share
Balance as of December 31, 2021153,749 $9.56 
RSUs granted19,686 11.77 
RSUs vested and converted to shares(35,849)8.68 
RSUs canceled(6,479)9.32 
Balance as of September 30, 2022131,107 $10.15 
As of September 30, 2022, the total unrecognized stock-based compensation expense related to the RSUs outstanding was $779.3 million, which the Company expects to recognize over a weighted-average service period of three years.
Stock-based Compensation Expense
Total stock-based compensation expense was as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Cost of revenue$10,525 $14,860 $33,413 $54,866 
Sales and marketing48,824 57,124 147,501 186,418 
Research and development25,113 34,472 76,996 122,976 
General and administrative55,846 78,379 177,490 247,048 
Total stock-based compensation expense$140,308 $184,835 $435,400 $611,308 
10. Income Taxes
The Company recorded a provision for income taxes of $1.1 million and $1.4 million for the three months ended September 30, 2022 and 2021, respectively, and a provision for income taxes of $5.7 million and a benefit from income taxes of $1.1 million for the nine months ended September 30, 2022 and 2021, respectively. The Company is subject to income tax in the U.S. as well as other tax jurisdictions in which it conducts business. The Company’s effective tax rate as of September 30, 2022 differs from the U.S. statutory rate primarily due to foreign income taxed at different rates, foreign withholding taxes, and valuation allowances recorded on its losses from the U.S., United Kingdom (“U.K.”), and other jurisdictions. The provision for income taxes decreased by $0.3 million and increased by $6.8 million from a benefit from income taxes for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021. These changes are primarily due to the absence in the current period of the revaluation of the Company’s U.K. deferred tax assets as a result of a change in the U.K. corporate tax rate enacted in June 2021.

The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. The Company assesses its ability to realize the deferred tax assets on a quarterly basis, and it establishes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. The Company weighs all available positive and negative evidence, including its earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. For example, due to the weight of objectively verifiable negative evidence, including its history of U.S. and U.K. net operating tax losses, the Company believes that it is more likely than not that its U.S. and U.K. deferred tax assets will not be fully realized. Accordingly, the Company has maintained a full valuation allowance on its U.S. and U.K. deferred tax assets as of September 30, 2022.
Provisions enacted in the 2017 Tax Cuts and Jobs Act related to the capitalization for tax purposes of research and experimental (“R&E”) expenditures became effective on January 1, 2022. Beginning January 1, 2022, all U.S. and non-U.S. based R&E expenditures must be capitalized and amortized over five and fifteen years, respectively. The U.S. Congress is considering legislation that would defer the amortization requirement to future periods. However, there is no assurance that the provision will be deferred, repealed or otherwise modified. The effect of the requirement did not have a material impact on our income tax provision.
16

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. Based on the Company's current analysis of the provisions, the Company does not believe this legislation will have a material impact on its condensed consolidated financial statements.
11. Net Loss Per Share Attributable to Common Stockholders
The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share amounts):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Numerator
Net loss attributable to common stockholders, for diluted net loss per share$(123,875)$(102,137)$(404,583)$(364,191)
Denominator
Weighted-average shares used in computing net loss per share, basic2,073,265 1,964,395 2,054,926 1,893,911 
Weighted-average shares used in computing net loss per share, diluted2,073,265 1,964,395 2,054,926 1,893,911 
Net loss per share
Net loss per share attributable to common stockholders, basic$(0.06)$(0.05)$(0.20)$(0.19)
Net loss per share attributable to common stockholders, diluted$(0.06)$(0.05)$(0.20)$(0.19)
The following outstanding potentially dilutive common stock equivalents have been excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented due to their anti-dilutive effect (in thousands):
As of September 30,
20222021
Options and stock appreciation rights issued and outstanding331,121 374,555 
RSUs outstanding128,182 166,033 
Warrants to purchase common stock13,042 13,042 
Total472,345 553,630 
12. Segment and Geographic Information
The following reporting segment tables reflect the results of the Company’s reportable operating segments consistent with the manner in which the chief operating decision maker (“CODM”) evaluates the performance of each segment and allocates the Company’s resources. The CODM does not evaluate the performance of the Company’s assets on a segment basis for internal management reporting and, therefore, such information is not presented.
Contribution is used, in part, to evaluate the performance of, and allocate resources to, each of the segments. A segment’s contribution is calculated as segment revenue less the related costs of revenue and sales and marketing expenses. It excludes certain operating expenses that are not allocated to segments because they are separately managed at the consolidated corporate level. These unallocated costs include stock-based compensation expense, research and development expenses, and general and administrative expenses.
17

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Financial information for each reportable segment was as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenue:
Government$273,834 $217,836 $778,622 $658,375 
Commercial204,046 174,310 618,625 450,647 
Total revenue$477,880 $392,146 $1,397,247 $1,109,022 
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Contribution:
Government$153,552 $125,706 $447,004 $400,705 
Commercial93,148 98,177 314,641 245,841 
Total contribution$246,700 $223,883 $761,645 $646,546 
The reconciliation of contribution to loss from operations is as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Loss from operations$(62,191)$(91,941)$(143,375)$(352,103)
Research and development expenses (1)
75,750 59,844 200,639 180,335 
General and administrative expenses (1)
92,833 71,145 268,981 207,006 
Total stock-based compensation expense140,308 184,835 435,400 611,308 
Total contribution$246,700 $223,883 $761,645 $646,546 
—————
(1) Excludes stock-based compensation expense.
Geographic Information